Blog entry

Civil society wishes on the EBRD’s 30th birthday: shut the fossil fuels party

As the EBRD marks its 30th anniversary, right after the hottest decade on record, over 60 civil society organizations — including CEE Bankwatch Network, 350.org, and Oil Change International — are calling on the Bank to end financing to the fossil fuels industry.

In a letter sent to members of the EBRD’s board of directors ahead of the Bank’s annual general meeting this week, the NGOs urged the Bank to step up its role in the decarbonisation process in its countries of operation. Some of these countries — such as Uzbekistan and Cyprus — are home to economies that are heavily reliant on fossil fuels for their energy production and are simultaneously some of the countries most vulnerable to the impacts of the climate crisis.

Though the Bank phased out direct investments in coal in 2018, it is still supporting gas, portraying it as a transitional fuel. In reality, instead of facilitating the energy transition, the EBRD’s lending does more to help cement countries’ reliance on fossil fuels. According to Bankwatch’s study, the EBRD has invested more than EUR 3.5 billion in the last two years in energy projects, with fossil fuels projects making 43 per cent of the Bank’s energy portfolio.

In early June, the EBRD published for public comments a draft methodology for aligning its lending with the Paris Agreement. Yet, this document is not nearly as robust or ambitious as it should have been.

For instance, the proposed ‘non-aligned list,’ which would include projects inegligible for EBRD financing, is even laxer than the Bank’s current energy strategy, since the draft methodology doesn’t prohibit financing of oil exploration and extraction projects, which are already partially excluded since 2018.

Civil society calls to stop exploring for, extracting, shipping and burning fossil gas are becoming louder as the climate change bomb time is ticking. The science is clear that fossil gas is a significant driver of global warming and climate change – not just due to the CO2 emissions during combustion but also because of the methane leaks that occur during extraction and transport.

The civil society letter comes after a promising announcement from the EBRD’s President Odile Renaud-Basso last month, that by the beginning of 2023 the Bank will align all its activities with the Paris Agreement.

Governments have already stepped up their climate ambitions this year. Over the past six months, the United Kingdom, European Union, and the United States have all pledged to phase out fossil fuels finance, with explicit commitments to pursue diplomacy to encourage others to do the same.

The European Investment Bank announced its own fossil fuels exclusions in 2019, and the UN Secretary-General has called for international public banks to end all fossil fuel finance.

The EBRD is hosting its annual meeting this week with the theme “Building Back Better Economies.”

“Fossil fuels are currently propped up by the market’s failure to look a decade into the future, and the EBRD has the mandate to support countries towards a zero-carbon future,” the civil society letter reads. “The EBRD region is ready for the transition, and the EBRD’s efforts to promote a just transition need to go hand in hand with phasing out dependence on oil and gas.”

Serbia: key national plan risks cementing coal dependence

In March 2020 the Serbian Government held early public consultations on the country’s Spatial Plan for 2021-2035. According to its Strategic Environmental Assessment report, the Plan aims to facilitate “the achievement of national objectives of spatial development despite various challenges, including depopulation, urbanization, regional inequalities, rural development, environmental degradation, technical infrastructure and insufficient or unproductive utilization of available territorial capital.”

Therefore, the stated purpose of this 15-year national plan is not to address those challenges, but carry on with the development of various projects in all sectors of the economy despite them.

This attitude explains why the Spatial Plan envisages, among others, the construction of lignite or fossil gas power plants such as Novi Kovin (estimated 700 MW installed power), Štavalj (estimated 300 MW installed power), Кostolac B3 (estimated 350 MW installed power), TE-TO Novi Sad (estimated 340 MW installed power), TENT B3 (estimated 750 MW installed power), and Kolubara B (estimated 2 х 375 MW installed power), despite their well-known contribution to climate change as well as the degradation of the environment and livelihoods of communities.

This approach also explains why measures such as installing desulphurisation equipment and other pollution reduction controls at existing coal power plants are presented as some kind of novel, forward-looking protective measures, even though these have been a legal obligation since the Large Combustion Plants Directive went into force in 2018. In fact, Serbia’s flagrant breach of its obligation to cut power plants’ pollution is currently the subject of an infringement procedure launched by the Energy Community.

