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Marubeni and Alstom’s corruption records cast new doubts on Croatian coal project, warns new analysis


Zagreb — Japan’s Marubeni Corporation and France’s Alstom – who have together been chosen as the preferred bidding consortium for the Plomin C* coal power plant project in Croatia – have a poor integrity record including several convictions for corruption offences which should raise alarm bells and increase vigilance among the Croatian public and potential financiers of the project, according to a new paper by CEE Bankwatch Network, published today.[1]

Online discussion on Balkan coal

To hear more about Plomin C and other coal plants in the Balkans, consider joining a Google hangout to be organised by Bankwatch on Oct. 10, 10 a.m. CET.

For more information, please write to claudia.ciobanu@bankwatch.org

Alstom and/or its staff has been found guilty of corruption offences in relation to at least seven cases in seven years across different continents, and is under investigation for several more, including around the Sostanj 6 lignite power plant in Slovenia. Most recently, the UK Serious Fraud Office charged Alstom Network UK with paying around USD 8.5 million in bribes between 2000 and 2006 to win transport contracts in India, Poland and Tunisia. Alstom has been under observation by the Norwegian Finance Ministry since 2011 after its Council on Ethics recommended in 2010 to exclude Alstom SA from the Government Pension Fund Global. [2]

“After years of watching the Sostanj case in Slovenia, where prosecutors have been investigating Alstom for corruption deeds, it was quite shocking to see the company selected as a preferred bidder in neighbouring Croatia,” said Pippa Gallop of CEE Bankwatch Network. “We can only hope that Plomin C will not turn out to be a similar debacle to Sostanj, which has ended up being a disastrous and overpriced project where many mistakes were made – mistakes which the authorities are now powerless to rewind.”

Marubeni, meanwhile, has been found to have been involved in two major corruption cases within three years, for which it has had to pay penalties of USD 88 million and USD 54.6 million. As a result the company has been debarred from receiving loans from the Japan International Co-operation Agency for nine months starting from March 2014. [3]

“The choice of these two companies is a giant leap of faith at best from Croatian authorities”, said Pippa Gallop. “Their poor track record makes it an obligation for the Croatian public and authorities to closely monitor these companies’ activities at Plomin C and for any institutions that are considering financing this new coal unit to conduct tight screening of the project.” [4]

As well as the non-acceptability of new coal plants per se due to coal’s climate impacts, the viability and legality of Plomin C in particular are already under scrutiny because of several issues:

  • The project relies on imported coal and will not help Croatia’s energy import dependence.
  • The former Director for the construction of the existing Plomin 2 power plant at the same location has calculated that the project will be economically unviable. [5]
  • In order to overcome this, the project promoter HEP is offering investors a long-term power purchase agreement to buy off at least 50 percent of the electricity produced for at least 25 years. According to an analysis by Hungarian law association EMLA, this agreement is likely to be illegal under EU state aid legislation. [6]

For more information, contact:

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

Bernard Ivcic, Zelena akcija/Friends of the Earth Croatia
bernard@zelena-akcija.hr

Notes for the editors

* Read more about the Plomin C project, including about other problematic aspects surrounding this new coal unit: https://bankwatch.org/our-work/projects/plomin-coal-power-plant-croatia

[1] The paper is available at:
https://bankwatch.org/sites/default/files/briefing-Plomin-AlstomMarubeniCorruption.pdf

[2] Ministry of Finance: Government Pension Fund Global: Company placed on observation list, 06.12.2011,
http://www.regjeringen.no/en/archive/Stoltenbergs-2nd-Government/Ministry-of-Finance/Nyheter-og-pressemeldinger/nyheter/2011/government-pension-fund-global-company-p.html?id=665635

[3] JICA notice, Measures against Fraud, March 26 2014,
http://www.jica.go.jp/english/notice/140326_01.html

[4] It is not yet clear which banks are considering financing the Plomin C project. Several public and commercial banks with which Bankwatch, Zelena akcija and Banktrack have been in contact have denied involvement.

[5] See http://slidesha.re/18JYncL for a calculation by Professor Enco Tireli using the European Commission’s Guide to Cost-Benefit Analysis (2008). He also examined different scenarios regarding CO2 emissions pricing and found that Plomin C on coal would not be economically acceptable even with a CO2 price of EUR 4 per tonne.

