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Western Balkans: EUR 3.5 billion gas build-out poses economic, energy security risks and threatens green transition

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A review of data in the Global Gas Plant Tracker and the Global Gas Infrastructure Tracker show:

  • 2,442 megawatts (MW) of planned gas-fired capacity would dramatically deepen the region’s dependency on gas for electricity, nearly tripling the 779 MW of such capacity today;
  • The region’s first two LNG import terminals in Montenegro and Albania would increase exposure to a tight, volatile LNG market with over 0.5 billion cubic meters (bcm) of regasification capacity; and
  • 2,715 kilometers of new gas pipelines would draw gas into the Western Balkans from Greece, Croatia, and other neighbours.

In 2021, the six countries of the Western Balkans—Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia—consumed a mere 3.7 bcm of gas, or four per cent of what Germany used that same year.

But the proposed expansion to the gas infrastructure network, backed by European Union and U.S. institutions, would expose the region to the volatile price swings and gas shortages experienced by much of Europe last year. Albania, Montenegro and Kosovo are not currently connected to gas networks, so new infrastructure would create entirely new gas dependence.

At the same time, renewed warnings this month from the Intergovernmental Panel on Climate Change that no new fossil fuel infrastructure can be built in order to limit planetary warming to 1.5° Celsius mean that the planned gas build-out represents billions of euros in potential stranded assets.

For a region with significant solar and wind energy potential, the plans for new gas infrastructure would also introduce fresh hurdles to EU accession efforts, as the move runs counter to provisions of the Energy Community Treaty that seek among others to align the green energy efforts of the region with that of the EU’s.

Pippa Gallop, Southeast Europe Energy advisor at Bankwatch, said ‘Fossil gas infrastructure built now will be a liability for the Western Balkans. Either it will increase import dependence and fossil-fuel lock-in, or it will end up as stranded assets. If the EU and its banks have learnt anything from recent supply problems, they must stop peddling fossil gas in the region.’

Robert Rozansky, Research Analyst at Global Energy Monitor, said ‘Countries around the world are rethinking their plans to import this volatile, dirty fuel amid the global energy crisis. If the Western Balkans forge ahead with new gas infrastructure, it will only make it harder to transition to clean, domestic, and affordable energy.’

Contacts

Pippa Gallop, Southeast Europe energy advisor, CEE Bankwatch Network, pippa.gallop@bankwatch.org

Robert Rozansky, Research Analyst, Global Energy Monitor, rob.rozansky@globalenergymonitor.org

 

Activists call on EU to better protect nature from energy infrastructure in the Western Balkans, Ukraine, Georgia and Moldova

Recent years have seen increasing conflicts between energy infrastructure and nature protection in the Energy Community region. In particular, rampant hydropower construction has damaged rivers and streams in some of the most precious and pristine areas of the Western Balkans, Dniester River basin, and Georgia (2).

The Energy Community countries represent global biodiversity hotspots, with extensive mountains, river and lake systems, that are home to numerous endangered and endemic species and important habitats. Many rivers are still in good or pristine condition, but are desperately under-protected. The countries’ Stabilisation and Association agreements and Association Agreements require them to enact EU nature protection legislation, but in many cases there are no clear deadlines for this. 

In December 2022, the countries committed to 2030 targets for greenhouse gas reductions, energy efficiency and renewable energy (3), likely accelerating the construction of renewable energy of all kinds – both low-impact such as rooftop solar as well as high-impact like hydropower and forest biomass.  

The groups are therefore asking the Commission to take urgent steps to include relevant parts of the EU Habitats, Birds and Water Framework Directives in the Energy Community Treaty, in order to ensure a balance between nature protection and energy sector development.

A major expansion of sustainable forms of renewable energy is ‘a welcome and necessary step towards tackling air pollution and climate change’, according to the groups. 

