Blog entry

[Campaign update] World Bank non-compliant with its own resettlement policies in Kosovo

The World Bank has this week published the Investigation Report of its Inspection Panel for the involuntary resettlement of residents in the village of Hade near Pristina in Kosovo. The investigation, undertaken following a complaint by current and former Hade residents and KOSID, confirms that considerable and un-repairable damage was caused to Hade residents during displacement, in order to open the way for the mines of the proposed “Kosova e Re” power plant.

Guest post by Dajana Berisha, Forum for Civic Initiatives/Kosovo Civil Society Consortium for Sustainable Development (KOSID).

The World Bank has been involved in Kosovo since 2001 and has acted as a prominent advisor to the Kosovo government. Back in 2004, UNMIK announced Hade village as an area of special economic interest due to open-cast mines. In 2004/5 many residents were displaced from their homes, some of them forcibly removed by police.

More than a decade later, many of these people are still living in temporary rented accommodation without adequate compensation for their agricultural land, and thus unable to make a living.

The Inspection Panel found that, while the World Bank did not make decisions on the resettlement and could not be held directly responsible, it could have provided specific advice on mitigating the impacts, but did not.

Against this background of failure to ensure adequate consultation and to ensure that people could continue to make a living, the World Bank supported Kosovo to draw up a Resettlement Policy Framework for future resettlements as part of its Lignite Power Technical Assistance Project. A version of the document was ready in 2008 but was later amended in 2011. The Inspection Panel found this process to be non-compliant with the banks’ standards, as the document did not include principles and methods for the valuation of assets of affected people living under the restrictions of the Zone in the New Mining Field.

Between 2009 and 2011, the Kosovo government expanded the area of special economic interest. According to the Inspection Panel, setting Obilic municipality as an area of special economic interest is not in accordance with international practices, as it is far wider than the actual land needed for the mine expansion. While the World Bank was not directly responsible for the decision, the panel finds that it could have used its role as a prominent advisor to propose alterations to the zone.

In 2012 another round of resettlement took place, guided by another World Bank-financed document, the Resettlement Action Plan for the Shala neighbourhood of Hade village. This time, new housing was promised but materialised only with serious delays and technical shortcomings such as frequent sewerage pipe blockages in the new dwellings.

For a long time now, a large number of residents have been left without basic living conditions, to make room for mine expansion.

The remainder of Hade remains in total isolation, and with polluted air, while residents of other villages are also in limbo, unable to sell or invest in their land or houses.

For a long time now, a large number of residents have been left without basic living conditions, to make room for mine expansion.

The Inspection Panel has found the World Bank to be in non-compliance with its policy for the Shala resettlement action plan’s ambiguity regarding institutional arrangements and the absence of a detailed resettlement schedule – oversights which it believes contributed to the significant delays experienced during this resettlement. Community members remained in temporary housing for a prolonged period which caused harm by creating uncertainty about their future and disruption in their lives.

The Panel has also found that there was a lack of attention paid to livelihood strategies for the affected households, including the most vulnerable and poorest. The Livelihood Restoration and Community Development Program anticipated in the plan was not developed in subsequent years.

Moreover, dragging out the process of relocation over so many years and separating the community, is not in accordance with World Bank’s standards and policies.

For an institution with as much experience as the World Bank, it is worrying to see that it is still making such basic mistakes. In fifteen years of involvement in Kosovo it still has not managed to bring its projects into line with its own standards.

Nevertheless, we will continue to demand that the Kosovo government and World Bank find a solution for the inhabitants of the areas affected by lignite mining. Some of the remaining Hade inhabitants are asking for immediate resettlement since their agricultural lands have already been taken and life in the village has become unbearable, but so far they have heard only empty promises.

We strongly oppose the violation of their rights, and urge the relevant institutions to take concrete steps to ensure the remaining residents of Hade the dignified living that they deserve.

