Blog entry

Bosnia and Herzegovina: Environmental and social study for Prenj motorway tunnel needs to tackle the elephants in the room

For the last 120 days, the European Bank for Reconstruction and Development (EBRD) has made the Environmental and Social Impact Assessment (ESIA) for the 10-kilometre Prenj motorway tunnel, its approach roads and the Konjic bypass available on its website for public comments. Project promoter JP Autoceste and the EBRD also organised Open Days on the project in early June, providing additional opportunities for questions and comments.

Given that this high-risk project would cost at least EUR 1 billion, to be financed with loans from the EBRD and European Investment Bank (EIB); that another section south of Mostar has become bogged down in disputes about the routing and expropriation; and that this section is in a sensitive area, long planned to be a National Park, we’ve taken a detailed look at the assessment.

A great deal of work has been put into the voluminous documentation, but several elephants in the room still need to be addressed.

Risks from lack of public consultation on the routing

As the EBRD’s Independent Project Accountability Mechanism (IPAM) has confirmed, the Federation of Bosnia and Herzegovina (FBiH) adopted the project-level spatial plan in 2017 without consulting the public on the final routing of the motorway. This means that subsequent consultations on the environmental impact assessments for these sections – including Prenj – cannot be regarded as meaningful, because they are not taking place at a stage when all options are open regarding the project.

For example, in 2023, when the Aarhus Centar Sarajevo submitted comments on the routing as part of the FBiH-level consultation on Prenj, the study authors responded that the subject of the study was the route set by the 2017 spatial plan.

Yet under EBRD and EIB rules, if the project is to be allowed to expropriate property, damage an Emerald site and damage critical habitats, it has to be proven, among other things, that the mitigation hierarchy – ‘avoid, minimise, mitigate’ has been followed; that there are no feasible alternatives and that meaningful public consultations have taken place.

This is a bigger issue than the ESIA study that needs to be resolved by the FBiH government. And the EIB and EBRD need to make it clear that this is a condition for financing.

Forest cutting, river channelling and high embankments in the Bijela canyon Emerald site

The assessment confirms there will be impacts on the stunning Bijela canyon Emerald site, but, intentionally or not, does not clearly describe and visualise them. From what we can piece together, the damage includes:

cutting an unquantified number of hectares of old, well-preserved beech forest, home to the rare white-backed woodpecker;
channelling the upper part of the Bijela stream underneath a large embankment for more than 1.2 kilometres and outside the embankment for a further 600 metres;
construction of other 20-metre-high embankments for the motorway to run along and a ‘landscaping’ area (ie. disposal site) for the disposal of dug-out waste from the Prenj tunnel and other tunnels.

The ‘Appropriate Assessment’ part of the ESIA admits that these will fragment the site and that not all the impacts can be mitigated. Other habitats and species subject to protection under the EU Habitats and Birds Directive beyond the Bijela site would also be affected by the project, although some species present in the project area, like the otter, Balkan chamois and wildcat, are not assessed.

Instead of analysing whether the project can go ahead at all with its current design, based on EBRD, EIB and Habitats Directive criteria, the Appropriate Assessment assumes it can, and jumps straight to mitigation and compensation measures. The same is true for the Critical Habitats assessment, whose purpose is similar but uses different criteria. Neither of these assessments demonstrates compliance with EBRD and EIB rules, and both rely too much on offsetting, which rarely works in reality.

Moreover, too many biodiversity studies are left to be done after the ESIA is completed, and underground fauna is not examined at all. These go beyond what can be considered pre-construction checks, as their results should influence the whole assessment.

Alternatives assessment needs to address high-risk sections

The alternatives section describes well those routings that have already been examined and rejected, but needs to be updated to respond to the problems with the current routing.

It takes for granted the idea that a full-profile motorway has to be built, and dismisses the zero alternative out of hand. The current situation is indeed untenable for Konjic and Jablanica as the main bottlenecks on the route, but variants in between ‘no project’ and ‘full profile motorway’ need to be examined, for example building only bypasses.

More detailed variants also need to be examined for the most sensitive parts of the route – the Bijela canyon and the area around the village of Podgorani near Mostar, where residents are concerned about the motorway running above their peaceful village and have proposed an alternative that involves lengthening the Prenj tunnel but shortening the overall route. The Podgorani area is also environmentally sensitive, with a Golden Eagle’s nest having been found in the Klenova Draga gorge nearby.

Even if such variants have been examined and rejected, the public does not know this unless they are described in the study. And as described above, establishing whether alternatives exist is a key condition for compliance with several EBRD and EIB requirements.

