Press release

Loan guarantee for Bosnia’s Tuzla 7 coal plant confirmed as illegal

A guarantee for a EUR 614 million loan from China Eximbank to build the 450 MW Tuzla 7 coal plant was cleared by the State Aid Council of Bosnia and Herzegovina in July 2018.

Following a complaint submitted by the Aarhus Center Sarajevo and Bankwatch in September 2018, the Energy Community Secretariat twice advised the Federation of Bosnia and Herzegovina (FBIH) Parliament not to approve the guarantee, after its examination of the case indicated that it would be in breach of EU law.

However, the FBIH parliament’s House of Representatives and House of Peoples defied the warnings and approved the guarantee on 7 March and 1 April 2019.

Under the Energy Community Treaty, Bosnia and Herzegovina must follow EU rules on subsidies in the energy sector. Among other things, in most cases state guarantees may only cover up to 80 percent of the total loan amount.

The guarantee for Tuzla 7, however, covers 100 percent of the loan, plus interest and other associated costs. There are circumstances in which covering the whole loan amount is allowed, but the relevant conditions were not fulfilled in this case.

Since the guarantee was approved, the project has been hit by further setbacks, in particular the withdrawal of GE as an equipment supplier. The lead contractor, China’s Gezhouba Group, has offered alternative Chinese technology which the Federation of Bosnia and Herzegovina authorities are now considering.

‘The loan guarantee for Tuzla 7 has been confirmed as illegal and Gezhouba cannot fulfil its contract. What more do Bosnia and Herzegovina’s decision-makers need to make them drop this fantasy project?’ said Denis Žiško of the Aarhus Centre Tuzla.

‘Fears about Bosnia and Herzegovina’s electricity supply are overblown. If we start reducing our massive energy wastage and invest more in solar and wind, Tuzla 7 can easily be substituted’, he added.

Bosnia and Herzegovina’s independent transmission system operator has confirmed (1) that even if Tuzla 7 is not built, the electricity supply will not be endangered until at least 2030, and even then only if electricity consumption is at the higher end of what is expected.

‘Tuzla 7 is a relic from a bygone age. Just like Slovenia’s notorious Šoštanj unit 6 (2), it would end up as a liability for Bosnia and Herzegovina due to the unrealistically low coal prices used in the feasibility study and the inevitable introduction of carbon pricing’ (3) said Pippa Gallop of CEE Bankwatch Network.

For additional information please contact:

Denis Žiško

Aarhus Centre, Tuzla

denis.zisko@ekologija.ba

Skype: denis.zisko

Mob: +387 61 140 655

Pippa Gallop

CEE Bankwatch Network

pippa.gallop@bankwatch.org

Skype: pippa.gallop

Mob: +385 99 755 9787

Notes for editors

1. BIH Independent System Operator, Indicative Generation Development Plan 2022-2031, p.43 https://www.nosbih.ba/files/2021/04/20210402-lat-Indikativni-plan-razvoja-proizvodnje-2022-2031.pdf

2. Around a decade ago, despite warnings from NGOs and others, Slovenia made the mistake of starting to build the Šoštanj 6 lignite unit, which ended up twice as expensive as planned, with 12 people being charged with offences including money laundering. The unit started commercial operations in 2016, and every year since then, the Šoštanj plant has made huge losses. In April it was reported that this year’s losses may top EUR 150 million. https://balkangreenenergynews.com/eles-ceo-slovenia-must-set-coal-phaseout-date-as-soon-as-possible/

3. For more on the feasibility study issues, see for example https://unearthed.greenpeace.org/2020/01/14/china-belt-and-road-coal-plants-in-bosnia-serbia-balkans/

Members of the Romanian Parliament attempt to scapegoat environmental NGOs for increasing electricity and gas prices

The parliamentary committee [1] was set up to find out why electricity and gas prices are on the rise in Romania. Not attending, according to the invitation letter, may result in a criminal investigation for obstructing “efforts to find out the truth”.

The organisations are well known for their efforts to protect nature – including through litigation – from environmentally damaging energy infrastructure projects. The projects halted as a result of NGOs exposing severe breaches of environmental impact assessment legislation include lignite mine expansions and the construction of a hydropower complex in the Jiu Gorge National Park. Their fight to stop illegal deforestation in protected areas to make room for energy infrastructure is equally well known.

