Blog entry

Calls for climate action grow louder throughout central eastern Europe

At larger protests, such as those in Poland, turnout amounted to around 30,000 protestors while protests like those in Kosovo had a turnout of approximately 200.

Bankwatchers and Bankwatch member groups attended many of the events across the region – in Ukraine, Latvia, Czechia, Poland, North Macedonia, Hungary, Romania, Estonia and Slovakia – (check out our Twitter dispatches) and ahead of the global strike, Bankwatch has called on staff at the European Investment Bank and the European Bank for Reconstruction and Development to join this historical mobilization to call for a transformation of these financial institutions.

Many of the protests in central and eastern Europe had highlighted the local perspectives about the urgent need for an energy transition.

In Romania, attitudes towards the climate crisis are changing fast. According to Bankwatch’s energy coordinator Ioana Ciuta who attended the Bucharest rally, youth leaders said that at their first strike, back in March, there had been only five of them. Half a year later, this number grew to around 1,000 protestors, and participants didn’t just come from the capital Bucharest, but from major cities throughout Romania such as Bacau, Cosntanta, and Brasov. “The Ministry of Environment, nobody’s ministry!” was the participants’ chant of choice as they were fenced in outside of the National Library of Romania.

An unexpectedly large crowd gathered in Bratislava, Slovakia, as nearly 5,000 people showed up. This comes after the Slovak President had come out in support of the climate strikes and the Prime Minister declared that Slovakia was ready to take action emphasizing the importance of youth demands for climate justice. Since the strike, Slovakia has become the newest member of the Power Past Coal Alliance, pledging to phase out coal by the year 2023.

The Hungarian government also announced plans to be coal-free by the year 2030. In Hungary, climate strikes boasted an attendance of about 6,000 – with solid representation from MTVSZ, Bankwatch’s member group in the country – and protesters in Budapest staged a “die-in” to stress that there is “no future on a dead planet”.

Poland, where coal makes up around 80% of the energy supply, saw some of the largest protests in central Europe, with events in over 60 cities. In Warsaw, participants demanding an end to fossil fuels, and coal in particular, simultaneously called for solidarity with miners. Outside the famous Palace of Science and Culture, protestors chanted “solidarity with miners, but never with mines!”

Yet, Polish decision makers have turned a deaf ear to the strikers’ demands, and even climate policy pundits have been quick to dismiss the young protestors; they believe climate policy is too complex for youth and should be left to the experts.

Bankwatch’s national coordinator for Poland Izabela Zygmunt has a different opinion, though: “My takeaway is that we must not let those young people down and put our campaigning expertise and expert knowledge behind them to show to policy makers that they are not making unrealistic or irresponsible demands, but that indeed, what they are asking for is both feasible and necessary,” she says.

“From the point of view of our campaigning, this has actually been an impulse to rethink our asks and check if perhaps we, as the expert climate organisations, are not making too modest demands and being too compromising.”

Living on the edge: waste collection at Mongolia’s landfill rehabilitation project

It is impossible to visit the city and not notice the burgeoning ger districts (areas with round, traditional dwellings) mushrooming on the city’s outskirts, where migrants are relocating to fenced plots oftentimes with extended families.

As the pace of development quickens, so too does the need to provide adequate services to the city’s residents, and to do so in a way that is sustainable for future generations. For these reasons, Ulaanbaatar is one of several Green Cities across the world, an initiative launched by the European Bank for Reconstruction and Development together with other international donors and funds.

The Green Cities programme aims to address the most urgent infrastructure challenges facing growing urban areas in developing countries in a way that does not jeopardise a country’s ability to meet sustainability targets and fight against climate change.

One such project launched by the bank aims to bring an outdated landfill up to EU standards. While the goals of the project are laudable, many challenges persist. Because of the dire situation with Ulaanbaatar’s municipal waste infrastructure, the project received an exemption from adhering to EBRD policies and thus EU standards. In addition, safeguards are needed for the rights of the nearly one hundred or so informal waste collectors who make a living by recycling garbage at the landfill and reselling it to traders.

