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Question marks abound over EU-Azerbaijan gas tango

Ministers, ambassadors and envoys from at least 15 countries, including Maroš Šefčovič, the European Commission’s Vice President for the Energy Union, are gathered today in the Azerbaijani capital to discuss the progress on the Southern Gas Corridor, the largest energy project the EU is currently pursuing.

But over the past couple of months, it seems the European Commission’s justifications for this controversial undertaking have been crumbling by the day.

Little left of human rights

A growing number of civil society organisations, including Human Rights Watch, have been warning about the EU locking arms with the Azerbaijan’s authoritarian ruler Ilham Aliyev, despite Europe’s commitment to human rights.

In a recent response to a question from MEP Xabier Benito (Podemos) regarding the SGC project, the EU’s energy and climate action commissioner Miguel Arias Cañete stated that the EU’s High Commissioner for Foreign Affairs and Security Policy Federica Mogherini had brought up the issue in a recent meeting with the Azerbaijani president and foreign minister. “Cooperation with Azerbaijan on energy issues including the SGC is a further means for engagement and in full respect of fundamental values and principles.” For now, it seems EU leaders are mostly willing to turn a blind eye to the Azerbaijani government’s ongoing crackdown on civil society and journalists in the country.

In fact, it looks like Brussels is even willing to embrace Azerbaijan’s lack of transparency. The Commission made sure to stifle any advance information about the date of the Azerbaijani president’s visit to Brussels earlier this month.

Yet, in an open letter published last month, jailed Azerbaijani dissident Ilgar Mammadov delivered the latest warning to European leaders about engaging with the Azerbaijani regime. “Recently, Aliyev has been trying to present the SGC as his generous gift to the west so that governments will not talk about human rights and democracy in Azerbaijan,” he wrote from his prison cell.

In two weeks Azerbaijan will need to show what it has done over the past four months to improve its so far horrid human rights record. The board of the Extractive Industries Transparency Initiative (EITI) has already decided to suspend Azerbaijan’s membership over its failure to comply with the international body’s standards. At its meeting on March 8-9, the board, which has already given Baku a second chance, will decide whether it can now restore its status. So far, there is little to indicate that the Azerbaijani leadership has any understanding of what human rights even means.

The European Bank for Reconstruction and Development (EBRD) has already said that the funding it is considering for the Trans Anatolian Pipeline, the SGC’s Turkish section, is dependent on Azerbaijan’s EITI status.

In the meantime, EU leaders’ feeble response to concerns around Europe’s commitment to human rights when dealing with Azerbaijan leaves no doubt about their shared commitment to dirty fossil fuels.

In his answer to MEP Benito’s question, Commissioner Cañete also confirmed that no climate assessment has been done for the EU’s largest fossil fuels project. Rather, he tried to rationalize this by claiming that “gaining access to gas from new sources under competitive market conditions should enable countries in South East Europe to replace some of the most polluting lignite power stations with efficient gas turbines.” But the environment commissioner did not bother explaining how this could be in line with the EU’s renewables goals and the Commission’s ‘energy efficiency first’ principle.

Greetings from Moscow

Not least worrying is that even the Commission’s narrative on the SGC as a way to diversify the EU’s energy suppliers is becoming increasingly questionable. The massive pipeline, carrying Azerbaijani gas, EU policymakers have repeatedly said, would help the EU lessen its dependence on Russian gas imports. But now it seems that the Trans Adriatic Pipeline (TAP), the western leg of the SGC, could in fact be used to deliver Russian gas into Europe.

In late January, Gazprom’s deputy head told attendees to the European Gas Conference that his company is interested in using TAP, likely by connecting the Turkish Stream pipeline to it, for shipping Russian gas to Europe.
And turns out that a number of the members of the TAP consortium, including Azerbaijan’s energy firm SOCAR, would actually be in favour of this scenario.

In fact, even Šefčovič said said, after presenting the annual “State of the Energy Union report” earlier this month, that the EU “should be less worried [about Gazprom] than in the past.”

