Blog entry

Amulsar’s costs to human rights and threats to environmental defenders

The Amulsar gold mine in Armenia was supposed to be a different kind of mine, a better one. It even received a loan from the European Bank for Reconstruction and Development (EBRD) to help it meet the highest environmental and social standards in mine construction and operation.

But for years, Armenian activists, Bankwatch and other international organisations have shown that this effort has failed. The mine is a risk to water, nature, health – all of which should be protected under Armenian and international law. The local tourism industry and people’s livelihoods felt the negative impacts as soon as mine construction started in 2016.

Furthermore, local activists have been punished for speaking out against the project, denied the right to peaceful assembly and association, freedom of expression, access to information, and access to justice. Amulsar has also proved ripe for corruption.

Although plenty of studies have shown that the project will bring financial benefits to Armenia, no official project study has sufficiently demonstrated the immense costs of the project.

Bankwatch’s Fidanka Bacheva-McGrath speaks at an event in Yerevan in June 2022 about the costs of the project to nature and human rights.

New reports show Amulsar risks remain

Now, a new report from FIDH, CSI Armenia and Bankwatch exposes the full extent of the failure of the Armenian government; the company responsible for the project, Lydian; and current and former investors like the EBRD and the World Bank’s International Finance Corporation (IFC) to protect, respect and fulfil human rights and remedy the negative impacts of projects.

A second report from the Coalition for Human Rights in Development also highlights the failure of the development banks to prevent retaliation against those who have spoken out against the risks and actual harms caused by the Amulsar project.

Speaking truth to power in Armenia comes at a price. An unprecedented number of SLAPPs, strategic litigation against public participation, were initiated against independent experts, lawyers and journalists that opposed the project.

Once stalled, work on Amulsar set to start again

The project has appeared dormant as of late. In 2018, 3,000 locals signed a petition calling for a ban on mining in the region, which was followed by months of protests and blockades of access roads leading to the mining area. Simultaneously, activists were mounting legal challenges to the mine in national courts and international mechanisms. Lydian International collapsed, the EBRD exited the project, and Armenia began investigating.

With the onset of the COVID-19 pandemic in 2020 and the violation of the cease-fire on the Armenia-Azerbaijan border in 2021, it was not clear where Amulsar was headed. A decision on a complaint filed with the EBRD’s Independent Project Accountability Mechanism (IPAM) is still on the way.

Yet in 2022, Lydian Armenia applied for a new water use permit. Right after, the government of Armenia amended the country’s Mining Code to make it easier to bypass public opposition, despite a joint statement against this from 44 non-governmental organisations. A supplementary regulation allows mining to proceed even in cases where civil protests against the mining occur, which seems to be a clear response to the challenges the Amulsar gold mine project has faced.

It’s just a matter of time before the issue of Amulsar is back on the doorsteps of nearby residents.

Armenian Environmental Front’s Anna Shahnazaryan speaks about the project’s environmental impact assessment and the project’s costs for Armenia.

The way forward

In June, CEE Bankwatch Network, FIDH, CSI Armenia, EcoLur and several other local civil society groups met in Yerevan for a report launch event, where they were joined by members of the international community in Armenia and representatives from the government. In addition to discussing the upcoming challenges of the project, we also discussed the way forward.

Armenia needs to uphold the rights of local communities and environmental and human rights defenders, in line with its obligations under international human rights law.

The government should revoke all existing permits for the Amulsar gold mine project; initiate an independent expert assessment of the costs and benefits of the mine; ensure proper remedy for the negative impacts caused by the mine to local communities, human rights defenders and the environment; and conduct an independent and transparent investigation into the corruption surrounding the land acquisition in Gndevaz.

The EBRD and the IFC should support the Armenian government in implementing these steps. They should also develop human rights and environmental due diligence policies in order to better comply with the UN’s guiding principles, including meaningful public participation.

The Hungarian energy emergency action plan: delaying the national fossil fuel phase-out, undermining EU energy solidarity

Many questions remain for each of the seven measures, including timeline, scope and monitoring. What is already clear is that the action plan delays and reverses the national fossil phase-out, energy transformation and just transition. It also puts too much of a burden on Hungarian households and taxpayers, jeopardises complying with national and EU climate and energy commitments, undermines targets for 2030 and challenges EU solidarity. It lacks energy-saving and energy-efficiency measures, renewable energy actions and increased state support to help achieve all of those goals.

