Blog entry

Last chance for Member States to include biodiversity in recovery plans

There is not much time left until the 30 April deadline for countries to submit recovery plans to the European Commission, and biodiversity conservation seems to be completely absent in many of them. The state of nature and biodiversity across the union is in very poor health and the recovery funds can and should be used immediately to address this. Yet, the ambitious goals set in the Biodiversity Strategy 2030 cannot be reached if nature-based projects are underfunded or completely neglected in the recovery plans.

Special guidelines released by the European Commission state that every Member State must plan at least 37 per cent of allocations of their national plan to reforms and investments supporting climate action, including biodiversity measures. Yet, the majority of Member States have failed to fulfil this criteria and many of them have not included even a single measure for addressing nature and biodiversity.

All over Europe, civil society organisations have been closely monitoring the ongoing preparation of the draft plans and, where possible, taking part in public consultations to provide input and expertise.

In March, 27 organisations sent a joint position paper to the environment ministers of EU countries demanding that Member States include more measures for biodiversity and nature protection. The clear lack of measures supporting biodiversity conservation must not be neglected. Countries that choose not to use the Recovery and Resilience Facility to invest in biodiversity may miss the targets set by the European Green Deal and more specifically by the Biodiversity Strategy 2030.

Proposed measures directly focusing on biodiversity and nature protection are very scarce in national plans. What’s more, many national recovery plans include proposals that pose a high risk to biodiversity. Assessments of plans prepared by national organisations show that there are many problematic projects included. They are often presented as green but can in fact be harmful to biodiversity.

For example, a special law on anti-drought investments proposed in the Polish plan aims to simplify investment procedures related to water facilities, in particular retention reservoirs. ‘This makes it much easier to intervene in protected areas, for example by enabling water installations in nature reserves’, says our campaigner. The same goes for plans of building small hydropower plants, which can harm biodiversity by blocking wildlife corridors.

The Latvian plan includes projects connected with commercial forestry actions and forest management methods that are not sustainable. It also includes planned investments in flood risk reduction infrastructure, which threatens to destroy valuable wetlands habitats.

Last week a coalition of environmental organisations joined forces to raise their concerns again and demand EU Commissioners working on climate and environmental matters to take rapid action and to turn their support for protecting nature into concrete action.

In a joint letter highlighting the alarming lack of measures for nature protection, the organisations outlined their demands:

‘Member States must quantify and explain how the RRF will contribute to the implementation of the Biodiversity Strategy, and show how they will address the major gaps in nature and environmental legislation that has resulted in numerous ongoing infringement procedures.’

Member States still have two weeks to drop harmful measures from their plans and include more funds for nature protection. The table below shows a list of measures proposed in national recovery plans that are potentially harmful to biodiversity.

Please note that the above is a non-exhaustive list based on information that we have obtained from our assessments of current draft recovery plans. As new draft plans become updated, we will continue to update this table accordingly upon identification of additional harmful proposed measures.

Saving ‘private’ Rioni: Georgia’s growing environmental protest

One cold evening in October 2020, Maka, Marita, Varlam and some of the other villagers in Rioni valley decided to start spending the night outside, on the bank of the Rioni River, in an attempt to protect it from the construction of a large dam. They said they would protest until preliminary construction on the 424 MW Namakhvani hydropower plant was stopped and its developer, ENKA Renewables (a consortium of Turkish ENKA and Norwegian Clean Energy), left the valley.

The guardians of the Rioni River, as people later called the protesters, have not gone home yet. Taking shifts, they have spent a collective 166 nights outside, sleeping in tents, and plan to continue until their demands are met. The company has not yet left the valley, either. However, the support the people of Rioni have received from the rest of the country has encouraged them to stand their ground.

What started as just a handful of people protesting to save the Rioni River a few months ago has already turned into a national campaign. On the Day of Action for International Rivers, 14 March, thousands of Georgians came from all over the country to join the guardians of Rioni and make history. It was the largest environmental protest in Georgia’s recent past.

