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EBRD must not back Egyptian coal imports

Cairo — Ahead of tomorrow’s Board vote on the EBRD loan to CEMEX Egypt, a number of civil society organisations [*], inlcuding Egyptian groups, urge the bank to reject this project not only because it involves support for dirty coal-based production but also because it actually means promoting the plans of a repressive government despite opposition from civil society.

On February 25, the EBRD Board of Directors is expected to vote on whether to approve or not a loan of up to 50 million euros to Assiut Cement Company, an Egypt subsidiary of multinational CEMEX, which would constitute almost the entire costs of a programme of “fuel conversion and environmental upgrade”. In reality, the loan would allow the company to switch from natural gas to a combination of coal and alternative fuels (biomass, refuse-derived fuel, and/or tire-derived fuel) for its cement production operations.

“This is a loan that goes completely in the wrong direction, by making the switch from natural gas to coal which is much more polluting. Having no domestic resources, Egypt will also need to construct the whole coal import infrastructure from scratch, an expensive wasteful endeavour taking away the money from solving the burning social issues that plague the majority of the Egyptian citizens” says Bankwatch’s MENA coordinator Kuba Gogolewski. “Of great concern are also the heavy metals such as mercury and lead which will be released in Egypt’s waterways as a result of these industrial processes, especially in the context of this country’s poor track record in addressing industrial water pollution.”

“In addition, this project is promoted by the undemocratic government of Egypt, to the benefit of the cement industry which is very powerful in this country, and in opposition to civil society which has been campaigning against the switch to coal,” says Xavier Sol, Counter Balance director. “The EBRD, which has a mandate to promote democracy in its countries of operation, should not be seen anywhere near this project which would please multinationals and a repressive government and pass the pollution costs onto the citizens who have been opposing it.”

[*] Organisations signing the letter are: Bankwatch, Counter Balance, Platform, urgewald, Re:Common, Egyptian Center for Economic and Social Rights (ECESR), Centre national de coopération au développement (CNCD-11.11.11), the Habi Center for Environmental Rights.

For more information, please contact:

Kuba Gogolewski
Bankwatch MENA coordinator
Kuba.gogolewski@bankwatch.org
0032485358317

Xavier Sol
CounterBalance Director
xavier.sol@counter-balance.org
0032(0)28930861

Notes for the editors:

1. Read the letter sent by Bankwatch and other NGOs to the EBRD concerning this loan:
https://bankwatch.org/sites/default/files/letter-EBRD-Egypt-gas2coal-20Feb2015.pdf

2. Read about EBRD support for Egyptian coal projects:
https://bankwatch.org/bwmail/59/concrete-boots-already-new-ebrd-energy-policy-potential-support-egyptian-coal-projects- and https://bankwatch.org/news-media/blog/guest-post-ebrd-justification-supporting-coal-egypts-cement-industry-negligent

EIB Climate Action undermined by bank’s fossil fuel lending


Brussels — Ahead of a public consultation on the European Investment Bank’s Climate Action Programme tomorrow in Brussels [1], Bankwatch insists that, if the bank’s pro-climate efforts are to be effective, the EIB must give up its loans to fossil fuels and other climate-damaging sectors.

“Via Climate Action, the EIB dedicates about a quarter of its lending to climate-friendly projects, which is commendable,” says Bankwatch’s EIB coordinator Anna Roggenbuck. “But the irony is that what the EIB gives with one hand, it takes away with another: the bank is pouring billions into oil and gas infrastructure, polluting airports and highways and other carbon-intensive projects, all of which effectively undermine the achievements of the EIB’s Climate Action Programme.”

Just this month, the EIB announced that the Trans-Adriatic Pipeline (TAP) is one of its priority projects for 2015. [2] TAP is one of the pipelines in the so-called Southern Gas Corridor, a series of mega-pipelines meant to bring gas from Azerbaijan into Europe, and which the EU is pushing in spite of its own estimates that domestic gas demand does not warrant it. [3]

“In its paper on Climate Action that is the basis for public comments, the bank says that ‘overall GHG footprint of EIB-supported investment projects is assessed to be negative’, which is a highly misleading claim, only made possible by the use of a biased methodology,” says Bankwatch MENA coordinator Kuba Gogolewski. “What this means is that the bank is not counting a baseline scenario with low- or zero-emissions but rather compares the impacts of GHG emissions only to dirtier options.”

According to Bankwatch, the EIB needs to resolve this major inconsistency by proposing a comprehensive Climate Policy to guide all of its lending. Such a policy would:

  • ensure that the entire EIB lending portfolio (not just the Climate Action part) is in line with the EU 2050 decarbonisation objective, an objective that the EIB must adhere to as the house bank of the EU;
  • assess the climate impact of all of the bank’s lending, including financial intermediary lending, and include an annual decreasing cap on absolute GHG emissions from all the EIB’s projects;
  • propose a clear plan to phase out fossil fuel lending by 2020 and plan for the phase out of other carbon-intensive lending;
  • actively seek out opportunities to invest in renewables and energy efficiency, especially in central and eastern Europe and other regions where energy intensity is high.

