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Home > Archives for Press release

Press release

Pipe Dreams: Why the Southern Gas Corridor will not reduce EU dependency on Russia


Brussels – The Southern Gas Corridor [*], the EU’s new pet energy project, is not only unnecessary in light of gas demand projections, but also seems likely to fall short on the much flaunted goal of bringing energy independence from Russia, according to a new NGO study “Pipe Dreams” published today.

The authors of the study are CEE Bankwatch Network, Re:Common, Platform, and urgewald.

The study is available online here:
https://bankwatch.org/sites/default/files/PipeDreams-LukOil-21Jan2015.pdf

Photos from the study are available here:
http://stories.bankwatch.org/azerbaijan

According to calculations included in the study, the 16 billion cubic meters of gas yearly planned to be brought into Europe via the Southern Gas Corridor might not be necessary after all. The EU already has an overall surplus of gas import infrastructure. According to European Commission scenarios, natural gas imports to Europe are expected to decrease by 2050 under all scenarios included in the EU 2050 energy roadmap. This means that the infrastructure surplus will just widen over the next decades, potentially meaning that a costly mega-structure such as the Southern Gas Corridor will turn into a liability.

Despite the Southern Gas Corridor being touted as Europe’s solution to reduce energy dependency on an unreliable Russia, the irony is that the project involves Russian company Lukoil benefiting from 950 million US dollars worth of loans from the EBRD and the Asian Development Bank for the development of the Shah Deniz field. Since 2014, Lukoil has been a target of EU and US sanctions alongside other Russian companies. Lukoil, a long-term EBRD beneficiary, has a dismal environmental and human rights record at its past operations in Russia, one notable example being the destruction of Komi lands by spills.

In another vulnerability of the gas corridor, turning Azerbaijan into the new gas supplier for Europe only leads to strengthening an authoritarian regime that over the past months has undergone one of its most abusive stages, arbitrarily imprisoning a number of high-profile opposition figures. Arguably, Azeri President Ilham Aliev has been able to tighten the grip at home not in the least because he emerged as a potential more important ally following the Russian invasion of Ukraine.

“The Southern Gas Corridor is actually a corridor of abuses leading from the Caspian into Europe,” comments Pippa Gallop from Bankwatch, one of the authors of the study. “From arbitrary arrests in Azerbaijan, to expected militarisation in Turkey along the route similar to what we have seen with the Baku-Tblisi-Ceyhan pipeline, to companies apparently trying to ignore court rulings in Italy in order to push for the pipeline. This is no way for Europe to ensure its energy independence, it’s just switching our dependency from one authoritarian ruler to another.”

“Ever since the Russian invasion, the Commission has repeatedly emphasised that the best way to ensure energy independence is via reducing demand,” adds Klara Sikorova from Bankwatch, another author. “In central and eastern Europe, the most vulnerable region to Russia’s energy whims, the energy savings potential is huge. If the EU has the money for such a mammoth project as the Southern Gas Pipeline, why doesn’t it spend it on measures which are cheaper and safer such as energy efficiency? This looks an awful lot like blindness if not hypocrisy and dirty lobbying.”

In brief about the Southern Gas Corridor:

Estimated to cost 45 billion US dollars, the Southern Gas Corridor is a chain of projects meant to bring gas to Europe from the Shah Deniz offshore gas field in Azerbaijan, owned by British Petroleum, Russia’s Lukoil and Azerbaijan’s SOCAR. The corridor would pass through Georgia, Turkey, Greece, Albania and Italy to other EU markets, and consists of the South Caucasus Pipeline extension, Trans-Anatolian Pipeline (TANAP), Trans-Adriatic Pipeline (TAP) and other branch lines. Turkmen gas may become a part of the equation at a later stage.

The Southern Gas Corridor is set to be backed with public money via the Connecting Europe Facility, potentially the European Investment Bank (EIB) and the Project Bonds Initiative, and indirectly via a loan by the European Bank for Reconstruction and Development (EBRD) to Lukoil for the second phase of developments at Shah Deniz, a loan set to be approved in early 2015. It is one of the most important projects on the EU list of Projects of Common Interest which are to receive political and financial backing in the following period.

For more information, contact:

Klara Sikorova
CEE Bankwatch Network
+ (420) 274 822 150, Ext. 27
klara.sikorova@bankwatch.org

Ohrid Lake facing damage by EBRD financed infrastructure projects

Concerns mount about increasing threats to Macedonia’s protected areas and the Lake Ohrid UNESCO site by EBRD investments in fast-tracked infrastructure projects.