‘No to Namakhvani HPP’, ‘No to Dams in Racha’, ‘We protect our homeland’, ‘Freedom for Rioni’, ‘Solidarity from Pankisi’ – these are some of the slogans on protestors’ posters at the rally held in the western Georgian city of Kutaisi, where media said about 22,000 people gathered.

‘We were five people and today we are thousands because we were standing here with the truth… This gives us the hope that the spirit will never die as long as there is at least one person protecting the truth,’

said one of the leaders of the Rioni protest, 28-year-old Varlam Goletiani, in his address to the audience. He added:

‘People from other parts of Georgia take shifts with us to spend nights in Rioni valley. There is not a place left in the country from where they have not joined us. In this state, we are creating a precedent for protests that are managed by utterly clean hearts and spirits.’

The dam which mobilised thousands

The Namakhvani hydropower plant will be one of the country’s largest. Its reservoir’s mirror surface will cover 610 hectares. It will flood parts of Tskaltubo and Tsageri municipalities, including the villages, cultural heritage, unique biodiversity, and some of Georgia’s precious and expensive micro zones for producing Tvishi wine.

The project poses threats to not only the river’s ecosystem and the region’s unique wine, but also to the population of the Imereti and Lechkhumi regions, scientists say. Its development started without any justification of the economic need for the plant, and the preliminary construction works started without the completion of a number of studies required by law. Furthermore, locals have little trust in the investor – one of Enka Renewables’ shareholders, Clean Energy, previously built another large dam in Georgia whose tunnels collapsed.

If the dam is destroyed due to an earthquake or technical failure, a 34-metre-high wave from Namakhvani’s dam could flood western Georgia’s main city, Kutaisi, estimate seismologists from the Institute of Earth Sciences and the National Seismic Monitoring Centre. This is not just an imaginary scenario, but one that could become a reality, given the strong earthquakes that have happened and could happen again in the area. In an official statement addressing the prime minister, the Institute announced that the project’s environmental assessment does not include proper studies and measurements and that it shows the project will not be built to withstand strong earthquakes.

In April 2020, the Georgian government granted ENKA Renewables permission to start preliminary construction on Namakhvani, but the civil society organisations (CSOs) Green Alternative and the Georgian Young Lawyers’ Association have claimed this was against the law. The CSOs have sued the Ministry of Agriculture and Environment of Georgia to annul this permit, because it was granted without the company providing the studies required ‘to identify possible threats to human life and health, environment and cultural heritage’.

The lack of transparency around the project is also what triggered the community’s protest. ‘Environmental decisions for both projects were made in violation of the law, without the proper inclusion and participation of the public’, reads the people of Rioni’s petition against the construction of Namakhvani and another large hydropower plant planned on the river, the Oni cascade.

They continue: ‘Additionally… no cost-benefit analysis has been presented, which is required by Georgian law as a part of the environmental impact assessment report’. The economic side of the project has raised a number of questions. In particular, a contract for the Namakhvani project was published that showed the government of Georgia had undertaken to purchase electricity from a private company for 15 years with a guaranteed high price and that it had transferred a large area in the Rioni valley to ENKA Renewables as private property.

The petition #SaveRioniRiver, which gathered more than 10,000 signatures, was sent to the government and the US and Turkish embassies in Georgia. The authors also submitted it to the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Asian Development Bank (ADB) and the World Bank; however, none of the financial institutions has responded yet. Not even after the dispersal of a peaceful protest in Rioni this February by police; not even after police were again mobilised against the protesters in the valley on 4 April 2021 in an attempt to allow ENKA Renewables to forcefully resume construction on Namakhvani.

In this most recent attempt to end the protest, police blocked the entrances to the protest area near Namakhvani and prevented activists from joining the guardians of Rioni. As of 9 April, the blockade continues. Locals have reported that not only protest supporters, but also people who live on either side of the blocked area are not allowed to pass. Public defender Nino Lomjaria, who visited the area on 8 April, called the blockage an ‘unproportional’ measure that limits people’s freedom of mobility.

