Press release

North Macedonia: Complaint challenges unfair subsidy advantages for hydropower

The country is a signatory to the Energy Community Treaty, which prohibits “any public aid which distorts or threatens to distort competition by favouring certain undertakings or certain energy resources.”

Small hydropower plants have in recent years wrought destruction across southeast Europe – including North Macedonia – due to their rapid development, often in protected areas, and lack of environmental law enforcement [2].

Yet new regulations approved by the North Macedonian government in February this year [3] permit an unlimited number of hydropower plants under ten megawatts to continue receiving operating subsidies in the form of feed-in tariffs.

At the same time, solar photovoltaics cannot receive any feed-in tariffs, no matter the size [4]. All quotas for wind plants have already been reserved, and only a few megawatts of biomass and biogas can still receive operating support.

The new rules also subject solar photovoltaic producers and most wind producers to an incentives system designed to minimise costs for consumers. They have to compete in auctions to offer electricity generation at the lowest price, and the successful bidders qualify for support in the form of premiums paid on top of the market price for electricity to ensure they cover their generating costs.

This system, which is also now applied in the EU, entails higher risks for investors, so failure to apply it to hydropower represents an unfair advantage for this sector.

“The Deputy Prime Minister of North Macedonia, Kocho Angjushev, owns a large number of small hydropower plants [5], and his cabinet is closely involved in the preparation of energy sector legislation. So the Government’s decision to give preferential subsidies to small hydropower looks suspicious,” said Davor Pehchevski of Eko-Svest.

“For a country that has the sun on its flag, North Macedonia is making strangely little use of its potential. Privileging hydropower might have made sense years ago when solar and wind were too expensive but those days are long gone,” added Pippa Gallop of CEE Bankwatch Network. “Instead of stimulating the growth of new sources, this scheme is propping up highly-damaging small hydropower plants. It needs to be changed immediately to ensure a level playing field.”

Contacts

Davor Pehchevski, Eko-Svest:
E-mail: davor@ekosvest.com.mk
Skype: davor.pehcevski
Tel: +389 71 264 087

Pippa Gallop, CEE Bankwatch Network:
E-mail: pippa.gallop@bankwatch.org
Skype: pippa.gallop
Tel: +385 99 755 97 87

Notes for editors

[1] For more information see the Energy Community website.

Download the complaint

[2] See for example:

[3] The Decree on support measures for production of electrical energy from renewable sources of energy, the Decision on the total installed capacity of preferential electricity producers and the Program for financial support for production of electricity from preferential producers using a premium for 2019.

[4] In the Decision on the total installed capacity of preferential electricity producers, the total installed capacity of preferential electricity producers is prescribed. The caps for capacities that receive feed-in tariffs are the following:

86 MW for wind power plants – but this is all reserved for the existing Bogdanci plant, the extension of the project, and the planned Bogoslovec plant.
10 MW for thermal power plants on biomass, of which 4.3 MW is already reserved.
20 MW for thermal power plants on biogas, of which 7 MW is already reserved.

No cap for feed-in tariffs for small hydropower plants.

The cap for photovoltaic power plants that receive premiums is 200 MW, while there is no cap for wind premiums other than the one set by individual auctions. There is no support for solar photovoltaic plants which are too small to compete in auctions at all.

[5] Through the umbrella company Fero Invest, Deputy Prime Minister Kocho Angjushev owns at least 25 small hydropower plants (SHPP), a company for design of SHPPs, a company for production and installation of turbines and a company for SHPP maintenance. Evidence of his majority ownership can be found here.

Independent data highlights air pollution crisis in Tuzla, Bosnia and Herzegovina

The measurements were taken in 2018 and showed that average levels of coarse particles known as PM10 were double the legal annual average limit for the five months of monitoring. PM10 average values were 78.9 µg/m3, while the legal average annual limit is 40 µg/m3. On three out of the five months of monitoring (98 out of 144 days), the daily limit was breached, even though national legislation allows the limit to be exceeded only for a maximum of 35 days per year.

Independent monitoring had to fill a gap, as there are no official measurements of PM10 in Tuzla, only of fine particles known as PM2.5, although the country has set a legal limit of PM10 pollution.

“People in Tuzla have already been protesting against air pollution, feeling that their city is one of the most polluted in the world. The data we publish today shows just how serious the problem is and how authorities in Bosnia and Herzegovina, who are failing to even do proper monitoring of smog levels, are directly responsible for hundreds of deaths and thousands of cases of illness,” says Denis Zisko from the Center for Energy and Ecology.

Modelling of health impacts shows that officially measured PM2.5 pollution caused 136 premature deaths in adults in Tuzla in 2018. This represents 17 percent of all deaths in adults older than 30. If pollution levels stayed within legal limits, air pollution would still be responsible for 63 deaths in Tuzla’s adult population, whereas adhering to the World Health Organization (WHO) recommendations would avoid each and every one of these deaths.

PM10 pollution resulted in 1339 new cases of bronchitis in adults in Tuzla in 2018 – almost one third of all incidences of bronchitis that year. Again, all these new cases of bronchitis could be avoided if WHO recommendations were followed.

