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Croatia’s EU funds spending plans: Land of unfulfilled clean energy potential


A new Bankwatch study, launched last week, looks at how nine central and eastern European countries are set to spend billions of EU funds until 2020 that are meant to transform the carbon-intensive, inefficient energy systems of their countries.

On our blog today, our Zagreb-based research co-ordinator comments on the findings from Croatia. Take a look at the results for other countries too and find out more at bankwatch.org/enfants-terribles >>

Croatia ought to be one of the easiest countries in Europe to transform to an energy-efficient, sustainable renewables-based economy, with its small population, relatively low energy demand, ample sun and wind resources, large areas of forest and large existing hydropower plant capacity.

The country had a favourable starting point for renewable energy compared to some other EU countries – 12.8 percent of energy in 2005 – mostly due to the fact that around half of Croatia’s 4000-plus MW of installed electricity generation capacity consists of hydropower plants built decades ago.

The problem is, however, that renewable energy development in Croatia has not got far since then compared to the potential. Successive governments have chased economically and environmentally dubious projects like the Plomin C coal power plant and the Ombla hydropower plant instead of improving the transmission infrastructure and making serious efforts to develop sustainable forms of renewable energy.

More

Climate action in EU Cohesion Policy funding for Croatia, 2014-2020 (pdf)
Study chapter | January 26, 2016

Other chapters, graphs & more

The 2009 Energy Strategy was already bizarre at the time it was adopted, and reality has only made it look worse. The Strategy predicted 3.5 percent per year growth in energy consumption. The predicted demand was to be satisfied, among other things, by 1200 MW of new coal power plants, 1200 MW of new gas-fired power plants, 1200 MW of new wind power plants and 300 MW of large hydropower.

In reality, in 2014 demand had actually decreased compared to 2010, no coal plants had been built, and only 42 MW (the highly controversial Lešće plant) of large hydropower had been built. In November 2015 it was also reported that the 230 MW Sisak C gas-fired plant had begun test operations.

New forms of renewable energy have fared somewhat better than coal and hydropower in recent years. Coal has been becoming less and less economic, while most of the hydropower potential left in Croatia is highly problematic because of its biodiversity impacts. Neither does adding more hydropower help much in terms of predictability of electricity supply considering the increasing climatic fluctuations of recent years.

Wind power, after a very slow start, has finally started to take off, with 339 MW of licensed capacity installed by November 2015. Solar photovoltaic too, has made some headway (42.9MW).

But just when Croatia was finally making progress with these plentiful resources, they hit a brick wall: The National Renewable Energy Action plan does not foresee any more solar and wind installations before 2020 because the quotas are full.

The EU is not raising this as an issue because Croatia is, even with its lacklustre efforts, on track to meet its 2020 renewable target. In 2013 it had 18 percent renewables in final energy consumption, leaving just two percent still to achieve by 2020.

EU funds to the rescue?

In this context it is not surprising that EU funds have a hard job supporting Croatia’s switch to clean energy systems. In the financial period 2014–2020, Croatia plans to spend around EUR 517 million on energy out of which EUR 437 million (a poor 5.16% of all Cohesion Policy funding) goes to clean energy.

The good news is that 62 percent of all energy investments are allocated for energy efficiency. However, only 18 percent, or EUR 95 million, is slated for renewable energy, and only 4 percent (EUR 20 million) for smart grids.

Graph: The different types of energy infrastructure investments in Croatia to be financed by EU funds 2014-2020

Source: Climate’s enfants terribles

This latter point is particularly worrying considering that grid stability is the main reason cited for not increasing the renewable energy quotas. Transmission and distribution ought to be one of the key priorities for matching the interest shown by the public and investors in increasing the use of renewable energy.

If there is any doubt that such interest exists, take the example of small renewable plants: Yearly quotas for small renewable plants are set at 12 MW per year and by 9 January 2014 (only 8 days from the opening of the tender) 2079 bids were submitted with a total of 87.9 MW of proposed capacities. Rather than increasing the quota, in 2015 the Croatian government decided not to contract new renewables.

So the EU funds allocations are likely to go beyond current national ambitions and make a contribution, yet they could do much more if they were based on a coherent strategy. Towards the end of 2015 the outgoing Croatian government presented a Green Paper for a Low-Carbon Strategy towards 2050, and it is to be hoped that the new government will continue this work. There are some recent encouraging signs, but ultimately decarbonisation needs a pro-active strategy, not just an absence of carbon-intensive projects. Considering Croatia’s high debts and poor economic situation, EU funds will be essential for supporting this process.

