Blog entry

Thousands remind the EBRD that coal is not an option

During this week’s consultation meetings in Istanbul, Belgrade and Moscow, the EBRD is discussing its new energy lending strategy with NGOs from its countries of operation. As a contribution to the debate and to amplify the resounding call for an end to fossil fuel subsidies, environmental activists are bringing more than 16 000 people with them – in spirit at least.

These 16 725 signatories of two petitions by 350.org and Oil Change International have called on the EBRD to stop financing coal power plants. The demand to end coal subsidies and for a #coalfreeEBRD is increasing. They also confirm that after the US government, the World Bank and the European Investment Bank have strictly limited support for coal, all eyes are now on the EBRD.

A change of course is needed at the EBRD in order to follow the World Bank and the European Investment Bank away from coal. Between 2006-2011, the EBRD spent 10 percent of its energy portfolio on coal, compared to just 11 percent for renewables (excluding large hydro (3%)). But the draft text of its new strategy (pdf) – the basis for discussion during this week’s meetings – proposes weak criteria that would only slightly reduce coal investments, while opening the door to investments in oil and gas, including shale (pdf).

During the first consultation meeting on Monday, Turkish NGOs complained that the draft strategy would allow for financing 50 coal plants in Turkey alone. EBRD representatives committed to check the language of the draft and remained on the defensive. During today’s second meeting in Belgrade, campaigners demonstrated with a banner reminding the bank of the health impacts of this dirty fossil fuel. They then passed the petition to the EBRD’s country director for Serbia Matteo Patrone.

Comments on the draft energy strategy can be submitted until September 30. After that, decision-makers from shareholding countries will have to agree on crucial improvements to the strategy. It remains to be seen if this week’s consultations will have a real impact on the final outcomes of the policy and whether the bank’s shareholders are willing to listen to people who speak up for the environment, public health and the climate.

Lessons from the European Investment Bank’s energy policy review show that public pressure can help tighten restrictions for coal. Until the final document has been adopted by the EBRD’s board of directors, we need to remind the bank that we no longer accept public money being poured into projects that pollute our air, contaminate our water, and endanger our climate. There is no sustainable alternative other than a #coalfreeEBRD.

Here are some suggested tweets:

Charts: Financial allocations for Cohesion Policy

The European Commission has this week published the financial allocations of Cohesion Policy to individual countries for 2014-2020. For a quick overview, we provide a few charts of the numbers below.

At the same time EU countries are getting into the nitty-gritty details of their programming for the coming period (the deadline for submitting the draft Partnership Agreement and Operational Programme to the European Commission is in October). During these months environmental campaigners have to be almost everywhere at once to make sure green spending and public participation aren’t sacrificed in the process.

The Latvian example shows that civil society participation and strategic environmental considerations are among the first to be let go in case of time and capacity constraints. The green potential of Estonia’s future agricultural policy is in danger of being hijacked by major agri-business interests. And lack of trust (among others) seems to be in the way of a better involvement of municipal and regional authorities in EU funds planning and implementation in Slovakia.

For more details on financial allocation and country eligibility see the European Commission’s website.

In connection with the climate earmarking, these figures are a key to determine how much money member states need to invest into climate measures. We will take a closer look next week how the numbers translate into absolute amounts earmarked for the transition towards a low-carbon economy.

Chart 1: Share of total Cohesion Policy allocations by country

Hover your mouse over a slice to see country name and the allocated amount in million EUR.

Chart 2: Total Cohesion Policy allocation by country (amounts in million EUR)

Chart 3: Map with colour-coding according to total allocated amounts

Hover over countries for more details (amounts in million EUR)

Reality, climate change and global attention is catching up on the ‘sustainable energy’ bank (EBRD)

In the famous words of American baseball legend Yogi Berra: “In theory there is no difference between theory and practice. In practice there is.” Based on Bankwatch’s experiences in 2012, Berra could well have been referring to the European Bank for Reconstruction and Development.

At the most fundamental level of our engagement with the EBRD, on climate change-related energy investments, the bank was able to ride the crest of a wave as a result of a carefully crafted construct, a fine piece of theory if you like: its Sustainable Energy Initiative (SEI). Via the SEI, the EBRD has for several years now been directing a considerable amount of its energy lending to renewable energy and energy efficiency.

