Blog entry

EBRD with disastrous start in Kosovo, European Parliament not amused

At the end of last year, Kosovo became the newest member of the European Bank for Reconstruction and Development (EBRD). One of the first words we heard from the bank on their financing plans for the country indicated an interest to invest in a new 600 MW lignite plant, Kosovo C, planned to be built close to capital Pristina.

Lignite power plant, Kosovo (Project background)

EBRD enters Kosovo: Past IFI failures must be heeded (Bankwatch Mail article)

In March this year, the EBRD concretely spelled out what it considers to be investment priorities in its draft strategy for Kosovo (pdf). In the document, the EBRD confirms its interest in giving a loan for the new coal plant, which has been for years pushed by the World Bank and the United States:

“The Bank will consider engagement in the implementation of the greenfield thermal power plant Kosovo C that is planned to start construction in the second half of the strategy period, provided the project complies with EBRD environmental and social standards, its policy on financing energy projects and delivers high transition impacts.”

Following comments to the draft strategy from Bankwatch and Kosovo coalition KOSID and a letter complaining (pdf) about the hurried nature of the strategy’s public consultation process, the European Parliament now adopted a resolution that strongly criticises the EBRD’s plans. It reads:

“regrets that the EBRD is planning to support new lignite capacity (Kosova e Re) in its draft country strategy, and calls on the Commission to take action to contest plans such as this that run counter to EU climate commitments.”

(See more details in our press release from today)

Coal is misguided progress for Kosovo

An end to coal subsidies in Europe

Two European public banks are currently reviewing their energy lending policies. We call for an end to coal subsidies.

Data, demands and expert comments

The EBRD’s enthusiasm for this project is misguided. Burning coal to produce electricity at the country’s two existing coal plants (Kosovo A and Kosovo B) is already costing the country over 100 million euros annually only in health related issues, with people dying prematurely and children suffering respiratory diseases, and building a new plant will perpetuate these health problems.

Importantly, Kosovo already produces more energy than it consumes domestically, but much of it is wasted due to inefficiencies in the distribution network, lack of insulation in buildings, irrational usage such as using electricity for heating, commercial losses (ie. electricity used but not paid for, eg. through illegal connections to the network or unpaid bills).

These are the areas where the EBRD should be focusing on, particularly on remedying technical inefficiencies. In addition, providing support for energy efficiency measures for residential buildings would come a long way in avoiding energy waste and reducing bills for households. Kosovo does not need new coal generating capacity; it needs to stop wasting energy and to explore sustainable energy sources.

An alternatives analysis carried out by the Renewable & Appropriate Energy Laboratory Energy & Resources Group University of California, Berkeley, shows that in the period until 2025, Kosovo can meet its energy needs through energy efficiency improvements, wind and hydro energy, as well as biomass and geo-thermal. This scenario would also result in three times more jobs created for the country, and address environmental problems.

Is the EBRD listening?

And these are the messages that Bankwatch sent to the bank in our contribution (pdf) to the public consultation of the strategy draft. The problem is, it seems that the bank could not care less about what NGOs like ours or our colleagues from Kosovar coalition KOSID, who submitted similar points (pdf) to the attention of the bank, have to say.

Why? Because the deadline for submitting the inputs was yesterday, April 18. But the final country strategy document will be approved by the EBRD on May 1, less than 10 working days later. It is highly unlikely that the bank has time and capacity in this interval to seriously assess the fundamental objections we raised.

Despite the bank bragging (pdf) about its openness to civil society in Kosovo, NGOs there are already frustrated with the hurried nature of the development of a document that will send strong but wrong political signals in Kosovo. KOSID and Bankwatch have this week sent a letter to the board of directors of the EBRD (pdf) to criticise the rush of the adoption of such a momentous strategy and the superficiality of the civil society engagement.

The EBRD claims it has come a long way over the past years when it comes to cleaning up its energy portfolio and improving communication with stakeholders and certainly it has increased its renewables and energy efficiency investments.

With regards to the energy lending, however, Bankwatch maintains that the continued support for fossil fuels and above all, coal, undermines this progress and locks in an unsustainable energy infrastructure in many countries. And the start of operations in Kosovo does not set an example for an improved communication with civil society.

