Bankwatch

Home > Archives for Press release

Press release

European development money helps sustain fossil fuels-based companies – report

The full report is available here.

The companies – Energa and Grupa Azoty (Poland), ČEZ (Czech Republic), Elektroprivreda Srbije (Serbia), and Bulgarian Energy Holding (Bulgaria) – rely heavily on fossil fuels, primarily coal, for energy generation. Despite governments’ pledges to address the climate crisis, these major energy companies have shown no commitment to reduce their reliance on oil, gas and coal. Some of them are even developing additional coal capacity. And yet, over the past years, they have been receiving hefty financial support from both the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB).

The new report reveals that, while virtually halting their direct investments in coal in the last five years, the EIB and EBRD have provided corporate level financing and extended loans for distribution and renewable energy projects to the same fossil-fuel dependent companies. Therefore, by allowing these investments without a long term decarbonisation plan, the two European public banks have effectively turned a blind eye to the companies’ fossil fuels dependence, and ultimately helped perpetuate it.

Since 2012, the Polish state-owned energy company Energa has received generous financial support from the EBRD, the EIB and the Nordic Investment Bank. Most recently, in 2017, Energa and the EIB issued EUR 250 million in hybrid bonds with the aim of financing the upgrade and expansion of distribution system during the following two years. Nevertheless, earlier this month, Energa approved the construction of the controversial 1GW Ostrołęka C coal-fired power plant, a joint project with Enea, another state-owned energy utility.

Over the past decade, Serbia’s national power utility Elektroprivreda Srbije (EPS) has received a series of loans from the EBRD. A EUR 200 million loan approved in 2015 was meant for restructuring, thus not only legitimising EPS’s continued reliance on lignite, but effectively freeing up resources that ultimately helped perpetuate it. In 2011, EPS received a EUR 80 million loan from the EBRD for what had been termed “environmental improvements.” In practice, the coal energy company has increased its emissions, and it continues to expand its coal mines.

The report’s authors stress that, in addition, fossil fuels are fast becoming a financial liability, thus creating a tangible investment risk. The EBRD’s ongoing review of its energy strategy is a prime opportunity to ensure the bank’s investments help bring about the urgently needed transition towards sustainable energy, rather than hamper it.

The draft of the new EBRD Energy Sector Strategy acknowledges the urgent need for decarbonisation through increased support for renewables and energy efficiency, but at the same time it keeps the door wide open for fossil fuels investments. The bank also commits to encourage greenhouse gas emissions reporting and decarbonisation plans by clients with significant carbon assets, however, it lacks explicit commitment to divestment from companies that are building new coal capacities

Fidanka Bacheva-McGrath, EBRD Policy Officer with Bankwatch, says: “The EBRD needs to send a strong signal to the market that the low-carbon transition for fossil fuel dependent companies and carbon intensive economies needs to start now. It is a joke to ‘encourage’ a state owned energy utility to develop a decarbonisation plan when it is building a new coal power plant that will be in operation for decades in the future. You cannot eat your cake and have it all.”

The report underlines the need for EBRD investments in fossil fuel dependent companies to facilitate absolute emissions reductions in both the short and the long term.

Europe’s development banks must also condition any further financing for companies whose electricity or heating capacity relies on fossil fuels on emissions reductions measurable within the lifetime of projects they support.

And lastly, companies planning new coal power capacity should not benefit from any financial support.

Anna Roggenbuck, EIB Policy Officer with CEE Bankwatch Network, said: “The review of the EIB’s energy strategy expected later this year is a great opportunity for the bank to reconsider its business model for the sector. As a financial institution, the EIB should be avoid getting involved with companies facing losses due to a major carbon exposure, and as an EU institution it ought to support energy transformation. Supporting companies’ decarbonisation plans based on energy efficiency and renewable energy sources is the only way forward.”

The full report can be found here: https://bankwatch.org/publication/european-public-funding-for-fossil-fuel-dependent-companies

For additional information please contact:

Fidanka Bacheva-McGrath
EBRD Policy Officer, CEE Bankwatch Network
fidankab@bankwatch.org
Tel. +359877303097
Skype: fidanka_b
Twitter: @fidankabmg

Anna Roggenbuck
EIB Policy Officer, CEE Bankwatch Network
annar@bankwatch.org
Tel. +48918315392 / +48509970424

Use of public money to support Tuzla 7 coal power plant must be investigated, shows new complaint

The Federation of Bosnia-Herzegovina Government has already approved a guarantee for a EUR 614 million loan from the China Export-Import Bank and is trying to rush it through the Parliament before general elections on 7 October.

