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Energy consultations reveal lack of strategic thinking at the EBRD


During this week’s EBRD consultation meetings on its new energy sector strategy it is becoming increasingly clear that the bank’s draft document can hardly be called a real strategy for it is lacking in solid analysis on what climate change means for investments in its region of operations and how the bank should react to this.

Climate change means that global emissions have to be cut by 50-70 percent by 2050 and that up to 80 percent of declared fossil fuel reserves have to stay in the ground. Yet, EBRD representatives at Wednesday’s consultation in Belgrade revealed a worrying lack of projections, scenarios, assumptions about greenhouse gas emissions reductions by the countries. Similarly there are no assurances in the draft that the bank will help EU accession countries to meet EU decarbonisation policies, and no analysis of the danger of fossil fuel investments becoming stranded assets.

In summary, instead of being guided by a real strategy, the EBRD is set to continue financing everything on a project by project basis – which in turn often means “if it’s bankable, it’s fine”. And that means coal, oil, and (shale) gas as well.

While EBRD representatives at the consultations have tried to play down the bank’s involvement in coal projects, the new draft policy would still allow controversial projects like the already-approved Sostanj 6 in Slovenia to be repeated, and makes no attempt to limit the bank’s support for coal mining projects.

However, there is new hope for increasing pressure on the bank at international level is coming from a growing number of countries announcing that they will work together to limit public coal financing, which follows the EIB and World Bank’s recent virtual withdrawals from coal lending. At the same time also civil society in the bank’s countries of operation is demonstrating the need for the EBRD to stop financing fossil fuels, starting with coal – on Monday in Istanbul, on Wednesday in Belgrade and today in Moscow (see below).

There are in fact so many compelling arguments against coal that it is hard to fathom why a European public institution would allow itself to finance the dirtiest of all fossil fuels for another five years, potentially pumping hundreds of millions of euros into projects that will pollute the air and endanger our health for several decades and crowd out financing for much-needed demand-side energy efficiency projects.

That civil society organisations in the countries where the EBRD operates don’t agree with this approach was demonstrated again today in Moscow, where activists, dressed up in miners’ helmets and T-shirts with slogans like “coal free EBRD” and “coal kills”, handed over a box symbolising the 16 725 people who had signed the petition for a coal free EBRD.

The action provoked a long discussion and the EBRD’s staff had to admit that environmental concerns were dominating the consultation meeting.

We will see how the bank now takes on board these concerns, but until the energy sector strategy has been finalised, we will continue to put pressure on the EBRD to take climate change seriously, and get out of fossil fuels, starting with coal.

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


These are truly exciting weeks for climate campaigners, especially those targeting development banks and other international lenders. After Barack Obama all but ruled out U.S. public financing of overseas coal plants and the World Bank and the European Investment Bank followed suit with restrictive criteria for coal in their energy lending policies, we hear now that Nordic countries have joined the U.S. initiative.

In a joint statement with the United States, Denmark, Sweden, Finland, Norway and Iceland yesterday declared the following (emphasis added):

As part of our commitment to accelerating the transition to low-carbon energy systems worldwide, the leaders of Denmark, Finland, Iceland, Norway, and Sweden will join the United States in ending public financing for new coal-fired power plants overseas, except in rare circumstances. We will work together to secure the support of other countries and multilateral development banks to adopt similar policies.

This announcement could hardly have been more timely. With the European Bank for Reconstruction, another European lending institution is currently revising its energy lending – only that the EBRD so far did not indicate significant restrictions on coal investments.

All six countries issuing the statement are shareholders of the EBRD, with the U.S. holding the single biggest share. The statement therefore offers us an indication that not only climate campaigners will call for a #coalfreeEBRD (see for example yesterday’s action), but that also in the bank’s internal decision-making process a coalition of countries may advocate for such a move.

How the internal struggles within the EBRD will turn out remains to be seen. Climate campaigners all the while will keep reminding the EBRD of these latest developments and the increasing pressure it is facing when considering support for coal.

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

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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.