In mid-July, the Hungarian government announced an energy emergency action plan as a response to the current energy crisis. The government claimed that this plan would address supply disruptions and rising energy prices in Europe. Amidst severe concerns from various Hungarian stakeholders and public outcry, further details have been clarified, announced and published as a decree in the weeks since. The implementation of the plan begins on 1 August, which means quite a shock for all affected households and other sectors.

The whole energy emergency action plan is seemingly centred on increasing Hungary’s energy supply security, but according to national energy experts, and in our view, it is not suitable for that purpose. Instead, it serves to decrease the state budget deficit and puts most of the burden on citizens, especially households. This action plan seems risky, as it would go in part against the EU-required national commitments to energy transformation and just transition, and potentially delay related actions in Hungarian spending plans. This could also affect negotiations between the European Commission and the Hungarian government on adopting national spending plans. For example, the Hungarian recovery plan still hasn’t been approved more than one year after the first deadline, which was in spring 2021.

In the meantime, on 20 July, the European Commission published its ‘Save gas for a safe winter’ communication, recommending a 15 per cent cut in gas use and ‘energy solidarity’ measures. Member States discussed it and a compromised version was adopted by the Energy Council on 26 July, with only Hungary opposing the plan (Hungary was also amongst the countries opposing the original communication).

The Hungarian action plan is ‘individualistic’, as it does not contain any EU collaboration or EU energy solidarity. The European Commission says it was not notified on time about the plan, despite the fact that such a notification was mandatory.

Following the Commission’s recent communication and the new REPowerEU plan, all Member States need to consider measures to address the ‘winter energy crisis’. The Hungarian action plan is not a good example for other Member States – it’s short-sighted and inadequate.

In this post, we analyse each of the seven measures of the Hungarian energy emergency action plan and their consequences. You can also read NSC-FoE Hungary’s quick analysis on some points here in English.

The energy emergency action plan decree text (15 July 2022) only says what is written in the titles of the seven points below, adding to each point who the responsible minister(s) is/are and that they need to come up with the details and start implementing the plan immediately.

1. Reform (reduction) of the state-fixed cap on household gas and electricity prices

The essence of the original Hungarian energy price cap is summarised here. You can see some further analysis here, or see a summary in this Bruegel article. Earlier this year, small and medium-sized enterprises (SMEs) and municipalities were already excluded from this price cap.

According to the new, reformed price cap’s decree and side-rules, the reformed energy price cap establishes a limit on the amount of gas and electricity that households can get at reduced prices. This limit for natural gas is 1,729 cubic metres per year, or 144 cubic metres per month; for electricity, it is 2,523 kilowatt hours per year (kWh), equivalent to 210 kWh per month.

Several Hungarian experts (including Bankwatch and other NGOs), the European Commission and the International Energy Agency have all raised critical voices against the Hungarian energy price cap since its 2013 launch, describing it as unjust, against energy transformation and detrimental to the phase-out of fossil fuels. It was primarily beneficial for those with high incomes and high energy users, and it provided incentives against energy efficiency and investments in renewables, especially in residential buildings. In contrast, low income lignite/coal/wood heating users were totally excluded.

A reform or a phase-out of this end-user energy cap has been long overdue, but in its current form, the reformed energy price cap fails to fix all the issues behind it, even if it introduces differentiated support based on consumption, which is a potential step forward. Experts say it will not substantially reduce domestic gas consumption, but it could improve the balance of the Hungarian state budget. However, if energy security is really the goal, then most of the burden should not be placed on the general public through residential restrictions, which in itself won’t be enough to address the deficit or ensure energy security.

As a consequence, low-income residents living in energy-inefficient flats/houses (especially in the countryside and other socially deprived groups) would need to pay many times more for their energy costs, which would make them even poorer, both financially and in terms of energy. In recent weeks, many people who had previously heated with gas have already bought up all the available firewood and lignite/coal for their winter heating, and stoves are in high demand. Villages and cities will be choking from air pollution and dust next winter.

On a positive note, the reform seems to finally encourage households (as well as SMEs and municipalities) to invest in energy savings and renewables urgently. There is a new rush for photovoltaics (PVs), building insulation and other building materials. But their prices are high and increasing, their stocks are depleting and there is a long waiting list for the relatively few experts, technicians and installers in the country. There have been some recent support schemes with mixed results.