[Campaign update] Arctic Sunrise joins campaign against coal power plant in Croatia

The ship dropped by Plomin Bay with a banner saying “Zaustavimo Plomin C” (Let’s stop Plomin C) to protest against the economically and environmentally damaging construction of a new unit at the Plomin coal power plant.

It is not clear who will finance the project, but we are concerned that public banks may be approached to do so. Both the European Investment Bank and the European Bank for Reconstruction and Development are currently reviewing their energy lending and we are calling on them to phase out coal and no longer contradict climate science and political commitments by supporting one of the dirtiest energy sources.

The Plomin C project is being presented as a reconstruction of unit 1 at Plomin, even though it is nothing of the kind. Plomin C would have four times greater capacity than Plomin 1:

This and other facts on the Plomin C project can be found on our project page

Bankwatch’s Croatian member group Green Action has more images from the action on their website.

* Campaign updates are a new feature on the Bankwatch website intended to highlight news from projects we monitor as well as from our member groups and partners.

[Campaign update] New bills for green energy in Serbia

Since March, electricity bills in Serbia include the price of subsidies for renewable energy. One of the leading newspapers, Politika, estimated in March that it will cost households about 16 dinars (15 euro-cents) per month for the average use of 400 kW. Estimations expect that about 10 million euros will be accumulated this way in 2013 alone.

While being welcomed by for example by the Serbian association for windmills, newspaper reports rather painted a negative picture of the additional costs for customers and subsequently of support for renewable energy. Yet, Serbia urgently needs to strengthen green energy investors. At the moment, the country has 37 mini hydro power plants with a merely symbolic output. Also the potential for wind energy still needs to be exploited, partly due to the fact that “[s]tate organized projects in this area were never initiated, as this sector is left for private investors” (Source: Serbia Energy).

EBRD added value at the Kolubara lignite mine

More interestingly, however, the critical voices do not argue against the continued support for the dominant coal sector that receives funding from international financial institutions and is planned to be further developed despite the obvious need to increase the share of renewables in Serbia’s energy mix.

An approach that has the interests of Serbia’s consumers in mind would focus on energy efficiency, cutting electricity bills by reducing the still enormous electricity losses – 16% in 2010 compared to 9% (and falling) in neighbouring Bosnia and Herzegovina (2010 World Bank figures). The freed up funds could offer the much needed boost for renewables.

The EBRD’s support for Serbian electricity company EPS and specifically for the Kolubara lignite mine further cements the current structure of Serbia’s electricity market. It fails to increase the wiggle room that innovative private investment in renewable energy in Serbia urgently need.

* Campaign updates are a new feature on the Bankwatch website intended to highlight news from projects we monitor as well as from our member groups and partners.

Shale gas in Poland: Government gags local opposition

Amid the excitement about a European shale gas boom – that sooner or later will also get international public lenders interested – critical voices and any opposition to the controversial “fracking” technology are a thorn in the sides of governments dreaming of an end to the dependence on Russian gas and energy firms dreaming of a shale gas bonanza.

In Poland, where almost one third of the land area is subject to exploratory drilling licences, the government apparently wants to avoid any interference in the exploitation of the already “dwindling” reserves (so far every new estimation of the size of shale gas deposits has been a downward correction of earlier figures).

All short-term local protest movements are simply and by decree rejected as a bunch of opportunistic racketeers. This is the Polish environment ministry speaking!

Liberty for oil companies

Firstly, the Polish government seems adamant to ensure shale gas investors a minimum of regulation rushing on with new rules on hydrocarbon extraction before the European Commission can finalise a regulatory framework for the extraction of unconventional fossil fuels in Europe.

The proposed law prescribes only very liberal rules for exploratory works, not taking standard environmental safeguards into account. More precisely, the law would allow exploratory drilling without environmental impact assessments even though such activities result in the same types, extent and intensity of environmental impacts as the actual exploitation. And All the while Poland has delayed the nationalisation of Europe’s Renewable Energy Directive so long that it is being taken to court for it.

Gagging environmental opposition

Secondly, while quarrels between Warsaw and Brussels are not unexpected, even Polish citizens are being treated as a nuisance rather than legitimate stakeholders when it comes to the energy sector.