But, they warn, ‘If not accompanied by adequate environmental safeguards, the widespread construction of new energy facilities will damage nature and generate public opposition, as already seen with hydropower. We cannot afford such a backlash to jeopardise the transition towards an energy-efficient economy based on sustainable forms of renewable energy’. 

In November 2020, the European Commission indicated willingness to include the relevant parts of these Directives in the Energy Community Treaty (4). However there has been little progress since then.

Pippa Gallop, Southeast Europe Energy Advisor at CEE Bankwatch Network – ‘It is becoming increasingly urgent to strengthen the Energy Community’s nature legislation. Accelerating energy infrastructure development without proper environmental safeguards in place won’t end well.’

‘When properly applied, the EU’s nature protection legislation is strong enough to protect nature, but flexible enough to ensure appropriate renewables development. The Commission must propose to include it in the Energy Community Treaty as soon as possible.’ 

The joint letter can be found here.

Contacts:

Pippa Gallop,
Southeast Europe Energy Advisor and Finance and Biodiversity Strategic Area Leader
CEE Bankwatch Network
pippa.gallop@bankwatch.org
+385 99 755 9787
Skype: pippa.gallop

Andrey Ralev,
Biodiversity Campaigner
CEE Bankwatch Network
andrey.ralev@bankwatch.org

Notes for editors:

  1. The Energy Community Treaty is an international organisation which brings together the European Union and its neighbours to create a pan-European energy market. It was founded by the Treaty establishing the Energy Community signed in October 2005 in Athens, Greece, in force since July 2006. Its key objective is to extend the EU internal energy market rules and principles to countries in Southeast Europe, the Black Sea region and beyond on the basis of a legally binding framework. The current Contracting Parties are Albania, Bosnia and Herzegovina, Georgia, Kosovo, Moldova, Montenegro, North Macedonia, Serbia and Ukraine.
  2. For more on this topic, see for example https://bankwatch.org/project/rivers, https://www.balkanrivers.net/en. 
  3. More information on the targets can be found here.
  4. See the conclusions of the Energy Community’s 21st Environmental Task Force meeting from November 2020. 

The unexplained backtracking of the EBRD and Tbilisi City Hall: why did they keep the contract with a Russian company?

The Tbilisi Metro Project, which is co-financed by the Green Climate Fund, received finances from the EBRD in 2020 and the Russian supplier was selected in a two-tier tender in 2021. Russia’s invasion of Ukraine changed the context and stalled the official procurement procedures with Metrowagonmash.

  • In March 2022, the EBRD suspended a transfer to the Russian company due to the risk of sanctions.  
  • In November 2022, the mayor of Tbilisi announced that the municipality and the EBRD had decided to terminate the contract and were in contact with alternative suppliers.  
  • In February 2023, a Tbilisi City Hall representative said that Metrowagonmash would remain on as the supplier, as it provided the most affordable tender proposal. The mayor of Tbilisi also stressed that he was forced to keep the existing agreement to avoid the imposition of fines and financial sanctions on the state – although it is not clear who would impose these. 

Bankwatch urges the EBRD to terminate the contract with the Russian company and find an alternative supplier for the project. Despite multiple attempts, the Bank has not yet responded to Bankwatch’s requests to clarify the reasons for its decision to retain Metrowagonmash as a supplier for the project.  

Manana Kochladze says: ‘We are not surprised that the Georgian authorities have chosen a Russian supplier. They have clearly turned to the Kremlin recently, ignoring the concerns of outraged citizens in Tbilisi. The EBRD’s silence on this issue, on the other hand, is surprising.’ 

Mariam Patsatsia says: ‘International financial institutions, including the EBRD, have halted their lending to Russia in response to Russia’s aggression against Ukraine. But this is not enough. Banks should take appropriate measures to prevent any indirect support to companies affiliated with the Kremlin and should not encourage trade with Russia through their financing.’ 

