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New report: hydropower subsidies wreak environmental havoc and line influential pockets in the Western Balkans

CEE Bankwatch Network * Euronatur * RiverWatch * WWF Adria

Brussels, Radolfzell, Vienna, Prague, Zagreb 

The report is available here 

Fuelled by generous state-sponsored feed-in tariffs that contradict EU guidelines on state aid for environmental protection and energy, the number of hydropower plants under 10 megawatts in Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia quadrupled from 108 to at least 488 between 2009 and 2018. 

Whilst the speed of development on solar and wind power projects has been glacial, in 2018 no less than 70 per cent of renewable energy incentives awarded in the region benefited small hydropower. Despite this support, small hydropower only generated 3.6 per cent of total electricity.

This boom in small hydropower has also caused public outrage across the region as rivers and streams, often in ecologically valuable and protected areas like the Stara Planina Nature Park in Serbia and Valbonë Valley National Park in Albania, have been dammed and put into derivation pipes, leaving riverbeds dry and the communities who depend on them without vital sources of water. 

The incentive schemes have lost credibility among the public by benefiting well-connected business people. For instance:

  • North Macedonia’s Deputy Prime Minister for Economic Affairs, Kocho Angjushev – owns at least 27 small hydropower plants – and the president of the main opposition party, Hristijan Mickoski also holds at least 5 concessions.
  • In Serbia, companies connected to Nikola Petrović, the best man (kum) of President Aleksandar Vučić, are among the top beneficiaries of hydropower support.
  • Montenegro’s renewables incentives system has mainly benefited people close to the President, Milo Đukanović. 

Pippa Gallop of CEE Bankwatch Network and lead author of the report, said: “It is high time to end hydropower subsidies in the Balkans. Perceptions that these schemes benefit the wealthy and fuel environmental damage endanger public acceptance of the whole transition to a sustainable and efficient energy system. Those countries which have not done so urgently need to switch to more transparent schemes based on auctions and premiums to ensure affordable and proportionate incentives,” she added.

Ulrich Eichelmann, CEO of Riverwatch, said: “The subsidies for hydro are the major driver of ecological destruction and social conflicts in the region, and worst of all, without generating a noteworthy amount of energy.  Governments need to end incentives for mature technologies such as hydropower. Only technologies which are still developing and whose costs are expected to fall further, like solar and wind, need support.” 

Petra Remeta, Conservation programs director of WWF Adria, said: “The fact is that the  Western Balkan countries have committed to apply EU subsidies rules by signing the Energy Community Treaty and Stabilisation and Association Agreements with the EU, so we call on the European Commission and the Energy Community to make sure this really happens. These rules include sustainability conditions and would help to stop subsidies for the environmental destruction of European rivers”.

Gabriel Schwaderer, Executive Director of Euronatur, said: “Existing feed-in tariff contracts for small hydropower plants need to be reviewed as they are valid for several more years. Any which granted incentives without all the legal conditions being fulfilled or for which the environmental permits have expired must be cancelled.”

Contacts

Pippa Gallop

CEE Bankwatch Network and lead author of the report

E-mail: pippa.gallop@bankwatch.org

Skype: pippa.gallop

Mob: +385 (0)99 755 9787

 

Ulrich Eichelmann

CEO, Riverwatch

Petra Remeta

Conservation programs director, WWF Adria

Anja Arning

Head of Public Relations, Euronatur

E-mail: anja.arning@euronatur.org

+49 7732 9272 13

 

Notes for editors

[1] Montenegro is phasing out renewables incentives altogether and Albania approved a law in early 2017 introducing an auction-based system for larger plants by 2020. North Macedonia has also taken steps towards an auction system, but left feed-in tariffs for hydropower intact, giving it an unfair advantage over solar and wind. The remaining countries – Serbia, Bosnia and Herzegovina and Kosovo – are yet to start with substantial changes to their renewables incentives regimes.

