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There you have it: Green investments do create jobs


You can hear it from all corners: Job creation is a must to reduce the negative impacts of the economic crisis. It is also at the centre of the European Union’s efforts to ensure a dynamic European economy.

The only problem is that some of the “quick fix answers” by European financial institutions don’t seem to work out quite that well.

What apparently does work, so the unmistakeable outcome of a report in the Czech Republic, are investments in energy efficiency measures (which unfortunately are being neglected all too often by both European institutions and EU member states).

The report Home is where the heat is (pdf), commissioned by Bankwatch and other organisations in the Czech Republic, shows how targeted public financial support for energy efficiency, mainly thermal insulation of buildings, helped create jobs and increase economic activity across the country.

Job creation at low public cost

The report looks at two financial support schemes which provide subsidies for the insulation of residential buildings. Both the ‘Panel’ scheme and the ‘Green light to savings’ scheme produce impressive results:

    The Panel scheme

  • Launched in 2001, it provided EUR 776 million in interest subsidies (490m) and bank securities (286m) by 2010.
  • Over its nine year span, it helped to create or retain 58 980 annual job opportunities, i.e. 6553 jobs every year.
  • At the same time it mobilised nearly EUR 1,92 billion in private investments.
  • About one quarter of the 1,2 million flats in multi-family prefabricated houses in the Czech Republic have been insulated under the scheme, reducing heating costs for households.

    • The ‘Green light to savings’ scheme

  • Launched on 1 April 2009, applications for EUR 470 million have been processed.
  • Between April 2009 and July 2010 the scheme generated 19 059 jobs.

Broader economic benefits

There’s more than jobs: The investment programmes had wider positive impacts on the economy by supporting the crisis-hit construction sector and mostly small, domestic companies working with domestic suppliers across the country. Unlike large infrastructure construction, the job opportunities have been spread evenly across all of the country’s regions.

Furthermore, by leveraging large amounts of private finance (by the customers themselves) the investments have helped keeping the economy moving in times of financial crisis. The economist Miroslav Zamecnik, co-author of the report and also of the Czech anti-crisis response has called the Green light to savings program “the single most successful anti-crisis measure.”

Clever use of cohesion policy promises more success

The Czech example should serve as a stimulant for the governments of EU member states as they start planning what to do with the money coming from the future Cohesion Policy (2014-2020).

Specifically in central and eastern Europe, where the potential to decrease energy consumption is still enormous, using EU funding for similar programmes is not only imperative from a climate perspective. It also promises to mitigate the negative impacts of another impending economic downturn in Europe.

The current legislative proposal from the European Commission explicitly calls for the prioritisation of investments into energy savings across the entire housing sector, but on the whole Member States are free to decide how and where they choose to prioritise regional funds.

Therefore, together with other green NGOs, we invited national and EU representatives to our event Green investments to the rescue, where we will discuss the potential of Cohesion Policy to steer Europe’s regions towards a sustainable economy.

Read more on and register for the event on our website.

Download the study Home is where the heat is: Thermal insulation programs for buildings in the Czech Republic and their positive effects on job creation (pdf).

Five ways to bring Cohesion Policy closer to citizens


After the European Commission had published its draft regulations for the future Cohesion Policy (2014-2020) it passed the ball to European Member States to prepare their national positions on the draft regulations and decide which priorities they want to focus on during the next EU funds period.

For people like me who are monitoring public spending and working to bring their countries on a more sustainable path, this is a great chance to influence, at an early stage, how a big chunk of money will be spent in my country.

Well, it could be, at least, if authorities in charge can be bothered to actively invite civil society organizations, academics and other “unusual suspects” to these discussions at an early stage. That is the case in Latvia. And by not only relying on inputs from state institutions, the government is having a better idea of what people actually want to get from EU funds.

Apparently, Latvia is a shining example among new member states though. Other governments are much more uptight about public involvement and some of my colleagues in other countries struggle to get valuable and timely information.

So by way of describing how the public consultation on the future Cohesion Policy went in Latvia, here are five golden rules that might help other countries to do the same:

    Be open

    The Latvian Ministry of Finance organised a public hearing on November 9, which was open to anyone interested. Representatives from the Ministry and the European Commission’s Directorate General for Regional Policy were available for discussions during three workshops on Strategy and Planning, Implementation and Control, and Ex-ante Assessments and Monitoring.

