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Why not do the obvious and use the EU bugdet for energy efficiency?


The European Commission recently published the new draft EU budget, the so-called Multi-annual Financial Framework (MFF), which defines the size and spending priorities for the period between 2014-2020 and aims at ‘results-oriented financing’. If used in the right way, the EU budget has the potential to help achieve the goals of the EU 2020 Strategy and overcome the triple crises of climate change, economics and energy dependency.

The Commission’s proposal includes several positive aspects. By ensuring that actions to avoid climate change are included in the design of EU-funded projects, addressing climate change is generally supported throughout the budget proposal.

Yet the proposal remains disappointingly unambitious, particularly from the central and eastern European perspective. The proposal does not guarantee financing for energy efficiency measures and small scale renewables in the CEE region, developments which promise enormous potential in the fight against climate change.

At the same time, some budget lines in the proposal – for example the European Regional Development Fund (ERDF) and the Cohesion Fund – mention energy efficiency and renewable energy as options but without earmarking concrete financing amounts. In the energy sector, the largest chunk of financing assigned for a specific purpose is to be spent on large scale projects under the Connecting Europe Facility like electricity and gas interconnectors.

Building an interconnected electricity market at the European level might well be a good idea that would enable Europe to share renewable energy across the continent. But CEE countries do not have the potential for the large scale export of renewable energy, and with the current structure of the sector, companies like CEZ in the Czech Republic or PGE Poland who are in the business of lignite will be able to use these EU funded interconnectors to provide one of the dirtiest energy sources to the market.

Energy efficiency – the low-hanging fruit in central and eastern Europe

New member states in CEE need a different approach to the energy sector altogether. Many are dependent on coal and imported gas, and large amounts of energy are wasted, with poorly-insulated buildings further increasing energy losses. No wonder that the ten most energy-intensive countries in the EU are in CEE. These countries need on average three times more energy per GDP unit than the EU-15 member states.

Consequently, efficiency measures such as thermal insulation of buildings should be the priority for public funding. These measures are the most cost-effective option and promise the highest added value to achieve EU climate targets.

Additionally, efficiency investments create jobs that are spread evenly over the region and benefit small- and medium-size enterprises in the building sector, one that was especially devastated by the economic crisis. A study by Miroslav Zamecnik (pdf in Czech language) of the Czech government’s economic committee shows that the Czech Green Investment Scheme, supporting efficiency measures in private housing, created 11 100 new jobs annually. Zamecnik writes: “In terms of how each Czech Crown invested benefitted the national economy, I can see no better anti-crisis measure.”

Similarly a study from Central European University (pdf) about options for retrofitting buildings in Hungary shows that a deep retrofit programme would create 131 000 new jobs by 2020 and create high energy efficiency standards in existing buildings. The necessary investment would be EUR 4,5 billion per year initially and decrease to EUR 2,8 billion in the final stage. The same study also highlights that diverting subsidies from fossil fuels and using EU funds wisely would provide the public budget with EUR 1 billion annually, enough to leverage the necessary private capital for such a programme to succeed.

Although Europe would like to be seen as a champion in the clean energy industry and a leading advocate in the fight against climate change, the Commission failed to assign funding for some of the most promising mitigation measures in the Multi-annual Financial Framework. It needs to get its act together in the next stage and dedicate sufficient funding to energy efficiency in its proposal for the future EU Structural and Cohesion Policy.

In this way, European funding will achieve several crucial goals: ensure economic convergence of the poorest regions by cutting their energy bills, deliver on the efficiency targets in the EU 2020 strategy and create hundreds of thousands of jobs in a sector where they are most needed.

Original image CC 2.0 courtesy by Krzysztof Pacholak – http://multicontrast.blogspot.com

From the outside looking in on EU money for Balkan accession


The Instrument for Pre-Accession Assistance (IPA) provides financial assistance for countries engaged in the accession process to the EU. Currently these are countries in the Western Balkans – my home country Macedonia among others – Turkey and Iceland.

The IPA funds have the potential to significantly contribute to the sustainable development of our countries, while preparing for EU entry. Unfortunately this potential often remains unfulfilled.