However, under the Energy Community Treaty, Bosnia-Herzegovina must follow EU rules on subsidies in the energy sector. Among other things, in most cases state guarantees may only cover maximum 80 percent of the total loan amount.

The proposed guarantee for Tuzla 7, however, covers 100 percent of the loan, plus interest and other associated costs. There are circumstances in which this is allowed, but Aarhus Resource Centre and Bankwatch argue that the relevant conditions are not fulfilled in this case.

“Given the extremely complicated nature of legislation on subsidies, the mere fact that the State Aid Council of Bosnia-Herzegovina approved this guarantee within eight working days of receiving the request from the Federal Ministry of Finance casts doubt on the quality of the assessment”, said Nina Kreševljaković of the Aarhus Resource Centre, Sarajevo.

“Using public money to support a new coal power plant is scandalous and deserves much more in-depth scrutiny than this. It will lock us into 40-plus more years of health-damaging pollution, greenhouse gas emissions and most likely economic losses too. The Energy Community needs to examine the case before any further steps are taken and Parliamentarians need to resist the pressure to approve the guarantee”, she added.

“Since 2017, China has required Chinese entities operating overseas to observe the laws and regulations of host countries, as well as international best practices to mitigate known risks, through its ‘Guidance on Promoting the Green Belt and Road’. China must cease financing consideration for the project while investigation on illegal state aid is underway,” stated Pippa Gallop of CEE Bankwatch Network.

 

For additional information please contact:

Nina Kreševljaković
LL.B. Aarhus Resource Centre Sarajevo, Bosnia-Herzegovina
admin@aarhus.ba
+387 33/660 588

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

Notes for editors:

The Energy Community Treaty entered force in 2006 and aims to create a common energy market between the EU and the Western Balkans, Ukraine, Moldova and Georgia. As well as implementing EU energy legislation, Contracting Parties must also implement selected EU environmental and competition legislation. For more information, see www.energy-community.org

The EU’s house bank obstructs climate action with continued fossil fuels spending and lacking investment in sustainable energy – new report

The full report can be found here.

An earlier Bankwatch report that looked into the EIB’s energy investments 2007-2010 and released in 2012, ahead of the previous review of the bank’s energy strategy, showed an increase in lending to both renewable energy and fossil fuels projects [1].

The energy strategy the EIB adopted later that year saw the introduction of the Energy Performance Standard, which in practice prevented financing to the most polluting, primarily coal-based, electricity generation projects.

Later, in 2013-2017, the EIB committed a total of EUR 52.5 billion – or more than 14 percent – of its entire portfolio to energy projects. Nevertheless, Bankwatch’s new analysis finds that under the guidance of the EIB’s current energy policy, the bank kept financing fossil fuels projects – mostly gas transportation and distribution, and mainly in western Europe, led by Italy, Spain and the UK.

The EIB’s annual fossil fuel lending should have long been on a downward trend. It seemed to have peaked in 2010, the year after the Copenhagen climate summit debacle, but it has since fluctuated. Moreover, two record loans to sections of the Southern Gas Corridor which were approved in 2018 mean the EU’s house bank is again doubling down on fossil fuels.

Over the same period, 2013-2017, energy companies with a high share of coal in their electricity and heating generation capacity – including Energa, Tauron and PGE in Poland, Endesa in Spain, PPC in Greece, and CEZ in the Czech Republic – enjoyed nearly EUR 4 billion in EIB money.

At the same time, the EIB lending for sustainable energy has been insufficient. Energy efficiency, as the bank itself acknowledges, is the most cost effective way to cut emissions and improve energy security. Yet, Bankwatch’s new analysis shows that in 20 EU countries, financing for energy efficiency projects constituted less than of the EU average (4.6% of overall EIB investments in each country).

The review of the EIB’s Energy Lending Criteria, expected to commence this year, is an opportunity to buck these trends and align the energy investments of the EU’s house bank with European countries’ commitments under the Paris Agreement.