In several cases, such projects reached the construction phase due to environmental authorities’ incapacity or unwillingness to enforce national and European environmental law during the permitting processes. In early November, representatives of Hidroelectrica (the state-owned company promoting the Jiu Gorge hydropower project), the National Environmental Protection Agency and the National Agency for Protected Areas appeared in front of the same parliamentary committee and made no secret of the fact that they are seeking ways to legalise the project [2], which is more than half built, and that environmental watchdogs are making this harder for them.

The parliamentary committee seeks answers to several questions:

1.”What are the main gas and electricity projects that cause such irreversible environmental harm that you want stopped?”;

2.”What are the main investments in the energy sector that your organisation stopped?” and

3.”What are your solutions so that energy projects of national interest can be eventually implemented, in accordance with all EU and national laws?”

Despite the fact that electricity and gas price rises have affected most European countries, the parliamentarians in this committee appear to believe that the recent increases are related to the fact that the courts declared these projects illegal.

One of the committee members is a former energy minister, during whose mandate the controversial hydropower project in the Jiu Gorge National Park was green-lighted, only to have its construction permit annulled by court a year later in a case brought by these environmental groups.

The hydropower project received construction permits in 2012 and 2016, after the Jiu Gorge had been declared a National Park, based on the old environmental permit, without an adequate environmental impact assessment. [3] The project would irreversibly destroy the last free flowing big river in Romania.

“This is an unprecedented act of intimidation of civil society and a blatant attempt to waive the law when it suits state-owned companies, with the support of environmental authorities which allowed for this to happen in the first place”, said Gabriel Paun, of Agent Green.

“Why is a parliamentary committee trying to discuss matters already decided by the courts? It seems that separation of powers is not a concept that these politicians think applies in real life, and the failure to understand the current crises is clear as day”, added Bankwatch Romania’s Ioana Ciuta.

“The fact that NGOs are being asked to explain themselves for doing exactly what watchdog NGOs are supposed to do in a society governed by the rule of law is simply unacceptable. Legislators targeting civil society suggests that Romania is slowly moving in the direction of other illiberal regimes in Europe,” commented Mark Martin, executive director of CEE Bankwatch Network, on behalf of four European civil society groups. “European NGOs – CEE Bankwatch Network, Europe Beyond Coal, Greenpeace CEE Romania, and Instituto Internacional de Derecho y Medioambiente – stand in solidarity with our Romanian colleagues, and affirm all their support and expertise in countering such acts of intimidation”, he added.

For additional information please contact:

Ioana Ciută, president, Bankwatch Romania, ioana.ciuta@bankwatch.org; +40724020281

Cătălina Rădulescu, lawyer, Agent Green and Bankwatch Romania, catalina.radulescu@gmail.com, +40745138165

Notes for editors:

[1] https://lege5.ro/gratuit/ha4dgnjqga2q/hotararea-nr-37-2021-privind-infiintarea-unei-comisii-parlamentare-de-ancheta-pentru-stabilirea-cauzelor-cresterii-substantiale-a-preturilor-gazelor-naturale-si-energiei-electrice

[2] https://www.agerpres.ro/economic-intern/2021/11/10/badea-hidroelectrica-investitia-de-la-bumbesti-se-afla-in-faza-avansata-ni-se-cere-sa-protejam-un-rac-care-nu-a-fost-gasit-niciodata–812010

[3] The total installed capacity of the three Jiu Gorge powerhouses would be 65MW, and the estimated gross annual production 260 GWh. However, environmental experts say that the flow of the river is currently much reduced, compared to the 1970s when the plans were first drawn up, and in addition to irreversible damage to biodiversity, the hydropower plants would generate almost no electricity in dry summer months. By comparison, the same amount of electricity could be generated annually in a solar-PV farm of approx. 100MW installed capacity. Romania currently has only 600MW in large-scale generation photovoltaic parks.

[4] The 2017 final court decision annulling the construction permit

Major setback on transparency at the EIB

The new policy [1] further deteriorates transparency conditions at the EIB and does not adhere to transparency standards of similar international financial institutions.

The EIB Directors – representing the 27 shareholders of the bank – adopted the policy during their monthly Board Meeting. Together with the management of the EIB, they decided to ignore the demands from 53 civil society organisations [2] formulated during the public consultation process.