Find out more

Other chapters, graphs & more at https://bankwatch.org/enfants-terribles >>

Turceni coal unit in Romania shut down after operating illegally


Last Tuesday, February 2, the Romanian National Environment Guard shut down Turceni unit 7 [ro] after operating in spite of the unit not complying with legal operating conditions related to pollution limits. Oltenia Energy Complex (OEC), the state-owned company managing the power plant, was also fined RON 60.000 (approx. EUR 13.000) as unit 7 exhausted the hours it was allowed to operate without conforming to emission limit values.

The decision is a direct result of pressure exerted by Bankwatch Romania and Greenpeace and has likely been expedited by the subsequent media coverage. Teams from the two organisations went to the coal power plant on 19 January to protest its operation. (Unsurprisingly, the management ignored our demands and refused to speak to us.)


(Image (c) Mircea Topoleanu / Greenpeace)

At the same time we asked the Environment Guard in a letter to inspect the unit and demand its immediate shut down.

With this week’s decision the National Environmental Guard has now dealt the final blow for the Turceni power plant – at least until it complies with national and European power plants emission standards. Since December 2014, Bankwatch Romania has taken OEC to court requesting the environmental permit for Turceni power plant to be cancelled, as the emission standards were not updated and the environmental impact was not evaluated.

Seven energy units have been built at the Turceni coal power plant between 1978 and 1987. Recently, they have been operating under an environment permit emitted in March 2014 by the Environment Protection Agency, which does not include unit 7, since it was supposed to stop operating since 2014.

Unit 7 was exempt from complying to emissions limits under the condition that OEC committed to only operate 20,000 hours until 31 December 2015 the latest. According to this exemption, for 5-6 years it has polluted up to 10 times more than the legal norms that are generally applicable or compared to other energy units from Turceni. The 20,000 hours were exhausted in 2014.

The decision gives us hope that the Environment Guard will make sure that all the other power plants which no longer benefit from derogations will abide to existing legislation. This applies to 41 large combustion installations, each including one or more gas or coal-fired power plant units, for which the derogation deadline ended on Jan 1st 2016. If these installations don’t comply, the Environment Guard must order them to immediately cease operation.

EU funds spending plans in Hungary: the dark side is in the details


A new Bankwatch study, launched last week, looks at how nine central and eastern European countries are set to spend billions of EU funds until 2020 that are meant to transform the carbon-intensive, inefficient energy systems of their countries.

On our blog today, Hungarian campaigner Alexa Botar comments on her findings from Hungary. Stay tuned for other countries following this week.

Find out more at bankwatch.org/enfants-terribles >>

The Hungarian energy system is characterised by very low per capita energy consumption and a relatively high energy intensity. While 2010-2020 forecasts expect overall energy consumption to increase by around 1.6% per year on average and electricity consumption by 2.2% per year, in reality the domestic energy consumption is on a constant decrease by 1,3% per year for the last ten years on average.

More

Climate action in EU Cohesion Policy funding for Hungary, 2014-2020 (pdf)
Study chapter | January 26, 2016

Other chapters, graphs & more

The key strategic document on energy, the National Energy Strategy (NES) claims to promote the transformation of the energy system with modestly progressive aims. In terms of electricity production, the NES prefers the “Nuclear – Coal – Green” scenario, in which the green part has been recently curbed, mainly to justify the viability of the construction of the Paks-2 nuclear power plant. The strategy also wants to strengthen the role of the state, which is contradictory to the country-specific recommendations of the European Commission. Consequently, EU funds, a drop in the ocean for “green energy reform”, are spent in an economic environment that is in contradiction to Commission requirements.

Hungary is dependent on one external supplier for around 80% of its gas and 100% of nuclear fuel supply. The government’s plans for Paks-2 and the South Stream gas pipeline would ensure funding for “dirty energy” from other sources and thereby undermine the transformation of the energy sector to which investments under the European Structural Investment Funds may, even if to a small extent only, contribute.