This focus on the SEI has not, however, diverted EBRD resources away from support for fossil fuel projects – indeed, all the indications are that the current review of the EBRD energy policy to be concluded in 2013 will see the bank reaffirm its commitment to providing financial support to the climate-damaging fossil fuel sector, including extending the scope of this support to emerging dirty resources such as shale gas. And all of this despite growing political and global institutional calls for fossil fuel subsidies to end now if the challenge of climate change is not to become, in the very near future, completely unwinnable.

Bankwatch in 2012

Download our annual report

Yet, on a practical level, what is most mystifying about the EBRD’s much vaunted SEI is that ‘climate-contrary’ investments (quite a number of them in fact) can be included under its ‘sustainable’ tag. Thus, as part of EBRD ‘sustainable energy’ theory, supporting improvements to a new coal-fired power plant’s energy efficiency merits a tick and inclusion under its SEI accounting, even as it locks in up to four decades of substantial carbon emissions with negative implications for EU climate goals.

The most startling example of this is the lignite-fired Sostanj Unit 6 project in Slovenia that, despite our best efforts working alongside local and international groups, finally received several hundred million euros from the EBRD. Part of our campaigning on Sostanj in 2012 has, though, exposed the often heard EBRD claim that it conducts first class due diligence across its portfolio: concerns about corrupt practices during the tendering process for Sostanj 6 were addressed to the European anti-corruption agency OLAF, that then opted to open an investigation – the conclusion of which is still pending.

Another international body has, quite without precedent, been taking an interest in another major EBRD-backed project that we worked on intensively in 2012 in tandem with international partners – and the sensation that what you see or hear from the EBRD about its investments is not what you get was, once again, very much to the fore.

In Kiev’s freezing December temperatures, Bankwatch and Greenpeace directly addressed the EBRD’s consideration of a EUR 300 million ‘nuclear safety’ loan for ageing Ukrainian reactors. We dropped a banner and staged a demo outside the bank’s national office – with the immediate impact being to delay a pending EBRD board decision on the controversial loan.

Controversial because, as Bankwatch and other groups pointed out, the EBRD is not mandated to finance nuclear expansion projects. Yet, despite the ‘safety’ narrative being touted by the bank, an expert analysis published in 2012 laid bare how some technical measures to be financed the EBRD loan – and an associated loan from Euratom – would only be required if the lifetime of the reactors was to be expanded.

Despite delaying the loan decision, the EBRD has subsequently agreed to the loan. Yet in a landmark ruling in early 2013, the Implementation Commission of the United Nations Espoo Convention has deemed that Ukraine’s plans to expand the lifetime of its old nuclear reactors is in breach of the convention – the same convention that Ukraine ratified in 1999.

Where this will now lead is unclear. But Bankwatch believes that a so-called ‘responsible investor’ such as the EBRD should be halting the disbursement of its loan in light of the circumstances identified by the UN Espoo Convention.

It is becoming increasingly clear, then, that the EBRD’s operating within – to be charitable – grey areas, where what it says it is doing on paper (or on its website) does not tally with the reality, is becoming increasingly apparent to many influential bodies and observers. With our longstanding experience of the institution, and its ways and means, we feel that our messages communicating what is really going on at the EBRD are making an impression.

Within the European Parliament, where we focus a lot of our advocacy, the EBRD is now on the radar of many MEPs concerned about how the bank – more than 60 percent owned by EU states – is simultaneously and perversely making a positive impact on climate change yet undercutting these efforts with its continued support for fossil fuels and unsustainable energy.

If the EBRD chooses to continue down this path – its stated interest in shale gas being a developing concern – we feel certain that we can mobilise further public hostility against the EBRD. All the same, we’d much rather be singing the bank’s praises for full-on support for truly sustainable energy investments.

Groups petition Polish government to drop permit for Europe’s largest planned coal plant

On Monday Polish NGOs Client Earth, Workshop for all Beings, Greenpeace, WWF and local community group Eco-Kociewie petitioned the General Director of Environmental Protection to cancel the environmental impact assessment permit for the Polnoc Power Plant in northern Poland. At a whopping 2 gigawatts, the Polnoc plant poses a number of threats to people’s health and the environment, with planned carbon dioxide emissions from burning coal exceeding 10 million tonnes annually.

