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New study assesses prospects for EU funded low-carbon energy solutions in Polish regions


Poland is currently in the final stages of planning how European funds under EU Cohesion Policy for 2014-2020 will be invested. Yet, beyond the national level, also Poland’s 16 regions (voivodeships) are about to conclude negotiations with the European Commission about the final shape of the Regional Operational Programmes (ROPs).

The results will show whether Poland’s regions are on the path to take full advantage of the potential of EU funds’ for the country’s sustainable development – a potential that is not to be underestimated. More than half of the EUR 9 billion that are earmarked for the low-carbon economy in Poland will be allocated and managed by the regional authorities. (For comparison, the total allocations of Cohesion Policy 2014-2020 for Bulgaria is EUR 7.59 billion, for Croatia EUR 8.61 billion.)

Bankwatch and Polish Green Network analysed the final drafts of the ROPs as they were presented to the European Commission. The analysis shows how ambitious (or not) the Polish regions are to invest in a low-carbon economy, in particularly when it comes to renewable energy and energy efficiency in residential buildings.

Report: Recommendations for the last state of programming of EU Regional Funds 2014-2020 for energy projects (pdf)

An important indicator is whether ordinary Polish households will be able to benefit from EU funds, for example through lower energy bills and greater security of energy supply. For smaller, localised investments, such as improving the energy standard in residential buildings or the production of citizen-owned energy from small renewables installations, the decisions made by the regional authorities will be essential.


Map: Allocation of funds for the thematic objective 4 on low-carbon economy as percentage of the total allocation of the European Regional Development Fund (ERDF) – Click image for full size

As the map above shows the level of ambition shown by Polish regions varies significantly.

While Śląskie in the South of Poland plans to spend almost 30 per cent of its European Regional Development Plan funds for low-carbon economy measures, there are many regions who keep the allocations close to the minimum 15 per cent, prescribed by the Polish Partnership Agreement.

While indicating the overall importance placed on the low-carbon economy objective by different regions, the map does not show their spending priorities within this area.

Energy efficiency in residential buildings

Going into more detail, one of the key elements we evaluated [1] was the availability of funding for energy efficiency in housing. The residential housing sector in Poland consumes over 30 per cent of all energy used in the country. The generally very poor energy standard of buildings resembles that of the 1970s in Western Europe and means a huge waste of energy and heat.

These losses could be avoided thanks to investments in deep retrofitting, estimated to result in up to 70 per cent energy savings.

Graph: Funds for energy retrofit of residential buildings (in euros and as a percentage of all ERDF funds in a region)

Looking at the Regional Operational Programmes, the allocations for improving energy efficiency in residential buildings are alarmingly low in relation to the entire amount of funds intended to support a low-carbon economy, and even more so in relation to the total ERDF allocation in a given region (see graph).

According to our analysis, the public sector seems to have priority in the regional spending plans with more than twice as much funds allocated to improving energy efficiency in state and municipality-owned buildings than in residential houses.

Yet, it is especially in residential buildings where energy efficiency measures should get priority funding given that such investments are more difficult to undertake for private households who — in contrast to public institutions — do not have sufficient financial resources or access to subsidies and preferential loans.

Investments in retrofitting multifamily houses could significantly alleviate the financial burden faced by many Polish families and improve their quality of life. Research by the Polish Institute for Sustainable Development and the Warsaw Institute for Economic Studies shows that Polish households spend on average around 15 per cent of their disposable incomes on energy bills. According to another research paper (pdf) on energy poverty in the EU, more than 20 per cent are unable to afford comfortable temperature levels at home during the winter.

What’s next?

Once negotiations with the European Commission are finalised, it will be up to the regions themselves to prepare the more detailed implementation documents that outline exactly who will be able to apply for funding from the EU budget, for what kind of project and on what terms.

Our report “Green Energy for All: Six recommendations for the last stage of programming of EU regional funds 2014-2020 for energy projects” contains some key demands for the last, crucial stage of the EU funds programming, and recommendations on how to make them reality.

These recommendations regard:

  • allowing for deep retrofitting of residential buildings,
  • supporting RES microinstallations and prosumer energy,
  • investing in renewables to improve air quality in Polish cities,
  • financing environmental education and information campaigns,
  • ensuring high biodiversity protection standards in energy-related projects,
  • providing support for community energy and partnerships.

We call on Polish voivodeships to show ambition, go for quality and to invest rather than just spend.

Notes

1. The other elements are prosumer renewable energy, air quality, environmental education, biodiversity protection and communities and partnerships in the energy sector.

