Blog entry

Mounting pressure to revoke permit for the planned thermal power plant Ugljevik III

More evidence against Ugljevik III

Following the complaint submitted in December 2014, the Energy Community Secretariat launched the second in a three-step infringement procedure last week, confirming once again that Ugljevik III’s permitting process violated the EU’s Directive on Environmental Impact Assessment.

Local authorities have two months to respond to the Energy Community Secretariat’s reasoned request and improve the situation.

What is wrong with Ugljevik III environmental assessment?

The plant’s environmental study is lacking most of the important elements needed to assess the plant’s likely impact on the environment. Most alarmingly, the data on emissions of SO₂, NOx and dust from the plant are demonstrably false.

Ugljevik III is also currently under examination by the Espoo Convention Implementation Committee due to Bosnia and Herzegovina’s failure to notify neighbouring countries about the plant’s transboundary impacts.

However, none of this was picked up by the ministry approving the study, which goes against the Republika Srpska law and Bosnia and Herzegovina’s obligations under the Energy Community Treaty.

In July 2017 the project seemed to reach a dead end when the Supreme Court of the Republika Srpska Entity cancelled the environmental permit for the project, but the Ministry of Spatial Planning, Construction and Ecology responded by issuing another permit without repeating the environmental impact assessment process. This new permit is now being challenged in court by the Center for Environment from Banja Luka.

Unmatched levels of pollution

It is no big surprise that the authorities are trying to play down the plant’s impact on the environment, considering the jaw-dropping levels of pollution from the existing Ugljevik power plant at the same site:

A recent report by the Health and Environment Alliance reveals that one single 300 MW plant at Ugljevik III emits as much SO₂ as all of Germany’s coal plants together.

In 2013 alone, Ugljevik spewed into the air 154,385 tonnes of SO₂ – an unmatched amount for Europe. Even if the new plant had lower emissions, associated activities such as the coal ash disposal and lignite mining at the Delici, Peljave-Tobut, Baljak and Ugljevik-Istok open-cast mines, would cause severe dust pollution for the communities far beyond the plant.

International financiers’ policies at risk

The new plant is promoted by Russian billionaire Rashid Sardarov’s Comsar Energy and planned to be constructed by the China Power Engineering and Consulting Group Corporation (CPECC).

China Development Bank representatives were present at the signing of an agreement between CPECC and the Republika Srpska authorities, indicating that the bank may be interested in financing. This, however, has never been confirmed since late 2014. With mounting evidence against this project, it would not serve the bank’s reputation and commitment to abide by the Chinese Green Credit Directive.

Moreover, a recent guideline regulating Chinese overseas investments makes it clear that there should be no financing of projects that “do not comply with standards relevant to environmental protection, energy consumption and security established in the destination country”, which is precisely the problem with Ugljevik III.

Given the country’s lack of convincing arguments in the first phase of the infringement procedure, it is hard to imagine how they could demonstrate the legality of Ugljevik’s environmental permit now. The country’s addiction to coal needs treatment, and admitting that it has a problem would be a logical start.

The EU’s flagship project lacks climate assessment

While the EU portrays itself as a leader of the Paris Agreement, its financial arm – the European Investment Bank (EIB) – approves another loan to the controversial Southern Gas Corridor project without proper climate impact assessments.

A EUR 932 million loan to the Trans Anatolian gas pipeline (TANAP) goes against the EU’s public stance on pursuing climate action. Only a month ago, the EU ministers emphasised the unprecedented urgency to step up global efforts in halting and reversing climate change, and committed to lead the EU to full compliance with the Paris Agreement.

Going the extra mile

To comply with the Paris Agreement, investments in fossil fuels efficiency are not enough – limits are also needed on consumption. In 2016, Oil Change International calculated that the potential carbon emissions from existing oil, gas, and coal operating fields and mines would take us beyond 2°C of warming, whereas we must aim for well below it. The organisation recommended governments and companies to conduct a managed decline of the fossil fuel industry.

