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The Runcurel expropriations, Europe’s second most harmful subsidy

The Romanian Government has been named and shamed today in a public fossil fuel subsidies awards ceremony in Brussels. From 10 April till 8 May, the public voted on the deadliest, dirtiest and sneakiest subsidies to fossil fuels in Europe. Our country was shamed for fostering land expropriations required for expanding a coal mine, displacing families and destroying nature.

In today’s award ceremony, Romania came in second in the Deadly Funding Award category. Declaring the project one of “public utility and national interest”, EUR 3 million were allocated from the state budget through Government Decision 960/2015 to buy 341 hectares of land and immediately hand them over to Oltenia Energy Complex. Owners will therefore receive a mere 1 EUR per square metre, regardless of what they own – be it forests, orchards or houses. 113 hectares of forest, two historical monuments and an entire village will be wiped out from the map. This year, the Government plans to publish two similar decisions for the expansion of the Jilț Sud and Roșia mines.

European countries have all agreed to scale up their efforts to tackle climate change in compliance with the Paris Climate Agreement. Still, governments and other public institutions all over Europe are spending billions of euro on funding one of the main causes of climate change: the extraction and burning of fossil fuels. By providing subsidies, governments end up taking one step forward and two steps back when it comes to climate action.

Alexandru Mustață, Bankwatch Romania energy campaigner said: “We are hoping that this award will make the Romanian Government reconsider spending another 2.5 million euro for two more mine expansions. Enough people have already suffered from the Runcurel expropriations.”

CAN Europe’s Director Wendel Trio explained: “These awards reveal that financial commitments are not consistent with Government promises to tackle climate change in line with the Paris Agreement. With the awards we expose a large amount of largely hidden subsidies for fossil fuels and call on all European Governments to phase them out urgently and no later than 2020. We also ask them to make their budgets 100% climate-friendly and implement the clean energy transition as soon as possible. They must put their people and environment ahead of polluting fossil fuels.”

How Europe’s bank spends cash for climate undermines Paris commitments

The EU’s 28 finance ministers will be meeting tomorrow (May 23) to discuss the priorities of the European Investment Bank (EIB) for the coming year. A new analysis finds the bank’s contribution to Europe’s response to the climate crisis has been worryingly insufficient and needs to be stepped up.

An uneven investment strategy across the EU’s 28 Member States and a lack of added value by one of its main financial tools means that the EIB puts the EU at risk of not meeting its climate targets under the Paris Agreement, according to a new briefing from Counter Balance and CEE Bankwatch Network.

The full briefing is available here on the Bankwatch website.

The EIB’s “climate action” lending has increased last year to a total of EUR 17.5 billion. But, as the briefing shows, in as many as 12 Member States less than 10 per cent of EIB loans support projects intended to reduce greenhouse gas emissions and facilitate adaptation to the impacts of climate change.

Most of these are ‘cohesion countries’, where GDP is lower than the EU average, hence the greater need for climate action money. Nevertheless, the briefing finds that EIB money for climate action is overwhelmingly allocated to the more advanced economies of the EU.

The briefing also shows how the European Fund for Strategic Investment (EFSI), the guarantee mechanism rolled out by Commission President Juncker to attract private capital, failed to reach the 25 per cent climate action threshold set by the EIB, with just EUR 2.5 billion in 2016 allocated to projects that contribute to climate change mitigation and adaptation.

This again bodes poorly for the ‘cohesion countries’, where EFSI climate finance did not exceed 10 per cent of total loans to the region. Conversely, 70 per cent of the money for renewable energy projects went to a single country – Belgium – while 80 per cent of money for energy efficiency was earmarked for France, Finland and Germany.

Anna Roggenbuck, EIB policy officer at CEE Bankwatch Network, said: “Clearly the EIB needs to do better with its climate money, especially for those who need it most. In addition to more for renewables and energy efficiency, the bank needs to move away from the fossil fuel investments that undermine its progress on climate action elsewhere, like the massive EUR 3 billion loans proposed for sections of the Southern Gas Corridor.”

