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EU-China summit an opportunity to tackle Chinese support for coal in southeast Europe

The coal units planned to be built with Chinese financing include a 600 MW new unit at the existing Rovinari power plant in Romania – the country currently holding the EU Presidency, 450 MW at Meliti in Greece, as well as several plants in Serbia and Bosnia-Herzegovina.

In the EU-China Strategic Outlook [2] published by the European Commission March 12, the Commission noted that “China is constructing coal-fired power stations in many countries; this undermines the global goals of the Paris Agreement.”

“It’s good to see the EU is finally saying something about Chinese support for coal worldwide. Now it’s time to make it clear to China that the EU will not tolerate this new spree of coal plants from appearing in southeast Europe with Chinese support. Otherwise, the EU will have a group of mini-Polands on its hands, which will eventually threaten Europe’s climate ambitions,” comments Pippa Gallop, Bankwatch research coordinator, and author of the analysis.

All the planned units are marred by controversy because of their doubtful legality and economic viability, shows the Bankwatch analysis.

Just two weeks ago, the Energy Community Secretariat in Vienna opened a dispute settlement case against Bosnia-Herzegovina for approving an illegal loan guarantee for the Tuzla 7 coal plant. The plant’s environmental permit is also being challenged in court.

“There’s a fundamental contradiction in Chinese money being poured into new European coal at a time when the EU has committed to carbon neutrality by 2050 and 17 EU states are either coal-free or committing to end coal,” says Ioana Ciuta, Bankwatch energy coordinator, one of the authors of the analysis.

“Western Balkan politicians constantly try to convince the public that the new coal plants would be clean, but there’s no such thing as clean coal. In any case, none of the China-backed plants planned in the Western Balkans will adhere to the latest EU pollution control standards, and the open-cast mines and ash dumps will continue to pollute,” added Ciuta.

Notes to editors:

[1] Read the Bankwatch briefing here: https://bankwatch.org/publication/chinese-coal-in-southeast-europe

[2] Read the EU-China Strategic Outlook document here: https://ec.europa.eu/commission/news/eu-china-strategic-outlook-2019-mar-12_en

For more information, contact:

Ioana Ciuta
Energy Coordinator, CEE Bankwatch Network
ioana.ciuta@bankwatch.org
+40724020281

Pippa Gallop
Research Coordinator, CEE Bankwatch Network
pippa.gallop@bankwatch.org
Skype: pippa.gallop

EU parliament reverses course, votes for strong action on climate with future funds for Europe’s needy regions

Climate Action Network (CAN) Europe and CEE Bankwatch Network have welcomed the outcome of the plenary sitting in Strasbourg, calling the result great news for the EU and its regions and an acknowledgement of the need for a rapid and comprehensive shift in Europe’s investment landscape.

The vote reverts back to the initial proposal from the European Commission on the ERDF from May 2018 that prohibited funding for projects with heavy environmental impacts like fossil fuels.

The outcome solidifies the final negotiating position of the Parliament that it will use in discussions with the European Council and Commission when the parties begin the so-called trialogues in October, and indicates a readiness for Europe to continue a progressive approach to climate finance.

Raphael Hanoteaux, EU policy officer with CEE Bankwatch Network, said: “The Parliament understands that business as usual is no longer an option, and fossil fuels have no place in the future of Europe’s financing. This vote sets a clear direction for a clean and sustainable Cohesion policy that will bring certainty to managing authorities, investors, and local stakeholders as they plan projects for Europe’s energy transformation.”

Markus Trilling, Finance and Subsidies Policy Coordinator at Climate Action Network (CAN) Europe, said: “Today’s vote is a good result for citizens and the economy. Investing in renewable energy and energy savings instead of financing fossil fuels will trigger the transition needed to modernise Europe’s regions and will help meet the EU’s climate objectives.”

Energy Community opens infringement procedure against Bosnia-Herzegovina over illegal Tuzla 7 state aid

The announcement follows a complaint [2] submitted by the Aarhus Resource Center, Sarajevo, and CEE Bankwatch Network in September 2018 that the guarantee would not be in line with EU State aid rules, which are binding under the Energy Community Treaty. [3]

The Energy Community Secretariat commissioned an independent legal analysis which confirmed the validity of the NGOs’ claims. [4] It has so far issued four warnings to the Federation of Bosnia-Herzegovina not to approve the guarantee as it constitutes illegal state aid according to EU rules. Commissioner for Enlargement Johannes Hahn similarly warned Bosnia-Herzegovina authorities not to approve the guarantee as it would contradict EU rules. [5]

The Federal House of Representatives nevertheless approved the guarantee on 7 March [6] but the House of Peoples has still to vote on the final stage of approval – set for 1 April.

“Both Commissioner Hahn and the Energy Community have been vocal in opposing this illegal guarantee. Continuing to defy these warnings would show a lack of commitment to the EU accession process and further delay Bosnia-Herzegovina’s energy transition,” commented Denis Žiško of the Center for Ecology and Energy, Tuzla.

