Blog entry

When water mixes with coal – The impacts of the floods in Serbia on people living next to lignite mines

When the floods hit Vreoci in Serbia on May 15, a nearby water reservoir broke and water rushed into the house of Nevena Radivojevic at 2 in the night. A rescue team came with boats and took away her grandchildren and her daughters in law, but there was no place for her in the boat. In the end her son, a hobby fisherman, came with a boat and managed to save her. It was a lucky escape.

Vreoci is a town surrounded by open pit lignite mine fields in the Kolubara mining basin in Serbia. Nevena, like many others, had tried for a long time to move away from the vicinity of the gigantic Kolubara lignite mine. The dusty air and the frequent tremors caused by the heavy mining machinery have for a long time been a burden on her and her family’s health. (See more in this video footage from an earlier visit to Vreoci.)

Yet, the Kolubara mining company has shown no interest in compensating Nevena and many other people living next to the mines. Without this support most people were forced to stay where they are and suffer under noise, air and water pollution.

I’m a regular visitor in Kolubara and when I went there after the floods, I spoke to people in three villages located near mine fields (Junkovac, Vreoci and Radljevo). Many of them said that the flood’s impacts were much worse for those living near the mine, especially where the waters and mud mixed with pollution from the mine.

The soil is covered with black mud because the water mixed with coal.

People are taking their furniture out to dry in the sun. They help each other clean up.

The people demand to be resettled as soon as possible, but now that the Kolubara mining company has to prioritise cleaning up the mine fields and increasing production again it is very unlikely it will help the local families without external pressure. For years already we have been requesting the European Bank for Reconstruction and Development (a long time financier of Kolubara) to get active in the resettlement process and make sure its client cares about the families living next to the mines. After the floods, this has become an even more burning issue.

There is for example Milan Simic from Radljevo, who has fought long and hard (and unsuccessfully) for compensation after the mine had swallowed his apple tree farm. Milan is now living on the coast of a new lake that used to be the Tamnava West mine field. The lake is 15 square kilometers big, possibly the second biggest in Serbia. From his house Milan Simić cannot see the road anymore, it was taken by the water.

Kolubara from Airworx on Vimeo.

There are the families from Junkovac, who live in fear since a landslide destroyed thirteen houses and their road one year ago. Since then they wait to be resettled with appropriate compensation, but the Kolubara mining company is letting them wait, while continuing to dump more waste on the same hill that had collapsed.

An image of the destruction after last year’s landslide.

Nevena meanwhile is especially worried. Her town of Vreoci may become a focal point for disputes between the Kolubara mining company and villagers. To be able to continue coal production, it is likely that the company will speed up the expansion of mining towards Vreoci.

More repression, more money – Financing transition in Egypt

Last Thursday an office of the Egyptian Center for Economic and Social Rights (ECESR) has been raided by military forces just days ahead of the presidential elections in Egypt that are coming to a close today. In a joint statement Egyptian and international organizations condemned the raid as “reflect[ing] a repressive atmosphere, and rising threats to the existence and function[ing] of civil society organizations”.

It was the second raid on ECESR offices under the current military regime and only the most recent incident to suppress opposition. One of the reasons ECESR has been targeted may be a recent success in front of the Administrative Court. The ruling allows ECESR to appeal against amendments to an investment law that stipulate that no third party may challenge the validity of agreements made between the Egyptian government and investors – a practice that would mock transparency standards and increase the risks of corruption.

The investment law is just one of the many democratic shortcomings of the Egyptian regime. Since the military took control in July 2013 hundreds of people have been killed, imprisoned and tortured for holding on to believes that the Egyptian military did not approve of. Activists and protesters, not only from the Muslim Brotherhood have been persecuted and politically marginalised. The most striking example of the repression has been a court ruling sentencing over 529 Muslim Brotherhood members to death.

Throughout this time, with no functioning parliament in the country, the European Bank for Reconstruction and Development continued its lending in Egypt even though its mandate restricts its operations to countries that apply the principles of multiparty democracy and pluralism.

Increased lending while political situation deteriorates

A February briefing (pdf) by Platform London based on a six-month mission to Egypt illustrates the conflict between the country’s political situation and the EBRD’s mandate:

“The regime in Egypt has been implementing policies inconsistent with the EBRD’s purpose, in particular with the political aspects of its mandate. […] Since the military takeover in July 2013, progress has been negative on most factors defined by the EBRD as ‘essential elements of multiparty democracy and pluralism’.”

The briefing further details that the situation has become significantly worse in relation to 11 out of 14 of these elements (pdf), including those concerning the rule of law, the separation of powers, free elections, freedom of speech and freedom of organisation.

It concludes:

“The current atmosphere of systematic torture, persecution and censorship of any public critics of the military and the military-appointed government highlights clear non-compliance with the EBRD’s political mandate.”