Lack of compensation for people living right next to the motorway

The expropriation corridor for the project is 50 metres – only as wide as the motorway itself. People who live or have land outside this zone get no compensation at all unless they manage to make a successful complaint to JP Autoceste or the EBRD/EIB complaint mechanisms. This corridor is set narrowly to save public money and because people have different opinions on whether they want to live next to the motorway or not. But we still believe this is too narrow and that the system is too binary.

There needs to be standardised compensation for people with houses – and to a lesser extent land – within a set number of metres each side of the motorway, due to depreciation of their property value, noise, vibrations and pollution, even if they are not expropriated. According to the EBRD’s Environmental and Social Policy, if people living alongside the Corridor Vc experience loss of land and assets, or restrictions on their use, leading to loss of income sources or other means of livelihood – ‘the client will offer compensation to affected persons at full replacement cost, and other assistance as may be necessary to help them improve or at least restore their standards of living and livelihoods.’

Confusion on vulnerable groups

One of the IPAM findings for the section south of Mostar was that the EBRD had not ensured that vulnerable groups had been properly identified during the project development. And so far this ESIA is in danger of repeating the same mistake. This can lead to undue impacts to their livelihoods and problems during the expropriation process.

In our understanding, this has happened partly because the provisions in the FBiH expropriation law regarding vulnerable people have a different purpose and different criteria than the EBRD and EIB policies, which causes confusion.

The FBiH law classifies vulnerable people in order to decide whether they qualify for an additional fee during expropriation, but the EBRD and EIB require their identification for a different and wider purpose: to ensure they are properly consulted and any specific needs taken into account during the project development. These two differing concepts seem to be conflated in this ESIA and need to be differentiated.

For example, the assessment does not consider war returnees vulnerable, and it may be that there is indeed no particular reason to offer them an additional expropriation fee. But given their experience of repeated upheavals and trauma, their enhanced connection to the land, and sense of home and heritage, they should be treated as vulnerable for the purposes of the EBRD and EIB policies, and extra care should be taken with consultations with them.

Such a risky project needs solid foundations

A lot can go wrong building a two-pipe 10-kilometre motorway tunnel in karst terrain, especially in an era of accelerating climate chaos when unparalleled storms and floods can hit at any moment. Building the tunnel alone is estimated to take five years, and that’s if everything goes well and there are no major surprises with underground water flows.

It’s up to the people of Bosnia and Herzegovina to decide whether such an expensive and risky project is the best use of scarce public funds at this time. But it’s also up to the EBRD and EIB to make sure that their standards are not breached in the process.

This may still be possible, but the current information in the ESIA package isn’t sufficient to prove that these standards are met. The banks must act now to ensure the assessment is improved. Either better solutions must be found for the Bijela valley and Podgorani, or it must be proven, with much more evidence, why the current ones are the best possible.

Poor planning by the European Investment Bank puts at risk one of the largest wind energy projects in the Western Balkans

‘A remote mountain village dominated by a small, cosy stone house over 100 years old, an equally old well and a hand-made stone fence. Sheep graze around the house and the surrounding area is characterised by many flowers, trees, colourful butterflies and chirping birds. Absolute silence, far from any electricity and water connections or country roads, surrounds this place.

This is not fiction but reality – a place called Stitar in Poklečani. The house in question, the well and the stone wall belong to my family and we have received high offers to sell it several times. Nevertheless, we always decided against it because we want to preserve this place in its tradition and culture.

In 2013, I accidentally found out about the plans to build this wind farm and contacted JP Elektroprivreda back then. Years passed and I received no information about the progress of the project. Until recently, I was not aware that JP Elektroprivreda was exempted from the environmental impact assessment for its project according to a decision from the Ministry of Environment and Tourism. The notice stated that the public had been involved. However, as a property owner, I learned about this project for the first time without the opportunity to raise objections, because the deadline had already passed.’

Sheep in the fields in Poklečani, Bosnia and Herzegovina. Source: local people from Poklečani.

This is how a January 2024 complaint by local people to the European Investment Bank (EIB) on the 132 Poklečani wind farm starts. A month later, the Board of Directors approved a EUR 145 million loan to public utility JP Elektroprivreda Hrvatske Zajednice for the project.

Bosnia and Herzegovina certainly needs more renewable energy – it currently only has three operating wind farms. But Poklečani is planned in a mountainous region bordering the Blidinje Nature Park, or even partly inside according to some local people. It is also near the Duvanjsko Polje Important Bird Area. Blidinje and Duvanjsko Polje are also proposed for inclusion in the pan-European Natura 2000 network of protected areas.

