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NGOs urge EU bank to quit fossil fuels investments, as it touts its climate commitment at COP24

[1] New briefing: Failing better or climate success?

State delegations are gathered in Katowice, Poland, this week to discuss the next steps to fulfill the Paris Agreement, but global development finance is not yet on track to tackle climate change.

A group of Multilateral Development Banks including the World Bank, the Asian Development Bank and the EIB, has announced a common “six block approach” to align their operations with the objectives set in Paris in 2015, but this contains no concrete commitment about the much-needed, complete phase out of their fossil fuels investments.

Heavily lagging behind, the EIB – bank of the European Union and the world’s biggest multilateral lender – is expected to raise the bar to translate the EU’s climate commitments into action as it updates its energy policy next year. The EIB’s next energy strategy, defining the type of energy projects to be supported by the bank, will be decisive for EU citizens, European public finance and the climate worldwide.

The bank has so far continued to support fossil fuels projects, and last week’s announcement of a new EUR 100 million loan to Gas Networks Ireland, just during the COP, shows it has no intention to stop.

A new joint briefing, published by Friends of the Earth Europe, Counter Balance and CEE Bankwatch Network has exposed that between 2013 and 2017 the bank disbursed EUR 11.8 billion in direct support to fossil fuels, much of which went to unneeded gas infrastructure.

In addition, earlier this year, the bank channeled more than EUR 2.4 billion to finance one of the most controversial infrastructure projects of all times – the Southern Gas Corridor – despite concerns over corruption, human rights, and the climate-impact of this mega-pipeline.

And the EIB also finances fossil fuels indirectly: since 2013 it has provided EUR 3.9 billion to companies that are currently planning new coal power capacity, and others who already rely on coal for much of their power and heat generation portfolios.

The briefing points out that, as encouraged by the latest IPCC report, a radical transformation of global finance is urgently needed to avoid the most disastrous consequences of climate change. For the EIB, this means that business as usual is no longer an option.

Some key recommendations indicate the path the EU bank should immediately take: shift its funds from funding fossil fuels and step up finance for renewable energy and energy efficiency projects.

Colin Roche, Friends of the Earth Europe, said:

“The time is now, the climate can’t wait any longer. 50 more years of fossil fuel infrastructure is incompatible with halting catastrophic climate change. It’s time for the Bank to draw a red line under fossil fuel subsidies, to stop funding climate change and focus on the solutions to the imminent climate catastrophe.”

Xavier Sol, Director of Counter Balance, said:

“As the bank of the European Union, we expect more than climate lip service from the EIB. A substantial move towards the transformation needed to contain climate change is the complete phase out of fossil fuels, and public finance has to set the example in this direction. It will be crucial for the EIB not to miss the opportunity of its new energy policy next year to go 100% fossil-free.”

Anna Roggenbuck, EIB Policy Officer at CEE Bankwatch Network, said:

“The EIB must end all support to fossil fuels loans, both direct and indirect. Its current “corporate loans” business model has to be revised to ensure all its loans contribute to the EU decarbonisation objective. The bank’s loans must be conditioned to companies presenting their assets’ decarbonisation plans in line with the Paris Agreement, and by no circumstances shall more loans be granted to companies developing new coal capacities.”

Contacts:

Colin Roche
Extractives Campaigner, Friends of the Earth Europe
colin.roche@foeeurope.org
+32 (0)489598984

Xavier Sol
Director, Counter Balance
xavier.sol@counter-balance.org

Anna Roggenbuck
EIB Policy Officer, CEE Bankwatch Network
annar@bankwatch.org

EkoSvest calls on Macedonian government to move to more rational renewable energy support system

The call comes as the Government plans a new Decree on Support Measures for Electricity Production from Renewable Energy Sources [1] that extends the system of feed-in tariffs, without even a competitive tender.

The intent to continue paying guaranteed prices to new plants on a first-come, first-served basis is in conflict with EU rules that stipulate moving towards more competitive and market-based support schemes using auctions for all but the smallest plants in order to reduce costs.[2]

Macedonia is obliged to comply with EU legislation on competition under the Energy Community Treaty and its Stabilisation and Association Agreement with the EU and has been receiving assistance from the EBRD and USAID to move towards a new incentives system.[3]

The new draft Decree includes auctions for larger wind and solar plants, but leaves the feed-in tariff system in place hydropower plants of up to 10 MW, wind farms of up to 50 MW, and biomass and biogas-fired facilities of up to 1 MW.