A second draft of the Spatial Plan was published in the autumn, without considerable changes, and its Strategic Environmental Assessment (SEA) is currently subject to transboundary consultations. The interested public in Romania has until the 1 July to submit comments.

The way these consultations are held are a far cry from the requirements for effective public consultation in a transboundary procedure. The SEA report is being shared only in English and the actual Spatial Plan has not even been made available to Romanians. The Spatial Plan is de facto, the object of the consultation, so presenting only half of the information makes the whole process a procedural box-ticking exercise.

That said, the participation of Romanian civil society in the consultations can make a difference because if this plan goes ahead, many of the projects will have serious and irreversible transboundary environmental and health impacts. In the comments it submitted, Bankwatch Romania requests that all fossil fuel based projects are dropped from the Spatial Plan, that sources of mercury pollution in water bodies are monitored and reported in Serbia (because Romania sees high concentrations of mercury in its waters on the border water basins), and that pollution control equipment is operated (where it exists) or installed at existing coal power plants.

In fact, the Strategic Environmental Assessment report itself acknowledges that 10 out of the 39 proposed “solutions” in the Spatial Plan will have negative environmental impacts. The Report describes them, but gives no recommendation for dropping such measures or improving the situation concretely. Some of these so-called solutions for territorial development which were assessed with a serious cumulative negative environmental impact and in conflict with the goals of the SEA are: “safe and reliable supply of coal”, “increasing the production of energy from liquid and gaseous energy minerals and geothermal energy”; “development of coal exploitation in Kolubara and Kostolac basins”, “construction of new thermal capacities” and “reconstruction and construction of small hydro power plants”.

It is clear as daylight that all these projects are not only openly at odds with the SEA’s goals, they also run counter to Serbia’s commitments under the Paris Agreement and the Green Agenda for the Western Balkans. These projects are also nowhere in line with the EU’s 2050 decarbonisation ambition, considering Serbia aims to be an EU member by that time.

The Energy Community is about introduce new air quality acquis. Yet, as the Spatial Plan makes clear, the Serbian government is planning to expand the country’s lignite generation capacity to the point of far outweighing the capacities of power plants slated for closure. The Plan shows no intention to tackle the issue of air pollution and neighbouring countries are going to pay the price, alongside Serbian communities.

A first-of-its-kind modelling of SO2, NOx and dust pollution found coal power plants in the Western Balkans are behind an annual public cost of approximately EUR 3 billion. It also found pollution from these plants is responsible for 3906 premature deaths in Europe every year, and 2308 of them were attributed to Serbian plants alone.

According to this study, Romania was the EU neighbour most impacted, with an annual burden on the public budget estimated between EUR 0.5 – 1.1 billion, and 380 premature deaths – 198 of them linked to coal-fired power plants in Serbia.

The situation has not significantly improved since 2016. The Kostolac B de-sulphurisation project, the only one that has been finalised so far, has hardly ever worked. In fact, emissions of some pollutants have been on the rise in Serbia, and, as Bankwatch’s atmospheric modelling has already shown, they can travel thousands of kilometres beyond Serbia’s borders.

In the absence of tangible measures and actions that will reduce the transboundary impacts of Serbia’s energy sector, it is our request that the SEA report is not given the green light by the Romanian Ministry of Environment, and it is our hope that many civil society groups will join our call.

Romanian government’s coal phaseout blabber

The Romanian Energy Minister announced in an interview June 9 that Romania does not actually plan to give up all coal, but only hard coal. This news came as a shock as, just a few days before, the Romanian Recovery and Resilience Plan, published on the website of the executive, included language on the phaseout of coal-fired electricity generation from the energy mix by 2032 and support for a legislative and regulatory framework for private investments in renewable-based electricity production. The document also mentioned the creation of a Coal Commission and the elaboration of a clear calendar for replacement and closure of coal units.

“We have a phaseout for hard coal for 2030, and securing and greening the mines until 2032,” Energy Minister Virgil Popescu said in the interview. “The Oltenia Energy Company is in a restructuring program and I do not want to advance a phaseout date until we have approved the restructuring program”.