Xavier Sol, Director of Counter Balance, said: “For all the fanfare pumped by the Commission about the EFSI, it has not lived up to its billing so far, especially in terms of contributing to European cohesion. The geographical concentration of the funds remains problematic for the second consecutive year, despite it being repeatedly pointed out by both civil society and the European Parliament. This is certainly an issue that European finance ministers need to address, also in the context of Brexit and its uncertain consequences on the EIB.”

For more information contact:

Xavier Sol
Director, Counter Balance
xavier.sol AT counter-balance.org
+32 2 893 08 61
Twitter: @xavier_sol

Anna Roggenbuck
EIB Policy Officer, CEE Bankwatch Network
annar AT bankwatch.org
+355 683 281 550 (only available until May 24)

 

Image by Steintec

Investment Plan for Europe more climate friendly, but European Parliament shows little ambition

Today in Strasburg, the European Parliament lead committees have brought the European Fund for Strategic Investments (EFSI) closer to compliance with the Paris Climate Agreement. However, they have once again fallen short of eliminating fossil fuel subsidies, which stand in the way of climate action.

Today the ECON/BUDG committees (1) voted on the European Parliament’s position on the future of the EFSI, the cornerstone of the Investment Plan for Europe. The committees have endorsed a 40% target on climate action. They also empowered the EFSI steering board, a governance body led by the European Commission and the European Investment Bank overseeing the strategic direction of the fund, to develop a climate test which all eligible projects and the overall EFSI portfolio have to pass.

In a previous vote on the prolongation of the EFSI in the ITRE committee MEPs agreed to even higher climate protection targets and the introduction of earmarking for energy efficiency. Those more ambitious climate action elements though have not been picked-up by the ECON and BUDG committees.

Overall, this position of the European Parliament does not go much further than what the European Commission and Council proposed earlier.

In September 2016 the European Commission published its proposal for the prolongation of the EFSI until 2020 – two and a half years beyond its initial term – with the aim to leverage 500 billion euro in additional investments across the EU. The Commission’s proposal offered some positive climate action provisions, such as setting a 40% target for projects with climate relevance or providing for technical assistance to beneficiaries to develop clean energy projects, though it still allows for financing of fossil fuel infrastructure (2).

In December 2016 the ECOFIN council supported the positive climate protection provisions of the Commission’s proposal. However, they still did not exclude financing for fossil fuel infrastructure from the EFSI.

Markus Trilling, Finance and Subsidies Policy Coordinator at Climate Action Network (CAN) Europe said:
“By introducing a climate proofing tool for the entire EFSI the European Parliament finally acknowledges the obligations stemming from the Paris Climate Agreement, namely to shift financial flows and investments in order limit climate change to 1.5C.”

“However, the European Parliament missed out on the most straightforward way to achieve compliance with the climate protection requirements, namely to ban fossil fuels. Now it is on the Steering Board to develop and, even more important, to enforce climate impact assessment tools which guarantee the EFSI is fit for future and contributes to catalyse the low-carbon and clean energy transition.”

Xavier Sol, Director at Counter Balance said:
“Reinforcing climate action as part of the Investment Plan for Europe is a welcome step. Indeed, EFSI has been supporting numerous fossil fuel infrastructure, namely gas projects, as well as high-carbon transport infrastructure. Therefore, we hope the changes brought forward by the Parliament will contribute to reverse this trend and force the EIB to rule out such investments.”

Anna Roggenbuck, Policy Officer at CEE Bankwatch Network said:
“Endorsing a 40% target on climate action was awaited and necessary step given the EFSI disappointing climate action record in 2016. Perhaps this will finally give the Fund a boost to direct financial guarantees towards this type of investments. We hope that this will also be an incentive for financing renewables and energy efficiency projects in countries where so far EFSI has not been utilised.”