“The EIB says that the current review of its Climate Action Programme is happening in preparation for this year’s Paris climate change conference,” says Roggenbuck. “But we’d be fools to believe that Paris will be a success with such patchy solutions as increasing climate friendly lending here and there. We must reduce emissions drastically and the most common sense first step in this direction is to end public support for fossil fuels now.”

Notes for the editors:

1. Read the paper presented by the EIB as a basis for the public consultation on the Climate Action Programme:
http://www.eib.org/about/partners/cso/consultations/item/public-consultation-on-eib-approach-to-supporting-climate-action.htm

2. Read about the EIB announcement on TAP:
https://bankwatch.org/news-media/blog/european-investment-bank-confirms-plans-finance-trans-adriatic-pipeline

3. Read a recent Bankwatch study on the Southern Gas Corridor:
https://bankwatch.org/publications/pipe-dreams-why-public-subsidies-lukoil-azerbaijan-will-not-reduce-eu-dependency-russia

For more information, contact:

Anna Roggenbuck, Bankwatch EIB coordinator
annar@bankwatch.org
0048509970424

Kuba Gogolewski,Bankwatch MENA coordinator
kuba.gogolewski@bankwatch.org
0032485358317

Long awaited investigation into Glencore for alleged tax dodging shows EU Bank’s lack of transparency and vulnerability to abuse

Brussels – The European Investment Bank (EIB) is virtually powerless in the face of abuse of its own funds, an internal investigation published last week by the EIB shows. What’s even worse is that the EIB’s new transparency policy – to be adopted in the coming weeks – would formally allow the bank to keep such internal investigations into abuses of its funds secret, hereby undermining public scrutiny of public money.

The draft transparency policy, which has been criticised by civil society on several occasions, includes a provision allowing the EIB to refuse the disclosure of any documents related to internal investigations, reports and audits even when they concern matters of public interest. The provision goes against EU legislation and is based on a biased interpretation of the jurisprudence of the EU Court of Justice.[*]

In parallel to this policy process, the bank last week finally released a brief summary of its 2011 investigation for alleged tax dodging into the Zambian Mopani copper mine owned by mining giant and former beneficiary Glencore. Despite numerous requests by civil society organisations, the bank’s management refused to make the outcomes of its investigation public for more than three years and even neglected the advice of its own Complaints Office to disclose it. The bank’s behaviour on the Mopani case illustrates its reluctance to face public scrutiny despite managing public funds. It was only following a recommendation by the European Ombudsman that the EIB caved in and finally released a two page summary last week.

The summary revealed that the bank never managed to complete its investigation because the beneficiaries refused cooperation:

“The work of the EIB Review Team was non-conclusive due to the difficulties faced in the investigation of the case. As not all of the necessary information could be obtained, it was not possible to comprehensively prove or disprove the allegations raised in the Leaked Draft Report regarding Mopani’s costs, revenues, transfer pricing, employee expenses and overheads.”

Consequently the EIB closed a deal with Glencore to repay the entire loan in 2012 but a proper investigation was never carried out.

Xavier Sol, Counter Balance director said:
“This confirms what we have seen on several occasions: once a deal is agreed upon the EIB is virtually powerless in the face of abuse of its funds. The Inspectorate General of the bank has clearly fallen short of its responsibilities but instead of drawing adequate conclusions, the EU Bank opts for a watered down transparency policy that would allow them to keep similar abuses secret in the future.”

Anna Roggenbuck, EIB coordinator at CEE Bankwatch Network said:
“The watering down of the EIB’s commitments to transparency is particularly worrying at a time when the Bank’s responsibilities are being expanded to orient and manage Juncker’s EUR 315 bn investment plan. As it stands today, the new transparency policy casts serious doubts over the EIB’s ability to manage EU funds in a responsible and transparent manner.”

Laetitia Liebert, Sherpa director said:
“We currently see international trends for transparency where companies, governments, and even the banks are more and more required to be transparent. This is particularly true at the EU level with the various EU directives adopted in the last few months. By reducing opportunities for transparency in its policy, which message does the Bank send to the European citizens? We are here to remind the EIB that it is a public bank that should work in the public interest and we have all the right to know how its money, our money, is managed.”


* See Client Earth contribution to the public consultation on EIB Transparency Policy:
http://www.eib.org/attachments/consultations/eib_group_tp_comments_client-earth_20150109_en.pdf

For more information contact:

Xavier Sol
xavier.sol@counter-balance.org
+32473223893

EBRD suspends loan for Romanian coal plant Turceni


UPDATE (September 7, 2015): The EBRD’s project summary document for the Turceni project now confirms that the loan has been cancelled.