What the minister said in fact was that, for now, the Romanian government plans a phaseout for hard coal, but not lignite. Yet hard coal represents only 2% of Romania’s electricity production, with the largest amount of emissions in the entire economic system being attributed to lignite, which produces 17-20% of annual electricity. In 2019, according to EU-ETS data, in Romania hard coal emitted 1.18 million tonnes of carbon dioxide (CO2), while lignite exceeded 12 million tonnes.

Hard coal is not enough

Not only does lignite need to be phased out as soon as possible for climate reasons, but hard coal-fired power plants would have to be shut down sooner for economic and environmental reasons anyway. One of them, Minita, has already been put in conservation. The thermal power plant exceeds the emission limits for sulphur dioxide (SO2) and dust (PM), substances that negatively affect human health, and cannot receive an Integrated Environmental Authorization (IEA), which is why Romania has been in an infringement procedure for four years. The entire Hunedoara Energy Complex (which operates two hard coal-fired power plants) is insolvent and had debts of RON 6 billion (approx EUR 1.2 billion) in 2020.

Although the European Union’s climate targets are clear, and the evidence that points to coal as the largest pollutant at national and global level is unequivocal, national authorities are not acting to match the level of urgency we are in. At the Oltenia Energy Complex, the restructuring plan provides for a lignite-based capacity of 1,650 MW in 2027, but there is also information that the company would have no more than 660 MW of capacity. The company has not set a date for the complete phaseout of coal, although the potential for renewable energy in the region is significant.

Just transition is left behind

Romanian coal regions have already submitted their Territorial Just Transition Plans to the Ministry of European Investment and Projects at the end of May, plans which will allow them to tap into the Just Transition Fund provided by the EU for the transformation away from coal. But proper planning at this level, including project proposals and mitigation of social impacts of mine and plant closures, requires a clear national phaseout date and timetable for gradually replacing coal. The Romanian government’s ambivalence about the coal phaseout date is, therefore, very problematic as it really hinders solid planning locally. It needs to give clear goals and directions for development, which municipalities can pursue in their more minute planning.

In Hunedoara county, the hard coal phaseout will lead to the dismissal of 4,000 employees in thermal power plants and mining areas. To solve this situation, social protection measures have been proposed such as compensatory wages and reducing the retirement age, but these are not a viable solution for younger staff who can reintegrate more easily into the labour market. An example of an initiative meant to help this approach belongs to the Romanian Wind Energy Association (RWEA) which is starting a program for the professional retraining of personnel in mining areas and other areas in energy transition.

In Gorj county, the situation is even more delicate. Although the TJTP identifies other opportunities for economic development, such as solar energy (with a potential of up to 60 GW), tourism, industry, recycling, carpentry and agriculture, the Oltenia Energy Complex does not seem to want to take advantage of this opportunity. Thus, it is unclear what will happen to a large part of the 12,000 employees, but also to those in related fields whose occupation supports the activity of coal-based electricity production. If national decision- makers do not set a date for the lignite phase out as well, the just transition in Gorj and Dolj (counties where Oltenia Energy operates) cannot be planned coherently.

A mistake that Romania risks repeating time and again is the lack or mimicry of public involvement in the decision to eliminate coal and post-coal planning. To add insult to injury, the government is now even miscommunicating about the ultimate coal phaseout date, the key information without which it’s hard to do any planning.

The European Commission cannot allow such bad practices to continue in Romania. The country has solid clean energy potential, and it has plenty of local actors in the coal regions which are interested in getting involved in preparing for life after coal. Brussels needs to put pressure on the central government to get its act together, set an ambitious phaseout date for all types of coal, and get planning together with local communities.

Uzbekistan has 10,000 NGOs, but what do they do?

This article was originally published on opendemocracy.net

Civil society in Uzbekistan continues to suffer from restrictions to freedom of speech and barriers to the legal registration of non-governmental organisations (NGOs). Legislation that limits the right to peaceful assembly places excessive requirements on organisers of public meetings. Yet while the Uzbekistani state stifles civic space, the government boasts of the number of non-governmental organisations in the country and insists that it is implementing measures to “radically increase the role of civil society institutions in the process of democratic renewal of the country”. The reality is that many of these organisations are, in fact, in some sense controlled by the state.