EU’s ‘best’ practice

Given this understanding about the urgency of the problem, it seems obvious that the extraction, import and burning of new fossil fuels should be preceded by an elaborate analysis of the potential climate impacts. It is expected that the EU and its institutions would conduct thorough assessments and wide consultation with the public prior to embarking on new fossil fuel projects.

It comes as a great disappointment that none of these steps were taken with regards to the Southern Gas Corridor, the largest fossil gas project that Europe is currently pursuing.

The EU’s flagship project goes unchecked

Source: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2016-007932&language=EN

The European Commission, a strong supporter of the project, admitted that it has not undertaken any climate assessments of the Southern Gas Corridor. The EIB conducts routine carbon footprint assessments of its loans but keeps the findings confidential before a loan is approved by its Board. Even after that, assessments are not made widely available.

Obtained through a personal request, the assessment of the Southern Gas Corridor proves to be weak and inadequate, not to mention its technical language makes it inaccessible for the general public. The report presented for the approval of Member States representatives was limited to the western section of the Southern Gas Corridor – the Trans Adriatic Pipeline – and covered only the first stage, until 2023. By then, the pipeline will have transported 10 billion m³ of gas annually. According to the project ESIA, the design pressure of the pipeline potentially allows to double that volume with two additional compressor stations.

Pushing for adequate assessment

In the assessment, the scope of calculated emissions was reduced to the bare minimum: it failed to include emissions related to the extraction of gas from the Shaz Deniz gas field and its transportation through other parts of the corridor, as well as emissions from the end use, such as combustion in power stations. Moreover, it used an outdated warming potential factor for methane, four times lower than what is stated in the latest IPCC report.

It was not until Bankwatch presented its own emissions calculations for the project that the Bank updated its assessment to account for the missing emissions.

Moving in the wrong direction?

Instead of calculating how much more fossil fuels we can afford to burn, we should focus the debate on ways to limit consumption.

Does this gas project compromise our chances to remain within the 1.5-degree warming limit? The EIB offers unconvincing reassurance: “The SGC should not have any direct effect on Climate Change, because it is an alternative source of gas and does not intend to cover any new demand.”

Download the EIB’s greenhouse gasses assessments.

Way off track in Riga, as controversial EU-funded tram project plows ahead

Half a year ago I questioned a EUR 100 million investment in the project dubbed the “Cemetery tram line”. The Riga City council continues to push for the construction despite its questionable value for the general public:

By all standards, it is a very expensive project;
It will primarily serve a small posh area;
The involved construction company has suspicious connections with high-ranking officials within Riga’s municipality;
Project planning process is shielded from the public view and commentary.

My complaint letters and several meetings organised at the highest level had barely any impact. Even placing the project and its questionable value for money in the political spotlight did little to shaken the decision-makers’ faith in the dubious project.

Skanste: the [future] cultural hub

The justification for a tram connection to Skanste rests on ideas and assumptions one less realistic than the other. For example, I was told that Skanste will become home to a number of initiatives essential for Latvian art and culture. Among others, there will be a:

‘multifunctional cultural centre’ that can be used as a concert hall, art gallery, exhibition space, or a venue for corporate events, with a capacity to host 1000+ guests;
Museum of contemporary art; and
House of music.

The Skanste development agency website says:

In the Riga city development strategy for up to 2030, Skanste has been defined as a priority territory for development and is set to become the 21st century business card of Riga: the central business district of the capital, a platform for European-scale events and, what’s most important, a quality life and work environment for many thousands of Rigans.

The plan in place predicts a substantial growth for Skanste – from the current number of 1 300 residents to as many as 37 000 residents by 2024. The growth of public and residential spaces will follow. Now, Skanste developers are pushing for the tram line.

Private interests

All those plans can be traced back to private sector representatives with business interests in the matter. Their participation, much-needed but absent for a long time, was welcomed by the Riga City Council. Never mind the not-well-connected ‘ordinary people’ who are also in need of convenient, environmentally-friendly tram infrastructure.