Support for oil and multinationals, bypassing the people of Egypt

Since the beginning of its operations in Egypt, the Board of Directors of the EBRD which represents the Bank’s shareholders, has approved 9 loans worth up to USD 756 million.

Platform’s examination of the loans[*] shows the bank’s failure to channel its money to where it is mostly needed in a country ridden by widespread poverty and unemployment.

Only up to a meager 6.6 % or USD 50 million of the EBRD’s support has been allocated to small and medium sized companies (SMEs).
Instead, the EBRD focused on multinationals, oil companies and agribusiness. Funds have been directed to sectors that are not improving the human development situation in Egypt.
Furthermore, as civil society organisations in Egypt pointed out, there have been no public consultations over the funded projects, despite concerns regarding social and environmental impacts.

Aiding a military regime

Equally problematic is the EBRD’s support institutions that are under the regime’s control: the public Egyptian Electricity Holding Company and Egyptian National Railways receive almost half of the EBRD’s support (362 million) and the state-owned National Bank of Egypt an additional USD 100 million.

All three loans have been approved by the EBRD after summer 2013 – at a time when severe and repeated human rights violations were being committed by the military regime.

Faced with such criticism, the EBRD regularly claims it is ‘closely monitoring’ the situation on the ground. If that is so, should the bank’s not only continued but intensified operations in Egypt be understood as approval of the regime’s conduct? Is the killing of hundreds an unfortunate but necessary side-effect of transition to a market economy? Does ensuring the supply of mid- to up-market ice cream somehow outweigh the collective death sentence for 529 oppositionists on the second day of trial?

* Since the briefing was prepared in February this year, the numbers have been updated for this blog post. The loan for Kuweit Energy that is included in our numbers, is not featured in the EBRD’s list of projects in Egypt because it covers also activities in Ukraine.

Guest post: EBRD justification for supporting coal in Egypt’s cement industry is negligent

Early in 2014 those of us at the Egyptian Centre of Economic and Social Rights (ECESR) working separately on the possibility of coal being imported into Egypt realised that Egypt’s Minister for Industry had organised a meeting with EBRD officials with coal on the agenda. The level of foreign funding that seemed to be popping up from various corners made us very suspicious that the EBRD might jump on the bandwagon.

Initially the main consideration was importing coal to fuel the cement industry, with the second phase to shift electrical power stations to coal use too. As far as we could see however, the initial decision was going to focus on the cement industry. See on the right an infographic we produced on the subject.

Infographic

See in full size on ECESR’s website

In response to these rumours, Egyptian civil society organised the first major ‘environmental’ opposition campaign the country has seen. Egyptians Against Coal took action, with CSOs like ECESR as part of the coalition of activists, organisations, groups and individuals interested in preventing coal coming into Egypt. The campaign, since its inception in September 2013, has indeed succeeded in putting across the facts about the health, environmental and economic costs of using coal. What would have been a straightforward task for the cement industry in persuading impressionable officials of the benefits of coal has become a much more drawn-out fight, taking place prominently in the political and media spotlight. In this we have succeeded.

However despite our efforts to date, on 24 April 2014, the Cabinet of Ministers decided to allow the use of coal for the cement industry and electrical plants in one fell swoop. Since then, media and public interest has piqued, with appearances on popular television helping to push the Facebook following of the campaign to over 150,000 people and a trending, ‘no coal Egypt’ hash tag on Twitter in less than two weeks. This week we launched a petition to harness this support and send a message to the new Cabinet set to be sworn in within a couple of weeks following the Egyptian presidential elections.

Except for being the main source of facts, scientific findings and measured criticism of the industry’s intentions for media, public and government members alike, Egyptians Against Coal also must fight on the international and regional fronts.

More than 75 percent of the cement plants are owned by foreign companies, including large multinationals like Lafarge and ItalCementi. IFIs are also interested, the clearest sign coming from the EBRD. With low levels of awareness about IFI operations in Egypt, it is no surprise that the significance of such meetings go unnoticed here, which is where ECESR’s role begins. Writing a cautious letter as to whether EBRD would, or is intending to, fund the switch to coal for Egypt’s cement industry and detailing the negative effects of such a decision, ECESR received a surprising reply. The EBRD unashamedly stated its support for coal in steel and cement industries where there are no economically or technically viable alternatives available.

In response we have put together a detailed technical memo, responding to each and every justification their short letter offered for their investing in coal for cement in Egypt.

