Blog entry

UPDATED: A guide to examining the European Investment Bank’s energy lending portfolio

Originally posted on the Open Spending blog to coincide with a journalist community hangout where our EIB campaign coordinator Anna Roggenbuck presented her experience with the EIB’s data.

UPDATE (July 15, 2013): The EIB sent comments and clarifications to the original blog post from June 13 based on which the text has been updated. We include explanatory notes where revisions have been made. A detailed point-by-point exchange between Bankwatch and the EIB that includes a number of additional arguments can be downloaded as pfd.

How to understand data from the EIB – what does the data tell us?

For each project the EIB is considering to finance, it publishes on its website basic data including a description of the project, its location, the amount of EIB financing, in most cases the loan beneficiary and where relevant environmental impact assessments.

The data has its limitations: Machine-readable data is available on the website but it is not reliable because it significantly differs from the more detailed databases provided on request (see below). Furthermore, the aggregation of loan volumes can only be made at a sectoral level, pre-empting the possibility to examine different categories within the energy sector (energy efficiency, coal, gas and so forth.).

More detailed and accurate datasets for individual industry sectors are available on request, though not for all industry sectors (no transport database for instance) and you’ll have to wait up to one month for the file.

[In reaction to the EIB’s comments, we revised the original statement that “no machine-readable data is readily available, and it is not possible to aggregate loan volumes”. The EIB also pointed out that Bankwatch had received a number of databases within a few days. This, however, is not a general practice and when planning to examine EIB data, one has to be at least prepared for a longer waiting time.]

With these files you can relatively quickly aggregate and examine EIB lending in a certain country or region like old or new Member States and for different years. Slightly more complex, but still very much possible, is collecting data for sub-sectors (e.g. renewable energy). This is particularly useful if comparing for instance energy efficiency lending in the old Member States of the western EU versus the new Member States, where the potential of and need for energy efficiency measures is much higher. (Click on the “EE” circle (bottom-right) in the visualisation below to see more.)

At the same time, the data provided by the EIB is relatively sparse, and the files notably do not include the names of loan beneficiaries, which would allow assessing whether any companies receive particularly extensive EIB support and in which countries these are based.

Another problem is how the EIB categorises projects. Even though the bank uses an official Eurostat classification system (NACE), inconsistencies and unclear attributions create a much rosier picture about the bank’s lending. (See more details for the energy sector lending below.) Note that for a more critical assessment or investigation one needs to consult additional materials like project summaries, EIB project assessment reports (only available on request), or a project promoter’s website.

Why is it important to analyse the EIB’s classifications? The EIB energy lending as an example

The EIB boldly states that it is a leading institution in the fight against climate change. While the bank does lend significant amounts for renewable energy projects, it also finances a large number of climate-damaging projects.

What the EIB categorises as clean energy is often not clear. This is especially the case when portions of a particular loan are attributed to different, often conflicting EU priorities like financing for renewable energy and energy efficiency on the one hand and security of energy supply (to EU countries) and trans-European energy networks like gas or oil pipelines on the other hand.

By assessing each project individually, we found the following underlying trends in the EIB’s overstated green energy lending:

1. Unclear classifications

Quite a number of projects in the EIB database we simply removed because they did not seem to be related to energy, let alone renewable energy. For example all energy-related expenditures for the large-scale waste incineration plant Termovalorizzatore Torino were assigned to renewable energy. Since we argue that waste is not a “renewable” energy source, we excluded the project from our numbers. [*]

[In its comments, the EIB explained that the Poland Forestry and Environment project, which we had earlier used as an example here, contained an element of energy production from biomass. The information, however, can only indirectly be found in a 400 page pdf file available on the website of the Polish Ministry for Agriculture and Rural Development. In any case, the point we are trying to make here can be illustrated by a number of examples, which is why we replaced the one from Poland.]

2. Very broad strokes

In some cases, financing that clearly did not go to renewable energy sources was nonetheless added to the renewables figure, even though renewables was just part of that loan. In case of a project with the Italian power company ENEL the EIB assigned the loan to “Renewable energy” even though more than 50% of the total loan of 450 million Euro was aiming at fossil fuels. (See the excerpt from the EIB’s database below. Irrelevant columns were deleted to reduce space.)

