Revealed: EBRD climate crimes rising
Bankwatch Mail | May 17, 2012
EBRD efforts to clean up its energy lending in central and eastern Europe are being undermined by extensive fossil fuel investments, with astonishing increases in the EBRD's backing for coal and oil projects in 2011.
This article is from Issue 52 of our quarterly newsletter Bankwatch Mail
These are the findings of a new Bankwatch analysis of the EBRD's energy lending since the bank's current Energy Policy was approved in 2006. Bankwatch's research, based on the bank's own lending figures, found that of the EUR 6.7 billion in EBRD support for the energy sector between 2006 and 2011 there were some positive developments such as a large increase in the bank's energy efficiency and new renewables investments. However, the good news is spoiled by the bank's continued financing of fossil fuels which made up almost half (48 percent, or EUR 3.26 billion) of its overall energy lending in the period.
In particular the EBRD's increasing financing of coal and oil projects is problematic, each receiving investments equal to the amount of new renewables financed in 2011.
The new report should come as a wake-up call at a time when the EBRD is developing a new Mining Strategy. A draft of the new mining strategy, released in late April, looks set to allow the EBRD to continue financing coal mining, a highly climate damaging sector.
The 68 MW Ombla underground hydropower project, for which the EBRD approved a EUR 123.2 loan in 22 November 2011, is once again under fire, this time in the European Parliament. Both the project itself and its approval process have attracted widespread criticism from civil society and biodiversity experts as the project location forms part of a future Natura 2000 site. In 2008 the Croatian State Institute for Nature Protection declared the project “unacceptable for nature”.
The Environmental Impact Assessment study dates from 1999, however the current Croatian law on EIA stipulates that EIA studies are valid only for a period of two years. In order to attempt to make up for this deficiency, the EBRD made its loan approval conditional on a Natura 2000 assessment study being carried out.
The draft strategy appeared just a day after the latest stern climate warnings from the International Energy Agency (IEA) that most of the carbon emissions allowed to be emitted during the next few decades are already locked in by existing carbon-based infrastructure. Maria van der Hoeven, executive director of the IEA, noted, “Our addiction to fossil fuels grows stronger each year. Many clean energy technologies are available but they are not being deployed quickly enough to avert potentially disastrous consequences.”
Graham Saul, Canadian climate activist and long-time IFI-watcher, commented, “The IEA has come round to taking on board the unmistakeable climate realities, and is now calling attention to some of the most acute absurdities of our day such as fossil fuel subsidies. Coming just a day after the IEA warning, the EBRD's latest intention to provide public subsidies for coal extraction shows an institution displaying almost sociopathic tendencies. That draft strategy needs to be rapidly rewritten to prevent it helping to pump more carbon dioxide into our atmosphere.”
Bankwatch is also calling for the EBRD's energy policy to be urgently revised in order to halt the bank's support for fossil fuels, starting with an immediate halt in support for the extraction and combustion of the most carbon intensive-energy source, coal.
Pippa Gallop, Bankwatch's Research co-ordinator and main author of the new analysis, comments, “While the EBRD energy policy brought a much-needed emphasis on sustainability and laid the ground for increased lending for energy efficiency and renewables, it allows the bank to finance almost anything except nuclear reactors. This is not good enough for a public institution that is supposed to lead new markets and promote sustainability, not just follow national governments' often old-school approach to energy provision.”
If the EBRD's energy policy was relatively ambitious when it was written, since its implementation a host of other issues have arisen, such as the bank's expansion to the southern and eastern Mediterranean region, rising oil prices, the death of the so-called nuclear 'renaissance', and the emergence of uncertain technologies and resources such as carbon capture and storage and shale gas, all requiring a new approach.
A further issue revealed by the Bankwatch analysis is that the increase in renewables lending by the EBRD brings with it new challenges that need to be addressed if renewable energy is to retain its integrity as an environmentally acceptable means of energy production.
According to Pippa Gallop, “The example of Bulgaria, outlined in the study, shows that the rapid but poorly planned expansion of renewable energy can be environmentally damaging. The fact that the EBRD has also recommenced its support for large hydropower plants in 2011 after many years is a concern given the high environmental impact of the three projects approved - in Georgia, Macedonia and Croatia. The EBRD needs to adopt strict sustainability criteria for renewable energy and to contribute to careful planning of these technologies with national and local authorities.”
The new Bankwatch analysis is available in pdf via: http://bankwatch.org/publications/tug-of-war-ebrd-energy
Theme: Energy & climate