Bucharest — The European Bank for Reconstruction and Development (EBRD) confirmed this week [1] that it has suspended plans to finance the refurbishment of the Turceni coal power plant in Romania [2]. The project is currently subject to a number of legal challenges on environmental grounds and Romanian authorities are investigating allegations of corruption at the plant.

“We welcome the news that the EBRD dropped financing for the coal unit at Turceni,” commented Ionut Apostol of Bankwatch Romania. “We hope that the EBRD will now focus on assisting authorities and businesses in the Turceni region to diversify away from coal and create much needed employment alternatives.”

“The Turceni project suffers from multiple legal issues including the failure to carry out a full environmental assessment and misclassification of the plant as an existing one instead of a new one to allow higher pollution levels, despite the EBRD financed project implying the reconstruction of unit 6 practically from scratch”, added Kristína Šabová from Frank Bold, Czech Republic. “Suspending financing of this project is likely to protect the EBRD from another scandal such as that at the Sostanj coal plant in Slovenia”. [3]

Thermal power plants (TPP), and particularly coal plants, are at present having difficulties in Romania because either their production is not needed or they cannot compete with prices of other energy sources. The mix of power production capacities has seen some changes in recent years, with old thermal power plants closing and the commissioning of (mainly) wind and solar facilities (many of which were supported by EBRD financing). Overall, the total installed capacity for power production remains similar to the level of the year 2000. More than half of capacity is kept in reserve and this over-capacity offers a short and medium term buffer for the system to transform into a cleaner and more efficient one and phase out fossil fuel based capacities, and it excludes the need to build new coal power plants. [4]

It was in this context that the EBRD approved a EUR 150 million loan in 2008 for the rehabilitation of units 3 and 6 at the Turceni TPP, a project that was never carried through, even though EUR 12 million in commissions were paid to the EBRD and a partner commercial bank. In early 2013, the EBRD decided to restructure and re-finance the loan arranged for the Turceni project, which turned into a EUR 200 million syndicated loan meant only for unit 6.

“Even though the loan to Turceni is just suspended at the moment, it is hard to imagine that the EBRD could possibly resume it, after having adopted its new energy policy in 2013 restricting coal lending,” comments Ionut Apostol. “According to the new policy, the EBRD can only invest in coal when cleaner and less climate damaging alternatives are not available, which is far from being the case in Romania these days.”

For more information:

Ionut Apostol, Bankwatch
+40 721 251 207
ionut@bankwatch.org

Kristína Šabová, Frank Bold
+420 720 565 672
kristina.sabova@frankbold.org

Notes for the editors:

[1] In a January 27 email addressed to Bankwatch, the EBRD confirmed that “the Bank has currently suspended considerations for financing of this project.”

[2] Turceni is the largest coal thermal power plant in Romania and it is part of a complex consisting of several coal power plants and lignite mining operations in Gorj county, south-western Romania. Out of the seven units that were built at the Turceni power plant, 3 units (plus possibly unit 6, if refurbished) are set to continue operating in the near future. The power plant uses local lignite and it was the second most polluting industrial facility in Europe in 2009; since then, facilities were built to comply with sulphur oxides emission standards. In its last form, the EBRD organised syndicated loan of 200 million euros was supposed to help finance the rehabilitation and modernisation of unit 6 at Turceni.

[3] An environmental impact assessment should have been conducted for the project along with a public participation process. This was partly triggered by an incorrect categorisation of the project, which was not considered to be about financing a new coal unit as should have been the case. As unit 6 has been out of operation since 2006 and partially dismantled, constructing unit 6 should have been considered building a plant from scratch and the baseline for this rehabilitation project should have been zero emissions. The project would have led to estimated emission levels of 1.6 million tonnes of carbon dioxide per year, as well as additional emissions of sulphur and nitrogen oxides, particulate matter and heavy metals. Furthermore, if refurbished, unit 6 of the Turceni power plant would need to comply with stricter emission limit values under the Industrial Emissions Directive (for new units) and not the emission limit value for existing units. The due diligence process conducted by the EBRD also failed to assess other issues directly related to the project, mainly the deforestation of certain areas to expand lignite mining to feed into the Turceni plant using a practice of slicing areas to avoid thorough environmental permitting. Finally, the due diligence for the project failed to review carbon capture and storage readiness for the project.

[4] More information is available in a briefing paper at
https://bankwatch.org/publications/briefing-turceni-coal-power-plant-rehabilitation

EIB set to weaken transparency standards

Brussels — One week before the European Investment Bank’s board of directors is expected to approve the bank’s new transparency policy, 13 civil society groups* monitoring the EIB warn that, as it stands, the draft policy amounts to a weakening of the already dismal transparency standards of the EU’s house bank.