[In its comments to the blog post, the EIB explained that the classification of the project was a mistake in the database we received and that “this mistake was subsequently corrected and never taken into consideration in the Bank’s public data regarding its energy lending”.]

3. Compartmentalisation

Somewhat in contrast to point two, the EIB in many cases focuses too narrowly on the specific activity they finance rather than taking the impact of a project as a whole into account.

For example loans over (approximately) 200 million euros in 2009 for the construction of a new gas power plant in Portugal are considered energy efficiency (and thus boost the bank’s ‘green energy lending’) even though the project lead to additional capacity to burn fossil fuels and thus emit CO2.

[In its comments, the EIB correctly pointed out that the original example (the Karlsruhe power plant) was not classified as energy efficiency in the database. The point we make nonetheless remains valid and is illustrated by another example, since we maintain that efficiency gains per energy unit do not justify a classification under energy efficiency when the project leads to an overall increase in CO2 emissions.]

This is especially problematic in the case of greenfield power plants in developing or transition countries that often have a significant potential to increase energy efficiency. EIB money that could be used for measures to decrease energy loss and consumption, has instead financed new and more efficient (or ‘less inefficient’) fossil fuel fired power plants to address growing energy demand.

What further questions can we ask?

While the EIB’s 2011 energy figures have improved over previous years, the share of fossil fuels is variable when considered over a longer period of time. It will be interesting to see whether the positive trend from 2011 continues.

Up to 30 percent of EIB financing is offered as ‘global loans’ to intermediary institutions like commercial banks and different investment funds. Details for such activities are almost never available due to confidentiality provisions by the financial institution. A more in-depth investigation into these loans and the financial intermediaries could offer insightful information on how climate-friendly the EIB’s global loans are.

[*] Confronted with our criticism of its classifications, the EIB argued that Bankwatch’s analysis was misleading as it lowered the EIB’s support for renewable energy (by not considering large hydro and waste-to-energy projects) and to energy efficiency projects (by neglecting efficiency gains of new co-generation projects). Yet, since Bankwatch’s methodology focuses on a sustainability objective it takes the wider impacts of projects into account, like biodiversity impacts of big dams or the climate impact of new, greenfield fossil fuel power stations (even if they are considered more efficient than old ones, they are still new fossil fuel plants). The EIB rightly stated that Bankwatch’s methodology was not in line with standard EU methodology, but we made our methodology transparent and explained and justified our choices.

The EIB and development, a chance to clean up the bank’s act

Cross-posted from the Counter Balance blog

“The European Investment Bank is not a development bank, it is an investment bank designed to support EU policies, including external action”, Werner Hoyer, the president of the EIB repeated in the European Parliament on Monday. Looking at the EIB’s investment portfolio, the facts prove him right: The development impacts of the 6 billion euros that the EIB invests annually outside the EU often remain unclear.

Nevertheless the EIB has a development mandate, explicitly mentioned in the Lisbon Treaty and reaffirmed by the European Court of Justice (pdf). The current review of the document that defines this mandate (see box) offers an opportunity for EU decision-making bodies to take a closer look at the widespread NGO criticism of the EIB’s external lending.

The EIB’s External Lending Mandate

The External Lending Mandate (ELM) (pdf) sets out the guidelines and priorities for the bank when lending outside of the EU. It determines the eligibility criteria for an EU guarantee for losses under loans when lending outside of the EU – except for ACP countries where the bank operates under the Cotonou agreement.

In theory when the EIB lends under its own risk these criteria don’t apply but in practice we see that the ELM determines the requirements for practically all its external loans. The next ELM will cover the period 2014-2020, with a mid-term review likely to take place in 2007.

The Commission’s proposal on the ELM has recently been sent to the European Parliament. The relevant committees will table their opinions in the next months and are expected to vote shortly after the summer, before the proposal goes to the Council following the EU co-decision procedure.

