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Victory for civil society as EBRD cancels loan for controversial Croatian dam

Zagreb, May 28 – Croatian electricity company HEP and the European Bank for Reconstruction and Development (EBRD) have cancelled a EUR 123 million loan contract for the controversial Ombla underground hydropower plant near Dubrovnik, HEP has announced yesterday.

The EBRD financing would have covered the biggest bulk of the EUR 152.4 million estimated to be needed for construction.

The project had attracted widespread criticism from civil society groups and experts due to its impacts on the Vilina Cave – Ombla Spring protected area, which is home to 68 identified cave species, of which as many as 14 species are endemic to this site alone.

Uncertainties about the technical and economic credentials added to the widespread criticism of the project, as did the chaotic project development procedure, including the the use of an old 1999 Environmental Impact Assessment and public consultations taking place only as a cosmetic measure long after the legal permits had already been issued.

The EBRD’s board approved the loan for the project in November 2011, on the condition that a nature impact assessment was completed before disbursement. The study was published in March this year and showed the project could harm many of the 68 identified cave species, including the endemic ones.

“The EBRD’s involvement in the Ombla hydropower plant has from the start been a story of insufficient scrutiny and cutting procedural corners, and we are relieved that the bank has finally had the sense to withdraw,” said Jagoda Munic, President of Friends of the Earth International and Biodiversity Programme Co-ordinator at Zelena akcija/Friends of the Earth Croatia.

“However, it is frustrating that more than a year and a half has been wasted that could have been spent on developing energy efficiency and sustainable renewable energy projects instead of flogging this dead horse.”

“The EBRD is currently undertaking a revision of its Energy Operations Policy as well as its Environmental and Social Policy, and we hope that it will take a long hard look at what needs to be learned about the sustainability of hydropower projects and adherence to EU law as a result of this debacle of a project,” added Pippa Gallop of CEE Bankwatch Network.

For more information, contact:

Jagoda Munic
Zelena akcija/ Friends of the Earth Croatia
Mobile: +385 (0) 98 1795 690

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

Groups oppose European bank’s plan to finance oil drilling in Egypt

On Wednesday 29 May the European Bank for Reconstruction & Development (EBRD) will vote on whether to make a $40 million loan to Kuwait Energy to drill and extract oil in Egypt. Egyptian and international organisations are pushing the board of the public multilateral bank to reject the loan – or at least postpone its decision.

As the board prepares to vote, a coalition of NGOs has published a briefing warning the EBRD not to finance Kuwait Energy. The coalition includes the Egyptian Center for Economic and Social Rights and the Egyptian Initiative for Personal Rights in Cairo and CEE Bankwatch and Platform in Europe.

Oil company Kuwait Energy is seeking the loan to fund its operations in Egypt and Ukraine. The company is drilling for oil in five areas in Egypt, including on the edge of the Red Sea, in Upper Egypt on the border with Sudan and in the desert near Marina on the North Coast.

The briefing reveals that

  • The EBRD failed to properly identify the beneficiary of the loan, or the country where it is incorporated (the tax haven Jersey).
  • The fossil fuel nature of Kuwait Energy’s drilling will fail to improve development or social justice in Egypt. While the EBRD claims to prioritise renewable energy, the reality shows a commitment to further oil & gas extraction, one of the few sectors that can easily attract capital.
  • The EBRD’s miscategorisation of this project as unlikely to have major impacts enabled the bank to avoid adequate impact assessments or due diligence.
  • By focusing merely on disclosing revenue payments and not ensuring oil contracts are published, the EBRD is effectively undermining international best practices on transparency.
  • The loan is presented as a means to reduce heavily polluting gas flaring. However, these will make up only a small part of the project, if they take place at all. The briefing argues that the “gas flaring” element was used to disguise a loan essentially geared towards general oil extraction operations.

    • The EBRD is also currently considering a major loan to the controversial Citadel Capital refinery in Cairo. Concerns have been raised about the lack of consultation with local communities, forced evictions and pollution of Cairo, contributing to the EBRD’s decision being repeatedly postponed.

    The EBRD’s plans for Egyptian have received public opposition and criticism. Its vision of accelerated privatisation, either outright or in the form of public-private partnerships, would increase poverty and inequality, while weakening both social justice and democracy. The EBRD aims to expand Mubarak-era policies of economic neoliberalism, which is described as a “success story”, despite the rampant corruption.

    Anne-Sophie Simpere, from CEE Bankwatch Network, said: The EBRD claims to be a bank of transition, but by supporting an oil company registered in a tax haven, it only perpetuates the patterns of the past in Egypt. Its haste in investing in the Arab Spring countries reveals that the Bank is not ready to seriously take into account the will of the people and the spirit of the revolution and thus cast serious doubts on the legitimacy of its intervention in the region.

