Albania is taking great strides forward in environmental terms – from energy efficiency to renewable energy and reforestation – thanks in part to Italy’s involvement.
“The projects we presented in 2007 for the reduction of CO2 emissions are making good progress,” declared Chiara Cattaneo, liaison officer in Albania for the Italian environment ministry. “Our organisation has provided co-financing for the feasibility studies for these projects, organised meetings with local partners and ministries, supplied interpreters and technical support.”
In total, the projects involve investments estimated at 123 million euros. The Italian companies that were successful in the CDM tender process are already at work.
“The only difficulties that arose among the 11 projects that were presented regard the biogas ones: two out of three will be delayed and probably re-proposed in the 2008 portfolio,” explained Cattaneo. “The others are going ahead in the meantime and, if the feasibility studies give positive results, we should soon be drawing up the PDDs with the companies.”
This year, in addition, the ministry aims to publish its tenders for companies more regularly and staggered over the months: each one will involve fewer projects but they will be more frequent and spread out between the various Balkan countries involved.
The Italian-backed economic programme, however, is moving ahead on several fronts. “In September, we will have a call for expressions of interest with the Albanian energy ministry for energy efficiency and renewable energy projects,” added Cattaneo. “In this case, we won’t publish a list of projects for which companies can put themselves forward but instead we’ll ask the firms to present ideas themselves in these sectors. In addition, September 2008 will also be the month for expressions of interest relative to the co-operation accord with Albania for technical assistance, which focuses on environmental protection, reducing pollution and promoting sustainable development. This is also going to be an area of opportunity for interested Italian companies.”
To sum up, says Cattaneo, “this mechanism is working both for the Clean Development Mechanism projects, as foreseen by the Kyoto Protocol, and in terms of technical assistance.”

Albania calls and the Valle d’Aosta answers. Five tenders for the development of various environmental projects that were published in 2007 by the Albanian ministry for the environment, forests and water management, in collaboration with its Italian counterpart, and won by a group of Valle d’Aosta businesses, are now being transformed into preliminary studies.
These projects seek to “improve energy efficiency in Albania,” explains Luca Cretaz, head of operations at Icssea, an engineering company from the Valle d’Aosta that is part of the consortium. The five proposals involve the recovery of biogas from two landfill sites (at Elbasan and Vlore), renewable energy (the construction of a mini-hydro station at Zalli) and other energy efficiency improvements (a co-generation plant at the Mother Theresa of Calcutta University Hospital Centre and various upgrades at Tirana’s student halls of residence).
An initial estimate of the total investments needed comes to more than 13 million euros. But how is the work progressing?
“We are developing the preliminary plans, which we will present to the ministry,” says Cretaz. “The projects have some very important elements, especially from the environmental and economic point of view, and we are satisfied about how they are moving forward.” In recent days, the group of Italian companies signed an accord with the Italian and Albanian ministries.
“Now we’ve given ourselves six months to develop the full plan for the projects, but in 90 days we’ll have already decided on the technical and economic parts,” the engineer added. “We are the consortium behind the work, but we’d also like to carry out some of the infrastructure ourselves because there are some very interesting components that derive from the fact that this country, from an energy efficiency point of view, is very backward. I mean, we’re coming across a lot of coal-fired boilers and other sites where we can take action with innovation and efficiency.”
Cretaz confirms that the Italian ministry is very much on hand to help at this point in the planning, an example of the Italian public sector providing a valid service. “We’ll soon be going to have another inspection in Albania itself, where we’ve found an excellent level of co-operation with the local authorities,” said the Icssea manager. When asked whether there have been any stumbling blocks on the way, Cretaz mentions “some difficulties” in getting updated figures for the plants. “But that’s to be expected,” he added, “considering we’re talking about obsolete plants.”
And what about the future? “Thanks to these projects we hope to have our foot in the door and we will certainly look for other opportunities to work in this area.”