The groups’ request outlines how the regional minister for environment acted against national legislation at the behest of the project investor in setting limits on waste discharge at the plant. An October 2002 Ministry of Environment regulation states that waste discharges from such plants cannot raise water temperatures above 21.5 degrees Celsius. Yet under pressure from project sponsor Kulczyk Investments, the Regional Director of Environment Protection raised the upper limit to 26.5 degrees, jeopardising in particular migratory fish populations.

Experts warn that species in the Vistula river – including Atlantic salmon and sturgeon, sea trout and river lamprey ¬– will suffer altered migration patterns and increased mortality rates. These species react to temperature changes much lower than even half a degree, so such an increase in water temperatures would be fatal.

The groups’ complaint is yet another strike against the controversial project and its investors, which have been plagued by missteps since project preparations began in 2011.

Readers of this blog may recall that last month Kulczyk Investments, owned by Poland’s richest man, is also driving forward controversial plans to drill oil and frack shale gas in Tunisia, with the financial blessing of the European Bank for Reconstruction and Development.

In February Kulczyk Investments suffered another setback to its plans at Polnoc when Polish NGOs won a huge legal challenge with a court overturning the project’s constructions permit.

Kulczyk Investments boasted about potential financing from the EBRD and the European Investment Bank during initial project preparations in 2011 in order to lure investors to the costly EUR 3 billion-plus project and to provide political cover for the risky investment.

But both IFIs dodged a bullet in avoiding the project, announcing in mid-2011 that they would not finance Polnoc or any other coal power plant in Poland. This decision was reiterated with the EIB’s recently adopted criteria for fossil fuel lending. The criteria make it clear that projects like Polnoc power plant would not qualify for funding from the EU’s house bank funding (and all eyes are now the EBRD to see whether it will follow the EIB away from coal investments).

Today’s petition from the groups adds to the mounting evidence against the project and should be a further warning to commercial banks sizing up the project. Coupled with the move of some institutional investors away from coal, that Polish courts are cancelling one permit after another for Polnoc is foreboding of things to come.

All at SEA – key assessment of EU funds programmes in Latvia fails to address environmental concerns, opportunities

There is a big long list of technical jargon attached to the programming documents of the EU funds for the 2014-2020 funding period – enough to fill an entire blog post on its own. But you will be relieved to read that, in the context of Latvia’s ongoing negotiations as to how we will spend our future EU budget money, I will focus on only one of these items. It may be a bit of a mouthful, but it is what it says it is – only in Latvia, as environmental NGOs are discovering, what should be a safeguard for the environment appears to have gone missing.

A so-called ‘strategic environmental assessment’ (SEA) of EU funds programming documents is supposed to explain to stakeholders and the wider public the likely impacts – both positive and negative – on the environment as a result of the implementation of the Latvian funding programme for 2014-2020. Around EUR 4.5 billion is at stake in Latvia over the seven year period. If certain projects or initiatives are likely to bring about detrimental impacts, then an SEA is supposed to lay out the necessary steps to prevent, reduce or offset such impacts.

An SEA for future EU funds spending, it should be noted, is a requirement under both national and EU legislation.

Yet the recently published SEA report produced by international consultants KPMG for Latvia’s one over-arching operational programme – called, in the jargon, OP Growth and Employment – is the reverse of what it should be. Instead of the SEA process serving as a safeguard mechanism for the environment, what KPMG has recently produced for Latvia views environmental protection as a hurdle.

For example, the SEA report describes how in some cases nature protection measures have turned out to be damaging for economic activities, and also stipulates that any new EU directives in the field of environment may undermine economic development.

On page 60 of the report, we learn that: “It is likely that in the period 2014-2020 in the EU there will be new environmental directives adopted and there are no resources foreseen for implementation of these new requirements. It would cause additional costs and restrictions to economic activities. […] Already now designation of nature protected areas in the bay of Riga has caused serious economic problems and burden to ports and sea freight transport, whereas there is no adequate protection of these areas ensured”. The report also suggests that before deciding on the protection of nature, we should calculate the costs and assess whether we can afford to sustain that.

