Coal remains deeply connected to electricity generation, industrial activity, and employment in Bosnia and Herzegovina. The country has relied on domestic lignite and brown coal for decades, using nearby mines to supply thermal power plants in both the Federation of Bosnia and Herzegovina and Republika Srpska. This model helped the country maintain a large degree of energy independence and, during stronger production years, supported electricity exports to neighboring markets.
That position is becoming harder to maintain. Coal output has declined, power stations are aging, mine productivity is uneven, and utilities increasingly face the cost of repairs, fuel shortages, and environmental compliance. Bosnia and Herzegovina is therefore dealing with two pressures at once: it still needs coal to support electricity supply, but the economic and regulatory foundations of the sector are becoming less secure.
Domestic Lignite Built the Country’s Thermal Power System
Bosnia and Herzegovina’s coal industry is based mainly on lignite and lower-calorific brown coal. These resources are generally used close to where they are mined because transporting low-value coal over long distances is rarely economical. The result is a system in which mines and thermal power plants are closely connected.
In the Federation of Bosnia and Herzegovina, major coal-producing areas include Tuzla, Kakanj, Zenica, Banovići, Breza, and other parts of the country’s central and northeastern industrial belt. Mines in these regions have traditionally supplied the Tuzla and Kakanj thermal power plants operated by Elektroprivreda Bosne i Hercegovine.
Republika Srpska has its own coal and power structure. The Ugljevik thermal power plant is supplied by the nearby Ugljevik mine, while the Gacko power plant depends on lignite production from the Gacko basin. These integrated mine-and-power operations remain central to electricity production within the entity.
Coal-fired generation has historically supplied around half or more of Bosnia and Herzegovina’s electricity, although the exact share changes with mine performance, hydrological conditions, power plant maintenance, and electricity demand. Hydropower provides the main domestic alternative, making the national generation mix particularly sensitive to both rainfall and coal availability.
The country’s large coal base has not guaranteed stable production. Many mines operate with aging machinery, difficult geological conditions, high labor costs, and limited investment. Underground mines can be especially expensive to maintain, while open-pit operations require continuous spending on equipment, land management, and the removal of overlying material.
Falling Mine Output Is Becoming an Electricity-Security Problem
The most immediate threat to coal generation is no longer a lack of geological resources. It is the difficulty of producing enough usable coal at a competitive cost.
Bosnia and Herzegovina recorded a major decline in coal-fired electricity generation in 2025, with output falling to its lowest level in roughly two decades. Coal shortages, maintenance work, and technical problems reduced the availability of several thermal units. Electricity imports rose sharply as domestic utilities purchased power to cover the gap.
This represents a significant change for a country that has often been a net electricity exporter. Bosnia and Herzegovina’s interconnected grid gives it access to regional markets, but dependence on imports can become expensive when wholesale prices rise. Utilities may also face financial pressure when they buy electricity at market prices while domestic retail tariffs remain regulated or politically sensitive.
The coal supply problem is linked to years of weak mine performance. Some mines employ large workforces but produce less coal than planned. Others need extensive modernization before productivity can improve. Delayed payments, accumulated debt, pension obligations, and disputes over mine restructuring have added further pressure.
Increasing production is not simply a matter of ordering mines to extract more fuel. Power plants require coal of an appropriate quality, and inconsistent calorific value can reduce generating efficiency or increase maintenance requirements. Utilities must therefore manage both the quantity and quality of deliveries.
The decline in reliable coal output is changing the sector’s strategic role. Coal was once treated as the stable part of the electricity system, balancing the variable output of hydropower. In recent years, coal itself has become a source of operational uncertainty.
Tuzla, Kakanj, Ugljevik, and Gacko Face Different Pressures
Bosnia and Herzegovina does not have a single national coal company or unified electricity market structure. Responsibilities are divided between government entities, public utilities, mining companies, regulators, cantons, and municipalities. This fragmentation makes national planning difficult and means that each coal region faces a different combination of technical, financial, and political pressures.
The Tuzla thermal power complex has long been one of the country’s most important generation centers. Several of its units are old, and plans to replace them with a new lignite-fired unit became increasingly controversial. The proposed Tuzla Unit 7 project faced financing, equipment, regulatory, and state-aid concerns, leaving the future of the site uncertain.
Kakanj remains another major coal-generation center. Its location near central Bosnian mines gives it an important role in the Federation’s electricity system, but its long-term position also depends on mine productivity and investment in older generating units.
Ugljevik has faced major environmental and financial pressure linked to sulfur dioxide emissions and pollution-control requirements. The plant has also been affected by a long-running dispute connected to electricity rights arising from pre-war investment arrangements with Slovenia.
Gacko combines a large lignite resource with persistent technical and environmental challenges. The mine and plant are economically important to the surrounding municipality, which makes any restructuring decision a regional employment issue as well as an energy-policy choice.
These differences reduce the value of a single national closure timetable. Bosnia and Herzegovina will need plant-specific and mine-specific plans that address technical life, replacement capacity, workforce support, environmental liabilities, and local government revenue.
Pollution Rules Are Increasing the Cost of Continued Operation
Bosnia and Herzegovina’s coal-fired power stations are among the largest sources of sulfur dioxide, particulate matter, nitrogen oxides, and carbon dioxide in the country. Pollution affects nearby communities, but emissions can also travel across national borders.
Meeting modern environmental standards requires major investment in flue-gas desulfurization, dust control, wastewater treatment, ash disposal, and monitoring systems. Some plants have installed or planned pollution-control equipment, but performance and compliance remain uneven.
The cost of carbon is becoming equally important. Bosnia and Herzegovina exports electricity and industrial products into European markets, where carbon-related trade rules are becoming stricter. The European Union’s Carbon Border Adjustment Mechanism increases the importance of measuring and reducing the emissions associated with electricity and carbon-intensive goods.
Coal-generated electricity may therefore lose competitiveness even before domestic plants are formally closed. If exporters face additional carbon costs, industries may demand cleaner power to protect their access to European customers.
This creates a wider economic problem. Coal supports domestic electricity, but continued dependence could raise the cost of industrial exports and reduce the attractiveness of Bosnia and Herzegovina as an investment location.
The Coal Transition Has Started Without Replacing Coal’s Full Role
Bosnia and Herzegovina has begun receiving international support for a just transition in coal-producing areas. A World Bank-backed program is intended to help repurpose land around mines, support renewable-energy development, provide worker protections, and develop new employment opportunities in communities including Banovići, Kreka, and Zenica.
These programs are important, but they do not immediately replace the electricity produced by coal plants. New solar and wind projects can expand relatively quickly, yet the country also needs stronger transmission infrastructure, storage, balancing capacity, market reform, and flexible generation.
Hydropower will remain important, but relying too heavily on it would expose the system to dry years. New interconnections and regional electricity trade can improve flexibility, although imports do not provide the same protection as reliable domestic capacity.
The transition will also require credible treatment of mine workers. Coal communities depend on wages, local procurement, municipal revenue, and public services linked to the industry. Closing a mine without replacing its economic function could create long-term regional decline.
Bosnia and Herzegovina is not moving away from coal through a single planned phaseout. The change is already occurring through falling mine output, aging plants, higher maintenance costs, environmental requirements, and weaker commercial performance. The central question is whether the country can build replacement capacity and support coal regions before the existing system becomes too unreliable to manage.