Climate action allocations

According to the official figure in the Partnership Agreement (PA) between the European Union and the Hungary, one of the central planning documents for EU funds’ spending, Hungary meets the EU-wide target of allocating at least 20% of EU funds spending to climate action (Hungary allocates 20,31%). Energy efficiency receives EUR 1 159 million, which will be of some help but is still insufficient, covering only 42,58% of what Hungary’s National Energy Efficiency Action Plan II deems necessary.

Almost EUR 3 billion goes to climate action in other sectors (incl. low-carbon transport, air quality, nature protection, risk management etc.).

Compared to other central and eastern European countries, Hungary stands out with a high share of cliamte action funding allocated to renewable energies (41%).

Graph: The different types of energy infrastructure investments

Source: Climate’s enfants terribles

Yet, the PA-level allocations for direct investments in renewables EUR 875,9 million cover at best 62,14% of what is needed to reach Hungary’s national renewables target of a 14.65% renewables share by 2020 (our own calculation based on data from a background study to the National Renewables Action Plan by the Hungarian Energy Office and Pylon Kft.)

Other energy-related key features in Hungary’s EU funds’ planning documents include:

Energy efficiency

The government plans to re-allocate funding for energy efficiency from residential housing to governmental buildings. The energy saved by renovating only governmental buildings does not add up to the national housing efficiency target (44.6 PJ/year savings during the 2014-2020 period – our own calculation based on the National Energy Efficiency Action Plan II). Moreover, this re-allocation can have negative social impacts since it reduces incentives for citizens to renovate their houses. Together with increasing end-user energy prices this will only aggravate problems of energy poverty.

Renewable energy

The partnership Agreement claims the exploitation of potentials in solar and wind to be seriously conditioned by technological and market development. But also the obsolete national legal and financial support system of renewable energies is a factor in the slow development of renewable energy use in Hungary. Hungary is lagging behind with planning a renewable energy subsidy system and with calls for proposals for renewable energy production. Unfortunately, solar and “other renewable sources” (including wind) are discouraged due to an insecure investment environment characterised by limited EU funding for citizen and community renewable energy projects, unfavourable feed-in tariffs and a recently introduced solar panel tax.

Incineration

Three Hungarian Operational Programmes (OP), the national planning documents for spending EU funds, support the incineration of waste in various ways, making waste prevention and recycling more difficult. For example, the Environment and Energy Efficiency OP (EEOP) includes a mayor project for treating the Budapest sewage sludge, which may include municipal solid waste co-incineration.

Biomass

Within renewable energy, the strong focus on biomass is a real threat. It would be important to declare that no forestry- or agricultural waste is used for biomass energy. Fortunately, some safeguards are included in the OPs: The EEOP, for instance declares that biomass energy production will be funded only if it meets sustainability criteria – however, the criteria have not been established yet.

EU funds spending plans in Estonia: The long and rocky path away from shale oil


A new Bankwatch study, launched last week, looks at how nine central and eastern European countries are set to spend billions of EU funds until 2020 that are meant to transform the carbon-intensive, inefficient energy systems of their countries.

On our blog today, Estonian campaigner Kadri Green comments on her findings from Latvia. Stay tuned for other countries following this week.

Find out more at bankwatch.org/enfants-terribles >>

Estonia continues to be one of the biggest emitters of greenhouse gases per capita, mainly due to the carbon and energyintensive oil-shale-based energy sector. Even though the sector provides only 4% of Estonia’s GDP, it is responsible for 78% of Estonia’s CO2 emissions and up to 98% of other emissions to ambient air.

More

Climate action in EU Cohesion Policy funding for Estonia, 2014-2020 (pdf)
Study chapter | January 26, 2016

Other chapters, graphs & more

Estonia’s National Energy Strategy 2015-2030 aims to reduce the use of oil shale in electricity production from currently (2012) 81% to below 50% by 2020. The fact that Estonia has succeeded in raising the share of renewable energy in final energy consumption to 26.5% shows the potential. Yet as a Bankwatch analysis launched last week shows, Estonia’s investment plans for EU funding 2014-2020 exhibit little ambition to transform the country’s energy sector to a greener and cleaner one.

Estonia receives EUR 3.59 billion in all the European Structural and Investment Funds (ESIF). However, only 4.78% of this money (EUR 164 million) are planned for investments in clean energy infrastructure (energy efficiency, renewables and electricity distribution), a modest share even compared to other countries in the region.