‘Southern Graft Corridor’ or the shady history of companies involved in Europe’s pet energy project

Note: The ‘Risky business’ report has been amended to correct several errors that have been idenfitied after publication.
Read a statement about those changes >>

The Southern Gas Corridor, a 3,500 kilometre system of pipelines meant to bring gas from Azerbaijan into Europe, is the pet project of the European Union in the energy sector. It is presented as a panacea for all ills: reducing Europe’s reliance on Russian gas, contributing to the move away from coal, and bringing energy and business to the poorer southeastern Europe. The USD 45 billion project is set to benefit from some of the biggest loans in the history of European public banks.

Whether this gargantuan fossil fuels project indeed serves the public interest – in Europe and beyond – is a major bone of contention. But, as a new Bankwatch report (pdf) reveals, this pipeline is set to benefit a host of companies and individuals with a particularly shady history.

The report “Risky business” looks at the companies contracted to build the sections of the Southern Gas Corridor in Italy, Greece and Turkey and finds a worrying track record of corruption. In several cases, construction companies and their executives have been convicted on different charges, or they are currently facing criminal investigation and prosecution.

If proponents and potential financiers of the project don’t see a problem in pumping billions of euros into a massive fossil fuel project that contradicts Europe’s committments under the Paris Agreement, they must at least realise that the mega-pipeline shapes up to be a breeding ground for corporate misbehaviour. Several companies involved so far have shown that they don’t shy away from dodgy deals.

Browse many details in an interactive presentation by clicking the image below or read some of the highlights at https://bankwatch.org/risky-business

Download the study at https://bankwatch.org/sites/default/files/risky-business.pdf

Find more background about the project at https://bankwatch.org/our-work/projects/southern-gas-corridor-euro-caspian-mega-pipeline

Backdoor for coal subsidies remains half open under new EU rules

This article was first published on EurActiv.com.

Yesterday (30 November), the European Commission presented its Winter Package of energy regulation. Touted as ‘transformational’ and ‘impressive’, the proposed new rules have not impressed everyone, though.

The main critique concerns the lack of ambition of the renewables target and the absence of binding national targets. Commentators also slammed the unambitious energy efficiency objective of just 30% to 2030, and the failure to completely eliminate food crop biofuels from the EU’s energy mix.

But the most important criticism concerns the fact that the Commission’s proposal can be interpreted as leaving the door open to hidden coal subsidies by permitting member states to use capacity mechanisms – that is, payments to energy companies that would otherwise be unprofitable but are needed as providers of reserve capacity, and does not prevent the money from going to coal plants.

Despite the rhetoric on phasing out fossil fuels, the 550 grams of CO2 per kilowatt hour cap which supposedly rules out the participation of coal power plants, only applies to new units. This is a serious shortcoming of the new package, which means that existing coal power plants may potentially still benefit from subsidies under the capacity mechanisms.

The presence of capacity mechanisms, combined with the weaker than expected provisions on consumers’ access to the market, has led Luxemburgish Greens MEP Claude Turmes to call the Winter Package a ‘gift to Poland’.

Indeed, Poland’s projected capacity market, which the country has been negotiating with the Commission, is designed around giving money to coal-fired power plants to keep their operation profitable and encourage investment in retrofits of old 200 megawatt units to ensure that sufficient (coal-based) capacity is available in the future.

”Don’t look a gift horse in the mouth,”, as the saying (also in Polish) goes, but if one nonetheless looks into the details of the Commission’s proposal, it is in fact less of a boon to the Polish government and the country’s coal-addicted big energy companies than it might seem at first glance.

Warsaw planned to implement a scheme similar to the British capacity market recently approved by the Commission and based on auctions for capacity providers. The main sticking point in the negotiations concerns opening the scheme to providers from outside Poland, as the Commission would not approve a scheme addressed exclusively to Polish providers. Commenting on that, the Polish minister for energy said that Poland’s neighbours would also be able to benefit from the capacity reserves offered by the Polish utilities.