Addressing their key points we show that

there are economically and technically viable alternatives to meet the fuel demand and needs of the cement industry;
their disclaimers of coal for cement being a Best Available Technique (BAT) in the EU was an incomplete slice of the whole picture. BAT’s are one of five principles which rely on the wider regulatory structure available in the EU but certainly not available in Egypt;
Egypt’s low Research and Development capacity, low innovation and low institutional capacity make scenarios like those in the Cement Technology Roadmap (pdf), that relies on carbon capture and storage to be implemented in the long term, irrelevant for our country;

Overall what is most worrying about the EBRD’s potential funding coal for cement industries, is the laissez faire attitude the bank has in justifying it. The bank is falling back on generalised arguments that show no consideration of the landscape of our country in any detail. If this had been done the bank would realise the cement industry in Egypt occupies a position akin to a monopoly. Multinational companies use subsidised fuel and electricity at the expense of those who really need it, and make profit margins of up to 70%.

Of course cement is a very important component of Egypt’s development which must keep up with the significant population growth predicted in the coming decades. But all other solutions except coal have simply been left unexplored, including the option to import cement itself. If the EBRD had done a detailed assessment of its applicability in Egypt they would have to conclude there is a powerful business lobby holding a government to ransom over the issue of energy sources. Its main concern is profit, not the ability of Egypt’s currently ailing healthcare system to deal with the fallout or the capacity of the already heavily polluted Nile river to take more badly regulated industrial wastewater and the resulting health and environmental problems across Egypt.

ECESR’s correspondence with EBRD on this issue is available in English and Arabic here: http://ecesr.org/en/?p=421803

Balkan lynx stage protest at annual meeting of European Bank for Reconstruction and Development

A delegation of 20 lynx from Mavrovo National Park in Macedonia today occupied a corridor in the Polish National Stadium in Warsaw, where the EBRD Annual General Meetings are taking place 14-15 May.

Their message: “EBRD, don’t finance the Boskov Most dam, as it will destroy the forest in which we live and eventually kill us.” The 20 delegates from Mavrovo Park constitute almost half of the little over 50 lynxes which still survive in the park today (the Balkan lynx is an endangered species).

At the stadium, the tiny lynxes held banners which said “I need a lawyer!”, “Extinct is forever”, “EBRD, don’t jinx the lynx”.

Participants in the annual meetings, including EBRD staff, representatives of governments and business, took pictures of the lynx which they deemed “adorable” and, most importantly, heard their story.

The lynx are now returning to Macedonia with the hope that the EBRD will make the right decision on Boskov Most: withdraw financing.

Images from the protest action

See more images on flickr

Funny business at EBRD meeting: sustainability champion Garanti fancies coal

As a child, I was never very good at understanding idioms. I would always have a completely different interpretation than the rest of my friends, much to their amusement. I was convinced, for instance, that “one hand washes the other” means exactly that you have to use your clean hand to wash the dirtier one, and so, on average, one hand is always cleaner than the other.

I had a flashback of this literal interpretation when I read that the Turkish Garanti Bank is one of this year’s winners of EBRD’s Sustainability Awards, which will be presented tomorrow in Warsaw at the bank’s annual meeting. In the announcement, the EBRD recognised Garanti for “its leadership in addressing key sustainability issues within its activities”.

I found this quite surprising and imagined this must be Garanti’s somewhat clean hand, since my most recent memory of the bank’s name was in relation with the SOCAR Aegean Refinery and a “secret” 1350 MW coal power plant, which shows a mixture of business interests, coal development and neglect of local health concerns in Turkey, and where Garanti Bank is part of the consortium of lenders which would power the EUR 5 billion project. (Even more conflicting with sustainability principles is the fact that this gigantic oil project to which Garanti is considering financial support, is conflicting with a genuinely green one – a geothermal-solar hybrid 50 MW power plant – which was granted an operation licence one year prior to the one that SOCAR holds.)

But even if I accepted that this case might be an exception, a look at Garanti’s track record of financial support to the coal sector puts the bank’s dedication to “addressing key sustainability issues” seriously into question:

Zetes 1 – on the Black sea coast – a 160 MW coal power plant which started operation in 2010, and was the first phase of a USD 1.6bn coal-fired project, financed largely by Turkish banks including Türkiye İş Bankası’ndan and Garanti Bank. It should be of great interest to a bank which is awarded a sustainability title that there is no ash landfill at the ZETES 1 and 2 plants, although this was a precondition in the Environmental Impact Assessment, and that local water contamination is present and easy to observe even to an untrained eye, due to leaking ash, water treatment plants in the existing mine area, coal transportation infrastructure and the storage of ash. (See Bankwatch’s study Black clouds looming (pdf).) Still, Garanti Bank together with IşBank are the main financiers for the development of the ZETES 2 and ZETES 3 coal plants, projects riddled with local opposition and legal battles over the EIA.
In its Stock report (pdf), Garanti proudly presents its contribution to fossil energy production in Turkey: “Garanti continued supporting the energy sector investments through its participation as mandated lead arranger in the financing of a 600 MW import coal thermal power plant investment and a 270 MW indigenous coal thermal power plant investment.”