Perhaps more concerning is that the SEA report seems to be oblivious to the fact that infrastructure or development projects, by their very nature, do have an impact on the environment. Pages 55 and 59 seek to downplay environmental impacts because, according to the authors, there is not enough detail in the OP itself about planned activities: “the OP doesn’t contain any specific measures or activities that could lead to negative impacts on environment in medium and longer term, threaten biodiversity or such.”

But let’s look at one example from the OP, a specific objective that aims to “facilitate the development of the major ports, increasing their carry capacity and safety level”. Indicative activities intended for support in this regard include: the reconstruction and construction of access roads for road transport and railway as well as the relevant infrastructure, and; the reconstruction and construction of moles and breakwaters, aquatorium deepening”.

It is clear that these kind of measures will have some environmental impact and risks, and that, therefore, these ought to have been assessed and described in KMPG’s report.

Similarly, the report also fails to give any environmental assessment of the likely impacts of such activities as: “reconstruction of the main highways within TEN-T network and connection of city infrastructures to TEN-T network”, and; “investments in development of Riga and Pieriga transport infrastructure ensuring the multimodality of Riga as a metropolis”. Among other things, the latter plans envisage an increase of transit freight movement on the left bank of the Daugava. Once again, at least the likely environmental impacts of such large infrastructure projects should have received attention in the SEA report.

Moreover, and despite national regulations requiring it, the SEA report also fails to look at alternatives, even not assessing whether the implementation of the OP might lead to the improvement or worsening of environmental quality compared to the status quo.

Environmental NGOs such as my own, the Latvian Green Movement, have been actively involved in the process of developing Latvia’s EU programming documents, and we have been striving to increase allocations for environment related activities.

At the same time NGO analysis and assessment of the future EU funding programme has led to concerns that certain programmed measures could be environmentally controversial. We have repeatedly expressed concerns about the use of public funds for activities that are damaging to biodiversity and that would further worsen the status of habitats of EU importance – an EU level report from this year found that only 11 percent of habitats of EU importance in Latvia have a good conservation status.

Yet, for instance, the planned measure of drainage system reconstruction without environmental safeguards would cause adverse impacts on the following habitats of EU importance: Northern boreal alluvial meadows (6450), Fennoscandian lowland species-rich dry to mesic grasslands (6270*), Hydrophilous tall herb fringe communities of plains and of the montane levels (6430), Molinia meadows (6510).

These drainage measures in fact fall under a specific OP objective that does sound good: “adapt to climate change by reducing the threat of floods, to ensure quality of living of people and promote business competitiveness and continued business activities”. Yet, without mitigation measures, the risk of damage is high: ‘improved’ drainage will in fact increase nutrient run-off to the Baltic Sea and decrease the water quality; eutrophication is already a major threat to wetland ecosystems in Latvia, and the proposed measures will further worsen the status of the habitats of EU importance.

Environmental NGOs have proposed the inclusion of mitigation measures in the above measures, such as the use of ecosystem services to mitigate floods – for example, through the creation of wetlands and ponds to minimise run-off. These proposals, though, were rejected by the Ministry of Agriculture in the first public hearing phase – yet it’s precisely these types of environmental concerns that should have been picked up and described in the SEA report.

The report completely fails to recognise numerous comments made by environmental NGOs and the Ministry of Environment and Regional Development during the elaboration of OP and related programming documents. When looking (or not looking) at alternatives, at least some mention ought to have been made of the sustainable solutions proposed for the drainage issue.

As page 22 of the SEA report blithely deadpans, however: “All suggestions and comments have been considered when preparing the final version of environmental report and those have helped to prepare more balanced and better suggestions for those who elaborate the OP”.

It is unclear if KPMG expected this report to receive wide public scrutiny, but certainly it has provoked both mirth and frustration among the NGO community – and, too, from certain national officials. The same company has also carried out an ‘ex-ante evaluation’ of the draft programming documents for the period 2014–2020 and it can only be hoped that a better job has been done there. That evaluation, however, is not made public, and only a half page summary of conclusions and recommendations will be included in Latvia’s draft Partnership Agreement.

Where now, and will the European Commission step in?

This highly dubious SEA report is now out for public consultation. A public hearing meeting is scheduled for August 29 and environmental NGOs and other players will raise various issues and make comments. The Ministry of Environment and Regional Development is planning to do the same.