In other Member States, there are other tools and policies to shield consumers from rising energy prices, but the Hungarian energy cap (old or reformed) still lags behind.

2. Increase the domestic production of lignite within an immediate deadline

The timeline and scope of this measure are still unclear. For example, how long will the domestic coal/lignite production increase last? What is the new timeline of the Hungarian coal phase-out? Which Hungarian coal and lignite mines will be expanded or reopened? Will this extra coal/lignite all be sold to fuel the Mátra power plant, or will it also be sold to households and other sectors, causing massive air pollution and health damage?

The measure will mostly affect the three Hungarian coal/carbon-intensive regions, delaying their just transition process. This action should be reconsidered and planned only for the very short term, since it goes against the phase-out of coal by 2025 and Hungary’s just transition commitments in the national energy and climate plan (NECP), territorial just transition plans (TJTPs) and other related 2030 climate and energy targets.

3. Ensure that all (lignite) units of the Mátra power plant are brought back into production and that production is continuous

This measure affects and most likely changes and delays the just transition plan (and the LIFE-IP North-HU-Trans project) of the Mátra power plant and the two related TJTPs of Borsod-Abauj-Zemplen and Heves counties, and the national target of phasing out coal-based electricity production by 2025. The action may jeopardise the timely launch of the Just Transition Fund in Hungary.

The Mátra power plant has five lignite units, but unit I (the oldest unit) is not currently operational, while the continued operation of unit II would require a derogation (relaxation of the law). The plant, operated by state-owned company MVM, already makes a loss (two units + plus reserve units generate a total of 450 megawatts, costing taxpayers EUR 113 million per year), and re-expanding the operation would cost Hungarian taxpayers much more still.

The timeline and details of the action have not been communicated yet; these must be clarified and discussed in consultation with the affected parties, including those in the TJTPs, in a transparent process, resulting in revised TJTPs and ensuring that this action too is temporary and short-term.

4. Increase the domestic production of fossil gas (including unconventional) from 1.5 to 2 billion cubic metres per year

Just like enforced coal/lignite mining, enforced domestic fossil gas extraction (either conventional, like at Orseg National Park, or unconventional, like at the Mako shale gas fields) would destroy the quality of life of the local people, their livelihoods, natural resources and biodiversity, which would lead to an economic dead end. A new shale gas fever would destroy the water supply of the Great Hungarian Plain (Alföld), which is already suffering heavily from drought and water shortages. Therefore, domestic fossil energy extraction should not be expanded or relaunched, especially in water- and environmentally-sensitive areas.

Even then, this action is very expensive and would require further support (taxpayers’ money, mining taxes cut) from the Hungarian state for MOL and other gas-extraction companies. The last time something similar happened, approximately a decade ago),Gazprom-backed NIS failed badly when trying to explore the Mako fields. Last year, MOL also backed away from expanding fossil gas extraction/exploration in Orseg National Park.

5. Extend the operating life of the Paks nuclear power plant

The already extended licences for the four existing Paks reactors expire between 2032 and 2037, so the idea that they might be quickly extended is not new. This also doesn’t mean that those units will or could continue to operate. The timeline and scope of this action is still to be defined by the relevant ministers. Instead, it looks like the Hungarian government is trying to use the present situation as cover in case the Paks II project (funded by a Russian loan, to be built by Roszatom) collapses. The extension of the plant’s operating lifetime could be a pragmatic move, but a second, renewed extension is another matter.

6. Arrange for the storage of natural gas reserves necessary to ensure the next Hungarian winter gas supply by 1 November, up to the maximum level of transport and storage capacities

The 15-year gas contract between Hungary and Russia, made in 2021, entails about 4.5 billion cubic metres of gas imports from Russia. Hungary has high gas storage capacities (6.5 billion cubic metres) compared to the national gas usage of 9.5-10 billion cubic metres per year and storages are currently around 45 per cent full. The action calls the responsible ministers (and in early July, the government also authorized the state-owned energy company MVM and the Hungarian Hydrocarbon Stockpiling Association) to arrange buying further gas from the market. However, in July, the Hungarian government already made two deals that seem to contradict this action point. Firstly, it sold 500 million cubic metres of gas to Serbia (from the gas reserve, as rented storage), while Hungary is now receiving most of its gas from the TurkStream pipeline, from Russia and via Serbia. Secondly, Hungary announced that it was starting negotiations with the Russian government to buy 700 million cubic metres from Russia, which is not the same as ‘buying from the gas market’.