The Albanian cabinet has approved the construction of six new industrial parks, to be built in the areas of Shengjin, Koplik, Spitalle Durazzo, Scutari, Elbasan and Valona.
The Albanian economy, trade and energy ministry is the authority that is contracting out the construction of this infrastructure. Interested companies will now take part in an international tender process. The construction will be subject to a government concession of 35 years and the administration in Tirana hopes it will provide a new stimulus for the country’s development.
There’s progress being made also in terms of energy infrastructure in Albania, which is looking to co-operate in this field with the Italians on the other side of the Adriatic Sea. The Puglia Region has recently approved the construction of a high-voltage power cable to connect Italy and Albania.
The project is a proposal of the Italian company Moncada, which wants to build a 400 KV line between the power stations of Brindisi Sud in Puglia and Babica, near Valona. The cable will have a total capacity of 500 MW and construction will cost about 240 million euros. The Albanian government has already given its approval to the project at the beginning of the year. The accord with the Puglia Region was designed so that the project could get a single authorisation from the ministries of economic development and the environment.
Moncada itself has previously announced a plan to build a wind farm at Valona, which would be the biggest in Europe: the renewable energy project will cost 750 million euros and have a capacity of 500 MW.

Work is also on-going in Macedonia for the 2008 project portfolio. “We’re preparing a new group of seven or eight CDM projects with the first tenders published by the end of July,” said Giorgio Mattiello, the Italian environment ministry’s liaison officer in Skopje, who also announced a new aspect compared with last year.
“We intend to change the way announcements for the companies are published: we’re going to stop having a rush to present projects for a single country once a year and we want to spread them out over several months in groups of two or three projects at most. This way,” he explained, “we aim to maintain a constant and strong focus for interested companies, making new projects available each month.”
But this isn’t the only impact of the new approach of having a constant flow rather than an annual peak in presentations. As the ministry’s liaison officer says, “the work will also be more steady and predictable for the officials who work to draw up the tender documents in the various Balkan countries.” The plan is to have a first round of announcements in July and a second in September, with calls coming also from the other countries that are working in an integrated way with Macedonia.
The new projects will be related to the areas of energy efficiency in industry, biomass and reforestation, just as was the case with the 2007 portfolio. Indeed, those companies that won tenders from last year are now working proficuously. “The feedback is good,” says Mattiello. “The winning companies are preparing their PDDs and, as for us, we’re continuing to support them in this phase, especially to interpret local legislation.”
There have been about 15 Clean Development Mechanism projects presented in Macedonia since this work got under way and probably another eight will be added with the 2008 portfolio.

Skopje’s landfill site aims to become one of the biggest in central Europe in the next 20 years. That’s thanks to the Macedonian authorities’ ambitious plan to restructure along technological and sustainable lines the capital city’s refuse site which, when the work is completed, will be able to contain 30 million metric tons of trash.
There’s much to be done, of course, and Italian companies are looking on with interest for the work that could come out of it. Among them is Gesenu, the utility of the city of Perugia, which is already busy in Macedonia following its winning of a CDM tender from the Italian environment ministry; the accord included co-financing for the preparation of a PDD for a project to recover and capture biogas from the landfill site and turn it into electricity.
“The feasibility study is going well – we’re waiting for some new documentation from the local authorities to take a further step towards completion,” said Andrea Eleuteri, the engineer who’s in charge of planning and management for Gesenu’s waste-treatment plants. “Our biogas recovery project fits perfectly with the new vision for managing and securing the landfill site that the municipality of Skopje is working on,” continued Eleuteri. “All the elements are in place to do a good job and the upgrade that we are carrying out will have interesting results both in environmental and economic terms.”
The Gesenu technician also commented about the Italian team on hand locally. “While we were developing the project we occasionally ran into trouble trying to get answers from local authorities,” he explained. “In these cases, the liaison work carried out by the environment ministry officials was fundamental, a great advert abroad for Italian industriousness and organisation.”