[6] See https://bankwatch.org/sites/default/files/PlominC-legalopinion-publicsummary-22Apr2014.pdf

[7] See further information about corruption cases associated with Alstom in their nomination for the “Public Eye Awards”, a public recognition of the corporations with least ethical behaviour: https://bankwatch.org/news-media/for-journalists/press-releases/alstom-nominated-prestigious-public-eye-awards

Visegrad countries pose fresh threat to 2030 targets

Brussels – The group of four Visegrad countries (Poland, Hungary, the Czech Republic and Slovakia) plus Romania and Bulgaria declared yesterday their readiness to block EU 2030 binding renewables and energy efficiency targets which are to be agreed upon at a European Council Oct. 23-24. Yet cracks are appearing in the group.

“This is a disappointing position coming from the V4 + 2 group,” comments Bankwatch energy campaigner Ondrej Pasek in reaction to the declaration issued by the countries yesterday.(1) “But what was surprising to observe were the widening gaps among countries, with Poland and the Czech Republic at two ends of the spectrum.”

“Visegrad countries are asking for a compensation mechanism to channel money from the old member states into the modernization of their obsolete, carbon intensive industry. But at the same time, they do not want to be bound by specific targets,” explains Pasek. “This is completely irrational and detrimental. We need binding targets on renewables and energy efficiency to generate savings and jobs for people. We need to make all countries accountable for how they use the funding provided by the EU public budgets.” (2)

Meeting Sept. 30, Ministers of Environment of Visegrad countries plus Romania and Bulgaria declared that their countries could potentially endorse one of the three 2030 climate targets planned to be adopted by the EU in October, the binding emissions reduction target, but only if the target “is set realistically and in a technologically neutral way.” The ministers added that 2030 binding targets for renewables and energy efficienct were “undesirable”.

Poland was the toughest among all V4+2 which indicates that either it will not accept the binding targets or it would demand for significant financial benefits in exchange for agreeing to targets. This tough line was echoed by the new Polish Prime Minister Ewa Kopacz (who is replacing Donald Tusk), who declared in her inaugural speech to the Polish Parliament today that “during the European Council on Oct. 23- 24 my government will opose provisions which will increase costs and prices of energy”.

In its final declaration, however, V4 countries, Romania and Bulgaria did not bow to the Polish tough stance and finally jointly called for a binding emission reduction target. The position of the Czech Republic , adopted in August, actively promoting non-binding targets in energy efficiency and renewables, was not reflected in the declaration either – the countries were not able to agree even on non-binding targets.

“What we are seeing is that new member states find it increasingly hard to come up with a common approach to decarbonisation of the EU,” says Ondrej Pasek. “The final V4+2 declaration comes down to the least common denominator which may not reflect well the ambitions of each of the countries. The Czech Republic, for example, is well aware of economic benefits of a common energy efficiency target but it could not do more at this stage.”

„The new Polish government seems to be just as much hostage to the coal industry as that of Donald Tusk and this is no surprise,” comments Marek Jozefiak from Polish NGO Polska Zielona Sieć. „Blocking the development of renewable sources of energy will have far-reaching consequences for Polish energy security. If we maintain our current energy mix, based on coal, we will either increase our dependence on energy imports, due to the rise in hard coal imports, or get burdened by the huge costs which are necessary to keep our ruined industry alive.” (3)

„Tusk has made a name for himself in Europe by promoting energy security, but what Poland and the other countries in the V4+2 group are doing now is precisely putting this energy security under great jeopardy,” adds Jozefiak.

For more information, contact

Ondrej Pasek, CEE Bankwatch Network
ondrej.pasek@bankwatch.org

Marek Jozefiak, Polska Zielona Siec / Polish Green Network
marekjozefiak@zielonasiec.pl

Notes

1. The full text of the declaration is available here:
http://www.mos.gov.pl/g2/big/2014_09/d6cdc9370500325c6f02a77f46f9d1c5.pdf

Excerpts from the declaration are below.