“Well-targeted feed-in tariffs can be appropriate for the first few years of renewable energy development but in Macedonia they have served to drive a boom of damaging small hydropower plants which have seriously damaged rivers like Tresonecka in the National Park Mavrovo and Brajcinska in the National Park Pelister. This is especially unacceptable considering the small hydropower plants’ marginal contribution to electricity generation, and subsidies for hydropower must be stopped,” said Davor Pehchevski of Eko-svest.

“In addition, the use of feed-in tariffs can cause excessive costs for Macedonian consumers and ultimately cause a backlash against renewable energy. An energy-efficient, renewable-energy-based economy is an imperative in order to limit climate change and prevent the health and environmental impacts of traditional sources of energy. We therefore cannot afford to turn public opinion against its development”, added Nevena Smilevska of Eko-svest.

“Technologies that are not new should not be financially supported. Solar and wind, which are still being refined, and whose price is still dropping, are the only generation technologies that should still be considered for financial incentives. Support for demand-side energy savings is also crucial in order to cut costs for households and reduce the environmental impact of energy production,” she added.

Eko-svest is also calling for a public consultation on the new legislation, considering its potential importance for the environment and household costs.

 

Contacts

Davor Pehchevski
Center for environmental research and information “Eko-svest” – Skopje, Macedonia
Mobile: +389 71 264 087
E-mail: davor@ekosvest.com.mk

 

Notes for editors

[1] Decree on Support Measures for Electricity Production from Renewable Energy Sources Draft available here.  

[2] The EU’s Energy and Environment Aid Guidelines (EEAG) 2014-2020 clearly state that:

  • Projects to be supported financially must be selected through a competitive procedure except for those smaller than 1 MW or, in the case of wind, 6 MW or six production units.
  • Feed-in tariffs are no longer allowed for plants of more than 500 kW except for wind plants where it may be allowed for up to 3 MW or three production units. Only premiums to make up the difference between the market price and the pledged generation price are allowed.The Energy Community Secretariat, EBRD and IRENA have produced Guidelines on this issue which suggest that in the Energy Community countries, in some cases it may be necessary to retain feed-in tariffs until a liquid day-ahead electricity market exists, on the condition that they are awarded via a competitive tender, and not on a first-come, first-served basis.

[3] More information about the EBRD Solar photovoltaic and wind power plant support programme is available here.

More information about USAID’s work on energy in Macedonia is here.

Poland’s Just Transition declaration is a fata morgana

“This Declaration is in clear contradiction with the basic position of the Polish ruling party on the future of the energy sector: over-reliance on coal for decades to come,” says Bankwatch’s Just Transition coordinator Alexandru Mustață.

In mid-November, days before the start of the COP24, the Polish government unveiled its new draft energy strategy to 2040 which provides that Poland will still produce 60% of its energy from coal in 2030 and plans for a phaseout of onshore wind power by 2035.

The text of the Declaration to be adopted on Dec. 3 in Katowice differs considerably from the draft originally proposed by Poland, which appeared to be much more in line with the government’s appetite for coal: it prioritised preserving coal jobs over protecting the climate and did not mention climate justice or developing countries at all.

In an unusual move, the Polish Ministry of Energy has even issued its own position ahead of the COP24, which echoes the Polish mining unions’ demands for a revision of global climate policy and objects to increasing the EU emissions reduction targets.

Domestically, the Polish government argues it needs to keep coal alive to protect workers. In reality, Polish coal is expensive to extract, mines are unprofitable and closing, the country is importing increasingly more coal from Russia, and coal-dependent utilities are struggling to make a profit while keeping energy prices for households within politically acceptable limits. Additionally, poor air quality in Poland has become a volatile social issue.

“The timing is right for the start of a Just Transition in Polish coal regions: the country’s low unemployment and shortage of labour present a good macroeconomic window of opportunity to smoothly transition a large workforce to other sectors,” says Izabela Zygmunt, Bankwatch’s national coordinator for Poland. “If Poland misses this opportunity now, it may face another wave of painful, unmanaged mine closures like it did in the 1990s.”

“As world leaders sign the Silesia Declaration on Solidarity and Just Transition in Katowice, they should insist that Poland, which proposed this declaration in the first place, now take it seriously,” she adds.

While central and eastern Europe used to rally around Poland in its pro-coal stance, governments in the region are giving signs of changing gears. The Hungarian government recently said its preferred coal phaseout date was 2030, Slovakia announced an earlier than planned end to coal mining subsidies for 2023, and Czechia is running a successful national programme (RE:START) to help its three coal mining regions develop away from coal.