Five years after the establishment of the IPA, there remains little capacity of national authorities to manage properly the funds and to prepare useful projects. Due in part to this slow progress, Macedonia is facing the risk of losing part of the funding. Equally disturbing are the poor decisions about what to use the IPA funds for. For instance the current framework for these decisions, as defined by so-called Operational Programmes on the national level and the European Commission itself, does not allow for funding renewable energy and energy efficiency projects, an area in which investments are much needed in all Western Balkan countries.

Public consultations on the future IPA

The easiest way to find out what people need in our countries is simply to ask them. So this spring the European Commission organised consultations for the future of IPA after 2013, which is when the current framework expires. The consultation was in the form of an online survey to which civil society organisations and the public could send inputs.

So far so good. But apart from providing a basic form the consultation process has several deficiencies that limited people’s ability to get involved. First, there was very little promotion of the consultations and it not well organised. For example I had to inform the EU’s technical assistance for civil society organisations in Macedonia – a facility that aims at supporting civil society organisations – that the call for consultation existed. Moreover the background documents to the consultations often weren’t provided, and clearly stakeholders generally – governments, financial institutions, bilateral donors and civil society organisations – were not equally informed about the process.

Already in March, Bankwatch and organisations from the Western Balkans, including – Eko-svest (Macedonia), EDEN Center (Albania) and CEKOR (Serbia) – had asked (pdf) the European Commission to improve the process and prolong the consultation period. For whatever reason and despite numerous inquiries to follow-up on our letter, the Commission took more than three months to reply.

The response wasn’t worth the suspense. The Commission’s letter (pdf) argues that it was unable to prolong the process by more than one week and to organise civil society meetings requested by us. It also mentioned having “… deliberately restricted information on the questionnaire to IPA stakeholders as some of the questions were complex, and they all required prior knowledge of IPA’s existing structures and practices.”

It’s still unclear to me whether the Commission intended to have a true consultation process or just gather statistical and other information from just “knowledgeable” representatives. After all the IPA instrument is a financial tool that affects every citizen in our countries. A meaningful consultation would therefore mean listening to the opinions of the all, including citizens and civil society organisations.

As things stand, this consultation process was far from open, participatory or meaningful. It certainly did not help bringing the people in our countries closer to the EU and its values.

Original image CC 2.0 courtesy of Jeni Rodger.

18 000 ask Slovenia to adopt clean energy. EBRD and EIB, take a hint.


Based in Croatia, I’ve been following the case of the planned new 600 MW unit at the Sostanj lignite power plant (TES6), and watched as it has gone from bad (preventing Slovenia from reaching its long-term climate targets) to worse (suspected corruption and dubious economic viability).

So when Slovene environmental organisation FOCUS invited me to join them in handing over 18 000 signatures asking their government to introduce a “clean energy future” without fossil fuels or nuclear, I was more than willing to join in. (See some images from the action below.)

Five weeks ago Bankwatch and FOCUS, with the help of the petition portal care2, launched a petition on the Slovene government’s National Energy Plan that focused on five bad options involving a new unit in Sostanj (TES6) or nuclear energy, or both.

Both the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) have approved financing for TES6, which is why also Bankwatch got involved. TES6 would basically replace the power plant’s existing units, but because of its scale, this one lignite power plant alone would swallow up almost the country’s entire carbon budget by 2050.

It was great to see so many people signing our petition within only five weeks. Slovenia might not be a country attracting lots of international attention. But as a small, flexible and developed country, it can and should be a role model for a transition to a sustainable energy model. Now, while the National Energy Plan is being developed, is the right moment for Slovenia to make strategic decisions to ramp up renewable energy and energy efficiency measures in the country.

Certainly, taking the leap towards an energy efficient, renewable energy-based economy is not always easy. In Slovenia, for example, renewables are seen as synonymous with wind turbines, for which there is only limited potential. Yet the country’s large sustainable biomass potential remains virtually unexplored.

This is exactly where the EIB and the EBRD should come in. Have they tried to assist the Slovene government in exploring Slovenia’s new renewables potential? Have they financed energy efficiency projects in the country? Instead of pressing on with the new unit in Sostanj, they should focus on financing a shift away from fossil fuels towards renewable energy sources and energy efficiency.

Although the petition was aimed at the Slovene government, the two international financial institutions should consider the message. As one of the more outspoken signatories puts it:

    Lignite is a filthy dirty type of coal that causes untold harm to the environment. Do take heed and invest in green energy!!!

