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EU complicity in colossal, lawless air pollution from Balkan coal plants must prompt swift action – new report

The report, Comply or Close, launched to mark the International Day of Clean Air for blue skies, finds that nearly 12,000 of these deaths were due to breaches of legally binding pollution limits. More than half of these preventable deaths took place in the EU, which imports 8 percent of the electricity produced by these heavily polluting plants. 

Air pollution from coal plants in Serbia, Kosovo, Bosnia and Herzegovina, North Macedonia and Montenegro affects not only people in their own countries but also those in neighbouring EU countries, particularly in Romania, Hungary and Greece, according to the report. 

“This report lays bare the human toll from the continued breaches of coal-based electricity in the Western Balkans. Governments of the region must immediately begin a rapid and just transition to sustainable energy systems, with EU support,” said Pippa Gallop, Southeast Europe Energy Advisor at CEE Bankwatch Network. 

The Large Combustion Plants Directive – an EU directive to reduce emissions of dangerous substances, adapted for countries parties to the Energy Community Treaty – legally requires these countries to rein in air pollution from their power plants since 2018. Yet, as the report finds, in 2020, the Western Balkans’ 18 coal plants emitted two and half times as much sulphur dioxide (SO2) as all 221 coal power stations in the EU combined. 

The new report reveals the extent to which coal plants in the Western Balkans have not only been flouting the countries’ legal obligations, but also taking an immense toll on people’s lives in the region and beyond. 

According to the analysis, 3700 people have died in the Western Balkans and 7000 in the EU only because of Western Balkan coal power plants breaching pollution limits between 2018 and 2020. Nearly a thousand more people are estimated to have died in other regions due to choking air pollution from the same power plants. 

In the three years since air pollution limits became obligatory under the Energy Community Treaty, coal-fired power plants in Serbia, Bosnia and Herzegovina, North Macedonia and Kosovo have been emitting SO2 at levels that are at least six times the legal limit [1]. 

In Serbia alone, coal plants that are subject to the National Emissions Reduction Plan emitted in 2020 more SO2 than the entire EU coal power plant fleet.  

The same year, Bosnia and Herzegovina’s Ugljevik power plant was the region’s worst polluter, single-handedly breaching the combined SO2 ceiling for all four countries. The unit, just like Serbia’s Kostolac B, has a desulphurisation system fitted, but it has not been put to use. Worse still, an additional 700 MW of new lignite capacity is still planned at the Ugljevik power plant. 

All four countries with National Emission Reduction Plans – Serbia, Bosnia and Herzegovina, Kosovo and North Macedonia – are currently facing dispute settlement cases for failing to comply with the pollution limits in the Plans in 2018 and 2019. Another dispute settlement case was opened against Montenegro in April 2021 after the Pljevlja power plant continued operating beyond its 20,000 hours quota under the Large Combustion Plants Directive’s “limited lifetime derogation”. 

“Those Western Balkan Governments which have not yet done so, must set a date for an urgent coal phaseout”, said Davor Pehchevski, Balkan Air Pollution Campaign Coordinator at CEE Bankwatch Network. “For power plants which cannot be closed immediately, governments must limit their operating hours until emissions standards are met, in order to save lives”. 

“In parallel, investments in energy efficiency measures and renewable energy must be urgently stepped up, and plans for a just transition for coal workers and communities need to be drawn up together with all relevant stakeholders, especially the affected communities.” 

According to the report, the electricity generated by these coal plants and traded with the EU in 2020 — although making up a tiny fraction of EU electricity consumption — produced as much SO2 as half of the EU’s coal power plants combined.  

“As our report shows, when the EU trades electricity with its Western Balkan neighbours, it bears both the impacts and part of the responsibility for the resulting out-of-control air pollution. The EU must also help countries in the Western Balkans to move beyond coal by taxing fossil-fuel based electricity imports and ensuring effective enforcement of the Energy Community Treaty”, said Lauri Myllyvirta, Lead Analyst at the Centre for Research on Energy and Clean Air. 

“Western Balkan governments cannot dream of EU membership while ignoring pollution control rules. To avoid this kind of flagrant non-compliance, enforcement of the Energy Community Treaty must be made a priority. The European Commission and EU governments must introduce effective penalties”, concluded Ioana Ciuta, Energy Coordinator for the Western Balkans at CEE Bankwatch Network. 