See more details on the legislative procedure >>>


Gaining control – A parliamentarian toolkit to get the EIB back on track

Counter Balance’s recommendations on the ELM (pdf – prepared in July 2012 for the European Commission’s assessment of the current external mandate of the EIB)

The proposed ELM text by the European Commission (pdf)

The issues raised include problems with environmental pollution and a questionable approach to sustainable development. At the moment, however, most attention is being paid to increasing allegations of fraud and tax avoidance that come with a lack of transparency at the EIB, for instance:

The continued controversies surrounding the Zambian Mopani copper mine project led Christian Aid to file an official complaint demanding the publication of an internal EIB examination into alleged tax avoidance and neglect of pollution problems by Swiss commodities giant Glencore Xstrata’s.
Other corruption investigations are ongoing for the Sostanj power plant in Slovenia and the Ibori case in Nigeria.
The absolute lack of information on beneficial ownership for the EIB’s financing to intermediary institution (especially private equity funds) increases the risk of fraud and leaves the door open for tax dodging.

Quantity vs. Quality

During Hoyer’s hearing in the development committee of the European Parliament, MEPs focused on the volume of the EIB’s lending which is expected to rise significantly within the EU following the bank’s capital increase. But Hoyer emphasised that external lending will remain crucial for the bank and even asked the Parliament to safeguard a sufficient budget.

Rather than concentrating on quantity, we think that the EIB and decision-makers tasked to define its mandate first of all should focus on improving the quality of the loans. In that regard Thijs Berman (S&D) echoed our concerns that “too many project are lacking a clear development orientation” and that the EIB should look for “sound projects which are aimed at poverty eradication”.

Bill Newton Dunn (ALDE) raised the issue of financial intermediaries which are problematic due to their lack of transparency. “You say you keep track of every euro, please tell me your secret”, he asked Hoyer ironically. Dunn explicitly referred to the Ibori case (see above) and wondered how the EIB is addressing issues like fraud and money laundering.

While Hoyer recognised the risks and the need for more efforts to tackle corruption, the EIB has proposed little concrete action apart from awareness raising and trainings for its staff. The revision of its anti-fraud policy which is currently awaiting approval from the board is lacking coherence with other policy initiatives at international level such as the anti-money laundering directive or global initiatives to tackle tax havens.

Filling loopholes

The ELM provides the opportunity to remind the EIB of its development mandate and improve the quality of its lending. A key challenge is indeed to fill the gap between the technical wording of the binding EU legislation and the reality of the EIB’s operations on the ground which are often fraught with opacity.

MEPs like Dunn and Berman pointed out some of the weak spots. Other issues that need to be addressed in the bank’s next mandate are:

As the Sostanj case illustrated the EIB needs to find possibilities to freeze disbursements to companies that are under investigation by the EU’s anti-fraud office, OLAF and it should work out how to recover assets when beneficiaries have been found guilty of corruption.
In the fight against tax havens, following EU and US legislative initiatives, the EIB should demand country by country reporting from its beneficiaries.
More transparency is a classic demand. Above and beyond disclosing more information on beneficial ownership of its intermediated loans, the EIB should also proactively offer much more details on projects on its website.
Strengthening public participation in beneficiary countries, by affected communities and civil society at all project levels and information disclosure requirements would also mean a step forward for the bank.

The European Parliament is a key body to hold the EIB to account, and with the ELM it has an important tool at hand to significantly improve the way the bank will operate in the coming 7 years.

Democratising Cohesion Policy – Slovakia not ready to put EU funds spending in citizens’ hands

From 2014 Slovakia has the opportunity to use a new tool that would enable decisions related to EU funds deployment to be made more directly by communities and citizens. The European Commission has decided to enable the decentralisation of the post-2014 funds within the new Cohesion Policy so that local stakeholders can actively take part in its implementation, and ideally reap more meaningful benefits from the EU budget.

For this, the so-called Community Led Local Development (CLLD) tool has been introduced. Yet, with less than half a year to go until the new spending period begins, it appears that Slovakia is intent on passing up the chance to make the EU funds more democratic.

Slovak ministries simply do not trust the ability of municipalities and regional authorities to implement the EU funds efficiently and on time.