They also openly disregarded the suggestions of the European Ombudsman presented to the EIB in the course of an investigation on how the bank should improve disclosure and dissemination of environmental information [3].

This decision also demonstrates the little attention paid to the European Parliament’s position. In two reports adopted in July 2021 [4], parliamentarians expressed concerns about the proposal for a new EIB transparency policy that “falls short of meeting the demands made by Parliament and civil society organisations to step up its transparency policy in line with the best practices and standards employed by other financial institutions”. Central to both reports was the concern regarding the lack of transparency on the use of financial intermediaries like commercial banks and investment funds, and the need to end secrecy around the meetings of EIB governing bodies.

In particular, the new policy does not require the EIB to proactively – and before it makes final decisions – publish information on the project if finances, including:

Which projects the EIB choses to finance and how it makes these decisions;
Which projects are funded through intermediaries; and,
What are the project’s impacts and how projects are monitored as they are being implemented.

Anna Roggenbuck, Policy Officer at CEE Bankwatch Network said: “The EIB claims of supporting human rights or being a climate leader are not trustworthy with the current level of secrecy in the bank. The citizens remain with extremely limited access to relevant social, human rights and environmental information on projects which impact them. This prevents their participation in decision-making and effective dialogue with the bank. It is incomprehensible that the EU’s bank resists adhering to internationally recognised transparency standards of similar banks and it denies providing information timely. Moreover, it added new exceptions to disclosure to already existing ones which it tends to overuse.”

Xavier Sol, Director at Counter Balance said: “Citizens deserve more than a bank openly deciding to turn its back on transparency. Public scrutiny is necessary for European institutions to be trusted, and yesterday’s decision is both a disgrace and a missed opportunity. At a time when public finance is standing at the heart of recovery efforts at European level, decisions that will impact the future of our societies should not take place behind closed doors.”

ClientEarth Lawyer Sebastian Bechtel said: “Despite great promises to lead the fight against climate change, the EIB Directors’ decision actively blocks people from verifying whether public money is truly used for this purpose. This is a shame. At a time where everyone is trying to claim green credentials, we need to be able to access evidence that the EIB is not greenwashing its activities but really putting its money where its mouth is.”

For additional information please contact:

Anna Roggenbuck
Policy Officer
CEE Bankwatch Network
+48 509970424
annar@bankwatch.org

Xavier Sol
Director
Counter Balance
+ 32 (0) 4 732 238 93
xavier.sol@counter-balance.org

Sebastian Bechtel
Environmental Democracy Lawyer
ClientEarth
+32 (0) 2 808 8862
SBechtel@clientearth.org

Notes to editors:

[1] The revised draft Policy that was submitted for the Board’s approval is available here: https://consult.eib.org/consultation/tpconsultation-2020-en/user_uploads/draft_revised_eib-tp_-_october_2021_en.pdf
[2] A Joint CSO Submission on the Draft Revised Version of the EIB Transparency Policy (March2021) https://bankwatch.org/wp-content/uploads/2021/03/EIB-Transparency-Policy-Joint-Submission.pdf
[3] See preliminary findings for case 1065/2020/PB (https://www.ombudsman.europa.eu/en/doc/correspondence/en/142831) and for case 1251/2020/PB (https://www.ombudsman.europa.eu/en/doc/correspondence/en/142832)
[4] 2020/2245(INI), Control of the financial activities of the European Investment Bank – annual report 2019 (7 July 2021), https://www.europarl.europa.eu/doceo/document/TA-9-2021-0332_EN.html
2020/2124(INI), Financial Activities of the European Investment Bank – annual report 2020 (7 July 2021), https://www.europarl.europa.eu/doceo/document/TA-9-2021-0331_EN.html

The EIB cannot become a ‘climate leader’ while failing on transparency

The EIB – the world’s biggest international financier – portrayed itself as a climate leader at COP26 [1]. But we don’t know to what extent this assumption is true since crucial information is kept secret – the bank being far behind its peers when it comes to transparency.

Civil society organisations have been for years now calling on the EIB to increase transparency in its lending activities. What the EIB is proposing in its new policy further deteriorates transparency conditions and falls short of what is required by EU legislation.

The EIB has now published its final draft of the revision, which will be discussed and likely adopted by its Directors during their Board Meeting on the 17th November. The draft however ignores the demands from 53 civil society organisations [2] brought up during the public consultation and offers nothing to improve the level of transparency at EIB.