The EBRD has committed to support sustainable energy and investments to strengthen the competitiveness of the Turkish economy through support for Turkish financial institutions. One of the key partners in this endeavour is Garanti Bank. Yet, while the EBRD has reviewed its energy policy and will scrap most assistance for coal-fired power plants, the flagship Turkish bank is among the main actors in the development of future coal power generation in the country.

Unfortunately I am not able to attend the award ceremony tomorrow. I would be curious to hear the acceptance speech that Garanti Bank’s representative will give. The last statement I read from the Project Financing Manager of Garanti Bank was that

“[…] coal prices decreased while natural gas prices increased. […] for the time being we estimate that coal-fired power plants will be ahead of the natural gas plants in merit order in the future. […] in general the focus will be on the coal”.

Will the bank dirty the EBRD’s sustainability awards with such statements tomorrow or announce a U-turn towards renewables energy efficiency? Now that would be a bold coming out.

New online toolkit to help tackle the Kings of Coal in southeast Europe and Turkey

See the new toolkit at kingsofcoal.org

In Turkey and the Western Balkans, decision-makers are still convinced that coal is the next big thing. Turkey is planning to build no less than 75 new coal power plants with around 37,000 MW capacity, making it the fourth most prolific country after China, India and Russia.

The Western Balkans’ planned 6185 MW of new coal plants (pdf) might seem puny in comparison, but for these relatively small countries, the projects represent a direct clash with their future EU obligations to reduce greenhouse gas emissions and decarbonise their energy sectors by 2050.

Many of these power plants (and other projects not related to coal) are likely to receive financing from public and commercial lenders. For those opposing the projects knowing how to communicate with the (potential) financiers and companies is an important advantage, which is why Bankwatch has prepared the toolkit Kings of Coal that provides easy access to this knowledge – with a focus on those actors most likely to be active in Turkey and the Western Balkans.

(Link to video: http://youtu.be/JpGz32jrwac )

The usual suspects have (almost) left the coal game

For almost two decades we’ve been working in Bankwatch to prevent harmful impacts from projects financed by the likes of the EBRD, EIB, and EU funds. One of their major steps forward last year was a virtual halt to financing for coal power plants by these banks. They have also been joined by numerous other institutions like the US Exim Bank and Nordic Investment Bank, and governments including the US, UK, Scandinavian countries and Netherlands, providing hope that coal may finally be on its way out. [*]

Certainly, in the EU, the situation on the ground looks reasonably promising: A report by Poyry consultants last year concluded that no new coal plants are likely to be built in Germany, Spain and the Netherlands in the foreseeable future.

And in the US, Sierra Club has tracked a remarkable 183 planned coal plants that have been defeated since 2002. Bad economics, health impacts and community resistance have proved to be a fatal mixture for these projects.

Even China, long known for its rapid construction of new coal plants, is finally showing signs of slowing down after the numerous ‘airpocalypse’ episodes of recent years. A recent Greenpeace analysis (pdf) found that China’s new coal control measures imply a reduction in coal consumption of approximately 655 million tonnes by 2020, compared with business-as-usual. This translates into an estimated reduction in CO2 emissions of about 1,300 million tonnes – almost enough to put China in line with a global trajectory of limiting climate change to 2 degrees centigrade.

But decision-makers in Turkey and the Western Balkans apparently haven’t read the writing on the wall.

(See and share more images below.)

Communicating with banks and companies – a necessary skill set for campaigners

Opposition to coal in the region is increasing, but what presents a particular challenge for campaigners – along with the resistance to change by most decision-makers on energy issues in the region and rampant corruption in the energy sector – is that the money for these projects is coming from various banks and export credit agencies from countries including China, Japan and the Czech Republic, which are quite different to the institutions traditionally monitored by Bankwatch, and in some cases much more difficult to communicate with.

With this in mind, we’ve put together the Kings of Coal website which explains how to contact the investors behind a project, which policies guide their decisions and how best to contact and influence them. The website is available in English, Serbian and Turkish and covers selected companies and banks from around the world. Although it focuses on the coal sector in southeast Europe and Turkey we believe it will also be useful to campaigners in other sectors and other regions too.

We’ve tried to present the information in as user-friendly way as possible, including the possibility of creating a custom-made dossier in which you can select the banks and companies you’re most interested in and then get a dossier on them sent to you automatically by email.

So please, do take a look and share the link or the materials below with your colleagues. And if you need any further information or have any comments, contact us at kingsofcoal [at] bankwatch.org.

[*] Coal is far from being out of the door already, however, since all of the mentioned institutions that have restricted their support for coal power plants have not ruled out coal mining from their lending.

Visuals

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Bigger size on flickr

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