Contacts: 

Manana Kochladze, Strategic Area Leader – Democratisation and Human Rights
manana@bankwatch.org
Tel.: +995 599 91 66 47 

Mariam Patsatsia, Community Support Coordinator
mariam.patsatsia@bankwatch.org
Tel.: +995 511 16 38 23 

Notes for editors: 

  1. In 2015, Bokarev and Makhmudov became two of the largest government contractors in Russia. Until 2017, they, along with Russia’s current deputy defence minister Alexei Krivoruchko, also held shares in JSC Kalashnikov Concern, which manufactures around 95 per cent of Russia’s guns. The weapons maker has been under US sanctions since 2014 following Moscow’s annexation of Crimea.  
  1. After leaving Kalashnikov, the partners continued to provide engines for Russian warships through Metrowagonmash’s sister company, as evidenced in the company’s 2018 and 2019 annual reports. 

Environmental groups challenge backdoor dismantling of EU nature safeguards

On 22 December, the Council of the European Union used a fast-track emergency procedure (2) to adopt a Regulation to accelerate the deployment of renewable energy (3). 

Although the Regulation contains useful provisions to speed up small-scale solar and heat pump installations, other parts of it undermine existing environmental law and public consultation requirements.

Among others, the Regulation allows Member States to exempt all renewable energy developments in designated renewables areas from being subject to project-level environmental impact assessments and public consultations, as long as a more general strategic environmental assessment has been carried out during the wider planning stage. This exemption includes even very damaging projects such as new hydropower plants or biomass plants.

Pippa Gallop, CEE Bankwatch Network – ‘The Council has used a sledgehammer to crack a nut. Increasing authorities’ staff capacity, digitalisation and removing political barriers like Poland and Hungary’s de facto ban on wind power will help speed up sustainable renewable energy – but dismantling environmental safeguards and public consultations won’t. It will increase public opposition and legal challenges instead of speeding things up.’  

Gregor Schamschula, ÖKOBÜRO – ‘The regulation by the Council offers no helpful solution to one of our most pressing problems: environmental dangers. We cannot sell out nature protection to help the climate, we need both. The regulation completely ignores the EU’s international obligations like the Aarhus Convention and the Alpine Convention. Our message to the Council from both a legal and an environmental perspective therefore is: try again, try better.’

Contacts:

Pippa Gallop, Southeast Europe Energy Advisor and Strategic Area Leader, Finance and Biodiversity, CEE Bankwatch Network

pippa.gallop@bankwatch.org
Mob: +385 99 755 9787
Skype: pippa.gallop

Gregor Schamschula, ÖKOBÜRO
gregor.schamschula@oekobuero.at
www.oekobuero.at 

Notes for editors:

  1. The groups have initiated legal action through a request for internal review – a mechanism that allows NGOs and the public to challenge certain EU decisions that breach environmental law. The Council now has sixteen weeks to respond to the request.

    A briefing outlining the main points of our request can be found here

    The request can be found here

  2. The Council used Article 122(1) of the Treaty on the Functioning of the European Union as the basis for the Regulation, part of the Economic and Monetary Policy section of the Treaty, which states that ‘Without prejudice to any other procedures provided for in the Treaties, the Council, on a proposal from the Commission, may decide, in a spirit of solidarity between Member States, upon the measures appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain products, notably in the area of energy.’
  3. Council Regulation (EU) 2022/2577 of 22 December 2022 laying down a framework to accelerate the deployment of renewable energy. The Regulation entered force on 30 December 2022 and is in force for 18 months.

Western Balkans: scientists and NGO representatives call for more rivers to be protected as part of the Emerald Network

In 2011, Western Balkan countries proposed a small number of sites as part of the Europe-wide Emerald Network of protected natural areas. But despite this, too many of the region’s stunning rivers have been left unprotected. Now a new proposal aims to rectify this. 

Established by the Council of Europe in 1989 under the Bern Convention, the Emerald Network consists of areas of special conservation interest established to conserve wild flora and fauna in their natural habitats.  