Among the most disturbing aspects of the mentioned law is the attempt to shut out local initiatives from public consultations. Environmental organisations would only be allowed to participate in administrative procedures if they were active in the field of environmental protection and nature conservation during at least 12 months before the administrative procedures began.

In practice this means that organisations formed specifically in reaction to newly planned investments (such as shale gas exploration works) would be excluded from the decision making processes concerning these same investments. Worse even, if a procedure lasts for some time already the required timeframe of being active can be prolonged to an absurd dozen years or so.

This is yet another attack (see an older example here) on Poland’s civil society and an attempt to limit its ability to influence our country’s energy policy. Shale gas exploration, open pit mines and similar endeavours obviously lead to opposition on a local level. Communities and villagers that fear health, environmental and geological impacts often quickly and spontaneously organise to protect their homes and themselves – like in Zamojszczyzna, where Chevron had started exploratory drillings.

The reason brought forward by the Polish Ministry of the Environment illustrates the impossible bigotry that environmentalists have to face in Poland:

“Sometimes in Poland people set up an environmental organisation, but only in the name. Just because they want to make some kind of business, and say we will stop your investment because we will sit in the court for years and you will never do your job, until you do this or that.” (Source: RTCC)

All short-term local protest movements are simply and by decree rejected as a bunch of opportunistic racketeers. This is the Polish environment ministry speaking!

The doubts surrounding shale gas exploitation in Europe are still extensive and range from the obvious environmental dangers to the fundamental question whether shale gas is at all economically viable in Europe.

Poland is rushing to create new, liberal legislation regarding the exploitation of shale gas. But haste makes waste. We could avoid some far reaching mistakes by waiting for the finalisation of the EU’s “Environmental, Climate and Energy Assessment Framework to Enable Safe and Secure Unconventional Hydrocarbon Extraction”. That way we could use the experience and knowledge of other EU member states regarding hydraulic fracturing. We could avoid amending our law yet again when European legislation is put in place.

Instead, Poland is again putting profit before people. And by trying to silence legitimate concerns early on, the Polish government yet again proves just how bad our country is for the environment and for its own citizens.

Guest post: A Russian journalist and Khimki forest activist is dead

On April 8, 2013, former editor of independent local newspaper Khimkinskaya Pravda Mikhail Beketov died in hospital. He was 55, but for the last four and a half years he has been severely disabled. On November 13, 2008 Mikhail Beketov was found unconscious near his house in the village of Starbeyevo. He was beaten extremely severely with baseball bats. He is thought to have been laying on the ground in the cold for around 36 hours. Though doctors saved his life, Beketov lost a part of his brain, his right leg, four fingers on both hands and remained disabled forever. He could neither walk, nor talk and needed constant external care. He underwent several surgical operations and had recently even been able move for short distances with the help of a prosthetic leg, however normal speech never returned. But all this progress appears to have been futile: now Mikhail Beketov is dead.

The official police investigation has still failed to find either the perpetrators or the masterminds of the attack. There was little doubt though that the attack was connected to his professional activity: beforehand, Mikhail received several “warnings”: his car was burnt, and his dog was killed. The administration of Khimki systematically pressured businesses that dared to advertise themselves in his newspaper “Khimkinskaya Pravda”, or took part in its distribution. Mikhail himself said that in case of a fatal attack one should seek those responsible in the Administration of Khimki.

The most likely explanation for the attack is that Beketov became the first casualty of the toll motorway construction project through the Khimki Forest. The project is still perpetrated by French construction giant Vinci jointly with Russian oligarch Arkady Rotenberg known for his “special relationship” with President Putin. Violence has become one of the hallmarks of the Moscow – St.Petersburg toll motorway project, and tens of criminal attacks against activists have been reported.