    Go public

    Information about the meeting had been circulated widely beforehand. At the end about 150 participants represented public officials, private companies, consultants, academics, social partners and NGOs.

    Allow real debate

    The meeting was well moderated and everybody could express their opinion. Despite the cliché that Latvians are rather calm and withdrawn, each point was debated vigorously. To my surprise, the future Cohesion Policy generated that much interest!

    Publish the outcomes

    The Ministry of Finance published a summary of the meeting, highlighting the most interesting discussions and viewpoints (in Latvian). (The presentations held during the meeting are still missing though.)

    Be creative

    You wouldn’t have expected that, now, would you?

    To further inspire debate about cohesion policy priorities in Latvia, the Ministry of Finance asked a think-tank to come up with criteria on how to define priorities and to organise further public debates on the priorities.

    I was invited to present possible criteria for selecting EU funding priorities and aspects of sustainable development during the first of these workshops. And more debates are to take place in different Latvian regions between November 16 and 25.

Latvia is one of very few countries where the European Commission’s proposals have been discussed so widely and openly. If all goes well, by Christmas time Latvia will have decided on thematic priorities that it wants EU funds to focus on in the future. And the decision will have been made with the involvement of more than just a few desk officers.

Way to go, Latvia!

If you want to have even more insights about building a sustainable economy with the help of EU funds, come to our event Green investments to the rescue.

And teach your European colleagues when you meet them this or next month.

The people’s perspective please: are public social safety nets important?

Yesterday, the European Bank for Reconstruction and Development (EBRD) published its Transition Report for 2011, subtitled “The People’s Perspective”. This is because the study pays unprecedented attention to how regular households in post-socialist countries are managing after almost three years of economic crisis.

And, as a matter of fact, people in this part of the world are not doing well at all according to the findings of the report:

  • wages have been reduced in a third of households,
  • a fifth of families have one member who has lost a job and, importantly,
  • 38 percent of households have had to reduce staple food consumption
  • while 13 percent were forced to skip or postpone medical treatments

(the last two figures compare to 11 percent and 4 percent, respectively, for western Europe).

The study also finds that eastern Europeans have fared much worse through the crisis than people in western Europe. According to the EBRD, this difference is explained by three factors:

  • “households in the transition region suffered more crisis-related shocks such as job losses, wage reductions and declines in remittances”
  • “in comparison to Western Europe, official safety nets were much less effective in most of the transition countries”
  • “pre-crisis borrowing may have left some households in the region vulnerable”

Are social safety nets dispensable?

I wish to look more carefully at the second factor, because social assistance has been one of the most assaulted public spending areas in central and eastern Europe during the crisis. Fiscal stabilisation packages adopted across the region have centred on austerity measures most often involving cuts in social assistance.

In this context, it is important to understand what greater value a solid social assistance system can have for a society.

Can it, for instance, help people weather times of terrible economic hardship? The EBRD study finds that in western Europe, social safety nets such as unemployment and housing benefits have indeed helped those receiving them to reduce consumption less than those not being able to take advantage of them. In transition countries on the other hand, the report finds that overall, the impact of social safety nets has been less clearly positive.

The EBRD itself is not sure what accounts for this difference, but the most likely explanation they propose is that “differences in effectiveness may have had to do with the size of benefits and the speed with which they were actually delivered” (i.e., bigger and faster aid has made a difference in the West).

The study does not go much further in the analysis of this conclusion. One could even be tempted to follow up by saying that social safety nets made little difference during the crisis in eastern Europe, hence social safety nets are of no great help in general and it is not worth burdening our budgets with them.

And indeed, the EBRD gives high grades for countries that are actually doing pretty badly in terms of human welfare these days: Estonia has taken the crown from Hungary as the top scorer in the EBRD’s transition rating. The country has a 13% unemployment rate, while the public sector, wages and pensions are being slashed.

Au contraire! The value of state services

But to think that social safety nets are ballast would be a wrong conclusion; it would ignore the fact that considerable, fast assistance has actually helped in the West. In the East, we simply do not have the luxury of observing the impact of solid, efficiently distributed aid because such help has never properly developed as a bankrupt socialist system was replaced by aggressive pro-market reforms. The EBRD data would need to be studied more, but it certainly indicates that proper social assistance can make a positive difference in times of steep economic crisis.

