Accession states at risk of CO2 lock-in: study

26 June 2013, ENDS Europe

International financial institutions must phase down their support of fossil fuel-based projects in EU candidate countries to help the states adapt more easily to the bloc’s policies, climate commissioner Connie Hedegaard has warned.

Decisions regarding loans to Albania, Bosnia and Herzegovina, Kosovo,
Croatia, Macedonia, Montenegro and Serbia “will have enormous impacts on
their future ability to join in the EU’s efforts on climate change”, she
stated.

Ms Hedegaard was writing in the foreword to a report on the lending
patterns in the Western Balkans of four organisations: the EU
pre-accession assistance instrument
,
the European Investment Bank (EIB), the European Bank for Reconstruction
and Development (EBRD) and the World Bank.

Almost half of €77.9m in energy funding from the pre-accession
instrument in 2006-12 was spent on environmental improvements at coal
plants in Serbia, the report by CEE Bankwatch for the South East Europe
Sustainable Energy Policy Programme found. The programme is a
partnership between the EU and regional NGOs.

The rest was spent on transmission upgrades in Kosovo and on a
hydropower plant in Bosnia and Herzegovina. EU accession funds are a
relatively minor source of energy infrastructure finance, the authors said.

Taken together, international finance institutions spent 32 times more
on fossil fuels than on renewable energy other than hydropower over
2006-12. Fossil fuel lending accounted for 36% of energy lending, while
hydropower took 17%, other renewables took 19% and energy efficiency
took 1%.

The EBRD, which dedicated nearly 50% of lending to fossil fuels, has
plans to finance at least two new coal plants in the region, the reports
said.

Around 44% of planned new electricity capacity in the Western Balkans
will run on coal or lignite, putting the countries at significant risk
of carbon lock-in
,
the authors warned. There could be “enormous” costs involved for the EU
taxpayer to put the countries on-track to achieve the EU’s climate and
energy targets the author said.

*On Monday, the EIB published draft lending criteria for energy
projects, including tighter rules for fossil fuel developments.

But NGOs said the proposed emissions performance standards were not
strict enough. CEE Bankwatch warned that exceptions will be made for
projects contributing to security of supply in the EU, or to economic
development outside the EU.

The draft will be discussed by the bank’s board of directors next month.

*Follow Up:*

Report
and
press release
,
plus EIB draft lending criteria
and
statement
,
and CEE Bankwatchreaction