“This project is an embarrassment and one that will cause problems for the country for decades to come. The feasibility assessment doesn’t include realistic coal prices or CO2 prices, the environmental permit is being challenged in court, and the lack of transboundary consultation is being examined under the Espoo Convention”, he added.

“Just yesterday the Energy Community published a new study criticizing the Western Balkans for sinking no less than EUR 1.2 billion in direct and indirect subsidies into the coal sector in 2017, and now Bosnia-Herzegovina is gearing up to waste more public money on new coal. The economic and environmental reality is that this cannot continue. Phasing out subsidies clearly requires political courage, but the best place to start would be not to add new ones”, added Pippa Gallop of CEE Bankwatch Network.

If Bosnia-Herzegovina does not take steps to rectify the non-compliance, the case will be brought to the highest decision-making body of the Energy Community, the Ministerial Council. Breaching Treaty provisions can result in exclusion from decision-making in the Energy Community, delays to EU accession, and temporary moratoria by European public banks on investments in the country’s energy sector.

For more information, contact:

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

Pippa Gallop
CEE Bankwatch Network
pippa.gallop@bankwatch.org
Mob: +385 99 755 97 87

Notes to editors

  1. Energy Community announcement:
  2. https://bankwatch.org/press_release/use-of-public-money-to-support-tuzla-7-coal-power-plant-must-be-investigated-shows-new-complaint
  3. https://www.energy-community.org/
  4. https://bankwatch.org/press_release/energy-community-bosnia-herzegovina-guarantee-for-chinese-loan-for-tuzla-7-is-state-aid-breaks-eu-law
  5. https://www.reuters.com/article/us-bosnia-eu-energy/eu-official-criticizes-bosnias-backing-of-chinese-power-loan-idUSKBN1QU1JD
  6. https://bankwatch.org/press_release/bosnia-herzegovina-federal-parliament-guarantees-chinese-coal-plant-loan-in-contempt-of-eu-law
  7. Read the Energy Community study about state aid for coal in Western Balkans: https://www.energy-community.org/news/Energy-Community-News/2019/03/25.html

 

Energy Community: Western Balkan coal subsidies worth over 1.2 billion euros in 2017

The study, entitled Analysis of Direct and Selected Indirect Subsidies to Coal Electricity Production in the Energy Community Contracting Parties, which covers the Western Balkans and Ukraine (2), shows that significant amounts of taxpayers’ money is used by governments in the region to perpetuate the countries’ over-reliance on coal – usually low-grade, sulphur-laden lignite, the most polluting of fossil fuels.

Public subsidies for coal mining and electricity generation in the Western Balkans – especially Serbia, Bosnia and Herzegovina and Kosovo – give coal an unfair advantage over other energy sources and continue to hamper much needed decarbonisation efforts, concludes the Energy Community.

Western Balkan countries provided total direct subsidies of over EUR 500 million in the years 2015-2017 while indirect subsidies to their coal industries were worth EUR 1.06 billion in 2017 alone, by failing to apply a carbon price and by foregoing returns from state-owned companies by allowing them to operate unprofitably (3). In 2017, Western Balkan countries paid direct subsidies worth EUR 157 million which, together with the indirect subsidies, make up a total of EUR 1.2 billion for that year.

The Energy Community Contracting Parties have legal obligations prohibiting energy sector subsidies that may give certain companies an unfair advantage. The Western Balkans countries also all have stabilisation and association agreements with the EU, stipulating deadlines by which they need to set up independent national level bodies to approve proposed subsidy schemes.

“These findings show that the Western Balkan countries are progressing much too slowly with applying EU subsidies rules in the energy sector, giving coal an unfair advantage and burdening the public with unjustified costs,” said Pippa Gallop from CEE Bankwatch Network. “The European Commission needs to take clear action on the report’s findings and ensure the countries deliver on their stabilisation and association agreements, but it also needs to provide more support for the Energy Community’s efforts in this field,” she added.

Handouts to the coal sector may even have intensified since 2015-2017, as exemplified by Bosnia and Herzegovina’s recent disregard for the Energy Community’s warnings (4) regarding a proposed state guarantee for a EUR 614 million China Exim Bank loan for the planned Tuzla 7 coal power plant.

A power purchase agreement for the planned Kosova e Re coal plant in Kosovo is also subject to scrutiny by the Energy Community Secretariat, whose preliminary findings indicate that it breaches the Energy Community Treaty (5) and may even bankrupt the country (6). Under the agreement, the Kosovar government would not only buy off all the electricity from the planned plant but would even provide payments when not operating, as well as numerous other guarantees for the investor, UK-registered ContourGlobal.

Igor Kalaba of Climate Action Network Europe warned that: “The Western Balkan governments are setting themselves up for a shock once they enter the EU Emissions Trading Scheme. Carbon prices have not been properly taken into consideration when planning new coal projects, increasing the chances those plants will end up as stranded assets. The European Commission needs to make sure the countries apply a carbon price signal as soon as practically possible. This would also provide the countries with income to implement a well-planned and socially just coal phase-out and to speed up energy efficiency and renewables development.”