In the field

In September we visited the Moringin Davaa landfill on the western outskirts of the capital to speak with these collectors and find out more about what they know of the city’s plans and how such plans might impact their already precarious living arrangements.

According to Dolgor of the local NGO ‘Development circle’ – which safeguards the rights of waste collectors across the city’s various landfills – collectors are usually picking a variety of plastic and metals, burning the materials (though no one is concerned or aware about how this might affect a person’s health or air quality) and then selling to intermediary buyers.

Estimates from the approximately twenty collectors we spoke with suggest that they earn between 60 000 and 80 000 MNT per day, or roughly 25 euros. Most have tried some other form of employment but find themselves returning to collecting, which they do together often times with other family members.

Most interviews were held with men, as women at the site felt especially vulnerable and afraid to talk, and in case not wanting to have their photographs taken.

Since he was seven years old, Byambabataar has for the last thirteen years been collecting waste with his mother.

One collector we met is Byambabataar. After he finished school, Byambabataar joined his family in collecting waste. While he tried other jobs, he found that the pay was better in the landfill. As with a common refrain heard elsewhere, he is concerned about the impacts on workers like his mother and the other older collectors. When he learned of the new project, his first thought was of her:

“There are women 60 years old working here. We are afraid that not everyone will be able to get a job, only a few of the younger people. All of them should be employed, there could be some training programmes or other assistance.”

Another collector Tsendsuren, who had previously worked in a sewing shop, but found that she could earn more money as a waste collector. Tsendsuren too did not know what she would do for a living without waste collection, but said she would hope to have some compensation to move back towards owning her own sewing shop.

Tsendsuren is a retired woman in her fifties who has been working at the landfill for seven years.

By the policy

Byambabataar, Tsendsuren and ‘Ujangabaatar’ were hopeful to hear about the participation of the EBRD in the landfill restoration project, because the bank requires its clients to adhere to certain principles and standards for livelihood restoration in the case of economic displacement. This would mean that the city of Ulaanbataar, as a recipient of the loan, would be required to ensure a proper resettlement and compensation for those workers who could no longer carry on their business as usual. From our interviews, It is unclear whether such a framework exists – whilst collectors spoke recently of participating recently in a survey with foreigners, it was not clear who these people were or for what the survey was intended.

The reality is however that this will be a tall task for a city lacking the institutional capacity and ill-equipped to deal with implementing EU standards or even approximation. The local coordinator of the Green Cities programme in Mongolia lamented the fact that although the city had held a series of consultations with a variety of stakeholders about what should be the priorities for the city’s development, officials were seen as too concerned with shifting political winds to implement a programme that would span further than an election cycle (How inclusive the consultations actually were is another point of contention altogether, as several NGOs described not being invited to participate).

The bank has an important role to play in ensuring that its loans are living up to its stated potential. For the livelihoods of these collectors depends on it.

NGOs challenge decision to approve Belgrade incinerator operating subsidies

In a surprising move, last week an article announced that operating subsidies for the planned Belgrade incinerator had been approved.

Only a week had passed since the Ministry of Environment’s decision to approve the incinerator’s environmental impact assessment (EIA), and the project was supposed to obtain a construction permit and a confirmation on the start of works before applying for subsidies.

It’s not often that a state institution works with such lightning speed as to issue so many approvals within less than a week, so we started digging to see what had happened.

Construction permit prejudices environmental assessment outcome

It turned out that the Ministry of Transport, Construction and Infrastructure had approved a construction permit for the project back on 16 August, without waiting for the decision on whether the EIA had been approved by the Ministry of Environmental Protection. This permit was then used to apply for approval for operating subsidies under Serbia’s renewable energy support scheme, which were then approved on 27 September, before the EIA decision was even made.

Not only did this process seriously prejudice the outcome of the EIA process, but it also meant that Beo Čista Energija’s application for subsidies should not have been approved, as it was incomplete.