Graph: Different types of energy infrastructure investments

Source: Climate’s enfants terribles

The situation looks only little better in the transport sector, where 49% of the Cohesion Fund investments will go to road construction. 17% and 14% respectively will be invested in rail and cleaner urban development. This priority setting raises the question as to how it is possible to reduce greenhouse gases by increasing the dependency on fossil-fuel-based transport modes.

Graph: Share of transport modes in total transport funding in Estonia.

Source: Climate’s enfants terribles

Being responsible for more than 60% of public investments in the country (average 2011-2013), Cohesion Policy funding could be considered a gift for policy-makers, offering them the possibility to steer large sums of investments. Yet it seems that Estonia does not have the political will to let go of fossil fuel-based solutions.

Find out more

Find graphs, other chapters and more at bankwatch.org/enfants-terribles >>

 

EU funds spending plans in Latvia: What’s hidden behind the ‘green veneer’?


A new Bankwatch study, launched this week, looks at how nine central and eastern European countries are set to spend billions of EU funds until 2020 that are meant to transform the carbon-intensive, inefficient energy systems of their countries.

On our blog today, Latvian campaigner Juris Dilba comments on his findings from Latvia. Stay tuned for other countries following this and next week.

Find out more at bankwatch.org/enfants-terribles >>

More than a half of Latvia’s territory is covered by forests and the country is proud to be one of the greenest countries in the European Union. Statistics on the share of renewables in gross final energy consumption seem to support this “green image” – 37 per cent of energy consumed in 2013 came from renewables. Only Sweden has outperformed Latvia with almost 50%.

Latvia’s large share of renewables has a dark side to it, however. Without access to domestic fossil fuel resources, Latvia’s primary energy production is dominated by biomass. 78 per cent of the renewable energy produced in Latvia comes from fuelwood (2013). And herein lies a potential problem because further increasing renewables in Latvia may not be sustainable if solar and wind are not playing a bigger role.

More

Climate action in EU Cohesion Policy funding for Latvia, 2014-2020 (pdf)
Study chapter | January 26, 2016

Other chapters, graphs & more

Money coming from EU Cohesion Policy could help increasing investments in the underdeveloped market for wind and solar energy. But a Bankwatch analysis launched this week of Latvia’s (and other countries’) 2014-2020 investment plans for EU Cohesion Policy shows that the millions of EU money will perpetuate the biomass bias in Latvia.

In total 17,20 per cent (EUR 755 million) of Latvia’s EU Cohesion Policy investments in the 2014-2020 period are dedicated to climate change objectives (an average share for central and eastern Europe). But these numbers include a range of investments and sectors. The EUR 26,6 million that are slated for renewable energy (compared to EUR 70 million in 2007-2013) are without exception supporting biomass. Wind, solar and other renewable energy sources go away empty-handed.

Graph: Split of renewable energy sources by technology

Source: Climate’s enfants terribles

The Latvian Renewable Energy Federation has urged the government (pdf) to develop comprehensive strategy to use the potential of wind and solar energy in Latvia thus giving a significant input in national energy security. And last year`s Strategic Environmental Impact Assessment of Latvia’s Energy Development Strategy 2014-2020 points out that an increase in the consumption of renewable energy may intensify logging and have a negative impact on the sustainable development of the forest sector and bio-diversity. An audit of the company Latvia’s State Forests (which owns a half of all Latvia’s forest) by the State Audit Office concluded in 2014 that the company’s forest management policy violates sustainable forest production.

While the forest area in Latvia is not shrinking and forest resources continue to expand, the assessments above indicate that Latvia’s faith in biomass may turn out to be a problem in the future, especially with the Government of Latvia hesitating to support a more balanced renewables sector.

Energy efficiency

In the new EU Cohesion Policy programming period 2014-2020, the Ministry of Economics plans to invest EUR 150 million in the promotion of energy efficiency in residential buildings. The Ministry of Economics estimates that 1,800 residential buildings will be renovated and insulated as a result of these investments. This makes up just 4.7% of the entire residential buildings stock (38,000) and is insufficient compared to the poor situation in residential buildings.

Housing stock accounts for almost half of all energy losses in Latvia (pdf). More than 60% of the housing stock across the country was built in the Soviet era and has very low energy efficiency performance. The Buildings Performance Institute Europe estimated (pdf) that 43% of homes in Latvia are dwellings with leakages and damp walls and that 35% of households cannot afford adequate heating.

