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Balkans are gambling on coal as EU utilities opt out

This article first appeared on Climate Home.

EU utilities lobby group Eurelectric last week released a statement that its members would not build new coal plants after 2020.

This pledge simply describes the status quo in most of the EU, as the bloc transforms its energy sector. Eurelectric’s Polish and Greek members refused to sign on, cementing the marginalisation of these coal-dependent countries.

Eurelectric’s affiliated members in the Western Balkans – Elektroprivreda Srbije (EPS) and Elektroprivreda Bosne i Hercegovine (EP BIH) – have stayed quiet. No wonder –  they are in the awkward position of planning new coal plants even as their peers in the European electricity industry publicly acknowledge that there is no place for coal in the future.

EPS plans several coal plants in the medium term and is concentrating on a lignite-fired 350MW unit B3 at the Kostolac power plant in Serbia. The project is supposed to be built by China’s CMEC and financed by the China Exim Bank but has been delayed for several years. The approval for its environmental assessment has already expired once and is currently being renewed.

Among other weaknesses, the project’s feasibility assessment does not include the costs of participating in the EU emissions trading scheme once Serbia joins the EU, and the plant is not designed to meet the new Best Available Techniques standards that are soon to be adopted at EU level, rendering it out-of-date before it is even built.

EP BIH is even more ambitious, trying to build a 450MW seventh unit at the Tuzla power plant in the eastern part of the country, as well as a less advanced 300MW eighth unit at Kakanj. Tuzla 7 is planned to be built by China’s Dongfang and financed by China Exim Bank, although the financing contract has not been signed yet.

The economics of both plants is shrouded in mystery, especially as another 350MW plant is planned by another state-owned firm just 30 kilometres from Tuzla at Banovići. Even the Director of EP BIH, Bajazit Jašarević, has admitted that both the Tuzla 7 and Banovići plants are currently unfeasible. EP BIH is going ahead nonetheless, in the hope that conditions on the electricity market will change in the future.

Eurelectric’s assessment is clearly that this is not going to happen. Its statement falls short of a commitment to closing existing plants, but overall, it signals a recognition that coal is not compatible with fighting climate change, and that it is not coming back.

The Western Balkan countries, under the Energy Community Treaty, are already having to gradually apply EU energy and environmental legislation, with the goal of creating a level playing field in a united electricity market. This means that they have to increasingly apply the same technological standards and that they are exposed to more and more competition from EU countries. Why, then, do Balkan utilities think they can succeed in making coal pay off, when EU companies have failed?

Making the coal phase out fair for workers – unions, companies and environmentalists discuss just transition in Romania

When the Paris Agreement was signed in 2015, a sense of doom must have pervaded across Europe’s miners, from the west of Spain to eastern Poland. It must have felt like another nail in the coffin, perhaps the last one, for an industry which has been aching in recent decades.

Coal mining regions, once pictured as the backbone of the economy, ensuring that nations don’t suffer from the winter’s cold or the summer’s heat, now feel abandoned. As Europe pledges to spend billions to undo the harm done in a century of unsustainable development, the communities which unearthed the fuel for this growth are left wondering what will happen to them.

On the other side are the environmentalists, fighting against a seemingly distant and invisible threat, climate change, by trying to make the giants of the fossil fuel industry reduce pollution and clean up the mess they left behind. For too long, these organisations were perceived as the enemies in the regions that depend on said giants. The companies were threatening employees with redundancy, claiming that the pressure of NGOs results in tighter regulations that make production too expensive. (The companies did not admit their own mistake to pretend the world wasn’t changing.)

The struggle for just transition changes these premises. Just transition is a development model that is based on locally designed public policies that aim at creating the context for fair income and a decent life for all workers and communities affected by pollution reduction measures. Working on just transition brings all actors to the same side of the table. Unions, NGOs and the industry can work together to find what is best for their regions and communities.

This is not environmental feel-good spin, but a reality that is beginning to unfold right now in Targu Jiu in the Romanian mining region of Gorj County.

Today all these stakeholders sit down at the same table to discuss a just transition for the County that is home to 10 lignite mines and two coal-fired power plants. Despite very different perspectives for the future, a common goal became already clear in the one-to-one meetings I’ve had with the different groups. Everyone shared the desire to create solutions that ensure that the community will no longer feel abandoned in Romania’s plans for growth.

The why and the how

A just transition must begin now, regardless of the future of coal. There are, of course, several factors which make things more difficult for the fuel: the emission trading scheme increases expenses, as do obligatory investments for pollution reduction, renewables became cheaper, more and more states are taking measures for decarbonisation, many units are old and uncompetitive.