Except, that is not what the Commission meant, as the new rules unveiled yesterday show all too clearly.

Under the new capacity mechanism legislation, any such scheme would have to be open to capacity providers from other countries and would have to be based on competitive price setting, with the money going to the lowest bidder.

Moreover, it would also have to be open to providers of energy storage and the so-called demand side response, i.e. companies willing to reduce their energy consumption in periods of peak demand.

Importantly, the introduction of any capacity mechanisms would have to be preceded by regional generation adequacy assessments to see if there is actually any need for them in the first place. And finally, before implementing them countries would have to first address the market failures causing the capacity shortage.

In the case of Poland, that might mean having to reconsider the recent legislation on wind farms, which effectively stopped new investments into onshore wind. Warsaw might also need to revisit the rules on so-called prosumers. This recent law replaced feed-in tariffs with auctions set up in a way that favours biogas installations and co-firing of coal and biomass, making investments in prosumer solar power too risky for most people.

Then, Poland would have to undergo a regional adequacy assessment to determine if any short-term or long-term capacity shortages still exist and if they can be resolved through better regional grid interconnections.

Only then would Polish authorities be able to introduce a capacity market. But such scheme cannot be designed as a direct subsidy to selected power plants. Rather, it would have to be competitive and open to capacity providers from neighbouring countries as well as operators providing demand-side response and energy storage.

In the press conference on Wednesday, where they presented the Winter Package, commissioners Miguel Arias Cañete and Maroš Šefčovič strongly emphasised the big role for cross-border trade in electricity and a more interconnected market. Šefčovič said the new rules were intended to promote “regional solutions, and not solutions within national borders.”

Cañete echoed that by saying that solidarity and regional links between EU members were very important in addressing capacity shortages and that capacity mechanisms could only be deployed in “exceptional situations.”

Asked about the still-open possibility of capacity subsidies going to coal, he said he believed that the growing competitiveness of wind and solar would solve the problem, while Šefčovič said he was certain that price signals would “stimulate modernising investments”.

If that is the logic behind the new rules, it will be very difficult for Poland to channel money into retrofits of old coal power plants and investments in new coal-fired units, even if, unfortunately, a backdoor for coal subsidies still remains at least half-open under the proposed new legislation.

It is probably less of a gift and more of false comfort, a provision that the Polish leaders will likely cling to in order to keep making promises to coal miners and the big energy companies – promises on which they will simply not be able to deliver.

An explicit ‘no’ to any further subsidies for coal would be a much more valuable gift. It would make the situation clearer, and, hopefully, push the Polish government to rethink its coal-centric energy policy that cannot be sustained in the long term anyway.

Poland is already lagging behind Europe’s energy transition, and the sooner it changes course, the better for its citizens, businesses, and general competitiveness, not to mention the environment and climate.

The Winter Package will now be reviewed, potentially modified and adopted by the European Parliament and the EU Council. It is up to MEPs and the ministers on the Council to make sure the new legislation emerges from the process without any backdoors for coal subsidies, which send a misleading signal and have no place in any post-Paris energy policy.

Here be dragons: How the EU bank’s development finance overlooks people at risk

According to a European Commission proposal, the European Investment Bank, the EU’s house bank, should be given an increasing role in responding to the plight of refugees in EU neighbourhood countries in the Western Balkans and the Southern Mediterranean.

But the new Bankwatch and Counter Balance report Going abroad shows the bank’s weak track record in caring for the needs of the most vulnerable and is therefore ill-equipped to support refugees and host-communities. Fundamental weaknesses in its project appraisal and monitoring standards outside the EU, in particular with regards to human rights, transparency and tax justice, are preventing the bank from effectively safeguarding the rights of people affected by its lending.

