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EU Summit: No axe for climate spending, but member states must deliver


Brussels, February 8 – A summit in Brussels on the EU budget for 2014-2020 concluded today with an unambitious commitment for 20 percent of EU spending to go towards tackling climate change. CEE Bankwatch Network and Friends of the Earth Europe called on member states’ governments to build on this with national spending plans that ensure quality outcomes that work for Europe’s people and environment. [1]

The final deal agreed by the European Council sees a EUR 959 billion budget for the next seven years. This represents a reduction of EUR 89 billion from the European Commission’s initial proposal, and is EUR 16 billion below the current 2007-2013 budgetary period total. The 20 percent climate action figure was also proposed by the European Commission.

Markus Trilling, EU Funds coordinator for CEE Bankwatch Network and Friends of the Earth Europe, said: “What we are seeing is peanuts for climate, with disappointing cuts likely to the environmental investment fund Life, as well as the Connecting Europe Facility. This will likely reduce investments into necessary green energy infrastructure such as smart grids.

“However, there is a lot still to play for. Member states need to put quality at the heart of their spending plans for 2014-2020, to open the door for investments into energy savings and renewables, green innovation, resource efficiency and sustainable transport. Quality spending at the national level can bring environmental and economic benefits and help bring Europe out of crisis.”

Trilling also warned about using EU budget money to support the fossil fuels sector: “Member states must avoid damaging spending, including subsidies for fossil fuels, in their national-level spending plans. Investments into gas infrastructure promote fossil fuel use and will simply lock European economies into carbon dependency for decades to come.”

For more information, contact:

Markus Trilling
EU funds campaign coordinator
CEE Bankwatch Network/Friends of the Earth Europe
Tel: +32 (0) 484 056 636
E-mail: markus.trilling at foeeurope.org

Sam Fleet
Communications officer, Friends of the Earth Europe (EN)
Tel: +32 (0) 2893 1012
E-mail: samuel.fleet at foeeurope.org

Notes for editors:

1. The relevant text from the final EU budget 2014-2020 agreement reads:

“Climate action objectives will represent at least 20% of EU spending in the period 2014-2020 and therefore be reflected in the appropriate instruments to ensure that they contribute to strengthen energy security, building a low-carbon, resource efficient and climate resilient economy that will enhance Europe’s competitiveness and create more and greener jobs.” (Paragraph 10)

Visit http://www.wellspent.eu to see how European projects funded by Cohesion Policy are working for the environment, society and the economy.

EIB Capital Increase May Not Further EU Goals

Brussels — Last week’s ten billion euros capital increase for the European Investment Bank (EIB), allowing the bank to lend 60 billion euros extra over the next three years, must come with clear commitments from the bank to stop loans for dirty energy, say NGOs.

The EIB’s shareholders, the 27 EU member states, voted unanimously last week for the capital increase, which is expected to contribute to job creation and boosting economic growth in crisis-hit Europe.

“This increase in the size of money to be lent out by the EIB cannot be allowed to distract from the more crucial dimension of the quality of the projects chosen by Europe’s bank for support,” comments Counter Balance Coordinator Xavier Sol. “In the past, EIB financed projects have not necessarily furthered EU objectives, but in times of crisis and with this capital increase, this cannot be allowed to happen any more.”

The EIB shareholders agreed last week that the additional lending will target four priority sectors: innovation and skills, SMEs, clean energy and modern infrastructure.

However, the strength of the bank’s commitment to clean energy remains a concern for NGOs monitoring the bank, despite significant improvements over the past years.

According to Bankwatch research, between 2007 and 2011, the EIB lent 30% of its energy budget (62 billion euros) for fossil fuel projects, sometimes causing a high carbon “lock-in” effect, for example when financing coal power plants to the value of almost 2 billion euros over these five years (1). In 2012, despite decreasing, fossil fuel lending still constituted 2.55 billion euros, or 20 percent of the bank’s energy lending. (2)

“Our research into the EIB energy sector shows that the EU policy objective of decarbonising the energy sector is still not well reflected by the bank’s energy lending,” comments Bankwatch’s EIB coordinator Anna Roggenbuck. “This year, as the bank is reviewing its energy lending policy, this must be remedied. If the EIB is serious about its climate commitments, it must announce, by the end of this year, that it is putting an end to lending to coal and other fossil fuels.” (3)

Furthermore, Bankwatch and Counter Balance encourage the EIB to increase the current target of dedicating 30 percent of the bank’s lending dedicated especially to Climate Action. (4) Additionally, the bank must ensure that the percentage of loans not specifically dedicated to Climate Action does not contradict climate concerns, as it is occasionally the case with current projects of the bank.