    Mohammed Mossallem from the Egyptian inistiative for Personal Rights: The EBRD continues to ignore calls by the Egyptian civil society to reconsider its strategy in Egypt, which is designed to promote the same investment policies that have had severe negative impacts on the economic and social conditions of the Egyptian people.

    Furthermore, their initial investment targets in the form of: the expansion of the Mostorod Refinery project, an existing fossil fuel project in violation of the social rights its surrounding community; and financing the field development plans of Kuwait Energy Company, an existing reserve based facility, clearly contradict their claimed objectives of investing in clean energy projects and in having a developmental impact.

    Mahinour El-Badrawi of the Egyptian Center for Economic and Social Rights: Today, with widespread documentation of ongoing human rights abuses in the country that some observers deem to be worse than during the Mubarak era, Egypt in no way complies with the minimum principles of democracy, human rights, and pluralism enshrined in Article 1 of the Agreement Establishing the EBRD. Indeed, since the EBRD country assessment for Egypt, approved on 31 October 2012, the situation with regards to Article 1 has continued to deteriorate,.

    If the EBRD is to live up to its standards, it should not be financing dictatorships. Instead, EBRD and its European Country Shareholders should respect the EU Parliament resolution issued in April this year “withhold(ing) budget support for Egypt due to lack of “respect for human rights, democracy and (lack of good) economic governance”.

    Contacts

    Mahinour El Badrawi, Egyptian Center for Economic and Social Rights, Cairo
    Mobile: +201289222100

    Anne-Sophie Simpere, CEE Bankwatch Network, Brussels
    Mobile: + 32485140327

The European Investment Bank’s energy lending: stuck in the past or facing the future?


The EIB’s beneficial and harmful energy projects

Brussels – The European Investment Bank, the house bank of the European Union, which directs a fifth of its annual lending portfolio of 60 to 70 billion euros to energy projects, is currently reviewing the policy document that guides its lending to the power sector. On this occasion, Bankwatch is publishing a poster of positive and negative examples of the bank’s lending to energy projects.

Earlier this year, the EIB lent around half a billion euros for a new 600 MW lignite plant at Sostanj in Slovenia despite the project’s disastrous climate and health impact and corruption allegations surrounding its management. This is one of several coal projects financed by the EIB within the remit of its current energy policy, published in 2007. Apart from coal, the bank has lent for gas and oil projects as well as for transmission lines to import electricity from nuclear power into Europe from Ukraine.

Such lending is incompatible with the objective of decarbonising the European economy by 2050 and with climate science which urges keeping fossil fuels in the ground.

On the bright side, the EIB has increasingly committed more resources to energy efficiency projects, notably for the rehabilitation of housing stocks in Romania, Germany and Spain.

Despite progress on energy efficiency and renewables however, the bank’s lending since 2007 is far from shiny: 19 billion euros were lent between 2007 and 2011 to fossil fuels compared to only 5 billion for energy efficiency.

More can be done, and the positive examples included in the Bankwatch poster are an illustration of what the institution’s energy portfolio should look like.

“Any replacement in energy generation after 2013 for coal and 2014 for gas should be turned down by the EIB on the basis of climate science and the economic assessment of external costs of fossil fuel projects,” comments Anna Roggenbuck, Bankwatch EIB coordinator and author of the poster. “This needs to be spelled out in the bank’s new energy policy that will come out later on this year. The EU’s bank must stop lending to fossil fuels in order to truly support the fight against climate change.”

Notes for the editors:

See a presentation of the Bankwatch poster here:
https://bankwatch.org/EIB-energy-future-past

Also in PDF:
https://bankwatch.org/sites/default/files/EIBenergy-futurepast.pdf

Read a briefing on European public bank’s energy lending:
https://bankwatch.org/sites/default/files/briefing-EnergyLending-22Apr2013.pdf

More about energy lending by European public banks:
https://bankwatch.org/campaign/energy-lending

More about the new EIB energy policy:
http://www.eib.org/about/partners/cso/consultations/item/public-consultation-on-eibs-energy-lending-policy.htm

For more information, contact:

Anna Roggenbuck
Bankwatch EIB coordinator
annar at bankwatch.org
+ 48 509 970 424

Regional funding negotiations – Green groups warn against last minute reintroduction of fossil fuel subsidies


BirdLife Europe, CEE Bankwatch Network, Friends of the Earth Europe, WWF

Brussels, Belgium – With the final negotiations aimed at sealing agreement on the EU budget for 2014-20 now underway, environment NGOs are warning that a last minute amendment aimed at permitting EU subsidies for fossil fuels that are devastating for the climate must be rejected by negotiators of the future EU Cohesion Policy’s regional development funds.