7. Introduction of export restrictions on energy carriers

This measure is the most confusing one; it potentially goes not only against several EU energy and free trade rules or agreements, but also against energy solidarity. Hungary imports 30 per cent of its electricity and 85 per cent of its gas. It also has a lot of interconnectors, being a transit country for electricity and gas, while it exports 100,000 to 200,000 tonnes of firewood per year. In light of all this, there are several questions to be asked. Which energy carriers are meant? How and over what timeline will their exports be restricted? And will the EU be okay with it?

Conclusion

All in all, in our opinion, each of the seven actions of the Hungarian energy emergency action plan needs reconsideration, clarification, scope and timeline. If that doesn’t happen, it will hamper the energy transition in the longer term and isolate Hungary’s energy policy from the EU’s.

Now more than ever, a wide-ranging, multi-year, complex energy renovation support scheme is urgently needed for Hungarian households, with EU funds and state funds combined. The government needs to support average/middle income households’ energy renovations (minimum 30 per cent support and refundable loans) and contribute even more to low income households (80-90 per cent grants); both groups must be incentivised towards deep renovation to avoid the lock-in effect. The Hungarian operational programmes, the national recovery and resilience plan, the Territorial Just Transition Plans and other programmes should all contain elements of this scheme. See our analysis to gain a better understanding of the overall situation.

EIB moves to curb intermediated hydropower financing

During the last few years, we’ve gradually discovered the involvement of the European Investment Bank in more and more small hydropower projects in southeast Europe, financed via commercial or national development bank intermediaries.

These include the Mojanska plants in Montenegro, the Tresonecka and Brza Voda plants in North Macedonia, the Beli Kamen and Komalj plants in Serbia, the Ilovac plant in Croatia, and the Blagoevgradska Bistritsa plants in Bulgaria.

What we have managed to piece together is that the EIB has provided at least 27 loans for hydropower plants through financial intermediaries in the region since 2010, though the exact number and many of the names of the plants remain unknown.

Intermediaries are secretive for a reason

The EIB doesn’t require its bank intermediaries to publish the names of the projects they finance (unless they are worth above EUR 50 million, which they rarely are), and only discloses the names of the projects financed if the intermediary consents.

It is not surprising that many intermediaries don’t want to advertise their involvement in small hydropower projects. Hundreds of plants have mushroomed across the region in the last two decades, many of them in the region’s most remote and pristine areas. Leaving rivers dry and robbing people of water for cattle, irrigation or even drinking, no other infrastructure projects have attracted such widespread public resistance across southeast Europe.

Arms-length investments

EIB investments are required to meet EU standards, but in the case of projects financed via intermediaries, it is usually up to the intermediaries to ensure this. What has become obvious in the last few years, is that commercial and national development banks in southeast Europe are far from able or willing to do so.

Most of the hydropower plants named above are in protected areas, yet not all were even subject to environmental impact assessments and where they were, they were of appalling quality.

When we have raised concerns with the EIB about the projects, the Bank has not been willing to take corrective action, stating that the intermediary is responsible for due diligence and monitoring and that the national authorities are responsible for environmental enforcement. While this may be true in theory, in practice it often turns out that neither the intermediaries nor the authorities are doing their job.

New exclusion rules

Earlier this year, the EIB published its new environmental and social policy and standards. Despite the much-awaited inclusion of specific standards for financial intermediaries, not much changed for intermediated projects.

Now, however, the Bank has updated a complementary document called the EIB eligibility, excluded activities and excluded sectors list, which updates a similar document from 2013.

It states, among other things, that ‘While detailed EIB due diligence may lead to the approval of such projects in some circumstances, in general final beneficiaries whose main activity is in the following sectors are excluded from multi-beneficiary intermediated loans and other intermediated debt products’. The sectors listed include mining, waste incineration and hydropower, among others, meaning that bank intermediaries can no longer finance hydropower projects without the EIB directly carrying out detailed project checks itself.

Similar rules which entered force at the beginning of 2020 at the EBRD have shown that in reality, intermediaries mostly won’t want to go through the extra hassle of additional due diligence and will stick to lower-risk projects instead. This is great news for rivers in southeast Europe and elsewhere.