The Commission has based its initiative on the relatively positive outcomes that have resulted from the LEADER tool in the current spending period – LEADER introduced ‘bottom-up’ decision making in rural development funding as part of the Common Agricultural Policy. The approach has involved Local Action Groups (LAGs), composed of local municipalities, entrepreneurs, NGOs and active citizens, that contributed to the implementation of a small portion of the policy budget – in the 2007-2013 period, LEADER accounted for 3.13 percent of the Rural Development Programme budget, or EUR 79 million).

Relatively small beans so far, therefore, but the aspiration is that CLLD would become the successor of LEADER and kick on from it by being available to all operational programmes within the 2014-2020 programming period. Countries that opt to use this tool will permit more people to get involved in EU funds’ implementation as well as in the longer-term development planning of the regions in which they live.

Wait a minute, says Slovakia

Given the evidence to date, however, Slovakia has certain reservations about implementing CLLD – for various reasons.

First off, the Slovak ministries – responsible now for taking forward their respective operational programmes – have next to no awareness about the CLLD tool. And, of course, resistance tends to be at its greatest when it comes to unknown things. Moreover, faced with the pressure of getting EU money spent as quickly as possible, ministries retreat to their comfort zone – which means opting for proven methods of decision-making and ‘known’ types of projects.

A further problem is the reluctance of national ministries to delegate control over the EU funds to lower governance levels, let alone to bodies (such as the public) that exist totally outside of their institutional structure. Slovak ministries simply do not trust the ability of municipalities and regional authorities to implement the EU funds efficiently and on time.

Of course, there has been an array of cases where the involvement of regional authorities in policy implementation has been decidedly mixed, to say the least. Yet, more fundamentally, Slovakia has not come up with any tools or mechanisms for cross-sector planning, decision-making and managing of public funds.

Rigid departmentalism and lack of coordination are one of the reasons why public policies in Slovakia perform so badly when it comes to the achievement of objectives. A mechanism is lacking which would enable the ministries to interconnect parts of the operational programmes they manage, and to monitor and manage the use of CLLD together. This problem is significant as many strategic priorities for Slovakia are cross-sectoral in nature and the strict sectoral approach hinders their effective implementation.

A good example of this is climate adaptation with anti-flood measures which, in the case of ecosystem-based solutions, require the cooperation of the Ministry of Environment and its organisations that deal with water, biodiversity or climate, the Ministry of Interior Affairs that deals with the adaptation agenda, and the Ministry of Agriculture and Rural Development that has responsibility for agriculture, soil management and forestry. In this area, if coordination is lacking – and unfortunately it is – simple fast-track solutions with questionable adaptation effects, such as dam building, will be preferred.

Mixed messages from Brussels

The European Commission is also contributing to this frustrating scenario by sending out contradictory signals.

On the one hand, the Commission is set on introducing mechanisms such as CLLD that – at least in the Slovak context – are new and will not be implementable without an introductory pilot phase. While on the other hand, the Commission is also introducing conditions into the 2014-2020 budgetary period that will compel the member states to draw funds as fast as possible. The ‘performance reserve’ motivates states to ‘efficiently’ fulfil their obligations – if set spending milestones are met on time, member states receive a bit of extra funding.

What we are seeing as a result of this, then, is that the introduction of innovative forms of policy implementation are being thwarted, especially in areas where no effective regional policy exists, and where there is the most acute need for new tools such as the CLLD, global grants or other innovative approaches – e.g. for local economies, a decentralised energy economy, and support for new models of public services provision.

In all likelihood, therefore, in the new programming period, centralised ‘top-down’ decision-making will remain dominant – and the potential for local initiatives and regional development led directly by local stakeholders will be squeezed.

A further complicating layer

CLLD, the new tool which could complement LEADER, is enjoying significant attention in regions, though not exactly for the best reasons.

The potential to gain control over additional resources for regional development is igniting conflicts between local and regional authorities. The Association of Towns and Municipalities of Slovakia (ZMOS) strongly opposes the idea of regional authorities implementing the CLLD package. And as long as the regional stakeholders remain fragmented, the willingness of ministries to devolve decision-making power will be even smaller.

There is, too, a further issue at the devolved level: muddled understanding of the essence of bottom-up tools for funds implementation.