As signatories of the Bern Convention, Albania, Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia established the Emerald Network in 2011, when they proposed a small number of sites. However, none of the countries have since expanded their original list of sites. Most sites lack management, consistent data collection, resources and legal protection under national law, leaving most rivers and fish populations unprotected. 

The list of rivers published today results from the Emerald Green seminar organised by CEE Bankwatch Network in December 2022, where participants provided scientific data on fish species and habitats. 

As a global biodiversity hotspot, the Western Balkans boasts exceptional freshwater diversity. The region’s extensive mountains, rivers, lakes and coastlines are home to numerous endangered species and important habitats with many endemic species that can’t be found anywhere else. Compared to the rest of Europe, most of the region’s rivers are in good or pristine condition and many are ideal candidates for protection, as recognised by the priority list published today. 

Andrey Ralev, biodiversity campaigner for CEE Bankwatch Network, said: ‘River protection and the proper implementation of the Emerald Network is a long-term process, requiring cooperation between governments, scientists, nongovernmental organisations and local communities. Our proposal, which is based on extensive scientific knowledge about fish populations in the region, is an important contribution to this process. The next step is to support the region’s governments in preparing official proposals for new Emerald sites.’  

Jelena Ivanić, vice president at the Center for Environment Banja Luka, said: ‘By signing the Bern Convention, our country made a commitment to protect and manage areas nominated for the Emerald Network. But not much has been done regarding this. Adequate protection of nature and the environment can be achieved through the implementation of the Bern Convention and the Emerald Network. We expect this to happen in the coming years through cooperation of all levels of authorities, local communities, NGOs and the scientific community with the aim of protecting previously proposed areas and new Emerald sites in Bosnia and Herzegovina.’ 

Strahinja Macić from the Polekol Organization for Political Ecology and Right2Water Initiative said: ‘Serbia is characterised by great genetic, species, ecosystem and landscape diversity. As part of the Balkans, it is one of the six centres of European biodiversity. Emerald sites are of great importance for the protection and preservation of wild animal and plant species, but the number of sites in Serbia is too small. No new areas have been proposed for inclusion in the Emerald Network since 2011, which is why the results of this seminar are valuable and present a good basis for proposing new areas with a special emphasis on transboundary river basins.’ 

Nataša Milivojević, president of the Rzav Ecological Association from Serbia, said: ‘Experts who participated in this seminar shared valuable data on the region’s biodiversity stemming from years of research. The seminar was a great idea that will certainly encourage decision-makers to speed up declaration of Emerald sites and ensure their sustainable management.’ 

Jelena Popović, general secretary of the Montenegrin Ecologists Society, said: ‘The establishment of a national Emerald Network of areas of special conservation interest while Montenegro is in the process of EU integration is an ideal platform for the establishment of the Natura 2000 network. This is also one of the mechanisms to protect the most valuable natural areas until the official implementation of the Natura 2000 network once Montenegro joins the European Union. Wild rivers in Montenegro are under tremendous pressures due to sand and gravel mining, the construction of hydropower plants and a lack of wastewater management, just to name a few issues. Updating the list of national Emerald sites and properly implementing the network would be a significant contribution to the protection of rivers and other valuable habitats.’ 

Aleksander Trajce, executive director of Protection and Preservation of the Natural Environment in Albania, said: ‘Albania boasts a very rich network of rivers and streams that flow freely to this day and host incredible biodiversity, including rare and threatened species on the European level. The proposal to include these rivers and streams in the Emerald Network is a major step in the right direction for ensuring their long-term protection and safeguarding the invaluable biodiversity that they host.’ 

Olsi Nika from EcoAlbania said: ‘Rivers in the Balkans are amongst the most threatened ecosystems, and at the same time they represent a biodiversity hotspot. In this regard, it is worth including them in a legally protected network.’ 

Gjorgj Mitrevski, community support coordinator at Eko-svest in North Macedonia, said: ‘Rivers in our country are impacted by various infrastructure projects that threaten the life of rare and endemic species that live there. The inclusion of rivers in the Emerald Network is a necessary step forward so that we can provide their protection as our natural heritage.’ 