Going abroad

A critique of the European Investment Bank’s External Lending Mandate

Download the study

The short version:
The EU bank’s dubious overseas development experience shows it cannot be a key player in Europe’s response to the plight of refugees – report
Press release | November 18, 2016

The Commission’s proposal is part of a mid-term review of the EIB’s mandate to lend outside the European Union. The expansion of the so-called External Lending Mandate (ELM) includes an overall increase of EUR 5.3 billion in guarantees for the bank’s external lending, including EUR 3.7 billion to cover public and private sector initiatives under the EIB’s Resilience Initiative that is focused on the support of refugees and/or host-communities in EU neighbourhood countries.

This is a much more ambitious and sensitive task than the usual EIB operations and as the report “Going abroad” makes clear, the EIB is already now struggling to correctly implement its current mandate. The increased EU guarantee, however, does not come with concrete provisions to ensure the effectiveness of the bank’s development finance.

The reality of EIB lending outside the EU

The current External Lending Mandate of the EIB for the period 2014-2020 enables it to operate in 68 countries in Asia, Latin America and Africa. The ELM provides an EU guarantee with a fixed ceiling of EUR 27 billion that covers sovereign and political risks of EIB investments in these regions. In 2015, the EIB lent EUR 7.8 billion overseas. In recent years, it has become a particularly important tool for the EU in its response to crisis situations in its Neighbourhood, most notably in Ukraine and in the Middle East and Northern Africa following the Arab Spring uprisings.

Out of the 68 countries covered by the ELM, 38 are ranked as authoritarian or hybrid regimes by the Economist Intelligence Unit in its 2015 Democracy Index (see a table with the democracy ranking of all ELM countries in the Annex to “Going abroad”).

Some of them are receiving large volumes of funding. Turkey, for instance, considered a hybrid regime before the recent crackdown on opposition leaders and independent media, might receive one of the EIB’s largest loans ever, EUR 1 billion, for the Trans-Anatolian Pipeline (TANAP) segment of the Southern Gas Corridor.

Elsewhere, freedoms of civil society are being curtailed even more. The Global Witness report On dangerous ground from June this year identified 2015 as the worst year on record with 185 killings of land and environmental defenders. 171 of these killings took place in ELM countries.

A map of places with 2015 killings of rights defenders. (Taken from Going abroad (pdf). Click on the image to see a larger version.)

These circumstances should require the EIB to operate under the highest standards and practices to ensure that any direct and indirect human rights impact of its projects is being assessed. This has also been argued earlier this year by Michel Forst, the United Nations’ Special Rapporteur on the Situation of Human Rights Defenders.

Yet, our analysis shows that the EIB is lacking procedures to make such assessments. In authoritarian regimes, where the EIB operates in a highly uncertain environment, the bank is virtually blind to human rights abuses caused by or related to its projects.

For instance, when conducting the environmental and social screening of a project, the EIB framework does not include an assessment of the political and human rights context in the country. This would include an analysis of the impacts a project can have directly or indirectly on people’s rights including the right to justice, freedom of thought and speech, freedom from torture and arbitrary detention or the right to freedom of movement. Even though these might seem to fall outside the direct reach of EIB projects, ensuring respect for these rights is critical to ensuring that people can participate fully in all stages of EIB projects without outside constrains.

While preparing the UN Guiding Principles on Business and Human Rights (UNGP), the UN’s Special Representative on Business and Human rights, Professor John Ruggie, analysed hundreds of public allegations against companies regarding human rights abuses. His team discovered that there is not a single human right that companies have not been accused of violating somewhere in the world. The only sensible conclusion is therefore not to create a sub-set of rights only relevant to business, but to recognise them all.

Such a comprehensive approach should also be adopted by the EIB. It hasn’t been done so far.

The Environmental and Social Management Plans of EIB overseas projects, documents that outline how potential negative impacts are to be avoided or mitigated, don’t include clear measures for safeguarding human rights. Neither do they take the EIB client’s ability into account to deal with human rights risks. How could, for instance Azerbaijan’s state energy company SOCAR, the biggest shareholder of the TANAP pipeline, ensure that those opposing the project are not becoming targets of prosecution by the Turkish government?

