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Guest post: Never again Sostanj


In the beginning of March, the European Investment Bank and the European Bank for Reconstruction and Development paid out half a billion euros in loans for a new unit at the Sostanj lignite power plant in Slovenia (TES 6).

The reactions I got from fellow environmentalists who had been campaigning against the project expressed a tremendous disappointment over this decision. Not only were the two banks not courageous enough to take one of the numerous flaws of the project and pull out. They also presented their decision with what was perceived as positive spin.

Ignoring the ongoing corruption investigations, the EIB’s press release for instance ends with this wording:

“The new plant will generate up to 30 per cent more electricity with no additional CO2 emissions.”

But “not more” carbon emissions is missing the point, what we need, as international bodies and various experts constantly point out, is fewer emissions. Instead, TES 6 alone will emit about as much carbon by 2050 as Slovenia as a whole would be allowed to emit if it is to reach European climate objectives.

This disappointment and the (justified) fear that the Sostanj lignite power plant may not have been the EBRD and EIB’s last controversial project has led 98 organisations to send an open letter (pdf) to both banks calling on them to never commit to such a misguided loan again. (You can read a quick summary of the letter’s content in Bankwatch’s press release from today.)

At this very moment the EBRD is considering a loan for the Kolubara B lignite plant in Serbia, and has recently published a draft country strategy for its newest member, Kosovo, which features as its centrepiece none other than the planned 600 MW Kosovo C lignite power plant.

With the energy lending of the EIB and the EBRD under review at the moment, this is just the right time to inscribe the lessons from the Sostanj disaster into their institutional memory. Coal should be off the table once and for all, as should any project under investigation for corruption. This applies to the Western Balkans as much as to any other region.

Read more on our energy lending campaign

[Campaign update] Woes in Kosovo’s energy sector trigger demand for Minister’s removal


On Friday March 15, 2013, the Kosovo Civil Society Consortium for Sustainable Development (KOSID) issued a press statement demanding the dismissal of Minister of Economic Development, Mr. Besim Beqaj from his position. The stated reasons are the “wrong and damaging governmental policies in the past years have brought the country in a state of emergency and energy collapse” and bring enormous costs to Kosovars:

Kosovars currently pay a high cost of electricity as a result of the Government’s decision last year to raise the lignite royalty from 0.27 Euro cents to 3 Euro (namely by 1011%). This was done with the aim of collecting more revenues for their budget, to cover the budget mismanagements in other national levels.”

Read the full press release on the KOSID website.

The demand is yet another effort by KOSID to reform the country’s energy sector, including a shift away from lignite to clean and renewable energy sources. Their particular attention received a lignite fired power plant near Pristina that is due to receive support by the World Bank and may also be a project the European Bank for Reconstruction and Development is willing to get behind.

UPDATE: Following the public outcry against increased electricity prices and support for the suggested removal of Besim Beqaj, the minister announced on Monday that there will not be an increase in electricity tariffs this year.

* 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.

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Revision of the EBRD’s Energy Operations Policy

New nuclear risks in Ukraine – decision expected tomorrow

This post is an article from Issue 55 of our quarterly newsletter Bankwatch Mail.

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In recent weeks, Alexander Shavlakov, the technical director of Energoatom, the state nuclear operator, acknowledged the reality of the programme, telling a meeting in February of the trade union of Ukrainian nuclear industry workers: “Without the Safety Upgrade Programme, [nuclear] units’ lifetime extension is out of the question. We should be conscious of this.”

The ‘nuclear safety’ billing of the SUP appears to be blinding EBRD decision-makers to the full implications of the proposed investment, although discussions and negotiations around the deal have been taking longer than expected – the EBRD board date for the decision is now scheduled for March 12, some six months later than planned.

For me, there is a fundamental issue at stake: “Would the proposed EBRD loan help to guarantee the safe operation of Ukraine’s 15 operating nuclear units, 12 of which are designed to finish operating by 2020? Our answer is ‘no’. The SUP has got to be exclusively geared to safety measures, including the decommissioning of old reactors, not prolonging their lifetime.”

Chief among the concerns of campaigners is that the SUP has not been designed to guarantee the safe operation of Ukrainian nuclear units after the expiration of the original design life.

Continued in Bankwatch Mail 55

Coal power plants make you sick


A timely report published today by the Health and Environment Alliance entitled ‘The unpaid health bill: How coal power plants make us sick’ provides comprehensive calculations of the effects of coal-fired power generation across Europe on chronic lung disease and some heart conditions. ‘The unpaid health bill: how coal power plants make us sick’ documents up to 18,200 premature deaths, 2,100,000 days of medication, 4,100,000 lost working days, and 28,600,000 cases of lower respiratory symptoms caused by coal power.

The health costs of coal-fired power stations add a financial burden to Europe’s people totalling 42.8 billion euros a year. Poland has the highest health impacts as well as health costs, estimated at over 8 billion euros per year, while Romania and Germany are third behind Turkey with more than 6 billion euros in health costs annually.

Chart: Annual health costs associated with coal power generation per country in millions of euros (2009 data)

(The map does not display values for Turkey.)

Of the 20 most polluting coal-fired power plants in the EU, five of them are Romanian installations at Turceni, Rovinari, Drobeta Turnu Severin, Isalnita and Mintia. Need a figure? 426 kg of mercury emitted each year at the Turceni power plant. Do you need a dispersion model? Suffice it to say that the Romanian government is taking steps (not unlike other countries in Europe) to postpone emission reduction at 28 power plant installations, while the EU accedes to the country under the Industrial Emissions Directive.