“The number of deaths and health conditions could be reduced if air pollution in Tuzla improved. Strong response to air pollution is urgently needed to protect citizens’ health and life,” said Maida Mulić PhD MD, director of Public Health Institute Tuzla.

But instead of focusing on meaningful reduction of air pollution in Tuzla, the government is currently planning to add a new 450 MW coal-fired unit to the local lignite power plant (built in the 1960s and 1970s), which is already a major source of pollution in Tuzla, with its adjacent open-cast mines and ash disposal site.

The new unit is subject to controversy, among others because it is not designed in line with the latest EU pollution control standards known as the LCP BREF.

“One of the most shocking aspects is that authorities are presenting the construction of a new coal unit in Tuzla as part of the solution. But the new coal unit would add to the total installed capacity at the existing plant and come with another polluting ash pond, which would only increase air pollution when dry. People in Tuzla must not fall for such a lie,” said Ioana Ciuta from CEE Bankwatch Network.

Instead, the ‘Lifting the Smog’ report makes concrete recommendations to protect the health of Tuzlan citizens.

“The Tuzla air pollution crisis needs an immediate response from decision-makers. What is needed is a plan how to phase out the Tuzla coal plant with interim measures to reduce coal pollution, but also upgrading the air monitoring network to identify the true magnitude of the health impacts. The health sector has a unique role to play in informing the public on the extent of Tuzla’s air quality problem and guiding the much needed changes,” says Vlatka Matkovic Puljic from HEAL.

Notes for editors:

[1] https://bankwatch.org/publication/lifting-the-smog

For more information, contact:

Denis Žiško
Centar za ekologiju i energiju
denis.zisko@ekologija.ba
Skype: denis.zisko
Mob: +387 61 140 655

Ioana Ciuta
CEE Bankwatch Network
ioana.ciuta@bankwatch.org
Mob: +40724020281

Vlatka Matković Puljić
Health and Environment Alliance – HEAL
vlatka@env-health.org
+32 (0)2 234 36 46

Bankwatch statement on the EU’s 2050 climate neutrality goal and central and eastern European country positions

Some in the region are bucking the trend. Slovakia this week not only announced its support for the 2050 EU goal, but also set 2023 as the end date for coal-based electricity generation, with the government days away from adopting a just transition strategy for the country’s main coal region of Upper Nitra.

Slovakia’s stance represents the end of an era. Central and eastern European countries can no longer hide behind the excuse that they are too ‘poor’ to implement the energy transformation. They are neither too ‘poor’ nor too ‘rich’ to avoid wasting resources. Poland, the largest country in the region, its biggest coal consumer and the most belligerent against EU climate goals, has one of the fastest growing economies in the EU. Its leaders boast of GDP growth rates with the same breath they use to say they are too poor to care for climate.

A recent Ipsos Mori survey finds that 86 per cent of Polish citizens are concerned about deteriorating air quality, which is now among the worst in Europe. Citizens are looking for low-carbon solutions to produce electricity and develop green business as a way to create jobs and develop the country. This growing consciousness is reflected in shifting investment patterns, where advances in energy efficiency and renewables technologies, and the accompanying price drop, have made these more economical and technically-attractive than fossil fuels.

The addiction to fossil fuels in Poland and elsewhere in central and eastern Europe is therefore either linked to illicit public support for corporate coal or used as a bargaining chip to get freer rein in how the countries will spend billions from the future EU budget.

There is no doubt that the adoption of a 2050 carbon neutrality target for the whole EU would come with considerable funds from the next EU budget for the energy transformation and just transition of the coal regions, with central and eastern European countries being the main beneficiaries. The question is not whether these countries can afford the 2050 target but whether they can afford not to sign up and continue to support an obsolete development model.”

Commission calls for higher ambition from central and eastern Europe in energy and climate plans

Bankwatch welcomes the Commission’s report, which rates the energy efficiency goals of all CEE countries as ‘modest’ to ‘very low,’ and all except Estonia as ‘below formula’ on renewable energy. The Commission is also expecting a more detailed assessment of the investment needs and funding sources for climate measures from most CEE countries

The Commission’s conclusions echo a Bankwatch analysis [1] that shows how CEE Member States rely overwhelmingly on unsustainable solutions like biomass [2] and waste incineration [3] to reduce their dependency on fossil fuels, instead of making the necessary investments in energy efficiency and small-scale, sustainable renewables.

Yet the Commission stops short of criticising the poor quality of public engagement during the formulation of the NECPs [4] and only in passing suggests consultation practices could be improved. Involving the public is a precondition for the proper planning and efficient implementation of the NECPs and a prerequisite to reaching the EU’s climate objectives.

Raphael Hanoteaux, EU policy coordinator with Bankwatch, said “Central and eastern European countries must create solid plans through meaningful public participation and by exploring every possibility to fund a more just energy transition. A surge in ambition is in their interest and absolutely necessary if the EU wants to achieve the 2050 net-zero objective that is awaiting approval at Thursday’s European Council.”