Existing projects still need attention

The fact that the EIB has recognised the problem and stemmed the flow of financing to hydropower via intermediaries is highly welcome. But the projects which have already been built still need the Bank’s attention in order to mitigate their worst impacts. The EIB cannot simply walk away from the fact that its money was instrumental in making these projects happen and needs to play its part in at least ensuring that adequate water levels are left in the riverbeds.

The Save the Blue Heart of Europe campaign aims to protect the most valuable rivers in the Balkans from building hydropower plants. The campaign is coordinated by the NGOs Riverwatch and EuroNatur, and is being run jointly with partner organisations from the Balkans.

Riding roughshod over EU environmental and public consultation rules risks boomerang effect for renewables development

As part of its REPowerEU initiative to end reliance on Russian gas, the European Commission is currently running a public consultation – ending on 27 July – on proposed amendments to the Renewable Energy Directive.

Go-to areas

The idea is for each Member State to identify ‘go-to areas’ where renewable energy development is considered desirable. These should include e.g. built-up areas or degraded land not usable for agriculture. Projects in these areas would then be subject to lighter environmental permitting processes.

As spatial planning is a clear problem in some EU Member States, it makes sense to tackle this issue and make sure that a reasonable amount of land is allocated for much-needed renewables development, but this will not be a quick process if it is based on proper scientific research.

Decades of environmental protection achievements under threat

The problem is, projects in go-to areas would not need an environmental impact assessment (EIA). And in cases where they may have significant impacts on Natura 2000 sites, they would not need to undergo appropriate assessments as required by the Habitats Directive.

This is panic-mode decision-making at its worst. The EIA Directive and Habitats Directives are already flexible enough to ensure that benign projects are not subject to unnecessary procedures. The screening process already ensures that many solar and wind projects need no EIA. So the main change would be to let controversial projects in go-to areas off the EIA hook as well.

Needless threat to Natura 2000 sites

Muddying its own idea that go-to areas should be priority areas for development, the Commission has made an inexplicable and gratuitous proposal which needlessly puts Natura 2000 sites at risk as well.

Currently, if a project is likely to have a significant impact on a Natura 2000 site, it has to undergo an appropriate assessment under the Habitats Directive. If it is confirmed that the project would ‘adversely affect the integrity of the site concerned’, it generally should not go ahead. There are exceptions, however, for projects where there is no alternative and which are of ‘overriding public interest’.

The rules are stricter in cases where the site hosts a priority natural habitat type and/or a priority species – the latter including wolves, bears, or sturgeon, for example. In such cases, generally only protecting human health or public safety can be cited as grounds to declare a project of ‘overriding public interest’.

The result is that some renewable projects can be built in Natura 2000 areas, and some cannot. This must always be assessed on a case by case basis.

Yet the Commission has proposed that ‘the planning, construction and operation of plants for the production of energy from renewable sources, their connection to the grid and the related grid itself and storage assets’ are to be ‘presumed as being in the overriding public interest and serving public health and safety’.

The appropriate assessment will be robbed of its power, reduced to a tool to define mitigation and compensation measures, instead of preventing harm in the first place. And it is not even clear what will be achieved, as Natura 2000 areas are unlikely to offer many quick opportunities for renewables development.

The public consultation boomerang

EIA and appropriate assessment processes also include public consultation requirements and guarantee the public the right to challenge the relevant decisions in court. So the Commission’s proposals are likely to breach the Aarhus Convention and are almost certain to be counterproductive.

Renewable energy, whether wind, hydropower or other sources, has already been a flashpoint for public opposition, and there is nothing more guaranteed to get on people’s nerves than the feeling they are being kept in the dark about what is happening in their area. The process of deciding on go-to areas is supposed to include public consultation but cannot be a substitute for project-level processes.

Other barriers need more attention

Environmental protection rules are not the only, nor the main barrier to renewable energy development in the EU. A 2021 EU-funded study identified a range of issues preventing faster renewables deployment, including spatial planning issues, lack of skilled administrative staff, unclear or incoherent rules, and lack of digitalisation leading to the need for extensive physical paperwork. Many of these issues are echoed by WindEurope in their paper on the issue as well.