 
All images by FOCUS, Slovenia

EBRD: Don’t open pandora’s box with lignite open cast mine in Serbia


It’s a busy time here in Serbia: after visiting Roma families to be resettled for road constructions two weeks ago, I’m now in the village of Vreoci, where the planned resettlement of 1180 families has caused some controversy and authorities have now started the excavation of bodies from the village’s cemetery. The reason for which people and their history are supposed to leave is the development of a new field in the lignite open cast mine in the Kolubara mining complex, Serbia.

The European Bank for Reconstruction and Development (EBRD) and the German development Bank KfW (Kreditanstalt fuer Wiederaufbau) are considering providing loans worth EUR 140 million (80 and 60 million respectively) for the project.

Resettlement without any plan or consent

The resettlement of the Vreoci village, about 60 km south of Belgrade is a precondition for the implementation of another project (without EBRD financing) at the Kolubara mining complex. During a meeting with a representative of the Vreoci population, I have been told that 1180 families should be evicted in the framework of this project.

But so far only 170 families have accepted financial compensation. Others are requesting to be resettled together and with all their belongings, to a location similar to the current one. The Serbian Ombudsman has criticised the fact that the opinions of the Vreoci inhabitants have not sufficiently been taken into account and that they have been stigmatised in the Serbian media for defending their rights.

Despite the unclear situation, the authorities last night began to excavate bodies from the village’s cemetery, ignoring objections by inhabitants and the fact that no agreement has yet been reached.

Although the resettlement is not part of the EBRD’s Kolubara project, it is nevertheless closely connected – it is happening only a few kilometres away on another field in the same mining complex. The EBRD of all institutions should be very cautious when considering projects that are related to resettlement issues in Serbia. The Gazela bridge rehabilitation offers more than enough lessons that the bank should have learned by now.

But non-consensual resettlement is not the only reason to criticise Kolubara.

Update (July 6)
In view of the recent developments, the local community has now requested the EBRD to postpone its decision on the Kolubara loan (scheduled for July 12) until the relocation of the village has been implemented in agreement with the inhabitants and without further disregard of their rights. You can read their compelling letter here (pdf).

Update two (July 28)
After postponing the loan decision by two weeks, the EBRD yesterday approved the EPS Kolubara Environmental Improvement project. We are in contact with the bank to learn about their responses to the issues raised by us and the Vreoci community.

Kolubara is only one piece in the fossil fuel puzzle

The European banks’ investment would in effect support the construction of lignite power generation to the tune of 700MW at Kolubara – part of the solution for Serbia’s energy needs according to the country’s national energy strategy.

Anyone taking the danger of climate change seriously must agree that there’s something deeply flawed with Serbia’s priorities. Kolubara will deepen the country’s dependency on lignite – the dirtiest of all fossil fuels. At the same time, the Serbian authorities have not yet seriously considered the potential for energy savings (except for a few selected industry sectors) and renewables are still sidelined in our country.

The EBRD apparently doesn’t see it as I do. During a recent meeting, EBRD staff made clear that the bank is indeed worried about hidden state subsidies for the coal sector in Serbia. But while recognising the large amount of investments needed for the development of renewable energy sources in Serbia, the EBRD’s answer was not that it should focus its investments on this sector. No – the EBRD claims that its involvement in Kolubara is necessary to improve the present structure of coal-for-electricity production.

Consequently, the Kolubara project is tagged as ‘environmental improvement’ on the EBRD’s website. But no matter how efficient future lignite processing is, making investments into perpetuating lignite production instead of clean electricity generation resembles re-arranging the deck-chairs on the Titanic rather than serious ‘environmental improvement’.

This becomes all the more relevant when considering the wider implication of this type of lending by the EBRD and other public financial institutions. Because Kolubara is only one piece of a much bigger fossil fuel puzzle being pieced together under the nose of the European Union’s climate targets: While governments in central and eastern Europe plan to continue their reliance on fossil fuels (coal in particular), international financial institutions like the EBRD and the European Investment Bank (EIB) are helping them on their way, instead of sending a strong message that this isn’t the way forward.

There are not only individual cases, like Kolubara in Serbia, the Sostanj lignite power plant in Slovenia or potentially a number of coal power plants in Poland. The EBRD is also investing in oil and gas – more sectors that hardly count as building new markets. The EBRD refuses to phase out its fossil fuel investments and actually increased them dramatically (pdf) between 2006-2009.

