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Polish region an unexpected champion of green energy citizen projects

As EU Member States continue to negotiate with the European Commission their spending plans for the next Cohesion Policy funds for 2014-2020, the Polish region of Podlaskie in the northeast proves an unexpected champion for the green energy citizen’s revolution in Poland.

In its draft Operational Programme outlining spending plans for the Commission, Podlaskie’s regional authorities intend to support “an energy revolution, which will result not only in the increased share of renewables in the energy consumption mix, but also make local citizens and entrepreneurs the owners of decentralised energy sources”.

Recognising that efficiency, diversification and local production are key both to ensure long-term energy security and meet the EU’s 2020 climate targets, Podlaskie sees the solution in supporting the creation of a locally-owned, decentralised energy system, that utilises indigenous renewable resources and stimulates local development.

With more than 80 billion euros of available funding, Poland will be the biggest beneficiary of Cohesion Policy funds in 2014-2020. In response to the Commission’s push for greener spending of the EU Budget, Poland will dedicate approximately 9 billion euros to finance low-carbon development, including renewable energy and energy efficiency measures.

Podlaskie stands out as a champion of the citizen’s energy revolution in Poland, but there are also other regions – notably Małopolskie and Podkarpackie – who have expressed intentions to prioritise the development of small, decentralised renewable energy installations. This is particularly important, because it is on the regional and local levels where much of this greener spending will happen and where EU money can be used most effectively to support the development of green energy communities in Poland.

Drafted in Warsaw, the national spending plans focus mostly on large-scale, nationwide investment projects. With around 40 per cent of all Cohesion Policy funds in Poland to be distributed directly by its sixteen regions, local governments decide where the lion share of the money goes and who can play a major role in shifting local development on a more sustainable path.

The 16 Polish Regional Operational Programmes, submitted by the regional authorities to the Commission, outline funding priorities and will guide the investments on the regional and local level for the next seven years. But some Polish regions understand the transformative potential of the new EU budget better than others. Consequently, the resources assigned for low-carbon growth vary across regions, with some planning to spend 25-30 per cent of available funds from the European Fund for Regional Development and others keeping close to the minimum 15 per cent.

With 180 million euros allocated to low-carbon development and 60 million euros earmarked for investments in renewables – compared to approximately 20 million euros invested in renewable energy and energy efficiency in the previous 2007-2013 EU budget – Podlaskie’s local government has the means to support their forward thinking.

This is crucial, because in the continued absence of national laws effectively regulating the renewables sector or recognition of the benefits of local, decentralised energy production, priority support for “prosumers” (producers and consumers of energy, owners of RES microinstallations, producing energy to cover own needs and selling the excess to the grid) could be key to stimulating the shift towards citizens’ power in Poland.

As Polish regions prepare to release the so called “Detailed description of priorities” by-laws, which will include project selection criteria and detailed allocations by investment priorities, it is vital they include provisions allowing communities, cooperatives and individuals to become beneficiaries of low-carbon, energy-related funding. Following Podlaskie’s example, priority should be given to the smallest RES investment projects, in order to use EU money to bring about a new local and regional energy system, one where local people are the owners and consumers of green energy.

Public in Bosnia-Herzegovina to pay for shaky economics of Tuzla 7 coal plant, but will officials take heed?

After several years of developments related to a seventh unit at the Tuzla power plant in Bosnia and Herzegovina, the public is now able to understand the plant’s economics, thanks to a document published in the run-up to a debate in the Federation of BiH parliament this week. It might have been a better idea to have this debate earlier, considering that the news is not exactly good for the project developer, Elektroprivreda BiH (EPBiH).

In April, China’s Gezhouba was the only one of two shortlisted bidders to submit a final offer for the 450 MW lignite unit, with Japan’s Mitsubishi Hitachi Power System having been put off by the political situation in Bosnia and Herzegovina and reportedly also the plant’s unprofitability. But only now have concrete figures emerged that allow a closer examination of the situation.