The report findings, as well as additional context, can be found at https://www.complyorclose.org 

 

Contacts 

Pippa Gallop
Southeast Europe Energy Advisor, CEE Bankwatch Network
pippa.gallop@bankwatch.org
+385 (0)99 755 9787
Twitter: @pippagallop 

Ioana Ciuta
Energy coordinator for the Western Balkans, CEE Bankwatch Network
ioana.ciuta@bankwatch.org
+40724020281
Twitter: @unaltuser 

Davor Pehchevski
Balkan Air Pollution Campaign Coordinator, CEE Bankwatch Network
davor.pehchevski@bankwatch.org 
+38971264087
Twitter: @dpehche 

Lauri Myllyvirta
Lead Analyst, Centre for Research on Energy and Clean Air (CREA)
lauri@energyandcleanair.org
+358 50 3625 981
Twitter: @laurimyllyvirta

 

Notes 

[1] 2019 and 2020 editions of the “Comply or Close” reports:  

https://bankwatch.org/publication/comply-or-close-how-western-balkan-coal-plants-breach-air-pollution-laws-and-what-governments-must-do-about-it 

https://bankwatch.org/publication/complyorclose2020 

 

See as well: Mortality in top 10 most affected countries due to electricity imports and emissions exceedances (2018-2020)

The EU Bank about to fail becoming a responsible lender

The EIB Environmental and Social Sustainability Framework (EESF) is the framework that should guide all the bank’s operations so that it “actively contributes to sustainable development and inclusive growth”¹.

Despite its declared commitments to step up the positive impact of its operations, the draft EESF proposed by the EIB is substandard, according to comments from civil society groups sent to the bank. In particular, CSOs highlight how poorly human rights considerations are embedded in the proposed EIB framework. 

In 2020, a study from CEE Bankwatch Network and Counter Balance exposed the numerous human rights violations and environmental destructions linked to EIB-financed projects, from Kenya to Georgia and Bosnia-Herzegovina. In Nepal, a recent investigation showed that the EIB disbursed funds for a transmission line project despite the operation clearly breaching its own environmental and social standards, acknowledging claims made by local communities impacted by the project. 

Last month, echoing civil society demands, the European Parliament urged the EIB to “increase its monitoring of and reporting for its projects outside of the EU” and “strengthening human rights due diligence”. The two Parliamentary reports also asked the EIB to increase its presence on the ground and to have more staff focusing on development issues, for the bank to truly uphold the “do no significant harm” principle in all its operations.

Still, the bank did not address any of these demands. For instance the EIB still refuses to carry out dedicated Human Rights due diligence, and dismissed CSO demands for a more open and meaningful consultation process.

If the draft proposal is adopted as such, it would undermine the EIB’s social and environmental commitments and the bank would lag behind its peer institutions. Without  stringent due diligence and clear lines of responsibilities, the EIB could end up acting no better than the average commercial bank, CSOs warn. The EU’s house bank must not lose sight of its public mission to bring genuine benefits to the territories and people impacted by its operations.

The EIB is the financial arm of the European Union and is currently transforming into the ‘EU Climate Bank’. In addition, it is exploring plans to step up its development operations outside of Europe. Its macroeconomic power is becoming increasingly important, with the bank being at the heart of the financing of the European Green Deal and the EU recovery plans to address the economic impacts of the COVID-19 pandemic.

 

Xavier Sol, Director at Counter Balance, said: “Over the last years, the EIB has taken valuable commitments on climate and has become a major financial institution. Still, it is not walking the talk. What it proposes now is a weak set of environmental and social standards, for which the EIB would largely delegate its responsibilities to its clients. It is urgent that the EIB President Hoyer and the bank’s shareholders reverse this trend and ensure the EIB becomes a responsible lender and carries out proper due diligence”. 

Aleksandra Antonowicz-Cyglicka, Human Rights and Community Support Coordinator at CEE Bankwatch Network, said: “As an EU body, the EIB must stand by human rights. It must not be involved in projects which violate fundamental rights otherwise it undermines the EU’s global credentials. As proposed, the Environmental and Social Sustainability Framework does not safeguard human rights. We expect from the EIB’s management to improve its human rights due diligence and tighten requirements for project promoters”. 