If we agree to this, then the recommendations at the end of the EBRD report are really puzzling. I had a look at the recommendations for Romania and Poland, the former being one of the countries taking most severe austerity measures during the crisis (cuts in salaries, freezing of pensions, cuts in subsidised medicine and benefits for the sick, incapacitated and unemployed), the latter being one of the countries to have passed through the crisis almost unscathed (so far), seeing a 3.8 percent economic growth in 2010 when most neighbouring economies were contracting.

For both countries, the EBRD encourages a reduction of social protection and state involvement. Romania is commended for progress in reforming the pensions system (i.e., reducing state support for pensions by increasing pension age and moving towards private pensions) while Poland is mildly scolded for seeing fits and starts in the reform process.

But why should the recommendations be so? If state support for the vulnerable, offered properly and on time in the West, has actually helped people during the crisis, why encourage governments to cut down on it? And, if on a global level, after having seen that only state support for the banking sector has been able to avoid catastrophe – both in the US and in Europe – then why insist so much on squeezing the state out of the economy?

During the last few years top EBRD representatives – partly as a result of the economic crisis – have increasingly recognised the role of the state, not only in regulation, but also in ensuring the welfare of the population. Take for example the statement by EBRD Chief Economist Erik Berglof from May this year:

    “A strong state is needed to support nascent markets and enforce laws and regulation, and it must invest in productivity-enhancing education and health care.”

Let us now hope that such realisations will lead to more consistent support for well-run public services instead of praising countries that implement austerity measures at the expense of ordinary people without cutting the subsidies and tax breaks enjoyed by better-off businesses.

Original image courtesy of Ashish Lohorung Rai – CC 2.0

An EBRD interpretation of biodiversity protection in the western Balkans


Here, at Bankwatch, we were waiting with curiosity for the date of November 8, when the Board of Directors of the EBRD would vote on whether to approve funding for two hydropower plants, one in Croatia and one in Macedonia.

Both plants look set to seriously damage the natural habitats of endangered and endemic species and both would be built in areas that are due to be Natura 2000 sites when Macedonia and Croatia join the EU. In both cases the environmental assessment has been inadequate.

In spite of these striking similarities between the two cases, on the same day, during the same meeting, the EBRD Board approved financing for Boskov Most, while postponing the decision over Ombla. (Postponement most likely means that the EBRD Board is looking into our objections to the project.)

Why this difference in treatment of the two projects? It’s not really obvious. The only slight difference I can think of seems to be between a seriously incomplete Environmental Impact Assessment study (Boskov Most) and a seriously out of date one (Ombla) – hardly something that should justify the former.

The EBRD’s response has been less than convincing . Although its explanations on Ombla have been much more detailed than on Boskov Most, we’ll leave it to the reader to see if s/he would give the thumbs up to a project whose justifications include the following:

  1. The EIA for Boskov Most failed to analyse the impacts on mammals, primarily the Balkan Lynx – a national symbol of Macedonia.

    2. According to the EBRD, the lists of species found in the area, as noted in the annexes of the environmental impact assessment (EIA) for Boskov Most, is a sufficient analysis. Yet, the EIA contains only one page of text for analysis of the entire group of mammals.

  2. Because of its location, the construction of the Boskov Most hydropower plant will damage a national park and a future Natura 2000 site.

    3. The EBRD responded that the HPP will not disrupt the environment and future qualification of the site as Natura 2000. This is a rather naive statement. The Balkan Lynx is by far the most important Natura 2000 species in the area and its population has already decreased due to human activities. If the construction leads to the disappearance of the Lynx population, there’s a good chance the Natura 2000 qualification will follow suit.

  3. The Environmental Impact Assessment for the Ombla HPP dates from 1999, and hence no longer corresponds to reality.

    4. The EBRD replied that the Croatian Ministry of Environment considers the EIA still valid, and so does the bank as a result. For me it is less self-evident that such a statement by the Croatian Ministry of Environment can be taken at face value, particularly when the project promoter, HEP, is a state-owned company. The EBRD should at least commission an independent assessment done of the EIA’s validity.

  4. An independent study commissioned by the EBRD itself stated that the project is technically risky and not economically viable and that it could only be implemented if it was heavily subsidised by the government.