Now the details: Gezhouba offered two options, one that uses a credit arrangement known as a Preferred Buyer’s Credit, at a cost of EUR 785.7 million, and one using a Buyer’s Credit, at a cost of EUR 835 million. Elektroprivreda BiH considers the first option economically viable, with a Net Present Value (NPV) of EUR 54.644 million over 25 years and an Internal Rate of Return (IRR) of 11.63 percent. The second is considered unviable, with a negative NPV and an IRR of only around two percent. In summary, EPBiH goes for the Preferred Buyer’s Credit.

But while the difference between EUR 785.7 and 835 million might sound like a lot, in the world of building coal power stations, it’s nothing.

The most drastic example from this region is the lignite unit at Sostanj 6 in Slovenia, whose costs doubled from EUR 700 million in 2007 to an estimated EUR 1.44 billion. The kanalysis by EPBiH document does take a look at coal plant prices from around the region in order to assess whether Gezhouba’s offer is reasonable, but it too easily dismisses Sostanj as incomparable and brushes over the problems it has suffered from, as if they could not happen in Tuzla.

Even projects with less dramatic price increases show a tendency to pile on a few tens of millions of euros during development. For example the price of Plomin C in Croatia was set at EUR 800 million for at least the last three years, but in May costs suddenly jumped to EUR 827 million before a preferred bidder had even been chosen.

If Tuzla 7 picks up EUR 50 million more in costs along the way – which is far from unlikely – it will be economically unviable. Similarly it won’t be good economics if the costs of coal or electricity prices used in the calculations turn out to be wrong.

EPBiH is aware of the second problem, having mentioned that electricity prices in the EU are currently lower than the expected sale price for Tuzla 7’s electricity at EUR 56.75/MWh. The expected price of lignite from nearby mines is just under EUR 2.4/GJ (4.75 KM), but if the real price is higher, ‘the competitiveness of the existing generation and feasibility of building new units will be threatened’, says EPBiH’s document.

So rather than coming to the same conclusion as most utilities in Europe – that it is a really bad idea to invest in coal – EPBiH has merely re-stated its commitment to constructing Tuzla 7 and is crossing its fingers that before unit 7 comes online electricity prices will rise above 56.75 EUR/MWh.

In order to be sure about the price, the document mentions EPBiH signing a long-term power purchase agreement with the project company to increase the stability of the investment. However, there is a risk that such an agreement would be in conflict with Bosnia and Herzegovina’s obligations under the Energy Community Treaty, which does not allow state aid.

In the end, we’re back to where we started, with a proposed coal plant that may or may not be feasible, nobody really knows. Will Bosnia and Herzegovina’s elected officials realise that this foundation is too shaky for such a large project, or will we soon have another Sostanj 6 on our hands?

City of Zagreb still playing with fire

Seasoned Bankwatch-watchers may recall our successful four-year campaign to stop the EBRD from financing a waste incinerator just outside Zagreb. Between 2005 and 2008, we supported Zelena akcija/Friends of the Earth Croatia and local group UZOR to prevent the City of Zagreb from building a huge 385 000 tonnes per year waste incinerator in Resnik on the outskirts of Croatia’s capital.

The reasons against the project were clear: the low levels of recycling and composting in Zagreb, the lack of facilities to safely dispose of the bottom ash, fly ash and filter residues, the inflexibility of such a large facility and poor previous experience with environmental enforcement in Croatia.

Whether for these or other reasons, the EBRD and later the EIB wisely avoided financing the project, with the Mayor of Zagreb confirming in late 2008 that the project would not go ahead.

Since then however, the City of Zagreb seems intent on passing a waste management plan that includes almost exactly the same measures, in spite of Zelena akcija’s best efforts to promote alternatives. The city is again holding a public consultation for a plan that looks eerily similar to the previous.

Even though Croatia must recycle 50 percent of its waste by 2020 as per EU targets and Zagreb has almost a quarter of the country’s population, the city’s new draft waste plan still has the incinerator project as its centrepiece, now – incomprehensibly – with a capacity of 400 000 tonnes per year.