2. According to latest Greenpeace report, cheap prices of energy produced from coal are an expensive illusion. In the last 25 years subsidies to coal mining and coal-based electricity production in Poland reached 170 bn PLN, whereas external costs on health amounted to further 700 bn PLN.

3. Read more about investment needs in energy efficiency in Central and Eastern Europe here:
https://bankwatch.org/sites/default/files/no-half-measures.pdf

And country by country recommendations for the sustainable use of EU funds in Central and Eastern Europe:
https://bankwatch.org/publications/funding-sustainable-development-european-regions-recommendations-programming-eu-funds

Excerpt from the final declaration made yesterday by the V4+2 group:

„The Ministers and State Secretaries reiterate that the single greenhouse gas (GHG) emissions reduction target at EU level must be set realistically and in a technology neutral way. The introduction of any legally binding renewable energy and energy efficiency targets at EU or national level is not desirable, in particular in the context of the proposal for the new governance system.

Moreover, the V4+ countries share the common view that the final agreement on the policy framework is conditioned by fair effort sharing and solidarity mechanism in both ETS and non-ETS sectors among the Member States based on the current distribution criteria reflecting 2020 package ambition levels, in particularly in non-ETS.2

Furthermore V4+ is convinced that predictable, stable and efficient rules protecting industry against carbon leakage are also indispensable part of a future agreement. Besides that V4+ supports higher flexibility between ETS and non-ETS sectors and the banking AEAs after 2020.

In addition, the V4+ Ministers and State Secretaries also declare that in addition to fair distribution of efforts in both ETS and non-ETS sectors an additional compensatory mechanism should be established enabling lower income Member States to finance modernization of their energy systems and industrial innovations. The V4+ countries also maintain their position that any decision on climate and energy policy must respect that it is the sovereign right of every Member State to freely choose its most suitable energy mix as provided in the Treaty.”

—

Image by Dennis Jarvis (CC BY-SA 2.0)

Big EU energy projects cannot be chosen behind closed doors, say NGOs


Justice & Environment, Bankwatch press release

Brussels — As a new process of identifying big EU energy Projects of Common Interest (PCIs) kicks off in Brussels today, environmental NGOs warn that the EU must only prioritise energy projects which are not destructive of the environment and climate, and that the choice of these projects must be done through a transparent process.

In a development little known to the general public, DG Energy is today starting a new process of selecting EU priority energy projects during the so-called Second Cross-Regional Group Meeting 2014.

Once a project – electricity grid, gas terminal, pipeline and alike – is identified as a PCI, it receives preferential treatment. „Firstly, member states should treat such project as superior, make permit-granting as fast as possible – main proceedings in maximum18 months,” explains Birgit Schmidhuber from NGO Justice & Environment. “Secondly, PCIs are eligible for funds from a special EU-fund as well as for financial ‘incentives’ from national governments.”

Such a project is also more likely to obtain support from European public facilities or bodies such as the Connecting Europe Facility, the European Investment Bank or institutions de facto controlled by EU Member States such as the European Bank for Reconstruction and Development.

In October last year, the European Commission presented a first list of its preferred energy projects for prioritisation, which was drafted behind closed doors. The preparation of a second list begins today.

“What we noticed with the first list was that there were way too many pipelines and LNG terminals which were prioritised by the Commission, which if approved are likely to threaten the EU’s climate targets for 2030 and beyond,” says Bankwatch’s Kuba Gogolewski. “Regardless of the type of projects that are being considered for prioritisation, their selection should happen in a totally transparent manner, so that civil society and local communities can alert of any environmental and social problems caused by the envisaged routing of these PCIs.”

While the first list was drafted by the Commission after only consulting with energy representatives, NGOs are now calling on DG Energy to ensure a more open and transparent process, including local communities and environmental NGOs, for the selection of projects to be included on the second list.

“DG Energy already promised a more inclusive process, we only hope they will stay true to their word,” says Birgit Schmidhuber from Justice and Environment. “Energy security and an efficient energy market are important goals but should not be achieved at the cost of destruction of environment and mismanagement of public funds.”