Experience from the current programming period shows that LEADER is being used as little more than an additional pot of money for filling the gaps in municipal budgets. Moreover, the new ‘integrated’ regional operational programme is being prepared with this in mind. It lacks any clear strategy, and so is likely to end up as a source of financing for a litany of disparate sectors such as roads, schools, health, social services, culture, tourism and waste – that is, a small chunk of money spread very thinly over many activities. The contribution of such a programme to goals that Slovakia has set, or to goals that have to be met as per EU level commitments, will be very hard to prove.

Questionable, too, is the actual contribution of LEADER to regional development – in many cases only cosmetic measures are financed under it. These include the renovations of civic squares, pavements, church renovation, playgrounds, bus stops or one-use promotion materials. These kind of investments are not spurring job creation or development of local economies despite the decisions to implement them coming from the local level. And a further compounding factor is that is very difficult to objectively evaluate the contribution of LEADER as no official evaluation procedures and criteria exist. Thus there are many questions hanging over the configuration of ‘local action groups’ and the assigning of EU allocations. It’s a situation that is creating ground for conflicts.

Some grounds for optimism

Nonetheless, there is some hope that the CLLD will be able to create a meaningful space for bottom-up, local decision-making in Slovakia. Thanks to a recent initiative from the Plenipotentiary for Civil Society and NGO representatives, Slovakia’s draft operational programme for ‘Efficient public governance’, under the auspices of the Ministry of Interior Affairs, contains a separate priority axis applying the CLLD.

Even if no other Slovak operational programme were to apply the CLLD, this axis could serve as valuable testing space for trying out new models of EU funds implementation that have democratic decision-making and participative spending of public funds at their core.

I can only hope that this modest space – now tentatively opening up and in combination with the future LEADER programme – will go to show that in Slovakia there is sufficient potential for the development of strong and stable regional economies based on direct input from active, engaged local citizens, organisations and entrepreneurs cooperating with municipalities. For the types of investments that are sorely needed: sustainable energy systems that meet local needs, the development of local agricultural markets and exchange networks for local produce, and the provision of social services by local specialized NGOs.

For now, though, despite the time spent and the opportunities available, the democratisation of public funds use in Slovakia remains very much in the balance. And the clock is ticking to January 1, 2014.

Is the Latvian success story over? Good public participation practices in EU funds planning in Latvia turns sour

Alda Ozola is a representative of the environmental NGO coalition in the Latvian Temporary EU funds Monitoring Committee for the 2014-2020 period.

According to Latvia’s Ministry of Finance, when it comes to the national level programming of the future EU money, they have a huge lack of capacity – thus ‘partnership’ is having to be sacrificed. Latvian NGOs, however, believe that EU funds programming for 2014-2020 is of major importance – after all it will determine the shape of public investments in the country for the next seven year period. In this context, partnership, involving a wide range of stakeholders, should not be compromised.

Why did NGOs initially have such high hope for EU funds partnership in Latvia this time around?

The first phase was indeed very promising. NGO representatives were included in the working groups for the National Development Plan (NDP), and there were public consultations and feedback about comments received from NGOs and social partners, and key moments surrounding the plan were reflected and discussed in the media.

Moreover, transparency was to the fore in the process, with all key draft documents and submitted comments on the draft NDP being published online – this publishing of comments was a first in Latvia for such a public process. However, there was less transparency when suggested activities had to be prioritised.

When preparations for the 2014-2020 EU funds programming started, there were again some very hopeful signs concerning partnership. In September 2012 there was a ‘temporary monitoring’ committee established, allowing NGOs and other stakeholders to participate.

Among other things, this Committee had the task of “overviewing the preparation of planning documents for EU funds”; during a meeting of the committee in May this year, participants were able to exchange views on key issues to be addressed within programming. Although this committee has the potential to become a solid platform for stakeholder participation, unfortunately it hasn’t lived up to NGO expectations, at least not yet.

A return to the old ways

There are further signs that the Ministry of Finance, that holds key responsibility for EU funds programming, is retreating to its old habits by approaching ‘partnership’ in a very formal way. The closer the deadline (October this year) for submitting the draft Partnership Agreement (PA) and Operational Programme (OP) to the European Commission, the less participatory the EU funds programming process is becoming.