Gaelle Dusepulchre, Permanent representative to the EU at FIDH EU office said : “Human rights and the principle of community led development should be the basic principles of operations for the EIB. The lack of clear responsibilities of the EIB and its clients to respect human rights is a real matter of concern. We urge the Bank to develop a comprehensive policy on human rights. This policy should put the Bank’s policies and operations in line with its human rights obligations, so that the EIB operations could truly benefit the ones to which they are supposed to benefit: the population”.

Catherine Gatundu, Head of resilient livelihoods and climate at Action Aid, said: “Considering the climate and development ambitions of the EIB, it is absolutely essential that women and communities are heard in decisions affecting their lives and environment. Urgent steps are needed to make this review process, and any investment decisions that follow, inclusive and meaningful, also for people living in the Global South”.

Ouafa Haddioui, Program Coordinator at Arab Watch Coalition, said: “While many EIB countries of operations of the EIB face a Human Rights crisis, the EIB proposal still lacks substantial progress to implement commitments on Human Rights. This may pave the way for damaging consequences on people’s conditions. It was also disappointing that the Public Consultation largely excluded local communities by being carried out only with the official EU languages”.

 

1. The ESSF is made of an overarching Policy document and of 11 Standards covering a variety of topics like public participation, rights of indigenous people or biodiversity protection.

*Several joint CSO contributions are available: 

European development bank’s new fossil fuels pledge falls short of aligning with the Paris Agreement

Bankwatch welcomes the EBRD’s decision to stop financing exploration and production of oil and gas and to develop a methodology to assess projects’ climate footprint as part of the global effort to tackle the climate crisis. 

This is a step in the right direction, but people in the EBRD’s countries of operation, some of them among the most vulnerable to the impacts of the climate crisis, deserve to know the Bank’s investments will no longer back fossil fuel dependent economies. 

The EBRD has in fact already started phasing out its support for oil exploration and extraction since 2018. So, yesterday’s commitment to keep investing in midstream and downstream fossil fuels projects is at odds with the latest call from the International Energy Agency (IEA) to cease support for fossil fuels. It also represents a failure to recognize the gravity of the crisis, not least, since the Bank, with its focus on economic transition, was well positioned to send a strong signal to its countries of operation and their markets concerning the energy transition. 

According to the IEA, international financial institutions have to scale up their lending for energy efficiency and renewable energy in developing and emerging economies as these countries have to increase their spending seven-fold before 2030 in order to stay on a path compatible with the Paris Agreement. 

The credibility of the EBRD’s approach to fossil fuels projects will be judged by the success of its new methodology for assessment of proposed projects’ climate footprint, so that indeed those expected to be emission-intensive would not qualify for EBRD support. 

As heat records are shattered from the Pacific Northwest to the United Arab Emirates, it becomes abundantly clear we are in the midst of a climate emergency. The EBRD has played a role in this. Bankwatch’s latest analysis shows that in 2019-2020 alone the Bank has extended EUR 1.5 billion in public money to the fossil fuels industry [1]. 

Bankwatch and many other civil society groups have been calling on the EBRD to end its support for the fossil fuels industry for over a decade. And yesterday’s announcement is a recognition the Bank has a duty to facilitate the much needed energy transition in its regions by urgently shifting its investments from fossil fuels to energy efficiency and renewables. Business as usual is no longer an option. 

The Bank acknowledged the need to boost its support to developing the necessary policies to enable its countries of operation to achieve net zero emissions by 2050. The Bank also needs to start demanding such plans from all its corporate clients if it is to ensure that EBRD investments indeed support clients on their decarbonisation paths. 

 

For additional information please contact: 

Gligor Radečić
Gas campaigner, CEE Bankwatch Network
gligor.radecic@bankwatch.org
+385977454467
Twitter: @gradecic 

Secret Chinese deal on Bosnia-Herzegovina coal plant must be urgently stopped, say NGOs

The call follows surprise news on the signing of a construction contract for the Ugljevik 3 plant between the Chinese company China Electric and the Polish-Chinese Sunningwell International LTD(1), neither of whom were publicly known to be participating in the project until now.