The overall multi-annual financial framework package for 2014-2020 includes spending under the Cohesion Policy. NGOs have discovered that negotiations on the European Regional Development Fund (part of Cohesion Policy) have recently seen the reintroduction by Polish MEP Jan Olbrycht of a proposal that could open the door to EU funding for oil, coal and gas. [1]

The negotiations on the next European Regional Development Fund (ERDF) – taking place in the form of a ‘Trialogue’ between the European Council, Parliament and Commission – should conclude by the end of May. [2] The ERDF is expected to amount to around EUR 200 billion in the next seven year budgetary period.

Markus Trilling, EU funds coordinator for Bankwatch and Friends of the Earth Europe, said:

“The Trialogue negotiations on the European Regional Development Fund, part of the EU budget, are at a crucial stage now, and despite the European Parliament having closed the door on future potential subsidies for fossil fuels last summer, certain fossil fuel advocates are refusing to lie down.”

Ariel Brunner, Head of EU Policy in BirdLife Europe, continues:

“It is unbelievable that at a time when public spending is under unprecedented scrutiny, some politicians are trying to pump taxpayers’ money into keeping the EU hooked on outdated and environmentally damaging sources of energy.”

Sébastien Godinot, EU budget coordinator in WWF European Policy Office, added:

“The future EU budget must be fully weighted behind cutting EU carbon emissions and support for ‘smart energy’. This should first and foremost mean developing and expanding electricity infrastructure to increase the uptake of renewable energy across member state grids. Gas is a mature energy source which does not need taxpayer support. Oil and coal, the fuels of the past, have no place in a clean energy future for Europe and must not receive a further lifeline from the EU budget.”

Markus Trilling concludes:

“This should not be tolerated by Trialogue negotiators. Abolishing subsidies for fossil fuels has now become a totemic issue in and outside of Europe, with organisations such as the International Energy Agency and the International Monetary Fund issuing warnings that such subsidies cannot continue if the climate crisis is to be contained, and Europe’s clean energy sector is to be competitive.”

For more information, contact:

Markus Trilling, Bankwatch/Friends of the Earth Europe
Tel: 00 32 (0) 484 056 636
Email: markus.trilling at bankwatch.org

Philippe Carr, WWF European Policy Office
Tel : 00 32 (0) 476 25 68 79
Email : pcarr at wwf.eu

Ariel Brunner, BirdLife Europe
Tel : 00 32 (0) 486 63 0042
Email: ariel.brunner at birdlife.org

Notes for editors:

1. Regarding negotiating texts on the European Regional Development Fund (ERDF) Trialogue, specifically on energy infrastructures (article 5-7 e), the European Commission’s drafting suggestion was as follows in the last trialogue:

“(e) improving energy efficiency and security of supply through the development of smart gas and power distribution, storage and transmission systems and by supporting the integration of distributed generation;”

ERDF rapporteur, Jan Olbrycht MEP, recently proposed the following suggestion instead for the ERDF trialogue:

“(e) improving energy efficiency and security of supply through the development of smart energy distribution, storage and transmission systems and by supporting the integration of distributed generation”

NGOs point out that Rapporteur Olbrycht’s proposal is counterproductive as replacing “gas and power” by “energy” not only keeps gas in the scope of the article, but also potentially reopens the door to coal and oil that were previously rejected – making the Parliament’s position even worse than that of the Council.

2. There are several ongoing “Trialogues” related to the EU Budget for 2014-2020 taking place at the moment, with one of them being devoted to the next European Regional Development Fund.

No end in sight for EBRD coal finance

Istanbul – With the 2013 EBRD annual meetings underway and in spite of repeated commitments to sustainability, the bank is set to continue financing coal projects that will dangerously aggravate climate change.

The EBRD is currently reviewing its energy sector lending policy, a process which takes place only once every five to six years, with a first draft of the policy expected during the summer. Under the current EBRD policy, nearly half of EBRD energy investments went to fossil fuel projects, with its lending for coal increasing from 60 million to 262 million euros (2006-2011).*

In March 2013 the EBRD provided 100 million euros to a new 600 MW lignite plant at Sostanj in Slovenia and is set to finance new coal operations in both Kosovo and Serbia, where it has already financed coal mining operations at the Kolubara complex.

“With repeated warnings about the need to end public subsidies for fossil fuels, pouring millions of euros into coal is unacceptable for a public institution like the EBRD,” said Fidanka McGrath, CEE Bankwatch Network EBRD coordinator. “At a time of scarce public finance, the EBRD must lead rather than follow markets.”

Some examples of EBRD coal projects:

  • Belchatow II in Poland, which received 125 million euros from the EBRD, will emit 5.5 million tonnes of CO2 per year for the next 40 years.
  • The Sostanj 6 lignite plant in Slovenia, which received 100 million euros from the EBRD, will make it nearly impossible for Slovenia to meet its 2050 EU emissions reduction targets.
  • The Turceni lignite plant in Romania should have stopped operations in 2015 as per EU legislation, but the EBRD contributed 150 million euros to modernise the plant, enabling it to emit CO2 for another 15 years.
  • The EBRD is considering a loan of 400 million euros for the 750 MW Kolubara B lignite plant in Serbia, and it has also recently expressed interest in financing a new 600 MW lignite plant near Pristina, Kosovo.

