Blog entry

Left jobless after eviction from Vinca landfill, Roma begin negotiations with Belgrade after complaint to the EBRD

The Vinča landfill on the Danube has been piling up over more than 40 years with no lining or collection of the water leaching out underneath. More than 80 people were living in informal accommodation and trying to eke out a living from discarded waste at the site, part of the 12 000 people estimated to be involved in waste collection throughout the city.

In 2019 the EBRD provided EUR 70 million to ‘Beo Cista Energija d.o.o Beograd’ for the construction of a solid waste incinerator and the remediation of this old landfill in the Serbian capital. The IFC and the Austrian Development Bank are also financing the project. The European Commission and the EIB were as well considering funding before pulling out in October 2019, citing its incompatibility with EU waste prevention and recycling targets. However, the EBRD didn’t find any non-compliance, which was confirmed by the IPAM’s superficial assessment released in December 2020.

Problems begin

In late 2018 some residents of the informal settlement were relocated to social housing units, while a number of individuals were left without any alternative form of housing. This resettlement was said to violate Serbian law and the International Covenant on Economic, Social and Cultural Rights because the housing that was allocated was not affordable for its users.

International human rights standards define the affordability of housing at a cost to an individual or household at a level that does not jeopardize the fulfilment of other basic needs. However, the majority of relocated households were already burdened with the costs of rent and utility services.

Also, only residents of the informal settlement that were there as of 8 June 2016 were offered relocation. As a result, some families who arrived after this census date were left without any alternative accommodation.

Moreover, many waste pickers have lost their main source of income because of the unilateral termination of their contracts with the public utility ‘Gradska Čistoća’. Despite the obligation of the city of Belgrade to ensure economic opportunities for income generation, a few people were offered only short term seasonal jobs, which were poorly compensated. At the same time, picking of recyclables from the streets of Belgrade has been prohibited, and thus their livelihood criminalised. Again, the rights of waste pickers are ignored by the lenders and local government as the new solid waste PPP project is being set up.

Seeking redress

On 13 January 2021, the EBRD’s Independent Accountability Mechanism registered a complaint filed by the A11 Initiative and six displaced people asking that the bank ensure adequate alternative accommodation and a realistic possibility for livelihood restoration for the resettled individuals. On 20 April 2021, the IPAM published an Assessment Report confirming that the case will proceed to problem solving. It aims to facilitate dialogue between the affected Roma people and the city of Belgrade to pursue resolution for the raised problems through information gathering, joint fact-finding and mediation meetings. The same day, A11 Initiative contacted the Executive Directors of the International Finance Corporation’s Board to inform IFC directors about the breaches of the bank’s Performance Standards during the project implementation.

This problem-solving initiative is a great opportunity for the City of Belgrade and the project promoter to demonstrate good faith and restore the human rights for Roma.

Scientific studies reveal river ‘sickness’ from small hydropower plants in Serbia

As millions of people around the world celebrate Earth Day, a new case study by Bankwatch and WWF Adria shows that we are still not going in the right direction. The theme of Earth Day 2021 is Restore Our Earth, but the Beli Kamen and Komalj hydropower plants in Serbia show we haven’t even stopped destroying ‘protected’ areas.

Built on the Crni Rzav and Ribnica Rivers in Zlatibor Nature Park, which is also an Emerald site, both plants were financed by the European Investment Bank (EIB) via loans to the financial intermediaries Banca Intesa Beograd and Crédit Agricole Srbija. A further plant, Peta, is also planned as part of the same hydropower complex, but has not been built yet. The EIB, which likes to model itself as the EU’s climate bank, has largely withdrawn from direct financing of destructive dams. But the lack of transparency over investments by intermediary banks has enabled the destruction of many rivers, for example by the Blagoevgradska Bistritsa cascade in Bulgaria and the Ilovac hydropower plant in Croatia.

How do we know if a river is ‘unwell’?

Assessing the impacts of the Beli Kamen and Komalj plants is difficult not only because of the lack of transparency about the projects and the remoteness of the area, but also because many of the problems hydropower plants cause are underwater. In 2020, WWF Adria organised hydrobiological studies of eight rivers in Serbia with the goal of assessing the environmental impacts of planned or already built hydropower plants. The studies were carried out in line with the EU’s Water Framework Directive, according to which the physical-chemical parameters of water, some very small plants and animals (phytoplankton, phytobenthos, macrophytes, macrozoobenthos) and fish are used to assess water status and quality.