But should it be the task of NGOs to attempt to rewrite the whole report, to point to potential – and pretty self-evident – environmental problems and propose mitigation measures?

And anyway, if the Ministry of Finance that is responsible for the OP does not want to listen, won’t we be wasting our time?

Our abiding motivation and interest in continuing to engage boils down to two things: this is significant new investment money for Latvia, and with continuing economic hardships across the country, it deserves – now as never before – to be deployed well; moreover, the European Commission has sought to frame the 2014-2020 spending period as one that has climate and biodiversity considerations as part of its DNA.

In these circumstances, and given the overall shoddy quality of the SEA report, it seems inevitable at this stage that Latvian NGOs will have little option but to petition the Latvian supervisory body responsible for oversight of the SEA process.

We hope that the European Commission will do the same.

All eyes on the EBRD – will it go coal free?

Guest post from Justin Guay, Sierra Club

Just weeks after President Obama announced an end to US taxpayer support for overseas coal plants, two of the world’s largest IFIs, the World Bank and the European Investment Bank (EIB), followed suit. Now the European Bank for Reconstruction and Development (EBRD) is considering coal restrictions of its own. Once final, these restrictions will reinforce a message that is growing louder every day – coal has no place in the 21st century clean energy economy.

Before we get to what’s going on at the EBRD, let’s summarize the policies that have been put in place over the past month at the IFIs. They’ve helped set the tone for the EBRD and will likely be incorporated in whatever policy is ultimately adopted. Remember these institutions have collectively provided USD 37.5 billion to the coal industry since 1994 so they’re pretty important. Here goes.

First, as a part of his climate plan, President Obama has outlined a ban (with rare exceptions) on U.S. public financing of overseas coal plants. The president wasted no time implementing this policy with the US Export Import Bank (the most heavily impacted and fossil fuel friendly US agency) rejecting a new 1,200 MW coal plant in Vietnam just weeks later. This was a huge decision given the U.S. Export-Import (Ex-Im) Bank funding has supported over USD 7 billion in coal finance over the past few years. Days later, the US Trade and Development Agency shelved plans for a controversial new coal plant in the Ukraine. Those two decisions reinforced the fact that the US is serious when it says it’s closed for overseas coal business.

At almost the same time, the World Bank and EIB introduced stringent restrictions on coal financing of their own (see here and here). Both were put in place after long deliberations which in the case of the World Bank took almost two years only to be finalized thanks to the leadership of Dr. Kim.

The significance of these two policies following on the heels of President Obama’s overseas coal ban is enormous. Both provided billions to the coal industry over the past few years – USD 5 billion from the World Bank and USD 1.5 billion from the EIB But the impact of this funding is even larger than it appears, because it helped leverage several times more in private investment while providing a cover to the coal industry by ensuring public acceptance of this destructive energy source.

It is into this whirlwind of activity that the EBRD stepped when it released a draft of its new energy policy. As currently drafted the policy won’t past muster given what has happened at other institutions. So what exactly does the EBRD need to do to be up to snuff?

First and foremost it would need to create an official policy statement that restricts support for coal projects by declaring an end to finance for both new and refurbished coal plants. To reinforce this policy it can, and should, follow the EIBs lead and include a carbon intensity metric to help screen out dirty projects. The EIB has proposed 550 grams/kWh which means for all intents and purposes the only fossil fuel plants the institution can support are natural gas. But even this standard may be strengthened as the EU is pressured to ratchet that down to 350 grams/kWh to reflect best in class gas plants.

But the EBRD can’t stop there. It must also extend the air emissions standards outlined in the Industrial Emissions Directive (IED) to rehabilitated as well as new coal plants. The IED sets important limits on the level of air pollution fossil fuel plants can create (and therefore the type of pollution control technology that must be deployed). Exempting rehab projects exposes local communities to dangerous and deadly air pollution. This loophole must be closed.

Currently half of the EBRDs USD 8.9 billion energy portfolio supports fossil fuels (including approximately USD 1 billion in past financing for coal). Getting this policy right is incredibly important for tackling climate change and shifting scarce public resources to clean energy. So let them know you’re watching.

Help us out by tweeting: All eyes on @EBRD: Time to move #BeyondCoal. #coalfreeEBRD

« Previous Page