Even if one is to ignore all these factors and believe that there will still be a market for coal in ten or twenty years, the alternatives created by a just transition will still be beneficial. First, because income opportunities other than working in the mines are scarce in these monotowns and other businesses are barely able to survive. Second, many of these regions have a potential for something else, but only one industry grew because it historically provided enough employment.

So what can be done? To start, the solution must come from the ground level, as numerous country strategies, devised by desk officers in the capitals, have come and gone throughout the years without much impact. But if a community believes in a project and everybody is involved, the chances for success grow exponentially.

The relevant local actors – unions, political parties, administration, businesses, informal leaders – then need to know their region’s potential development paths and the resources to realise the most promising one.

Only a few financing tools for just transition exist, even in the EU, but the calls for more are being heard – for example, in the reform of the EU’s Emission Trading Scheme. Once a solution and the funds for it are identified, long term political support becomes necessary to create the context for growth – be it public policy, fiscal benefits or infrastructure.

Thus a just transition of the coal regions, acceptable and beneficial to all, becomes possible. It is now up to the regions to demand it, and up to the politicians to support it. Action in this direction will be beneficial to the affected communities and the downsizing industry, but also to the security of energy systems, as change will occur gradually, in a context agreed and anticipated by all actors.

Western Balkans are massively expanding coal power – but the new plants may have to be closed again soon

This article first appeared on EnergyPost.

Utilities in Western Europe are closing down fossil fuel power plants on a massive scale. Enel announced in 2014 that 23 coal and gas power stations in Italy with a capacity of 13 GW are to be scrapped within five years. In Germany, Vattenfall sold its 8 GW of loss-making lignite-fired power plants to Czech company EPH in 2016. In 2014 E.ON announced it would close 13 GW of coal and gas capacity across Europe and both RWE and E.ON have had to undergo restructuring in recent years as a result of their gas and coal plants losing value. In the UK coal fired power is dying a slow death.

The main drivers for this coal phase-out have been an increase in renewable energy coupled with very low electricity prices in most parts of Europe, and to a smaller extent, having to pay for CO2 allowances under the EU Emissions Trading Scheme.

Now the Western Balkans countries – Bosnia-Herzegovina, Kosovo, Macedonia, Montenegro, and Serbia – look to be in grave danger of repeating the same mistake. They are planning to build new power plants that may suffer the same fate.

Table with planned coal plants in the Balkans at less and more advanced stages.
A table from the briefing showing projects in advanced stage that have great political support (left-hand column) and those at a much earlier stage (right-hand column).

EU market rules also apply to the Western Balkans electricity sector via the Energy Community Treaty, which entered force in 2006. It aims to extend the EU energy market to neighbouring countries and to make sure they apply EU regulations on subsidies and at least some of its environmental standards. The EU Emissions Trading Scheme (ETS) has not yet been adopted by the Energy Community, but Accession Countries – and that includes most Western Balkans countries – need to apply it as soon as they enter the EU.

More expensive

However none of this seems to have entered the heads of decision-makers in the Western Balkans, who remain wedded to producing as much electricity as possible, irrespective of the economic feasibility or impacts on the environment and climate. All countries in the region except Albania are planning to construct new coal power plants using low grade brown coal also known as lignite.

The planners assume that coal will be cheap, but not only is coal polluting, it is also going to get much more expensive. Environmental standards are gradually improving, which means additional costs due to pollution control equipment. And once the Emissions Trading Scheme is applied, it also means significant additional operating costs in the form of emissions allowances.

In a briefing published on 29 March we’ve crunched the numbers for ten new lignite power plants across the Western Balkans – one already built and nine planned – to see how much CO2 prices might add to annual operating costs.

For Pljevlja II in Montenegro, one of the smallest plants planned in the region, even with a very low CO2 price of €5 per tonne, payments would amount to nearly €8 million every year. With a CO2 price at €35 per tonne – which could easily be reached by 2030 – annual payments would come to no less than €55.6 million.

For the largest planned plant, the 600 MW Ugljevik III in Republika Srpska, annual payments would range between nearly €21 million and €146 million per year, for the same range of CO2 prices.

Table showing carbon costs planned for the planned coal power plants at different prices for carbon emissions.
Carbon costs planned for the planned coal power plants at different prices for carbon emissions.

No information

Worryingly, these huge costs do not appear to have been properly accounted for when planning the new coal plants.