Poor ecological status of parts of the Crni Rzav River after building the plants

The Beli Kamen plant (1.68 MW) was put into operation in 2016 and the Komalj plant (0.6 MW) in 2018. Beli Kamen has two intakes and two pipelines – one on the Crni Rzav (4.3 kilometres upstream from the powerhouse) and one on Ribnica (2.5 kilometres upstream from the river confluence). Komalj has no separate intakes, but the water used by Beli Kamen goes directly into Komalj’s pipelines, bypassing the Crni Rzav River for an additional 2.4 kilometres. Therefore, a total of 9.2 kilometres of river are seriously impacted. Hydrobiological studies were carried out by WWF Adria in 3 locations:

Location 1, in a stretch not impacted by hydropower, higher than the intakes
Location 2, above the Komalj powerhouse
Location 3, below the Komalj powerhouse

Hydrobiological research on Serbian rivers. Photo: Nataša Milivojević

The results proved not only impacts between the intakes and Komalj powerhouse, but also downstream. In total, more than 10 kilometres were destroyed. Location 2 had much higher temperature and higher values of oxygen concentration and saturation, which is a consequence of low water levels and algal bloom. During times of rapid photosynthesis of algae during the day, the water quickly becomes saturated with oxygen. The surplus oxygen just bubbles out of the water. That leaves no reserve for the system at night when the water organisms need oxygen. After algae die their decomposition leads to poor water quality.

Location	Temp. (°C)	pH	Electrical conductivity (μS/cm³)	Water hardness (mg/l)	Oxygen concentration (mg/l)	Oxygen saturation (%)
1	17.8	7.9	260	130	9.74	114.8
2	23.8	8.65	350	170	12.03	151.3
3	18.3	8.61	370	180	9.78	111

The hydropower cascade very seriously altered the river habitats, as proven by the changes in algae compared to the river stretch not impacted by hydropower (Location 1). The lack of any algae at Location 3 means lack of food and shelter for many aquatic animals. The overgrowth of algae at Location 2 and the change in species composition indicate a totally modified river stretch with stagnant water. Below the two hydropower plants (Location 3), the status based on macroinvertebrates was poor, and according to some indices even bad. Between the two plants (Location 2), it was moderate. The river stretch not impacted by hydropower (Location 1) had good status, and according to some indices, even high.

	Location 1	Location 2	Location 3
Ecological status class	II	III	IV
Ecological status assessment	Good	Moderate	Poor

A very important indicator of the impact of hydropower was the disappearance of the stone crayfish (Austropotamobius torrentium). It was found on Crni Rzav in 2018, but not in 2020 when the Komalj plant started operation. The stone crayfish is a priority species for conservation in the EU Habitats Directive and the Bern Convention. It is an indicator of the good status of mountain rivers and is threatened all around Europe by hydropower projects.

Stone crayfish from Veliki Rzav River. The species disappeared from the Crni Rzav after building the hydropower plants. Photo: Nataša Milivojević

The studies on fish showed that there has been a drastic decline in biomass of fish recorded at Location 3. Below the hydropower plants there were 17 times fewer fish than above. The most significant decline was in the population of Danube barbel (Barbus balcanicus), another protected species by the Habitats Directive and Bern Convention. The decline is a consequence of habitat fragmentation, changes in the hydromorphological characteristics of the river flow, construction of inadequate fish passes that prevent spawning upstream and variable water levels. The impacts on fish will also have serious consequences on other species that prey on them and are protected in the Zlatibor Nature Park and Emerald site – the otter (Lutra lutra), black stork (Ciconia nigra) and kingfisher (Alcedo atthis).

European chub (Squalius cephalus) from a river stretch not impacted by hydropower. Photo: Nataša Milivojević

Is restoration possible?

Coming back to Earth Day 2021, it is still possible to ‘restore the Earth’. There is a growing movement, Dam Removal Europe, whose goal is to restore rivers in Europe with natural or cultural importance. It will take time until the Serbian government understands that restoring 10 kilometres of Crni Rzav and Ribnica will bring more benefits than only 2 MW of hydropower. But until then, some urgent action is needed.