Local people say that the wind farm would be too near to their houses and a cemetery and would entail the destruction of 350,000 m² of forest land.

Poklečani, Bosnia and Herzegovina. Source: local people from Poklečani.

The EIB violates its own standards

In 2022, the EIB approved its new Environmental and Social Standards, strengthening its biodiversity requirements and highlighting the need for all projects to comply with EU environmental law.

The Federation of BiH authorities exempted the project from carrying out an environmental impact assessment (EIA) – a decision which has been challenged in the local courts by the Aarhus Centre in Sarajevo. And the EIB accepted this decision.

This represents a breach of point 5 of the EIB’s environmental and social impacts standard and of the Energy Community Treaty, which requires BiH to adhere to the EU EIA Directive for energy projects. Considering the size of the project, its location near protected areas and inhabited areas, as well as its visual impact on the landscape, the project undoubtedly should have been subject to a full EIA.

´I know that the investor and the authorities in Bosnia and Herzegovina have so far had no scruples about disregarding legal aspects. However, it is unacceptable for a European Union bank, financed with taxpayers’ money, to actively support a project without due consideration of fundamental human rights and without carrying out an environmental impact assessment,´

write local people in communication with the EIB.

The project also violated point 23 of the EIB’s biodiversity standard by not carrying out an appropriate assessment (AA) on Blidinje and Duvanjsko Polje:

‘All projects likely to have significant effects on a Natura 2000 site, a protected and/or Key Biodiversity Area shall be subject to an assessment according to the EU Habitats Directive (i.e. an Appropriate Assessment).’

The EIB’s environmental appraisal did not detect this omission despite its obligation to verify projects’ compliance with the applicable legislation, even though it is well-known that environmental assessments need to be improved in BiH. The EIB’s own project documentation refers to the European Commission’s Bosnia and Herzegovina 2022 Report, which highlights that environmental assessment legislation needs to be

‘enforced and strengthened together with the necessary improvements in the access to information and the participation of the public in the decision-making process on planned investments.’

Request for Internal Review – an evolving tool for EU accountability

On 15 May 2024 CEE Bankwatch Network submitted a Request for Internal Review of the EIB Board’s Decision to approve the financing of the wind farm, based on the EU Aarhus Regulation. This Regulation grants eligible organisations the right to request an internal review in cases when an administrative act contravenes provisions of law relating to the environment. This was the case with Poklečani, because the financing of the project was approved without an EIA and AA.

This is not the first Request for Internal Review submitted by Bankwatch. Most recently, in March 2023, together with ÖKOBÜRO from Austria, a request was submitted against using the fast-track emergency procedure to adopt a Regulation to accelerate the deployment of renewable energy in the European Union, which undermines existing environmental law and public consultation requirements.The case is now at the European Court of Justice.

Faster deployment of renewables can’t and should not be done by limiting public participation

It might seem counterintuitive for organisations that promote a sustainable energy transition to challenge renewable energy deployment. But due to illegal and undemocratic decisions that undermine environmental safeguards and public participation, that’s what we’ve been compelled to do.

Renewables acceleration is crucial – as are public participation and environmental safeguards. The Poklečani case shows how limiting public participation will slow down the project rather than speeding it up. Early involvement of local communities would have resulted in a better project design, avoiding social and environmental impacts. Now, the legal challenges will put the project at risk – unless the EIB decides to fix its mistakes.

The Romanian village of Buteni: A climate-neutral rural community in the making

Freshly returned from researching best practices in urban centres abroad, a dedicated team of local officials are determined to bring their green vision for their hometown to life.

In recent years, the rural community of Ciugud in Alba Iulia has been lauded as a successful example of how to embrace sustainable living in Romania. Now, a promising new contender has emerged, one that’s even more attuned to the social needs of its community and committed to meeting Romania’s climate neutrality goals.

Buteni, a village located 70 kilometres from the main city in Arad County, boasts a thriving local economy populated by small agricultural and furniture businesses as well as a local secondary school. Through continued investment in local education and infrastructure, Buteni has managed to avoid the population drain experienced by so many other villages in Romania. To further strengthen roots within the community, the local administration recently launched a programme aimed at attracting Romanians living abroad to purchase homes in the village.