A new plant for the recycling of municipal solid waste is due to be built in Stip, a city in the eastern part of Macedonia. Construction will start in the autumn of this year.
According to Stip city council, the project should be completed in the course of two years, thanks in part to a donation from the Dutch city of Harlemer. The first part of the investment is worth about 2 million euros and will be spent reclaiming the existing landfill site in Stip and preparing for the second phase, involving the actual construction of a factory for composting organic waste and separating out the solid trash. The second phase of building the plant should start after 2010, when the total value of the investment is expected reach 20 million euros.
The flow of foreign investment into Macedonia doesn’t come out of thin air, though. It’s an area where, for example, the Italian environment ministry is active, pioneering various projects in the country and bringing in Italian companies specialised in energy generation and saving, fuel switching, forestation and the production of energy from waste. The “Partneri 2” project also has as its main aim the creation of a business environment that’s attractive to foreign investors: it will run for the next 18 months simultaneously in Macedonia, Albania, Bosnia Herzegovina, Serbia and Montenegro. The project, worth 1.18 million euros, is backed by Eurochambres, Europe’s association of chambers of commerce and trade, and forms part of Cards 2005, a regional programme that seeks to direct EU aid to countries in south-east Europe.
All this activity has won the approval of the World Bank. In its “Doing business 2008” report, the World Bank recently put Macedonia in fourth place among countries that have worked best to stimulate the economy and attract foreign investment. It cited in particular recent laws to reduce taxes, simplify tax-collection mechanisms, remove the minimum level of capital needed to set up a company and accelerate procedures for building permits.

Montenegro’s ministry of tourism and the environment signed agreements on 25 June with the Italian companies chosen to prepare feasibility studies and PDDs for the CDM projects that are slated to reduce CO2 emissions in the country. The Italian companies that will get co-financing from the Italian environment ministry for their feasibility studies are Sirio Techno Group, Tolo, Ati (a consortium between Eurecna and Eng Team & Partners), Italian Utilities (in partnership with Anteco and Mgm Worldwide), Agrotec (in partnership with Tuscia University) and probably Mwh (its contract still has to be signed).
“The projects involve the energy, waste, biomass and reforestation sectors,” explained Christian Melis, the Italian ministry’s liaison officer in the country. “The call for expressions of interest closed positively and the evaluation commission, which assessed the offers received from the Italian companies, chose the winners for the nine proposed projects. We’ve already alerted the local authorities, who will provide the Italian consortiums with the necessary data to do their feasibility studies.” Things are really getting going now: while 2007 was the year of scouting and preparing the tenders, 2008 is dedicated to the feasibility studies.
Melis also provided a profile of the Italian companies involved. “The consortiums are above all composed of engineering companies specialised in building energy and waste plants, but there’s also a consultancy and a university – Tuscia from the city of Viterbo,” said the ministry official. “Of course, the selection process was also based on experience in the relevant sector for the project. But I have to say that none of the offers received showed any signs of amateurishness,” continued Melis. “All of the companies that came forward were well prepared and specialised.”
But is it possible yet to take stock of this endeavour? According to Melis, “the interest shown by Italian companies is absolutely positive and the procedures have been respected right up to the signing of the contracts; as for Montenegro, it’s been a good exercise in finding ways to attract foreign investors. Let’s not forget the knock-on effect that we want to create here: an Italian company entering Montenegro with a feasibility study in the environmental sector can discover an interesting new world that can offer further opportunities from an economic point of view.”
The 2008 project portfolio is being worked upon. As in the other Balkan countries, Montenegro will also publish its calls in successive steps but, as Christian Melis confirms, “the methodology should remain the same: bilateral co-operation and calls for expressions of interest for the Italian companies, published by the local ministries.”

Budva’s local authority and the joint venture Montenegro Osmoza, using Canadian funding, will develop by the end of July a project worth about 10 million euros to build a water desalination system. The plan is frowned upon by Montenegro’s ministries of agriculture, tourism and the environment, which have expressed their “clear contrariety”.
The ministries are opposed because a new regional aqueduct coming from Boljesestre, on Lake Scutari, is about to start operating, a project that cost 20 million euros, financed by the World Bank. It’s due to be ready for 2009. The aqueduct will supply water at a much lower cost (about a third lower) than the forecasts indicated for the desalination project – which is due to be operated under a 20-year concession – taking into account that the latter is not likely to be able to meet the total demand of the city of Budva. The new aqueduct, however, has been designed so that it can cover growth in demand for the coming 20 to 25 years, including even season peaks in summer.
In the meantime, Montenegro’s central bank (CBCG) has published preliminary figures on foreign direct investment for the first quarter of 2008. Overseas investments in the Balkan country reached 215.2 million euros, an increase of 6.8% from the same period of the previous year. As regards the composition of investment flows, the property sector saw a decrease while growth was recorded in the banking and corporate segments.
According to the Montenegrin bank’s statement, a breakdown of FDI flows in the first quarter shows that 45% of investments were in the banking sector with 38% in property.

