Just transition in Slovenia

The Savinjsko-Šaleška (SAŠA) region

Historic overview

With the first mining activities at the end of the 19th century, the Savinjsko-Šaleška (SAŠA) region has a nearly 150-year-long mining tradition, which in 2023 is still deeply involved in all socio-economic aspects of the region. In addition to the direct economic dependence on the coal industry, which was built around the largest Slovenian coal deposit and one of the thickest layers of coal in the world more than 100 years ago, another coal-related industry found its home in the Šaleška valley – electricity generation. Today, the latter is located in the town of Šoštanj and provides approximately 30 % (in certain periods even up to 60 %) of domestic electricity production in Slovenia.

Current electricity production

While electricity production based on thermal technology in the Šaleška valley plays an important role in the national energy mix, an even greater significant coal-related dependency can be determined within the local economy. Today, this industry directly employs around 1,800 residents of the Šaleška valley (municipalities Velenje, Šmartno ob Paki, and Šoštanj in Fig. 1) which is almost 10 % of the total working population and annually generates almost 30 % (500 million €) of all revenue generated in these municipalities. This includes revenue of Šoštanj Thermal power plant (TEŠ), CMV Group and direct transactions made by those two entities to local subcontractors and suppliers. On the other hand, when excluding revenues of Šoštanj Thermal power plant and CMV, approximately 10 % of the local economy directly relies on revenues generated from the local coal industry. These numbers can further indicate that another 10 % of the active workforce or between 1,500 and 2,000 residents of Šaleška valley is also indirectly employed through coal-related business activities. These numbers combined with the information on greenhouse gas emission intensity provide a clear argument for the need to start the transition process early.

National Strategy for Transition

To holistically address the development needs was accepted the National Strategy for Transition from Coal of Slovenian Coal Regions. It sets five strategic objectives, which need to be achieved by 2050. Based on those broad objectives, the objectives for the Territorial Just Transition Plan were developed. Moreover, the resolution on Slovenia’s long-term climate strategy until 2050 (DPS 2050) places the coal phase-out and other fossil fuels as one of the key sectors for decarbonising the energy supply sector, which also supports the decarbonisation of other sectors. According to the National Energy and Climate Plan (NECP), the DPS 2050 envisages that the use of coal will be reduced by up to 30 % by 2030 compared to 2005, after which coal will be exploited at only one location in Slovenia.

The area of influence in the SAŠA coal region consists of ten municipalities from the Upper Savinja and Šaleška valley. With key impact area positioned around Velenje, Šoštanj, and Šmartno ob Paki, the direct economic impact includes jobs of approximately 1800 of the region’s residents that are directly employed by CMV and TEŠ and an additional 1500 to 2000 jobs created within the region’s economy through support services and other procurement activities of the coal industry.

Transition situation – Mine Closure Act

The legal framework for closure of the Velenje mine and the economic and social restructuring of the Savinjsko-Šaleška region should be based and aligned with the applicable legislative framework. To ensure compliance of the Mine Closure Act with the existing national and European legislation, in Report on Analysis of Key Opportunities and Challenges was prepared a review of relevant legislation, which is directly or indirectly related to mine closure as well as other national and international non-legislative documents dealing with mine closures and other closely related topics (i.e. environmental issues, construction, special planning, etc.). Moreover, as the content of the Mine Closure Act will have to be aligned with national strategies, national programs, community guidelines and other long-term development programs and policies in that Report is also prepared a review of relevant strategic documentation that could directly or indirectly effect the planning and implementation of the Velenje mine closure.

The Act on Gradual Closure of Velenje Coal Mine must also be adopted as quickly as possible, with which Coal Mine will receive the necessary funds for all measures related to gradual closure, which includes mine closure, surface rehabilitation, personnel issues, etc. Adoption of the SAŠA Region Restructuring Act will enable funds to be drawn up for restructuring, investments and new projects. The establishment of the Just Transition Fund is of key importance for the Savinjska-Šaleška region, as this will enable us to stimulate the circular economy, introduce new technologies and preserve the energy location of the Šaleška Valley. The projects identified within the Velenje Coal Mine Group pursue our key strategic goals and are primarily aimed at a gradual transition to a carbon-free society while creating new market opportunities, creating new jobs with higher added value outside the PV Group, optimizing existing programs with the aim of ensuring greater competitiveness and reducing dependence on Velenje Coal Mine.

Next transition steps

Given the strong coal-dependency of the local socio-economic environment, thoughtful transition steps need to be taken while being comprehensively aligned with both local and national contexts. When it comes to environmental challenges, operations that are addressing surface remediation, decommissioning of coal-related infrastructure, and repurposing of coal-related infrastructure should be addressed as early in the process as possible. This will provide new investment opportunities and can be recognized not only as a foundation for a future quality living environment but also for the economic and social transition of the region. Repurposed facilities will provide conditions where new social programs could take place, offering employees in the coal-mining industry and other region’s residents re-skilling, training, and other career-related services. On the other hand, with a highly skilled labour force available, new investment areas and incentives for economic development in place, the region will be able to attract important greenfield and brownfield investments. In addition, the region’s energy transition should also be addressed at this point of time, namely through initial efforts related to the sustainable transition of district heating system (from fossil to renewable generation) and R & D activities related to e-mobility and alternative sources of energy.