Green House programme driven by local ingenuity

Romania has significant potential to generate energy from sustainable sources, notably solar energy.Based on national energy strategy estimates, harnessing the country’s solar resources could lead to the installation of 4,000 megawatts in total capacity and the annual production of 4.8 terawatt hoursof energy. Recognising this untapped potential, the local administration in Buteni has taken the initiative to seek funding through programmes offered by the Romanian government.

One such scheme is the Green House programme, which incentivises homeowners to install photovoltaic panels for electricity production in their homes. Managed by the Environmental Fund Administration (AFM), the programme provides non-reimbursable funding to cover the purchase and installation of photovoltaic systems. The subsidy can cover up to 90 per cent of the total costs, capped at roughly EUR 4000 per project.

Aware of the potential challenges faced by the rural population, especially when it comes to bureaucracy and digital literacy, Buteni’s administration has taken the proactive step of assisting residents in filing their funding applications.

And the results speak for themselves. Over the past three years, thanks to the Green House programme, more than 200 residents have installed or are due to install photovoltaic panels. This translates to an approximate total capacity of 800 kW.

Impressively, around 20 per cent of the houses in Buteni will benefit from the programme, with EUR 720 000 in government funds accessed to date. This amount is also supplemented by a contribution from the beneficiaries themselves amounting to EUR 280 000. As evidenced by the ongoing interest from prospective applicants, the local administration is keen to help residents to continue access funding this year.

Expanding solar power

Building on the success of the Green House programme, the local authorities have also set their sights on financing sustainable energy sources through additional schemes, recently securing funding from central government through the EU’s Modernisation Fund. This will see the installation of a total capacity of 399 kilowatts (kW) of photovoltaic panels, encompassing a 155 kW photovoltaic park and the installation of 244 kW of panels on public buildings.

Of course, the expected influx of renewable energy also presents new challenges. For instance, the expected 800 kW increase in household electricity production is likely to place significant demands on the current electricity distribution system.

Recognising the scale of the task ahead, Buteni is now seeking a grant to conduct a feasibility study aimed at modernising its energy transport network. The project will see the involvement of researchers from universities in Bucharest, Cluj–Napoca, and Timisoara.

These efforts should not only help ensure that the grid can handle the anticipated capacity issues, but also lay the groundwork for establishing Buteni’s first energy community. On top of that, the local authorities have started to rehabilitate the public lighting system, which will see 564 conventional lighting fixtures replaced with LED lights.

Buteni’s vision for a sustainable future also extends beyond its borders. Local authorities recently participated in a knowledge-sharing programme involving professionals from Arad County and experts in Norway. The programme offered participants valuable insights into best practices from Norway aimed at increasing their knowledge of renewable energy and energy efficiency and enhancing their administrative capacities.

These efforts speak volumes about Buteni’s commitment to sustainable living. By learning from others and implementing innovative solutions proven to work elsewhere, the village is paving the way for a greener future.

What’s next for Buteni?

Aside from its plans for the electricity distribution sector, the village also aims to undertake research on geothermal water resources. Looking ahead, their eventual goal is to exploit geothermal energy to create their own district heating system.

Education is another key focus. Having recently modernised the local secondary school with a government grant, the local administration is now looking at ways of supporting Erasmus exchange programmes for children in the community alongside plans for a ‘smart’ preschool.

While there’s still much work to be done, Buteni is taking concrete steps towards a climate-neutral future and a better quality of life for all its residents. In doing so, the village serves as an inspiring example of how other communities can put sustainable living into practice.

Open days on the Corridor Vc Prenj tunnel: a promising new public engagement tool?

Public sector company JP Autoceste is currently planning the most difficult and expensive section of the Corridor Vc motorway – a 10-kilometre tunnel through the Prenj mountain and its approach roads, costing an estimated EUR 1 billion.

No-one knows exactly what awaits the builders inside the karstic mountain, and the sections approaching the tunnel would run through inhabited areas near Konjic and biodiversity-rich sections like the Bijela valley Emerald site and Klenova draga, a rocky valley home to golden eagles. The exit on the Mostar side would also run above the quiet village of Podgorani, condemning the locals to noise and pollution.

Both the European Bank for Reconstruction and Development (EBRD) and European Investment Bank (EIB) are considering financing the project, and the EBRD is currently holding a public consultation period on the Environmental and Social Impact Assessment (ESIA), until the end of June.

From 5 to 7 June, the EBRD and JP Autoceste also organised open days in Konjic, Jablanica and Mostar to better familiarise the public with the plans. Bankwatch went along to the Mostar event to better understand both the project and the open days format.