The Commission’s REPowerEU proposals do include some points on addressing these issues, notably spatial planning. But much more attention needs to be paid to some of the other points. Speeding up digitalisation and increasing administrative capacity to process permitting applications, for example, would be a much more constructive approach than dismantling environmental safeguards.

The European Parliament must ensure that the more destructive elements of these proposals are stopped. Otherwise this Commission will be remembered not for the European Green Deal, but for ripping up the EU’s environmental and public consultation rules.

Skavica Dam — the last thing Albania needs

Greenfield hydropower projects bring serious risks for people and nature which very often outweigh the economic benefits. In the worst cases, huge areas of land are flooded, many people need to abandon their homeland, rivers are converted into artificial reservoirs, wild animals are brought to extinction and the country is left with foreign debts and a climate-vulnerable energy system.

Considering all these criteria, the planned Skavica dam in Albania is extremely damaging. Nonetheless, according to the Albanian government, the US International Development Finance Corporation (DFC) is considering financing it, even though the project would fall under the DFC’s list of Categorically Prohibited Projects.

Albania relies heavily on hydropower, with 95 per cent of its domestically produced electricity generated this way. Its annual electricity generation has suffered from lack of water due to climate change and it will get even worse according to the World Bank. Albania should invest in energy efficiency, wind and solar plants and reconstruction of existing dams, rather than building more of the same.

The Dibra valley under water

The Skavica hydropower project includes a large dam built in a pristine gorge with high cliffs next to the village of Skavica in the municipality of Kukës. The most significant impacts would be in the municipality of Dibër. The huge reservoir would impact, according to the municipality, up to 15,138 hectares (58 square miles) of land, mostly agricultural land and forests, but also 41 villages. With several thousand people displaced, Skavica may have the worst social impacts of any dam built in Europe in the 21^st century.

So far, no official information about the design and location of the dam is available, as the environmental and social impact assessment (ESIA) is expected to be completed by the end of 2022. But according to the project promoter, the Albanian Energy Corporation (KESH), the dam will probably be 147 metres high.

Decisions made far from the public eye

In July 2021, seemingly without any tender procedure, a preliminary contract was signed between the state-owned KESH and the US construction giant Bechtel for the first phase of the project which entails carrying out technical investigation, building access roads for construction and carrying out an environmental and social impact assessment (ESIA). This was preceded by a special law approved in parliament (No. 38/2021), with the name of the company included in the law, therefore eliminating open procurement and competition. Already, a similar special law for the building of the national theatre was deemed unconstitutional by the Albanian Constitutional court.

Bechtel has gained notoriety in southeast Europe for its involvement in several unsuccessful and/or overpriced projects, like in Kosovo, Romania and North Macedonia. This raises the risk of possible corruption and doubts about the value for money of the project, as well as the meaningfulness of the forthcoming environmental impact assessment. If deals for the project have already been arranged behind closed doors, then the ESIA is bound to come up with the ‘right’ answer, irrespective of its actual findings.

Local people have organised many protests in Albania and the US against the planned plant and the decision-making. In 2020 the police fined two of the organisers of one such protest, ‘as a way’, they claim, ‘for the institutions to scare the people from reacting to official decisions’. The Facebook group Opposition to Skavica Dam has almost 4,000 followers and a petition has been signed by more than 2,000 people.

The rarest cat in Europe brought to extinction

In addition to the inevitable negative impacts on local communities and the violation of their human rights, the dam would also inundate floodplains, forests and pastures around the river where many species threatened in the rest of Europe are common.

But one of the animals is especially endangered, in fact, it is the rarest cat in Europe. The Balkan lynx (Lynx lynx balcanicus) has less than 40 individuals remaining in the wild. The gorge of the Black Drin, which has inaccessible cliffs and forests far from villages, is the only area where the lynx can cross between the Mavrovo National Park in North Macedonia and the Munella mountain in Albania. The building of the dam would isolate the only two viable populations and condemn them to extinction.

The Skavica dam would also inundate the most extensive floodplain forest in Albania – the forest along the Black Drin River composed of black alder (Alnus glutinosa), black poplar (Populus nigra) and willows (Salix sp.). It is a priority habitat according to the EU Habitats Directive. Conservation of this forest is necessary to store more carbon in the soil, especially critical in the country with the highest deforestation rate in Europe (which led to a ban on logging being imposed in 2015).