Work is progressing in Serbia as well, politics permitting. In the words of Roberto Binatti, the liaison officer in Belgrade for the Italian environment ministry and part of the task force for central and eastern Europe, “potential projects to be carried out under the Clean Development Mechanism (CDM) are still on hold pending the setting up of the Designated National Authority (DNA), the body that gathers the local authorities involved and which will make preliminary evaluations of the projects to be presented to the CDM Executive Board of the Kyoto Protocol. But the Italian ministry is continuing with its work of identifying new potential projects and, above all in this phase, of capacity building.”
In this regard, a workshop was organised about the CDM to provide support for the DNA and the local authorities. “As part of our technical-legal assistance, we presented at the end of June the first report evaluating future Serbian legislation on the protection of the air; furthermore, we will present to the Serbian authorities the potential benefits of the European Union’s Seventh Framework Programme on research and technology development,” he added.
In the meantime, Tuscia University is working on a feasibility study for a reforestation project designed to deal with flooding rivers in the province of Vojvodina. The project is included in the package drawn up by Italy’s environment ministry in co-operation with its Serbian counterpart. “The project covers 1,400 hectares of land,” explained Lucia Perugini from the department of forestry and environmental sciences of the Viterbo-based university. “In particular, we are looking at reforestation that will combine a traditional operation, with the planting mainly of poplars on about a thousand hectares, with the addition of plants for the production of biomass in the remaining 400 hectares.”
The areas involved run alongside the province’s rivers – the Danube and its banks above all – and a local system of canals. Tuscia University’s figures suggest 300,000 metric tons of CO2 could be stored over 15 years, with an annual saving of carbon dioxide emissions into the air of an estimated 20,000 tons.
The study, the details of which will be finalised by the Italian university by the end of July, has been carried out thanks to daily exchanges with the local public company, which manages the water system, and the university of Novisad. “Once its feasibility has been established, the project will be presented to the environment ministry to prepare for investments by Italian companies that are interested in entering Serbia,” the researcher explained. “The project is very interesting: biomass is actually a sector that could attract significant investment.”

Italian winds are blowing through Serbia. Fintel Multiservizi has started building a wind farm at Vrsac, in Vojvodina. The Macerata-based company, which operates in the electricity market with trading activities and sales to end-users, announced that the total installed capacity of the plant will be 100 megawatts.
Initial estimates made by the Italian firm indicate that it will be possible to run the wind farm for 2,200 hours a year with average wind speeds of 8 metres a second. Fintel also expects to undertake similar initiatives at Bela Crkva and in three municipalities of central-eastern Serbia (Vlasina, Bor and Pirot), on the border with Romania and Bulgaria. It is also considering the construction of small hydroelectric stations of 2 megawatts each. Each project is run by a separate company, under the overall control of the local subsidiary, Fintel Energija. Fintel is now in the process of finalising its contracts with the local state company in charge of transmission and dispatchment.

Small and medium-sized enterprises from the Valle d’Aosta are betting on Albania. At the end of last year, a consortium of companies from this northwestern Italian region won five tenders organised by the Albanian Ministry of the Environment, Forestry and Water Management, in co-operation with its Italian counterpart, for the development of various environmental projects to reduce carbon-dioxide emissions. The consortium is headed by Sea Srl, which operates in the field of energy and network services, and by Fratelli Ronc from Introd, near Aosta, a company specialising in the construction and management of hydroelectric power stations. The five projects involve biogas recovery at two landfill sites (at Elbasan and Vlore), renewable energy sources (building a mini-hydro station at Zalli) and energy efficiency improvements (a co-generation plant at the Mother Theresa University Hospital Centre and various modifications at Tirana’s student halls of residence). An initial estimate put the total value of the investments at more than 13 million euros. Now the consortium is busy drawing up feasibility studies and business plans, co-financed by the Italian environment ministry, to find out whether the projects are worth pursuing. “We went to Albania in February for an initial inspection of what’s to be done,” said Luca Cretaz, head of operations at Icssea, an engineering company from Aosta that’s part of the bidding group. “Our first impression was good: the local authorities co-operated, providing us with more data than we already had and there were no language problems – almost everyone spoke either Italian or English. Of course,” he added, “the Italian environment ministry’s help was very important. They organised meetings for us, provided an interpreter when one was needed and actually accompanied us on some visits. The ministry’s office in Tirana was a fundamental point of reference for us.”