 

For more information, contact:

Nicolas Derobert, CAN Europe Communications coordinator, nicolas@caneurope.org, 00 32 483 62 18 88

Xavier Sold, Counter Balance director, xavier.sol@counter-balance.org, 00 32 473 223 893

 

Notes for the editors

(1) http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&reference=CJ16-OJ-20170515-1&language=EN

(2) “The Steering Board shall provide detailed guidance and assessment tools, in particular with regard to eligible projects and to the overall portfolio of the EFSI, with particular regard to COP21. That guidance shall ensure that at least 40 % of EFSI financing under the infrastructure and innovation window supports project components that contribute to climate action”

Italian authorities overrun communities in a bid to enable Europe’s dash for gas

In a last minute attempt to force facts on the ground, the Italian authorities have enabled the removal of a group of olive trees to make room for a future construction site of the Trans-Adriatic Pipeline (TAP), despite an earlier agreement between the company and local institutions. Nevertheless, the company has not been able to clear the site by the official deadline and the residents have vowed to step up their protest against the largest energy project the EU is currently pursuing.

The 3500 kilometers long Southern Gas Corridor (SGC) is intended to bring to Europe 10 billion cubic meters of gas per year from Azerbaijan via Georgia, Turkey, Greece, Albania, and Italy. TAP, the western leg of the SGC, is planned to reach the shores of southern Italy, near the town of Melendugno.

Yet, local communities on Italy’s southern coast fear the massive pipeline and its accompanying infrastructure could have irreversible impacts on the peaceful Apulia region whose economy is dependent on tourism and agriculture.

In late March the company, TAP Ag, started works intended to uproot over 200 olive trees to make room for the construction of the western end of the pipeline. This move was met with fierce but peaceful popular resistance, and in late April, after a series of meetings with the mayor of Melendugno and the local prefect, the company decided to suspend the works ahead of the official deadline of April 30th, until the end of the 2017 tourist season.

Still, in the last week of April the company’s excavators unexpectedly arrived at the site late at night, after police had breached the protest barricades, blocked nearby roads and rounded up local activists. Although 11 more trees were removed, the company will not be able to commence construction as 16 other ancient olive trees, which have a legal protection as natural monuments, remain at the site.

The local residents have repeatedly stressed that their concerns extend well beyond the local olive grove. They have campaigned against the TAP pipeline since nearly five years, as they perceive it as an imposed mega-project, bound to impact people and the environment in Europe and beyond. Feeling betrayed by their own state, a few Melendugno residents have started a hunger strike demanding the government to engage in an open dialogue on its support to the project.

But the people in Melendugno are not alone in opposing this pipeline. Farmers and land owners in Greece have also been protesting the pipeline project on very similar grounds, and residents in more than 30 communities across Albania, whose livelihoods depend on agriculture, have been raising similar concerns about the removal of vineyards, plum trees and olive groves for the construction of the TAP pipeline.

In parallel, the project has raised serious concerns in terms of transparency. Already contested for its dodgy links to the Azeri regime, the pipeline was recently the subject of an extensive investigation conducted by the Italian magazine L’Espresso. Shedding light on TAP and TANAP (the Trans-Anatolian Pipeline) and the network of state-owned companies with links to Vladimir Putin, Recep Tayip Erdogan and Ilham Aliyev as well as Russian oligarchs involved in the projects, the investigation reinforces earlier concerns that the project was designed to serve the interests of a few, at  citizens’ expense.

Gianluca Maggiore, spokesperson of the No TAP Committee, says: “The local residents have made it clear we will not allow this destructive project to go ahead. Our opposition has gained broad support across the country and beyond, proving this project is simply not feasible. There are still numerous outstanding technical issues around the next phases of the works and their compliance with the requirements of the environmental impact assessment. However, we don’t oppose the TAP project just to defend our lands. Designed to fill the pockets of three authoritarian regimes with dismal human rights record – in Azerbaijan, Russia and Turkey – this project prioritises geopolitical games over the actual needs of people and the environment.”