In a letter sent today to the directors of the EIB who will take the final decision during their meeting on February 3, the NGOs criticise in particular that:

  • The EIB will not be responsible to disclose to the public any documents related to internal investigations, reports and audits, even if they concern matters of public interest and even once investigations are closed. This is hardly in line with EU legislation and the jurisprudence of the European Court of Justice.
  • The policy therefore disregards provisions in the Aarhus convention [1] that calls on EU institutions to make available a wide range of such information. Indeed, at the moment, the EIB only discloses a limited set of environmental documents for the projects it supports.
  • The EIB will not be required to disclose the list of final beneficiaries of its loans going through financial intermediaries – mostly commercial banks who on-lend EIB loans. Those loans will remain a black box for public scrutiny.

Xavier Sol, director of Counter Balance comments:
“The fact that the EIB is set to weaken its transparency standards precisely at the time when it will play a major role in managing the new European investment plan worth 315 billion euros is outrageous. Approving the transparency policy in its current form would mean that the European public would have very limited control over the institution which is charged with such a crucial role in alleviating the pains of the economic crisis. This is no time for the bank to hide behind a noncommittal policy, instead, it should be opening up in front of European citizens.”

Anna Roggenbuck, EIB campaign coordinator at Bankwatch, adds:
“Already now the bank is lagging behind the transparency of other international lenders. If this draft policy is approved, the EIB would become one of the most opaque financial institutions in the world. This is ironic at best coming from the house bank of the European Union which preaches transparency and accountability to the world.”

Notes for the editors:

* List of groups signing the letter: Counter Balance, CEE Bankwatch Network, BothENDS, WWF Europe, Eurodad, Centre for Law and Democracy, Ibis, Sherpa, Publish What You Fund, Arab NGO Network for Development (ANND), Transparency International (EU office), Action Aid International, Article 19.

1. The list of information provided by the EU regulation 1367/2006 which outlines how the Aarhus Convention should be applied by EU institutions includes “data or summaries of data derived from the monitoring of activities affecting, or likely to affect, the environment” as well as “authorisations with a significant impact on the environment, and environmental agreements” and “environmental impact studies and risk assessments concerning environmental elements”. In addition, the Aarhus convention mentions that each Party shall provide “sufficient information to the public about the type and scope of environmental information held by the relevant public authorities”.

2. Read about the the Aid Transparency Index and the EIB’s disappointing ranking:
http://www.counter-balance.org/european-banks-are-most-opaque-multilateral-organisations/

Croatians say no to coal in referendum

Zagreb – Inhabitants of the city of Ploče on the Croatian coast overwhelmingly rejected a plan to build an 800 MW coal plant in their town in a referendum taking place over the weekend. The vote raises questions about the acceptability of other coal projects planned in the country, including the controversial Plomin C.

„We congratulate the citizens of Ploče for the excellent result in yesterday’s referendum,” says Bernard Ivcic from Zelena Akcija. „This vote clearly shows that Croatians are worried about the environmental and economic consequences of coal plants, that such projects are not welcomed here, and that it would be very difficult for investors to implement them.”

Over 90 percent of those voting in the referendum in Ploče said no to the new coal unit, and the 60 percent attendance rate means that the vote is valid. While the referendum is not legally binding, the mayor of Ploče stated that the vote represents the will of the people and should be taken into account by central authorities.

The new 800 MW unit in Ploče was proposed last year by Luka Ploče energija and it has the backing of Croatia’s ministry of economy. However, locals have been protesting against its construction arguing that it would negatively affect the health of the people in the region.

„The referendum in Ploče is also a strong signal to the Croatian government and to our state electricity company HEP that residents of Istria could vote the same in a potential referendum about the Plomin C coal unit planned in their region,” adds Ivcic. „The time for pushing dubious projects through against the will of the people has passed.”

The Croatian electricity company HEP is planning to construct a new 500 MW unit at the Plomin power plant on the Istrian coast. The project is already marred in controversy, not only because of its potential health and environmental costs, but also because of doubts about its economic viability and concerns about the corruption record of the two companies tasked with constructing the unit, Japanese Marubeni and French Alstom.

“This referendum is not only a warning for the future of coal in Croatia, but also for the entire Balkans, where authorities have been proposing a series of environmentally harmful and economically shaky coal projects over the past years, without consulting their citizens,” says Ioana Ciuta from Bankwatch. “Listening to its citizens and rejecting coal would bring Croatia closer to the European Union’s decarbonisation goals, an objective all governments across the Balkans must take seriously.”

For more information, contact:

Bernard Ivcic, Zelena Akcja
bernard@zelena-akcija.hr

Notes for the editors:

Read more about the Plomin C plant here:
https://bankwatch.org/our-work/projects/plomin-coal-power-plant-croatia

More about coal units planned in the Balkans and controversy around them:

coal