Blog entry

Guest post: Polish open pit lignite mine in Lubin challenged in front of Constitutional Court

The Lubin municipality in south-western Poland, under threat by Polish government plans to build a new open-pit lignite mine, is taking its case to the Polish Constitutional Court.

The Lubin community, supported by legal NGO Environmental Law Service, claims that the Concept for the National Spatial Planning, approved by the government in 2011 and which prohibits any new investments on the area of the deposit in order to “protect” the resources, is unconstitutional as it infringes property rights.

According to the ELS legal analysis (pdf) the Concept collides with five articles of the Polish Constitution, three acts of parliament and two acts of international law.

The doubtful legality of plans to build this new open-pit mine has been for the last three years also under scrutiny of European Parliaments Petitions Committee after inhabitants of Lubin submitted a petition (pdf) to the European Parliament against open-pit mining in their region in 2010.

In May this year representatives of the Committee came on a fact finding mission to the Dolnoslaskie voivodship in Poland where the lignite deposits are.

On Sept. 17, during a public session in Brussels, the EP Committee presented publicly a draft report on the issue following the mission, focusing particularly on issues related to environmental protection and public consultations. According to Polish media, the Euro-parliamentarians were particularly critical towards Polish government for ignoring the results of a local that took place in 2009 and during which a majority of citizens opposed plans for the open-pit mine.

„The Concept of the National Spatial Planning pursues the protection of the lignite deposit in absolute terms, with no restrictions as regards to timing or subject matter,” comments Tomasz Wlodarski, director of Ecological Law Service in Poland. „It therefore fundamentally breaches the right of ownership because areas under such type of protection cannot be used for any new investments nor sold.

Wlodarski: „This law actually constitutes a form of expropriation of the citizens. Under no circumstances should it be assumed that it is in the public interest to exploit all lignite resources in this country.”

Irena Rogowska, governor of Lubin and president of the coalition „Development YES, Open-pit mines NO” (the coalition brings together local communities, local government representatives and environmental NGOs from five Polish regions threatened by Poland’s new lignite open-pit mine development plans): „It is absurd that a future investor can decide over the fate of property in our region, and not our community, our citizens. From communist times already we’ve seen that the protection of this deposit means the end of local development and the slow destruction of our livelihoods.”

“Move over Poland!” Czech parliament bids for EU ‘dirty energy’ crown, as renewables subsidies make way for fossil fuels

No sooner had Polish prime minister Donald Tusk reaffirmed his preference for fossil fuels last week – “The future of Polish energy is in brown and black coal, as well as shale gas”, he told an audience last week in Katowice – than the Czech Senate approved a bill on Friday to revise the country’s renewable energy legislation that will not only seriously undermine the development of clean energy but, stunningly, will also provide a major boost to energy plants that burn fossil fuels.

This Kafkaesque situation, that has swept through both chambers of the Czech parliament at breakneck speed, also has worrying implications for the upcoming deployment of EU budget money intended for low-carbon projects and initiatives.

The political scene in the Czech Republic has been hamstrung for some months now, with the latest major scandal – there have been more than a few in the last fifteen years – bringing down a fragile and deeply unpopular coalition government over the summer. The latest round of parliamentary elections are set to take place in October, following a messy no confidence vote against President Milos Zeman’s hastily convened interim government.

Yet despite politics effectively being on hold in the country, this newly proposed law that will redraw the Czech Republic’s approach to renewable energy – environmental groups and renewable industry groups fear that the legislation will bring the development of the Czech renewables sector to a standstill – has whistled through the parliament, and now awaits inevitable sign-off from Zeman.

Renewables backlash

What explains all of this?

According to a spokesman for the country’s dominant, 70 percent state-owned energy giant ČEZ, “Definitely we welcome (today’s Senate decision), it’s a step in the right direction, to gradually limit the spiral of support for renewable energy which has deformed the entire market”.

This ‘deformation’ of the Czech energy market, stemming from the introduction of generous feed-in tariffs – subsidies – for solar photovoltaics in 2007, is not an incorrect summation, yet it conceals a host of other factors.

Though never acknowledged by the likes of ČEZ and other major energy players, the ill-conceived feed-in tariff that has catalysed the Czech ‘solar boom’ in recent years did distort the energy market and bring about public anger towards renewables because of rising electricity bills – but this was precisely down to the tariff regime encouraging major energy investors, including CEZ, to move massively into photovoltaics, assured as they were by guaranteed, highly advantageous rates of return.