On Wednesday, Dec. 5, CEE Bankwatch Network, together with WWF and Climate Reality Project, will hold a side event ‘Local communities prepare for a post-coal future’ presenting efforts towards Just Transition in central and eastern Europe. Speakers at the event include representatives of municipalities in CEE. Bieszczady room, 11:30 – 13:00.

During the side event, Bankwatch will launch its publication ‘Heroes of Just Transition’, featuring stories from seven coal regions in central and eastern Europe where communities try to build post-coal futures.

 

For additional information please contact:

Izabela Zygmunt
National Coordinator for Poland, CEE Bankwatch Network
izabela.zygmunt@bankwatch.org
+48 502036987
Twitter: @IzabelaDZygmunt

Alexandru Mustata
Just Transition Coordinator, CEE Bankwatch Network
alexandru.mustata@bankwatch.org
+40 726770808
Skype: alexandru.mustata1
Twitter: @AlexandruBW

Read more about Just Transition in central and eastern Europe on http://just-transition.info  Follow @TransitionJust on Twitter.

[1] https://www.parlament.gv.at/PAKT/EU/XXVI/EU/04/42/EU_44223/imfname_10859196.pdf

Bosnia-Herzegovina settlement agreement shows coal plant environmental assessment is illegal

The tacit admission that the environmental assessment procedure was illegal came as Bosnia and Herzegovina was about to be declared non-compliant with the Energy Community Treaty at today’s Ministerial Council meeting in Skopje. The Ministerial decision was to be the final step in a dispute settlement process initiated by the Energy Community Secretariat based on a complaint from the Center for Environment from Banja Luka in 2014.[2]

The Ugljevik III project is promoted by a little-known company called Comsar Energy Republika Srpska, headed by Russian billionaire Rashid Sardarov.[3] It has proceeded slowly in recent years and media reports have raised questions about its viability.[4]

The complaint by Center for Environment outlined how the EU’s Directive on Environmental Impact Assessment – binding for Bosnia and Herzegovina under the Energy Community Treaty – has been violated by failure to include in the plant’s environmental study many of the important elements needed to assess its likely impact on the environment, such as CO2 emissions and heavy metal pollution to air.

Most alarmingly, the data on emissions of SO2, NOx and dust from the plant are demonstrably false.

However this was not picked up by the Ministry approving the study, meaning that the authorities did not adhere to Republika Srpska law or Bosnia and Herzegovina’s obligations under the Energy Community Treaty to adhere to EU law on environmental impact assessments.

The environmental permit for Ugljevik III has already been overturned once by the Republika Srpska high court in 2017. But instead of using the opportunity to ensure a compliant environmental assessment was carried out, in July 2017 the Republika Srpska authorities issued a new permit without any additional analysis.

Center for Environment is also challenging the 2017 environmental permit in court in Bosnia and Herzegovina for its failure to assess transboundary pollution, draw up an emergency plan in case of serious accidents, or assess the planned coal storage depot in a sufficient level of detail.

“It’s a mystery why it has taken nearly four years and an international investigation for the Republika Srpska authorities to admit the very clear deficiencies of the Ugljevik III environmental assessment, but it is very welcome that it has finally happened. This would be an excellent opportunity to drop this outdated and polluting project altogether,” commented Duška Kudra of Center for Environment.

 

For additional information please contact:

Nataša Crnković
President, Center for Environment
Tel: +387(0)51 433 142
natasa.crnkovic@czzs.org

Pippa Gallop
CEE Bankwatch Network
pippa.gallop@bankwatch.org
Skype: pippa.gallop
Mob: +385 99 755 9787

 

Notes for editors:

[1] For the official announcement, see: https://energy-community.org/news/Energy-Community-News/2018/011/28a.html

[2] Center for Environment’s complaint is here: https://bankwatch.org/wp-content/uploads/2014/12/complaint-EnCom-Ugljevik-16Dec2014.pdf

[3] http://comsar.com/

[4] See eg. Capital.ba: Ako se ne produži koncesija Serdarov odustaje od TE “Ugljevik 3”, 09.08.2018 http://www.capital.ba/serdarov-odustaje-od-te-ugljevik-3/

EIB to weaken accountability mechanism, despite civil society criticism

The decision taken today by the EIB Directors during their monthly Luxembourg meeting concludes a long process of reviewing the policy that governs the bank’s Complaints Mechanism.

The Complaints Mechanism is a key tool for anyone affected by projects financed by the EIB to seek remedy for harmful impacts of EIB investments. Since its creation in 2008, it has been used by individuals and communities across the EU and beyond as the main channel to make their voices heard at the bank.