Why is an incinerator getting renewable energy subsidies anyway?

As the world becomes more sensitive to the damage caused by plastics and the EU ramps up its efforts to reduce waste, it is baffling to see Serbia approving feed-in tariffs for a waste incinerator, under the guise of renewable energy subsidies. This is clearly destimulating waste prevention and recycling and encouraging Belgrade to burn its trash.

The planned scheme is also, in our opinion, illegal under the Energy Community Treaty, in which Serbia committed to implement the 2009 EU Renewable Energy Directive by the beginning of 2014. The Directive does allow the incentivisation of energy produced from biomass, and defines biomass as including the biodegradable fraction of industrial and household waste, but it does not allow subsidies for non-biodegradable waste like plastics, let alone the diesel auxiliary fuel that will be used in the incinerator to help with ignition.

However, in the Ministry of Energy and Mining’s decision to approve the incentives, there is no information to suggest that anything less than the entire output of the plant will be supported. Serbian law also allows incentives for “waste-fired power plants”, which are defined very vaguely, but clearly include more than biodegradable waste, which is included separately under “biomass power plants”.

The EU starts learning from its mistakes… and Serbia?

Within the EU, steps have been taken to try to prevent incentives for burning biodegradable waste crowding out waste prevention and recycling. The new Renewable Energy Directive II, which entered force in 2018, prohibits states from granting support for renewable energy produced from the incineration of waste if the EU’s increasingly strict separate waste collection obligations have not been complied with.

The whole model of feed-in tariffs for renewable energy has also been replaced with a more cost-efficient model based on auctions and premiums across the EU, and the European Commission has advised Member States to phase out financial support for energy recovery from mixed waste.

Frustratingly, Serbia is once again out of step with EU moves to become a more efficient and sustainable economy, delaying inevitable changes in its renewables subsidies system and supporting a waste management system that is in some ways less progressive than the one it had 30 years ago.

More frustrating still, it is being supported by the European Bank for Reconstruction and Development, the International Finance Corporation, and apparently also Austria’s OeEB to do so. Is it really so much to ask that international banks stop supporting projects based on illegal and discredited income models and instead help Serbia move towards a circular economy?

European Commission criticises the EIB’s role as a development bank

The European Investment Bank (EIB) has for years dedicated around 10% of its lending to operations outside the EU, in particular under its so-called External Lending Mandate (ELM). The ELM is a system under which the EIB benefits from a budgetary guarantee from the EU to support its development operations – set at a level of EUR 32.3 billion for the 2014-2020 period. As such, the European Commission is responsible for ensuring that the EU guarantees are wisely used by the Bank, and that reports are made annually to the European Parliament and Council on the EIB’s performance.

Despite the Commission’s recent evaluation of the EIB gives an overall positive assessment of the soundness of EIB operations, for the first time clear critical lines have emerged on the need to better align the Bank’s activities to the EU development policy objectives. Let’s take a look at the few most important ones:

The EIB needs to raise the bar on Human Rights due diligence

The European Parliament flagged this issue in its latest report on the EIB, just as we did in our Going Abroad report back in 2016 and in a recent briefing: the EIB is responsible for conducting serious due diligence on the Human Rights impacts of the projects it finances. The European Commission has now taken its turn to flag the same weakness in the operations of the EIB, mentioning that “Human Rights due diligence should be an integral part of ELM project preparation“.

In particular, the EC recommends the EIB to integrate in its contracts with clients “clauses enabling to suspend disbursements in case of serious breaches of human rights or environmental and social standards” – something the Bank should have been doing for a long time.

The EIB has begun to acknowledge these calls for improvements on human rights due diligence by starting the work on a guidance note for project promoters regarding stakeholder engagement. Although the Bank consulted civil society organisations on a draft in February – March 2019, there has not been any information on the note since then. Even when it is published, this guidance note doesn’t fulfil the urgent need of proper human rights due diligence on the policy and project level.