This in spite of the fact that Zagreb’s annual residual waste actually dropped to around 270 000 tonnes per year for the years 2009-2013, all with a very low percentage of recycling and no serious efforts to reduce the production of waste. So imagine what would happen if Zagreb’s authorities really made an effort on recycling, composting and waste reduction.

The proposed waste management plan foresees no less than EUR 360 million for the construction of the incinerator and an ash landfill, 35 times less money for recycling and separated collection, and zero for waste reduction measures. The costs of the incinerator alone total 83 per cent of the entire budget to implement the plan, turning the waste hierarchy on its head.

The only city-wide recycling measures include an increased number of recycling containers, which enable recycling only of a few materials and have long proven to be of limited use when people must walk further to use them and have no economic incentive to do so.

The need to treat waste sludge from Zagreb’s controversial wastewater treatment plant is often cited as a reason for the incinerator, but no alternative treatments are covered in the waste management plan, nor is there an explanation of what will happen once the backlog of sludge is burned and Zagreb does not produce enough other waste to fill it. Importing other people’s waste seems like the only outcome if the burner is built.

The incinerator would create around 100 000 tonnes of ash, but there have so far been no realistic proposals of where this could be landfilled, as all suggested locations have been met unsurprisingly with fierce local resistance. It is also unclear where the hazardous fractions of the waste eg. the filter residues, would be disposed of and how much this would cost, but considering that Croatia has no suitable facilities it can be expected that this could incur considerable costs and as well raise ethical questions about leaving other countries to bear the consequences of Croatia’s waste.

The frustrating thing is that the alternatives – waste prevention, recycling, composting and mechanical biological treatment with anaerobic digestion – are available and functioning in many cities, but the City of Zagreb refuses to see this. We must move quickly beyond this impasse and agree on a waste management plan we can all live with. And that means that the City of Zagreb will have to open its ears and start listening rather than blundering blindly on with its plans.

The question here is where the international financial institutions stand. A meeting with EBRD representatives in Zagreb in May 2013 showed that the bank is aware of the imperative of solving Zagreb’s waste problem and is interested in supporting the city’s efforts. But will it silently follow the City of Zagreb’s increasingly absurd plans or help it finally develop a waste management system we can be proud of?

A Private Affair: Report shows how development finance institutions benefit the rich in Western countries


The European Network on Debt and Development (Eurodad) launched today the study A Private Affair in which it shows how the world’s biggest multilateral lenders are using billions of euros of loans in developing countries to finance Western-based companies while excluding governments and citizens of countries they are meant to assist from decision-making.

The analysis, which looks among others at loans by the European Investment Bank (EIB) and the International Finance Corporation (IFC), the World Bank’s lending arm, analyses the consequences of the gradual shift from aid to private finance at the core of global and national development initiatives.

By 2015, the development finance institutions suveryed by Eurodad will be lending over 100 billion US dollars, the equivalent of almost two thirds of official development assistance.

Yet this huge amount of money hardly benefits those it is nominally meant to support, the most vulnerable people in developing countries.

The report A Private Affair (pdf) finds, among others, that:

  • Companies from wealthier nations have often received the lion’s share of contracts. Investments are sometimes routed through tax havens – which drain much-needed finance from developing countries.
  • Companies from low-income countries receive minimal support. For example, only a quarter of companies supported between 2006 and 2010 by the EIB and the IFC were domiciled in low-income countries.
  • Developing countries have virtually no say in how these institutions are run, or how the decisions they make. The World Bank’s IFC has the highest proportion of developing country voting share for decision making – but even in this case the voting rights of both middle and low-income countries are less than 30 per cent.
  • The financial sector – especially investment banks – have been favoured by DFIs in recent years, receiving on average more than 50% of funding that has been allocated to the private sector, even though serious questions have been raised about the kind of development impact this will have.

One of the examples studied in the report is the case of the EIB’s 14 million euro loan to the resort ClubMed in Morocco. While this amount may be generally added up to the institution’s support for North African whose plight was brought to world attention by the Arab Spring, in reality it is hard to argue that the loan benefits anyone but the European owners of the resort. While the EIB claims that the loan will contribute to sustainable tourism and local employment, local organisations in Morocco denounce the project’s impact on the environment and the land grab associated with the construction of such gated resorts.