How to massage statistics

According to official data, there are more than 10,000 NGOs in Uzbekistan. A closer look at the data, however, reveals that the majority are actually government-organised non-governmental organisations, or GONGOs.

As Uzbekistan’s Independent Institute for Formation of Civil Society reports, despite the rapid growth in the number of NGOs since 2014, 66% of them are government-established organisations, with almost half of them created by government decree.

As a result, the number of NGOs in Uzbekistan may be overstated more than twice. Whereas truly independent groups struggle to obtain official registration, the government establishes new GONGOs or opens branches of old ones as separate organisations, which explains the impressive presence of NGOs in the country – at least in numbers.

If the Uzbek government is to deliver on its promises of opening up and supporting the development of civil society, it needs real democratic reforms.

As of 2020, the Ministry of Justice of Uzbekistan publishes lists of registered NGOs for each region. Here, we can see that NGOs with the same name have been registered in different districts of the same region as separate organisations. For example, in the eastern Fergana region, there are 20 branches of the Mahalla Public Charitable Foundation for “good neighbourly relations”and targeted support to people in need of social protection; 20 branches of the Youth Union that supports the development of “a physically healthy, spiritually mature and intellectually advanced generation able to think independently”; and 20 branches of the Adolat Social Democratic Party.

This explains the huge number of supposedly independent NGOs in Uzbekistan. However, the Mahalla Public Charitable Foundation was established in 1992 by presidential decree – as was the Youth Union in 2017. In essence, most NGOs with branches in each region have been created by presidential decree or by other government agencies.

These GONGOs have access to resources beyond the reach of independent NGOs. For example, in 2016, the Nuroniy Foundation, which was established to support the elderly, was allocated 1.5bn som (around $140,000) from the reserve fund of the Cabinet of Ministers by presidential decree. In addition, the government allocates funds in the state budget every year to support the activities of these GONGOs – independent NGOs have no access to these funds.

Recently, the limit of money and property that NGOs can receive in one calendar year from foreign sources has been increased to approximately $2,300, although this is still a negligible amount for any organisation working on social issues such as forced labour or domestic violence. Any foreign funding above this threshold needs to be approved by the registering authority. As such, the state can restrict the flow of funds an NGO receives from foreign sources, and therefore many registered NGOs are afraid to criticise the authorities, to avoid losing crucial funding.

Zombie NGOs

The total number of Uzbekistan’s NGOs includes organisations that no longer exist or exist only on paper, including some that were officially dissolved by presidential decree. Others continue to exist in name but do not function, as is the case with numerous centres for the rehabilitation of victims of violence and attempted suicide, which were intended to work as shelters.

For example, in 2018, a presidential decree set up centres to protect people who have suffered from violence, including domestic violence; to provide urgent medical, psychological, social, legal and other assistance to those in difficult social situations; and to prevent suicide.

While the state Commission on Gender Equality reported that 197 centres had been established in Uzbekistan, three NGO employees reported, on condition of anonymity, that most either did not exist or did not function in the way shelters are supposed to. In December 2020, it became known that the hotline of the Tashkent rehabilitation centre was not working because its only employee had not received a salary for several months. One woman had been answering the hotline 24 hours a day, seven days a week.

Moreover, Uzbekistan’s Commission on Gender Equality announced that in March 2021, 782 requests for assistance had been received at centres across the country, with 154 people living in the shelters. Divided by 197, this means that each centre had received four requests per month on average and that not all centres were even accommodating people. This may indicate that the government has grossly exaggerated the number of shelters in existence, a theory given weight by the fact that 29 centres for women who have suffered from domestic violence were established by presidential decree on 19 May, replacing the 197 shelters registered as NGOs.

In any case, these statistics signal that the centres’ performance has been poor. After all, the number of complaints is growing: according to the Ministry of Internal Affairs of Uzbekistan, there has been an increase in the number of complaints related to gender-based violence, with 11,000 filed to law enforcement agencies in the first three months of 2021 alone, compared to 8,430 protection orders for victims of abuse issued between January and October 2020.