 

New report: Scenarios for a just transition in Jiu Valley, Romania

The alternative scenarios, prepared by the Romanian Center for Economic Policies – Cerope, focus on the development of three main economic sectors: agriculture, industry and services. The analysis shows that, if alternative development scenarios are implemented, thousands of jobs and hundreds of millions of euros can be generated in the region by 2030 – 750 jobs and 88 million euros net profits can be created over the next decade in small-scale farming and animal raising; 1520 jobs and 31 million euros in renewables and energy efficiency; and 434 jobs and 38 million euros profits in tourism and other services. 

The analysis comes at a time when the EU’s Platform for Coal Regions in Transition is paying special attention to the Jiu Valley, this year a focus region for the Platform, and when national authorities are gearing up to prepare a regional development strategy for the region in view of deploying resources from the next EU budget (2021-2027). 

“The EU Coal Platform represents a great opportunity to create jobs in the Jiu Valley, but in order for these new jobs to be sustainable and well-paid, Romanian authorities need to get seriously involved with retraining and creating the necessary infrastructure,” said Alexandru Mustata from Bankwatch Romania.

The report highlights the need for state authorities to prepare the ground for alternative development of the coal region by investing in retraining programmes for the workers, increasing connectivity of the region, strengthening the public administration, prioritising investment areas and facilitating cooperation among local actors. 

“Our ambition is to see the Romanian Ministry of European Funds use this analysis when defining the development strategy for the Jiu Valley. The report indicates clearly that the region’s most valuable resources do not lie underground. The Jiu Valley is well-suited for the development of small scale farming, renewable energy projects and tourism,” said Vlad Catuna, campaign coordinator at Greenpeace Romania. 

During the launch event of the analysis, taking place September 23 in Lupeni, one of the main mining towns in the Jiu Valley, four mayors from the region joined an earlier commitment by local leaders to work together for just transition in the Jiu Valley (a memorandum of understanding was already signed by six Jiu Valley mayors this July in Brussels). 

Read the new report by Greenpeace Romania and Bankwatch Romania

For more information, contact: 

Alexandru Mustata

Bankwatch Romania

alexandru.mustata@bankwatch.org

+4 0726 770 808

Vlad Catuna

Greenpeace Romania

vlad.catuna@greenpeace.org 

+4 0754 029 180

Reversal of subsidies for wind power in Bosnia and Herzegovina prompts legal action

Bosnia and Herzegovina is a signatory to the Energy Community Treaty (1), which prohibits “public aid which distorts or threatens to distort competition by favouring certain undertakings or certain energy resources”. (2)

While the Republika Srpska entity does not have a single wind farm in operation, in March this year, new legislation prevented feed-in tariffs or premiums for wind farms.(3)

Freedom of information requests by the Center for Environment to the Ministry of Industry, Energy and Mining and the Energy Regulatory Commission failed to uncover any evidence backing claims by the Minister for the legislative maneuvering.

The official justification for the end of the incentives was the need to reduce costs of renewable energy support for consumers. (4) In July the Republika Srpska Minister for Industry, Energy and Mining, Peter Đokić, also claimed that wind farms are now viable without incentives. (5) 

Jelena Ivanić of the Center for Environment said, “Republika Srpska’s move to cut incentives for wind farms has left small hydropower as the only renewable technology receiving significant support, in spite of its vulnerability to climate change, its small contribution to overall electricity generation (6) and the enormous damage it is causing Bosnia and Herzegovina’s communities, economy (7) and unique biodiversity. Only small amounts of solar power are being supported and now wind has been excluded, so what exactly is our energy transition going to be based on?”

Pippa Gallop of CEE Bankwatch Network said, “Bosnia and Herzegovina will need to replace its ageing coal plants in the coming years, so this measure is incomprehensible. If Republika Srpska wanted to reduce the cost of renewables support for consumers there were numerous other ways to do it than cutting all incentives for wind farms, such as switching to an auctions and premiums system, reducing the wind quota, or reducing the feed-in tariff across all technologies.”