The Commission wants to better control EIB operations

Under the procedure set out in Article 19 of the EIB Statute, the Commission issues an opinion on every project in the EIB pipeline, based on a short note produced by the EIB services. Under this procedure, a negative opinion of the Commission is tantamount to a veto for the EIB. A positive opinion means that the project can move ahead and be submitted to the EIB Directors for their approval.

But the Commission’s evaluation demonstrates the current limits of this procedure: the level of information shared by the EIB under the Article 19 procedure is often insufficient and should be enhanced. Hence, the Commission’s efforts to ensure coherence of the EIB activities with EU policies – including on Human Rights – face limitations due to a lack of available information.

In addition, the Commission notes that its monitoring and evaluation on EIB projects is also delicate, as “it is difficult for Commission services to gain insight into their performance other than via external stakeholders, given that reporting on actual results is provided only after project completion and there is no obligation for the EIB to signal implementation problems.” A blunt conclusion drawn by the EC is that the “actual results and impacts of the EU intervention remain largely unknown“.

In this context, we welcome the Commission’s willingness to exert a “stronger policy steer from the EU“, including via the Article 19 procedure and to require more information to the EIB about how it assesses, implements and monitors its projects. Furthermore, we call on the EC to make this whole process more transparent by making its opinions under the Article 19 procedure available to the public, which is not currently the case.

Coherence with EU policies and values is at risk

The Commission acknowledged concerns raised by civil society organisations about the negative impacts of several projects supported under the ELM which lacked compliance with EU wider policies. These concerns related to environmental matters, as well as to human rights issues, including the intimidation of whistle-blowers or citizens expressing critical views (as in the case of the EIB’s highly problematic support for Ukrainian agri-giant MHP), the rights of local landholders or forced resettlements (see the Nepal Power System Expansion Project), inadequate information and consultation of local communities (problems with indigenous peoples status in Nenskra dam in Georgia), and fundamental reservations about EIB financing of infrastructure projects or credit lines in countries with poor human rights track record such as Azerbaijan.

At a time where the design of the post-2020 European financial architecture for development is under heated discussion, this evaluation sends a signal to the EIB: when supported by EU guarantees, financial institutions must adopt a serious do-no-harm policy.

If the EIB is to be serious on its external mandate, it has to deliver on human rights due diligence, better align with the development policy objectives of the EU such as poverty reduction, and act in a more transparent and accountable manner.

As it currently stands, however, the EC’s new report confirms the words of Thomas Wieser, Chair of the High-level Group of Wise Persons on the European financial architecture for development, quoted in Financial Times, when he said that the EIB “lacks the necessary knowledge on development projects.”

The EU’s flagship investment scheme must not become backdoor for fossil fuel financing

As public pressure to address the climate crisis keeps growing, a report we released last week with Counter Balance shows, that only 29% of EFSI’s Infrastructure and Innovation Window investments, including for small and medium sized companies, supported climate action between 2015 and 2018. In central and eastern Europe the EFSI has been completely unable to address a market failure in financing climate change mitigation investments.

Moreover, even this limited allocation of European financial resources for climate action is undermined by EFSI’s continued support for fossil fuels projects. These investments – mostly in gas infrastructure – have received EUR 2.6 billion worth of guarantees over the same period.

As of April 2019, oil refineries and oil reserves have enjoyed EUR 65 million in guarantees under the EFSI’s Infrastructure and Innovation Window, and gas-fired power plants have been awarded guarantees worth EUR 148 million.

Climate breakdown courtesy of EFSI money

Scientists have been warning humanity must leave most of the world’s fossil fuels reserves in the ground if we are to avert the worst impacts of a runway climate crisis. Yet, the EFSI programme has effectively been providing a vital lifeline to the fossil fuels industry. In particular, it has extended almost EUR 2 billion in guarantees to gas transmission and distribution projects such as the controversial Trans Adriatic Pipeline, the Black Sea Gas Connection, the Italy-France Interconnector as well as the Transgaz Brua Gas Interconnection Project.