EIB policy improvements needed

The EIB needs to make its lending through financial intermediaries fully transparent, at least for projects which may have significant negative impacts on the environment, such as hydropower plants.
For higher-risk projects, such as those from Annex I or II of the EIA Directive, or any projects situated in sensitive areas, such as Emerald sites, the EIB needs to require that the projects be referred to the EIB for environmental and social appraisal, and the Bank needs to be included in project monitoring. Based on data from the hydrobiological studies, it can be clearly concluded that the negative impacts of small hydropower plants on river biodiversity are extremely high, compared to the very small amount of electricity produced (in this case study – 10 kilometres of rivers were destroyed for around 2 MW capacity). The EIB should stop financing such projects.
The EIB needs to make clearer the relationship between its Environmental and Social Standards and its Hydropower Guidelines and ensure that the provisions for financial intermediaries set in the Guidelines are included in loan contracts.

Project-level remediation of damage needed

The EIB must engage with all stakeholders to investigate the reasons for the poor to moderate environmental status of the river impacted by the plants and carry out additional assessments in more locations where plants financed by the Bank are situated using the same methodology as in the WWF-Adria study.
The EIB must engage with the final beneficiary of the loan to remedy the situation accordingly and with the Institute of Nature Protection of Serbia to set the necessary nature conditions in order to improve the ecological status of the Crni Rzav and Ribnica Rivers (leave more water in the river, modify the energy production regime, etc.).
The EIB needs to investigate how its clients Banca Intesa Beograd and Crédit Agricole Srbija performed their due-diligence duties and publish its findings.
The EIB must oblige its client to engage with the final beneficiary, the relevant authorities and interested stakeholders to reach an agreement not to build the third planned plant, Peta, because of the negative impact of the other two plants on the river ecosystem.

This publication was produced in collaboration with EuroNatur in the frame of the joint research and advocacy work on hydropower finance and subsidies.

This publication was updated following a reply by the EIB to Bankwatch on 14 March 2022.

Estonia’s EU recovery fund measures are promising yet potentially obstructive

Unlike many other countries, as of mid-April, Estonia had only published brief documents outlining the proposed measures and budget allocation for the Recovery and Resilience Facility (RRF). It also organised weeklong consultations for selected measures, but these did not provide many further details.

While the lack of access to a full draft does not allow for a thorough review of the recovery plan itself, a general assessment of provided documents shows that the measures included in the Estonian recovery plan are mostly aligned with the European Green Deal.

However, as the devil is in the details, many measures could also jeopardise the green transition, there is a need to ensure that the detailed eligibility and implementation criteria planned for proposed measures is aligned with the Green Deal.

The estimated EUR 0.9 to 1.1 billion allocated to Estonia under the RRF will be channeled towards five areas: healthcare and social protection (EUR 446 million), business (EUR 337 million), e-governance (EUR 135 million), energy and energy efficiency (EUR 92 million) and transportation (EUR 96 million).

Mixed signals from the recovery measures

Proposed measures with a likely positive effect on climate goals take EUR 322 million, or 29 per cent, of the estimated total. These include much needed investments in the energy grid, energy storage and renewables (EUR 45 million), increasing the energy efficiency of buildings (EUR 47 million) and a green fund for investing in enterprises’ green transition (EUR 100 million). A further EUR 50 million is planned for introducing integrated renewables-based hydrogen technologies, but the measure’s design could be based on overly optimistic expectations and lead to implementation issues.

Measures that will positively contribute to the decarbonisation of the transportation sector and hence the climate goals include constructing an additional tram line in Tallinn (EUR 26 million), restoring a section of a former railroad line in Northern Estonia (EUR 34 million) and municipal investments in cycling paths (EUR 5 million).

Most other measures can be potentially harmful and could undermine the Green Deal. Due to the low level of detail provided, many of the proposed measures could be used to support the growth and longevity of harmful companies and sectors that significantly reinforce climate change, such as extracting and processing mineral resources and fossil fuels. Such measures include, for instance, supporting firms’ export capacity (EUR 33 million), adopting innovative and resource-efficient technologies (EUR 23 million), and digitisation and automation of enterprises (EUR 73 million).

There is also uncertainty around the impact of measures like advancing bioresources (EUR 24 million) and constructing a joint transport terminal of Rail Baltic (EUR 31 million). For the former, it is unclear whether the measure will fuel increasing logging intensity that carries the risk of adverse environmental and climatic impacts. The latter could support the decarbonisation of the transportation sector, but it encourages developing Rail Baltic, which likely negatively affects biodiversity as it can involve clearing bogs and forests of high conservation value to make way for the railroad.