On 13 January the Macedonian parliament is set to approve a sovereign guarantee for a loan of up to EUR 160 million for road projects, including the Ohrid-Pestani road that threatens the integrity of the Lake Ohrid World Heritage site of Outstanding Universal Value and the Galicica National Park. The road section is part of a new expressway to the Adriatic sea that threatens to significantly damage the landscape and biodiversity value of Macedonia’s prime tourist attraction.

“It is absurd to damage the UNESCO site and the Galicica National Park, in order to turn Lake Ohrid into a transit stop on the way to the seaside. Macedonian parliamentarians should question the rationale of this investment.” said Fidanka Bacheva-McGrath, EBRD Policy Officer at Bankwatch. “It is beyond comprehension, how this infrastructure is going to encourage regional development, if it will damage Macedonia’s main tourism asset – the natural and landscape value of the Lake Ohrid area?”

The state guarantee will benefit an EBRD investment into a National Roads Programme that includes four road sections. The project was approved by the bank’s board in November and financing of EUR 74 million for two sections was already committed by the bank, however the approval of the second tranche of EUR 86 million that concerns the construction of the Ohrid-Pestani section is subject to completion of environmental and social procedures.

The slicing into small sections of the new expressway around Ohrid and the bundling of the Ohrid-Pestani section within a large investment package is an attempt to conceal the significant impacts of the new road. This infrastructure project will necessitate the rezoning of 54 hectares of the Galicica National Park, and furthermore, UNESCO has already expressed its grave concerns about the lack of comprehensive infrastructure planning in the Lake Ohrid World Heritage site. [1]

“It appears that both the EBRD and the Macedonian authorities have failed to learn a lesson from the Boskov Most hydropower project, where in 2011 the bank approved EUR 65 million sovereign guaranteed loan for a dam in the Mavrovo National Park,” says Pippa Gallop, Bankwatch research coordinator. “A year ago the bank’s Project Compliance Mechanism found the project failed to comply with the bank’s own environmental standards and last month the Bern Convention opened a case as well. The Ohrid-Pestani road is bound to run into the same complications, so decision-makers should think twice before pushing it ahead in spite of all odds.”

For more information, contact:

Fidanka Bacheva-McGrath
Bankwatch EBRD Policy officer
fidankab@bankwatch.org

Notes

For more background, read a letter sent to the EBRD concerning this project:
https://bankwatch.org/sites/default/files/letter-EBRD-MKroads-06Nov2014.pdf

[1] The Galicica National Park and the Ohrid Lake UNESCO World Heritage property of Outstanding Universal Value (OUV) are under severe pressure from several projects including a ski resort, a lakeside tourist resort, Corridor VIII railway and the Ohrid-Pestani road. UNESCO expressed concern regarding the lack of comprehensive infrastructure planning and impact assessment for the Ohrid region at the

UNESCO Doha meeting in June 3, 2014:

“There is some concern about the potential individual and cumulative negative impacts of the planned infrastructure projects on the OUV of the property, and ski developments in the property would be likely to be incompatible with its World Heritage status. The mission’s recommendations should be recalled, in particular that a comprehensive action plan for the lakeshore be developed before the projects progress further and that Environmental and Heritage Impact Assessments of these projects be prepared in conformity with IUCN’s World Heritage Advice Note on Environmental Assessment, and the ICOMOS Guidelines on Heritage Impact Assessments for World Heritage cultural properties, and submitted along with further technical details of these projects to the World Heritage Centre for review by the Advisory Bodies before any decisions are taken that would be difficult to reverse, in accordance with Paragraph 172 of the Operational Guidelines.”

Juncker’s investment offensive risks turning against Europeans

Brussels – Environmental NGOs call on President Juncker, the European Commission and the European Investment Bank to consider for financing from the 315 billion growth package only projects which are sustainable and in line with EU goals and only after proper public consultation with potentially affected communities.

“The idea of an investment offensive to stimulate the real economy in Europe is potentially good, but seeing what projects member states want prioritised for financing raised alarm bells,” comments Markus Trilling from CEE Bankwatch Network. “Offering public guarantees for highly risky projects such as mega-coal units, nuclear plants or incinerators is no way to ensure the sustainable development of European economies. On the contrary, it’s making Europeans pay for projects which contradict EU goals such as fighting climate change. It’s an offensive against Europeans.”

“There is a huge pipeline of energy efficiency, renewable energy and more green projects in Europe that should be the focus of this investment package: they are the best placed to deliver more and better jobs, a safer and more stable energy market, and a healthier environment. President Juncker should not miss the opportunity to invest public money where it most benefits the people and their future”, said Sébastien Godinot, Economist at WWF European Policy Office.