But the news about Moscow’s interest in the Southern Gas Corridor really should not come as a surprise. TAP’s country manager for Italy already told Italian investigative journalists that the pipeline could carry Russian gas.

What’s more, another Russian energy giant, Lukoil, is already one of the companies developing Shah Deniz II, the Azerbaijani gas field intended as the source for the SGC. The EBRD has even arranged a half billion dollar loan for Lukoil’s share in the Shah Deniz II project, which was then matched by another loan from the Asian Development Bank.

What, then, could be the EU’s motivations to advance a project as massive as the Southern Gas Corridor? Hopefully the European Commission and governments can offer more convincing answers, because it surely isn’t about promoting human rights, tackling climate change, or even mitigating the EU’s dependence on Russia.

Under heavy skies: dire results from first independent pollution monitoring in Montenegro

It was ten in the evening on 17 December when my colleague and I arrived in Pljevlja, Montenegro. Although we could feel the smell of burnt coal already while driving there, the minute we set foot out of the car, the air was stifling. “This place reminds me of childhood, it smells like in your grandparents’ house when the chimney was stuffed and all the smoke came inside. Only this is outside”, he said, with a scarf pulled over his nose.

We travelled to Pljevlja to install our environmental dust monitor, which will independently record the particulate matter (PM 10 and 2.5) levels for at least the next month. We were apprehensive that this month would be some of the worst pollution we’ve seen.

Air pollution in Pljevlja has led to protests in many forms: residents lining up to form the letters SOS, visible from high above, and oversized electricity bills featuring the heavy health costs of coal displayed in the town square.

A person being interviewed in front of a group protesting with a placard.
Image by Green Home, Montenegro

Now we are able to report on just how bad the pollution is in this little town in northern Montenegro, home to the country’s only lignite power plant.

This graph shows the average PM 10 and 2.5 levels over a 24-hour period. The EU limit on PM 2.5 was exceeded on 29 of the 35 days observed, or 83 per cent of the time. The EU’s directive on air quality, which has been transposed in Montenegrin legislation, does not allow for any exceedance of the PM 2.5 limits.

The PM10 daily average was breached on 21 of the 35 days observed. Over the course of one year, the PM10 limit may be exceeded no more than 35 times. With half of winter still to come, and locals’ observation that air quality doesn’t improve much during the rest of the year, it is inevitable that more than 14 days will exceed PM10 limits.

This graph of hourly measurements shows high PM10 peaks, with the highest recorded on Christmas day eight in the morning, at 294.15 micrograms per cubic metre. Similarly PM 2.5 levels spiked on a number of occasions and are on average above the EU annual limit more often than not. The highest levels of PM2.5 recorded came on 13 January between midnight and one in the morning, standing at 238.85 and 206.16 μg/m3 , respectively.

The high PM2.5 levels are particularly worrying, because these particles are lighter and so penetrate deeper into the lungs, causing greater respiratory damage in long-term. PM2.5 also stays in the air longer and can travel farther: while PM10 particles remain in the air for minutes or hours, PM2.5 particles can stay in the air for days or weeks. Whereas PM10 particles can travel from as little as a hundred metres up to 30 kilometres, PM2.5 particles can travel up to many hundreds of kilometres. PM2.5 levels are not however monitored by government monitoring stations in Montenegro, so even though the locals can feel that the air is bad, there is no way to tell exactly how dire the situation is.

Air pollution in Pljevlja is caused by the nearby lignite power plant and the domestic use of coal and wood for household heating. There are no plans in the immediate future to tackle the pollution, and the long-term solution offered by the government is to construct yet another unit at the lignite power plant. It claims that this unit would produce heat, and the town would be connected to a district heating system. However, there is no separate project to back this claim, so no reason to believe this would ever materialise. The same promise was made 35 years ago when the first unit was put into operation.