The concession for the project has been held since 2013 by Comsar Energy, apparently owned by Dagestan billionaire Rashid Serdarov. In 2020 Republika Srpska’s Concession Commission stated that the concessionaire was not fulfilling its obligations (2) but did not recommend action to tackle the issue.

“The Ugljevik 3 project has plagued energy sector planning for many years, and the authorities tacitly allow the investor to violate all possible contracts and laws. Now suddenly Chinese companies appear from nowhere to save another dirty project that was doomed from the start. We are asking the Republika Srpska Government why it has not yet terminated the contract with Comsar Energy, and why it is even considering a new coal project in this era?” said Majda Ibraković from the Center for the Environment.

Earlier this year, the Government of Republika Srpska unjustifiably extended Comsar Energy’s concession for construction and operation of Ugljevik 3 from 30 to 44 years (3), despite the fact that the concession agreement was violated on several occasions, because permits were not obtained or preparation works started. Previously, the same Government allowed Comsar Energy to increase the capacity of Ugljevik 3 to 700 MW, contrary to Republika Srpska’s Energy Development Strategy.

Wawa Wang from Just Finance International added: “Allowing its state-owned enterprise(4) to undertake a new coal project contravenes China’s climate pledge to address the growing coal fleet in the Balkans and other BRI countries enabled by Chinese companies and state funds(5). China has not only avoided addressing concerns by NGOs and the UN special rapporteurs (6) on the undermining of legal requirements enabled by Chinese financed Bosnian coal projects, but also greenlighted a new project – once again – without a valid Environmental Impact Assessment.“

The Center for Environment has several times addressed the Republika Srpska Government and the Ministry of Energy and Mining with requests for information on the basis for extending the concession and increasing the installed capacity, but so far has not received a concrete and justified answer from the institutions. 

 

Contacts:

Majda Ibraković, Center for Environment, Bosnia and Herzegovina

majda.ibrakovic@czzs.org 

+387 65379917

Wawa Wang, Just Finance International Programme, VedvarendeEnergi, Denmark

ww@ve.dk

+45 8194 9469 (Signal) 

Pippa Gallop, CEE Bankwatch Network

pippa.gallop@bankwatch.org

+385 99 755 9787

Skype: pippa.gallop

Notes for editors:

  1. Capital.ba, 29 June 2021, https://www.capital.ba/kinezi-preuzimaju-ugljevik-3-od-rasida-serdarova
  2. Republika Srpska Concession Commission annual report for 2019, 2020. https://koncesije-rs.org/wp-content/uploads/2021/01/2019-izvjestaj-lat.pdf
  3. Capital.ba, 11 February 2021, https://www.capital.ba/vlada-produzila-serdarovu-koncesiju-za-te-ugljevik-3-na-44-godine/
  4. Sinomach WeChat account, 24 June 2021, https://mp.weixin.qq.com/s/n5qYPMlWX096lVwbA3ZUCg
  5. China financed over USD 43 billion in overseas coal projects since 2000, https://www.bu.edu/cgef/#/all/EnergySource 
  6. https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=26016

European bank challenged on human rights credentials

See our new “No time to celebrate: a breakthrough for human rights is needed after 30 years of the EBRD” report here.

Established in 1991 to rebuild the economies of eastern Europe and the former Soviet Union, the EBRD has since expanded to include North Africa but remains the only bank of its kind with a mandate to promote democracy and the rule of law.

Last year EBRD investments reached a record high of EUR 11 billion. But the countries that received the lion’s share are Turkey and Egypt, two places where respect for human rights and democratic governance is on the backslide. 

The EBRD in theory follows a ‘more for more, less for less principle,’ meaning that investment volumes decrease where there is a deterioration of freedoms. 

In reality, the bank has nearly doubled its investments in Turkey from EUR 1 billion in 2019 to EUR 1.7 billion in 2020 during a deepening human rights crisis that saw a massive erosion of civil liberties.

The report surveys bank lending in countries where respect for democracy is at its lowest: Belarus, Egypt, Turkmenistan, Turkey and Uzbekistan. A case study on Ukraine questions the EBRD’s approach of investing in the private sector.

It provides case evidence of EBRD clients benefiting from a weak rule of law, dysfunctional judicial systems and the perks of crony capitalism through fast-tracked permitting, sectoral monopolies, tax breaks, state grants and all sorts of other state interventions. 