Ahead of the European Council December 18-19, during which the approval of member states will be sought for the investment package, six major European environmental NGOs sent a letter to the European Commission and the European Investment Bank asking the institutions to pay heed to five recommendations concerning the selection of projects:

  1. that full transparency is ensured during the process of selection of projects and that meaningful public consultations are conducted before financing is agreed,
  2. that projects selected are fully in line with the EU 2050 climate and biodiversity goals,
  3. that projects financed contribute to energy and resource efficiency and to the decarbonisation of energy and transport systems in line with the climate imperative, which would come with important economic gains,
  4. that money is benefiting local communities instead of being wasted on carbon and resource intensive large scale projects [*],
  5. that financial instruments are used wisely making sure that investment risks are not socialised while profits privatized.

An example of how such smart spending from the growth package could look like can be found in Anne Valley, Ireland, where an integrated wetland was constructed instead of installing a traditional water treatment plant. Not only is the wetland more efficient in clearing mostly livestock wastewater than a traditional plant, it also offers multiple benefits like flood control and climate regulation. Capital costs were €715,000 for the project – less than half the estimated cost of an equivalent traditional plant (€1,530,000). Annual maintenance costs are also lower. In addition €220,000 was spent on new tourism facilities which are creating additional economic value, impossible with a traditional plant.

Xavier Sol from Counter Balance says: “If this growth package is to be anything more than smoke in the eyes of Europeans, then the Commission and the European Investment Bank must exercise political will and ensure that only those projects which can indeed contribute to the sustainability and resilience of the European economy are selected and financed.”

Notes for the editors:

*A special report from the European Court of Auditors recently criticised the spending of EU and EIB funds on unnecessary “white elephant” airport projects: http://www.eca.europa.eu/Lists/ECADocuments/SR14_21/SR14_21_EN.pdf
Airports are among the proiects proposed by member states for financing from the investment package.

CEE Bankwatch Network is publishing every day a profile of one of the projects proposed for financing by member states:
https://bankwatch.org/news-media/blog/juncker-investment-offensive-against-europeans-economy-and-environment

Read the letter sent by NGOs to the EC and the EIB:
https://bankwatch.org/sites/default/files/letter-EC-EIB-EFSI-16Dec14.pdf

See an infographic about how countries in Central and Eastern Europe plan to use EU Budget money for problematic spending, including fossil fuels and incinerators, an omen for how the Juncker money could be spent in the region:
https://bankwatch.org/newmoneyoldideas

For more information, contact:

Markus Trilling
EU campaigner, Bankwatch
Markus.trilling@bankwatch.org
+ 32 484 056 636

Sebastian Godinot
Economist
WWF European Policy Office
sgodinot@wwf.eu
+32 2 740 0920

Xavier Sol
Director
Counter Balance
xavier.sol@bankwatch.org
+32473223893

Balkan coal projects face mounting challenges as China and CEE leaders meet in Belgrade


Belgrade/Banja Luka/Sarajevo, 16 December 2014: As the third annual summit of Chinese and Central and Eastern European leaders gets underway today in Belgrade, [1] problems are mounting for the lignite projects planned in the Balkan region [2]. Today alone, an official complaint [3] has been submitted to the Energy Community Secretariat on the planned 600 MW Ugljevik III lignite power plant in Bosnia and Herzegovina, and a new analysis [4] has been published showing that the planned 450 MW Tuzla 7 lignite plant – also in Bosnia and Herzegovina – is likely to be economically unviable.

The complaint on Ugljevik III outlines how the EU’s Directive on Environmental Impact Assessment has been violated by failure to include in the plant’s environmental study most of the important elements needed to assess the plant’s likely impact on the environment. 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, which means that the authorities have not adhered to Republika Srpska law or Bosnia and Herzegovina’s obligations under the Energy Community Treaty.

The analysis of Tuzla 7 by economist Vladimir Cvijanovic published today shows that with even relatively minor additional costs for the planned loans, the price of lignite or investments in the lignite mine the investment may turn out to be uneconomic. Rises in all three of these factors are considered likely.[5]

In addition the Federation of Bosnia and Herzegovina appears to be planning to free the project from paying VAT, thus depriving the public budget of an income of EUR 133 560 500 and effectively subsidizing the project. It is also considering the possibility of signing a long-term power purchase agreement which may also be seen as a subsidy for the project and risks subjecting electricity consumers to higher than necessary prices if the deal is badly done.