A new air quality action plan is desperately needed for Pljevlja, one that provides heating options that do not rely on burning fuel. It is also high time that local authorities start planning for a transition away from coal, including in electricity generation. Technology is advancing at a fast pace, surely plans for the energy sector can keep up.

Lack of transparency hindering Czech export agency

Although not an institution that typically receives much fanfare, the export credit agency (ECA) in the Czech Republic has a poor track record worthy of more scrutiny.

Its latest failure relates to a contract for the construction of a power plant in Turkey. The operator of the power plant, Adularya, alleges that the components and machines provided by a Czech exporter, the Vítkovice Machinery Group, are not suitable for the low quality coal that is used at its Yunus Emre power plant. Neither side wants to take responsibility for the dispute, so the future of the plant is now unclear. Since the beginning of 2017, the Czech government has sought a solution with its Turkish counterpart since the latter took over Adularya after the political purge in 2016. There is however currently no agreement among Czech politicians about how to resolve the situation, which is concerning in light of the ECA’s missteps in recent years.

The Czech ECA is made up of two institutions: the Czech Export Bank (CEB), which lends to Czech exporters or their customers, and the Export Guarantee and Insurance Corporation (EGAP), which insures these loans. Together they provide support to Czech companies that want to do business in areas with risky conditions.

As a response to the financial crisis and thus a desire to boost exports, the CEB and EGAP became more lenient in evaluating the financial and political risks of the projects and so a number of loans were made to projects that otherwise would not normally have received them. Without the proper safeguards in place, a number of problematic projects emerged. For example, a police investigation led to accusations that two EGAP managers falsified information about the construction of a cement factory in Vietnam. The project lost EUR 30 million when the construction failed.

CEB and EGAP have also supported the construction of a number of new coal power plants since then, several of which have failed, resulting in more losses for the state. The first such failure involved the Kolubara power plant in Serbia, which received a loan in 1999 following damage it sustained during the war in the former Yugoslovaia. Part of the loan was never repaid. EGAP also paid for power plants at Balloki and Muridke in Pakistan because the Czech supplier was not able to finish the construction.

Three other dubious projects backed by the ECA are located in Russia. A power plant in Kurganskaja had difficulties with paying back CEB, because of losses it incurred as a result of a devalued Ruble. The Krasavino power plant, which is already running, split into two divisions, neither of which is willing to pay for the loan from CEB. There is also an unfinished project at Poljarnaja.

CEB stopped project financing because its Russian counterpart did adhere to its contract. The gas-fired power plant is not going to be finished and therefore, CEB will lose a significant amount of money on the deal. Financial losses like these had to be paid by the state, by public money. It is estimated that this will cost the Czech state CZK 20 billion (over EUR 740 million).

In spite of these failures, CEB and EGAP were determined to build a second lignite power station in Pljevlja, Montenegro. From the beginning, the project was questioned by several NGOs, Bankwatch included. Škoda Praha – owned by the Czech state – was chosen for the project under dubious circumstances, for which the Montenegrin government had to adopt a special law. Experts and local NGOs doubt future energy demand scenarios and the real price of the power plant, which will be in fact much higher in the future. The operation of Pljevlja II can be feasible only with very creative accounting, and more likely this project will bring financial burden to the Montenegrin government.

These shortcomings are only exacerbated by the climate and health problems posed by the project. The present power plant, Pljevlja I, already causes significant air pollution in the Pljevlja valley. If both power plants were to operate, pollution would reach critical levels, greatly impacting the health of local residents and their environment.

CEB did eventually dodge a bullet with Pljevlja, announcing in October 2016 that the project was risky and thus refusing to participate.

Nevertheless, the unsuccessful projects financed by CEB and EGAP raise alarms about its decision-making and interest in fossil fuels, which does not correspond with the Paris Agreement. There is a need for more transparency within the Czech ECAs. Both CEB and EGAP operate with public finances, so the public has the right to actively participate in the environmental decision-making related to its operations.