In most cases no information is available to the public on the feasibility of the projects, even though most of the companies involved are state-owned. In those few cases where we do have some information on feasibility (Pljevlja II in Montenegro, Kostolac B3 in Serbia, Gacko II in Bosnia and Herzegovina), CO2 prices have not been properly taken into account.

In the case of Kostolac B3 in Serbia, the feasibility study summary states that CO2 prices have not been included because it is assumed that the state will pay these. But this assumption is certainly not in line with EU or Energy Community state aid rules. What’s more, in the sensitivity analysis where a CO2 price is included, it becomes obvious that even a low CO2 price is enough to render the plant uneconomic.

These findings should worry the companies developing projects, but also the governments and the public. Failure to include CO2 prices in feasibility calculations dramatically increases the risks of building coal plants that will be too expensive to operate, like many of those in Italy and Germany, and in the case of state-owned companies, it will likely be public budgets that will end up footing the bill one way or another.

Way of thinking

Most of the new coal plants planned were initially conceived 10-15 years ago when the situation was quite different. These projects have failed to take account of the massive changes that have taken place in the electricity sector since then. The companies pushing these projects urgently need to revise their feasibility assessments to take into account CO2 payments and technology improvements such as the Best Available Techniques reference document for large combustion plants which is currently under revision. If they do so, it is highly unlikely that any of the plants will turn out to be feasible.

The region’s governments also need to change their way of thinking away from generating ever-greater amounts of electricity in centralised facilities, and instead concentrate on managing demand. Demand-side energy efficiency is the best way to avoid shocks from fluctuating prices of either carbon credits or imported fuels and provides direct benefits for the public such as warmer houses and a significant number of jobs.

Some new capacity is still needed though. With a dearth of wind and solar power in the region, the governments also need to set 2030 targets for renewables and to diversify away from over-reliance on hydropower and coal. Without this, the region looks set to find itself stuck with a fleet of new but un-useable coal plants – a monument to the utilities’ and governments’ failure to change with the times.

 

Image by Luis Alveart, CC BY-NC-ND 2.0, https://flic.kr/p/r5p3Ji

River defenders gather forces in Georgia

This article first appeared in open Democracy.

Free-flowing rivers are often the unsung heroes of the natural world. They support immense biodiversity, as in Macedonia, where the Mala Reka nourishes the scenic Mavrovo National Park, the country’s largest. The park is home to fifty animal species, 129 species of birds, and over a thousand invertebrate species – many of which are strictly protected. Despite the park’s incredibly diverse and fragile ecosystem, its river has been threatened by the planned Boškov Most dam.

For years, Bankwatch and environmental groups in Macedonia campaigned against the 68-megawatt project, which would have been built inside Mavrovo. Local activists and international experts alike repeatedly warned that the project would be detrimental both to the park’s fragile ecosystems and the dwindling population of the critically endangered Balkan lynx.

Then, in January, the campaign met with success. The European Bank for Reconstruction and Development, the only financier of the controversial hydropower dam, officially announced it had cancelled its EUR 65 million loan to the project. Ecologists and many others cheered the decision.

The example of Boškov Most and other equally inspiring examples of people power will be on display this week in Tbilisi, where an extraordinary meeting of river defenders from around the globe is being held. Activists from 40 countries battling harmful hydropower and promoting the multiple benefits of rivers are gathering in the Georgian capital to share experiences and discuss potential responses to this complex problem.

It’s no coincidence that the meeting is being held in the former Soviet republic, as the small country has big ambitions to be a major hydro player.

Stories of resistance

Mountainous Georgia is endowed with rich biodiversity and a plethora of wild rivers, upon which the government is looking to build at least 34 new dams in the country’s northwest to become an electricity exporter. One such project is the 280 megawatt Nenskra dam, which at 1 billion dollars is an attractive investment for the government and foreign firms but which is exacting a toll on the indigenous Svan communities and the primeval nature of the Upper Svaneti region. Having been sidelined from decision making over the project, local residents have mobilised to protest the Nenskra dam and other planned hydropower projects in the region, which they fear could strip them of their traditional livelihoods and ancestral lands.

Residents from Svaneti will be in Tbilisi to share their stories of resistance and hear messages of solidarity from others like those involved in the successful Boškov Most case. They will also be there to learn from activists fighting for their rivers all over the planet.

Activists are fighting for rivers because, despite wins like Boškov Most, rivers and freshwater are facing unprecedented global threats. Chief among these threats is a tsunami of dam(n)ing hydropower plants. According to a 2015 study, “at least 3,700 major dams, each with a capacity of more than 1 MW, are either planned or under construction, primarily in countries with emerging economies.” If all these plans materialise, the capacity of global hydropower would expand by 73 per cent.

