EBRD gives up Kolubara B lignite power plant project in Serbia

Subotica, Serbia — The European Bank for Reconstruction and Development (EBRD) confirmed Friday September 6 that it is no longer interested in financing the 750 MW Kolubara B lignite power plant project near Belgrade in Serbia. The project is proposed by Serbian electricity company Elektroprivreda Srbija, with Italy’s Edison as a strategic partner.

In an e-mailed answer, the bank confirmed that “We have also informed the client that, should the project become active again, it will have to be assessed against the new energy strategy which has far more stringent rules and would make our possible participation very difficult.”

This decision comes as the EBRD is in the process of reviewing its energy lending strategy. While the bank has shown little interest in dropping coal lending in the future document, it is still possible that significant pressure from campaigners and decision-makers around the world might force the bank to follow the example of the World Bank and the European Investment Bank in significantly limiting coal lending.

“The Kolubara B was poorly thought out from the beginning, and has developed glacially. Friday’s announcement by the EBRD is another nail in its coffin”, said Zvezdan Kalmar of environmental group CEKOR. “The fact that construction of the plant began in the 1980s means that it will be virtually impossible to ensure that the technology used meets the latest EU standards that Serbia will soon be obliged to adhere to. We advise Edison to leave this sinking ship as soon as possible and concentrate on sustainable renewable energy projects instead”, he concluded.

Serbia is currently developing a new energy strategy, and is planning a series of new lignite-fired power plants such as Kostolac B3 and Nikola Tesla B3 in a move which campaigners say is out of line with trends in countries such as the UK, Netherlands, Spain and Germany [1]. Serbia’s interest in building more lignite power plants also threatens to put the country on a collision course with the EU as it has to comply with progressively stricter EU climate requirements as part of the EU accession process. [2] However interest from western investors has been limited so far [3].

“Serbia has so far stayed far too attached to lignite, ignoring the trends going on in the US and western Europe, and to date the EBRD has been at least tacitly supporting this direction, despite the bank’s mission to promote sustainable development in its countries of operations,” adds Kalmar. “We hope that the EBRD’s decision to give up Kolubara B is just the starting point of a bigger process of dropping dirty projects and eventually eliminating coal lending altogether.”

Contacts:

Zvezdan Kalmar, CEKOR
zvezdan at bankwatch.org
Tel.: +381 655 523 191

Notes for editors

[1] A recent analysis by Poyry for the UK government concluded that no new coal plants are likely to be built in Germany, Spain and the Netherlands in the foreseeable future. See
https://www.gov.uk/government/publications/poyry-report-to-decc-outlook-for-new-coal-fired-power-stations-in-germany-the-netherlands-and-spain

[2] Serbia currently has no CO2 emissions reductions targets, however it will have to comply with the EU’s existing targets on 20 percent reductions by 2020, as well as with the new EU targets for 2030 currently under discussion.

[3] Instead, Chinese companies backed by state banks are showing increasing interest in Serbia and the wider central and eastern European region, but of the various projects on the table, including Kostolac B3 and Nikola Tesla B3 in Serbia, only the Stanari plant in Bosnia and Herzegovina has had its final contract signed and started construction. Campaigners are expressing concerns that the contracts are often being negotiated outside of clear and transparent tender processes, raising concerns about possible corruption and failure to ensure that the technology used is of the highest quality. One example is the Pljevlja II plant in Montenegro, in which a special law is due to be passed in order to enable the government to bypass a tender procedure:
https://bankwatch.org/news-media/for-journalists/press-releases/montenegrins-criticise-plan-bypass-tender-procedure-pljevl