Press release

European Ombudsman urges European Investment Bank to enhance transparency – once again!

In October 2022, the EIB announced that its board had approved a significant loan to an undisclosed energy utility in Poland to modernise the electricity network. Bankwatch, however, could not identify this loan proposal on the Bank’s project list. Consequently, we requested environmental information, including the borrower’s identity. In response, the EIB, citing its transparency policy, which permits withholding commercially sensitive information until a loan agreement is signed, claimed that it was prevented from disclosing the information because it had signed an agreement to protect the commercial interests of its client.

However, the European Ombudsman, Emily O’Reilly, advised that, when handling information access requests, the EIB should consider overriding public interests and inform its clients that broad access to EU documents should be granted to the public. Any denial should rely solely on exceptions provided in the Bank’s transparency policy. She stressed that applying this exception requires proper justification based on specific and actual explanations of reasonably foreseeable risks of damage rather than hypothetical scenarios.

This is not the first time the Ombudsman has criticised the EIB’s transparency rules. In 2022, the Ombudsman issued three decisions following complaints from Bankwatch, Client Earth and Counter Balance in relation to EIB’s transparency practices. The Ombudsman found that the Aarhus information rules, which apply to the EIB, requires the Bank to adopt a more ambitious approach to disclosure. Of the several improvements recommended by the Ombudsman, none has been implemented by the EIB to date (3).

Anna Roggenbuck, EIB policy officer at CEE Bankwatch Network, says: ‘The European Ombudsman’s decision is an important milestone in enhancing transparency within the EIB. In this case, the EIB reached an agreement with PGE, one of the largest polluters in the EU, to withhold environmental information about the loan until the deal was finalised, with the sole purpose of avoiding public scrutiny and potential criticism. The Ombudsman found that their arguments about the need to protect the commercial interests of the company simply held no water. The EIB has increasingly entered into such confidentiality agreements with its clients. This strategy shows the Bank’s total disregard for Article 15 of the EU Treaty, which states that ‘to ensure the participation of civil society, the Union’s institutions, bodies, offices and agencies shall conduct their work as openly as possible.’

Contact:

Anna Roggenbuck, EIB policy officer at CEE Bankwatch Network

annar@bankwatch.org

+48918315392

Notes for editors:

(1) The EIB’s own official transparency statistics are telling. The level of transparency of its operations has decreased dramatically in recent years. In 2021, only 57 per cent of project summaries were published at least three weeks prior to approval in line with the general rules of its transparency policy. This percentage was less than in 2020 (60 per cent) and considerably less than in 2011 (99.7 per cent).

(2) PGE is Poland’s biggest coal-heavy energy utility, responsible for approximately 40 per cent of the country’s electricity generation. Bankwatch has repeatedly criticised the EIB, the self-styled ‘EU climate bank’, for channelling public money into fossil fuel companies such as PGE.

(3) The EIB has consistently flouted the EU’s transparency rules, the Aarhus Convention on access to information, and the best practices of multilateral development banks. This poor record is perhaps best reflected in the EIB’s ranking in the DFI Transparency Index, which measures the transparency of the world’s leading development finance institutions. The bank scores the lowest among multilateral development banks, lagging far behind institutions such as the Asian Development Bank, the African Development Bank and the International Finance Corporation.

Civil society calls for the EU’s Ukraine Facility to prioritise the Partnership Principle and environmental conditionality

The proposed Ukraine Facility, slated to be the EU’s financing instrument for providing modernisation and recovery support to Ukraine from 2024 to 2027, represents a crucial opportunity to foster green reconstruction and pave the path for Ukraine’s accession to the EU. Recognising the significance of this initiative, civil society representatives have highlighted the need to draw upon the best practices of existing EU instruments, such as the Recovery and Resilience Facility.

They are calling for a thorough integration of the European Code of Conduct on Partnership, a set of standards proven to be effective in promoting public participation and engagement. Civil society is best placed to provide the checks and balances for planning, implementing, monitoring and evaluating the reconstruction of Ukraine. To that end, involvement of civil society at the earliest stage is crucial, especially in light of the weakening of public consultations amidst martial law in Ukraine.

Svitlana Romanko, founder and director of Razom We Stand, says: ‘A post-war rebuilding of Ukraine’s economy that’s based on clean energy and aligns with EU climate goals will save us money in the long run and help Ukraine eliminate its dependence on fossil fuel imports. It’s of utmost importance that Ukraineadopts a green taxonomy, because every euro invested will bring Ukraine closer to energy independence and economic vitality. It will also help the country meet the clean energy goals set out in the European Green Deal, the Paris Agreement, the RePowerEU plan, and other EU policies and international agreements. In this way, Ukraine can become abeacon of success, inspiring the world to create a more peaceful and climate-friendly future.’