And if the public were getting it in the neck through rising bills that picked up the cost of the feed-in tariff regime, the government of the day dithered over taking action that could have stemmed big energy’s solar bonanza. Indeed, the minister of industry at the time, Vladimír Tošovský, is a former director of ČEZ Trade.

External criticism…

When the proposals to revise the ‘supported energy sources law’ came to light some months back, they were criticised by the International Energy Agency (pdf) – and it’s not hard to see why.

In line with big energy’s successful ‘punishment’ narrative for genuine renewable energy, feed-in tariffs for wind and solar energy will now be phased out. Eligibility for subsidy support will apply instead only to hydro power (up to 10 MW), combined heat and power plants (including existing plants using coal and gas) and so-called ‘secondary sources’ – this will see the subsidising of biomass used in waste incinerators, hence providing the unsustainable, and unpopular, incineration sector with a vital boost. In financial terms, under the new law support for incineration and fossil fueled CHPs is estimated at CZK 1.8 billion, or EUR 72 million (pdf).

Support for electricity production from all other sources of energy will cease as of one minute past midnight, January 1, 2014.

… external support?

And it’s precisely at that moment when we will enter the new EU budgetary period for 2014-2020.

My expectations, as well as those of other Czech environment groups, about the next seven year spending period’s potential to boost our clean energy development have been cautiously optimistic. After all, we’ve seen at the EU member state level a determination to channel 20 percent of future EU spending at low carbon projects and initiatives.

However, the new fossil-fuel heavy preferences laid out in the revised renewables law have already been reflected in EU spending proposals under the Czech Republic’s main programming line for ‘renewables’, the so-called Operation Programme for Enterprise and Innovation for Competitiveness (OP EIC).

EU funding support of roughly EUR 1.3 billion for supposed ‘low carbon economy’ measures is most definitely being sought by the Czech Republic’s big energy fish for carbon intensive energy production.

OP EIC has clearly been targeted by the Czech Heating Association, one of the most powerful lobbies in the country that includes ČEZ, other major energy suppliers (including some coal power plants), as well as the owners or developers of waste incinerators. The Association’s CEO is none other than former prime minister Mirek Topolánek, forced to resign from office a few years ago after yet another embarrassing scandal. As Czechs say of our disgraced politicians, ‘They may exit out the door, but sure enough they’ll be back through the window.’

A double heist, then, is shaping up under the guise of ‘clean energy’ support – both at the national level, via the soon to be rolled out new feed-in tariff scheme, and potentially through subsequent EU funds support. It is absolutely imperative that the European Commission, in its EU budget negotiations with the Czech authorities before the end of the year, is alive – and wise – to what is being attempted.

Not only are these developments extremely bad for the environment, but the ‘double heist’ scenario is also bearing down on the Czech public.

Fed the line that they are being allowed to escape from the chains of high cost, publicly subsidised renewables, the new law will still be a burden – only now they are about to start feeling the feed-in tariff for waste incineration, the co-burning of biomass and coal-based combined heat and power plants, not only in their pockets but also in their environment.

Watch an interview with Jan Habart of the Czech biomass association speak more to the implications of the new renewables law

A message to EBRD President Suma Chakrabarti

For a referenced version and a list of signing organisation download the letter as pdf.

Dear President Chakrabarti,

The last time civil society groups met with you in person during the 2013 EBRD annual meetings in Istanbul, we agreed that there would be disagreements ahead. It was a warning not to expect a very ambitious Energy Sector Strategy, and during those two days of discussions, civil society participants heard a number of excuses about why the imperative to end EBRD financing for coal and other fossil fuels could not be realised in our region.

We now turn to you after a week of consultation meetings in Istanbul, Belgrade and Moscow with EBRD staff and other civil society groups, as we believe that some of our concerns deserve your attention. On each occasion participants submitted a petition to the EBRD signed by 16 725 people from around the world, amplifying the call for the EBRD to phase out fossil fuels from its portfolio, beginning with coal. This is a clear sign that interest in and criticism of the EBRD’s energy investments are broader than the few civil society groups that have traditionally shown interest in the bank and its operation. It is also a reminder that the EBRD risks falling behind similar financial institutions on its climate commitments.