A useful tool for discussing project specifics

The event was held at the cultural centre in Potoci, a village north of Mostar, suitably near to the project site. Several representatives attended from JP Autoceste, the EBRD and the Enova consultancy who worked on the ESIA study. This made it possible for the public to discuss a range of issues like routing and design, land acquisition, and other environmental and social impacts, and to examine the route in detail with the project designers.

Local authority representatives had also made additional efforts to inform people about the event. Although some people could not attend during working hours at all, the time frame of 09:00-17:00 allowed at least some flexibility. Around 25 members of the public dropped by in Potoci – a relatively small proportion of those potentially affected, but a very decent start considering the relatively rural setting and unfamiliar format.

Since discussions could run in parallel, people could get detailed individual answers to their questions and comments without undue time pressure. The format also seems suitable for less outgoing people who would hesitate to speak up in front of a wider audience.

Not a replacement for plan and project-level consultations

The open days format looks like a promising engagement tool to complement public consultations, but shouldn’t be seen as a replacement. These events are more informative than consultative, and are difficult to record accurately. People’s inputs are dispersed throughout the day and they talk with various project representatives, so even with good organisation, the chances of something being missed in the minutes are high.

The Prenj events also took place at a stage when the main features of the motorway, such as the routing, had already been adopted as part of the project-level spatial plan, and only minor adjustments can take place. This can be useful, but only if also preceded by earlier consultations when all options are still open.

Lack of routing-level public consultations may boomerang again

Such early consultations did not happen for this project. The Federation of BiH legislation required public consultations on the spatial plan, but they were held only in 2011 when the planned route from Konjic to Mostar was vastly different from the one that was later adopted. It was shortened in 2016 to go via the Prenj tunnel, rather than running along the mountain, and the Federal parliament adopted the spatial plan in 2017 without soliciting public input on the changed sections.

Consultations on the Federal-level environmental assessment for the project were held in 2018 and 2023, but as the route had already been decided on, they were not meaningful. The same applies to the currently ongoing EBRD ESIA consultation. Even now, it is hard to understand how the routing decision was taken and whether the currently planned variant is the least damaging one possible.

A similar situation south of Mostar has led to an impasse in which many residents oppose the route, and some have resisted the expropriation of their properties. People don’t understand why the motorway has to run over their land and houses, when a seemingly better option on the Podveležje plateau is available. The EBRD’s accountability mechanism has confirmed that the routing decision was not taken transparently and recommended a re-examination, but the Bank staff are reluctant to insist on it.

The EBRD and EIB have a chance to learn from this and insist that the routing decision for Prenj is revised. The spatial plan adoption process was not done according to the law and needs to be overturned. The route then needs to be publicly consulted, based on a clear overview of the pros and cons of each option. Such a process would take some time, but could have been completed long ago if it had been done when people near Mostar first raised their concerns.

High-risk projects need solid foundations

With the open days, JP Autoceste has taken a step forward in improving its communication and building more open relations with project-affected people, but the question remains whether it will be enough without leaving options available for route changes.

It is for the Federal authorities to decide on what options are open, but the EBRD and EIB can make it a condition of their financing. However, the EBRD’s publication of the project ESIA for consultation suggests they are skipping this stage again, risking another backlash. Lack of early stage consultations may negatively impact implementation and result in increased costs for an already extremely expensive project, which in the end will be paid by the public. If the EBRD and EIB are truly interested in improving the lives of Bosnia and Herzegovina’s people, they need to ensure that everything possible is done to avoid this.

This billion-euro project with a 10-kilometre tunnel in karst terrain is risky enough, without further delays caused by improper consultations during the planning stages. Open days are welcome, but they need to be built on more solid foundations.

‘Delivering Impact Together’ … unless things get complicated: EBRD Annual Meeting marked by shrinking civic space

Focus on human rights intensifies at EBRD Annual Meeting

The European Bank for Reconstruction (EBRD)’s 33rd Annual Meeting in Yerevan was overshadowed by escalating human rights issues in several member countries. Civil society representatives from Georgia, protesting the newly introduced ‘foreign agent’ law aimed at repressing civic freedoms, expressed their fears about their government’s assault on democracy. Echoing these concerns, representatives from Kyrgyzstan highlighted the recent approval of similar regulations in their country, while representatives from Armenia sounded the alarm on multiple strategic lawsuits against public participation (SLAPPs) filed by mining companies aimed at silencing environmental activists.