For more information contact: 

Andrey Ralev, Biodiversity Campaigner
CEE Bankwatch Network
andrey.ralev@bankwatch.org
Mob: +359 884 268 552 

Romania U-turns on decarbonisation to expand a lignite mine in Gorj and wipe out 106 hectares of forest

On January 11, 2023, contrary to the decarbonisation process enshrined in the National Recovery and Resilience Plan (NRRP) and in national law, which foresees a coal phase-out by 2032 the latest, the Romanian government adopted a Government Decision to cut down a 106-hectare forest without compensation so that the state-owned coal mine and plant operator Oltenia Energy Complex (CEO) could expand one of its lignite mines. 

The decarbonisation law is one of the milestones in the NRRP that had to be completed by the end of 2022 for Romania to receive the second tranche of EU recovery funds. After a series of amendments, the Emergency Ordinance 108/2022 regarding the decarbonisation of the energy sector was approved as Law 334 on December 5, 2022.  

‘Expanding the Timișeni-Pinoasa mine in Gorj county to a capacity of 8,000,000 tonnes/year of lignite, not only increases CO2 emissions, but also means that more than 100 hectares of forest will be wiped out. Deforestation and then burning lignite will have a double negative effect on the environment by increasing CO2 emissions and reducing the absorption capacities’, said Alexandra Doroftei, coal campaigner at Bankwatch Romania.  

The decarbonisation law has already undergone substantial changes, positive and negative:  

  • on December 14, 2022, a series of changes were made through Government Emergency Ordinance (GEO) 175/2022, to respond to the European Commission’s observations. Thus, the provision which allowed coal power plants to stay in technical reserve was scrapped. 
  • But on December 28, 2022, two weeks after the previous changes, the government approved the postponement of the retirement of 660 MW of coal units (Rovinari 3 and Turceni 7), from 31 December 2022 to 30 October 2023.  

The purpose of the decarbonisation law is to establish the framework for reducing CO2 emissions in the energy sector, but the most recent changes have exactly the opposite effect. 

Moreover, The Oltenia Energy Complex, in its restructuring plan approved by the European Commission as a condition for receiving state aid, has a coal power plant retirement calendar, so it is expected that mines which supply the coal to the respective units would follow the same calendar, not the opposite. 

According to the Government Decision adopted on January 11, the expansion of the Pinoasa lignite mine would reach a production of 8,000,000 tonnes/year, almost half of Oltenia’s total 2021 lignite production.  

In 2022 alone, two other Government Decisions were approved, 1484 of December 14, 2022, and 1411 of November 22, 2022, which, together with this week’s Government Decision 13/11.01.2023, would lead to a potential increase of lignite production by 15.5 million tonnes/year, which means almost the entire lignite production of Romania can be covered by these three mines. 

‘The actions of the Romanian government towards the decarbonisation of the energy sector show that cashing in recovery funds is its main motivation, not real measures to decrease CO2 emissions and advance the energy transformation. We urge the Government to act on the climate crisis and stop postponing the much-needed measures to mitigate it’, concluded Doroftei.

Contacts 

Ioana Ciuta, Energy coordinator for CEE Bankwatch Network and president of Bankwatch Romania, ioana.ciuta@bankwatch.org; Twitter: @unaltuser 

Notes for editors 

  1. Bankwatch Romania is an association established in 2012, whose aim is to prevent the negative environmental and social impact of public and private projects and to promote sustainable alternatives and public participation in decision-making. www.bankwatch.ro 
  2. Between 2017 and 2021, Oltenia Energy Complex had an average total annual production of approximately 18.5 million tonnes of lignite from the ten mines it operates. 
Year  2017  2018  2019  2020  2021 
Production [thousand tonnes]  22,512  21,207  19,686.86  13,158.339  15,879.740