Development banks energy investments jeopardise the ability of Balkan accession countries to meet EU energy and climate targets, says new report

Brussels, Belgium – Heavy investments in fossil fuels by international financial institutions (IFIs) in the Western Balkans are hindering these countries’ compliance with EU accession requirements, finds a new report – “Invest in Haste, Repent at Leisure” – from civil society organizations CEE Bankwatch Network, SEE Change Net and WWF, created as part of the SEE SEP (South East Europe Sustainable Energy Policy) programme.

As Croatia prepares for EU entry on 1 July and with the European Investment Bank, the European Bank for Reconstruction and Development and the World Bank all currently reviewing their energy sector lending strategies, the report finds that between 2006 and 2012 Europe’s development banks lent 32 times more for fossil fuels than renewable energy sources not related to hydropower.

This trend means that the Western Balkan countries [1] are heading in the opposite direction of the EU goals on climate change for the years 2020, 2030 and 2050, an eventual requirement for these aspiring EU countries.

The groups are calling for a halt to international public investments in fossil fuels and the rapid ramping up of efforts on residential energy efficiency and energy savings.

The report also shows that:

• Almost half of the EBRD’s energy lending – the largest public lender in the region – has supported fossil fuels, with only two percent of its portfolio allocated for non-hydropower renewable energy sources, and a further 23 percent supporting hydropower.
• Fossil fuels account for 36 percent of all IFI energy financing in the region, or EUR 597.3 million, with hydropower receiving EUR 310.1 and renewable sources just EUR 18.5 million, or 1 percent; and
• Energy efficiency, which has a high potential to address energy poverty in the region and prevent new environmentally-impacting infrastructure, makes up only 17 percent of the IFIs’ energy portfolio, or EUR 288.8 million.

Writing in the foreword of the report “Invest in Haste, Repent at Leisure”, EU Commissioner for Climate Action Connie Hedegaard says “support for energy efficiency and renewable energy sources is lagging, while governments around the world spend hundreds of billions of dollars subsidizing an incipient catastrophe”.

Pippa Gallop, research co-ordinator at CEE Bankwatch Network and co-author of the report, said: “The countries in the region, backed by the IFIs, are heading in the opposite direction of EU 2020, 2030 and 2050 targets on sustainable energy production. This is totally unacceptable for institutions who have a very specific role in supporting new, environmentally- and socially-sound investments rather than simply investing in whatever governments or companies propose.”

“Estimates [2] show that it is up to 10,000 times more cost effective to save a unit of energy than to generate a new unit. We call upon the EU to urgently push the IFIs to make this their number one priority”, said Angela Klauschen, Policy Officer at WWF’s Mediterranean Programme, “and then to ensure that any new energy infrastructure developed is fully sustainable.”

Garret Tankosić-Kelly, Principal at SEE Change Net and co-author of the report, said: “Let us be absolutely clear about who is going to pay for the currently planned 30 billion euros of energy development; primarily the 20 million or more consumers in South East Europe through increased energy prices and the repayment of IFI loans. Then – when this damage needs to be undone as prospective Members States join the European Union – those additional costs will again be borne by the public in the region and EU tax payers.”

The reality of this concern is born out by MEP Ulrike Lunacek, who stated that she “regrets that the EBRD is planning to support new lignite capacity (Kosova e Re) in its draft country strategy, and calls on the Commission to take action to contest plans such as this that run counter to EU climate commitments”.[3]

Notes for the editors

Given the imperative to assist the countries of the region to orientate towards the EU’s 2020, 2030 and 2050 targets, this report recommends that the IFIs:

• Stop funding new fossil fuel projects in prospective Member States, especially coal, and rapidly increase the share of energy savings, energy efficiency and sustainable renewables in their portfolios;
• Make residential energy efficiency and energy savings the number one priority in the region;
• Adopt a zero tolerance approach to indicators of corruption or breaches of environmental standards for all projects;
• Support the diversification of renewables and de-emphasise support for damaging hydropower projects, especially those built as energy export vehicles;
• Prepare funds and programmes to assist the countries of the region who wish to meet 20 percent energy efficiency targets, especially in instances which will help tackle energy poverty;
• Prepare funds and programmes to assist the countries of the region to tackle the alarmingly high technical and commercial losses in the region’s energy systems; and
• Greatly simplify project disclosure for funds and intermediaries so that it is clearer which money ends up where.

The full report is available at SEE Change Net’s website (www.seechangenetwork.org) at the following link: http://seechangenetwork.org/index.php/publications/invest-in-haste-repent-at-leisure.html.

1. Energy Community Regional Energy Strategy, http://www.energy-community.org/pls/portal/docs/1810178.PDF

2. Bernard Laponche, Bernard Jamet, Michel Colombier and Sophie Attali (Eds): Energy Efficiency for a Sustainable World, 1997

3. http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2f%2fEP%2f%2fTEXT%2bTA%2b20130418%2bTOC%2bDOC%2bXML%2bV0%2f%2fEN

For more information contact:

Masha Durkalić, Communication Officer, SEE Change Net
masha at seechangenet.org,
+387 63 999 827

Chantal Menard, Communications Manager, WWF Mediterranean
cmenard at wwfmedpo.org
+39 346 235 7481

Pippa Gallop, Research Co-ordinator, CEE Bankwatch Network
pippa.gallop at bankwatch.org
+385 99 755 9787

Commissioner for Climate Action, Connie Hedegaard
Media Contact: Stephanie.RHOMBERG at ec.europa.eu
+32 229 87278

MEP Ulrike Lunacek, Group of the Greens/European Free Alliance, member of the Delegation for relations with Albania, Bosnia and Herzegovina, Serbia, Montenegro and Kosovo
Media Contact: Eva.ROSENBERG at ec.europa.eu
+32 474 23 47 86

SEE SEP partner organizations:

SEE Change Net (regional)
Analytica (Macedonia)
ATRC (Kosovo)
Cekor (Serbia)
CPI (Bosnia and Herzegovina)
CZZS (Bosnia and Herzegovina)
DOOR (Croatia)
EDEN (Albania)
Ekolevizja (Albania)
Eko-Svest (Macedonia)
Forum za slobodu odgoja (Croatia)
Fractal (Serbia)
Front 21/42 (Macedonia)
Green Home (Montenegro)
MANS (Montenegro)
CEE Bankwatch Network (regional)
WWF (regional)