Notes for the editors:

1. Read a Bankwatch analysis of EIB energy lending 2007-2011: https://bankwatch.org/sites/default/files/EIB-carbon-rising.pdf

2. Read a Bankwatch analysis of EIB energy lending for 2012: https://bankwatch.org/sites/default/files/briefing-EIB-energy-14Jan2013.pdf

3. The European Investment Bank is currently reviewing the policy guiding its energy lending. You can read about the process here: http://www.eib.org/about/partners/cso/consultations/item/public-consultation-on-eibs-energy-lending-policy.htm

The current policy, which guided loans in the period 2007-2011, allows for support of coal and other fossil fuel projects. In public submissions to the consultation process for the new policy, Bankwatch and Counter Balance demanded of the EIB to put an end to fossil fuel lending. You can read the submissions of the two NGOs here:

https://bankwatch.org/sites/default/files/comments-EIB-energy-policy-Dec2012.pdf

http://www.counterbalance-eib.org/wp-content/uploads/2012/12/CB_contribution_EIB_energy.pdf

4. Climate Action is the EIB lending to renewable energy, energy efficiency, sustainable transport, innovation and climate change adaptation.

Read more about the EIB’s Climate Action programme: http://www.eib.org/projects/topics/environment/climate-action/index.htm

Counter Balance, which focuses on EIB non-EU loans among others, argues that the EIB’s lending outside of the EU should be limited to the EU neighboring region, given the bank’s poor climate track record when it comes to loans outside of the EU.

For more information, contact:

Anna Roggenbuck
CEE Bankwatch Network EIB Coordinator
annar at bankwatch.org
Tel.: 0048 509 970 424

Xavier Sol
Counter Balance Coordinator
xavier.sol at bankwatch.org
Tel.: 0032(0)2 893 08 61

ALSTOM nominated for “Prestigious” Public Eye Awards

The French energy and transport conglomerate Alstom is one of the seven finalists for the People’s Public Eye Awards 2013.

The nomination is a result of information submitted by NGOs Focus Slovenia, SHERPA France and CEE Bankwatch Network, in which dubious business practices of the company across the world are highlighted — often linked to proven corruption or corruption allegations surrounding the awarding of contracts.

At Sostanj, in Slovenia, despite the European Anti-Fraud Office (OLAF) and a national Slovenian anti-corruption agency finding reasons for suspecting that corruption acts were committed in the awarding of the contract to Alstom, two European public banks, the European Investment Bank and the European Bank for Reconstruction and Development, are about to pour almost half a billion euros into an ill-fated new lignite plant.

In other places around the world, where Alstom has been proven to have acted in a corrupted manner, the company has received fines and even seen its subsidiaries debarred by the World Bank. This has not necessarily led to an improvement of the practices of the company.

“We want this nomination to work as a wake up call for Alstom, to show the company that the world is watching and it cannot continue to conduct shady business in order to get contracts around the world,” says CEE Bankwatch Network’s Pippa Gallop. “We also hope that the two European public banks that want to finance the Sostanj project to be constructed by Alstom will finally face the reality that paying money for this dubious project would risk public money and put a serious blemish on their reputation.”

See the Alstom nomination for the Public Eye Awards (including a clip):
http://www.publiceye.ch/en/vote/alstom/

READ AN ASSESSMENT OF ALSTOM’S BUSINESS PRACTICES AS DESCRIBED IN OUR NOMINATION COMPILED BY THE INSTITUTE FOR BUSINESS ETHICS OF THE UNIVERSITY OF ST. GALLEN, SWITZERLAND: https://bankwatch.org/sites/default/files/publiceye-alstom-assessment-Jan2013.pdf

Read more about the Public Eye Awards:
http://publiceye.ch

Read more about corruption scandals marring Alstom’s reputation:
https://bankwatch.org/news-media/blog/spot-difference-alstom-indonesia-and-slovenia

Read more about the EIB and EBRD funded Sostanj project:
https://bankwatch.org/our-work/projects/sostanj-lignite-thermal-power-plant-unit-6-slovenia

For more information, contact:

Pippa Gallop
CEE Bankwatch Network Research Coordinator
pippa.gallop at bankwatch.org
Tel.: 00385997559787

The newest EBRD member, Kosovo, does not need new coal

Pristina – As Kosovo becomes the newest member of the European Bank for Reconstruction and Development today, civil society groups in the country tell the bank that it should exclude from the start any investments in coal and that it could have an enormous positive impact by supporting energy efficiency measures.

Kosovo currently loses up to 45 percent of its electricity in transmission and distribution, but is considering constructing a 600 MW lignite power plant that analyses conducted by the World Bank’s former chief clean energy specialist Dan Kammen (1) show is more costly and creates fewer jobs than energy efficiency and renewable energy.