Bankwatch’s report lists a number of steps the EIB can take to this end, and primarily ending the bank’s support for fossil fuels. This should go in parallel with stepping up support for energy efficiency and renewble energy projects, in particular to small scale, community owned, decentralized projects.

Additionally, financing for electric utilities should only be allowed under the condition they have a solid transition strategy into low emissions energy, including a commitment not to develop new coal capacity or extend the existing one.

The EIB’s next energy strategy needs to adopt the EU’s ‘energy efficiency first’ principle, and the bank needs to take a proactive approach to help stimulate energy efficiency investments.

Lastly, the new energy strategy should make the EIB pay special attention to the social and environmental sustainability of renewable energy projects, and hydropower in particular.

Anna Roggenbuck, Policy Officer with CEE Bankwatch Network and author of the report, says: “By continuing to support fossil fuels projects with billions of euros in public money, the EIB is effectively betraying Europeans. The EU’s house bank must change tack and commit to shifting its funds from fossil fuels projects to sustainable energy ones.”

Xavier Sol, Director of Counter Balance, said: “Figures clearly show that the EIB still needs to raise the bar to put the EU’s commitments under the Paris Agreement into practice. The review of its energy lending criteria is the chance to show that as the EU bank it is not lagging behind but rather showing the way to a clean energy transition and a fossil free future.”

 

For additional information please contact:

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

 

Notes for editors:

[1] https://bankwatch.org/publication/carbon-rising-european-investment-bank-energy-lending-2007-2010

Court complaints launched against Bosnia-Herzegovina hydropower permits

Aarhus Resource Centre, Sarajevo, Bosnia-Herzegovina
Coalition for the protection of rivers of Bosnia-Herzegovina
Environmental Movement Ozon, Montenegro
Green Home, Montenegro
CEE Bankwatch Network 

The river Drina constitutes the most significant habitat for the endangered Danube Salmon (Hucho hucho), which is found only in a few of southeast Europe’s cleanest rivers. [2] The area has also developed small-scale tourism facilities based on rafting and angling which would be heavily impacted by any nearby dams.

A larger version of the Buk Bijela project has been disputed since the 1970s due to its impacts on the protected Tara canyon in Montenegro, which is both a UNESCO World Heritage site and part of the Durmitor National Park.

“The Republika Srpska Ministry for Spatial Planning, Construction and Ecology extended both the environmental permits even though the investor failed to request their renewal within the legally defined deadline. The Ministry should have annulled the previous permits considering that construction had not begun within four years of their issuance. Instead, it issued an illegal decision to prolong the existing environmental permits. In contravention of Bosnia-Herzegovina’s obligations under the Aarhus and Espoo Conventions, [3] the environmental impact assessments were not repeated, nor were the public consultations, either in Bosnia-Herzegovina or Montenegro,” explained Nina Kreševljaković from the Aarhus Resource Centre in Sarajevo.

The original public consultations, held in 2012, had been poorly advertised and the comments provided by NGOs in Bosnia-Herzegovina and Montenegro were not taken into account.

“The latest version of the project is claimed in the environmental impact assessment not to impact on the river Tara, but without any evidence provided. Considering that the Tara is the main tributary of the Drina and that the reservoir would reach the Montenegrin border, it is inevitable that some impacts would occur and need to be assessed”, pointed out Nataša Kovačević from Green Home in Montenegro.

The 93 MW Buk Bijela dam is being pushed by state-owned company Elektroprivreda Republike Srpske (ERS) and a memorandum on construction of the project has been signed with China National Aero-Technology International Engineering Corporation (AVIC-ENG) in July 2017. It is expected to be financed by Chinese state banks.

The 44 MW Foča plant, a few kilometres downstream, is also promoted by ERS, but no source of financing has been mentioned publicly. Both plants are part of the so-called Upper Drina cascade, along with the planned Sutjeska and Paunci plants.

Goran Krivić, Co-ordinator of the Coalition for the Protection of Rivers of Bosnia-Herzegovina, commented that “A project similar to one cancelled half a century ago is not something that should be pushed by Republika Srpska’s institutions and representatives. This week it has even been revealed that no feasibility study has been carried out for the project. This in itself is reason enough for the project’s suspension, not to mention the threatened species and development of sports and tourism.”