The EBRD claims to be committed to fostering economic progress and sustainable reconstruction in countries that uphold the principles of multi-party democracy, pluralism, and market economics. But critics argue that the bank’s actions don’t always match its words. Mariam Patsatsia, a community support coordinator at Georgian non-governmental organisation Green Alternative, highlights this discrepancy: ‘The EBRD’s commitment to its stated goals is inconsistent, resembling more of a pendulum swing than a steady progression. Georgia is a prime example of this. Having once represented a beacon of democracy in the region, it now risks collapsing into full-fledged autocracy. We hope to see the EBRD not only recognise the risks posed by these detrimental changes but also be prepared to respond effectively.’

During their meeting with civil society, the EBRD President and Board of Directors publicly recognised this lack of civic space as a significant risk and reaffirmed the importance of meaningful civil society engagement. Reflecting on these issues, several board members displayed a willingness to find solutions to how the EBRD can better address retaliation risks and improve its approach to public participation.

At the Independent Project Accountability Mechanism (IPAM) sessions, one of the key presentations centred around the EBRD’s irresponsible withdrawal from the controversial Amulsar gold mine project in Armenia. In bilateral meetings with the Board of Directors, Armenian civil society representatives stressed the need for the EBRD to redress the harm caused by the project and to enhance its environmental and social safeguards. Their request for the bank to incorporate these lessons and prevent similar issues in future investments was met positively by members of the board.

Pressure mounts on EBRD to stand up for human rights

On the eve of the Annual Meeting, 60 civil society organisations released a joint statement offering straightforward recommendations on how the bank can effectively respond to increasing human rights risks. These action points include increasing the transparency of projects promoted by public-sector clients, proactively engaging with rights holders to inform due diligence and verify information provided by clients, assessing retaliation risks and developing an effective response mechanism, and committing to a shared responsibility to redress the harm caused by problematic investments. Their message was delivered to the EBRD President and relevant stakeholders during the public consultation session.

While the EBRD has made concerted efforts to promote human rights by introducing different initiatives such as the Civil Society Steering Committee, the Just Transition Initiative, and the Better Work Uzbekistan programme, as well as advocating for policies that promote a safe space for civil society, much more needs to be done at the project level to safeguard human rights.

There’s a clear mismatch between the EBRD’s aspirations and how projects are actually implemented on the ground, particularly when it comes to retaliation prevention and response (as seen in the Indorama project in Uzbekistan), seeking and considering stakeholder feedback (as in the Corridor Vc project in Bosnia and Herzegovina), and redressing the harm caused by problematic projects (as in the Amulsar project in Armenia or investments in grain and poultry producer MHP in Ukraine). To prevent these abuses from happening again, the EBRD must put its top-level commitments into action by strengthening its human rights due diligence and updating its policies.

Sustainable infrastructure must be inclusive

The EBRD prides itself on its approach to the green economy, exemplified by its flagship Green Cities initiative, and is currently developing a new sustainable infrastructure strategy for the transport and urban sectors. At meetings with the President, Board of Directors and senior bank management, civil society participants provided constructive input on how to make EBRD investments in these sectors more inclusive and sustainable. Bankwatch has documented a critical mass of cases demonstrating the challenges facing EBRD projects on the ground, the need to adopt circular economy principles, and the urgency of decarbonising these sectors.

A key concern raised by civil society participants was the need for the stronger integration of gender considerations into transport projects and municipal services. They stressed the importance of incorporating the EBRD’s measures and existing good practices into its investments to ensure women have access to reliable, safe and affordable public transport, which is crucial for supporting their role as carers and providing a gateway to economic, educational, and other opportunities. They also called for women and other vulnerable groups, such as people with disabilities as well as young and older people, to be included in the planning and design of projects that impact their daily lives.

Rebuilding Ukraine: Smaller municipalities need more support

In the aftermath of Russia’s full-scale invasion of Ukraine, the EBRD was prompt in establishing new programmes. Yet, despite being the main financial supporter of Ukraine’s reconstruction and development, the EBRD has failed to change its skewed approach to financing Ukraine. The fact is that the EBRD continues to primarily support large-scale projects overseen by corporate enterprises, agricultural holdings, and major cities. Notably, there are no projects in its Ukrainian portfolio specifically aimed at supporting smaller municipalities.

Given its recent capital increase, it’s imperative that the EBRD overhauls its approach to financing Ukraine. Efforts should be directed at preserving environmental standards and addressing modernisation, recovery, and reconstruction needs at the local level.