Valeriya Izhyk, EU policy officer at CEE Bankwatch Network, says: ‘Ukrainian civil society is faced with the unprecedented challenge of having to balance urgent war-related action with well thought-out strategic planning for EU accession. The Ukraine Plan is urgently needed for the country to meet this challenge head on. The European Code of Conduct on Partnership can bring structure to this dual objective by providing civil society with an effective tool to leverage progress. The Code sets out the membership criteria and procedures for monitoring committees, the bodies that will oversee the implementation of the Ukraine Plan’s operational programmes once they have been approved. This is exactly the type of governance architecture we need to ensure national ownership of the Ukraine Plan.’

Olga Polunina, executive director of Ecoaction NGO, says: ‘Now is the time to start planning the reforms and investments to be included in the Ukraine Plan – guided by Chapter III of the proposed Ukraine Facility – and to determine how civil society will be involved in its development. To ensure an inclusive and transparent approach, consultations should be held not only with business associations and entities, but also with civil society. But if previous attempts at developing a Ukraine recovery plan are anything to go by, this is likely to be an uphill battle. It’s equally important that both the Ukraine Plan and the Ukraine Facility safeguard environmental standards during reconstruction, especially given the suspension of environmental assessments for reconstruction work during martial law.’

Despite the Facility’s stated objective of aligning Ukraine with the European Green Deal and supporting the country’s green transition, the proposal lacks the minimum requirements for environmental sustainability and fails to specify a climate expenditure target. The Facility should not undermine any other EU legislation with which Ukraine is expected to comply. This includes the country’s obligation to apply provisions in the EU’s Regulation on the Governance of the Energy Union and Climate Action to the development of its National Energy and Climate Plan in a transparent and participatory manner.

Civil society representatives are emphasising the urgent need to incorporate such conditionalities, milestones and targets into the new regulation. A focus on environmental considerations will not only align the Facility with the objectives of the European Green Deal, but also ensure a sustainable and resilient future for Ukraine that is free from fossil fuels.

Contacts:

Valeriya Izhyk
EU Policy Officer, Ukraine reconstruction, valeriya.izhyk@bankwatch.org

Jason Kirkpatrick
Senior Communications Manager, press@razomwestand.org

Oleksandra Khmarna
Head of Communications, okh@ecoaction.org.ua

Notes for editors:

(1) The Centre for Environmental Initiatives – Ecoaction – is Ukraine’s largest environmental NGO. Uniting the efforts of experts and activists with the goal of protecting the environment and the climate, Ecoaction advocates for a fossil-free energy transition, clean air, and the sustainable development of energy, transport and agriculture in Ukraine. In 2022, Ecoaction published a set of principles designed to guide Ukraine’s green recovery. The initiative has received the support of more than 50 Ukrainian civil society organisations. https://en.ecoaction.org.ua/

(2) Ukrainian group Razom We Stand, founded at the beginning of Russia’s war in 2022, is campaigning to end the war by cutting Russian exports of fossil fuels. It has consistently called for a comprehensive and fully enforced embargo on Russian fossil fuels as well as a green reconstruction of Ukraine with the aim of providing a cleaner and brighter future for the country.

New report – deadly legal breaches by Western Balkan coal plants increased in 2022

Five years since pollution control rules came into force under the Energy Community Treaty, SO2 emissions from coal plants included in the National Emissions Reduction Plans (NERPs)(2) of Bosnia and Herzegovina (BiH), Kosovo, North Macedonia and Serbia were still collectively 5.6 times as high as allowed.

Dust emissions also increased compared to 2021, and in 2022 were in total nearly 1.8 times as high as allowed. NOx slightly exceeded the sum of the countries’ ceilings due to a lack of pollution control investments, increased emissions and tighter year-on-year limits in the NERPs.

For the first time since the rules entered force, North Macedonia’s Bitola B1+2 had the highest SO2 and dust emissions in the region – and both almost doubled compared to 2021. Its SO2 pollution reached 111 408 tonnes – 17 times as much as allowed, and it single-handedly breached the total regional limit for SO2. The reasons for this drastic increase are not clear, but the use of a different kind of coal may have contributed.

Long-term offenders Ugljevik in Bosnia and Herzegovina and Kostolac B in Serbia continued to massively breach SO2 limits despite having desulphurisation equipment in place. It is still unclear whether technical issues or attempts by the operators to save money and increase production are to blame.