Foreign investors and Georgia’s history of failed dams

The company behind Namakhvani HPP has two shareholders: ENKA (90% share) from Turkey, known for construction engineering but with limited experience in hydropower plant construction, and Clean Energy (10% share) from Norway, known in Georgia for building the controversial Shuakhevi hydropower plant, where the main tunnels collapsed two months after it became operational. After three years of repairs, Shuakhevi resumed operation in 2020. However, even after the dam was repaired, a crack appeared in the reservoir, and locals believe that subsequent water leakages in the surrounding villages were caused by the project.

Namakhvani and Shuakhevi are not the only dams in Georgia that have been met with fierce opposition from locals or severe criticism from environmental and human rights groups and international financial organisations.

‘There are the same problems in Enguri valley, in Rioni valley, in lower Svaneti, in Dariali gorge, [with the] Khadori hydropower plant’, Zurab Nizharadze, an activist from Svaneti, told Georgian media during the #SaveRioniRiver protest. Nizharadze has fought against the Nenskra and Khudoni hydropower plants which are planned to be built in Svaneti and are financed by the EBRD and EIB. In 2020, after two years of investigation following the complaints of local activists, the EBRD’s and EIB’s independent mechanisms announced that the Nenskra plant did not comply with international standards. The mechanisms said that both banks had violated their own environmental and social policies.

‘The main problem that we face regarding hydropower plants in Georgia is that the government considers their development as the main answer to the existing challenges of Georgia’s energy sector development, while the country lacks even a strategic plan for energy development. Due to the fact that Georgia is a contracting party of the EU Energy Community, the existing practice of decision-making and supporting hydro projects violates the requirements of the Community, too’

said Dato Chipashvili, representative of the Georgian environmental and human rights CSO Green Alternative.

Biodiversity forgotten in the Latvian recovery plan

In its current form, the draft Latvian recovery plan still has numerous gaps and needs significant revisions. The plan simply ignores biodiversity, and includes a set of highly questionable investments, which if approved, can have a potentially negative effect both on biodiversity and climate. It is also not clear how the ‘do no significant harm’ principle will be respected. This is problematic because the European Commission’s guidelines require Member States to think in terms of quality spending. States should explain how recovery and resilience plans will contribute to wider environmental goals under the European Green Deal, including the objectives of the Biodiversity Strategy for 2030. Several Latvian green organisations, including Zaļā brīvība (Green Liberty), Latvijas Dabas fonds (Latvian Fund for Nature), Pasaules Dabas Fonds (WWF’s associated partner in Latvia), and Latvian Ornithological Society (BirdLife Partner) prepared a joint assessment of the draft recovery plan and submitted suggestions on 9 March to the Ministry of Finance as the ones in charge of preparing the national recovery plan.

Irrigation activities go against biodiversity strategy

The draft plan foresees “Investments in flood risk reduction infrastructure, including renovation of polder pumping stations, renovation of protective dams, renovation of regulated sections of rivers”. This is something that goes against the EU’s Biodiversity Strategy 2030, which aims to put biodiversity in Europe on a path to recovery and contains specific actions and commitments to protect nature and reverse the degradation of ecosystems. At the same time, other EU funds like LIFE and the Structural and Investment Funds for years support activities that go in the opposite direction, including restoration of irrigated areas and wetland habitats (like floodplain meadows and mires).

Irrigation activities are therefore often at odds with EU nature protection and biodiversity policy.

Wetlands also play an important role in carbon sequestration. That is why any draining activities need to be carefully assessed in the context of climate change and biodiversity protection.

Afforestation is not always green and climate-friendly

Another point of concern for biodiversity in the Latvian plan is the foreseen support to commercial forestry actions, including the replacement of unproductive forest stands, afforestation and management of young forest stands. These activities look green and sustainable at first glance but can be very harmful to biodiversity. Replacement of unproductive forest stands means in reality clear-cuts. This forest management method is not sustainable. It is both harmful to the environment and nature. Clear-cuts release huge amounts of CO2 captured in the trees. They also may destroy biologically-valuable forest stands and habitats of EU importance. Clear-cuts are a commercial forest management approach that reduces biodiversity. Also, the thinning of young forest stands is something that is being done in commercial forests after clear-cuts. Such activities serve private commercial interests only and therefore should not be financed by the Recovery and Resilience Facility. Afforestation also seems green at first glance. Yet, it is not so if it happens at the expense of protected grassland habitats. The conservation status of grassland and meadow habitats of EU importance is highly unfavorable, not just in Latvia but across Europe. Therefore, these vulnerable habitats should not be risked by supporting afforestation activities in Latvia and other forestry-oriented countries. Activities promoting harmful forestry models should not be supported by the financial instrument from which 37% is aimed to support climate action.