Also on our blog

Energy consultations reveal lack of strategic thinking at the EBRD
September 6, 2013

Nordic countries ‘no’ to coal is a glimmer of hope for EBRD energy lending
September 5, 2013

Thousands remind the EBRD that coal is not an option
September 4, 2013

About the process

It is clear that the EBRD is making an effort to go beyond its Public Information Policy in the course of this consultation, and we would like to acknowledge this. In particular groups in southeast Europe have commented that the availability of funds for participation in the consultations was useful. However concerns have been raised about the format of the consultations and the likelihood that the inputs from the meetings will reach the real decision-makers at the bank.

The presence of a senior member of the bank’s Energy and Natural Resources department was a positive sign, yet this was repeated neither in Belgrade nor Moscow. In Belgrade representatives of the Regional Environmental Centre facilitating the consultations committed to sending a text of the comments made during the meetings to participants to ensure that there were no mistakes nor misrepresentations of what was said. We appreciate follow through on this commitment, as past experience shows that inputs can be improperly summarised during EBRD consultations, and this is particularly important given that no senior figures were present in Belgrade and Moscow.

About the strategy

The biggest disappointment about the draft Energy Sector Strategy is its lack of vision and strategic goals linked to long-term forecasts and climate commitments.

Climate change means that global emissions must be cut by 50 to 70 per cent by 2050 and that up to 80 per cent of the world’s known fossil fuel reserves must remain in the ground if we are to stay within the two degrees warming target to sustain our planet. Yet during the discussions in Belgrade it became apparent that the draft strategy is neither based on background projections and scenarios – therefore the bank’s ‘uncertainty’ argument – nor is there a commitment to binding climate targets for the whole of EBRD operations and a projection of what emissions reductions trajectories the countries of operation ought to be following – the ‘no climate deal’ argument. The project-by-project approach prevails, which in practice translates into an appetite for relative efficiency gains that can justify the involvement in even the most controversial of projects, including the Sostanj thermal power plant or the Kolubara lignite mine ‘environmental improvement’ project.

The lack of a strategic approach is bedazzling at a time when warnings about overvalued fossil fuel firms and stranded assets are no longer reserved to climate campaigners. Research from investment banks points to the irreversible trends at play in the market that threaten fossil fuel industries. Analysts are alarmed by the notable decline and stagnation in share prices, credit ratings and the grim growth prospects for the fossil fuels sector, leading responsible investors to decrease their exposure to fossil investments. In this new market context, the EBRD would be way off target if it continues to turn a blind eye to such signals, creating liabilities for the region’s energy sector in which it plays a crucial role.

The EBRD also now lags behind sister institutions like the World Bank and the European Investment Bank, with the latter including an Emission Performance Standard and shadow price for carbon that virtually eliminates support for coal projects. While we note the introduction of a shadow price for carbon at the EBRD, the level at which this price is set is crucial, and yet it is still not available to the public at this late stage in the revision process. The EBRD should take a lead and outdo its peers by introducing an EPS that mirrors those set in shareholding countries like the UK and Canada, or take a step further and introduce an exclusion list like the Nordic Investment Bank.

These are fundamental issues for the new Energy Sector Strategy and need time to resolve, so we ask that you see what can still be done at this stage to ensure that the strategy really is strategic and that it addresses the challenges of climate change with the urgency it deserves.

We look forward to your reaction!

Kind regards,

For a referenced version and a list of signing organisation download the letter as pdf.

A comeback to Polish prime minister Tusk’s backing of coal

This is, of course, the same Donald Tusk that will host the November UN Climate Change negotiations in Warsaw, which are supposed to bring the world closer to a decarbonisation scenario, the only means of steering away from catastrophic climate change.

Tusk added that renewable energy sources, which are now required by EU standards to be a part of the country’s energy mix, will be limited to the extent that is acceptable to the European Union, and at the same time that EU funds for Poland would be invested in coal mining technologies and equipment.

While the speech was certainly meant for a domestic and industry audience, Brussels ears hopefully heard it and contrasted it with other statements from Polish authorities who are promising to show true climate leadership during the Warsaw conference.

Yet what kind of leadership on climate can a country provide if it focuses its energetic sector on coal and shale gas, the dirtiest forms of energy, and if it seeks to limit to a minimum investments in renewables?

Poland, of course, is known in Brussels for its retrograde stances in climate. Last year, the country blocked a European Council endorsement of long term (2050) climate targets for the EU. All eyes are now on Poland to see its stance on current debates about 2030, whose outcomes are expected to be announced soon.

Poland is the biggest beneficiary of EU funds, while being one of the smaller contributors to the common pot. European money, of course, comes together with furthering European objectives, such as ambitious renewables targets or even the EU goal of decarbonising the European economy – still not cast in stone, not in the least because of Poland.