Plavnieki host 30 times more inhabitants than Skanste and also requires more developed transport lines

Photo by Kārlis Dambrāns – CC BY-SA 2.0

I see the rationale; boosted by private investors, Skanste will develop at lightning speed. Maybe this is what is written in the secret part of the project proposal that is still not available to the public? The confidential document was meant to explain the choice of the tram line and its role in increasing the capital’s environmentally-friendly public transport rolling stock, as well as to promote the use of public transport in Riga more broadly.

Talis Linkaits, a traffic and spatial planning expert commented:

The Skanste tram line project is an example of wasting EU funds. The whole idea of the project is the result of Skanste’s real estate lobby. […] At the moment, there are around 2000 inhabitants in Skanste, and by constructing the tram line in this direction we risk having a route to nowhere.

Reality check

It is an open secret that the local business sector is highly unstable: ever-changing regulations are a real plague for Latvian banks. The privately-held ABLV Bank, the major investor in the grand Skanste project, is no exception. While decision-makers confidently use ABLV Bank’s interest in Skanste as a predictor of future growth and prosperity of the region, the future of the bank itself is under question.

U.S. authorities accused ABLV bank of involvement in money laundering schemes and bribery. On 26 February 2018, bank shareholders decided to start the liquidation process to protect clients’ and creditors’ interests. This also means that “New Hanza” and all other Skanste-related projects and construction works are now stopped.

This is yet another example that demonstrates how businesses can have colossal plans and make irresistible promises to entice the government into redirecting public funds into “appropriate” assets. This blind belief in the private sector without proper risk assessment is the approach too familiar for the Riga residents. The abnormally expensive Southern Bridge is another case in point.

The same goes for the tram line. How much can we afford to take from EU funds? The strategy to “take it all” is one way to do it. But it is also the hardest one for regular taxpayers.

This month the EU sets its priorities for the next budget period 2020 – 2027, and we need to push for more public participation and improved transparency on the allocation, disbursement, and use of funds that are meant to work, first and foremost, for the people.

Join the campaign #PeoplesBudget and see how you can shape the budget of Europe.

The Baganuur women affected by coal burning

Long and cold winters in Mongolia prompted the people in the capital – Ulaanbaatar – to come on the streets and protest against high levels of air pollution coming predominantly from coal burning.

Existing combined heat and power coal plants in the capital already account for over 50 % of SO₂ and NO₂ emissions in the city. Another massive contributor are the urban poor in Ulanbaatar. Living in ger districts disconnected from public utilities, including heating, they are forced to rely on coal and waste burning as the primary source of energy.

Overlooked social impacts

Besides environmental and health concerns, coal mining in Baganuur has excerbated certain social issues that are systematically overlooked. Domestic violence, economic exclusion and unemployment have been on the radar of concerned women’s groups for some time.

In the light of Chinese companies’ interest in construction and expansion of coal mines and other energy projects in the region, these impacts are only expected to increase. The influx of foreign workers and increasing crime rates will put pressure on the already strained social infrastructure.

Moreover, impact assessments of the Baganuur coal mine expansion are not consulted with local population, which really worries local women groups.

Coal – a false solution

The dominance of coal in the Mongolian energy sector strategy and plans for new power facilities in Ulaanbaatar and Baganuur rest on myths about coal, rather than robust feasibility studies, impact assessments and an analysis of alternative scenarios.

The strategy prioritises a number of coal-based power plants across the country using arguments of reliability and affordability of coal-based energy that have been proven wrong. Mongolia’s ambitions to export energy drive the expansion of the mining industry.

Last year’s Bankwatch report argued that the energy plans of the Mongolian government – which have the backing of international financial institutions – are disconnected from the urgent need to improve the efficiency of an ageing energy system and to address the massive potential of solar and wind energy in the country.

One of these, the World Bank’s Mining Infrastructure Investment Support (MINIS) project, reviews the feasibility of the Baganuur mine expansion and carries out a cumulative study of its potential impacts. None on these studies have been made available for public review and commenting.