It’s time to invest in biodiversity

Only 10 per cent of all habitats of EU importance in Latvia are in a good state.

Similarly to the rest of Europe, where 81 percent of habitats are in ‘poor condition’ as a recent European Environmental Agency (EEA) report shows, Latvia faces a dire situation that will only become worse without swift action. The EU’s Biodiversity Strategy 2030 requires significant investments for nature protection in the coming years, meaning urgent reforms and systemic solutions for biodiversity. The Recovery and Resilience Facility can bring funds to address this crisis. Recently 27 environmental organisations have signed a joint position paper on mainstreaming biodiversity conservation and nature-based solutions in the recovery plans. Accordingly, Latvian green organisations have proposed a set of biodiversity and climate-targeted actions to be included in the Latvian recovery plan, many of which can be well applied in other EU countries. The recovery plan should promote sustainable management of private lands as well as the development of existing and new natural areas. It should also help with the implementation of the EU’s Birds and Habitats Directives, EU Biodiversity Strategy 2030 and European Green Deal.

The proposed biodiversity investments must address the following important biodiversity conservation aspects:

Development and management of the network of protected areas of EU importance (Natura2000);
Enhancing connectivity of Natura 2000 sites;
Restoration, maintenance, and improvement of the quality of habitats of EU importance;
Restoration and creation of new wetlands;
Combating invasive species;
Development of nature tourism infrastructure.

Following the Commission’s guidelines on the reform-oriented approach in the development of recovery plans, green organisations have also proposed the development of the so-called ‘Payments for Ecosystem Services’ system. Such a mechanism would enable a voluntary system of payments for ecosystem services. This means that businesses would have an opportunity to make their voluntary financial contributions to the climate change mitigation scheme. These contributions would be then used by landowners, municipalities, businesses, and NGOs to implement climate change mitigation measures and support biodiversity.

The Latvian recovery plan currently lacks ambition for reaching environmental goals and the planned actions do not include any real reforms.

Yet it is still possible to elaborate investments into biodiversity conservation and include these in the plan. This will not only benefit the environment and climate but will also deliver a set of economic benefits to ensure economic growth, job creation, and better health and human welfare. This, in turn, will help to deliver green and sustainable recovery both in Latvia and throughout the EU.

High time for better biodiversity protection in the Energy Community countries

The Energy Community Treaty currently covers some of the most biodiverse regions in Europe. From the steppe and forests of Ukraine and Moldova, to the mountains and rivers of Georgia and the Western Balkans, these countries have a stunning range of species and habitats, including beautiful and well-preserved rivers.

What they also have in common is that they are inadequately protected from human activity. Despite the nomination of numerous sites as part of the Emerald Network under the Bern Convention, plans to ensure the Network was fully protected by 2020 were not met, by a long way.

Threats to nature come from many sectors, including agriculture, waste, transport and industry, but in recent years, the impact of the energy sector has been especially pronounced in the Western Balkans and Georgia, due to a rapid expansion of hydropower.

While it is clear that hydropower blocks fish migration and decreases water quality, in reality, its impacts are much wider. For example, small plants often completely dry up the riverbed downstream of the water intake, clearance of forests for reservoirs and access roads destroys habitats and causes erosion and landslides and local people often lose access to water for their livestock or crops.

But hydropower is far from the only form of energy that endangers rivers and other habitats. Coal and nuclear plants heat up water bodies by discharging spent cooling water, coal mining and ash dumps endanger groundwater and rivers, biomass endangers forest biodiversity, wind farms and transmission lines can affect birds and bats, and we have all seen what oil spills can do.