It also openly disregards the suggestions of the European Ombudsman presented to the EIB in the course of an investigation on how the Bank could improve disclosure and dissemination of environmental information [3].

Civil society organisations are calling on the EIB Board members to amend the Policy so that the EIB is required to proactively – and before it makes final decisions – publish information on the project it finances, including:

Which projects the EIB chooses to finance and how it makes these decisions;
Which projects are funded through intermediaries, given the bank lends to numerous commercial banks and investment funds, who then fund specific projects; and,
What are the project’s environmental, social and human rights impacts and how projects are monitored as they are being implemented.

Anna Roggenbuck, Policy Officer at CEE Bankwatch Network said: “Just transition will not happen if citizens will be cut off from information. The EIB must ensure they have access to all relevant information on projects which impact them. The EIB has to start publishing the information timely, stop overusing exemptions to disclosure and put clear obligations on its clients so that it can prove it invests in the interest of citizens and their territories.”

Clara Bourgin, Policy and Advocacy Officer at Counter Balance “The EIB is seeking to become the “EU Climate Bank” and has been tasked to play a key role in the financing of the EU Green Deal. While some of its recent climate commitments are welcome, the EIB cannot become a true climate leader and contribute to a just transition if it keeps hiding crucial information about the projects it supports.”

ClientEarth Lawyer Sebastian Bechtel said: “The EIB has made some great promises at the COP but we can’t believe them blindly. We need to have evidence that it is actually putting its money where its mouth is. That is why transparency is crucial and should be an absolute priority for the bank.”

For additional information please contact:

Anna Roggenbuck
Policy Officer CEE Bankwatch Network
+48 509970424
annar@bankwatch.org

Clara Bourgin
Policy and Advocacy Officer
Counter Balance
+ 32 (0) 4 749 445 85
clara.bourgin@counter-balance.org

Sebastian Bechtel
Environmental Democracy Lawyer
ClientEarth
+32 (0) 2 808 8862
SBechtel@clientearth.org

Notes to editors

[1] EIB at COP26

[2] A Joint CSO Submission on the Draft Revised Version of the EIB Transparency Policy (March2021)

[3] See preliminary findings for case 1065/2020/PB and for case 1251/2020/PB

New Bankwatch analysis: Tuzla, in Bosnia and Herzegovina, could be a regional leader in sustainable heating

The city of Tuzla is one of the most polluted in the Western Balkans and across the EU, but the closure of three coal units at the plant within the next decade means that the city faces a unique opportunity to modernise its heating and energy systems and turn into a model for the region.

An analysis by independent consultant Bernard Schneider, commissioned by CEE Bankwatch Network, examines technical options for replacing the coal-based district heating currently under use in the city with renewable solutions – and finds that this is entirely feasible.

According to the analysis, the optimal scenario envisages the transformation of the district heating grid into a low-temperature, fourth generation one, where heat pumps and subsurface storage capacity play an important role. This solution will require deep renovation to bring about massive improvements to the efficiency of heat use in buildings, to reduce the input heat by at least 50 per cent.

Solar thermal energy would be exploited wherever possible, including building a large solar thermal or PV plant on a brownfield site. Wind turbines would have to be built in order to produce the electricity required for heat pumps, which could be included in a power-to-heat-to-power concept in order to improve their economic performance. It is assumed that the majority of these heat pumps will draw energy from ambient air, together with ground water and shallow geothermal heat wherever sites will allow this.

Natasa Kovacevic, CEE Bankwatch Network: “The commitments that countries are making at the ongoing COP26 should serve as a reminder to authorities in Bosnia and Herzegovina that it’s imperative to phase out coal by 2035 at the latest and put an end to delusions about a new coal unit in Tuzla. Money and solutions exist to clean up the city’s energy and heating systems, but a political decision is needed.”

“The planning of advanced low-temperature heating solutions in Tuzla needs to start now, because any feasible technology, in combination with energy efficiency measures, will take several years to be implemented – from securing investments, to undergoing permitting procedures, to completing construction, to actual operation. The time for the authorities in Tuzla to take a decisive step in this process is now.”

Denis Zisko, Center for Ecology and Energy Tuzla: “This analysis is clear evidence that Tuzla has a viable alternative. The question remains, will Tuzla city authorities have enough political courage to start the process of decarbonization of the district heating system, or will the citizens of Tuzla continue to be hostages of coal and Elektroprivreda d.d. Sarajevo, due to purely political interests?”