The new revelations come on top of a disastrous year for coal in the Balkans, which has seen the Kolubara mines in Serbia and Sikulje mines near Tuzla in Bosnia and Herzegovina flooded in May, the Kostolac mines in Serbia flooded in July and August, an explosion at Kosovo A in June which killed two workers, a mine accident at the Raspotocje mine in Bosnia and Herzegovina in September that killed 5 miners, and two fatal accidents at the Kolubara coal mines in Serbia [6].

“The latest revelations show that it’s time to stop treating the lignite sector as a holy cow which will save our economies”, said Igor Kalaba of Center for Environment. “When subjected to closer analysis, it is revealed that lignite is no longer a driver of our economy but a drain on it. The last thing we need is another case like the Sostanj plant in Slovenia which is predicted to lose EUR 70-80 million annually and is only employing a fraction of the people predicted”, he added.[7]

“Chinese companies have shown increasing interest in investing in the energy sector in the last 2-3 years in our region, but we advise them and other investors to look at new forms of renewable energy like wind and sun rather than poorly planned lignite projects”, added Rijad Tikveša of Ekotim.

Contacts

Rijad Tikveša, Ekotim, Sarajevo
Tel: +387 33 812 515
Mob: +387 61 554 302
E-mail: rijad@ekotim.net
ekotim@bih.net.ba

Igor Kalaba, Center for Environment, Banja Luka
Tel : +387 51/433-142
Mobile: +387 65/860-796
igor.kalaba@czzs.org

Pippa Gallop, CEE Bankwatch Network
pippa.gallop@bankwatch.org

Notes for editors

[1] For more details see the official summit website at: http://china-ceec-summit.gov.rs/

[2] For an overview of the new plans and the problems surrounding them, see https://bankwatch.org/coal

[3] The complaint is available at: https://bankwatch.org/sites/default/files/complaint-EnCom-Ugljevik-16Dec2014.pdf

[4] The analysis is available at: https://bankwatch.org/sites/default/files/critical-analysis-economics-Tuzla7-16Dec2014.pdf

[5] These changes in the project conditions are considered likely because:

– the cost of lignite production in the Kreka mine is already above the price needed to keep the project feasible (4.75 BAM/GJ). In 2012 it cost 7.18 KM/GJ to produce.

– the offer from China’s Gezhouba is subject to further negotiations before signing any contract and experience from other projects shows that price rises are likely, especially as there were no other final bidders after Hitachi withdrew.

– information is given about the potential loan conditions for a loan for 85 percent of the cost of the project but not about the conditions for the other 15 percent.

– no information about potential loans for expansion of the lignite mines is mentioned.

[6] For more information see:

– Kolubara mines flooding: http://serbia-energy.eu/serbia-mining-kolubara-mines-basin-the-floods-what-was-affected-chronology-of-recovery/

– Sikulje mines flooding: http://tuzlalive.ba/aktuelna-tema-zasto-je-potopljen-rudnik-sikulje/ (in Bosnian)

– Kostolac mines flooding: http://www.balkanmagazin.net/struja/cid189-100744/izgradnja-bloka-b3-u-kostolcu-ceka-zeleno-svetlo-iz-kine (in Serbian)

– Kosovo A explosion: http://www.reuters.com/article/2014/06/06/us-kosovo-powerstation-blast-idUSKBN0EH10N20140606

– Raspotocje mine accident: http://uk.reuters.com/article/2014/09/05/bosnia-mine-accident-idUKL5N0R620520140905

– Kolubara accidents (January and November): http://www.danas.rs/danasrs/kolumnisti/inspekcija_kolubara_je_bezbedna.884.html?news_id=292960

[7] For more on the Sostanj plant, see https://bankwatch.org/news-media/for-journalists/press-releases/sostanj-lignite-plant-mistake-not-be-repeated

Green 10 open letter to VP Timmermans: “Do not kill laws crucial for our health, environment and the economy”

The 10 leading environmental NGOs in Europe appeal to Vice President Timmermans not to sink the air and waste packages: “Polluton kills 58,000 persons every year. Are they not European citizens? Shouldn’t the Commission protect their interest too? ”

After the leaks of the 2015 Working Plan of Juncker’s Commission, appeared on the Press today, the 10 leading environmental NGOs in Europe, the Green 10, have written an open letter to Vice President Timmermans expressing their grave concerns.

Angelo Caserta, Director of Birdlife Europe and current Chair of the Green 10, states: “We are deeply concerned that environmental protection and sustainability is not only going to be absent in the Commission’s Workplan for 2015 but that Vice-President Timmermans is even planning to withdraw two recently proposed pieces of legislation that would bring major benefits for citizens’ health, the environment as well as for Europe’s economy – the air package and circular economy package“.