Dust emissions from the Gacko plant in Bosnia and Herzegovina remained alarmingly high in 2022 – 12 times as much as allowed. The plant operator has also recently announced plans to burn refuse-derived fuel, i.e. waste, in the plant.

In addition to the NERP breaches, all three Western Balkan countries with coal power plants subject to an ‘opt-out’ derogation limiting their operating hours are now violating this provision. Montenegro’s Pljevlja plant has been operating illegally since late 2020, when it exceeded the allocated 20 000 hours allowed after 1 January 2018. In 2022, it was joined by Bosnia and Herzegovina’s Tuzla 4 and Kakanj 5 units, as well as Serbia’s Morava plant, which also operated beyond their 20 000 hours limits. All the plants continue to operate.

The Energy Community Secretariat has opened a number of dispute settlement cases against the countries (3) and last week (4) a new complaint was submitted by the Renewables and Environmental Regulatory Institute (RERI) from Serbia and Bankwatch regarding the Morava plant’s illegal operation.

By the end of June, all the countries also need to submit National Energy and Climate Plans (NECPs), outlining their plans for greenhouse gas emissions reductions by 2030 – which will also need to include their plans for coal plant closures.

Ioana Ciuta, Energy Coordinator at Bankwatch – ‘Two contradictory trends are currently underway: The region’s antiquated coal plants are increasingly unreliable, but the energy crisis has distracted governments and utilities even further from a sustainable energy transition. At the moment ‘close’ looks much more likely than ‘comply’, and there’s an increasing danger that this will be uncontrolled. All the countries need to show in their NECPs that they have a plan, but in most cases not even a draft has been publicly available so far.’

Davor Pehchevski, Pollution Campaigner at Bankwatch – ‘The pollution levels in the Western Balkans are utterly unacceptable. The governments must finally get a grip on the situation and stop letting energy utilities make their own rules. The need to cut pollution and ramp up energy efficiency and sustainable forms of renewable energy is greater than ever. Due to the lack of timely action in previous years, everything needs to be done at double speed now.’

Contacts:

Ioana Ciută, Energy Coordinator

ioana.ciuta@bankwatch.org

Tel: +40 724 020 281

Pippa Gallop

Southeast Europe Energy Policy Officer

pippa.gallop@bankwatch.org

Tel: +395 99 755 9787

Davor Pehchevski,

Pollution campaigner,

davor@bankwatch.org

Tel: +389 71 264 087

Notes for editors:

The report is available at ComplyOrClose.org
As part of their obligations to comply with the Large Combustion Plants Directive under the Energy Community Treaty, four Western Balkan countries – Bosnia and Herzegovina, Kosovo, North Macedonia and Serbia – have drawn up National Emission Reduction Plans (NERPs) covering the period from 2018 to 2027. Instead of requiring each large combustion plant to comply with the emission limit values from the Large Combustion Plants Directive from 1 January 2018, these plans allow the countries to calculate national emissions ceilings for sulphur dioxide, nitrogen oxides and dust, and to gradually decrease their total emissions from selected pre-1992 large combustion plants until 2027. In 2027, all the plants included in the NERPs will individually need to be in compliance not only with the emission limit values from the Large Combustion Plants Directive, but also with Part 1 of Annex V to Directive 2010/75/EU on Industrial Emissions.
Due to the breaches of the NERP pollution limits, in March 2021 the Energy Community Secretariat opened dispute settlement cases against BiH, Kosovo, North Macedonia and Serbia. In February 2022 it took the next step forward in the process by issuing reasoned opinions against Bosnia and Herzegovina, Kosovo and North Macedonia. The case against Serbia remains open but did not escalate. The Secretariat also opened a dispute settlement case against Montenegro in April 2021, for breaching the 20,000-hour opt-out limit for the Pljevlja plant. In October 2022, this was followed by the Secretariat opening a second case against Bosnia and Herzegovina regarding the Tuzla 4 and Kakanj 5 opt-out breaches.
Serbia: Complaints over illegal operation of Morava coal power plant – Bankwatch

Serbia: Complaints over illegal operation of Morava coal power plant

Under rules which entered force on 1 January 2018 (3), Elektroprivreda Srbije’s (EPS) 120 megawatt Morava coal power plant was allowed to operate for a maximum of 20 000 hours until the end of 2023 at the latest. After that, it had to either close or achieve EU pollution control standards.

However, by the end of 2022, Morava had operated for a total of 23 051 hours since 2018, (5) and continues to operate to this day.