In 2017, Counter Balance and a group of 24 NGOs highlighted numerous issues with the first draft of the Complaints Mechanism policy and Operating Procedures and recommended improvements.

Recognising the profound shortcomings of that draft, EIB Directors last month requested that the bank make additional changes. The new draft does contain provisions that offer some measure of oversight by the Board but still falls short of ensuring that the Complaints Mechanism is the independent and effective accountability instrument it needs to be.

The new policy leaves room for the EIB staff and services—those whose decisions may well be the cause of adverse impacts—to interfere with the Complaints Mechanism’s decisions, thus further weakening its capacity to operate independently for those who need redress the most. Rather than raising the bar for a fairer and more transparent mechanism for those harmed by the bank’s investments, the policy undermines its legitimacy.

An independent and safe Complaints Mechanism is especially important when it comes to the EIB’s activities outside the EU, where the bank operates most often within contexts where there is closing space for civil society. In such cases, there is a high risk that the bank’s standards of public participation and open consultations are not met, and that its projects end up being associated with, contributing to, or exacerbating human rights violations and environmental damage.

Xavier Sol, Director of Counter Balance said:

“This decision shows once more a bigger governance issue within the EIB: the Management Committee of the bank is running the show and tries to sweep disturbing stories under the rug, while the Board of Directors exercises limited control. Given the current discussions on the impacts of Brexit on the EIB and the future role of the bank in the next EU budget, we think it is high time for the Directors to acknowledge the bank needs fundamental reforms.”

Kris Genovese, Senior Researcher at the Centre for Research on Multinational Corporations (SOMO) said:

“The level of interference by EIB staff in the complaint process that is baked into this policy is unprecedented among its peer institutions. Remedy cannot rely on the willingness of the party who committed the abuse. Yet, according to the new policy, no investigation report will be approved unless the EIB Management agrees with the findings of its supposedly independent Complaint Mechanism that its own actions or those of its staff were improper.”

Kindra Mohr, Policy Director of Accountability Counsel said:

“The effectiveness of an accountability tool like the Complaints Mechanism depends on its independence and legitimacy. Communities both inside and outside the European Union must be able to trust that the process and outcomes are fair and free from undue influence. Unfortunately, the EIB did not go far enough to ensure the independence of this critical forum for those who have been harmed by the bank’s operations.”

Anna Roggenbuck, EIB policy officer at Bankwatch said:

“At times when the democratic gap between the European Union and its citizens seems to be widening, we consider it crucial that people affected by EIB operations have their voices heard and their concerns adequately and safely addressed. By backtracking  on its Complaints Mechanism policy, the EIB has sent today a disturbing signal to people in and outside the EU.”

 

For further information:

Xavier Sol
Director, Counter Balance
xavier.sol@counter-balance.org
+ 32(0)2 893 08 61

Kindra Mohr
Policy Director, Accountability Counsel
kindra@accountabilitycounsel.org
+1 415 296 6761

Anna Roggenbuck
EIB Policy Officer, CEE Bankwatch Network
annar@bankwatch.org
+48 918315392 / +48 509970424

 

Notes

[1] http://www.eib.org/attachments/consultations/eib_complaints_mech_policy_en.pdf

 

Strong Commission push for climate action in the next EU budget risks backslide in Parliament and Council

The Parliament’s rapporteur on the legislation, Andrea Cozzolino, recently unveiled a proposal where he puts fossil fuels back into the scope of the European Regional Development fund. This is a disappointing development as it would enable investments that would drastically decrease the funding available for the clean energy transition, especially for the regions whose economies and energy systems need it most, all the while creating a significant carbon lock-in to fossil fuels infrastructure.

In June, the Commission committed to spending one of every four euros in the next EU Budget on climate action. At a time when it has never been more urgent to invest heavily in clean energy and low-carbon technologies, this is a welcomed move, but should not be seen as blank check to do business as usual with the remaining 75 per cent of the one trillion euros.

In one of its proposals for the future Cohesion Policy, the Commision for the first time clearly excluded a list of harmful activities from the support of European Regional Development Fund. This exclusion list was originally welcomed by many stakeholders including Bankwatch as a forward looking and ambitious proposal that provides the certainty that investors need to commit to low-carbon technologies and transition to a ‘circular economy’.

This list, if implemented correctly, would show the EU’s ambition to support clean investments, and would also serve as example for other public funds.

The Parliament’s report, however, by ceding to the pressure of the most backward-looking lobbies puts this all in jeopardy. Both the Parliament and Council should uphold this crucial provision and send a clear signal that the EU is ready to live up to its climate commitments.