Biodiversity neglected

The European Commission has highlighted the need to allocate a larger proportion of EU funds for protecting and restoring biodiversity in both the Technical Guidance for the RRF and the EU Biodiversity Strategy. Such investments would also contribute to the requirement to invest 37 per cent of the recovery fund in green transition. Despite all this and the central role of preserving biodiversity and ecosystems in climate change mitigation and adaptation, Estonia has not proposed any measures on these.

From the view of conservation, for instance, the status of most forest habitat types of the Habitats’ Directive in Estonia is either inadequate or bad, suggesting that the state has not fulfilled its duty to ensure and restore the favourable status of these. Also, 49 per cent of the forest area within the Natura 2000 network in Estonia is not covered by the Habitats’ Directive forest habitat inventory, indicating that forests with potentially high conservation value may not be adequately protected from intense logging.

Using the RRF to invest in improving the status of forests and other habitats and in taking inventory of the land within the Natura 2000 network would help to capture and store carbon and ensure that ecosystems needed to adapt to climate change would be preserved. It would also contribute to the climate goals required by the facility.

Missing pieces

To realise the good intentions behind Estonia’s proposals, further scrutiny is needed to ensure that the measures effectively contribute to the Green Deal.

This requires, first, a comprehensive application of the ‘do no significant harm’ principle across all measures as well as applying the EU Taxonomy for sustainable activities criteria on measures classified as ‘green’. Second, it must have a stronger focus on investing in biodiversity and preserving and restoring the favourable condition of different ecosystems. Third, Estonia must have a public recovery plan that defines a strategic and operational framework specific to the RRF. Without this, the measures are likely to be ineffective in the long run.

District heating in the Western Balkans – we need clean, modern heating that works for everyone, for the long term

If you live in the city of Skopje, North Macedonia, it is likely that you will find yourself in an apartment in a block of flats built somewhere around the 1970-80s, with district heating that, during the colder half of the year, works between 6am and 10pm. It’s a “take it or leave it” service, with no possibility of regulating the temperature in your rooms, no option of turning on the heating on a cool September day, or turning it down when it is 15 degrees outside in January. This was my experience growing up here in the 1980s, and it still is today, in 2021.

The situation is largely similar throughout the Western Balkans. But it doesn’t have to be this way. In recent years, people have become more vocal about wanting quality heating in their homes, also because of the toll that outdated heating systems have been taking on their health. As soon as winter starts, the media is flooded with reports and warnings about alarming levels of air pollution exacerbated by heating. That is because coal, gas, heavy oil and wood are the main heating fuels in the region.

For example, the share of coal in district heating in Kosovo is 94%, and concerning individual heating, an estimated 62% of households in North Macedonia are using wood. In addition, many households across the region use old-fashion, inefficient electric heaters to warm their houses, which are costly and drive demand for electricity, including from the region’s heavily polluting coal plants.

While governments in the region are contemplating how to decarbonize their energy sectors and address air pollution, it seems they only mean electricity. The heating sector does not get the attention it deserves – either that, or they turn to fossil gas, as has happened in Serbia.

District heating needs to be part of the solution

In the Western Balkans, district heating is used in Bosnia and Herzegovina, Kosovo, North Macedonia and Serbia, and there are plans to build a district heating system in Montenegro. Indoor heating and hot water supply account for 43% of energy consumption in the Western Balkans. And of all district heating in the region, a staggering 97% is based on fossil fuels and only 3% on renewable energy. And even this renewable energy is mostly biomass, the sustainability of which is currently subject to vigorous debate.

Apart from their dependency on polluting fuels, district heating systems in the Balkans are characterised by outdated and leaky pipelines, and a distribution network serving buildings with poor energy efficiency performance. But instead of seeking easy short-term solutions to patch the systems, authorities should focus on leapfrogging into the most cutting-edge heating systems that integrate various solutions of different scales, adapted to individual locations.

Let’s take the Tuzla example, a city in Bosnia and Herzegovina, notorious for its polluted air due to a lignite power plant that provides heating to around 23,200 households as well as public and commercial buildings. The city has been making efforts to address the situation by providing subsidies for heat pumps and for external insulation of buildings, and by taking measures to reduce the costs for connection to the network in an effort to attract new customers.