EBRD sticks to business as usual despite Ukraine facing war and severe shortages


Energy security has been on everybody’s minds since the Ukrainian crisis erupted. And more than elsewhere, this is a concern in Ukraine itself, which this winter is seriously struggling to meet its basic energy needs after gas supplies from Russia were cut in June.

And yet, Ukraine’s “Western benefactors” seem quite far off from providing serious help. When it comes to international financial institutions operating in Ukraine, such as the European Bank for Reconstruction and Development (EBRD), the rhetoric may be fine, but the reality does not match up to it.

EBRD President Suma Chakhrabarti said earlier this year that a fundamental issue for Ukraine is its low level of energy efficiency and that, if this was raised to European standards, Ukraine would only need to import very small amounts of gas.

Indeed, the energy intensity of Ukraine’s economy is among the highest in the world, two and a half times higher than the OECD country average. Energy losses in power grids are twice as high as the EU average, and losses of heat in the centralised heating system eat up to 25-40 per cent of the generated heat. (See also this infographic [ua].) All this is already produced energy but it does not reach the end consumers.

Yet the EBRD has done little to change its approach to Ukraine since the downfall of Yanukovych and Russia’s invasion. Yes, the bank has opened a few small credit lines for residential energy efficiency, adding up to little over 110 million euros but most of it would not become available to Ukrainian beneficiaries until summer 2015 when the Board of the EBRD will be deciding on the Ukrainian Residential EE Financing Facility (UREEFF). Such investments, of course, are needed as soon as possible. And we need more of it.

Still, the chunk of EBRD funds is set to go to old mega-projects that would only become operational in ten years and have little to do with energy system efficiency improvements.

Between 2006 and 2013, the EBRD approved investments of over 1.2 billion euros in the country’s energy sector with almost half going to state monopolists like Ukrenergo, operator of the country’s high-voltage transmission system and Energoatom, operator of all nuclear power plants in Ukraine. The EBRD supported new high voltage transmission lines and upgrades at nuclear power plants to enable their operation for another two decades.

And now, we are set for more of the same.

Ukrenergo’s recently invited to scoping meetings for the Second Backbone ultra-high voltage transmission line, over 900 km of new 750 kV lines, which was introduced back in 2010 and was part of an old country energy strategy from 2006 which was already proven to be unrealistic.

Yet this project not only has whopping costs of around 2.6 billion euros, it would also be primarily allow for electricity exports to the EU and it would take decades to become operational. In brief, it would do nothing to ensure the current urgent needs of domestic consumers in Ukraine. And even in the long run, it would lead to an amount of savings so small that it falls within the range of statistical error [1].

Not to mention that Ukrenegro is notorious for not being able to complete the projects it commits to. The only one they did manage to finish until now (out of three for which they received EBRD financing) is the 124 km transmission line Adzhalyk-Usatove, whose construction was accompanied by contested changes of routing, severe clashes between police and locals and an extra costs of 5 million euros to move the line out of villages.

For us in Ukraine, the big question is whether this type of investments preferred by the EBRD is really the most effective, cheapest and fastest mean of addressing the energy challenges of the country.

Unfortunately, a detailed feasibility study for the Second Backbone project is not available despite this study being funded directly by the EU via the Neighbourhood Investment Facility (NIF). Ukrenergo did not provide any figures on the project’s feasibility during a scoping meeting in Odessa taking place in mid-November. No EBRD staff were present at the meeting.

So we can only conclude that the EBRD is continuing to do business as usual despite all that has happened in Ukraine.

According to the latest information, international lenders such as the European Investment Bank and the World Bank are considering financing another controversial long-term project, the Kaniv pumped storage plant, a project from which the EBRD had pulled out six years ago because of serious concerns regarding the project’s economical and technical feasibility.

The EBRD and other IFIs must understand that it is not an option any more to continue with business as usual in Ukraine. We simply might not survive as a country to see the benefits (if any) from those long-term mega-projects they have been slowly developing in previous years.

It is time to admit that reconstruction and refurbishment programmes of existing infrastructure is more hard work, yes, but it is what can truly make a difference for the people in my country in the short run.

Notes

1. The final scoping report for the Second Backbone UHV Corridor claims the project will provide annual savings of 220 GWh – or about 0,1 per cent of annual electricity production in Ukraine (195 TWh).

Time to stop shooting the messenger


MANS, the Network for the Affirmation of the Non-governmental Sector, has for years been one of the most active and fearless NGOs in Montenegro, uncovering the numerous corruption scandals that plague the country and hinder improvements in the quality of life of its people.

It has long been subject to over-reactions from the authorities regarding its activities, but recent attacks by the Informer ‘newspaper’, considered by many to be close to the Montenegro authorities, have spilled over into the territory of the vile and absurd.