Finally, how could negative social impacts possibly be avoided, if the summary of risks, in so-called Environmental and Social Data Sheets, includes only public participation and resettlement processes, if applicable, but does not address the broader social impacts of projects, e.g gender issues, poverty alleviation or human rights?

Changing course

During the mid-term review of the ELM and the considerations for the Resilience Initiative, the European Parliament has a chance to suggest clear measures for covering the glaring due diligence gap of the EIB.

What the EIB needs in its external lending to safeguard refugees and other vulnerable groups is a Human Rights Policy. It has to develop practical guidance on assessing projects with regards to all basic human rights and all possible affected groups. Such guidance should not only be used during project assessment but also during monitoring on a project-by-project basis. Last but not least, these procedures need to apply for EIB operations involving financial intermediaries.

In addition, the European Commission needs to conduct a human rights risk assessment of the EIB’s External Lending Mandate itself to identify the risks of human rights violations in the bank’s operations under the EU guarantee.

The situation in Africa, the Middle East and the European neighbourhood regions is not a challenge that can be solved by throwing money at it, especially if that money is managed by an institution that is not equipped to care for those who are most at risk.

The sound and the fury: new film documents the plight of communities near Romanian coal plant

Oppressive noise and a cloud of dust engulf the residents of Roșia de Jiu and Rogojel, villages located next to Romania’s Rovinari power plant. In a new video, Bankwatch Romania has documented the toll that producing coal energy is having on these communities that live near the lignite mines, transport belts and power plant at Rovinari.

Official noise measurements show that the transport belts generate between 54,9 and 83,1 decibels, while the desulphurisation installations [1] generate between 68,8 and 71,6 dB. These are well above the national legislation that sets limits at 55dB during the day and 45dB during the night. (For comparison, a passenger car driving 105 km/h generates noise of 76 dB at 8 metres distance; a vaccum cleaner generates 70 dB.)

The noise and the dust from Bankwatch on Vimeo.

Residents of the two villages have asked for years to be relocated to an area out of harm’s way or at least to have the lignite deposits moved and the transport belts sealed. Yet no resolution has been found in spite of negotiations with various company committees and directors, or through complaints submitted to the environment protection agencies or public health authorities.

In operation since the 1970s, three units at Rovinari were modernised in recent years when desulphurisation installations were built to conform with European environment legislation. Yet the fact that the belts are not covered and the lignite not sprayed with water has also lead to a high concentration of coal dust in the air. During dry summer days, the villages seem to be swallowed by fog, and air pollution is causing a variety of heart and respiratory diseases.

Though the Paris Agreement has recently come into force, residents of Roșia de Jiu and Rogojel will continue to suffer as Romania burns lignite at Rovinari. It will not be confined to just these communities, because air pollution does not respect borders, and the Romanian government has not acted to protect its citizens.

Notes

1. The Rovinari Power Plant is the only of the four operated by Oltenia Energy Complex (OEC) to have its coal delivered on a transport belt directly from the lignite mines and the deposits surrounding it. OEC was established in 2012 by the mergers of the companies operating the largest lignite power plants and mines delivering their fueling. Today it manages 10 mines and 4 power plants: Rovinari, Turceni, Craiova and Ișalnița.

Deceptive promises of new jobs in the coal sector don’t help workers, communities or the climate

Several years after most of the EU has stopped planning new coal plants due to their poor economics and their climate and health impacts, several new plants are still being pushed across southeast Europe. The plans are in most cases accompanied by promises of creating new workplaces or saving current ones. High unemployment across the region makes this an easy way to score political points.

The sad truth, however, is that workers and communities are being misled. Bankwatch has crunched the numbers and found that in most cases, the claims being made are exaggerated. Even the current levels of employment cannot be maintained in most cases, so promises of new jobs are nothing short of fraudulent.