Under the control of the government

Perhaps the high number of GONGOs in Uzbekistan would not raise so many questions if independent NGOs created on the initiative of private citizens were freely registered in the country. But that isn’t the case.

For example, a group of students at the Faculty of Sociology of the National University of Uzbekistan has been trying for more than two years to register a youth volunteer centre. The Ministry of Justice has rejected the application more than 20 times. Instead of immediately pointing out all the inaccuracies in the initial submission, the registering authority highlighted only one error at each refusal. At the same time, the Association of Volunteers – a platform promoting volunteer groups in the country – was registered at the first attempt.

As Dilmurad Yusupov, a development studies doctoral student in the United Kingdom stated at the time, “It turned out that the association had several influential founding members… which confirms my suspicions that [it] is another GONGO. [But] how can we have a Volunteer Association if we still do not have a single volunteer organisation?”

As the UN Human Rights Committee noted in May 2020, there is a high percentage of refusals to register independent NGOs in Uzbekistan, a situation that hasn’t improved since the country’s election as a member of the UN Human Rights Council in 2020.

In April 2021, the Ministry of Justice denied registration to Shukrat Ganiev, the head of the Humanitarian and Legal Center, for the ninth time, due to the alleged failure to pay the full registration fee and the apparent lack of clarity regarding the centre’s board members. This occurred despite the fact that an employee carefully checks that all necessary documents are submitted and fees paid at the time of application, and that the full names of board members were filled in on the relevant form.

“I tried to unite a group of young guys who had achieved the status of national experts on monitoring forced labour for this monitoring NGO. The team would monitor cotton picking, employment of people in cotton clusters, hired workers and working conditions at construction sites across the country,” Ganiev told the author.

“Unfortunately, the ‘do not register’ system [for NGOs] has survived, as have the notorious black lists. Despite the fact that we tried to talk about constructive dialogue, about partnership, this is not happening today. The practice of developing GONGOs remains, which replaces real NGOs, a real civil society.”

In mid-February 2021, Minister of Justice Ruslanbek Davletov promised to publish a model charter for NGOs to follow, but nothing has been seen yet.

If the Uzbek government is to deliver on its promises of opening up and supporting the development of civil society, it needs real democratic reforms. So far, we’ve had statistics and promises that might look good on paper, but do not address the underlying problems of a heavily restricted public environment.

Zero hour for energy ministers to halt the expansion of Europe’s fossil gas network

Calls to curtail the expansion of fossil gas infrastructure are mounting, and on Friday (11 June) EU energy ministers have a chance to ensure Europe’s cross-border energy infrastructure is in line with the leadership role it has taken in the global effort to stem the climate crisis.

The next version of the trans-European infrastructure energy (TEN-E) regulation, the EU’s key legislation concerning priority interstate energy projects is nowadays in the works, but there is a serious risk it would end up cementing Europe’s dependence on fossil gas..

A draft released by the European Commission in December 2020, already proposed removing all support for fossil gas pipelines and liquid natural gas terminals. But a number of governments seem to be intent on stalling the desperately needed transformation of Europe’s energy system.

In particular, the governments of Bulgaria, Cyprus, Czechia, Greece, Hungary, Malta, Poland, Romania and Slovakia have been seeking to perpetuate the myth of fossil gas as a so-called bridge fuel through EU legislation, including via so-called “blending” i.e. the mixing of fossil gas with hydrogen or other gaseous fuels.

In a letter sent in late May, Bankwatch and over 50 other civil society organizations from these countries urged their governments to stop the expansion of Europe’s fossil gas infrastructure through the TEN-E regulation.

The science could not be clearer. Humanity must halve its emissions within the next nine years to have a chance of averting a full-blown climate breakdown.

The EU’s newly upgraded climate targets also require a reduction of up to 37 percent in fossil gas consumption by 2030 according to the European Commission’s scenarios. Building more fossil gas infrastructure would not only undermine this goal, it would bring us closer to the dreadful scenarios of a rapidly heating planet.

The International Energy Agency used to be a proponent of fossil gas as a transition fuel. Until last month. In a landmark report, this global energy opinion leader warned in no uncertain terms that there is no more room for investments in fossil gas if global emissions are to get to net zero by mid-century. EU energy ministers should heed this call.