“We hope that EBRD membership for our country will help us move forward on a path of sustainable development and towards a European future,” says Visar Azemi from the Kosovo Civil Society Consortium for Sustainable Development (KOSID), an umbrella organisation for non-governmental actors. (2)

“Right from the start, however, we want to make sure that the EBRD will support the kinds of investments people of Kosovo want,” continues Azemi. “Indications that the bank could consider investing in the expensive and unnecessary Kosovo C coal plant make it imperative to remind the bank that Kosovo does not need more coal. Instead, before investing in new generation capacity it needs help to increase energy efficiency measures such as grid modernisation and building insulation programmes, which have been proven to be cheaper and to create more much-needed jobs than the coal plant.”

In the week preceding Kosovo’s recognition as the newest member of the EBRD, Kosovo media claimed that a bank spokesperson signalled the bank’s interest in financing the new 600 MW coal plant, Kosovo C, currently pushed by the World Bank and the United States Agency for International Development (USAID). (3)

The Kosovo C project has been around for over a decade, starting out as a planned 2000 MW plant that would turn the country into the leading energy exporter for the region. Yet lack of investors and resistance to a massive lignite project in a country that already has the highest single point-source of carbon emissions in Europe have gradually diminished ambitions. Even the current planned size threatens Kosovo’s EU ambitions as it would endanger the country’s ability to meet its 2020 climate targets it has committed to as part of the EU’s Energy Community.

“The start of the EBRD’s lending in Kosovo at a time when it is also reassessing its overall energy lending creates the opportunity for the bank to make a fresh start and start saying no to controversial dirty coal projects in the Balkans,” comments Ionut Apostol, EBRD coordinator at CEE Bankwatch Network. “The EBRD usually invests in coal in our region claiming it has no alternatives; but people in Kosovo are showing the bank already today that well-researched and superior alternatives exist.”

Notes for the editor:

1. Read why the new Kosovo C coal plant does not make economic and technological sense and see more about alternatives:
http://action.sierraclub.org/site/DocServer/Kosovo_Lignite_Project_Fact_Sheet_FINAL.pdf?docID=9421%22

2. More info on KOSID at: http://www.kosid.org/

3. See more information about the Kosovo C project at: http://sierraclub.org/international/kosovo

For more information, contact:

Visad Azemi
Coordinator of KOSID
visar.azemi at kosid.org
+37744116296

Ionut Apostol
Bankwatch EBRD coordinator
ionut at bankwatch.org
+40721 251 207

No excuses for the EIB to finance Sostanj

Ljubljana — The Slovenian parliament has ratified today – in an extraordinary session, right before the start of the Christmas holidays – the state guarantee contract between the European Investment Bank and the Slovenian government for a 440 million euros loan for the construction of a new coal unit at Sostanj.

After the Slovenian government too approved the state guarantee on 6 December, the parliament vote is the last step needed for the EIB to disburse the money. The management of the bank is now expected to make a final decision on the disbursement. However, the EIB also has to take into account that there is an ongoing OLAF (European Anti-Fraud Office) investigation into allegations of corruption against the management of the new block.

The new block at Sostanj is estimated to cost 1.3 billion euros, and could not be constructed without the 550 million euros promised by the EIB (110 million have been paid already) and an additional 200 million euros expected to come via the European Bank for Reconstruction and Development (EBRD).

“Under no circumstances should the EIB disburse the remaining 440 million euros to Sostanj – this is one of the worst investments to support from European public sources,” comments Lidija Zivcic from Slovenian NGO Focus.

“The emissions from the 600 MW lignite block would prevent Slovenia from meeting its 2050 climate targets, and the corruption investigation concerning the management of the project has still not been completed by OLAF,” adds Zivcic. “Disbursing money before the conclusion of this ongoing investigation is not only highly risky for the bank but it could also make the EIB breach its own internal policies and thus be seen as an improper use of EIB funds.”

“Additionally, the economic viability of the project is highly questionable. The Slovenian government has failed to make sure its own recommendations for energy investments are met; moreover, it is clear that the project as it is right now will never bring profit if the EU 2050 decarbonisation roadmap is respected,” adds Nina Stros from Greenpeace in Slovenia. “If we also consider the extreme social costs that burning lignite causes, it is hard to see any reason for the bank to support this project.”

The European Investment Bank, the EU house bank, has this autumn launched a process of reviewing its energy lending policy in order to align it better with EU climate goals.

“Climate science says it loud and clear that we cannot be investing any more in fossil fuel infrastructure as of today,” comments Pippa Gallop from CEE Bankwatch Network. “Putting this money into Sostanj right now, as the EIB is revising its loans in the energy sector, is a slap in the face for people who believe that the EIB is engaging in an honest process to clean up its lending. Financing such a damaging project is inadmissible behaviour coming from a public bank.”