In coming months, the Albanian Ministry of the Economy, Trade and Energy (METE) is due to publish a call for expressions of interest for CDM pilot projects in the fields of energy efficiency and renewable energy. Italian or joint italo-albanian companies will be entitled to respond to the tender. “The projects fall under a co-operation accord on sustainable development and greenhouse-gas emission reduction signed on December 19 last year in Tirana,” said Chiara Cattaneo, the Italian environment ministry’s liaison officer in Albania. “There are about 5 million euros available, which will be used to co-finance the projects. But that’s not all: more opportunities will arise for Italian companies from a co-operation accord that was signed to deal with environmental protection, cutting pollution and promoting sustainable development. At the moment,” Cattaneo added, “we’re defining the scope of technical assistance that will be provided, the submission process for the Italian companies making project proposals in partnership with Albanian companies and how they will be chosen to supply technical assistance. The Albanian environment ministry will soon publish a call for expressions of interest.” As regards the 2007 portfolio of CDM projects, the call for expressions of interest closed on November 8 last year and seven groups of Italian companies were chosen as a result. Each group is soon due to sign a contract with the Albanian environment ministry to get co-financing for their feasibility studies.

Sixteen municipalities from the Italian region of Molise, Albania and Montenegro have agreed to set up the South Adriatic Eurodistrict. Ten of them are in Molise while the rest line the coast on the opposite side of the Adriatic. The local authorities of Kotor, Budva, Tivat, Herceg Novi and Ulcinj in Montenegro, of Scutari in the Republic of Albania and of Campomarino, Guglionesi, Petacciato, Portocannone, San Martino in Pensilis, San Giacomo degli Schiavoni, Ururi, Acquaviva Colle Croce, Montecilfone and Montemitro, all in the Italian province Campobasso, will form the South Adriatic Eurodistrict, an international body falling within the Adriatic Euroregion. A draft accord has already been prepared. The agreement aims to stimulate and promote co-operation between the various municipalities that line the Adriatic Sea on issues that fall within the jurisdiction of the individual local authorities. Similarly to Euroregions, Eurodistricts fall within the “Model and outline agreements, statues and contracts on transfrontier co-operation between territorial communities or authorities” formulated by the Council of Europe on the basis of the Madrid Outline Convention. The initiative is being co-ordinated and developed by the Union of Basso Biferno municipalities.

New CDM projects in Macedonia are due to be presented by August. Now that the selected Italian companies and the Macedonian environment ministry have signed contracts for the 2007 project portfolio, which allowed for the co-financing of feasibility studies, the Italian environment ministry is working on drawing up the 2008 project portfolio. Giorgio Mattiello, the Italian ministry’s liaison officer in Macedonia, said: “The new projects will have to do with energy efficiency and any themes that come out of the ‘call for ideas’ that was published in the press and which sought the involvement of companies, local authorities, etc.” When the new projects have been decided, there will be a call for expressions of interest from Italian companies, probably some time around September or October. According to industry estimates, Macedonia could generate credits amounting to 4 million metric tons of carbon dioxide equivalent a year.

In 2007, 15 CDM projects were identified by the ministry in the following sectors: waste (recovery of landfill gas, recovery of methane in livestock farming), renewable energy (wind, biomass and geothermal), energy efficiency (improvements at a university hospital centre and to street lighting), fuel switching (substituting oil with gas in a thermal power station) and carbon sinks (afforestation in a central area of the country).

