SARAJEVO (Reuters) - Montenegro has scrapped plans to add a 254 megawatt (MW) unit at the Pljevlja coal-fired power plant, becoming the first Western Balkan nation to take tougher stance on air pollution from coal, a government official said on Thursday.

Montenegro, like other Balkan countries, faces an acute need for new power sources after decades of under-investment. The new unit was a huge project for the small Adriatic nation and would have accounted for about 8% of its national output.

Ljubo Knezevic, energy advisor to Montenegro’s prime minister, said the move came after a number of changes in European regulations on industrial emissions, as well as the formal attitude of international financial institutions towards projects of this type.

“It was concluded that it is no longer possible to realize the project on commercially justifiable principles, respecting the desired environmental standards,” Knezevic told Reuters.

The government would instead overhaul the existing 210 MW ageing unit at Pljevlja to avoid its closure, boost output and trim greenhouse gas emissions in line with the EU standards, he added.

The EU candidate country also aims to add new wind and solar capacity to help meet the bloc’s renewable energy targets and cut greenhouse gas emissions.

Knezevic said significant investment was already underway for the rehabilitation of two large environmental black spots in Pljevlja, one of which relates to the reclamation of the ash and slag landfill created by operation of the power plant.

Lignite, the most polluting coal, is widely available in the Western Balkans, providing a cheap energy resource and the major source of energy for Kosovo, Serbia, Bosnia, Macedonia and Montenegro.

In 2016, the region’s 16 Communist-era plants with 8 (GW) capacity emitted the same amount of sulphur dioxide as 250 coal-fired plants with 30 times more capacity in the rest of the EU, environmentalist groups said in a recent report.

The region plans to add 2.7 GW of new coal plant capacity in the next decade, mainly financed by Chinese banks.