In 2022, the plant pumped out 33 183 tonnes of sulphur dioxide – four times more than in 2021 (8,174 tonnes). It also emitted 1 580 tonnes of nitrogen dioxide and 125 tonnes of dust. Approximately half of these health and environment-damaging emissions were illegal, because they took place after Morava had exceeded its 20 000 operational hours. Since EPS had not made investments to bring the plant into line with EU legislation, it should have closed.

Morava is the fourth coal power plant in the Western Balkans to breach its operating hour limits. Montenegro’s Pljevlja plant has been operating illegally since late 2020, and in March 2022, the Federation of Bosnia and Herzegovina’s Parliament also voted to illegally extend the lifetime of the Tuzla 4 and Kakanj 5 coal power plants beyond their allowed operating hours, without undertaking additional pollution control measures. For this reason, the Energy Community Secretariat opened dispute settlement cases against Montenegro in April 2021, and Bosnia and Herzegovina in October 2022.

Hristina Vojvodić, legal expert at RERI – ‘The Western Balkan governments and utilities are becoming increasingly brazen in their disregard for pollution control legislation. If they care at all about preventing needless deaths from air pollution, they need to show that they have a workable plan to make their coal plants comply with the law and to start closing the oldest and most polluting ones immediately.’

Ioana Ciuta, Energy Coordinator at Bankwatch – ‘Considering the scale of the air pollution breaches in the Western Balkans, it’s outrageous that the EU is still allowing the region’s coal plants to trade on the EU energy market. The EU must introduce proportionate, dissuasive and effective penalties into the Energy Community Treaty if it wants to be taken seriously’.

Contacts

Milena Dragović, Communication Manager, RERI

milena.dragovic@reri.org.rs

Ioana Ciută, Energy Coordinator, CEE Bankwatch Network

ioana.ciuta@bankwatch.org

Tel: +40 724 020 281

Notes for editors

(1) For more about the Renewables and Environmental Regulatory Institute (RERI), see https://reri.org.rs/en/

For more about CEE Bankwatch Network, see www.bankwatch.org

(2) For more on the Energy Community’s dispute settlement mechanism, see: https://www.energy-community.org/legal/cases.html

(3) The Large Combustion Plants Directive (2001/80/EC) is now obsolete in the EU but entered force in the Energy Community countries only as of 1 January 2018. Power plant units in the region had to either meet the emission limit values in the Directive or could be subject to derogations such as the ‘opt-out’ clause. In exchange for being allowed to pollute at higher levels, ‘opt-out’ plants had to limit their operating hours. Once 20 000 hours have passed, or after 31 December 2023 – whichever happens first – the plants can only continue to operate if they meet the emission limit values set out in Part 2 of Annex V to Directive 2010/75/EU on industrial emissions, which requires significant investments in pollution control equipment.

Ministerial Council Decision 2016/19-MC-EnC of 14 October 2016 approved the ‘opt-out’ exemptions and the Energy Community Secretariat’s Summary Report on the final list of opted-out plants from April 2018 shows the final list of ‘opt-out’ plants, which includes Morava, Kolubara A3 and Kolubara A5 in Serbia.

(4) By the end of 2021, the Morava plant had been operating for 16,966 hours since 2018 and according to data submitted by the Serbian Environmental Protection Agency to the Energy Community, the plant continued operation for a further 6 085 hours in 2022 – amounting to a total of 23,051 operational hours by the end of 2022.

(5) For operating hours and emissions, see data reported to the European Environment Agency: https://cdr.eionet.europa.eu/rs/eu/energycommunity/

Green light for major Black Sea gas project will accelerate the climate crisis

Bankwatch Romania and CEE Bankwatch Network urge the Romanian government to suspend this reckless extraction. Parent company OMV Group (Austria) has previously stated its support for the Paris Agreement, but in reality the fossil energy firm’s actions are little more than greenwashing. In Romania, their strategy is actually designed to significantly increase gas exploitation. According to environmental assessment documents, starting in 2027 OMV-Petrom expects to extract around 8 billion cubic metres (bcm) of fossil gas per year from the Neptun Deep field for at least 20 years, well beyond the time Europe’s energy system should be free of fossil fuels.

Alarmingly, this project would never have happened without EU-funded pipelines. The Tuzla-Podișor pipeline, which is set to connect the Neptun Deep fossil gas field with Romania’s gas network was awarded a EUR 150 million loan from the European Investment Bank in 2018, and recently received an additional EUR 80 million via the EU’s Modernisation Fund. The climate science community has been unequivocal in delivering its repeated message: fossil fuels must be kept in the ground in order to keep the 1.5°C target within reach. In May 2021, the International Energy Agency warned that oil and gas development must stop immediately for the world to meet the goal of net zero emissions by 2050.