As such, ECAs should actively disclose information about projects that they discuss at an early stage. In this way, NGOs can evaluate the potential environmental impacts and the public can express its views. This will go a long way to help avoiding the conflicts and criticisms that have arisen so far across the portfolios of CEB and EGAP.

Ukraine’s addiction to nuclear energy poses a decades-long threat to Europe

Despite an urgent need to rebuild and reshape its highly inefficient and outdated energy sector, Ukraine has recently presented a draft of its new energy strategy that looks more like of the same. While the strategy makes mention of modern renewable energy sources, targets for these are low, and nuclear energy still maintains its leading position in the mix. The country’s 15 Soviet-era reactors are expected to bridge the gap in the so-called energy transition until 2035, meaning that they would need to operate twenty years beyond their designed lifetime, posing a threat to neighbouring countries in Europe and beyond.

The draft energy strategy released by Ukraine for consultations in January does not plan for the active development of renewables until 2025, with its share of the energy mix reaching 20 per cent by 2035. According to estimates by Bankwatch member in Kyiv the National Ecological Centre of Ukraine, the potential share of renewables by 2035 should be at least 60 per cent, in order to ensure that the long-term goals of the Paris Agreement are met. To reach this amount, the active development of renewables, distribution networks and energy storage systems should begin now. Yet instead of moving in this direction, Ukraine looks set to extend the lifetime of another aged reactor – unit three at the Zaporizhia nuclear power plant – whose licence expires after 30 years operations in February.

The shortcomings facing clean energy in the draft strategy should be no surprise, given that Ukraine has refused for the past five years to conduct a thorough environmental impact assessment (EIA) of its decisions to prolong its nuclear units. Such an assessment would provide an opportunity to discuss alternative energy scenarios, and would benefit from feedback after consultations with neighbouring countries and other EU member states, where solutions to phase out nuclear energy are being sought.

The threats presented by an absence of renewables in the draft energy strategy, along with a thorough EIA for Ukraine’s nuke extension, are compounded by the fact the safety upgrade measures meant to improve the conditions of these reactors are not being fully implemented by Ukrainian authorities. These measures are partially funded by European taxpayers via the EBRD and Euratom.

Fortunately these worrying decisions are not passing unnoticed, as international bodies have sounded alarms. In November 2016, the implementation committee of the Espoo convention on transboundary impact assessment opened an investigation into the extension of five Ukrainian reactors (South Ukraine 1 and 2, Zaporizhia 1 and 2, Khmelnitsky – point 3 in the pdf). Moreover, the Secretariat of the Energy Community has opened an infringement procedure against Ukraine for its failure to comply with the provisions of the Energy Community Treaty, specifically for not transposing the EU’s EIA directive. Such developments are indictment of Ukraine and its inability to develop sustainably its energy sector in line with its neighbours in Europe.

The draft energy strategy is a far cry from the progress in the sector expected by the European Commission and financiers as a condition of their lending programmes. The EBRD and Euratom, supporters of the nuclear safety upgrade program in Ukraine, should be alarmed by provisions in the draft strategy to keep units running for another 50 years, a timespan never once envisioned for the VVER-type nuclear unit. As such the EBRD and Euratom should suspend their financial assistance until Ukraine complies with its international obligations.

[Campaign update] Pljevlja residents protest against air pollution

Once again people from Pljevlja in northern Montenegro have taken to the streets to protest against the awful pollution that has been plaguing the town for years.

Supported by NGOs Ozon and Green Home, the protest aimed to put pressure on the authorities to take action to resolve the situation, which is caused by the nearby lignite power plant together with domestic burning of coal and wood.

See images from the action below >>

While the situation gets worse and worse, the only measures that the authorities have so far come up with are subsidised sales of wood pellets for stoves instead of coal. However two years in a row these have only been available once winter has already started and most people have already bought their fuel. And without incentivising the use of more efficient and appropriate stoves, such measures will achieve very little.