Most coal plants across the region run on lignite from captive mines, which employ many times more people than the power plants themselves. A look at the current labour productivity levels across the region shows that there is tremendous variation, with the least efficient mines in the Federation of Bosnia and Herzegovina and the most efficient in Greece.

Infographic

Chart: Comparison of labour productivity in mines across the Balkans and those of other countries.

See the interactive infographic

Ironically, the countries in which the most extravagant claims are made around future employment in the mines – Bosnia and Herzegovina and Montenegro – are among the countries with the least productive mines. They are therefore the ones least likely to be able to fulfil these promises.

In the Federation of Bosnia and Herzegovina, claims are frequently that the planned Tuzla 7 unit will save 3500 jobs in the nearby mines. But this is impossible, and even the state-owned utility Elektroprivreda BIH’s own documents admit this. In fact, if productivity levels at the mines reached those of the Czech Republic or Poland, the number of workers in the mines would be nearer 450.

It’s a similar story in Montenegro. The government insists that the planned Pljevlja II power plant would safeguard existing jobs and create new ones, but this can’t possibly be true. In 2014 the Pljevlja mine employed 921 workers. The government‘s own Pljevlja II feasibility study shows that this number would have to shrink to 520-544 by 2025 if the new plant were to have any chance of being economic. However, our new study shows that even this seems generous – if Pljevlja‘s productivity was at the same level as that of Drmno and Kolubara in neighbouring Serbia, there would only be around 330 people employed.

Gone are the days when uneconomic coal mines could be kept alive with subsidies.

However, countries with higher productivity levels have no room for complacency either. Germany’s lignite mines are among the most productive in Europe, yet with wholesale electricity prices low, they and the nearby power plants are having serious financial problems. A stark example of this is Vattenfall’s sale of its lignite power plants and mines in Germany – a deal expected to clock up a loss of EUR 2.4-2.9 billion. The company still considered this deal better than holding on to them.

Most of the plants and mines in southeast Europe are already uneconomic and even if no new plants are built, the number of workers, particularly in the mines, will have to be reduced.

Gone are the days when uneconomic coal mines could be kept alive with subsidies – all the countries in the region are either EU members or signatories of the Energy Community Treaty which obliges them to follow EU state aid rules in the energy sector.

Background, resources, updates

Find out more

Alternatives

All this means that a well-planned and just transition for the workers and communities that depend on coal is needed. As our study describes, the Romanian hard coal sector has already undergone a painful restructuring and closure process and provides a stark lesson of what can happen if coal mine closure is carried out without good planning and adequate inclusion of those affected.

Two transformations are urgently needed: the first is the transformation of the coal mining areas themselves, to diversify their income and clean up their environments. So far, not one southeast European country has an adequate plan for a just transformation of its mining areas.

The second transformation is that of the whole energy sector, to an energy-efficient, renewables-based system which represents both a mitigation measure to slow climate change, and an adaptation strategy to make the system more resilient to the impacts of climate change.

Although these two transformations may not always coincide geographically, it’s worth exploring to what extent jobs in the coal sector could be replaced by those in buildings retrofitting and renewable energy.

The EU already hosts almost 1.2 million renewable energy jobs. While the southeast European countries haven’t taken full advantage of these opportunities yet, Slovenia already has 3800 people employed in the renewable energy industry, primarily in solid biomass, heat pumps and photovoltaics. Croatia has 3400, mostly in solid biomass and wind energy, while Romania has 18 950 people employed in renewables.

The opportunities are there, but so are the threats. If southeast Europe’s politicians continue to bury their heads in the sand and make unrealistic promises they can’t possibly fulfil, sooner or later people are going to catch on, with unpredictable consequences. It’s in all our interests that the planning for a just transition starts right now.

Read more about coal in the Balkans

« Previous Page