National governments, as sad as it is, might be tempted to choose the easy option and opt for coal – which appears cheap when not paying its external costs – rather than building up a renewable energy sector. International financial institutions on the other hand have no such “excuse” for not using the financial resources at their disposal in innovative, climate-friendly and truly sustainable ways.

Find more details on the Kolubara project in our briefing paper (pdf).

Video: Polish perspectives on the EU presidency

Today Poland takes the helm of the EU presidency, but the country’s recent move to unilaterally block a 25 percent reduction target for EU carbon emissions has solidified expectations that Poland would hinder a more ambitious EU climate policy agenda.

Bankwatch’s Polish coal campaigner Kuba Gogolewski describes in the video below how European public banks fit in to the picture, as Poland pushes the breaks in European climate policy by sustaining its large-scale domestic coal power production.

More information is on our project page on Coal-fired power plants in Poland

See also our comment in the EU Observer

Deja-vu in Belgrade


On June 5, I visited one of the largest informal Roma settlements in Belgrade called Buvljak. Just a few hundred metres from the European Investment Bank’s (EIB) regional office in Southeast Europe, Buvljak is home to more than 200 families.

To make way for roads connected to a new bridge over the Sava, 73 families are planned to be resettled and their homes torn down. The access roads to the Sava bridge are financed by the EIB, which has committed 160 million euros. The actual bridge was constructed with financial support from the European Bank for Reconstruction and Development (EBRD).

The purpose of my visit to Buvljak was to monitor how well Belgrade authorities and the EIB are involving the people at Buvljak in the decision-making process about the resettlements.

I know from previous experiences that excluding the people affected by resettlement from the decision-making process will lead to poor results. As part of reconstruction works on the Gazela bridge (financed by the same two banks above), in August 2009 about 170 families have been forcefully resettled, some to remote areas without access to work. At least 10 families were forced to return to Belgrade, some of them now living in Buvljak, since they weren’t able to make a living outside of Belgrade. Many of those who used to live at Gazela still haven’t found work in their new homes, and uncertainty and stress have led to tensions in some of the new settlements. [1] (You can see details in Bankwatch’s photo and video blog Out of Sight, on the Gazela resettlement.)

The Buvljak inhabitants confirmed our fears about a lack of public participation. I learnt from them that in April, they had been given a few options about resettlement. The proposed areas are far removed from Buvljak and the places where Roma in Belgrade usually are able collect and recycle waste, which is how many make a living. Even worse, the proposed locations include a site next to a dirty and polluting mine complex and coal power plant, another is in the wetlands, another near a cemetery, and others are in areas well known for racial hostilities and previous attacks on Roma.

All the proposed locations are far from urban infrastructure, healthcare facilities, public transport lines, which shows clearly that the resettlement as it is planned will marginalise the Roma communities even further.

The specific housing options presented to the families were divided into three categories: 35 square meters for families up to 5 members, 45 square meters for families between 5 and 10 members, and 60 square meters for larger families. An external expert, whom we asked to judge the quality of the planned houses, told us that there are, already in the planning, serious problems with the insulation for heating and humidity.

The plan is also to group all of the houses in sequential blocks which would place Roma together and at the same time isolate them from the rest of the community. Despite the housing blocks, neighbours that cooperate together to get by in Buvljak might be separated when resettled, a prospect Buvljak inhabitants want to avoid.

Integration at the new locations is the main concern for people in Buvljak. So far they haven’t seen the actual resettlement locations that are being proposed nor have they spoken to anybody in these communities. Such an arrangement is crucial before the people from Buvljak give consent to be relocated and is an important step towards integration in the new communities. Unfortunately such measures seem irrelevant to the Belgrade authorities and developers.

When calling on the banks to withdraw from such controversial investment projects, the EIB and EBRD often claim that their involvement means that at least minimal standards will be followed. But as the Gazela resettlement shows, this will not happen automatically. While I find myself again calling on the banks to make sure the rights of Roma are being respected, those in Buvljak live in a state of uncertainty about their future.

 

Image: One of the families from Gazela that now lives in Buvljak. Taken from http://outofsight.tv

1. Interview with one of residents of Barajevo settlement, located on the outskirts of Belgrade, which is one of 5 new settlements of Gazela inhabitants.