New Agribusiness Strategy: An opportunity to transform agri-food systems

With the EBRD set to review its Agribusiness Strategy this year, Bankwatch’s recommendations were well received by the bank’s leadership. Although EBRD investments in the agribusiness sector between 2019 and 2023 helped increase agricultural production in its countries of operations, they failed to adequately address the challenges of food security and sustainable agribusiness.

In Bankwatch’s view, the EBRD has the potential to transform agri-food systems through targeted investments and policy dialogue, implementing climate and circular-economy solutions, and enhancing environmental standards.

Reporting neglects human rights impacts

Last year, Bankwatch published a ‘forgotten annex’ to the EBRD’s 2022 Sustainability Report, highlighting a number of cases involving human rights violations in EBRD investments that were omitted from the official report and received no mention in the environmental and social performance documentation for these projects.

Once again this information is notably absent from the 2023 Sustainability Report, which largely focuses on the EBRD’s efforts to ‘green’ the energy sector, industries, the financial system, and cities through direct investment, technical assistance, and policy dialogue

Nina Lesikhina, policy officer at Bankwatch, highlights this significant transparency gap in the EBRD’s reporting: ‘None of the EBRD annual reports contain project-level information on environmental and social performance. In 2023, the Bank supported 464 individual projects, but we have no ex post evaluation information on the impacts of these projects, as implemented. Nor do we have any publicly available aggregated data, for example, on the effectiveness of stakeholder engagement, measures to reduce gender-based violence and harassment, or grievance redress mechanisms at the project level. The EBRD commits to upholding these standards and should report on them.’

The EBRD’s draft 2024 Environmental and Social Policy affirms that the bank will report annually on the environmental and social risks and impacts linked to its projects. Therefore, Bankwatch calls on the EBRD to ensure that all of its aggregated project data are carefully collected, analysed, and documented in its annual Sustainability Report. The EBRD must demonstrate that its investments not only bring green benefits but also uphold human rights as an ultimate development goal.

Can Ukraine’s EU-backed recovery plan deliver on its green promises?

EUR 50 billion in EU funding has been earmarked for Ukraine to implement the reforms detailed in the Ukraine Plan. These measures must align with the Ukraine Facility Regulation and the goals and policies of the EU, ensuring not only a return to pre-war conditions but also contributing to a more sustainable approach to the development of Ukraine and its integration within the EU. Although the plan was endorsed by the European Commission in April and approved by the Council of the European Union in May, future periodic evaluations will determine whether or not these criteria have been met.

It’s particularly important that the Ukraine Plan adheres to the provisions of the regulation on meaningful stakeholder engagement, the allocation of funds to subnational authorities, as well as the principles of ‘do no significant harm’ and ‘leave no one behind’. Additionally, the plan and overall financial framework within Ukraine Facility must ensure that at least 20 per cent of the overall proposed investment budget is allocated to climate, environmental, and green transition measures, including biodiversity conservation. For this reason, adherence to these requirements is essential if Ukraine is to receive further financial support.

We’ve taken a close look at the environmental aspects of the plan, particularly the measures outlined for safeguarding the environment during reconstruction efforts.

Green shoots of recovery?

The Ukraine Plan takes several positive approaches to the reconstruction of the country, such as emphasising energy and resource efficiency during the construction and renovation of buildings. Additionally, it prioritises the restoration and modernisation of municipal infrastructure, such as heating, water supply and drainage systems, while supporting the production of green building materials in line with EU standards.

Ukraine’s planned energy sector reforms aim to improve the legal framework for the development of renewable energy sources, increase the efficiency of centralised heat supply systems, enhance energy efficiency in public buildings, and promote the domestic production of energy equipment.

These measures are vital, particularly given the findings of a recent study on the climate impacts of the first 18 months of Russia’s war in Ukraine. It reveals that the prospective national rebuild could potentially increase greenhouse gas emissions by over 50 million tonnes of carbon dioxide equivalent (CO2e). However, a more sustainable approach to reconstruction involving energy-efficient technologies would reduce this figure significantly over the long term.

Ukrainian non-governmental organisations Ecoaction and Ecoclub have been actively involved in shaping the government’s reconstruction plan from the outset, offering valuable recommendations, particularly for the energy sector. Encouragingly, some of their suggestions have already been incorporated into the plan, which bodes well for a future collaborative approach.

The plan also signals positive developments for the agricultural sector, with a strong emphasis on sustainability and green initiatives. Notably, the plan prioritises small and medium-sized farms, representing a significant shift from previous policies, which disproportionately favoured large agricultural enterprises. This focus on smaller farms, known for their less environmentally harmful practices, is a welcome change.