Contacts

Jelena Ivanić, Center for Environment

jelena.ivanic@czzs.org 

Tel. +387 65 779 467

Pippa Gallop, CEE Bankwatch Network

pippa.gallop@bankwatch.org

Skype: pippa.gallop

Tel: +385 99 755 9787

Notes for editors

  1. For more information, see www.energy-community.org
  2. Article 18 of the Treaty: “1. The following shall be incompatible with the proper functioning of the Treaty, insofar as they may affect trade of Network Energy between the Contracting Parties: (….) (c) any public aid which distorts or threatens to distort competition by favouring certain undertakings or certain energy resources.”
  3. Law on Amendments to the Republika Srpska Law on Renewable Energy Sources and Efficient Cogeneration (No. 02/1-021-250/19)
  4. “The Government of Republic of Srpska approved the Law on Amendments to the Law on Renewable Sources of Energy and Efficient Cogeneration upon an urgent procedure. The reasons for amending this Law are related to the need to limit the fee for stimulating electricity from renewable sources and in the efficient cogeneration which final consumers of electricity are paying. The reasons for adoption of the Law on Amendments to the Law on Renewable Energy Sources and Efficient Cogeneration by Urgent Procedure are related to the need that certain energy producers from renewable sources (wind farms) are excluded from the system of incentives which will limit the growth of electricity bills on this account which would be significant in the following period. For example by exercising the right to incentive for a wind power plant with a 50 MW installed capacity at least 16 million BAM a year needs to be provided. Urgent parliamentary procedure was necessary because some wind farms that are under construction might claim and reserve this right in accordance with the valid law.” Source: http://www.vladars.net/eng/vlada/ic/ns/Pages/The-10th-Government-session-held–.aspx
  5. Vladimir Spasić: Republika Srpska to adopt new renewables incentive schemes by end-2019, Balkan Green Energy News, 4 July 2019.
  6. In 2018, small hydropower plants contributed only 2.6 per cent of electricity generated in BIH according to the State Energy Regulatory Commission (DERK) 2018 Annual Report, December 2018.
  7. Center for Environment: Small hydropower plants cause Bosnia-Herzegovina more than EUR 2 million in losses annually, 30.11.2019

Setting precedent, EU bank to drop all fossil fuels funding beyond 2020

Prague, Brussels – The European Investment Bank, the house bank of the EU, is proposing to end financing for all fossil fuels beyond 2020, becoming the first multilateral financial institution to make such a commitment in line with the Paris Agreement. 

A draft of its Energy Lending Policy, dated 24 July 2019, commits the bank to “phase out the financing of investment in energy infrastructure directly associated with fossil fuels… [and] no longer originate projects after the adoption of this policy and will stop lending to fossil-fuel energy projects by the end of 2020.”

The draft also proposes to exclude fossil fuels funding across other EU policy frameworks, including the Modernisation Fund for Europe’s less developed regions. In addition, the draft proposes to set up an Energy Transition Package that could be a key source of financing and technical advice on energy infrastructure in some of the EU’s most carbon-intensive regions. Such a move could stimulate a just transition.

Petr Hlobil, campaigns director with CEE Bankwatch Network, said, “This draft shows commendable leadership from the EIB in becoming the first among public banks to commit to a total phase out of investments in fossil fuels after 2020.

The EIB recognises the need to transform the energy sector in central and eastern Europe and aid this transition by investing in zero-carbon technologies and energy efficiency and putting in place an Energy Transition Package. 

We expect incoming Commission President Von der Leyen to honour these commitments in front of the European Parliament and ensure that her cabinet, especially those in Energy and Climate Action, are fully behind this strategy. The Commission must take a similar approach by allocating additional funding from the EU budget after 2020 that is currently under negotiation.” 

For more information 

Petr Hlobil, campaigns director

CEE Bankwatch Network

Email: phlobil@bankwatch.org

Mobile: +420 603 154 349

Ahead of Asia Infrastructure Investment Bank meeting in Luxembourg, over 89 000 petition bank to drop Nenskra dam project in Georgia

The petition, which aims to protect a precious river valley in Svaneti from the construction of a 280 MW hydropower plant with a 125m high dam, included over 89 000 signatures from the international community. It targeted two European banks, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD).

Europeans called on the banks to pull out of the controversial project that threatens to damage the pristine environment and livelihood of local villagers, and which would create considerable economic risks for the country, as confirmed by a recently leaked contract between the Georgian government and the company behind the Nenskra project [3], as well as earlier reports by the International Monetary Fund [4] and the World Bank [5].