Beketov questioned the official version of the road across the Khimki Forest as an alleged way to solve the transport crisis in Khimki. He was the first person who publicly named corruption as the main reason explaining why the worst possible option was chosen for the motorway. The explanation was simple – protected forest lands were considered as a source of gross extra-profit for the perpetrators of the project. In one of his last articles headlined “The Khimki Forest Condemned” he attracted public attention to the plans of then Governor of Moscow Region Boris Gromov. According to his ruling, a 6-km-wide strip of land in Khimki Forest was ‘reserved’ for infrastructure needs of the future motorway. Now the project concessionaire denies any additional use of forest lands. Nevertheless, there is no official documents confirming it. The planned layout of the motorway in the project of new General Plan of Khimki reveals massive infrastructure object inside the forest except the motorway itself. It was symbolic for the Movement to Defend the Khimki Forest that in the last issue of Mikhail Beketov’s newspaper he summoned residents to a meeting to protect the Khimki Forest.

Of course, Khimki Forest was not the only point where Mikhail Beketov opposed the authorities. Since he began to publish the Khimkinskaya Pravda early in 2007, this newspaper became a truly alternative source of information for Khimki residents. He systematically criticized the course perpetrated by the authorities and took aim at the authorities’ neglect of the social and environmental interests of the majority in favour of the profit of a few “close friends“ of those in power. It is a pity that in the case of Khimki Forest, European business took side of those in power rather than of people like Beketov – Vinci still refuses to take seriously its contribution to corruption, destruction of the environment, and suppression of civil society in Russia.

Many top officials, including President (then Prime Minister) Vladimir Putin in October 2011, promised to find the criminals, who had attacked Beketov in November 2008. All these promises remained void. No culprits have been caught. And there is a strong suspicion that nobody has ever tried to investigate this crime seriously.

Exposing the nuke-speak: responses to the EBRD’s justification for financing nuclear lifetime extensions

Earlier this month, the European Bank for Reconstruction and Development approved a 300 million euros loan for the highly contended so-called “Nuclear Safety Upgrade Programme” in Ukraine.

The EBRD finances safety measures at a reactor whose lifespan is over, full stop. The unit has stopped working and Energoatom plans to resume its operations after the upgrades are completed. And still the EBRD maintains that its project has nothing to do with lifetime extensions.

Having faced strong opposition against the project, the EBRD went to unusually great lengths to publicly justify the loan decision. Besides a promotional video and a guest post on the FT’s beyondbrics blog, the EBRD’s specifically prepared a Q&A on their website on “What the opponents say – and how the Bank responds”.

Yet as my rejoinders below will show, the EBRD’s responses fail to dispel the concerns that opponents raised repeatedly. And to illustrate the great deal of disappointment that fellow environmentalists have expressed I will include some of the comments I received from them. (EBRD responses are small and in italic, quotes from colleagues are indented.)

1. The programme is basically a lifetime extension of nuclear reactors which instead should be shut down.

EBRD response: Nuclear safety is a consideration of the utmost priority at any time regardless of whether a unit has just been connected to the grid or has been producing electricity for decades. The upgrade programme includes measures to address well-known generic safety issues with reactors of this design irrespective of their age. […]

The opposition to the project does not target the timing of the safety upgrades but the measures included in them. It has been pointed out repeatedly and in detail that the safety upgrades specifically include measures that prepare old nuclear units for running longer than their designed lifetime and cannot be considered mere safety upgrades.

Jan Haverkamp, Greepeace anti-nuclear campaigner added:

The EBRD has been informed of this issue [the lifetime extensions], did not want to address it and avoids addressing it by diverting attention in their answer here.

With this loan, the EBRD is net increasing the risk to the population of Ukraine and Europe, because the chance of a nuclear incident or accident increases with age exponentially. Whereas the upgrade may (or may not, depending on the risk assessment) decrease the risk in the few years of the expected technical lifetime, it does not do so over the entire extended lifetime during which the risk will increase in absolute terms.

2. Unit 1 at South Ukraine NPP initially did not get a licence beyond 2012. Does the EBRD have confidence in the independence of Ukraine’s nuclear regulator?

Energoatom has made a case to the nuclear regulator (SNRIU) for a longer operation period of SU1 arguing that the design life of the plant had not yet elapsed. Energoatom provided documentation, including information by the design institute, to substantiate the claim. After review SNRIU granted the extension of the licence until the end of the current fuel campaign. Due process was followed and we have no indication that any pressure was put on the regulator to influence its decision.