Juraj Melichar, Slovak campaigner with Bankwatch and Friends of the Earth-CEPA in Slovakia, said, “The energy and climate plans can be an effective tool to guide investments in local, renewable energy projects that benefit people and reflect local realities. Such investments should support local development instead of the polluting industries that benefit from business as usual.”

For more information contact:

Raphael Hanoteaux
EU policy officer
Email: raphaelh AT bankwatch.org
Telephone: +32 2 894 46 00

Notes for editors:

[1] https://bankwatch.org/press_release/necp-national-energy-plans

[2] https://bankwatch.org/blog/a-false-solution-to-a-real-problem

[3] https://bankwatch.org/press_release/new-study-finds-climate-and-energy-plans-at-odds-with-eu-targets-for-circular-economy-and-emissions-reductions

[4] https://bankwatch.org/press_release/necp-national-energy-plans

Just Transition plan for Slovak coal region Upper Nitra to be aproved today

The ‘Transformation Action Plan” for Upper Nitra, the official name of the document, was prepared by a consulting company for the office of the Slovak deputy prime minister. It is set to be approved by the Slovak government in the next weeks.

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.

“I’ve been personally participating in practically all meetings of local working groups during 2018, and I can confirm that the directions of transformation outlined in the Action Plan are an expression of the wishes and ideas of the citizens of the region,” says Lenka Ilcikova, Bankwatch and CEPA-Friends of the Earth Just Transition campaigner.

“I also appreciate the fact that the document incorporates comments of experts and general public submitted during the consultation period,” Ilcikova added.

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”.

But the Action Plan fails to set a clear date for the phaseout of coal in Slovakia.

“If the Action Plan contained clear commitments to put an end to coal, Slovakia could become a true model of good practice for Central and Eastern Europe, showing how other coal regions in neighbouring countries could transition away from coal in a participatory manner, which respects the voice of locals,” says Lydia Knazovicova, CEPA-Friends of the Earth Coal Phaseout campaigner.

“Without a coal phaseout, however, the plans for carbon neutrality are more difficult to implement. The Slovak government should muster the courage to set an end date for coal – this would be the definitive sign that also the Action Plan is taken seriously and will be implemented.”

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.

“The change is just beginning. In order for everything we have planned to turn into reality, all the proposed measures need to be well prepared, monitored and evaluated, and this has to be done with all relevant actors involved. Local participation is more important than ever,” concludes Lenka Ilcikova.

For more information, contact:

Lenka Ilcikova
ilcikova@priateliazeme.sk
00421 905 580 031

Lydia Knazovicova
knazovicova@priateliazeme.sk
00421 904 483 543

Read more about Upper Nitra on just-transition.info

In Georgia, leaked contract shows Nenskra hydropower project to cost country USD 60 million a year

The report contradicts the claims of the Georgian government and JSC Nenskra, which have long maintained that the 280 MW hydropower plant is essential for Georgia’s energy security, arguing it would provide the country with considerably cheaper electricity.

But an analysis of the contract by Bankwatch member group in Tbilisi Green Alternative shows that the government has committed to buy electricity generated by Nenskra during its first 36 years of operation at a price that is on average double the current tariff for domestic electricity, and three times the price of electricity Georgia exports. This means that if the project materialises, it will generate losses of approximately USD 60 million every year for the public coffers.

Initially signed in August 2015 and amended in June 2017, the contract also reveals that the Georgian government has agreed to reimburse the company for any losses in case Nenskra fails to generate the anticipated amount of energy due to various hydrological reasons. This is not an unlikely scenario, given the projected impacts of climate change in the region, as well as the under-performance of earlier hydropower projects in Georgia like the Paravani, Dariali and Shuakhevi plants [2].

The new revelations add to earlier warnings about the financial viability of the billion dollar Nenksra project. The International Monetary Fund’s fiscal transparency report for Georgia from September 2017 [3] warned that the Nenskra project would pose serious risks to the country’s fiscal stability. The IMF’s findings were followed by a February 2018 World Bank analysis [4], commissioned by the Georgian finance ministry, which warned that the project could incur costs over EUR 1.8 billion between 2022 and 2041.

The report authors expect additional costs – beginning at EUR 113 million a year between 2023 and 2026 – due to worsening exchange rates. In addition, liabilities to Georgia’s electricity operator due to the energy surplus could reach USD 154.2 million by 2041, and the report also cautioned that the project’s costs could further increase with delays or unplanned expenses.

David Chipashvili, campaigner for Green Alternative, said: “The promises of energy security by the company and government officials about the grandiose Nenskra project have now confirmed to be out of touch with reality. Their motivations to sign an agreement that is so blatantly against the national interest remain a mystery.

International financial institutions considering the project, including the European Investment Bank, the European Bank for Reconstruction and Development, the Korean Development Bank, the Asian Development Bank, and the Asian Infrastructure Investment Bank, have long been aware of the outrageous terms in this contract. Now that it has finally been made public, they need to seriously re-think their engagement.”

For more information contact

David Chipashvili
Green Alternative, Bankwatch campaigner for Georgia
Email: dchipashvili@greenalt.org

Notes

[1] http://rustavi2.ge/ka/news/135478

[2] https://bankwatch.org/project/hydropower-development-georgia

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

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