Following a similar campaign about the health impacts of coal-fired power generation in Kosovo, the HEAL report provides another stark warning to both the European Bank for Reconstruction and Development and the European Investment Bank as the two revise their energy policies and consider what if any restrictions to place on financing for coal projects. The report is yet more fuel for the need to phase out support fossil fuels starting with coal. The EU needs to get its act together, for cleaner air, to prevent climate change, and for better health.

These EU citizens have better ideas for EU funds


While negotiations over the EU budget 2014-2020 are still in limbo with many Members of the European Parliament ready to veto the deal from two weeks ago many decisions on the nitty-gritty details of how exactly the (less than) one trillion euros will be spent are yet to come.

Coverage so far of the “big-numbers game” of EU budget negotiations left little media space for the voices of those who are to benefit of EU funded projects. Yet, for those who listen carefully, these voices are not only loud and clear, they can also help make decisions that are in the interest of European citizens and communities.

Read more

See a list of all winning projects of Bankwatch’s Better Ideas competition

A greener EU budget to exit the crisis


Read our positions

Such was the intention of Bankwatch’s Better Ideas competition, that in the second half of 2012 invited ideas for projects that best contribute to the sustainable development in people’s communities. The outcome stands in sharp contrast to a supposed EU fatigue: Not only the number of project ideas that we received but also their quality surprised our national campaigners. There is, for example:

  • the community garden scheme in Stredokluky (CZ) that promises to create jobs in a rural area, provide local, ecological food and restore land and biodiversity;
  • or the center for eco-passive building technologies in Kock (PL) that would offer consulting, training and production of eco-passive building technology and would employ around 15-20 people.

And the list goes on (pdf).

This week, the winners of the national competitions as well as jury members from all participating countries joined us in Brussels for the final award ceremony. It was inspiring to see all these people from across central and eastern Europe who care about the future of their communities, countries and “their” Europe.

We asked some of them to tell us what inspired them to take part in the contest, how they see their project’s potential to receive funding and what they would like to tell national and EU decision makers. See for yourself:

Constant dripping wears away the stone. Kyrgyz parliament votes to renegotiate Kumtor gold mine contract.


The Kyrgyz Parliament today voted [ru] to renegotiate a contract signed in 2009 [*] with Canadian Centerra Gold Inc. for the exploitation of the Kumtor gold mine, near the border with China.

The parliamentarians invoked, among others, serious environmental concerns to motivate their decision, which can be considered a success for local activists that have been for years campaigning against the negative impact of mining by Centerra.

One day before this vote, the Kyrgyz Parliament heard from a State Commission appointed with a comprehensive investigation into the risks and benefits of gold mining by Centerra. (Following an Interagency and a Parliamentarian Commission, this was already the third official investigation since 2011.)

The Kumtor Gold Mine

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In the environmental part of the report, the State Commission argues that mining by Centerra has caused irreparable damage to nearby glaciers, including destroying the largest glacier in the area, Davidov. Results from German and Slovene laboratories show that mining activities have led to the pollution of the Kumtor, Taragay and Naryn river basins and will continue doing so if no measures are taken. At the moment, there is considerable risk that the dam on Lake Petrov might break because of pressure from mining operations, leading to a disastrous spill of tailings downstream.

The reassessment of the terms on which Centerra can mine in the future is good news also beyond current threats. The new open pit mines planned by Centerra would negatively affect more glaciers in the region. In addition, the company is at the moment exploring territories which intersect the territory of the Sarychat-Ertash nature reserve, permission to which was approved in 2009 and revoked in July 2012 by the Government. A reassessment of the contract might also make Centerra more inclined to abide by decisions that limit its activities.

In addition to environmental harm, the State Commission told the Kyrgyz legislators that the deal with Centerra never brought considerable benefits for Kyrgyzstan (although the Kumtor mine is the main profit-generating project of Centerra, responsible for 92 percent of the Canadians’ income in 2011; and a profitable year that was!). The Commission advised Kyrgyz authorities to renegotiate the contract, investigate the conditions under which it was signed, and adopt measures necessary to avoid similar mistakes in the future.

The company has indeed enjoyed shockingly favourable terms, to mention but a few: a generous tax regime, fixed environmental charges (USD 310 000/year), an extended allowance to operate the open-pit mine until 2026 and very low payments for future recultivation works after the mine’s closure. These come on top of other beneficial conditions like the high gold component in the ore (on average 2.9 g per ton and more), relatively low spending on the gold production (502 USD/ounce) and a bulk of proven and probable remaining gold reserves (about 900 tonnes of gold compared to 260 tonnes produced 1997-2011).

The decision taken by the parliament today should serve as a wake up call, both for all Kyrgyz authorities with any influence on the direction of the country’s development, and to the international financiers of Centerra (including the EBRD, which in 2010 extended a revolving debt facility to the company). The voices of citizens and civil society groups – which have been for years sounding alarm bells about Centerra – cannot be shoved aside by claims about bringing sustainable development to a country. On the contrary, they should be involved in these decisions from the very start.

Notes

* The 2009 deal is just the most recent form of the contract between the Kyrgyz state and Centerra. It offers the Kyrgyz state a 33 percent of the company and a minor share in Centerra Gold.