For example, the Ministry of Finance organised a public consultation process on the draft PA and OP. The document itself was drafted without any public involvement, but the draft was made available on May 3 this year. There was one month given (deadline: June 3) for the public and other stakeholders (ministries etc.) to express their views and comments on the draft documents, with public consultation meetings due to follow.

After June 3 the Ministry of Finance sent questions to line ministries asking for their views on thematic concentration, but no meeting or any other feedback to NGOs or other bodies who submitted comments has taken place. There had been a commitment to publish all comments online, yet this was not carried out. At the same time the Ministry of Finance continues to insist that it is ensuring meaningful partnership as part of the process.

Latvian NGOs have thus felt frustrated about the lack of feedback to their comments. Even proactively contacting ministries failed to throw much light on the developing process or the updated documents. Therefore, when we learned that the Ministry of Finance would report to the Cabinet of Ministers on the progress of EU funds programming on July 2, NGOs decided to turn up too and express their deep concerns about the partnership debacle.

I personally informed the Cabinet about NGO concerns regarding partnership and asked the Cabinet to task the Ministry of Finance with ensuring timely and systematic engagement with civil society. The outcome for now is positive: the Ministry of Finance has pledged to publish all received comments and the justifications for taking or not taking them into account. The ministry has also committed to organise a consultation meeting with NGOs in July. While this is still only a commitment, it appears to be a fairly concrete one as it is set out in the Cabinet’s meeting notes.

The nuts and bolts – what needs to improve in Latvia’s EU funds programming now?

Other than the stop-start nature of the public consultation process itself, there are several priority issues that Latvian NGOs have put forward in a bid to improve content aspects of the EU funds programming. These are chiefly: allocating money for biodiversity protection, integrating environmental and climate aspects throughout all of Latvia’s EU funded programmes, providing support for social enterprises, and permitting NGOs to be eligible beneficiaries in some activities.

Among the most actively involved actors in the EU funds programming has been the Environmental Advisory Council, a coalition of 20 national environmental NGOs, and the Public participation consortium, representing NGOs active in the areas of civil society development, environmental protection, rural development, health, education and culture. Both of these platforms are represented in the ‘temporary monitoring’ Committee of EU funds for the 2014-2020 period, and also use other available opportunities to get involved in the programming process.

The Environmental Advisory Council has already approached DG Regio on several occasions this year to express concerns about the lack of proper consideration being given to environmental priorities and nature conservation issues during the programming process for EU Cohesion policy 2014-2020 in Latvia. The risk, according to the Council, is that some marginal activities, such as buying an expensive helicopter for rescue operations that can’t be justified with growing climate change impacts, could be supported, while certain core challenges in biodiversity conservation could easily be overlooked.

For one thing, the EU Biodiversity Strategy 2020 foresees that full implementation of the EU’s Birds and Habitats directives is ensured by 2015. To do this in Latvia, the first steps should include mapping and assessing biodiversity (species and habitats of EU importance), as well as restoration measures covering several hundred square kilometres – this of course requires a significant budget that is probably not available via national funds.

Therefore, without targeted EU funds support, there is no possibility to restore at least 15 percent of Latvia’s degraded ecosystems and ensure favourable conservation status for at least 40 percent of species and habitats, as stipulated in the EU Biodiversity Strategy 2020. Yet, none of these measures are proposed for inclusion in the priorities for funding by Latvia’s Ministry of Environment.

Moreover, according to the Latvian Fund for Nature, currently Latvia is not delivering the main goal set out in major policy documents – to ensure favourable conservation status. No habitat inventory has been carried out and the preliminary monitoring data confirms the expert conclusions that several Annex I habitats and species are not in a good state – and that the situation has worsened since 2007.

For example, 60-90 percent of the grassland habitats within Natura 2000 sites are in a bad conservation state, and no measures have been taken to improve the situation. Therefore proposed tourism infrastructure funding is not sufficiently justified from the point of view of the priorities in biological diversity and ecosystem protection. We have been pointing out that construction of new tourism infrastructure will create an unnecessary burden for the future, as the state is currently not even able to maintain the existing infrastructure.