Large hydropower has already had a devastating impact on freshwater species: Since 1970, freshwater species have lost 81% of their populations, due in large part to dams. In the most heavily-dammed basins, fish runs have already – in many cases – collapsed: California’s historic salmon runs, for instance, are nearly gone. Further hydropower expansion would decimating the world’s remaining freshwater fisheries, which feed up to 550 million people globally.

Now developers are targeting the Amazon, the Mekong, and the Congo basins, which together contain 18 percent of the world’s freshwater fish species. In the Balkans, where estimates about the number of planned hydroelectric facilities range from 944 to as many as 2700 hydroelectric facilities, some of Europe’s most pristine river ecosystems face irreversible damage.

The expansion would exact a human toll as well. Near these planned projects, the communities that reside there – many of whom are indigenous and maintain distinct cultural practices – face the threat of displacement. All too often, when local residents mobilise to protest, governments respond violently to cull dissent and keep the flow of international investments into their coffers.

A Global Witness study concludes that no less than 15 activists campaigning against harmful hydropower projects were killed in 2015, mainly in the Central American countries of Honduras, Guatemala and Mexico. In other cases, hydropower opponents, who often point to the absence of any meaningful public consultations with affected communities, are threatened, harassed or tortured. Berta Caceres, who had led a local campaign against the Agua Zarca Dam in Honduras and was assassinated a year ago, is but one example.

Advocates for expanding hydropower claim that dams can help mitigate climate change, offsetting the social and environmental price tag. Unfortunately, studies have revealed that dams are a false solution for meeting both the challenges of rising energy demand and the worsening of the climate crisis.

One recent study has found that dam reservoirs have a greater short-term contribution to climate change than earlier thought, specifically due to methane emissions. The researchers found that dams are responsible for more methane – a potent greenhouse gas – than lakes and rivers, and are comparable to emissions from rice plantations and biomass burning. If the global hydropower development continues unabated, this problem will get even worse – in no small part because much of the hydropower expansion will take place in tropical countries where vast amounts of methane-producing vegetation will be flooded.

Civil society plays a crucial role in helping to amplify the voices of local communities standing together against governments and hydropower multinationals to protect their rivers. In Congo, Burma and other places across the world, protests against destructive hydropower projects have already forced decision-makers to change course.

National governments and international bodies are beginning to recognize that protecting freshwater is a top concern. 22 March marked World Water Day, a UN-sponsored recognition of the substance of life, and two recent court rulings, in New Zealand and India, extended the protections afforded by human rights to rivers. These milestones suggest that the numerous benefits provided by rivers (economic, environmental, social and cultural) are finally being given their due.

But protecting rivers requires a concerted global effort. And that, perhaps, is a silver lining in the renewed onslaught of hydropower: Water activists from diverse global movements will be forming connections in Tbilisi this week, uniting to take on the key drivers of the hydropower boom and protect our rivers as a vital source of life.

For our rivers, for our lives – activists from across the globe meet in Tbilisi, Georgia

85 river and dam activists from 40 countries and all continents gather in Tbilisi, Georgia this week to share experiences about their efforts to protect the world’s rivers and join their struggles against destructive hydropower projects.

The meeting, organised by Bankwatch and International Rivers comes at a time when dams are back in fashion, being considered as a clean and green source of energy, even though dam reservoirs are increasingly recognised as major greenhouse gas emitters.

In the 1990s investors including the World Bank had withdrawn from large hydropower installations over environmental and social concerns. Yet despite their resurrected enthusiasm, dams continue to be opposed (with some success!) by communities across the world for their destructive impacts on local ecosystems and livelihoods.

In Georgia, where the meeting takes place, the government and investors are fixated on tapping unused hydropower resources in remote and fragile mountain areas. In Upper Svaneti in the country’s north-west, 35 projects are planned in an area roughly the size of Mallorca in the Enguri river basin. Locals look back at decades of opposition to dam projects in the area and have so far successfully blocked the destruction of their homes and livelihoods.

Photo story

A panorama view with meadows, forest and mountains in the distance.The community of Chuberi will lose part of its land should the Nenskra dam be built.

Read the photo story

Further east, some of the most important river systems in Central Asia are under threat with the Lake Baikal basin and the Amur River basin. In 2016, protests led to the freeze of a USD 1 billion loan by the China Export-Import Bank for the Egiin Gol hydropower project, one of several potential projects in the Lake Baikal basin. Not too far away, plans for several large dam projects in the Amur River basin – the largest transboundary free-flowing river of North Eurasia and China – are currently frozen following concerted efforts from opponents.