Notes for the editors:

1. Read more about the EBRD energy review process:
http://www.ebrd.com/pages/sector/powerenergy/comment.shtml

2. Read a critical take on the EBRD’s energy lending authored by Bankwatch, one of the main NGOs monitoring the bank:
https://bankwatch.org/publications/comments-ebrds-2006-energy-operations-policy-and-recommendations-forthcoming-energy-str

3. Read more about European public financing for fossil fuels:
https://bankwatch.org/sites/default/files/briefing-EnergyLending-22Apr2013.pdf

* EBRD 2012 energy lending figures are released during the annual meetings.

Ukraine’s Nukes Are in Breach of UN Convention

Kiev – Ukraine’s expansion of the lifetime of its old nuclear reactors is in breach of the UN Espoo Convention, ruled the body monitoring the implementation of this international agreement, because Kiev went ahead with the prolongation of the use of its old reactors without assessing the impact this may have on neighbouring countries.

In a letter to the Ukrainian Ministry of Environmental Protection, the Implementation Committee under the Espoo Convention wrote that Ukraine was in breach of the UN Convention that the country ratified in 1999.

In its national Energy Strategy, Ukraine envisages prolonging the lifetime of 12 old nuclear reactors, whose licence for operation would otherwise expire by 2020. Kiev has already renewed licences for two units (Rivne 1 and Rivne 2) and is close to prolonging the functioning of a third reactor, the South Ukrainian Unit 1.

According to the UN Espoo monitoring body, the extension of licenses for these units has been done without an environmental impact assessment (EIA) and without informing neighbouring countries about the plans, as Espoo procedures would require. The decision of the UN Espoo body confirms that the extension of lifetime of nuclear power plants requires conducting an environmental impact assessment and consulting it with neighbouring states, a confirmation that will have an impact on other countries planning to prolong the lifetime of their nukes.

CEE Bankwatch Network, together with Greenpeace CEE and Friends of the Earth Europe (FoEE), is now calling on the EBRD, whose 300 million euros loan to the Ukrainian nuclear operator is enabling the Ukrainian lifetime expansions, to halt any disbursements of funds until Ukraine meets its obligations under the Espoo Convention.

Iryna Holovko, Bankwatch national campaigner for Ukraine, comments:

“The EBRD has been systematically turning a blind eye to the fact that their loan to the Ukrainian nuclear sector endorses Ukraine’s nuclear lifetime extension agenda. The bank went ahead with their loan to upgrade old Ukrainian reactors which are meanwhile being prepared for another 15 to 20 years of operation without a comprehensive Environmental Impact Assessment. This is an irresponsible approach on the part of a public bank, to put it mildly.

“Now an UN competent body is clearly saying that the lack of an EIA and of a consultation with neighbouring impacted countries puts Ukraine in breach of international legislation it has ratified. If the EBRD really wants nuclear safety in Ukraine as it claims, it must take this opportunity to halt the disbursement of its loan and condition the payments to obligatory compliance with Espoo requirements, that is, the preparation of an EIA for all units under preparation for extension and consultation with neighbouring states.”

Notes for the editors:

1. The UNECE Convention on Environmental Impact Assessment in a Transboundary Context (Espoo Convention) was adopted in 1991 with the aim of encouraging signatory countries to assess, at an early stage of planning, the potential environmental transboundary impacts of major projects and to inform neighbouring countries about the potential consequences of these projects. List of signatory countries and more information is available here:
http://www.unece.org/env/eia/eia.html

2. In March this year, the EBRD approved a 300 million euros loan for the “nuclear safety upgrade” programme of Ukrainian national energy company Energoatom. Another 300 million euros is expected to come from Euratom, the European Atomic Energy Community, which is still to make a final decision on this loan over the next months. While the “nuclear safety” programme is nominally supposed to improve the safety of nuclear operations at Ukraine’s 15 nuclear reactors, an expert analysis published last year clearly shows that some technical measures to be financed from these loans would not be necessary unless the lifetime of the reactors were not expanded. Hence, this money will be used to facilitate the implementation of Ukraine’s national energy strategy, which envisages these lifetime expansions, instead of being used for what is vitally needed to truly decrease nuclear risks – decommissioning programmes and figuring out how to safely deposit spent nuclear fuel.

For more information, contact:

Iryna Holovko
NECU Ukraine
Bankwatch Ukrainian national campaigner
iryna at bankwatch.org
+38044 353 78 42