Sostanj lignite thermal power plant unit 6, Slovenia

Slovenia plans to build a new 600 MW unit for the Šoštanj lignite power plant (TEŠ6) which would replace the power plant’s existing units 1-4 and possibly 5. Its promoters argue with increased efficiency, but in fact, this one lignite power plant alone will swallow up almost the country's entire carbon budget by 2050.


The Šoštanj lignite power plant.
Quick facts
Loans from the European Investment Bank (EUR 550 million) and the European Bank for Reconstruction and Development (EUR 100 million) add up to more than 50% of the overall costs of the investment.

Bankwatch and Slovene NGO Focus Association for Sustainable Development call on the EIB and EBRD to help identify and exploit renewable energy sources in Slovenia instead of locking the country in to carbon-intensive energy production for decades to come.


TEŠ6 promises higher efficiency, but not low-carbon energy

TEŠ6's promoters argue the power plant’s new unit will increase efficiency and reduce CO2 emissions, but forget to mention that it will effectively prevent the necessary national emission decreases from taking place.

Operating TEŠ6 will result in emissions of 3.4 mt CO2 per year, which is equivalent to almost all of Slovenia’s emissions in 2050 (if it cuts emissions by 80 percent – a minimum according to the European targets of 80-95 percent).

Alleged corruption case at TEŠ6


(A campaign cartoon portraying the former and directors of the Sostanj lignite power plant.)

In a report from February 2012, the Slovenian Commission for the Prevention of Corruption issues serious warnings that:

    "the project [TES 6] is designed and implemented in a non-transparent manner, lacks supervision and is burdened with political and lobbying influences, and as a result there has been [and still is] a high risk of corruption and conflict of interest".

Read more in our press releases:

The dirty French-Slovenian connection
February 23, 2012

EBRD freezes loan disbursements in Alstom's coal project over corruption allegations. NGOs call on the EIB to follow suit
April 18, 2012

The false hope of carbon capture and storage (CSS)

The CCS-readiness, claimed by TEŠ6 promoters, consists only of reserved space next to the construction site for an installation to capture CO2. This is as sophisticated as CCS-readiness can get, since the technology does not (yet) exist for a power plant of this size and its effectiveness is highly uncertain.[1]

Environmental Law Service and the Bellona Foundation have analysed how CCS-readiness has been assessed for the Šoštanj project. The study (pdf) concludes: "[T]he information contained within the documents [...] does not allow for the assessment of the feasibility of the project – neither technical nor economic feasibility, nor the availability of suitable storage sites." [2]

Using the promise of CCS to muddy the waters, public money is being invested in Russian climate roulette.

Hidden long-term costs for Slovenian economy

Since initial project proposal, the project costs have already risen from around EUR 700m-900m to EUR 1.2bn. The wider economic consequences, however, are not reflected in this figure: Energy from coal has to take expected changes in the price of CO2-emissions permits into account. These permits will need to be purchased by Slovenia as part of the EU Emissions Trading Scheme.

Alternatives need to be identified

Slovene NGO Focus and Bankwatch believe that there is potential for renewable energy sources as yet unexploited in the country. Also the energy demand could be easily reduced by energy efficiency measures.

Slovenia is nearly 60% forested and there is likely to be further potential from locally sourced sustainable biomass.

Even the conservative governmental proposal for the National Energy Programme 2010–2030 (July 2011) shows in one of the scenarios that a future without TEŠ6 and new nuclear reactors is possible. This finding is further strengthened by an analysis of the Wuppertal Institute suggesting a higher potential for energy efficiency investments and development of renewables than envisaged in the Slovenian proposal.

European Parliament concerned about fossil fuel lending

MEP Kathleen Van Brempt in a question to the European Commission:

"If we are to achieve the EU 2020 objectives and to combat climate change […] we need to develop a suitable financial framework that provides support for projects and measures that contribute to achieving European objectives. The European Investment Bank (EIB) can and must play an important role here and build up its financial support in a way that makes a sustainable energy mix possible."

Šoštanj as a negative precedent for coal subsidies in CEE?

EIB and EBRD support for Šoštanj leaves the door open to the many more coal projects in central and eastern Europe seeking EIB financing. In Poland alone projects with a combined capacity of 12GW are being considered right now.