While international financial institutions continue neglecting innovative, efficient and resilient solutions (decentralised development of solar and wind energy, and demand-side energy efficiency measures) and, instead, promote the continued dependence on coal and the export of commodities, women groups of Baganuur would like to be sure the impacts on women would not increase.

Indigenous Svan communities unite to block hydro development in Svaneti

Representatives of all 17 communities of Upper Svaneti gathered in Mestia for a traditional Svan Council meeting, Lalkhor, to oppose the development of gold mining and hydropower projects in Svaneti that threaten local livelihoods and ecosystems.

The protesters restated their demands – discontinuation of over 50 dam projects, including the Khudoni and Nenskra dams and the Mestiachala hydropower plant.

The Lalkhor came up with the joint statement and developed a petition addressing the Georgian government, diplomatic missions accredited in Georgia, and international financial institutions.

The Lalkhor demands to recognise Svans as ancient, indigenous, aboriginal, autochthonic people with appropriate rights for customary and community property in Svaneti and to ban development of any infrastructure without their prior consent.

“We categorically and forever prohibit construction of hydropower plants, gold mining and any other activities that harm natural livelihoods, material and non-material cultural heritage! From now on, the HPPs in Svaneti will not be constructed. As defined by the international legislation, any infrastructural development project will require our consent,” says the statement.

In relation to the Lalkhor meeting and demonstration that was held in Mestia, the special police forces were called to the region to presumably counteract the protest.

About Mestia:

Mestia is a home for an indigenous community and a historical starting point for alpine climbers and adventurers. Recently, its hydropower potential turned the region into a honeypot for large dams investors.

The interests of local communities are swept aside, and the potential construction risks are largely underestimated or ignored altogether. Besides adverse effects on local livelihoods, a cascade of dams will irreversibly change the pristine mountains of Svaneti leading to a number of associated geological risks.

Cohesion at crossroads: What we need from the next EU budget

It went relatively unnoticed, but last week signalled another important moment for the Future of Europe. Last Wednesday (February 14), the European Commission published a document which sets out options for the EU budget post-2020, and includes some concerning signals about the role of cohesion policy in the European project. Not least, this document also foreshadows the option of significant reductions in cohesion policy funding.

Surely, the EU budget should cut inefficient and harmful spending, but an ambitious budget also needs to be transformational – a budget that is a key pillar in determining the future of Europe. This has become a particularly contentious question, but the Commission’s paper avoids many of the real questions of how reforming Europe’s cohesion policy could in fact contribute to addressing it. And it’s all the more worrying when this paper comes as civil society is increasingly being pushed out of the political debate about the next EU budget.

In a recent opinion article, MEP Lambert van Nistelrooij broke down the Commission’s proposal into three scenarios:

“Scenario 1: Maintains support from the European Regional Development Fund, European Social Fund and the Cohesion fund for all Member States. Efficiency gains will be made through modulating aid intensities and better targeting support.

Scenario 2: Ending support for the more developed and transition regions, leading to a reduction of EUR 95 billion. Countries like Belgium, Germany, the Netherlands and even many regions in Spain and Italy would lose support.

Scenario 3: The third and final option would discontinue investment for less developed regions altogether and focus solely on cohesion countries. This would lead to a reduction of almost EUR 125 billion.”

And there are serious questions underlining the debate around the future of the EU’s cohesion policy. What will it mean for Europe if cohesion ceases to be a pan-European policy? And how might cuts affect vital investment choices in public infrastructure towards the sustainable future Europe needs?

Last week, in response to the Commission’s document, the President of the European Committee of the Regions, Karl-Heinz Lambertz, warned that EU cohesion funds must not be cut and must continue to be made available for all regions and cities if the European Union is to have a more united, inclusive, greener and prosperous future. “If we want a Europe of ambition, we need a budget of ambition. The EU should be doing more with more: we will never achieve a truly social, inclusive and greener Europe that improves the lives of every citizen unless Member States contribute more to the EU purse. Europe’s future now lies in the hands of the leaders of the EU27. We hope that they create a people’s budget that is effective, flexible and ambitious to allow Europe to respond to the challenges of today and overcome the challenges of tomorrow,” Lambertz wrote.