In the longer term, the authorities are claiming that the planned Pljevlja II coal power plant would include district heating that would alleviate the situation. However this claim is false. The power plant would generate heat, but without a separate project to construct the heating pipe network, this would be meaningless. Indeed, the existing plant that was opened in 1982 was also supposed to include district heating, but 34 years later, there is still no sign of it. In the meantime, technology has moved on, and it may well prove more economic to install individual heat pumps rather than district heating.

Rather than making fraudulent claims about non-existent benefits of Pljevlja II, the Montenegrin authorities need to finally admit that Pljevlja is at some point in the next few years going to have to undergo a transition away from its dependence on coal. Pljevlja desperately needs a comprehensive and inclusive plan to resolve its increasingly serious environmental and social problems and diversify its economy. Given the increasingly poor economics of coal, the town’s transition will happen anyway, but without a plan it could be a very painful one.

Images

All images by Green Home.

Call the chimney sweepers! Independent monitoring shows for first time true level of air pollution near coal plant in Serbia

“Ioana, look, the wind is blowing from the South today, all this is going over the Danube to Romania!” writes L. and sends me a photo as proof, one November morning.

He lives in the village of Drmno, in Serbia, only 15 kilometres away from the border with Romania, my home country. Drmno is sandwiched between the Kostolac B power plant and the open-cast lignite mine which supplies its fuel.

A few days a month, the black smoke which comes out of the plant’s chimney is blown northwards, but for all the other days, it looms over the Drmno village.

There is no official way for the locals to find how bad the pollution is, as the Environmental Protection Agency’s measurement station only monitors two types of pollutants: sulphur dioxide and carbon monoxide. But the black clouds are full of other types of pollutants too, including dust particles, PM10 and PM2.5, which enter the lungs and blood streams of those exposed.

Because of this lack of publicly available data, Bankwatch together with its Serbian member group CEKOR and local partner Zdravo Drmno have embarked on a month long continuous independent air monitoring activity.

Our measurements for the first time offer locals information on how polluted the air they breathe really is. The results are not short of alarming. Practically, only on 4 days of the entire 30 days of monitoring has the limit for PM2.5 not been breached. These are tiny particles that our eyes are not able to see, but our lungs for sure will feel, especially after prolonged exposure.


Graph: Daily average of PM 10 and PM 2.5 levels in Drmno on 30 days in November and December 2016. (Click on image to see higher resolution. See also a more detailed graph on Bankwatch’s air pollution page.)

And we are looking at exceedances of over 6 times the limit on some days. On December 9 the daily average stood at a soaring 123.56µg/m³. According to Serbian legislation, the maximum allowed annual average for this pollutant is 27.14µg/m³ per day in 2016. By 2024 this limit will be tightened to 20µg/m³ which is also the limit recommended by the World Health Organisation and the one used by the Institute for Public Health in Serbia in its communication.

Neither Serbian, nor EU or WHO guidelines allow breach the annual limit, but it is unclear who bears the responsibility of non-compliance or what concrete steps would be made as a remedy and whether that will ever be enforced in Serbia.

The PM10 monitoring results do not offer much relief either. In addition to the annual limit, PM10 also has a daily-average limit according to Serbian law. Only 35 exceedances of the daily average are allowed over the course of a year.

Our monitoring results, however, have shown that already on 16 of the 30 days observed the limit has been breached. While being fairly unremarkable at first, the PM10 curve has been going up and up since December 2.

Chances are that this indicates just the beginning of a heavily polluted winter season. There is a strong link between weather conditions and the measurement results. And every winter, locals from Drmno observe that the cloud ceiling stays low, trapping the air pollution in the town.

Instead of offering a solution to this problem or providing the local population access to air quality information, the Serbian Government is set to build yet another 350MW unit at the existing plant – the Kostolac B3 project – and for over two years it had an environmental permit which had been issued without consideration of the transboundary environmental impacts.

The Environmental Ministry will however soon be requested to renew this permit and it will have to consult neighbouring countries in the process of the environmental impact assessment. I look at the photos L. sends me every second day and wonder “how can this pass?”