For the second time this year, in late October the ‘newspaper’ published offensive sexual images on its cover page and implied that they portrayed MANS’ Executive Director Vanja Calovic. The first smear campaign, in June, was launched after MANS revealed numerous irregularities, possible cases of political corruption and vote buying at local elections in several municipalities held in May this year. Its publication was a deliberate attempt to compromise her personal and professional integrity.

This repeated smear campaign against Calovic is threatening not only MANS, but also other civil society activists and individuals that dare to reveal corruption and organized crime.

The case is all the more alarming for taking place in an EU accession country, but is unfortunately not the only case, as Bankwatch recently showed. From Hungary to Russia; from Egypt to Azerbaijan, civil society is coming under increasing pressure.

The authorities’ capacity to respond appropriately varies: often the repression is clearly perpetrated by the government. In the ‘Informer’ case, where the smear campaign against Vanja Calovic is at least nominally carried out by the media, government institutions must move fast to ensure freedom of speech and respect of human rights of civil society activists. The Montenegrin government is responsible for ensuring the full appreciation of individual human rights guaranteed by international conventions and the Montenegrin Constitution, including in cases of individuals that are criticizing corrupted behaviour of the government.

We also expect that the new EU commission and Commissioner Hahn who is responsible for Neighbourhood Countries will clearly condemn such practices, and that the EU will back its words with action.

Two great new websites on all things coal


Over the last years, we’ve seen remarkable progress in the fight against coal and the pollution and climate risks coming with it.

Not only have international financial institutions adopted policies to all but limit support for coal plants. But a global movement has stopped new coal plants and mines almost everywhere.

In the European Union, 109 proposed coal-fired power plants have been defeated. Since China’s air pollution crisis, mainly due to massive coal burning, 10 of China’s 34 provinces have banned the construction of new coal-fired power plants. Coal-burning in the US has dropped by 21% after peaking in 2007. US groups have defeated 179 new coal-fired power plants, and more than 177 existing plants are slated for retirement.

Yet a lot still needs to be done to end our addiction to coal once and for all – the Western Balkans being a case in point. Two new websites launched this week now offer a slew of information about the remaining challenge and how to tackle it.

coalbanks.org

While Bankwatch focuses on public financial institutions, our friends at BankTrack are taking on commercial banks for ten years already. This week BankTrack launched the new ‘Coal banks’ website that

“provides extensive data about the banking industry’s ongoing deep links with the coal industry, and gives people around the world an opportunity to directly encourage banks to finally end their coal financing.” (BankTrack press release)

Worryingly, their extensive research shows that 2013 constitutes a record year for private banks’ support to coal, with a four-fold increase since 2005.

endcoal.org

Launched today by a group of environmental, social justice and health advocates from around the world, endcoal.org is a resource for local communities, activists, students and researchers who want to learn more about the problems with coal and solutions to meet global energy needs. The website is packed with resources and news on all things coal.

Most impressive thought is the site’s interactive map and database that tracks all planned coal plants around the world since 2010. The Coal Plant Tracker, developed by CoalSwarm, allows you to find out how many coal plants are planned in any given country, track stages of development, and access more detailed information on the projects.

If you thought there was no need to campaign against coal, just take a look at Turkey for example:

Marubeni, hands off Plomin!

As Marubeni executive Hiroshi Tachigami attended today’s Energy Market Conference in Zagreb this morning, Greenpeace activists hung a banner from the Vatroslav Lisinski concert hall in Zagreb, advising Marubeni to keep its hands off the Plomin C coal power plant project.

Marubeni was in September chosen as preferred bidder, along with Alstom, for the 500 MW project, which would run on imported coal. Negotiations are now ongoing with the companies with a view to signing a contract for a strategic partnership to build and operate the coal plant.

As well as all the usual drawbacks associated with coal such as climate and health impacts and its increasingly poor economics, the choice of Marubeni and Alstom as preferred bidders has raised eyebrows due to Marubeni having been convicted of corruption in two cases and Alstom in at least seven in the last few years. As a result, Marubeni is currently barred from receiving financial support from the Japan International Co-operation Agency (JICA) and Alstom is on the special observation list of the Norwegian Pension Fund Global.

Unsurprisingly Croatia is anxious to bring in investors to kick-start its ailing economy, but Plomin C’s economics have been roundly criticised from the start. Recent information received unofficially suggests that the price set for the Croatian electricity company HEP to buy electricity as part of a long-term power purchase agreement from the Plomin C plant may be around double that of the current market price. If this turns out to be true then the 64 percent of the population found by an opinion poll to be against the project earlier this year will no doubt rise even further, and perhaps we will finally have an opportunity for a real debate about the country’s energy future.