The wild beauty of the Energy Community countries by Bankwatch

Insufficient protection in the Energy Community Treaty

When the Energy Community Treaty was signed in 2005, its authors recognised that if the EU’s neighbours were to be allowed to participate in the EU energy market, some environmental safeguards would need to be put in place. Obligations to carry out environmental impact assessments were included in the Treaty, as well as an obligation to protect wild migrating birds and limit air pollution from power plants.

But time has proven that these are not enough. The results from an environmental impact assessment inform the measures to be included in the environmental permit for an energy facility, but we are not aware of any example from the region where such an assessment has concluded that the impact of an energy project on the environment would be unacceptably high.

In addition, smaller projects such as hydropower plants, are often exempted from undertaking environmental assessments due to their small installed capacity, yet their damage is considerable. This is partly due to failure to properly screen projects under the environmental assessment legislation, but it is also a reflection of the gap left by not having the full range of EU nature protection law as part of the Treaty.

If these countries are participating in the EU energy market and trading electricity with EU countries, they need to play by the same rules in order to avoid unfair competition. The same goes if they want to benefit from the energy transition. Renewable energy can bring many benefits, but when not well planned, it can also damage biodiversity. This has already happened with hydropower but can easily happen with poorly-sited wind farms and uncontrolled use of forest biomass in particular.

Energy projects threaten biodiversity in the Energy Community region by Bankwatch

Active protection needed

In contrast, the EU’s Birds Directive, Habitats Directive and Water Framework Directive aim to actively protect species, habitats and water bodies respectively. They strive to actively improve the status of species, habitats and watercourses such as rivers and lakes, rather than just stopping their further decline.

Their underlying assumption is that areas protected as Natura 2000 sites and water bodies such as rivers and lakes should not be harmed unless there is truly no other option. They define under what circumstances it is allowed to decrease the quality of water or build infrastructure in protected areas, and stipulate what needs to be assessed in order to take such a decision.

For this reason, Bankwatch and partners have undertaken an analysis of how these Directives can be incorporated into the Energy Community Treaty, bearing in mind its energy-sector mandate. In our opinion, any energy projects potentially impacting on the existing network of nominated candidate Emerald sites and other protected areas, or on watercourses, should be subject to assessments under the Directives, to understand whether they can go ahead.

Building on existing obligations

In fact, most of the countries have already started to implement these Directives, particularly the Water Framework Directive, within the framework of agreements with the EU, and under the Danube River Protection Convention (ICPDR). The protection of Emerald sites and setting up of Natura 2000 sites in the EU accession countries is lagging, and needs to be speeded up, but under our proposal to start by using already protected or identified high-value natural areas as the basis for assessment, protection of these areas from new energy projects does not need to wait.

Certainly the Directives are not a silver bullet, but in 2017 the European Commission’s comprehensive evaluation of the Birds and Habitats Directives found that bird populations, other protected species and natural habitats in Europe would be much worse off without protection from the Birds and Habitats Directives and that the benefits from the Directives are much greater than the costs.

Likewise, although the implementation of the Water Framework Directive with the EU clearly needs to be improved, in 2019 the Commission also concluded that it has been successful in setting up a governance framework for the EU’s water bodies, slowing down the deterioration of water status and reducing chemical pollution, and that it is generally fit for purpose.

As the Energy Community countries increase their share of renewable energy, better nature protection is becoming more and more crucial. Clearly a great increase in renewable energy is needed in the countries, but it must not come at the expense of biodiversity.

Thirsty hydropower: misuse of drinking water pipelines has destroyed a river in Bulgaria

When initially designed, this seemed to be the most sustainable hydropower cascade in Bulgaria. According to the investment proposal submitted by the investor to the Bulgarian authorities, the project aimed at the ‘utilisation of the hydropower potential of the pipeline “Blagoevgradska Bistritsa” at eight points of its length with the goal to construct small hydropower plants’. The plants were going to operate under a ‘subordinate’ regime, meaning that they would produce energy only from the amount of drinking water the town needed, which is already in a pipeline and thus would cause no additional damage to the river.

Funding was provided by the European Bank for Reconstruction and Development (EBRD) and later, after the plant was built, the European Investment Bank (EIB) also supported the project company’s trade receivables. Both banks used a financial intermediary – the commercial bank Allianz Bank Bulgaria PLC. Due to a lack of transparency on the part of the multinational banks, their involvement became public many years later. The affected public could not participate in the project’s approval and raise their concerns in front of the banks.