Both of the targeted international development banks, the EIB and the EBRD, have approved loans for the Nenskra project, in the amount of USD150 million and USD 214 million respectively, but neither of them have signed the final loan contracts yet.

The petition was initiated by Bankwatch and its member group in Tbilisi, Georgia – Green Alternative. Founder of Green Alternative, Manana Kochladze, who submitted the petition and signatures to EIB and EBRD representatives in Luxembourg, said:

“This petition showed the power of global support, how tens of thousands of Europeans raised their voices for the local indigenous people of Svaneti and stood in solidarity for their protest. If implemented, the Nenskra hydropower plant could cause irreparable damage to the untouched river and mountain ecosystem in Svaneti.  It would deprive the local indigenous communities of their ancestral lands. Along with this, the Nenskra project will cause fiscal risks for the country, a proper environmental assessment has not been conducted, it does not comply with the country’s legislation and its processes are not transparent. We believe that all of these reasons, along with the massive public outcry against Nenskra will be enough evidence for the international development banks to reconsider their financial support and pull out of this controversial project.”

For more information contact:

Manana Kochladze
Green Alternative, Founder
manana@bankwatch.org
Phone (WhatsApp): +995 599 916 647

Rusudan Panozishvili
Media and Community Coordinator
Panozishvili@greenalt.org

Download photos and videos from the event

Notes for editors:

[1] https://act.wemove.eu/campaigns/stop-nenskra-en

[2] https://bankwatch.org/nenskra

[3] https://bankwatch.org/press_release/in-georgia-leaked-contract

[4] https://www.imf.org/en/Publications/CR/Issues/2017/09/27/Georgia-Fiscal-Transparency-Evaluation-45274

[5] http://greenalt.org/wp-content/uploads/2018/09/Assessment_of_HPP_Cost_2018.pdf

Slovak government approves Just Transition plan for Upper Nitra

The ‘Transformation Action Plan of coal region Upper Nitra´, the official name of the document, was prepared by a consulting company for the office of the Slovak deputy prime minister. It has already been approved by the regional parliament in Upper Nitra.

The document is largely based on inputs from local communities in Upper Nitra, who have been organising in working groups to prepare scenarios for the transformation of the region since 2018.

‘The Action Plan places the public interest in protecting the environment above the private interest in extracting coal reserves – which is a major breakthrough,’ says Lenka Ilcikova, Bankwatch and CEPA-Friends of the Earth Just Transition campaigner.

‘It also obliges ministries to prepare money for the implementation of transformation projects and to do so with the maximum possible level of participation from the local community and other impacted actors,’ says Ilcikova.

‘Now capacity building is our absolute priority – the capacity of local governments, companies and locals, so that their efforts contribute to transforming this vision on paper into a satisfying reality,’ concludes Ilcikova, who as been involved in developing the Action Plan alongside local communities from Upper Nitra since the start.

The Action Plan confirms the rejection of a new mine at the Novaky coal complex, which private company Hornonitrianske bane Prievidza (HBP) was intent on opening. Locals’ inputs have resulted in a plan that aims for „developing economic activities in symbiosis with a clean environment”.

Last month, Slovakia announced that it supports the EU 2050 carbon neutrality goal and said it would end electricity production from coal by 2023.

‘Slovakia could really become an example of good practice model for central and eastern Europe, showing how other coal regions in neighboring countries could move from coal with respect for local people’s voices,’ says Lydia Knazovicova, a coal phaseout campaigner at Friends of the Earth-CEPA in Slovakia.

The Action Plan to be approved today is a true victory for local communities in Upper Nitra. In 2018, while the locals were organising into working groups, the Slovak government was ready to circumvent the will of locals and choose projects proposed by big companies, including HBP, to support from funds made available via the European Commission’s Platform for Coal Regions in Transition. Nevertheless, the locals and civil society pushed back, forcing the central government to include their contributions in planning for the future of the region.

For more information, contact:
Lenka Ilcikova, ilcikova@priateliazeme.sk, 00421 905 580 031
Lydia Knazovicova, knazovicova@priateliazeme.sk, 00421 904 483 543