The Energy Community Secretariat has invited public comments on the results of the study until 25 April 2019. All comments should be submitted to public_consultation@energy-community.org.

For more information please contact

Stevan Vujasinovic
Southeast Europe Communications Coordinator
Climate Action Network (CAN) Europe
stevan@caneurope.org
Tel: + 381 63 390 218

Pippa Gallop
Research Co-ordinator
CEE Bankwatch Network
pippa.gallop@bankwatch.org
Tel: +385 99 755 9787

Notes to editors

  1. The study is available here
  2. The study covers countries signing the Energy Community Treaty which use significant amounts of coal – Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia and Ukraine.
  3. EUR 865 million for CO2 costs and EUR 221.6 million in foregone returns
  4. For more information, see: https://bankwatch.org/press_release/bosnia-herzegovina-federal-parliament-guarantees-chinese-coal-plant-loan-in-contempt-of-eu-law
  5. See: https://energy-community.org/news/Energy-Community-News/2018/06/14.html
  6. See speech by Energy Community Director Janez Kopac at an event in the European Parliament on 22 November 2018

Lack of ambition on full display as eastern Member States graded on first climate and energy plans submitted to Commission

A grading of the NECPs from Bulgaria, Czechia, Estonia, Hungary, Latvia, Poland, Romania and Slovakia finds that paltry targets for renewable energy and energy efficiency remain just above the bare minimum required by the EU. The analysis grades Latvia at the top of the table, with Bulgaria and Hungary’s business as usual approach earning it the lowest marks [2].

As part of the design of the EU’s 2018 ‘Clean energy package’, the NECP was envisioned as a tool for Member States to plan their own targets for 2030 and explain how each would contribute to the bloc’s targets for energy efficiency, renewable energy and a phase out of fossil fuels, while quantifying the investments needed to reach such objectives.

But in many countries goals to increase renewables and energy efficiency as part of the energy mix are negligible, as in Romania and Slovakia, which plan an uptake of renewables from 25 to 27.9 per cent and 14 to 18 per cent, respectively.

In Europe’s most energy-intense economy, Bulgaria has limited potentials gains in energy efficiency, because the NECP is designed to subsidise energy prices, thus disincentivising efficiency investments.

A lack of measures designed to reduce energy consumption and boost efficiency gains has also led to an uptick in plans for nuclear energy or the burning of gas, waste or biomass, posing more problems than solutions. For instance, the extensive use of biomass as a fuel source threatens biodiversity and poses risks of deforestation in Poland, Slovakia and Estonia.

Also, with coal firmly envisioned in its future energy mix, Poland plans the development of nuclear energy as a key decarbonisation measure, but even in the most optimistic scenario the nuclear power plant will not go online before 2033, and its economic viability is questionable.  

Raphael Hanoteaux, EU policy officer for Bankwatch, said: “While the development of the NECP is a learning process, there is vast room for improvement. It is in everyone’s interest that the final plans are more ambitious and more inclusive before the end of the year. ”

For more information contact

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

Notes

[1] The new briefing is available here
[2] The complete grading can be found in the table below, and the methodology explaining the grades is available here.

Romania’s dodgy math: will the country retire 2.2 GW of coal by the end of 2019?

Romania’s NECP, a document supposed to guide the country’s climate and energy policy for the next decade, claims Romania will have only 3.7 GW of installed coal capacity by 2020 – a shocking claim considering that currently there are 5.9 GW installed and the government made no plans to retire any unit this year.

The document also says that an another 540MW of coal capacity will disappear by 2030. Additionally, the NECP includes a very unambitious target for renewable energy in final energy consumption of only 27.9%.

‘Normally, anybody who wants to prevent a catastrophic increase of the global temperature would be happy to hear that 2 GW of coal will be retired in one year. But let’s not open the champagne bottles yet. The NECP lacks a commitment for a coal phaseout and it relies on plans to build a new coal unit. This means the 2020 installed capacity figure is likely a blatant inaccuracy – even more embarrassing as Romania is now in the spotlight for holding the EU Presidency,’ comments Alexandru Mustata, campaigner for Bankwatch Romania.

According to Bankwatch, calculations for the NECP are based on the National Energy Strategy, which prioritizes building a new 600MW unit on the site of the existing Rovinari power plant in Gorj county. An expert assessment of the economics of the new unit included in the Bankwatch publication shows that the new Rovinari unit would hardly (if ever) be economic if built. Fuel, CO2 and limestone costs will eat up 82% of the total revenue generated by the unit, leaving little room to cover the other costs – salaries, operation etc. – not to mention making a profit.

‘Romania once again fails to prepare a clear strategy to tackle this century’s biggest challenge: climate change,’ says Mustata. ‘Instead, it plans a new coal unit while most other European countries plan phaseouts and it squanders its enormous renewables potential. All this while being at the helm of the EU and supposedly offering guidance to the entire block.’

Notes to editors:

Read the Bankwatch analysis of Romania’s NECP, including an expert assessment of the economics of the new planned coal unit at Rovinari here.

For more information, contact:

Alexandru Mustata
Bankwatch Romania campaigner
alexandru.mustata@bankwatch.org