Elena Gerebizza, campaigner with the Italian NGO Re:Common , says: “The Italian government and the European Commission should acknowledge the reasons behind the peaceful resistance to TAP in Italy for years now, and review the political and financial support to the project. TAP is not bringing any benefits to Italian and EU citizens, who are rather asked to bear the costs of this mega-project”.

Xavier Sol, from the European civil society coalition Counter Balance, says: “The situation on the ground looks very far from the rosy picture described by the promoters of the project. It is high time for the European Commission to stop supporting this project which is faced with local resistance, is not in line with the EU’s climate commitments under the Paris Agreement and supports oppressive regimes.”

For more information contact:

Gianluca Maggiore, local NO TAP committee spokesperson
+39 339 684 7706

Elena Gerebizza, Energy Campaigner Re:Common
egerebizza@recommon.org
+39 340 670 53 19

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

Planned power plants in the Balkans need review as EU adopts tougher pollution standards

The European Union has today approved an updated set of binding standards for power plants, which include new, stricter pollution limits.

The standards, known as the LCP BREF [1], were adopted today by the IED Article 75 Committee [2]. These standards do not address CO2 and other greenhouse gas emissions, and therefore would not help countries meet their obligations under the Paris Agreement. Yet, once implemented, they will help prevent thousands of premature deaths caused by air pollution from coal power plants [3], by restricting emissions of sulphur dioxide, dust, nitrous oxides, hydrogen chloride, hydrogen fluoride and mercury.

Several Western Balkans countries already require the use of the EU’s BREF standards in their legislation as a basis for issuing permits. As a result, as soon as the new standards are published in the EU’s Official Journal later this year, they will also apply to new plants across most of the region [4]. Therefore, governments in Bosnia-Herzegovina, Kosovo, Macedonia, Montenegro and Serbia – where planned new coal power plants are most likely to be affected by the updated BREF [5] – need to revisit investment plans to ensure the project designs are indeed in line with the new standards and consider the possible financial implications.

Ioana Ciuta, Energy Co-ordinator at CEE Bankwatch Network, says:

Governments across the Western Balkans urgently need to review their plans for new thermal power plants. If they fail to comply with the new standards they will be landed with expensive investment costs within just a few years.

Pippa Gallop, Research Co-ordinator at CEE Bankwatch Network, says:

None of the new coal plant projects in the region appears to have taken these new standards into account in their planning. But it would be a lot cheaper for them to adjust the project designs now than to have to carry out retrofits in a few years’ time.

For more information contact:

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

Ioana Ciuta
Energy Co-ordinator, CEE Bankwatch Network
ioana.ciuta@bankwatch.org
+40 724 020 281
Twitter: @unaltuser

Notes:

[1] Large Combustion Plants Best Available Techniques reference document. This is one of a series of BREF documents for different industrial sectors.

[2] The Industrial Emissions Directive (IED) Article 75 Committee is a body established by Article 75(1) of the IED, assisting the Commission in elaboration of implementing acts. The Committee is composed of the Member States and is chaired by the Commission. The Committee adopts decisions on BAT conclusions.

[3] EEB, HEAL, CAN Europe, WWF European Policy Office, and Sandbag: Lifting Europe’s Dark Cloud, October 2016: http://www.eeb.org/index.cfm?LinkServID=E3882544-5056-B741-DBB3E8DE57F619F6

[4] All of the Western Balkans countries refer to Best Available Techniques in their legislation but only Albania, the Federation of Bosnia and Herzegovina, Macedonia and Montenegro explicitly refer to the EU reference document. Serbia and Republika Srpska need to adopt these standards as soon as possible to provide clear guidance and increase regulatory certainty for investors.