“Chinese banks are already attracting negative publicity for their support for coal power plants in the region,” added Pippa Gallop from CEE Bankwatch Network. “Financing harmful hydropower plants like Buk Bijela and Foča is only going to create more disharmony between China’s business activities and Bosnia-Herzegovina’s EU aspirations. The EU urgently needs to ensure that the countries in the region adhere with EU nature protection legislation, no matter who is financing infrastructure projects, and Chinese banks need to enhance their due diligence around such projects.”

 

For further information please contact:

Nina Kreševljaković
LL.B. Aarhus Resource Centre Sarajevo, Bosnia-Herzegovina
admin@aarhus.ba
+387 33/660 588

Goran Krivić
Coalition for the protection of rivers in Bosnia-Herzegovina
gorankrivic@gmail.com
+387 65/690-972

Nataša Kovačević
Green Home
natasa.kovacevic@greenhome.co.me
+382 67 605 060,

Aleksandar Perović
Environmental movement Ozon
aleksandar.perovic@ozon.org.me
Tel: +382 40 206 564
M/Viber: +382 67 608 083
Skype: alexandar.perovic

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

 

Notes for editors

[1] Aarhus Resource Centre Sarajevo complaints:

* 77/18 (Buk bijela), dated 14.06.2018 against Decision 15.04-96-35/13 of 17.05.2018 by the Ministry for Spatial Planning, Construction and Ecology of Republika Srpska, Bosnia-Herzegovina.

* 81/18 (Foča), dated 22.06.2018 against Decision 15.04-96-43/13 of 04.06.2018. by the Ministry for Spatial Planning, Construction and Ecology of Republika Srpska, Bosnia-Herzegovina.

[2] Freyhof, J., S. Weiss, A. Adrović, M. Ćaleta, A.Duplić, B. Hrašovec, B. Kalamujić, Z. Marčić, D. Milošević, M. Mrakovčić, D. Mrdak, M. Piria, U. Schwarz, P. Simonović, S. Šljuka, T. Tomljanović, & D. Zabric. 2015. The Huchen Hucho hucho in the Balkan region: Distribution and future impacts by hydropower development. RiverWatch & EuroNatur, 30pp. https://balkanrivers.net/sites/default/files/Huchen_Study_2015.pdf

[3] Article 6. paragraphs 4, 8, and 9 of the Aarhus Convention, and Article 5 of the Espoo Convention.

Pipeline mired in controversy gets half a billion euros from European development bank

CEE Bankwatch Network * Counter Balance * Global Witness

For immediate release

With its decision, the London-based lender shrugged off the findings of two independent evaluations blasting the project’s compliance with the EBRD’s Environmental and Social Policy, the rules which place restrictions on the types of activities the bank can finance.

The first [2] details how construction on TAP has led to at least thirteen formal complaints lodged with project financiers [3] and demonstrates violations to the Equator Principles [4], the minimum standards for responsible investment and management of environmental and social risk in the project finance sector and a benchmark for those EBRD policies.

The second report from Ramboll Environ, a private consultancy commissioned by TAP AG itself, finds ‘major non-compliance’ [5] with project construction and certain aspects of the bank’s Environmental and Social Policy.

Furthermore, in the southern Italian province of Lecce where TAP makes landfall, the project is the subject of an ongoing investigation by the public prosecutor concerning the authorisation and fulfilment of its environmental impact assessment [6].  

The prosecutor is also looking into allegations that the project fails to comply with the EU’s directive on industrial risk, which may pose a serious public security threat to the four communities located near to the planned pipeline receiving terminal.

Elena Gerebizza, energy campaigner with Re:common, said, “The EBRD failed in its due diligence by refusing to properly listen to the people of Melendungo, the community on whose shores TAP arrives and who for years have resisted the devastation wrought by this unwanted project. We add our voices to those in Melendugno, calling on the EBRD to carry out a proper investigation and independent assessment of the project.”

Fidanka McGrath, EBRD policy officer for Bankwatch, said: “The EBRD has taken a long time to approve the TAP project, but the fight from locals and the major non-compliance findings of consultants show that it is not fit for purpose. The massive injection of public money in the Southern Gas Corridor, that TAP is part of, has not been enough to make right everything that is wrong with the pipeline: from fueling corrupt and oppressive regimes, the project tramples on the rights of farmers and communities, and ends by locking in Europe to fossil fuels.”

