Pioneers since 1853

Veolia: Forging a Path through Environmental History

In Central and Eastern Europe, Expertise Developed to Meet the Challenge of Energy Sovereignty.

Let’s head east, about eight hundred kilometers from Italy, to Central and Eastern Europe. Since the fall of the Berlin Wall, the former countries of the Eastern Bloc have gradually embraced market economies. Today, these countries, known as Central and Eastern European countries (CEECs), including Bulgaria, Croatia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovenia, Slovakia, and the Czech Republic, have had to undergo profound changes in their understanding of public services. Over the course of the 1990s, the population had to adjust to the fact that previously free services now had to be paid for in order to increase their efficiency and reliability.

One of these services was energy supply. At the end of the twentieth century, the young democracies of Eastern Europe faced another colossal challenge: how to ensure energy sovereignty when almost everything had to be built from scratch? While strategies and public policies varied, one constant emerged: each state relied on local or foreign companies to lay the foundations for this desired independence and to apply for integration into the European Union.

During this period, Veolia accompanied these countries in reducing their dependence on Russian coal and gas and contributed to their improved energy autonomy. In 2022, the group supplied energy to twelve million inhabitants in the region. Veolia has gained the trust of many countries thanks to its industrial legitimacy as an energy producer and distributor. But it’s not just about that. “We provide solutions that are sustainable. Our values are society, hygiene, safety, and transparency,” says Philippe Guitard, Director of Central and Eastern Europe at Veolia. This trustworthiness has paid off; for example, Veolia’s revenue in the Czech Republic reached 1.5 billion euros in 2022, even though the company had not yet established itself in the country in 1997.

Urban district heating networks are the primary activity through which Veolia has established a long-term presence in the CEECs. In cities such as Warsaw, Poznan, and Lodz in Poland, Bratislava in Slovakia, Budapest and Pécs in Hungary, and Prague and Ostrava in the Czech Republic, Veolia operates and modernizes thermal power plants. “In these countries, about 90 percent of medium and large cities are heated by collective district heating networks due to harsh winters. The current challenges are to secure heat supply and reduce the carbon footprint of the power plants,” says Renaud Capris, CEO of Enova, former Director of Operations in the Czech Republic, Bulgaria, and Hungary.

Over time, the environmental performance of heat production units has been improved, as the standards of the 1990s were not strict enough. The CEECs’ accession to the European Union in the early 2000s forced them to adopt the same rules as Western European countries, which required significant renovation work. “There is a proactive desire to gradually phase out coal-fired power plants. The city of Pécs in Hungary, with a population of about 200,000 inhabitants, has successfully converted its entire district heating network to biomass, completely eliminating coal and gas. Straw is collected from local farmers, as are wood residues,” explains Renaud Capris. Most CEECs are in the process of transitioning to cleaner solutions such as biogas and biomass in order to move away from coal. “The goal is to offer alternatives at a reasonable cost for consumers,” Renaud Capris adds.

Veolia has been present in this region of the world for over twenty years, where energy issues play a crucial role in political and economic balances. This has become even more true since the beginning of the war in Ukraine in February 2022. One of the consequences of the Russian invasion is an increased awareness among the public of the significant dependence on Russia for energy supply, especially gas. Energy autonomy is no longer just an ambitious goal; it is now a regional security issue. The secure access to local energy has been at the heart of European regulatory developments since then, aiming to preserve resources by producing and distributing energy through the most efficient means possible. As a partner to local communities, Veolia designs and develops tailored solutions, allowing its clients to gradually overcome the uncertainties associated with market price fluctuations.

The story of energy intertwines with the turbulent history of a region at the center of important geostrategic issues. “Although reserves of oil, gas, and nuclear fuel remain, their sharp decline and the search for alternatives have led to a paradigm shift: the deployment of low-carbon technologies and energy efficiency are now matters of national and economic security,” writes researcher Diana-Paula Gherasim on the website of the French Institute of International Relations (Ifri). She adds, “The risk of a carbon wall being erected in Europe between the West and the Central and Eastern European Member States is no longer relevant.”

Energy sovereignty, decarbonization, and purchasing power converge fundamentally. While Central Europe still remains dependent on coal, there are numerous plausible opportunities to modify the energy mix. “Renewable energies are the cheapest source of electricity production for Poland, the Czech Republic, Romania, and Bulgaria,” highlights a 2020 report by the Bloomberg NEF expert group. According to the authors of the study, a massive energy transition in the region would reduce CO₂ emissions from the electricity sector by 50 percent in ten years, making a 6 percent contribution to the European Union’s emissions reduction targets.

For Francisco Silvério Marques, the future lies in energy savings and accelerated decarbonization. “In ten years, we will no longer be able to have energy service contracts based on fossil fuels. We will need to use on-site, decarbonized energy, local and renewable, which reduces environmental impact, promotes autonomy, and improves price visibility. Today, we are proficient in downstream operations, optimizing energy use, and we will continue to progress by guaranteeing even more energy savings. At the same time, we must continue to strengthen our upstream activities: our capacity to produce local and renewable energy to meet the needs of our clients.” This vision of a decarbonized future could well materialize throughout the entire Old World and beyond.