[5] These include:
Bosnia-Herzegovina: Tuzla 7, Banovići, Kakanj 8, Ugljevik III, Gacko II
Kosovo: Kosova e Re
Macedonia: Oslomej reconstruction
Montenegro: Pljevlja II
Serbia: Kostolac B3

Overlooked carbon costs could turn Western Balkans’ new coal power plants into white elephants – analysis

A new Bankwatch analysis examining ten coal-fired power plant projects across the Western Balkans finds that, once the cost of carbon emissions allowances are factored in, they could become a serious liability for both the companies involved and the public. Moreover, only a few feasibility assessments for coal power plants in the region are publicly available, and most of those have failed to properly take carbon costs into account, the briefing authors note.

The full briefing can be downloaded from here: https://bankwatch.org/sites/default/files/briefing-Balkans-CO2-29Mar2017.pdf

The EU’s Emissions Trading Scheme (ETS), one of Europe’s key instruments for reducing greenhouse gas emissions and tackling the climate crisis, obliges companies to purchase allowances for every tonne of carbon dioxide they emit. As countries of the Western Balkans are already working to join the EU, entering the ETS could effectively render a number of coal-fired power plants across the region stranded assets, the analysis shows.

Even at just EUR 5 per tonne of CO2, Montenegro’s Pljevlja II project, among the smallest in the region, would have to foot an additional EUR 8 million bill every year for its carbon emissions. With CO2 price set at EUR 35 per tonne – a price that may well be reached by 2030 – this extra annual cost would climb to no less than EUR 55.6 million.

For the 600 MW Ugljevik III in Bosnia-Herzegovina, the largest coal power station currently planned in the region, the yearly carbon bill would range between EUR 21 million and EUR 146 million, depending on the CO2 price.

Promoters of new coal projects, primarily state owned utilities, have so far overlooked these extra costs. For example, the feasibility study summary for Serbia’s Kostolac B3 plant explains that carbon costs had been left out on the assumption that they would be covered by the state. In practice, however, state aid rules that apply to Serbia as a signatory to the Energy Community Treaty forbid this kind of payment.

At the same time, the project’s sensitivity analysis, which does include carbon costs, leaves no doubts that “even a low CO2 price is enough to render the plant uneconomic,” according to Bankwatch’s assessment.

These findings illustrate the grave economic risk that investment in new coal power entails for companies and the public alike. Decision-makers, the briefing authors state, should revisit the feasibility of all coal power projects after applying shadow carbon pricing, and before allowing any further implementation of these plans.

In addition, governments that seek to secure future electricity supply have to “prioritise demand-side energy efficiency as the most sustainable long term way to avoid shocks from prices of either CO2 or imported fuels.”

Pippa Gallop, Research Co-ordinator at CEE Bankwatch Network and co-author of the briefing, says:
“New energy infrastructure built now will last for several decades and has to be future-proof. Legislation and demand patterns are going to change significantly, and investments have to be flexible enough to take account of this. But the Balkan coal plans are the opposite of flexible – they are not even likely to be feasible under today’s conditions of low electricity prices, let alone tomorrow’s conditions with CO2 pricing and higher environmental standards.”

Ioana Ciuta, Energy Co-ordinator at CEE Bankwatch Network and co-author of the briefing, says:
“Even with low CO2 prices, stranded assets are already reality in many parts of Europe. E.ON already plans to close 13 GW of its coal and gas capacity across Europe, and Enel intends to close 23 coal and gas power stations by 2019 in Italy alone. Behind these developments are the rise of renewable energy and the drop in electricity prices across most of Europe. So decision makers in the Western Balkans would be wise to put the money where the future is, rather than wait and adapt when they have no other choice.”

For more information contact:

Ioana Ciuta
Energy Co-ordinator, CEE Bankwatch Network
ioana.ciuta@bankwatch.org
+40 724 020 281
Twitter: @unaltuser

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