“By withdrawing the air quality proposal – Birdlife’s Caserta added – the European Commission would miss the opportunity to prevent as many as 58,000 premature deaths per year that result from air pollution, when the current toll is 400,000 premature deaths per year. We would also miss a huge economic benefit to the European economy as the air quality directive would deliver health benefits of €40-140 billion in avoided external costs and provide about €3 billion in direct benefits due to higher productivity of the workforce, lower healthcare costs, higher crop yields and less damage to buildings”.

The Green 10 letter also states: “Withdrawing the circular economy package would also go against the number one priority of the European Commission. Europe would fail to create as many as 180,000 new jobs through turning waste into a resource while making business more competitive and reducing demand for and dependency from costly scarce resources from outside the continent”.

NOTE

Link to Green 10 Open Letter

http://www.green10.org/publications/?logout=1

New money, old ideas: How EU spending plans for central and eastern Europe are selling short a greener future

Brussels, December 11 – Central and Eastern European countries are planning to use unacceptable amounts of their €350 billion allocation from the EU budget on dirty energy projects, polluting forms of transport and incinerators, according to a comprehensive analysis of draft government spending plans published today by CEE Bankwatch Network and Friends of the Earth Europe.

A visualisation* of spending plans in CEE and the new report are available at https://bankwatch.org/newmoneyoldideas

The European Commission last year made ambitious plans to transform the European economy away from fossil fuels and heavy resource use, meaning potential green benefits for the newer, more energy-intensive EU member states.

Yet the spending plans for 2014–2020 submitted to Brussels by eight Central and Eastern European countries would lock them into dirty energy futures at the expense of citizens and the environment.

“This EU budget was meant to herald a new era of greener spending and help Central and Eastern European countries become better equipped for the environmental and economic crises facing the world today. Instead what we see is a continuation of the same old spending patterns with governments planning to use the money for fossil fuel-fed, resource intensive projects” said Markus Trilling, EU funds coordinator at Bankwatch and Friends of the Earth Europe.

CEE Bankwatch Network and Friends of the Earth Europe obtained the draft spending plans of Poland, the Czech Republic, Hungary, Slovakia, Latvia, Estonia, Lithuania and Croatia from for 2014–2020 and compared these with how funds were allocated seven years ago. The analysis finds that:

  • Money meant for the development of the region will continue to fund fossil fuels – primarily gas but also coal via co-generation projects. In Poland and Estonia, fossil fuels account for over 20 percent of the energy infrastructure planned to be financed from the EU Budget.
  • Central and Eastern European countries plan to spend over half their transport funds on roads, with only token amounts going to sustainable and public transport infrastructure.
  • Funding for renewable energy is static compared to the previous seven years, or even declining in some countries (particularly in the Czech Republic); much of this funding – virtually all in Estonia, Latvia and Lithuania – goes to potentially environmentally damaging biomass projects
  • More than half of funds meant for waste will be spent on incineration and landfills as opposed to more sustainable practices such as prevention, recycling and reuse.
  • Funding for energy efficiency has increased, roughly quadrupling in the Czech Republic and Poland – although some of this money will go to large polluters.

“Plans for using the new multi-billion Euro budget are little more than spending as usual. We’re seeing the same old types of projects being financed when a new era of more modern greener spending was promised. We need more public investments in sustainable energy and transport and in waste reuse and recycling which could work as catalysts for private investors,” concluded Markus Trilling.

The only significant improvement in the next seven year budgeting period is an increase in funding for energy efficiency – although it must be ensured that this is spent on the citizens and communities who need it, and not to cut the energy bills of polluting industries.

The European Commission has yet to approve the vast majority of national spending plans for the EU funds. Fewer than 40 out of a total of 535 EU-funded programmes have so far been approved, meaning the Commission can still insist on greener spending.

CEE Bankwatch Network and Friends of the Earth Europe are calling on the European Commission to make sure authorities in Central and Eastern Europe revise their plans and use European public funds to modernise their economies and bring long-lasting, sustainable benefits to citizens. They are calling for subsidies for dirty activities by major companies to be stopped.

***

* The visualisation is available for publication. The necessary code can be made available upon request.

For more information please contact:

Markus Trilling, EU funds campaigner for CEE Bankwatch & Friends of the Earth Europe
Tel: +32 (0) 2 893 10 31
Email: markus.trilling@foeeurope.org

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