Rivers don’t know borders

The cross-border dimension of riverflows is becoming especially pronounced in the Middle East, where among others the Ilisu Dam in southeast Turkey may threaten the environmental, cultural and economic situation of downstream communities in Iraq as well as Iraq’s Marshlands that were included in the UNESCO World Heritage List. Another case, Iran’s Daryan Dam, set to be completed by 2018 is feared to have a destructive impact on the water flows to Iraqi Kurdistan.

River campaigners in the region acknowledge this transboundary importance. The Tigris and Iraqi Marshes Campaign for instance insists that water could be a force for peace, igniting cooperation between all countries of the Tigris-Euphrates basin. EcoPeace Middle East, another group represented at this week’s river gathering, looks beyond nationalities by working with communities from all faiths to stop the degradation of Jordan River and rehabilitate it as an important intercultural, traditional and life-supporting water source. (See for instance their guide for tourist guides.)

Small is not always beautiful

But also plans for small hydropower installations must be treated with care, as the situation in the Western Balkans illustrates. A study by Austrian NGOs Riverwatch & Euronatur showed that 817 or 49% of all projected hydropower plants in the wider Balkan region, most of them small, fall in protected areas. Weighing their biodiversity footprint against their often minimal carbon savings, makes the more than thousand projects planned in the Balkans seem rather irresponsible.

Photo story

An image of a pristine river taken just above the water surface.Small hydro projects threaten the blue heart of Europe in the Balkans.

Read the photo story

The range of experience represented at the meeting will be rounded up by campaigners from the Americas, Africa, and South-East Asia, who will have stories to share from the Magdalena river campaign in Colombia and the Inga 3 dam in the Democratic Republic of Congo among others.

For impressions from the meeting and more from participating organisations, follow the hashtag #RiverGathering on Twitter.

Italian communities block pipeline works to save ancient olive trees

An ancient olive grove in southern Italy is currently on the frontlines of grassroots resistance to the Southern Gas Corridor project, the EU’s flagship energy project.

Earlier this week, members of the No TAP Committee, a local civil society group, and residents from the town of Melendugno mobilised to protest against what appears like the beginning of the works on the Italian section of the Trans Adriatic Pipeline (TAP), the westernmost point of this gigantic energy infrastructure. The protesters have been met with fierce police response, and this development is an unprecedented escalation of a years long stand-off around the landfall site of the pipeline.

In the early hours of Monday (March 20), TAP excavators moved in, in a bid to uproot the olive trees and make room for the pipeline construction site. The trees are planned to be moved to a temporary storage facility and re-planted at a later stage, but local residents have objected to this solution, fearing wider damage to the environment.

The bulldozers first cut four trees infected with Xylella fastidiosa bacteria, but before they could continue with the rest local residents started gathering at the site. By noon, around seven hours after the beginning of the works, over a hundred people, including families with children, were present at the site, alongside a similar number of police.

The improvised sit-in protest had managed to halt the excavators and shortly later the mayors of Melendugno and another neighbouring town, together with two members of parliament from the Five Star Movement, approached the police and the prefect, the state’s representative in the province, to suspend the works.

The works at the olive grove are “illegal,” Michele Emiliano, Governor of the Apulia Region, was quoted by Italian news agency ANSA as saying, but “the regional government does not have instruments to stop a project that the government has told police to protect, an operation considered [by the national government] absolutely strategic.”

Meanwhile, more people kept arriving to the site, and a public assembly held at Melendugno’s town square on Monday evening saw nearly a thousand people attending.

The next morning, four mayors, dressed in their ceremonial sashes, arrived at the site together with two members of parliament and 200 people, most of them residents of the nearby communities.

Trying to block the bulldozers, they were met with harsh police response that resulted in the injury of several people, including an elderly woman from Melendugno. The events have received considerable coverage in Italian media.

Olive trees on the contested area where the Trans-Adriatic Pipeline is supposed to be built.
Olive trees on the contested area where the Trans-Adriatic Pipeline is supposed to be built. (Image via Comitato No Tap)

Agreeing to look into issues with the permit authorising the works, the prefect had made a formal request to TAP’s contractor to suspend the works for three days.

Yet protesters, determined to prevent the works from moving ahead, arrived at the site at 5.00am yesterday and today. Public assemblies were also held every afternoon.

The mayor of Melendugno has called for non-violent actions and respect of the law. He also stressed that people have the right to defend their land, and that if the company and the government breach the law by proceeding with the works without permits, residents will find ways to respond.