The Hartija Dooel paper mill that stands in the old industrial area of Kocani, a town in eastern Macedonia, wants to save energy and cut pollution. These two aims may soon be achieved thanks to the start of a CDM project identified by the Italian and Macedonian environment ministries as part of their 2007 project portfolio. The project involves substituting part of the fuel oil needed for production with biomass, comprised of agricultural residues from the local area, mainly wheat and rice straw. There are two options: the first would mean installing biomass-fuelled boilers for the production of heat; the second involves a combined heat and power (CHP) unit with a steam turbine. At the end of 2007, a consortium of two Italian companies was chosen by the ministries to draw up a feasibility study for the project: Eurecna, a company from Venice that provides international technical assistance for economic development and governance projects in the public sector, ICT and renewable energy solutions, and Eng team, an engineering company from Pordenone. They signed a contract with the Macedonian environment ministry on February 18, a necessary step for the co-financing of the feasibility study, which must be ready within six months in order to receive CDM certification from the necessary bodies. “I’ve just been to Macedonia to have an initial meeting with the people at the paper mill,” said Mario Costariol, Eurecna’s managing director. “The management has high hopes for the project so they are co-operating. At the moment, the factory has very high energy costs, which risk pushing it to the margins of the market. By using biomass, they could cut these costs and also have some environmental advantages.” Have any problems already been identified? “The main problem for the project,” Costariol added, “is to organise the collection and storage of straw by farmers. In Italy, straw is an agricultural by-product with its own market but in emerging economies this hasn’t yet happened so the straw is burnt in the fields, buried or left to rot. Thanks to this project, the farmers will get an economic benefit.” Once the feasibility study is prepared, the paper mill can decide whether to fund the investment itself, seek financing or else leave the project to be carried out by a third party. “For now, the company hasn’t expressed a clear preference,” Costariol said, adding that he was very satisfied with the support provided locally by the Italian environment ministry’s office in Macedonia. “They helped us out with institutional and operational contacts,” the Eurecna MD concluded. “It was a pleasant surprise – an example of good service provided by Italy’s public sector.”

Eurecna and Eng team won tenders for two other projects. One involves energy efficiency improvements at the heating system of the Clinical Centre in Skopje while the other is for street lighting improvements in 15 municipalities.

Macedonia’s gross domestic product (GDP) expanded 5.1% in 2007, according to the national statistics office. The sectors that contributed most to growth were wholesale and retail trade (14%), transport and communications (12.5%), and hotels and restaurants (6.8%). GDP growth was quite robust in 2007 and, although it failed to meet the official target of 6%, was in line with the European Commission’s forecasts. The EU’s executive branch estimates economic growth for Macedonia of 5.5% this year and 5.3% in 2009.

Italian companies are lining up to get involved in environmental CDM projects in Montenegro. Following the publication of a call for expressions of interest on February 20, Montenegro’s environment ministry received responses from 10 companies and consortiums, most of which were keen to get involved in at least one project. “All the projects have received at least three offers with some of them getting as many as eight,” said Christian Melis, the Italian environment ministry’s liaison officer in the country. “That means that all nine project proposals are likely to be taken forward with feasibility studies and Project Design Documents (PDDs).” The expressions of interest are for nine proposed projects that were listed by the Italian and Montenegrin ministries in their 2007 portfolio with the aim of improving the environment in Montenegro. The highlights include methane recovery projects at the Pljevlja and Niksic landfill sites and at a pig farm at Spuz as well as projects for energy generation using biomass and energy efficiency in public illumination in several municipalities. There are also projects to boost efficiency at industrial plants, fuel switching to lower environmental impact and the reforestation of degraded land. Melis noted that the project for the regional landfill site of “Lovanja” at Kotor has been removed from the 2007 portfolio because the site no longer exists. Another three proposals have been turned into pilot projects, financed by the Italian environment ministry: “landfill gas to energy at the Podgorica landfill site”; “wood biomass to energy in northern Montenegro”; and “small-scale bundled project at Krupac and Slano”. The expressions of interest received from the Italian companies will be evaluated by a joint italo-montegrin committee, which has 60 days to make a decision (starting from March 20). The selected companies will be called to sign an accord with Montenegro’s environment ministry and then start drawing up their feasibility studies, which are eligible for co-financing. Meanwhile, the two ministries are working to update the project portfolio. According to Melis, the new proposals will probably involve energy efficiency improvements at existing industrial plants and energy generation from biomass. There may also be projects for the development of wind farms while hydroelectric developments are unlikely. According to industry estimates, Montenegro could generate credits amounting to 2.5 million metric tons of carbon dioxide equivalent a year, about the same as Albania.