But three problems should have raised a red flag for the banks. First, the project was planned within protected areas – two water intakes were in Rila National Park and the river flows through another Natura 2000 site. Second, the project was divided into eight pieces when requesting environmental approvals, indicating an attempt to play down its impacts. And third, the company constructing the plant was owned by Grisha Ganchev, ‘a known money launderer and organised crime figure’, according to a cable from the US Embassy in Sofia.

‘No life at all, not even frogs’

Blagoevgradska Bistritsa used to be one of the best rivers for trout fishing in Bulgaria. Local anglers remember catching trout up to 1 kilogram in weight or 50 centimetres long. The river was also a habitat for three protected species at the European level – the otter (Lutra lutra), the stone crayfish (Austropotamobius torrentium) and the endemic Struma barbel (Barbus strumicae).

Right after the construction of the cascade, anglers and farmers noticed severe changes in the river. According to a survey with local people commissioned by Bankwatch in 2020, the whole river between the intakes in the national park and the lowest plant of the cascade was severely impacted. Many people said that they had seen the river completely dry and that in some stretches there was ‘no life at all, not even frogs’. Even below the lowest plant, anglers noticed a lot less wildlife in the river. Farmers also complained that there was no water for irrigation anymore.

Have you seen the Blagoevgradska Bistritsa river fully dry or with low water level?

Fishermen take over monitoring the river, ‘since the authorities do not care at all’

When they realised that they were losing their favourite river, fishermen’s associations from Blagoevgrad and Sofia started regular inspections of the hydropower plants’ operation. The results of 12 field visits since 2015 have been compiled in a public monitoring platform. ‘For every violation of the environmental rules we do our best to fight it, since the authorities do not care at all’, said the founders of the platform. The information gathered was made accessible to the public, the media and the authorities.

See the Public Control Platform

A hidden pipeline

The fishermen discovered that at any time of the day, even when the town of Blagoevgrad was barely using drinking water, the cascade was operating at full capacity and the river was dry. The water permits allowed the cascade to use more than twice the water necessary for the town, breaching the environmental permits that said: ‘The exploitation of the hydropower plant would not have its own impact on the water balance of the river’.

In theory, since the plants use the drinking water for the turbines, once the water has passed the last plant, it should continue towards the town. But footage from the cascade’s lowest plant shows a large pipe which discharges water used in the hydropower production process directly back into the river. This proves that the cascade is using additional river water, more than the amount that is carried further for the town’s water consumption. This explains why the river upstream is dry, without fish, otter or crayfish.

Two Bulgarian laws and two EU directives breached

Citizen monitoring has provided evidence of several violations of national and EU legislation, namely:

The Bulgarian Water Act requires a minimum ecological water flow to be discharged with priority over any economic activity. Field visits by fishermen showed one of the intakes leaving no water in the river, while the other barely trickled.
The Bulgarian Act for Environmental Protection requires an environmental impact assessment (EIA) to be carried out before construction of hydropower plants which may have a significant impact on the environment. Eight different decisions for the eight plants were issued, without requesting an EIA – a practice known as ‘salami slicing’, or splitting a project into pieces to downplay its likely impacts.
The EU Water Framework Directive requires Bulgaria to implement measures to prevent the deterioration of the status of bodies of surface water.
The EU Habitats Directive requires Bulgaria to conduct an appropriate assessment of projects likely to have a significant effect on Natura 2000 sites. The project is located in two such sites.

What can still be done to save the river?

Because their involvement was not known, the issues could not be addressed to the banks in a timely manner. A response from the EBRD on 21 December 2018 stated:

‘Unfortunately we have not succeeded in retrieving the information for the Projects you were looking for. These Projects are just too old for us to still have active records with operational detail.’

The EIB has admitted in a reply to Bankwatch that:

‘the EIB did not carry out an environmental due diligence on the Blagoevgradska Bistritsa plants, did not assess the decisions of the competent authorities regarding the Environmental Impact Assessment (EIA) of the plants, and did not carry out field visits’,

and suggested we contact the plants’ owner and/or the competent authorities in Bulgaria.