    5. This bit is really bizarre. The EBRD responded that the version of the consultants’ study read by us was labelled „final” by mistake. Since then, according to the bank, the consultants have issued a „final-final” version of the same report which deems the project viable and no longer particularly technically risky. It looks seriously like a case of changing the results to suit pre-decided conclusions to me.

  5. We raised the issue of the lack of a Strategic Environmental Assessment (SEA) for Croatia’s Energy Strategy – one of the national programmes with largest impact on the environment and the document on which the Ombla investment is based.

    6. The bank responded with a noncommittal assurance that it will continue to follow the implementation of the EU SEA Directive in Croatia while at the same time restating that the lack of an SEA for the National Energy Strategy does not invalidate its support for the Ombla hydropower plant. Sorry, I thought the point of legislation was exactly that not sticking to it does invalidate what comes afterwards. Why is a strategic assessment of environmental risks not crucial for the approval of a project that will affect the environment of Croatia for decades to come?

The EBRD cannot continue to hide itself behind project promoters’ pretenses of legality: either it sends a clear message to countries that environmental protection legislation is essential (including SEAs) or it should stop pretending that it is following EU legislation!

Original image courtesy of Lassi Kurkijärvi – CC 2.0

The day renewable energy was killed in the Czech Republic


It would be more appropriate to call this bill „the CEZ support bill” since by posing serious obstacles for renewables development it paves the way for further domination of the Czech energy market by fossil fuels and nuclear, produced by mastodon CEZ – surely no stranger to this bill considering the close connections between business and the political class in our country.

These are the sections of the new law which make Green NGOs sure that it is meant to stifle rather than support renewables:

  • Clean energy producers will lose the guarantee of uptake of their electricity to the grid. Renewable energy therefore may never get to the network.
  • Support in form of feed-in tariff will be limited by an annual threshold set for each renewable energy source. Substitution is not allowed, neither is transferring part of the quota into later years. Consequently, renewable energy companies will be competing with each other to sell their production before the quota is filled.
    As the sum of thresholds only just reaches the 13% renewable energy target of the country, these obstacles and the uncertain business environment may easily lead the Czech Republic to miss the target.
  • The bill extends funding for co-firing biomass and coal in large power plants until 2015. The decision will lead to a price increase of biomass, which will threaten small local heating plants and CHP stations and users of domestic boilers for pellets.
  • Instead of supporting the targeted use of the energy derived from kitchen waste, leaves or grass in the form of biogas, the new law financially supports the combustion of these potential energy sources in waste incineration plants, together with other high-quality, recyclable materials.

With this law, our government is cutting off any potential competitors to the powerful fossil and nuclear energy sector, embodied in the ubiquitous CEZ.

Unfortunately, such behaviour is not an exception in central and eastern Europe, and perhaps elsewhere. The European Commission therefore needs to attach strict conditionalities to the granting of EU moneys, and it needs to make sure that funds for such crucial investments as in renewables or energy efficiency are earmarked in the EU budget.

This is the kind of focus on a higher quality of EU funding that Bankwatch is advocating for. In this way, the room for such foolish laws as the one passed in the Czech Republic last week would be reduced.

Unfortunately, the legislative proposal regulating the use of EU Funds for central and eastern Europe – announced by the Commission last month – is not as strong as I or other environmentalists would have wanted it. So now it’s up to the European Parliament to step in and improve the regulations.

Original image courtesy of flickr user rgmcfadden – CC 2.0

Ombla hydropower plant: public money down the sinkhole

Today Bankwatch member group Zelena akcija/Friends of the Earth – Croatia held an action today outside the offices of the EBRD in Zagreb, calling on the bank not to approve a planned loan of up to EUR 123 million for the Ombla hydropower plant project. You can see some images from the demo here.

The loan is due for approval by the EBRD’s Board of Directors next Tuesday, 8th November, but a whole range of environmental, economic and procedural concerns about the project remain unaddressed.

Last week 34 Croatian and international NGOs address bank staff and directors in a letter calling on the bank not to go ahead with the project, but a short response from the bank mentions only mitigation measures.

We didn’t ask for mitigation measures. There are some things that just can’t be mitigated. At the very least a new Environmental Impact Assessment needs to be carried out, instead of using one from 1999.