Montenegro has joined the European Union’s Competitiveness and Innovation Programme (CIP), following in the steps of other nearby states that are candidates or potential candidates to join the 27-nation bloc. Croatia and Macedonia signed up to the CIP last October while Turkey joined its ranks in February. Under the CIP, the European Commission promotes innovation, entrepreneurship and growth in small and medium-sized enterprises (SMEs). Commission Vice-President Günter Verheugen, responsible for enterprise and industry policy, said Montenegro’s participation confirmed the country’s European aspirations along with its entry into the new Enterprise Europe Network, which will allow Montenegro to reap the full benefits of adopting best practice policies for SMEs, entrepreneurship, competitiveness and innovation. The groundwork on developing a favourable regulatory framework for SMEs has almost been completed through Montenegro’s participation, since 2003, in the European Charter for Small Enterprises. Verheugen and Montenegro’s minister for economic development signed a memorandum of understanding formalising the republic’s entry into the Entrepreneurship and Innovation pillar of the CIP.

The CIP runs from 2007 to 2013 with a budget of 3.6 billion euros. Its three main pillars are the Entrepreneurship and Innovation Framework Programme (EIP); the Information and Communication Technologies Policy Support Programme (ICTPSP); and the Intelligent Energy-Europe Programme (IEE).

There is no progress on Serbia’s CDM projects pending the formation of the Designated National Authority (DNA), the body that will bring together all the local authorities involved to evaluate the projects. “There have been delays in the setting up of this authority,” said Roberto Binatti, the Italian environment ministry’s liaison officer in the country. “As soon as we have a DNA, we will move forward with a call for expressions of interest to choose the Italian companies that are potentially interested.” The Italian ministry has already identified 23 CDM projects for the 2007 portfolio. Twelve of them involve the recovery and combustion of gas, located at landfill sites, livestock farms and a distillery. Some projects are dedicated to renewable energy sources in the form of mini-hydro power stations, the use of biomass and a pilot wind-farm project. There are several initiatives to bring improvements in energy efficiency and they involve a major producer of fertilizers and nitric compounds (Hip-Azotara, the largest such company in the Balkans), a centralised heating system and street lighting in several municipalities, where old mercury vapour lamps will be replaced with those using sodium. There is also a reforestation project at a special nature reserve that includes the subsequent use of biomass.

The ministry will continue identifying new projects during 2008. Of the four Balkan countries, Serbia offers the best investment opportunities in the area of environmental CDM projects. According to industry estimates, it has the potential to generate carbon credits amounting to the equivalent of 20-25 million metric tons of carbon dioxide a year, 10 times more then Albania or Montenegro.

Serbia’s industrial sector expanded 4% in January from a year earlier, rebounding after a weak performance in previous months. Data from the statistics office showed that growth was led by an 8.5% expansion in output at utilities. Manufacturing saw an annual rise of 2.7% in January, following a 1.1% contraction in the final month of 2007. Within the manufacturing category, the weakest performances came in radio and TV gear (-40.1%), transport equipment (-35.2%) and wood products (-28.6%). Higher-than-expected increases were reported for sectors with some of the highest added value such as the production of office equipment and computers (+149.5%), precision and optical instruments (+44.3%) and electrical machinery (+40.3%). The manufacture of metal products (excluding machinery) showed an increase of 14.9% compared with a decline of 21.4% in December. Production of basic metals, which contracted 11.5% in December, also rebounded thanks to a 2.3% expansion in January. Finally, the mining and quarrying sector returned to growth in January with a 0.7% rise in output.

The statistics office also reported that inflation continued to rise, increasing to an 11.5% annual rate in January from 11% reported in the previous months. The biggest gains were shown in the price of food and beverages (+20.1% compared with +18.4% in December).