The EFSI’s climate action target risks becoming meaningless when 72 percent of the scheme’s support to the transport sector – or EUR 5 billion of guarantees – have gone to carbon-intensive projects such highways, airports, aircrafts and cars.

The world has just seen the hottest June and July on record. The hefty financial support granted to these reckless projects via the EFSI scheme at a time we’re already feeling the effects of a one degree increase are nothing less than a climate Russian roulette.

Higher standards needed

The European Commission’s insistence to continue pursuing business as usual – not least by promoting fossil gas – sure has been key to this. But so have been other issues plaguing this major investment scheme.

Successive analyses by our two NGOs have cast serious doubts about the sustainability of EFSI investments and their geographical concentration. These reports also questioned the scheme’s added value and highlighted its lack of transparency.

And there are real reasons for concern over the integrity of the Investment Committee, the EFSI’s governing body. Dominated by members of the financial and the banking industries, with no representation of civil society and trade unions, it lacks a diversity of perspectives required.

What’s more, conflicts of interest remain an issue in the Investment Committee. The new report reveals that at least four of its members who declared conflict of interest in 2018 had either worked or still work in companies that received EIB loans in the past. As obvious as it may sound, conflicts of interest cannot be tolerated in a body that manages a multi billion euro portfolio of public money.

Since the EFSI scheme has been extended for a second period and its portfolio has grown, the decision making process guiding the fund has become somewhat more transparent, mainly in retrospect. But information that is crucial for the accountability of the scheme is still withheld, even after guarantees for projects have been approved.

Reforming EFSI’s successor to enable a European Green Deal

The ongoing negotiations for the next EU budget have so far failed to prioritize Europe’s 2050 decarbonisation target. The ‘InvestEU programme,’ a proposal for a post-2020 successor to the EFSI, needs to be the turning point for EU public finance. The EIB is currently looking to end its investments in fossil fuels, so the InvestEU programme must not become the backdoor for oil, gas and coal financing.

If ‘InvestEU’ indeed becomes part of the so-called European Green Deal that incoming Commission President Ursula von der Leyen has been touting, it must exclude any and all support for fossil fuels. Instead, these are small scale, decentralized renewable energy and energy efficiency projects that need to be at the heart of Europe’s strategic investments.

Climate neutrality or annihilation?

On Friday 13 September the newly formed Estonian national climate commission held its first conference together with the Estonian Academy of Sciences and Government Office, with the apocalyptic title “Climate Neutrality – Annihilation or Success?”

A coalition of 12 NGOs were permitted to use the event to hand the prime minister Jüri Ratas a petition with nearly 2 500 signatures, demanding that Estonia become climate neutral by 2035. However, things did not go according to plan.

Shortly before the event however, the organisers announced that no petitions would be allowed and anywho who tried to hand over any signatures to the prime minister will be removed from the premises, contrary to what was previously agreed.

Regardless of the initial setback, the NGOs continued to gather signatures and successfully delivered the petition to the prime minister on 30 September. The petition asks to re-open the outdated, long-term national development plans, some of which are based on studies conducted as far back as 2013, well before the landmark Paris Agreement was in place.

Estonia produces some of the most per capita CO2 emissions in the EU, which rose more than four per cent in 2018, while the rest of the EU declined by 2.5 per cent, according to Eurostat. While Estonia will meet its 2020 Paris climate targets, it will fall way short of its 2030 goals if it continues business as usual: the government is proposing to extend the life of the fossil fuel shale industry by substituting electricity from shale with large amounts of biomass and instead use shale for oil.

This would mean upwards of one billion euros of investments in new fossil fuel infrastructure and refineries and allocating free CO2 quotas to subsidise the fossil fuel industry instead of planning a just transition. This is in clear contradiction with international climate policies.

The old developmental documents are now being used as the basis for the new National Energy and Climate Plan that all Member States must submit by the end of the year. Such an approach is leading the country on the road to annihilation, not success.

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