However, what Tuzla actually needs is a systemic and long-term solution. And this should not be to construct a new lignite-fueled unit, with the excuse of providing heating to Tuzla residents. Rather, the city authorities should figure out how to provide clean, affordable heat by exploring the local potential for renewables and heat storage, while using the existing infrastructure and focusing on energy efficiency measures in buildings and the distribution network. It requires political will on all levels, and a recognition that, ten years down the line, coal will become way too costly, not just economically, but also in terms of health and environmental costs to be worth investing in in the first place.

A modern, clean heating system that starts operating in 10 years from now, needs to be planned immediately.

In locations where they already exist, like Tuzla, district heating systems are old, inefficient and polluting, and they are not consumer oriented. In communities where district heating is planned, the proposed systems often revolve around designs that were popular 40 years ago, like a single source central system, such as a gas or biomass plant.

The town of Pljevlja in Montenegro has been promised district heating since 1982. Instead, for the past four decades people have been suffocating on air pollution from a dozen lignite-fueled boilers feeding a local network that serves around 390 households in the centre of the town.

The authorities plan to convert the country’s only coal power plant into a co-generation plant which would supply heating to the town of Pljevlja. Replacing a number of small polluting boilers with one single polluting source could perhaps have worked in 1982, when the number of alternatives was limited. But technology has evolved so much since then.

District heating is a complex topic that requires progressive thinking how to modernise all aspects of the system – low-temperature, multi-source solutions on the supply side, such as the use of excess heat from industrial processes or data centers, local renewables potential like solar or geothermal together with heat storage, modern technologies like heat pumps, in combination with energy efficiency measures at the level of the network and on the demand side in order to bring down heat demand.

The localised nature of district heating systems means they should be transformed with a bottom-up approach. The initiative must come from the municipal authorities and local communities, but national and international stakeholders have an important role in integrating clean, modern solutions into national strategic and policy planning. Funding is already available for national and local governments willing to develop such projects, and there are „best practice“ examples from around Europe.

On the path to decarbonisation, which Western Balkan leaders have committed to achieve by 2050, district heating is too big an elephant in the room to be ignored. One of the reasons it has been sidelined for years, even by EU policymakers, is the absence of a „cross border dimension“ that would render it an issue of regional and Europe-wide interest. District heating by nature is primarily a localised, municipal service. But the effects of inefficient heating systems, in the form of air pollution, health and environmental hazard, economic and social costs, extend well beyond municipal and national boundaries.

No country can achieve the necessary emissions reduction targets without aggressive measures to make heating systems clean and smart. At the national level, the ongoing National Energy and Climate Plans (NECP) processes are the place to plan for heating related measures. Recognizing this as a regional concern, in late 2020 the Energy Community launched a heating and cooling platform, with the aim of mobilising the participating countries and stakeholders to exchange information and ideas around this topic.

As a district heating consumer, I often ask myself when can I expect to come back to a home where I can adjust the temperature, control how much I consume and pay at the end of the month, knowing that it is also safe to breathe outside in wintertime because Skopje is heated from clean sources?

Once a district heating project is planned, it would take several years to mobilise funding, secure building permits, carry out construction works, and actually put in place any new technology. That is why planning progressive, locally adapted solutions that work for citizens, for the economy, for the environment, and for the long term, needs to start immediately across all the Western Balkan countries.

When courts help cloak export credit agencies’ financial clout

In December 2020, following a lawsuit filed by environmental group Green Istria, Croatia’s High Administrative Court ruled, once again, that citizens have the fundamental right to hold the Croatian Bank for Reconstruction and Development (HBOR) to account and that the Bank must be transparent about the ways in which it uses public funds.

As obvious as it might sound, this ruling is a significant milestone in civil society’s quest to expose the decisive role export credit agencies like HBOR have been playing in enabling the fossil fuels industry and human rights abuses around the world. The Trans-Adriatic and the Trans-Anatolian gas pipelines, Indonesia’s coal industry, and liquified natural gas projects in Mozambique are just a few examples of controversial projects enabled by various export credit agencies.

The Croatian court case is important since in a number of instances in recent years, central European courts have sided with export credit agencies that insisted on withholding information on their operations.

Export credit agencies’ little-acknowleged impact

State-owned export credit agencies enable governments to support local companies in doing business abroad, particularly in financially and politically risky parts of the world.

Members of the Berne Union, the most important association of export credit agencies and investment insurers, collectively cover nearly USD 2.5 trillion in exports every year. That is 13 percent of the world’s transboundary trade.

This makes export credit agencies more powerful than many multilateral development banks. And yet, these financial institutions are as opaque as they are influential (see here for more).