Transport

Total direct EU Cohesion Policy investments in the transport sector make up EUR 1.3 billion, which accounts for 30% of all funds. More than half of these (EUR 654.5 million) will be invested in reconstructing and building roads.

Graph: Share of transport modes in total transport funding in Latvia

Source: Climate’s enfants terribles

Although meeting greenhouse gas emission reductions is a declared strategic objective of EU Cohesion Policy investments in the transport sector in Latvia, the Operational Programme itself, one of the key documents defining how EU funds are spent, stipulates that one of the targets of road investments is to increase traffic intensity.

The green veil behind which these investments hide is very thin indeed.

Find out more

Find graphs, other chapters and more at bankwatch.org/enfants-terribles >>

 

Bring on the money, don’t ask for results. EU funds spending plans in the Czech Republic


A new Bankwatch study, launched this week, looks at how nine central and eastern European countries are set to spend billions of EU funds until 2020 that are meant to transform the carbon-intensive, inefficient energy systems of their countries.

On our blog today, Czech campaigner Ondrej Pasek comments on his findings from the Czech Republic. Stay tuned for other countries following this and next week.

Find out more at bankwatch.org/enfants-terribles >>

The Czech Republic has the fourth highest per capita greenhouse gas emissions in the European Union and exports 20% of its mostly coal produced electricity. The country is a perfect example to illustrate the findings of Bankwatch’s new report “Climate’s enfants terribles”, namely that EU funding in new Member States fails to systematically address one of the main challenges of our time – climate change.

The Czech Republic’s official documents and EU funds’ spending plans include references to common EU objectives, including those related to climate change. Its EU funds budget fulfils EU requirements, procedures were followed. And still, the carbon intensity of our economy will most likely not change much.

More

Climate action in EU Cohesion Policy funding for the Czech Republic, 2014-2020 (pdf)
Study chapter | January 26, 2016

Other chapters, graphs & more

Take renewable energy as an example, a sector which is going through rapid developments in neighbouring countries and offers enormous potential for innovation and cost decreases. But this potential is completely undermined in the total allocation for EU funds in the Czech Republic: out of a total EUR 22 billion only EUR 52 million, or less than half a per cent, is allocated to renewable energy sources.

Interestingly, the country’s National Renewable Energy Action Plan [1] includes an estimation of installed capacity expected from each renewable energy technology in the Czech Republic to meet the EU’s binding 2020 target of a 13% renewable energy share. In the EU funds allocations, however, supply of wind and solar generated electricity is not at all included.

Graph: Share of renewables in the 2020 target versus the share of financial allocations for renewables

Source: Climate’s enfants terribles

On a positive note, energy efficiency receives almost 2 billion Euro, an unprecedented level of support. Yet, current estimates of the Ministry of Industry and Trade, which produced the graph below, say this will not suffice to bring about the amount of energy savings that our economy desperately needs.

Graph: Calculation of annual savings contributing to the overall target and the deficit of savings due to the late start of the Operational Programmes.

Source: Climate’s enfants terribles

Not only has the disbursement of funds started late, but the requirements the beneficiaries need to comply with are not leading them to fully use their efficiency potentials. Nor is it ensured that subsidies for private enterprises will create additional savings, going beyond the measures these companies would realise anyway.

The dissonance between declared objectives and the reality of low-carbon measures is however best shown in the area of air-pollution prevention. One of the principles for EU funding is to support low-carbon transition in all of the areas of interventions, not only in those directly financed under this objective. In reality, in the Czech Republic as well as in some regions in Poland, households are incentivised to buy new sources of energy using the most carbon intensive fuel of all – coal. And the incentive is not a mild one – 70% or more of the cost of the coal boiler is covered by the subsidy.

While the Czech government is careful to comply with all formal rules, the European Commission as well as the net contributors to the EU budget should look carefully at the real results and systemic changes in the countries and sectors they effectively finance.

According to a scenario outlined in the Czech National Energy Policy, the energy consumption will not decrease over the next twenty years and CO2 emissions in 2040 will still be at 50% of the 1990 level despite the country’s spending plans for EU funds. In that case, EU funds will have failed to facilitate a low-carbon transition. No amount of funding for energy efficiency will undo that.

Find out more

Find graphs, other chapters and more at bankwatch.org/enfants-terribles >>

Notes

1. https://ec.europa.eu/energy/sites/ener/files/documents/dir_2009_0028_action_plan_czechrepublic.zip