Although the EIB’s financing came at a later stage, in our view the Bank should have undertaken due diligence to ensure its client’s operations complied with environmental law. As public money was used to build the plant and later to support its owner, we cannot accept that the European banks take such a hands-off approach. The EIB and EBRD need to oblige Allianz Bulgaria to engage with the final beneficiary, with the relevant authorities and interested stakeholders in order to remedy the situation.

The Bulgarian authorities need to modify the water permits of the plants so that they are identical with the water permits for the drinking water supplier.

The water discharge pipe from the lowest plant should be removed, and new fish passes on all intakes should be built to facilitate migration.

How should the banks improve their policies?

The multinational banks use various intermediaries – commercial banks, state development banks and private equity funds – to help reach smaller clients. In 2019 the EBRD’s new environmental and social policy set stricter conditions for financing hydropower projects, including higher transparency of the intermediaries’ projects. The EIB’s 2019 Hydropower Guidelines also set up similar provisions, but it is not clear how they are implemented. The EIB is also reviewing its transparency and environmental policies in 2021.

The EIB and the EBRD need to make their lending through financial intermediaries fully transparent, at least for risky projects such as hydropower plants, so that any concerns can be raised before the damage is done.

For such high-risk intermediary projects, the EIB also needs to be involved in environmental and social appraisal and project monitoring, as its intermediaries clearly are not able to do these tasks adequately.

The EIB also needs to ensure that the provisions for financial intermediaries set in the Hydropower Guidelines are included in loan contracts, while the EBRD needs to keep long-term records on intermediary projects as a basic matter of accountability.

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

Devil in the climate details as Slovakia finalises plan for EU recovery fund

The devil however is in the details. The premise of the plan is misguided in that it is based on Slovakia’s outdated climate and energy strategies. The proposed renovation and efficiency measures are littered with false solutions, as is the country’s approach to tackling the industry’s pollution problem, and in spite of significant improvements for green transport, some investments still miss the mark. All the more frustrating is that many of the issues explored below could have been addressed during the planning, had the government set out a transparent process for public engagement in line with the Commission´s partnership principle. The end result should be a recovery plan that is less focused on trying to catch up with the EU’s average GDP and more concerned with financing decarbonisation and resilience measures that lead Slovakia to the goal of reducing CO2 emissions by 55 per cent by 2030

Components of the Slovak national recovery and resilience plan

Name of the Component	RRP in mil. €	Green
Green Economy	2 170	2161
Renewable energy sources and energy infrastructure	220	220
Renovation of buildings	700	700
Sustainable transport	750	741
Decarbonisation of industry	350	350
Climate change adaptation	150	150
Education	798	97
Science, Research and Innovation	700	50
Healthcare	1 450	545
Efficient public administration	1 037	92
Total sum	6 155	2 945
	Minimum:	2 277

*Source: Ministry of Finance, Slovakia, March 2021

Outdated plans and no regional capacities

One of the key problems with the Slovak recovery plan is that it is based on outdated documents. There is no appropriate carbon neutrality decarbonisation model finalised for aligning the measures with 2030 and 2050 EU climate targets. The Slovak National Energy and Climate Plan was outdated even in 2020 when it was published. There was not enough political will to update the decarbonisation models, and Slovak ministries did not have sufficient capacities. The Ministry of Environment prepares the model for carbon neutrality since 2019, but only general information about measures is available – no clear pathway. Moreover, Slovakia will probably review its reports on renewable energy shares starting from 2010 due to incorrect reporting of data from households and small sources in the last decade. The current government’s Programme from April 2020 stated that it would review the NECP and Low Carbon strategy. The draft plan has not so far built in NGO recommendations for supporting preparation of capacities in the Regional Centres, which would help orchestrate the planned decarbonisation at the regional level. One-stop shops in the regions assisting households in applying for funding is a measure in good direction, but it shouldn´t subsitute real decarbonisation planning and implementation and much wider and deeper focus of the Regional Centres.