For more information, please contact:

Birgit Schmidhuber
birgit.schmidhuber@oekobuero.at

Kuba Gogolewski
kuba.gogolewski@bankwatch.org
Tel.: (0032)485358317

Notes for the editors:

1. See the existing list of PCI projects:
http://ec.europa.eu/energy/infrastructure/pci/pci_en.htm

2. Read recommendations from Justice and Environment and Bankwatch for the choosing of new PCIs:
http://www.justiceandenvironment.org/_files/file/2014/JaE_Bankwatch_PCI%20Process%20Recommendations%202014.pdf

Energy Community meeting must deliver reforms


Brussels – A group of leading NGOs active in the Balkan region [1] are calling for urgent reform of the Energy Community Treaty, as its Ministerial Council prepares to meet in Kiev on September 23rd [2]. The groups are calling for both the expansion of the environmental and climate component of the Treaty and measures to ensure that existing obligations are better enforced.

“Energy Community Treaty reform is a once in a decade opportunity to garner support for the EU’s neighbours to meet EU climate and energy targets”, said Garret Tankosić-Kelly, Principal of SEE Change Net Foundation.

“The New Climate Economy report demonstrates that sustainable development is only attainable through the joint action of countries at all income levels, particularly in the energy sector which is still the largest source of greenhouse gas emissions in the Balkans,” added Dragana Mileusnic of CAN Europe.

Recent changes in the European Commission structure, where high priority has been given to the concept of an Energy Union, under Vice-President Alenka Bratušek, are expected to lead to the EU strengthening its cooperation with the Energy Community in the following years.

“Governments in Contracting Parties must give EU environmental law as much importance as EU energy rules. Only with the stronger environmental rules can we ensure the creation of a fair common energy market for the EU and the Energy Community,” said Malgorzata Smolak of Client Earth.

Weak enforcement of Energy Community rules set forth in the Treaty remains one of the major obstacles for their full implementation. Strengthening enforcement must be the top priority of the reform, while more EU environmental legislation needs to be included in the Treaty, NGOs concluded. They also expect to be more effectively engaged in the work of the Energy Community to ensure better transparency and public participation.

Contacts:

Dragana Mileusnic, CAN Europe Policy Officer
dragana@caneurope.org
Tel.: +32 471 438 442

Masha Durkalic, SEE Change Net Communications Officer masha@seechangenet.org
Tel.: +387 63 999 827

Notes:

[1] The NGOs are: SEE Change Net Foundation, Bosnia and Herzegovina ∙ Client Earth, Poland ∙ Front 21/42, Macedonia ∙ CAN Europe, Belgium ∙ Analytica, Macedonia ∙ Advocacy and Training Resource Center – ATRC, Kosovo ∙ CEKOR, Serbia ∙ Public Interest Advocacy Center – CPI, Bosnia and Herzegovina ∙ Center for Environment, Bosnia and Herzegovina ∙ DOOR, Croatia ∙ Environmental Center for Development, Education and Networking – EDEN, Albania ∙ Ekolevizja, Albania ∙ Eko-Svest, Macedonia ∙ Forum for Freedom of Education – FSO, Croatia ∙ Fractal, Serbia ∙ Green Home, Montenegro ∙ MANS, Montenegro ∙ World Wide Fund For Nature – Mediterranean Programme∙ CEE Bankwatch Network, Czech Republic.

[2] The Energy Community is an organisation set up to help the countries of the Western Balkans and the Black Sea region adopt and implement existent EU energy policies (EU Energy Acquis). The Ministerial Council is the highest decision-making body of the Energy Community and comprises of the energy Ministers from the Contracting Parties and representatives of the European Union.

New Commission might sideline environment in CEE

Brussels — The priorities of European Commission president elect Jean-Claude Juncker for the newly-announced Commission threaten Europe’s climate and resource efficiency ambitions, says CEE Bankwatch Network. Particularly worrying from the perspective of CEE countries is an apparent shift in the vision of Regional Policy from making the European economy more sustainable, to “jobs, growth, investment and competitiveness” without any nod to green energy and resource efficiency.

In a “mission letter” yesterday outlining the agenda to be pursued by the new Commissioner for Regional Policy Corina Cretu, who is tasked with oversight of more than 450 billion euros in EU regional development funds, Juncker makes a U-turn from the previously agreed investment plans for green energy and resource spending.