A Counter Balance video shows how little the ClubMed resort has to do with development:

More background in this Counter Balance blog post

After going through these startling features of the activity of development finance institutions, Eurodad concludes with a set of recommendations to these institutions:

  • to align their investment decisions to developing countries’ priorities and national development plans,
  • to demonstrate clear financial and development added value,
  • to comply with the guidelines of responsible finance.

Otherwise, if such recommendations are not taken into account, rich countries are only pretending to finance development, when instead they finance their own businesses wreaking havoc in developing countries for private gains.

Video: A mockumentary about biodiversity offsetting


Наши друзья из общественной организации “Biodiversity Offsetting” (совместно с FERN, Re: Common, World Development Movement и Carbon Trade Watch) сегодня начали кампанию, направленную против планов ЕС разрешить компенсацию потерь биоразнообразия.

Компенсация потерь биоразнообразия позволяет девелоперам уничтожать природу до тех пор, пока они платят за его замену в каком-нибудь другом месте. Это равносильно лицензии на отстрел. С точки зрения охраны природы этот принцип выглядит очевидно абсурдным. Такая практика не принимает во внимание сложность определенных экологических систем и полна технических лазеек. Какую, например, компенсацию получила бы “природа” за нарушение популяции рысей в Македонии, которые находятся под угрозой исчезновения, в зоне ее восстановления? Как можно было бы компенсировать потери, если бы популяция рыси исчезла полностью?

Сатира как нельзя лучше подходит для того, чтобы донести эту точку зрения до общественности, и именно поэтому кампания начинается с демонстрации псевдодокументального фильма, представленного ниже.

Вы можете внести свой вклад в недопущение компенсации потери биоразнообразия, приняв участие в общественных слушаниях ЕС до 17 октября 2014 года и подписав петицию в ЕС на сайте http://naturenotforsale.org/letter2EU

Компенсация потери биоразнообразия делает мечты реальностью. Это лицензия, которая может сделать мечты недобросовестных застройщиков реальностью. Во всем мире компенсация уже служит откупом за разрушение незаменимых экосистем с целью освобождения места под реализацию горнорудных проектов, строительство автодорог, трубопроводов …

Европа является новым рубежом для компенсации биоразнообразия. Европейский Союз изучает возможность принятия законодательства, которое разрешает компенсации биоразнообразия.

Напомни ЕС, что природа не продается, приняв участие в общественных слушаниях до 17 октября 2014 и подписав нашу петицию ЕС на сайте http://naturenotforsale.org/letter2EU

Video: A mockumentary about biodiversity offsetting


Our friends at Counter Balance (together with FERN, Re:Common, World Development Movement, and Carbon Trade Watch) have today launched a campaign against the EU’s plans to allow biodiversity offsetting.

Biodiversity offsetting allows developers to destroy nature as long as they pay for its replacement somewhere else – it amounts to a licence to trash. From a perspective of nature protection the concept is just plainly absurd. The practice doesn’t take into account the complexity of certain ecological systems and is full of technical loopholes. How, for example, should ‘nature’ be compensated for disturbing an endangered lynx population in Macedonia in their reproductive area? How could the bill be settled if the lynx population was to disappear altogether?

Satire seems the best way to bring this point home, which is why the campaign kicks off with the video mockumentary below.

To help preventing biodiversity offsetting in Europe, you can respond to the EU’s public consultation before 17th October 2014 and sign a letter to the EU at http://naturenotforsale.org/letter2EU

Biodiversity offsetting makes dreams come true. It is the license that can make bad developers’ dreams a reality. Across the world offsets already justify the destruction of irreplaceable ecosystems to make way for mining projects, motorways, pipelines …

Europe is the new frontier for biodiversity offsets.The European Union is considering new legislation that permits biodiversity offsets.

Tell the EU that nature is not for sale by responding to their public consultation before 17th October 2014 and sign our letter to the EU at http://naturenotforsale.org/letter2EU