Slovak ministries should include a component for ‘Preparation of regional capacities for decarbonisation’ with EUR 3 million.

Renovation of buildings

Reforms include integrating various public support measures, increasing transparency, complex assessment of historical buildings, and dealing with construction waste. The last reform is the only circular economy initiative in the whole recovery plan. The renovation of public historical buildings should incentivise deep renovation and preserving historical values – not only pragmatic utilisation of these buildings. It is hardly possible to assess if it’s an appropriate use of funding to contribute to carbon neutrality by 2050 at the latest. Moreover, the regional decarbonisation strategies and capacities for preparing them are almost non-existent.

The relevant ministries should double-check the support for historical and listed buildings with the decarbonisation model.

Fossil gas boilers a false solution to tackle energy poverty

Investment package for improving the energy efficiency of 40 000 family houses investments package includes a EUR 50 million allocation for fossil gas boilers. Although the Ministry of Environment conditioned this programme on other energy efficiency measures, it comes with a false presumption that low-income households will be schooled into using fossil gas boilers to avoid air quality infringement. Low-income families would hardly switch from cheaper fuels, such as wood (and unfortunately waste), to fossil gas. This is problematic because Slovakia already has one of the worst ratios of energy-related spending compared to income in the whole EU and opting for the more expensive fossil fuel would only make it worse. Fossil gas boilers in the plan should be replaced by more sustainable solutions. The Slovak Academy of Sciences recommends examples of good practice in tackling energy poverty, such as supporting homes’ renovation in other member states. There is mention of solar systems and heat pumps, but they are not yet properly integrated into the component.

The Ministry of Environment should replace support for fossil gas boilers with renewable energy sources (RES) systems.

The renewable energy sources and energy infrastructure

Reforms from the renewable energy sources and energy infrastructure component primarily focus on transposing the Clean Energy for all Europeans package into Slovak legislation.

Ministry of Economy should add sustainability criteria for renewable energy sources and set municipalities, energy communities and prosumers into the eligible recipients of public finance support for building new RES – not only support entrepreneurs.

Decarbonisation of industry

This component’s reforms include a phase out of subsidies for electricity from domestic coal, which was approved in 2018 and won’t be financed from the Recovery and Resilience Facility. Streamlining controls and improving integrated permitting for industry is another reform that raises attention from the environmental and access to justice points of view. The cost-efficiency is the main principle for investments in the EUR 350 million decarbonisation of industry component of the plan.

The Ministry of Environment should check if the projects listed there are in line with the carbon neutrality model, which their department finalised.

Railway and cycling infrastructure, but also highway hydrogen infrastructure

Reforms in sustainable transport are focused on preparing investment projects and other public passenger transport and intermodal freight transport measures. The new policies for the long-term support of alternative fuels seem problematic as the RRP supports highway infrastructure. Through EUR 700 million, the plan includes spending on a number of positives, including the development of low carbon transport infrastructure and environmental freight transport, as well as promotion of ecological passenger transport. Unfortunately, it also plans to support problematic construction of infrastructure for alternative fuels (e-mobility and hydrogen). Pedestrian, cycling and public transport infrastructure were strongly neglected for decades as overpriced highways have been financed as a state priority. Individual automobile transport is much less efficient, socially accessible and environmentally sustainable than public transport systems.

This is why the EUR 50 million allocation for 1000 new electric and hydrogen recharge stations on highways should be switched from grants to loans.

The partnership principle and participation

The Slovak Ministry of Finance sent the first draft of Slovakia’s recovery plan to the European Commission on 23 December 2020. However, the Ministry published the complete draft of Slovakia’s plan for public consultation on 8 March 2021. With the tight deadline for submitting plans to the European, this three month delay made the public participation in the planing process mostly a formal exercise. Moreover, the Slovak government massaged the legislative process by publishing a draft version of the plan for the official consultation on 8 March 2021 in order to reach agreement among political coalitions, discuss with the Commission and finalise by 30 April 2021. This is a dangerous precedent as the legislative process allows this consultation only in its final stage.

The Ministry of Finance should incorporate the partnership principle into the implementation structure of the recovery plan.

« Previous Page