HBOR’s vigorous – and, gladly, fruitless – insistence to deny public scrutiny is a case in point.

How many court cases one needs to see where the public money goes?

In 2015-2019, HBOR legally challenged no less than 31 decisions of the country’s Information Commissioner after it had ordered the country’s export bank to disclose information on its clients, projects it supports and other aspects of its operations. The Bank lost all 31 court cases.

The ruling from February 2021 was no different. Green Istria requested HBOR to disclose protocols of its board meetings from 2015-2018 related to projects it supported. HBOR, unsurprisingly, refused to grant access to this information. This time, the Information Commissioner decided to side with the Bank, so Green Istria filed a lawsuit at the High Administrative Court against the Commissioner’s decision.

Two years after the environmental group’s initial request for information, the court confirmed earlier rulings, according to which, HBOR disposes public money and therefore citizens have the fundamental right “to exercise control over the holders of power and over the spending of public funds”.

Like their Croatian peer, export credit agencies in Poland, Hungary, Czechia do not disclose their full portfolios on their websites, and they also resist requests for information.

Eximbank Zrt., the Hungarian export credit agency, had turned down a Friends of the Earth Hungary request for information on its loans, and made sure to appeal rulings by two court instances. In 2019, the Curia of Hungary accepted Eximbank Zrt’s banking secrecy claim.

But, the Freedom of Information Act, representing the public interest, should be superior to banking secrecy of a state-owned bank. So, Friends of the Earth Hungary, lodged a complaint with the Constitutional Court, and the case is still pending there.

Similarly, a 2019 ruling of Poland’s Supreme Administrative Court, concluded a three years long effort by Polish Green Network to reveal who enjoys the generous support of the Polish export credit agency KUKE S.A. Eventually, the court ruling upheld KUKE S.A.’s claim for insurance secrecy as a reason to reject the request for the complete list of the companies it had provided with publicly-backed insurances.

European Commission does little to end export credit agencies opacity

Bankwatch member groups and fellow NGOs have long been calling out this little known but influential class of public finance institutions for their contribution to human rights violations and to fueling the climate crisis.

But part of the problem is that even the European Commission refuses to adopt a proper benchmark to determine whether European export credit agencies’ operations are actually in line with the EU’s objectives and obligations.

Export credit agencies voluntarily follow the OECD’s Common Approaches guidelines for undertaking environmental and social due diligence. OECD members are supposed to report to the organisation about all projects supported by their export credit agencies that have a potentially ‘medium or high negative environmental or social impact’. Consequently, as can be seen in the newest information, covering 2016, this list omits an unknown number of projects that are supposedly less impactful.

Yet, this voluntary and mainly inadequate reporting has allowed the European Commission to downplay its own responsibility to properly scrutinize European export credit agencies’ investments.

Members States are legally obliged to submit annual reports on their export credit agencies’ performance. But to determine whether they are compliant with the EU’s objectives and obligations, the Commission’s yardstick is the inadequate OECD Common Approaches. The scope of the Common Approaches only covers a limited part of export credit agencies’ portfolios.

The application of the Common Approaches is entirely discretionary, and many of the standards the Common Approaches refer to are weaker than EU policy provisions. A more appropriate benchmark would be the body of EU laws, directives and obligations (see here for more).

It is high time export credit agencies come out of the dark. And the European Commission as well as the European Parliament have the authority to design appropriate, binding regulations. New rules can play an important role in strengthening the transparency and accountability standards of these public finance institutions. It doesn’t need to take countless legal battles to shine a light on what is being done with European public money, especially when it too often ends up bankrolling climate change and human rights violations.

Czech recovery plan a few steps away from being on the right path

The drafting of the Czech recovery and resilience plan has largely been going on behind closed doors. Civil society organisations (CSOs) were not invited to participate in the planning process and there has not been any attempt to inform the public about the most current version of the plan and the latest changes up until the end of March. Despite this lack of respect for the partnership principle, the plan has undergone several major positive modifications due to pressure from CSOs and the European Commission since the first draft was published in October. Harmful projects erased from the plan included investment in highways, re-financialisation of the newly legislated tax reforms and investments in LNG/CNG vehicles. With these harmful measures gone, the plan is largely going in the right direction, but there are still some noticeable missteps present. In official documents, the Czech government claims that 37 per cent of all measures included in the recovery plan contribute to the green transition – exactly the minimum share required by the European Commission. It also states that there is no breach of the ‘do no significant harm’ principle by any measure listed in the plan. While this sounds good, even if a little unambitious, the question is whether that’s really true. With around EUR 7 billion at stake, it’s crucial to get the answers right.