It’s surprising that Albania is still pushing hydropower development. Hydropower will not resolve the country’s energy crisis, and will endanger not only nature and wildlife, but also the people of Dibra who will be forced to leave behind their homes and the lands on which they depend. It will only get harder to build new hydropower plants in the future, due to climate vulnerability, the region’s unique biodiversity and public resistance. Given the above situation, we expect that the US International Development Finance Corporation (DFC) will refrain from financing the Skavica hydropower plant.

—

Replacing coal with forest biomass for heating is a dangerous green mirage

There is a common misconception that burning trees to generate heat can be considered ‘carbon neutral’ because the CO2 released in the process is supposedly re-absorbed by forests. In reality, harvesting and burning woody biomass curtails nature’s ability to capture carbon, and adds this greenhouse gas to the atmosphere just like burning any fossil fuel.

A 2017 study showed that the combustion of wood for heating can produce two and a half times more CO2 emissions than fossil gas, and 30 per cent more than those from coal as per unit of generated energy. So, felling forests, assuming they will grow back in 20 years or more, would create a dangerous ‘carbon debt.’ It does little to cut emissions on a timescale relevant to stemming the climate crisis, as we cannot wait decades for trees to grow back.

And yet, forest biomass still enjoys political backing in Europe. The EU’s Renewable Energy Directive (RED) considers biomass a renewable fuel under certain conditions. The Directive is currently under review and the European Commission has proposed to somewhat tighten the sustainability criteria for forest biomass.

But the proposal still falls far short of addressing scientific evidence warning about the repercussions of forest biomass and threatens to be watered down even further. Research has shown that harvesting and combusting forest biomass, not only aggravates the climate crisis, it also increases the risk of deforestation in countries where forest management and legal enforcement are insufficient, as is the case in much of the Western Balkans.

Illegal logging in the region is already known to be associated with corruption and organised crime. So, promoting even more forest biomass for heating where legal enforcement remains weak risks facilitating a grey economy.

According to a World Bank study, already in 2013, over 58 percent of the total woody biomass in the Westen Balkans came from unregistered consumption, as opposed to the amounts registered for energy use. In addition, there are still glaring gaps in statistical data on the sources of woody biomass, its usage and export, while there are no proper wood recycling practices exist.

Many towns in the Western Balkans, especially in Serbia and in Bosnia and Herzegovina, have plans for biomass-based district heating plants. But these ambitions could be little more than hot air, if only because there is no reliable data no how much residual woody biomass is actually available in each of the countries. In fact, the World Bank study mentioned above found that, on average, 75 percent of the sustainable technical potential for woody biomass for heating in the Western Balkans was already used.

Therefore, increasing demand for biomass is only likely to drive unsustainable forest harvesting. For example, because Banja Luka has no local source for woody biomass, its 49 MW heating plant uses woodchips transported from 50-100 kilometres away, and still has not been able to meet half of the demand of the wood source for this year, not least in the face of Europe’s energy crunch.

All the warning signs are there for any decision-maker who is still considering promoting forest biomass in the Western Balkans. Local governments in the region that are finally ready to abandon fossil fuels in district heating should stay away from this green mirage.

The growing appetite for forest biomass, not least when it is legitimised by an EU directive, risks channeling government subsidies to a fuel that practically worsens the climate crisis and moves the region away from genuine sustainable energy.

European public finance also has an important role to play in ensuring the Western Balkans’ energy transition is on the right track. The European Bank for Reconstruction and Development (EBRD), as well as other international financial institutions, should fully mobilise to help accelerate the decarbonisation of heating systems. This also means halting the promotion of primary forest biomass within EBRD programmes such as ReDEWeB and Green Cities and within EU investment funds.

The EBRD in particular needs to formally stipulate that biomass – exclusively, secondary woody biomass – may be used in small, combined heat and power installations only when there are no viable heating alternatives. Larger biomass plants should be avoided in order to diminish both the climate and biodiversity risks.

For local governments in the region, and their financial backers, the focus needs to remain on implementing modern and efficient heating technologies such as heat pumps coupled with renewable energies like solar, wind, geothermal power and waste heat from industry or the commercial sector. These measures need to be complemented by thermal energy storage technologies and increased investments in energy efficiency. This way we will be able to not only to help slow down the climate crisis, but also keep homes warm and forests intact.

« Previous Page