The current multiannual Finance framework (MFF) that covers the period of 2014-2020 and includes a budget of close to one trillion euro, which corresponds to roughly one percent of EU gross national income of the EU Member States. Cohesion policy represents about one third of the EU budget, and in several Member States, public infrastructure investment is highly dependent on EU Funds.

It is also one of the most visible components of the EU Budget, with potential to improve the daily lives of citizens. Cohesion funds help Europeans access finance for warmer homes, they support measures that lead to cleaner air, and they help make our public spaces greener. It would be a grave mistake to cut this piece of the budget at the very moment when many citizens actually doubt the added value of the European project.

For Latvia, where I live, EU funds are hugely important. According to the Commission’s paper this is one of Europe’s least developed regions, and indeed nearly 70% of the total public finance available in Latvia is EU Funds. I cannot imagine how Latvia would look without EU-funded investments in areas like energy efficiency, nature protection, water and waste management,. not to speak of the impact on the country’s economic development.

At the same time, it is disappointing that all attention remains on structural matters with little political discussion on how a future cohesion policy could be made genuinely transformational.

There is a lot of work to do here. Despite many positive programmes, EU funds from cohesion policy funding are too often unsustainable, contradictory to the EU’s climate and energy goals, or commitments on sustainable development. The case of Bulgaria’s Kresna Gorge case is a prime example. Billions of EU funds could soon be spent on building a motorway through this beautiful Natura 2000 site, where alternatives exist, and without the proper participation of local citizens and farmers. These and other cases illustrate how Europe’s cohesion policy still lacks the mechanisms to exclude or reduce harmful and contradictory spending.

The EU’s future budget needs a clear definition of the sustainability criteria with a balanced view of the social, economic and environmental dimensions of sustainable development. That is the only way to reduce uncertainties in decisions about EU funding. The EU budget also needs to include stronger ex-ante conditionalities (including social, climate and environmental impact assessments and safeguards) for all programmes and instruments that could help ensure that funds are properly spent in support of sustainable development across Europe.

The same applies to climate mainstreaming – that is, EU funding that serves higher ambition within the EU 2030 climate and energy framework and in line with the Paris Agreement. In some countries, such as Latvia, the National Energy and Climate Plan is still a mystery, but the next EU budget can and should include financial incentives for increasing national ambitions that would in turn be reflected in these climate action strategies.

I have seen plenty of examples of policy incoherence and EU spending on unsustainable or harmful projects all over Europe. So I strongly believe that a reform is needed, but a truly ambitious reform would be one that makes the next EU budget `sustainability, biodiversity and climate proof`, and guarantees the implementation of the Paris Agreement and the Agenda 2030 for Sustainable Development.

Spending under the cohesion policy often lacks transparency, and it does not properly engage citizens and local stakeholders. But it doesn’t have to be this way. We need clear rules for spending and improved transparency on the allocation, disbursement and use of funds as the basis of a just and integrative EU budget after 2020.

The Commission’s document from last Wednesday talks about investing massively in the digital revolution – shouldn’t that include new, user friendly tools to help all citizens, and investors, easily see where EU funds are flowing in their area, and who is benefiting? There is a serious lack of clarity about the results and benefits of EU funds for citizens. Europeans need to know how EU public money facilitates sustainable development and wellbeing, how it helps building a sustainable economy, and eventually how it shapes the narrative for Europe..

Lambertz of the Committee of Regions, is right to call for a People’s Budget at this very moment. Civil society groups across Europe have been campaigning exactly for this since mid-last year. The cohesion policy must not be castrated. If the Commission does not seize the moment to reform it to become the driver of genuinely transformational projects empowering citizens to build a more environmentally and socially sustainable future, then we risk further Brexits.

To read the positions and work of the PeoplesBudget campaign, a cross sectoral alliance representing over 70 civil society organisations, please visit www.peoplesbudget.eu

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