Without a clear commitment by European public banks, Slovenia and the rest of the region will not meet the EU’s emission reduction targets and will thus navigate Europe and the world away from a future with sustainable energy production.

Bankwatch believes that the IFIs should not lend for coal projects at all and should also phase out lending for other fossil fuels.

Notes

1. For more details, see Greenpeace International's briefing (pdf) on the topic. (The briefing illustrates the controversy around CCS but should not be understood as Bankwatch's exact position.)

2. Bellona's general approval of the CCS technology is counter to Bankwatch's position. We do not believe that CCS is an option for solving the climate crisis.


For more information contact Pippa Gallop, Bankwatch's research co-ordinator or Lidija Zivcic, senior expert at Focus, Association for Sustainable Development.

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Latest developments


 

Blog entry | January 28, 2014

When Dr. Kim, President of the World Bank, and leaders of other international financial institutions ponder funding new coal power projects this year - like the one in Kosovo - there's one word that should be seared into their memories: Sostanj.

Press release | January 24, 2014

Ljubljana – The scandal-marred lignite plant TES 6 at Sostanj in Slovenia will likely cost 1.44 billion euros (2 billion US), more than double than what was initially predicted, and is due to produce annual losses of 50 million euros, show calculations recently revealed by Slovenian media. These cost escalations, predicted by NGOs critical of the project, should constitute a word of caution for other countries in South-Eastern Europe that are considering building new coal capacities.

Balkans, coal, EU, TES6
Press release | December 9, 2013

The European Bank for Reconstruction and Development has been approving financing for coal projects over which corruption allegations loom, and in some cases even while official corruption investigations were underway, according to an analysis published by CEE Bankwatch Network today.

Balkans
Blog entry | September 6, 2013

With another public action, colleagues in Moscow are today bringing to a close a week that has seen the European Bank for Reconstruction and Development having to listen to a lot of uncomfortable truths.

Blog entry | August 28, 2013

As part of the consultation on its energy sector strategy the EBRD next week hosts public meetings in Istanbul, Belgrade and Moscow to discuss with civil society from its countries of operation. While public pressure is increasing to end coal financing it is important to note that restrictions to carbon-intensive investments must be strictly and clearly defined in the strategy document if they are to improve the EBRD's climate impact. An article from Bankwatch's 2012 annual report (pdf) illustrates how a too flexible approach allows the EBRD to greenwash also very dirty investments.

Publications

Bankwatch Mail | March 20, 2014

Bankwatch has been monitoring and campaigning against the ill-conceived EBRD- and EIB-financed Unit 6 at Šoštanj in Slovenia for several years now. Yet the project never ceases to amaze with its myriad flaws and scandals – and the first few months of 2014 have been no exception.

Study | December 9, 2013

The EBRD is about to approve a new energy strategy, yet it is unclear to what extent it will follow other public lenders in halting coal financing. In this paper we step away from the discussions on climate issues to take a look at another reason why the EBRD should be wary of investing in coal projects: corruption.

Briefing | October 22, 2013

The Western Balkans countries are aspiring to become members of the European Union. On 24 October the Ministerial Council of the EC-backed Energy Community will approve a list of priority energy infrastructure projects resulting from the Regional Energy Strategy known as Projects of Energy Community Interest (PECIs) for the Western Balkans, Moldova and Ukraine. These projects would be prioritised for fast-track approval and public financing.

Bankwatch Mail | May 10, 2013

If there is one sector in which the EBRD has been causing particular controversy in recent years, it is the energy sector. From lignite in Slovenia to hydropower in Georgia and nuclear in Ukraine, the bank has financed a series of projects that have incurred opposition from various quarters. Now that the EBRD is revising its Environmental and Social Policy it's time to take a look at what needs to be learned from these projects.

Bankwatch Mail | May 10, 2013

Following confirmation at the beginning of March that the European Investment Bank and the European Bank for Reconstruction and Development are paying out half a billion euros in loans for a new unit at the Sostanj lignite power plant (TES 6) in Slovenia, 98 organisations sent an open letter to both banks calling on them to never commit to such misguided loans again.