SU1 will go into a long outage at the end of its current licence, Energoatom will perform (safety and other) upgrades and seek a new licence. We have confidence that such a request will be duly reviewed by SNRIU and Energoatom will get a new licence if it can demonstrate that SU1 meets all the requirements. This process, however, has nothing to do with our project.

Unit 1 at the South Ukraine plant has been taken off grid already, because its lifetime has expired. The EBRD explicitly admits here that the decision on a new licence (and thus a lifetime extension) will be made after safety and other upgrades have been implemented.

These are exactly the upgrades of the Nuclear Safety Upgrade Programme that the EBRD now supports. In other words, the EBRD finances safety measures at a reactor whose lifespan is over, full stop. The unit has stopped working and Energoatom plans to resume its operations after the upgrades are completed.

And still the EBRD maintains that its project has nothing to do with lifetime extensions.

3. The Bank did not use its leverage sufficiently to bring Ukraine to a commitment to a fixed date for the phasing out of nuclear power production

The Bank has no policy basis for forcing the closure of any source of energy. The EBRD’s energy policy is mainly geared towards bringing about greater energy efficiency. However, the Bank has been given a clear mandate by its shareholders that: “it may provide financing to an operating facility in relation to nuclear safety improvements” (EBRD Energy Operations Policy).

Ukraine is currently reviewing its own energy strategy but has made it clear that it will continue to use nuclear power generation. Consequently, addressing the safety issues and raising of standards is the EBRD’s primary concern and its due role.

Ukraine’s nuclear extension plans and Europe’s complicity

Greig Aitken, long-time IFI activist and editor of Bankwatch Mail wrote:

Support for nuclear safety, if it does result in the closure of unsafe facilities, is the kind of tough medicine Ukraine needs, but that is not what the latest EBRD loan is going to bring about.

The excuse being offered by the bank – that Ukraine has made a sovereign decision to extend nuclear lifetimes in which the EBRD has not been involved and which it cannot influence – is highly disingenuous. The implementation of this sovereign decision depends on external, European support. The EBRD is providing this support and is thus playing the role of an accessory to a dangerous, unsustainable policy agenda – moreover, one that has not been consulted with a transparent and democratic due process, and where the alternative of shutting down the outdated nuclear reactors has not been assessed.

The Ukrainian nuclear horse has bolted once again (destination unknown), and while the bank’s arguments are akin to saying it is now trying to close the stable doors, on this occasion the EBRD’s offer of ‘safety financing’ has clearly helped to prise those stable doors open in the first place. The attempt to paint this intervention as responsible financing is naive, not to say totally illogical.

4. The EBRD should rather invest in renewables and lessen Ukraine’s dependency on imports of gas and oil and nuclear power.

The Bank is taking a very active role in the promotion of “green” energy in Ukraine and in many cases serves as a forerunner. In 2012 alone the Bank invested over €200 million in energy projects based on renewables sources such as wind or water. At the same time, the Bank is a leading force in the drive to improve the country’s energy efficiency. Ukraine still has an energy intensity which is three times higher than the European average. The EBRD therefore strongly supports the present review of the country’s energy strategy and the commitment to reach an 11 per cent renewable energy target by 2020.

It is not at all clear if Ukraine’s commitment under the European Energy Community to reach the 11 per cent renewables target by 2020 is reflected in the latest draft of the Energy Strategy. The Ministerial Council claims (pdf) that the renewable share in gross energy consumption already now lies at 5.5 percent – a number that includes a mysterious ‘other sources’ category which are not necessarily renewable energy sources. And even the State Agency on Energy Efficiency and Energy Saving admits that the new Energy Strategy contradicts Ukraine’s commitments under the Energy Community.

While the EBRD claims to see Ukraine’s “strong effort to increase energy efficiency”, the new draft Energy Strategy is not at all that convincing: it aims at decreasing GDP energy intensity by 60% by 2030 which would take Ukraine only as far as Poland in 2006 and is hardly an ambitious target. The EBRD loan for the NPP safety upgrade programme will again allow the Ukrainian government to continue their “business as usual”. And we will wait another 10-20 years for a strong stimulus to seriously address the country’s high energy intensity.

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