Notes for editors:

Read the analysis here: https://bankwatch.org/publication/summary-of-the-study-analysis-of-sustainable-heating-options-for-the-city-of-tuzla-federation-of-bosnia-and-herzegovina

For more information, contact:

Natasa Kovacevic

Bankwatch district heating coordinator

Phone: +38267030033

Natasa.kovacevic@bankwatch.org

Denis Žiško

Centar za ekologiju i energiju

Mob: +387 61 140 655
denis.zisko@ekologija.ba

As world leaders pledge to end coal, Serbia lets polluters continue illegal operations

Of the 227 facilities listed by the Ministry for Environmental Protection, only 46 have obtained permits since the Law entered into force in 2004. That means, no fewer than 181 facilities are operating without environmental permits, ie. illegally.

This includes many of Serbia’s largest polluters, including all the coal power plants operated by state-owned utility Elektroprivreda Srbije (EPS), the mining complex in Bor operated by Zijin Bor Copper doo, as well as the iron factory complex operated by HBIS Group Serbia.

Permits are vital to make sure toxic chemicals from industrial operations are capped. Plants operating without them put people and nature in serious and continuous danger.

The draft amendments (1) to the Law on Integrated Prevention and Pollution Control would postpone the deadline for issuing integrated environmental permits for existing plants until 31 December 2024. They were adopted at a government session on October 21, without any public debate, and will almost certainly now be approved by the National Assembly.

Serbian non-governmental organisation the Renewables and Environmental Regulatory Institute (RERI) today wrote to the Serbian Public Prosecutor requesting intervention.

This is already the second time that the deadline for existing plants to obtain environmental permits is being extended – the latest deadline expired on 31 December 2020.

“The timing could hardly have been more ironic,” said Jovan Rajić from RERI. “At least 23 new countries have pledged to phase out coal power this week at COP26 (2) but the Serbian government is handing out new privileges to polluters.”

‘Postponing the deadline for issuing environmental permits is a clear signal to polluters that laws do not apply to them and that the State will always be there to support them in their lawlessness because it does not care for the laws and is not able to implement them,’ added Rajić.

RERI has so far submitted five requests for extraordinary inspections, as well as three requests for initiation of commercial offence procedures against the polluters responsible, but no fines have been imposed yet.

Serbia’s coal plants are among the most deadly in Europe, pumping out more sulphur dioxide than all the 221 coal power plants in the EU put together (3).

“More than three million people across Serbia are exposed to excessively polluted air. The current state of environmental degradation puts Serbia in the top 10 countries globally with the highest number of premature deaths attributed to pollution. Postponing the issuance of environmental permits runs contrary to the pressing need to address environmental challenges across Serbia,” said Ognjan Pantić from Belgrade Open School.

The country is already subject to a dispute settlement case opened earlier this year by the Energy Community Secretariat due to breaches of the Large Combustion Plants Directive (4), but Serbia’s sulphur dioxide emissions from coal plants in 2020 were even higher than in previous years.

“More than half of the estimated 19,000 deaths caused by Western Balkan coal power plants in 2018-2020 took place in the EU (5), and at the same time the EU is trading electricity with the region, so it bears both the consequences and part of the responsibility. The European Commission has to take stronger action to include penalties in the Energy Community Treaty if we are to see any improvement in the situation,” said Ioana Ciuta of CEE Bankwatch Network.

“By once again allowing Serbia’s power plants to operate without environmental permits, Serbia is knowingly putting its citizens’ health and the environment at risk. Serbians are the ones that will pay the price for the Government’s flippant attitude towards its own laws. At this crucial time in the fight to protect nature and our climate, Serbia should be putting its people’s right to a healthy environment at the heart of decision-making, not using their legal power to maintain the status quo,” said ClientEarth’s energy lawyer Maria Jolie Veder.

Contacts

Jovan Rajić, RERI

jovan.rajic@reri.org.rs

+381 60 3637171

Ioana Ciuta, CEE Bankwatch Network

ioana.ciuta@bankwatch.org

+40724020281

Bianca Vergnaud, ClientEarth

bvergnaud@clientearth.org

+32 471 88 70 95

Ognjan Pantić, Belgrade Open School

ognjan.pantic@bos.rs