The solution to Europe’s energy woes lies elsewhere. If the EU is truly committed to climate neutrality, there can be no new investments in new oil and gas extraction backed by public funding. A recent Bankwatch’s analysis shows that Romania, with the EU’s blessing, aims to use at least EUR 1.7 billion in EU funding by 2027 for new fossil gas projects. EU Member States should rather focus their efforts on replacing fossil fuels with renewable energy, stepping up energy efficiency and supplying households with sustainable, clean heating.

Correction: We have amended the text to reflect that the IEA’s report from May 2021 called for halting specifically new oil and gas extraction, not all gas development. The Neptun Deep project should not happen if the Romanian government listens to science.

For additional information, please contact:

Raluca Petcu

Fossil gas campaigner, Bankwatch Romania

raluca.petcu@bankwatch.org

+40770209187

EU Member States jeopardising economic recovery by locking citizens out of decision-making

The report, No recovery without citizens: why public involvement is key to Europe’s green transformation, shows how excluding the public has opened the door for investments which harm the climate, further drive biodiversity loss and neglect crucial public services like healthcare and education across Europe. It analyses investments in Bulgaria, Estonia, Hungary, Italy, Latvia, Poland and Spain made with the EU recovery fund. The report also examines the role of the InvestEU and REPowerEU programmes, as well as the European Investment Bank (EIB). These investments are theoretically supposed to help Europe bounce back from the COVID-19 pandemic and transform economies towards a greener and more resilient future, but they were planned without citizen involvement.

Daniel Thomson, EU Policy Officer for Biodiversity at CEE Bankwatch Network said:

‘The publics’ needs and interests must be the key priority when designing and implementing public funds. This can only be done by better engaging with citizens and allowing their full involvement in the process. Unfortunately, this has not been the case for the EU’s recovery, allowing investments which do not reflect the true priorities of citizens and wasting precious public money.’

This situation would not have occurred if citizens had been adequately consulted on how to use the billions of euros made available. One of the consequences of the lack of civil participation is a large portion of recovery funds in some countries (as well as those from InvestEU and EIB investments) going to corporations still extracting and burning fossil fuels while making huge profits.

Frank Vanaerschot, Director at Counter Balance said:

‘We’re in the middle of a cost of living and climate crisis. Spending public money on big polluters with a lot of profits is undemocratic and counterproductive. We as citizens have the right to define which investments we need, to make sure we can all access affordable energy, housing and transport within environmental limits.’

The report exposes how investments in flood management, renewable energy, transport and other sectors made with recovery funds are being misused. The new breakwater in Genoa, Italy is one example. The breakwater will increase air pollution by sparking more traffic from huge ships and road vehicles and endanger dolphins, whales, seals and turtles inhabiting the area. There is also no guarantee of increased employment in Genoa, despite the cost to the public purse potentially reaching over EUR 1.3 billion.

Eva Pastorelli, campaigner at Italian NGO ReCommon said:

‘Citizens are not being properly consulted on choices that will affect their future. New Italian legislation on projects financed by recovery funds has blocked citizens from having an adequate say on investments such as the Genoa breakwater, under the guise of speeding up the process to meet investment deadlines. As the botched environmental assessment in Genoa shows, there is a real danger that profits for the few could prevail over the well-being of citizens and the ecosystem.’

Citizens and civil society organisations can help identify and align investments with the actual needs of their societies and economies if they can meaningfully participate in decision-making on how EU recovery funds are spent. To do this, the European Commission, the EIB and EU Member States should improve transparency around investments, strengthen the role which civil society organisations play in monitoring national plans and improve citizen participation rather than allowing private companies to define investment plans.

For more information, please contact:

Daniel Thomson, EU Policy Officer for Biodiversity, CEE Bankwatch Network, daniel.thomson@bankwatch.org, +32 (0)2 893 08 61

Frank Vanaerschot, Director, Counter Balance, frank.vanaerschot@counter-balance.org, +32 (0) 487 67 16 27

Eva Pastorelli, Campaigner, ReCommon, eva.pastorelli@bankwatch.org, +39 320 666 34 37

Notes to editors

A series of videos explaining problematic uses of recovery financing are available on the Citizens’ Observatory for Green Deal Financing website here.
The report analyses funding available through the EUR 806 billion NextGenerationEU recovery fund package, which includes the Recovery and Resilience Facility, the additional EUR 20 billion of new REPowerEU grants, the InvestEU facility and the EIB’s energy lending.

The Citizens’ Observatory for Green Deal Financing is a coalition of civil society organisations from across Europe advocating at EU and national levels for more transparency and a just distribution of EU funds.

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