Less than a third of measures support the green transition

A whopping EUR 3.1 billion, almost half of the funds, is planned for a component with ‘green transition’ in its name. This definitely creates the illusion that the required 37 per cent share of green and climate measures is easily achieved. In reality, only around 30 per cent of the total budget can be considered green. Measures supporting biodiversity are below seven per cent of the total allocation.

There are several great and truly green measures proposed, such as the construction and electrification of railroads on a massive scale. More sustainable transportation (including railroads, but also biking and walking paths) will receive EUR 844 million.

Components of the Czech recovery and resilience plan:

Digital transformation (EUR 1.1 billion)
Physical infrastructure and green transition (EUR 3.1 billion)
Education and job market (EUR 1.57 billion)
Institutions, regulations and support of entrepreneurship in response to COVID-19 (EUR 0.56 billion)
Research, development and innovation (EUR 0.51 billion)
Health and resilience of the citizens (EUR 0.57 billion)

Another EUR 230 million will go towards energy efficiency measures, and almost EUR 200 million towards the development of photovoltaics. Another EUR 169 million will be used for revitalisation of the recycling infrastructure in order to bring us closer to the circular economy model. Although these investments contribute to environmental and climate goals, when taken together they still do not reach the 37 per cent mark. Furthermore, certain measures, such as investments in distribution networks for district heating (more efficient pipelines), highly efficient gas boilers and financial support for the Czech development bank (ČMZRB) are also problematically considered as fully contributing to the green agenda. Despite the fact that more efficient pipelines for district heating are needed they will still redistribute heat from fossil fuels. Although some environmental organisations consider gas boilers highly efficient and helpful in the short-term to alleviate air pollution, cleaner air, in this case, is the result of a false solution that relies on continued dependence on gas. And although support for small and medium enterprises (SMEs) is crucial for the development of more resilient local economies (which is the purpose of the ČMZRB), marking this measure as 100 per cent contributing to the climate objectives does not make sense. This measure is currently undergoing changes due to interdepartmental proceedings, and the Czech government has said that the necessary steps will be taken to ensure its full compliance with the climate objectives. Another problematic measure is the ‘digital transformation of enterprises’. This measure is supposed to contribute EUR 72 million to the green target (1 per cent of the total budget). The only rationale for this is that digitalisation may have secondary effects on the emission reduction target and will help to kickstart the circular economy. Although digitalisation can positively affect waste management and make work more efficient, counting it as a climate measure is highly opportunistic, because it may also negatively impact energy consumption.

Missing biodiversity and nature-based solutions

The allocation for biodiversity protection is nearly absent in the recovery plan and does not create any opportunity for reaching the goals set in the Biodiversity Strategy 2030 or the Farm to Fork Strategy. Although EUR 576 million is allocated to a component called ‘nature protection and adaptation to climate change’, most of the measures included there are problematic. Friends of the Earth Czechia (Hnutí Duha) previously raised concerns over this component. Measures for flood protection have to be allocated exclusively to dry polders, the restoration of wetlands, and the revitalisation and renaturation of riverbeds. Other important areas missing in the plan are the revitalisation of watercourses in the landscape and urban areas, meaningful improvement of the state of forest ecosystems (e.g. avoiding fast reforestation solely for carbon sequestration), implementation of land improvements aimed at stabilising the landscape, and the elimination of support for irrigation not supported by the European Commission. Up to now, none of these suggestions have been reconsidered and included in the plan, despite the fact that the Ministry of Industry and Trade constantly lists Hnutí Duha as their partners in drafting the plan.

A good example?

The Czech recovery plan has come a long way from supporting new highways and vehicles running on fossil gas. The overall feeling is that the plan is quite complex and takes into account different needs of the economy, society and climate. However, that does not mean that there are no problems with the plan. There are strong measures to support the country’s pathway to decarbonise and transition away from fossil fuel dependency. However, the plan’s neglect for measures in support of nature and biodiversity conservation and several questionable climate measures are serious cause for concern. If money from these and few other components was redirected towards more meaningful, environmentally friendly measures (e.g. more money for accelerating and preparation of the renovation of buildings), the plan would meet its 37 per cent climate objective and could be considered a good example for other countries.

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