Using EU money to promote coal at a time when most of Europe (and not only) is starting to say no to coal is brave, to say the least.

And the EU would be well advised to keep an eye not only on use of EU funds for coal but also on how Poland uses European money meant for renewables.

According to Poland’s renewable energy strategy, renewables should constitute 15 percent of the energy used in the country by 2020. Up until now, Poland has been generally on track with meeting this target (the share of renewables was 8.3 percent in 2011 and 11.45 percent in 2012), but almost half of this „renewable” energy is in fact coming from combustion of biomass in co-firing plants (coal and biomass). So even in the small section of the energy sector dedicated to renewables, coal is sneaking in.

That Poland wants to play a dirty energy game is one thing, but that it wants to do that on EU money while messing up with EU climate plans and while also pretending to be a leader on climate issues in relation to UN processes, is a whole different type of game.

If the Poles manage to get away with this, that would be an extraordinary feat. But a dangerous one, mind you.

As for Mr. Tusk, the benefits of coal mining and exploitation are hardly as impressive as he claims, and if he wants to be a responsible leader, he must inform his citizens correctly.

For instance, the Prime Minister claims that continuing to invest in coal mining is important in order to preserves job in the mining sector, which currently amount to 120,000 in Poland. But he fails to explain as well that as many as 57,000 jobs could be created with each billion of euros invested in renewables, as a European Parliament report shows.

While speaking about the benefits brought by coal, Mr. Tusk willingly ignores the costs. According to a report by HEAL published this year, PLN 34 billion (EUR 8.2 billion) are lost yearly in Poland as a result of diseases caused by coal pollution. In addition, about 3 500 premature deaths, about 1 000 new hospitalisations, and 800 000 lost working days each year are caused by the coal industry in Poland.

These are the things we all have to speak about when we consider what kind of energy mix we want for our country. Polish leaders should realise that for the sake of their people and stop using Brussels funds to go against EU objectives.

New arrests link corruption with land expropriation at Serbian Kolubara mine

Recent developments in Serbia forebode gloomy times for the country’s energy company EPS. After the European Bank for Reconstruction and Development’s confirmation on Friday that it has given up the Kolubara B lignite power plant project, Serbian media reported on Monday that police had arrested several individuals connected to the EPS-owned and EBRD-financed Kolubara lignite mine.

Among the arrestees are former director of the Kolubara Mining Basin Nebojša Ćeran and former financial director Ljubisa Nekic and businessman Radoslav Savatijević. They are suspected of fraud in land expropriation proceedings around the Kolubara mine.

Although the arrests are recent, the issue has been in the public eye for some time, not least as Minister of Energy, Development and Environmental Protection Zorana Mihajlović highlighted already in January that Kolubara is “mired in crime and corruption”. She explained that, among other forms of corruption, Radoslav Savatijević, member of the Managing Board of EPS was given EUR 1.2 million by the board as compensation for his house in the village of Vreoci, that was to be expropriated as room was being made for a new strip mine. The value of the house was appraised at an astonishingly high EUR 3.4 million.

She noted that the advance payment was made based on the EPS board’s decision, without a decision on expropriation, and based on a directive written by then Director General of the Mining Basin Kolubara Nebojša Ćeran. She also stressed that Savatijević’s house was in fact located far from the second priority zone, and that it would not be up for demolition for at least the next seven years, if ever, and that Savatijević did not have the house registered as his address of residence, and thus should not be eligible for expropriation compensation.

Land expropriation and corruption have been two recurring themes at the Kolubara mine for several years now and Savatijević’s case indicates that they are closely connected.

As Bankwatch and others have reported, locals who are living in horrible conditions next to the mine (and don’t have Savatijević’s connections), complain about delayed, insufficient or no compensation at all for their damaged properties.

Neither are the arrests now the first case of corruption in Kolubara. Dragan Tomic, former director of the Kolubara coal mine in Serbia and four others have been charged with of abuse of power and of damaging the Kolubara budget 2004 and 2008. They allegedly signed a series of contracts with Inos sirovine Lazarevac through which Inos purchased 5.8 million kilograms of scrap metal from Kolubara at prices ranging from 30 percent to 56.25 percent of actual market price, causing around USD 650 000 damage to Kolubara’s finances.