The TEN-E rules define which transboundary energy infrastructure projects can be prioritized for construction over the coming decade, meaning these projects enjoy privileged access to permitting and public finance. If these projects are built in the next decade, they would either operate well beyond the time emissions should otherwise be plummeting or become stranded assets.

A Portuguse proposal for the revised TEN-E regulation offered a disturbingly weaker version to the one drafted by the European Commission. It proposed, among others, blending of fossil gas with hydrogen until 2030 although the benefits of blending are seriously contested by scientists and civil society experts. The Portuguese text also suggested that oversized gas projects already labeled as Projects of Common Interest could keep this preferential status. This would mean greenlighting controversial projects such as the EastMed pipeline and the Malta-Italy gas pipeline.

If this version of TEN-E regulation is adopted, it would entrench Europe in a system run by the fossil fuels industry while betraying EU citizens and future generations.

This experiment would also carry a hefty price tag. According to the EU energy regulator ACER, potential Projects of Common Interest under the current TEN-E could cost over EUR 75 billion if built. Money that would be better spent on boosting energy efficiency and expanding Europe’s renewable energy capacity.

In November 2019, the European Parliament formally declared a climate emergency, instructing the European Commission to ensure all relevant legislative proposals support the goal of limiting global warming to 1.5 degrees.

Eleven EU governments have already backed the exclusion of all fossil fuels, including blending, from the new TEN-E regulation. The other sixteen should now recall the climate emergency and the EU’s 2050 climate neutrality goal intended to address it.

When the EU’s energy ministers vote this Friday, they need to ensure that fossil gas can no longer be part of Europe’s energy network.

Hungary’s recovery plan – not green, just, or resilient

The final draft of the Hungarian recovery and resilience plan submitted to the European Commission is the result of a last-minute decision to shrink the plan to about 40 per cent of its originally planned budget. In order to do this, the government limited the amount requested from the EU’s Recovery and Resilience Facility (RRF) to grants, excluding all loan financing. Thus, the content of the plan also had to be reduced substantially and in a rush. Even though some concerning measures like non-refundable support to large solar power plants run by state-owned suppliers have been removed, the remaining investments fail to trigger a transition to a climate-friendly, resource-efficient, sustainable and crisis-resilient economy.

Regarding housing, the plan includes a welcome measure on community solar energy projects for social housing, which would be organised through community-level decisions about revenue distribution. However, Hungary’s housing programmes in general lack comprehensive support for renovation to improve energy efficiency, and the recovery plan will not improve the situation.

One such programme in the plan, the residential programme (a 100 per cent grant) combined with solar panels and/or electric heating is a waste of money and energy for the targeted low-income families because it is not combined with deep energy efficiency renovation. Instead, it only provides funds for the replacement of existing windows with plastic ones, a particularly poor solution. The renovation of public education buildings has been deleted from the plan, and higher education buildings are planned to have only medium-level instead of deep renovation, which will cause the lock-in of lower-quality energy efficiency measures, ignoring the potential for cost-efficiency and awareness raising that deep renovation could bring. The plan also does not address biodiversity loss in a meaningful way and fails to identify biodiversity targets and milestones. The few habitat restoration projects in the Water Management component of the plan are too small to substantially contribute to halting the loss of biodiversity. On the other hand, the large-scale real-estate investments (new buildings, renovation of old buildings, development of roads and infrastructure) which dominate the plan fail to incorporate biodiversity friendly solutions. An opaque planning process with several public drafts but without clear timelines and timely feedback forced consulting partners like Friends of the Earth Hungary (but also the planners themselves) to work in a rush. More substantial input from social stakeholders could also have improved the plan’s resilience to crises, its environmental performance and its social acceptance, but the process would have had to be more transparent.

According to the plans, partnership in implementation is limited to one-way communication with the public. While the monitoring committees of Cohesion and Structural Funds are planned to also track the implementation of the Recovery and Resilience Plan, the competence of each monitoring committee needs to be clarified towards the partners and the public. Proper and timely public consultation on the implementation documents, calls for proposals, etc., would also be crucial.