(See more images from the protest on Greenpeace Croatia’s facebook page)

Can the European Investment Bank move ahead of the pack on climate?

For some years now, the European Investment Bank (EIB) has invested about a quarter of its portfolio in projects with a positive impact on the climate via its Climate Action Programme. While this is a good start, there is no guarantee that the remaining three quarters of the bank’s lending does not undermine its progress on combating climate change.

Last year the EIB became one of the first multilateral financial institutions to show leadership and act on the threat of climate change. The bank adopted a policy that all but ended support to coal power plants by introducing a ceiling on emissions generated by energy projects (a so-called Emissions Performance Standard). This ensures that loans like the 440 million euros for a new, 600 megawatt lignite unit at Sostanj in Slovenia don’t happen again.

Restricting lending for carbon-intensive energy generation is a welcome development at the EIB. But what of the pipelines, refineries, highways and airports currently on the EIB’s books that are responsible for countless climate-damaging emissions and threaten the EU’s ability to meet its long-term goal of a decarbonised economy in 2050?

By separating loans benefiting the climate from the rest of the EIB’s activities, perverse effects are achieved: in spite of its Climate Action Programme, the EIB still lends three quarters of its research funds (around 10 billion euros annually) to the automobile industry. What is more, efficiency improvements at coal or gas plants are categorised as climate-friendly when in fact they prolong the lifetimes of the plants, leading to more emissions overall than are cut via efficiency measures. And the bank’s stance remains ambiguous on new forms of energy that are a threat to the climate like shale gas.

The future of the EIB

These questions are even more relevant when we have in mind the increased role envisaged by Juncker for the EIB in spurring growth in the EU. Already observers are sending warning signs that the new commission is pushing Europe away from climate and environmental concerns, precisely as the world is in the last stages for reaching a climate deal in Paris next year. There is a threat that the EIB could be pushed in the wrong direction too.

As a case in point, the EIB is set to offer priority funding for Europe’s Projects of Common Interest. Of the 248 projects on the list, 100 are for natural gas transmission, including new pipelines for imports of gas into the EU. Yet such projects only increase Europe’s reliance on fossil fuel imports, hardly contributing to resource resilience.

The EU’s goal of making its economy carbon neutral by 2050 means that climate considerations must become part and parcel of any economic activity conducted in the bloc. Against this backdrop, marginally lending to climate while still putting money in fossil fuels is not enough. The EIB, which has a mission to implement EU objectives, must develop a full-fledged Climate Policy, which would make explicit the EIB’s intent to phase out support for fossil fuels by 2016.

To make this work, the bank should come with a roadmap for a steady, annual increase of investments in new renewable energy projects and energy efficiency measures that reduce demand and support upgrades to electricity grid infrastructure in order to support the transition to a near-zero carbon future.

In addition, the EIB needs a Climate Policy that requires for any relevant project a ‘mainstreaming’ of climate change considerations. For example, in the transport sector projects proposed to the EIB for funding would be selected based on a ‘climate-friendliness’ rating applied during appraisal, weeding out the most carbon-intensive proposals and leading to an overall reduction in emissions for the bank’s transport portfolio.

Local energy projects await funding

At the same time, existing EIB initiatives aimed at energy savings like JESSICA or ELENA receive little attention in the Member States of central and eastern Europe, whose economies, including households and the public sector, are on the whole more carbon-intensive. Understanding better the needs in these countries and promoting readily available solutions should form part of the new Climate Policy.

The EIB is wont to argue that not enough projects come its way in the green energy sector, so the bank has to lend to dirtier business. This is, however, only a result of the fact that the bank mostly communicates with the big companies and governments it knows and trusts as business partners. These established relationships therefore tend to preclude a proactive search for those projects that are most in need of favourable financing.

A Climate Policy would necessarily target small and medium enterprises such as cooperatives, community-driven initiatives and mixed municipality or community projects, where plenty of ideas for sustainable initiatives abound but without the requisite financing.

Examples from the last 2007-2013 EU budget show that when national investment schemes into energy efficiency and small-scale renewables are launched, the money usually disappears in a heartbeat.

In many countries, community-based renewable projects are still novel and their access to commercial funding is limited. Where commercial banks lack expertise and interest, the EIB can build a strong presence to move community renewables in the Member States of central and eastern Europe from a budding niche to a fully-recognised economic opportunity for the financial sector.

Such projects demonstrate how the EIB – guided by a robust Climate Policy – can lead Europe away from a dependency on fossil fuels and contribute to the continent’s energy security and decarbonisation.