The planned reforms also include developing advisory services and promoting the transition to products with higher added value. If implemented effectively, these measures have the potential to foster more sustainable farming practices and contribute to a greener, more resilient agricultural sector in Ukraine.

While the Ukraine Plan addresses the issue of climate change with a focus on state and international climate policy, including the establishment of a Scientific Expert Council on Climate Change and a commitment to preserving the ozone layer, its lack of emphasis on carbon pricing mechanisms, particularly the EU Emissions Trading System, is a cause for concern.

Although adaptation to climate change is mentioned in the agriculture section of the plan and in relation to national legislation, it lacks a dedicated chapter. This is a crucial oversight, as communities are already developing and implementing recovery plans. To support their efforts, national policy must seamlessly integrate with local policies, providing a clear framework that prioritises climate adaptation.

Contradictions and inconsistencies

Although the Ukraine Plan acknowledges the importance of biodiversity conservation, the focus is limited to forest management at the expense of a more comprehensive approach. It’s encouraging to see that the plan outlines the development of a National Biodiversity Strategy and Action Plan aimed at increasing the protection of nature conservation areas and restoring ecosystems damaged as a result of the war. However, there is no mention of the biodiversity strategy in the list of reforms, and specific targets for increasing the size of these protected areas are notably lacking.

The plan proposes legislative changes to preserve forests and combat deforestation and degradation. However, it also aims to increase wood production significantly over the next decade from 15 to 25 million cubic metres, which is hard to reconcile with a commitment to preserving forests and the EU’s stern measures on deforestation-free products. The Ukraine Plan’s forest management strategy should focus on addressing environmental concerns, particularly the prevention of forest degradation, as outlined in the EU Deforestation Regulation.

Another contradiction arises in the energy sector. The plan’s stated goals of decarbonisation, decentralisation, and efficiency are completely at odds with its hopes for a ‘nuclear energy renaissance’. The development of nuclear energy is neither financially stable nor economically profitable. Over the past 30 years, new nuclear power plants have consistently encountered cost overruns and significant delays worldwide. Nuclear generation directly opposes energy decentralisation by contributing to even greater centralisation of the energy system, jeopardising energy security for decades to come.

Considering the recent loss of almost all of the country’s coal generation due to Russian shelling, cheaper and faster energy solutions are now desperately required. Instead, distributed generation from renewable energy sources offers an immediate and cost-effective solution that can empower individual communities and consumers. Ukraine has no time to wait for nuclear units.

Fertile ground for improvement

With global and domestic temperatures continuing to rise each year, the plan fails to incorporate measures that target the impacts of the climate crisis on communities. While the plan addresses climate adaption at the national level, it omits any strategy for tackling the consequences of climate change at the local level.

Agriculture is a sector acutely vulnerable to the effects of the climate crisis. But the only adaptation solution mentioned in the plan is irrigation, with reference to its positive impacts on the environment. Yet, this sole measure is nowhere near enough. The plan needs to adopt a joined-up, holistic approach to climate change adaptation that meets the diverse challenges posed by droughts, floods, and other climate-related events.

Surprisingly, for all its focus on small and medium-sized farms and adopting a green approach to agriculture, the plan fails to address the fundamental issue of Ukraine’s extensive arable land. While acknowledging that 70 per cent of Ukrainian territory is arable, the plan neglects the long-term risks associated with this pattern of land use. Reducing arable land and increasing productivity in cultivable areas are crucial for sustainable agriculture.

However, this should not be misinterpreted as a justification for rejecting green measures. Enhanced productivity should be achieved through sustainable practices, not by intensifying the use of pesticides and fertilisers. The goal is to optimise production efficiency on existing arable land, not to expand it.

Sustainable future within reach

In conclusion, while the Ukrainian government’s recovery plan offers many positive steps, a closer look reveals contradictions and inconsistencies that conflict with the principles of a green recovery. The Council of the European Union already approved the plan, the monitoring and assessment of the plan’s implementation and its adherence to the Ukraine Facility Regulation and the EU’s climate and energy goals would be key in the next period.

The recommendations provided by advocacy organisations like Ecoaction, Ecoclub, CEE Bankwatch Network, and Transport & Environment – now in the hands of the Council and the European Commission – have the potential to put the plan on a more sustainable footing. Upon approval by the Council, vital financing and investments are expected to flow, allowing Ukraine to receive regular tranches for implementing the plan.

The original article in Ukrainian is available here.

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