Xavier Sol, Director for Counter Balance, said, “The EBRD has taken today an unfortunate decision to fund TAP. As the mayor of Melendugno has said, the EBRD made no real effort to properly consult locals impacted by the pipeline and did not conduct a thorough and independent assessment of the project. More should have been expected from this public bank to really act in the public interest. Public funds end up supporting an imposed mega infrastructure lying on unstable ground, given the recent change of government in Italy. ”

With today’s decision from the EBRD, development banks together have funded over EUR 6 billion for the Southern Gas Corridor [7], the 2000 kilometre stretch of pipeline beginning in Azerbaijan and spanning Turkey before linking up to TAP.

 

For more information contact

Fidanka McGrath
EBRD policy officer, CEE Bankwatch Network
Email: fidankab@bankwatch.org

Elena Gerebizza
Energy campaigner, Re:Common
Email: egerebizza@recommon.org

Notes

[1] https://www.ebrd.com/work-with-us/projects/psd/trans-adriatic-pipeline-project.html

[2] https://www.banktrack.org/download/the_transadriatic_pipeline_project_identified_noncompliance_with_the_equator_principles/the_tap_project_identified_noncompliance_with_the_equator_principles.pdf

[3] The complaints have been received by the European Investment Bank, the EU’s bank that in February signed off on a loan of one and half billion euros for TAP. The EBRD will register complaints only after it has approved a project.

[4] The Equator Principles are a well-established risk management framework currently adopted by 89 of the world’s top commercial banks in order for them to assess and manage environmental and social risk when advising on or financing certain categories of projects. See http://equator-principles.com/members-reporting/

[5] https://www.tap-ag.com/assets/07.reference_documents/english/Project%20Finance%20Disclosure/Executive%20Summary%20of%20TAP%20Site%20Visit%20Monitoring%20Report%20Spring%202017_UK2222080_Issue_01a.pdf

[6] https://www.ilfattoquotidiano.it/2018/01/09/tap-la-procura-di-lecce-riapre-linchiesta-dopo-lesposto-di-otto-sindaci-salentini-unico-gasdotto-con-snam-leggi-aggirate/4082033/

[7] https://docs.google.com/spreadsheets/d/1NktFpFQY8x1Y8pxnGiEnL3i5hlKIq2GRsl5Vm3u4vt8/edit#gid=247408276

Promises for coal jobs in southeastern Europe are dangerously out of touch with reality – new study

In this analysis covering eight southeast European countries [2], CEE Bankwatch Network finds that claims that the coal industry will create or maintain tens of thousands of jobs in the region – a key argument used to justify building new coal units or prolonging the life of unprofitable, old and polluting ones – are greatly exaggerated.

According to Bankwatch estimates, while proponents of coal have overall claimed that 10,030 jobs would be maintained and 17,600 new jobs created, a reduction of workplaces by around 5,170 is more likely.

The planned 500 MW Kosovo e Re power plant is the regional prize winner in terms of exaggerated employment claims. Media statements by the concessionaire suggest that 10,000 jobs would be created during the construction phase and 500 during operation. Yet the Bankwatch analysis shows that no more than 1,200 workers should be required during the construction stage – and many of them are likely to be imported specialists – while no more than 190 should be required during operation.

At the same time, overstaffed coal mines in the region will see large reductions in employee numbers whether new coal power plants are built or not.

‘Governments in the region which pretend the coal industry can be kept afloat are merely deceiving people. The industry is dying and the promises of job creation are keeping workers and communities trapped into an altered reality,’ says Ioana Ciuta, Bankwatch energy coordinator and co-author of the study. ‘Meanwhile, employment in renewables has reached 1.5 million in the EU alone and it’s growing. There are alternatives for people, if only governments would put as much effort into promoting them as they put into saving coal.’

‘That the coal age is coming to an end is a fact and southeastern Europe is not immune to this trend,’ says Pippa Gallop, Bankwatch research coordinator and co-author of the analysis. ‘Resources that governments now waste on propping up a dying business need to be invested in helping regions transform away from coal from today, as many mines have been laying off workers for years already.’

 

Notes to editors:

[1] The study can be found HERE.

[2] The countries covered in the study: Bosnia and Herzegovina, Bulgaria, Greece, Kosovo, Macedonia, Montenegro, Romania and Serbia

 

For further information please contact:

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

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