Below, we provide further insight into the problematic topics identified above.

The plan preserves wasteful energy practices in building management

Energy efficiency first

The plan does not contain broad, non-reimbursable (or non-reimbursable combined with reimbursable) support for the energy renovation of domestic residential buildings. There have been no calls for EU grant funding of proposals that would exploit the huge potential for this renovation in the last 10 years (only for limited loans). Based on the 1.4 million houses/flats that a recent study of the Hungarian Energy Efficiency Institute (MEHI) suggests should be renovated in the next five years, a broad energy efficiency housing renovation subsidy scheme with a 30 to 40 per cent non-reimbursable grant is required to make sure these renovations really happen. Such a grant scheme would have multiple benefits for the national economy, the study by MEHI revealed. If only about half of these, i.e. 650,000 flats, underwent cost-optimal renovation in five years, about 7.5 PJ of energy per year and nearly 420,000 tonnes of CO2 could be saved. The state budget would also benefit (the revenue per unit of state aid would be 1.01 units for a 40 per cent grant and 1.35 units for a 30 per cent grant), and the additional employment generated by the increase in investment demand could exceed 100,000 people. Along with public demand, the EU Recovery and Resilience Facility’s Technical guidance (January 2021) and the EU Renovation Wave strategy, as well as the country-specific recommendations for Hungary, called for an increase in the energy efficiency of buildings. Still, the energy efficiency programme outlined in the draft Operational Programme for Environment and Energy Efficiency (EEEOP+), linked to energy suppliers as beneficiaries (Energy Efficiency Obligation Scheme), is not likely to deliver the necessary large-scale and deep renovation for residential energy efficiency improvements.

Electrification of heating – inefficient and does not reduce air pollution or emissions enough

Without improving buildings’ insulation, the electrification of heating to combat energy poverty is not efficient or cost-effective and its climate protection impact is negligible. Combining electricity with solar panels for heating is also not a good solution, as sufficient quantities of solar electricity are not produced during the winter when heat is needed most. This forces residents to use more expensive grid electricity, mostly based on fossil fuels, for their heating panels. The possibility to store this energy for short periods of time would not help the situation. With the primary objective to reduce heating energy demand, efficient clean alternatives for heating modernisation are heat pumps, solar collectors and in some cases wood gasification boilers. The recovery plan includes a measure requiring that before and after the investment there must be an energy certificate verifying the energy consumption performance of the house, which we welcome. However, the ‘before’ certificate should be the clear guide for the most cost- and energy-optimal investment decision for that particular house – it should determine what energy efficiency and renewable heating technology should be applied for. (In most cases, the best option is not infrapanels or electric heating panels.) Also, the implementation documents need to clarify how the target group (low-income households, who cannot afford loans) will have proper access to the grant and how the grant will be distributed in a fair way. Deep retrofit of schools and university buildings needed While upgrades of public education buildings (Component A, Demographics and Public Education) have been taken out of the final plan, those of universities (Component B, Highly Educated, Competitive Labour Force) should not fall into the trap of supporting only shallow renovations or only renewable energy installations, which would lock in energy wasting operations for decades. Instead, deep refurbishment, potentially combined with renewable energy installations, are needed, with energy certification before and after the investment to verify the positive impact achieved. These would serve as good examples with the potential to raise climate and energy awareness among visitors, students and teachers.

Community renewable energy production and use

To be fair, we also have to highlight a partially positive element of the Hungarian recovery plan. MTVSZ proposed several times since January 2021 that the plan eliminate electric heating (this has only partially been taken into account: in the Energy component, it was unfortunately kept in). We also proposed that the plan specify what the community solar plants for social housing would mean. Later, in April, we pushed for wider-scale support to various community energy projects, also with the potential to remedy energy poverty. In the final submitted version, this part has been improved, under the Settlements / Local/Rural development component: low-capacity solar power plants will be financed, and the profits from electricity sold would be used for housing and the upgrading of heating in the residential buildings, based on community-level decision-making. Electric heating is not specified. There are two indicators included: the capacity of community renewable energy production and proposals for legislation on energy communities.