While it can be said that tourism infrastructure is a tool to protect the habitats from degradation due to pressure from tourism, this measure in particular is not a priority in the current context as it does not directly provide for improved conservation status for habitats of EU importance.

The clock is ticking as we count down to the 2014-2020 funding period. Meeting some of Latvia’s top environmental needs – as well as our EU commitments – can only happen via meaningful public participation and partnership, even at this relatively late stage in the process.

The EU’s bank is less ambitious than the US in restricting energy from coal

Just as the world is abuzz with Obama’s new climate pledges, below the radar, the European Union’s house bank published draft guidelines for its future energy lending which are actually less ambitious than the US’ when it comes to coal.

Sidelining a reluctant Congress, Obama is going through the Environmental Protection Agency to introduce several important climate friendly measures, including allowing to run only coal plants (new and existing) which meet emissions performance standards of 440gCO2/kWh.

At the same time that most of the world’s media was busy covering these important US developments, the European Investment Bank, the bank of the EU, was bringing to the public a draft of its new energy policy, expected to be adopted by member states of the EU and the Commission, which compose the board of the bank, on July 23.

The criteria inserted by the EIB when it comes to coal are full of loopholes, for instance when “a plant contributes to the security of supply” or “to poverty alleviation and economic development”. Such broad and worn out concepts can end up justifying any kind of dirty energy investments.

[Campaign update] Kolubara landslide: Images of devastation, people waiting for compensation

People in the village Junkovac, near the Kolubara lignite mine, are relieved but still tense. They were threatened by a landslide, which has now slowed down, but still poses a risk for them if they don’t move. Yet, despite of being scared, they are not leaving their houses for fear of not receiving adequate compensation from the Kolubara mining company.

It started four weeks ago (Bankwatch reported): A hill nearby Junkovac started sliding down towards the village – apparently because of the pressure put on it by overburden from two mine fields that was dumped in the vicinity. Operations on one of the two fields (Field C) have been supported by the European Bank for Reconstruction and Development and the German KfW banking group.

I was there after the first two houses had collapsed and I’ve seen how a road has been swallowed by the landslide. Another three houses have collapsed since then.

One of the houses that were completely destroyed.

An entire road has been swallowed by the landslide.

Locals watching the clean up works 150 meters away from their house.

Background, updates and more on the Kolubara lignite mine project

The people I spoke to were afraid and shocked, also because at first they only received informal advice, no concrete help from authorities. The state energy company EPS which operates the Kolubara mines and which is responsible for the management of the overburden was working with bulldozers to slow down the landslide. But strangely when I visited the village, there was no police on site, no emergency teams, just Kolubara machinery. One could not help the feeling that the company is just cleaning up its backyard, its territory.

Until last week when I visited Junkovac again, the landslide had steadily slowed down (but the earth is still moving). The landslide also does not head towards the village anymore. These are the good news.

But it was sad to see an entire street washed away and to be unable to find out what exactly happened to the people who lived there. They are gone, their houses are gone.

Approximately 40 houses in the village are still in danger and authorities are preparing to relocate and compensate eleven families soon – the rest should follow at a later time. Our local contact, who prefers to remain anonymous, told me the families received and signed an inventory of their property (prepared by the municipality). The document, however, did not include an estimation for the value of this property, so people are are waiting for more than two weeks now to receive a financial offer. Once the offer arrives, they can either accept and get paid or refuse and receive 50% of the offer and be advised to go to court, which could become a very costly and lengthy procedure.

It remains to be seen whether the offered compensation is appropriate. Except for one family (whose house was destroyed), all have decided to stay until then and not accept the offer of temporary relocation to Vreoci. Our contact said that others don’t want to leave for fear of being cheated. They prefer to stay, even though the landslide could change course again.

As financiers of EPS in general and specifically of parts of the work on those fields from which the overburden came, the EBRD and KfW should closely monitor this process and ensure the people in Junkovac are treated fairly.

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UPDATED: A guide to examining the European Investment Bank’s energy lending portfolio

How to understand data from the EIB – what does the data tell us?