Together with 27 others, in April 2012 Tomic was also charged with embezzling USD 11 million from Kolubara between 2006 and 2007. Tomic allegedly paid private companies for unnecessary mining equipment and services. Kolubara was overcharged for the number of hours put in by the private companies, and Kolubara executives did not follow appropriate public procurement procedures.

The EBRD has so far distanced itself from these issues. In its communication with Bankwatch, the bank has insisted that the problems with resettlement and corruption did not occur within any EBRD-financed projects and that sufficient action had been taken to ensure that such malpractice would not happen again. (We beg to differ.)

Yet, these things have been happening during the EBRD’s long-term co-operation with EPS, especially at the Kolubara mining basin. Since 2001 the bank has been involved with the Serbian energy quasi-monopolist and has since then approved five loans for EPS, three of which for Kolubara (Emergency Power Reconstruction Project, EPS Power II, Kolubara mine environmental improvement project).

In light of the diverse and increasingly numerous allegations of corruption at Kolubara, the EBRD needs stop putting too much trust in EPS and start taken its own additional measures to examine management practices at the mine.

Of horses and roads – protests in Ukraine highlight lack of safety

There is a joke about Ukrainian roads in which a German, a Pole and a Ukrainian person are being asked which country has the worst roads. The Ukrainian immediately suggests Poland, making the Pole wonder: “Why is that? Do you have such good roads in Ukraine?” To which the Ukrainian replies: “We have no roads in Ukraine.”

Roads in Ukraine do exist, but many are in urgent need of repair and upgrade to European safety standards. A good thing then that European multilateral banks can finance these works and bring “European standards” with them, right? Not exactly, unfortunately, as protests in Kiev have highlighted this week.

On Monday, under the eyes of a big number of media representatives (see images below), villagers and activists demanded from Ukraine’s state-owned road company Ukravtodor to create safe conditions for pedestrians along the M06 Kiev-Chop road.

Activists with toy steering wheels were running in front of Ukravtodor’s office, colliding with surprised passers-by. The action was to demonstrate the everyday life in the village of Bolyarka where one can be hit by car at any moment when going to the shop or to work – because people in Bolyarka have no choice but to walk on the street with cars and heavy trucks speeding by.

The street passing through Bolyarka is the M06, a crucial connection between Kiev and the West that has been upgraded with the help of almost half a billion euros from the European Bank for Reconstruction and Development and the European Investment Bank. While the upgrades have increased driving comfort and allowed higher speed, the Kiev-Chop road has not become safer, especially not for local villagers. In Bolyarka the situation is especially dire:

Pedestrian pavements are missing and villagers are forced to walk on the road itself as heavy trucks speed by at 120 km/h (regardless of the 60 km/h speed limit).
No traffic lights have been installed.
Horse driven carts cannot safely cross the road – this in a village where half of the population are farmers and rely on horses.
The private property of villagers has been damaged due to faulty drainage construction.
Some children stopped going to school because the school is standing across the road and it is too dangerous to cross the road twice a day.

Last year, after Bankwatch member group NECU brought the situation in Bolyarka to the attention of the EBRD (pdf), the bank conducted a safety audit not only of Bolyarka and other villages that we had identified but of the entire M06-road (pdf). The audit’s result confirmed the lack of safety.

A year later, the situation remains unchanged. The only concrete measure taken to create safer road conditions in Bolyarka was the reduction of the speed limit from 90 to 60 km/h. (Even though drivers keep speeding at 120 km/h as villagers told me.) Other than that, Gulsan, the contracting firm that built the road, is refusing to finish pedestrian crossings because Ukravtodor owes Gulsan money. And the EBRD seems to be incapable of putting enough pressure on Ukravtodor to make sure pedestrian crossings, sidewalks and the necessary conditions for horse carts are being created.

Instead, the EBRD hired consultants to train local communities to coexist safely with the road. The results: about 300 people in Bolyarka received two small reflecting signs to warn car drivers and farmers were handed “high-visibility jackets” with reflectors along with information leaflets on road safety.

These measures seem almost laughable compared to the danger on the street and the money involved. On average, one cyclist and five pedestrians are being killed in accidents every day in Ukraine, and almost all of these accidents happen on highways. (In light of this it would have been no surprise had the people from Bolyarka turned up with a pile of horse manure to remind Ukravtodor of the situation in their village.)

A lessons for the EBRD to take from this is that in order to provide added value by introducing European safety standards it needs to better monitor the implementation of its projects (especially after receiving warnings from civil society) and accordingly put more attention on the interests and safety of local people.

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