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Serbia: New Energy Efficiency Regulations – Turning the Tide in Favor of Green Construction?

Serbia: New Energy Efficiency Regulations – Turning the Tide in Favor of Green Construction?

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Green and energy-efficient construction made its shy debut on the Serbian market almost a decade ago. Although various attempts were made to promote these green investments by creating a demand on the market, the results were moderate.

Nevertheless, this initial spark has finally been recognized by the Serbian Government, which recently published a draft Law on Renewable Energy Sources and a draft Law on Energy Efficiency and Rational Use of Energy. These laws, which relate to the construction sector – for many years the main pillar of Serbian economic growth – represent the Government’s intentions to make this sector as green and efficient as possible.

Although it is known that greater initial investments in the construction of the energy-efficient buildings will be fruitful and economically viable for investors and property owners in the long run, constructing energy-efficient buildings has been implemented only by a few major and innovative players so far. The majority remain skeptical, and they continue to use decade-old materials and techniques, despite the financial downsides and negative environmental impacts.

The new draft Law on Energy Efficiency and Rational Use of Energy aims to turn the tide and push green and energy efficient construction forward in the Serbian market. The main goal of this law is to promote the construction of new energy-efficient buildings, and to make already-constructed as energy-efficient as possible. To do so, it seems that the lawmakers have predominantly opted for a carrot, rather than a stick.

In order to boost energy-efficiency transparency and the rational use of energy, the law requires the obtaining of a certificate of energy efficiency. This would come handy for future buyers and lessors who want to avoid “the cat in the sack” when calculating future operating expenses, and it should be of great importance in calculating potential effect-expenses caused by, for instance, changes in temperature levels and other climate alterations.

The law also defines products and materials that increase energy efficiency. Their use in construction and adaptation of buildings, especially those categorized in top energy classes, is promoted through various incentives. As there is no better way to implement and promote new trends than through incentives, the draft law states that tax and customs relief, among others, can be provided to investors who use technologies and products that contribute to more efficient use of energy, or who place such products on the market.

In order to prevent this of becoming just an empty bill, licensed energy managers and energy counsels are envisaged as experts authorized to monitor and improve the implementation of the rational and efficient use of energy.

Additionally, once the Law on Renewable Energy Sources enters into force, use of renewable energy sources will be declared of special importance and public interest for the Republic of Serbia. By doing so, there will be room for local municipalities to reduce land development and infrastructure fees, as well as to provide other incentives for the construction of new buildings and the reconstruction of old which will be powered and heated by renewable sources of energy.

This law also regulates the production of energy from renewable sources for producers’ own consumption. This could be an efficient way of incentivizing industrial parks and production facilities to construct renewable energy systems next to their production facilities and use the resulting energy for their own needs, with surpluses available for sale to energy suppliers. This model, combined with the incentives for the use of green energy provided by local authorities, could be a turning point in the construction sector, as it will commercially motivate investors to opt for greener construction.

Although green construction has been present on the Serbian market for some time, it appears that it needed an additional push to be widely used and accepted by investors. These new laws may provide the breakthrough necessary to tip the scales in the promotion of energy-efficient construction, if applied correctly.

By Ana Lukovic, Head of Real Estate, and Igor Golubovic, Junior Associate, Karanovic & Partners

This Article was originally published in Issue 8.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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