Land confiscation organised by the state has left farmers destitute and exploited at the hands of new corporate players. Police are sent to quash protests against oligarchs, while dependent courts are used to intimidate critics through strategic lawsuits against public participation. 

Fidanka McGrath, EBRD policy officer with CEE Bankwatch Network, said, “The EBRD can and should do more to promote democracy and protect human rights. We call on the EBRD to improve its policy dialogue with authoritarian governments, to strengthen the integrity checks and the application of its human rights safeguards.”

Kate Watters, executive director of Crude Accountability, said, “Thirty years of engagement with an authoritarian regime like Turkmenistan has failed to produce a market economy, pluralism, or democratic reforms. We call on the EBRD to sincerely and seriously return to Article 1 as a founding principle of engagement and hold the Turkmen government accountable for its gross violations of human rights.”  

Umida Niyazova, executive director of Uzbek Forum for Human Rights, said, “EBRD’s investments in Uzbekistan’s cotton sector give reason for concern. Companies that have historically been linked to serious labor rights violations, including forced child and adult labor, have been awarded multi million dollar loans without sufficient social and environmental due diligence. In a country where civil society and independent trade unions are seriously constrained, there must be more checks and balances before approving funds.”

Leslie Piquemal, senior EU advocacy representative with CIHRS, said, “The EBRD must implement its ‘more for more, less for less’ principle in countries of operations. Egypt is in blatant non-compliance with the EBRD’s political mandate. The country’s tens of thousands of political prisoners, systematic use of torture, and frequent enforced disappearances attest to that. To uphold its mandate and protect its over 7 billion euros’ investment in Egypt, the Bank should invest political capital in human rights, the rule of law and democratic governance.”

 

For more information contact

Fidanka McGrath, EBRD policy officer

CEE Bankwatch Network

Email: fidankab@bankwatch.org

 

Kate Watters, executive director 

Crude Accountability

Email: kate@crudeaccountability.org

 

Umida Niyazova, executive director

Uzbek Forum for Human Rights

Email: umida.niyazova@gmail.com 

 

Leslie Piquemal, Senior EU Advocacy Representative

Cairo Institute for Human Rights Studies (CIHRS)

Email: leslie@cihrs.org

 

Notes

The report “No time to celebrate: a breakthrough for human rights is needed after 30 years of the EBRD” is available here https://bankwatch.org/publication/no-time-to-celebrate-a-breakthrough-for-human-rights-is-needed-after-30-years-of-the-ebrd

The report is prepared by CEE Bankwatch Network, Cairo Institute for Human Rights Studies (CIHRS), Cotton Campaign, Counter Balance, Crude Accountability, Ecoaction and Ekodom, with the support of the Defenders in Development Campaign and endorsed by the following organisations https://bankwatch.org/wp-content/uploads/2021/06/No-time-to-celebrate-endorsements.pdf.

 

Commission must apply spending rules to EU recovery funds before greenlighting national plans

A Bankwatch analysis of the draft spending plans in eight countries of central and eastern Europe finds significant gaps between what Member States propose and what the Commission requires.   In particular, states miss the 37 per cent threshold for total spending in favour of a green transition and to prove that investments will ‘do no significant harm’. These national plans also make use of loopholes to include funding for fossil gas, while allocating paltry sums to address Europe’s worsening biodiversity crisis.  Christophe Jost, EU policy officer with CEE Bankwatch Network, said, “This is not a box ticking exercise. If the plans are not in line with EU rules on climate and biodiversity, then the Commission must send Member States back to the drawing board. We cannot fail to prepare for a green and just transition.”  Dan Thomson, biodiversity policy officer with CEE Bankwatch Network, said, “The ‘do no significant harm’ principle is supposed to be a rigorous and effective tool to ensure investments do not harm climate or nature. Yet, in many cases Member States have failed to properly apply this principle, opening the door for approving harmful measures that will severely impede the achievement of the EU’s climate and biodiversity objectives.”    For more information contact:  Christophe Jost, EU policy officer, CEE Bankwatch Network  Email: christophe.jost@bankwatch.org  Daniel Thomson, EU Policy Officer for Biodiversity, CEE Bankwatch Network  Email: daniel.thomson@bankwatch.org