“I would ask you to pay particular attention to the contribution that the funds under your responsibility can make to establishing a European Energy Union and completing the Digital Single Market,” Juncker writes to Cretu in the mission letter. This is a far cry from the vision of Regional Policy set out in Commission proposals from last year, which earmarked 38 billion euros from the regional funds for climate action intended to modernise the European economy, particularly in central and eastern Europe where funds are most needed.

In reaction to the letter, Mark Fodor, Executive Director of the CEE Bankwatch Network said, “By missing out to acknowledge the crucial role of EU funding for addressing the climate challenge, the president-elect is showing complete disregard for the future of our planet.”

Read the full “mission letter” to the new Regional Policy Commissioner:
http://ec.europa.eu/about/juncker-commission/docs/cretu_en.pdf

Read a letter send by Green 10, the most important environmental NGOs in Brussels, to Jean-Claude Juncker about the structure of the new Commission:
https://bankwatch.org/sites/default/files/G10-letter-Juncker-EC-11Sep2014.pdf

For more information, contact:

Mark Fodor, Executive Director Bankwatch
mark.fodor@bankwatch.org

Markus Trilling, EU funds coordinator Bankwatch
markus.trilling@bankwatch.org
+32484056636

Europe’s finance ministers urged to stop EU Bank’s ‘extraordinary’ slide towards secrecy

Campaigners across Europe are urging the European Commission and their Ministers of Finance to halt a dangerous slide towards secrecy of the giant European Investment Bank (EIB), of which the EU member states are owners.

The already secretive Bank is proposing to make it far harder for European citizens to find out what it is up to, despite the fact it is a ‘public’ bank owned by EU governments.

Now campaigners including Counter Balance, Eurodad and Christian Aid have written to EIB directors, who represent the EU member states and the Commission on the board of the bank, urging them to speak out against the plans at their next meeting in Luxembourg on Tuesday, 16th September.

“The Bank’s planned lurch towards secrecy is extraordinary,” said Joseph Stead, Senior Economic Justice Adviser at Christian Aid. “At a time when the rest of the world has recognised that companies behave better when the public can find out what they’re doing, the Bank is proposing to conceal more than ever.”

Maria Jose Romero, Policy and Advocacy Manager at Eurodad, said: “Despite numerous calls from the European Parliament for the EIB to act with more transparency, it is becoming increasingly secretive. This is a Bank that is effectively owned by the people of Europe and, as such, it should be open and accountable.”

Xavier Sol, Director of Counter Balance added: “We urge all the directors to use next week’s Bank Board meeting to demand the bank to abandon plans to limit transparency and instead pursue openness and honesty about its affairs. We hope the public interest will prevail over corporate interests.”

The European Investment Bank lent EUR 71.7 billion to projects within and outside Europe last year; around 10 per cent of its funding goes to more than 150 countries outside the European Union, including in Eastern Europe the Middle East, Asia, Africa and Latin America. Bank-financed schemes include large infrastructure projects like motorways, pipelines and power stations as well as loans to small and medium-sized enterprises through financial intermediaries.

According to the 2013 Aid Transparency Index, the Bank is already lagging behind other multilateral organisations in terms of transparency. The Index rated it as ‘poor’ – one rung above the worst rating of ‘very poor’, as part of an assessment and ranking of 60 donor organisations.

This summer, the Bank launched a public consultation on proposals to change its ‘transparency’ policy in ways which would allow it to hide even more information than at present. The Bank has invited comments on its proposals by 26th September 2014.

Notes to editors

1. The Letter to the EIB directors:
http://www.counter-balance.org/wp-content/uploads/2014/09/Transparency-policy-letter-EIB-Directors.pdf

2. A briefing by the NGO Counter Balance lists the most worrying changes:
http://www.counter-balance.org/wp-content/uploads/2014/07/Policy-note_EIB-transparency-policy_Counter-Balance.pdf

Contacts

Counter Balance – Xavier Sol
xavier.sol@counter-balance
Tel.: +32 2 893 08 61

Eurodad – Julia Ravenscroft
jravenscroft@eurodad.org
Tel.: +32 2 893 0854

Christian Aid – Rachel Baird
RBaird@christian-aid.org