Components lend themselves to easy-to-achieve biodiversity targets, yet the government has failed to include any of them

Components of the plan lack substantial biodiversity conservation aspects, investments rarely incorporate nature-based solutions and there are no guarantees that conservation objectives will be met. A major shortcoming of the plan is that it allocates a meagre amount for awareness-raising and capacity-building. Shaping people’s views and teaching them how to work with nature, not against it, is paramount if we want the envisioned green infrastructure (new buildings, urban green spaces, waste management and water management infrastructure) and digital solutions (e.g. precision agriculture) to be used for what they were meant: the green recovery. Regarding water management, thanks to intensive lobbying by CEE Bankwatch and its member group MTVSZ, the Hungarian government abandoned the idea of using RRF sources for irrigation. Hungarian conservationist experts pointed out that irrigation is harmful for biodiversity while sustainable landscape management based on water retention has a thousand-year tradition in the country. There are many successful examples of the agricultural use of flood basins in Hungary, like orchards, extensive fishponds, grazing, etc. These models sustain several ecosystem services while creating considerably more jobs than intensive farms. Farmers should be encouraged to farm in a way that is appropriate to the land by means of strong awareness-raising programmes and a reorientation of agricultural subsidies. Based on our suggestions, water retention elements received more emphasis in the final plan, but safeguards for their implementation are still lacking. The ‘do no significant harm’ assessments (or at least what has been made public from them) in the plan are not consistently detailed. Some are simple declarations, lacking substance and in-depth analysis of alternatives. Others include a more detailed analysis but need to be amended significantly. The involvement of public institutions and civil society organisations active in nature conservation, even in the elaboration of funding schemes and calls for proposals, could significantly expand the green dimension of the plan and prevent damage to nature at a low cost. The use of vegetation for shading and temperature control, rainwater retention and sustainable rainwater management, wildlife-friendly solutions, increasing green areas, community composting are just a few examples of missed opportunities.

Nevertheless, the government could still improve the biodiversity angle of the plan by:

developing and incorporating robust biodiversity targets and milestones;

ensuring the meaningful involvement of civil and public nature conservation organisations in implementation and monitoring; and
assuring that the adept non-governmental organisations are involved in the awareness raising campaigns about water retention.

Without ensuring proper public participation, implementation will also fail

A more meaningful consultation process could have improved the plan’s quality

Despite the fact that the plan’s drafting process, should be subject to the Aarhus Convention, its public consultation did not meet the legal requirements of the Convention, as there was no public and predictable timetable for planning and consultation and no timeframe for expressing views on the various drafts. Unfortunately, this opaque process forced both the planners and the partners who gave their comments, including the Friends of the Earth Hungary, to rewrite their inputs in a rush. Public control of implementation is questionable The planned measures of ‘public consultation‘ in the implementation of the plan are inadequate and insufficient as they are limited to one-way communication with the public. The implementation documents of the recovery plan should undergo public consultation. Based on the Commission Staff Working Document Guidance to Member States on the Recovery and Resilience Plans, MTVSZ / Friends of the Earth Hungary recommends that the monitoring committees of the operational programmes of cohesion policy funds be involved in the drafting of implementation documents, calls for proposals and in the monitoring of the implementation of the plan. Public participation and partners’ involvement in policy-making should be strengthened Contrary to the EU’s country-specific recommendations for Hungary, which called for ‘effective involvement of social partners and stakeholders in the policy-making process’, the reforms included in the plan itself will do little to strengthen social partners’ participation in policy-making, focusing instead on giving one-sided information and making the government’s decisions understood.

More information:   29 April 2021: announcement of the results of the EUCashAwards campaign of the Climate Action Network (CAN Europe), where national spending plans, including recovery plans, ‘competed’ for readers’ votes: https://www.cashawards.eu/  29 April 2021: CEE Bankwatch Network press material on recovery plans in Central and Eastern Europe. The detailed analysis of the recovery plan and the above summary was compiled by Ákos Éger (executive president), István Farkas (co-president), Alexa Botár (climate&energy), Teodóra Dönsz-Kovács (EU Funds, participation), Bence Kovács (community energy) and Zsuzsanna Ujj (biodiversity) at FoE Hungary. Contact: info@mtvsz.hu

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