Notes for the editors:

1. Read an independent assessment of the economic viability of the new plant, showing Sostanj is not a solid investment:
https://bankwatch.org/sites/default/files/Sostanj-TES6-economics.pdf

And an analysis of the conditions posed by the Slovenian authorities on the constructors (unlikely to be met):
https://bankwatch.org/news-media/blog/financial-alchemy-slovenias-energy-sector-still-results-lignite-not-gold

2. Slovenian state commission for the prevention of corruption says conditions for corruption were present in the awarding of the equipment contract for the new plant to Alstom and says works should not go ahead until allegations are cleared:
https://bankwatch.org/sites/default/files/StateCommissionReport-corruption-TES6-23Feb2012.pdf

3. OLAF opens investigation into the allegations of corruption:
https://bankwatch.org/sites/default/files/Slovenia%20Investigation.pdf

4. Operating TEŠ6 will result in emissions of 3.4 mt CO2 per year, which is equivalent to almost all of Slovenia’s emissions in 2050 (if it cuts emissions by 80 percent – a minimum according to the European targets of 80-95 percent).

5. The European Investment Bank, the EU house bank, has a mandate to further EU objectives, including when it comes to climate change policies.
http://www.eib.org

For more information, contact:

Lidija Zivcic
Focus Slovenia
lidija at focus.si
+386 5 907 13 26

Nina Stros
Greenpeace Slovenia
nina.stros at greenpeace.si
+386 40 871 530

Pippa Gallop
CEE Bankwatch Network
pippa.gallop at bankwatch.org
+385997559787

New report shows World Bank tough talk on climate is just a mirage in Mongolia’s Gobi desert


Ulaanbaatar, Mongolia – Just one week after its grim warning during the UN climate talks in Doha that the world is on a path towards a four degree-rise in global temperatures, the World Bank is set to approve financing for yet another coal plant. The plant will power a giant mining complex in Mongolia’s South Gobi desert, fuelling climate change and violating the Bank’s own policies, argues a new analysis from advocacy groups (1).

The groups reviewed the environmental and social impact assessment (2) prepared by mining conglomerate Rio Tinto for its US$13.2 billion Oyu Tolgoi copper and gold mine and associated facilities, including a 750 megawatt thermal coal power station. Rio Tinto’s assessment was submitted to the World Bank Group and the European Bank for Reconstruction and Development (EBRD) in order to be considered for project finance (3).

The groups found that Rio Tinto’s assessment contravenes World Bank guidelines for approving coal power projects because it does not include an assessment of the power plant or the cumulative impacts of the project over its full life cycle. The assessment also fails to provide any meaningful consideration for low-carbon alternatives or support for renewable energy projects, and fails to adequately account for CO2 emissions, all issues that the institution requires an expert panel to consider for each and every coal plant they consider financing (4).

Justin Guay of the Sierra Club explains, “The World Bank’s climate credibility is on the line. Fast tracking this project, without following existing coal screening policies, just doesn’t jive with Dr. Kim’s statement that climate change is ‘tilted against many of the world’s poorest regions and likely to undermine development efforts and goals’.”

The groups also contend that Rio Tinto’s analysis does not adequately assess the impacts of the project on the arid region’s already scarce water supply and its threat to the traditional way of life for the nomadic herders who have lived in the region for centuries. The project necessitates the use of fossil and deep water aquifers, yet the Rio Tinto’s assessment offers no effective proof that this will not impact the herders or their livestock.

According to Sukhgerel Dugersuren, Executive Director of the Mongolian NGO Oyu Tolgoi Watch, “Rio Tinto’s blatant disregard for the people who call the Gobi Desert home and the water resources they depend on for their survival should be a clear signal to international financial institutions that the project cannot receive funding in its current design.”

Based on the review’s findings, the groups are requesting that the World Bank and EBRD delay consideration of the Oyu Tolgoi project until Rio Tinto demonstrates that there are enough water resources in the Gobi for the lifetime of the project and takes concrete measures to mitigate its environmental and social impacts, and the World Bank convenes an expert panel to consider low-carbon alternatives.

“Before considering this project any further, the World Bank and EBRD need to go back to the drawing board and commission an independent, robust and transparent review of the environmental and social impact assessment that genuinely evaluates the impact on scare water resources and the coal projects’ compliance with bank policies. They must also create concrete plans for alleviating the mine’s impacts on local people and their livelihoods,” added Sukhgerel.

A decision on the project by the World Bank is expected at the end of January, and the EBRD will consider the project in February. The U.S. Export-Import Bank, Export Development Canada and the Australian Export Finance and Insurance Corporation are also considering financing the project.

Notes for editors

1. The ESIA review was conducted by the Accountability Council (US), Bank Information Center (US), CEE Bankwatch Network (regional), London Mining Network (UK),OT watch (Mongolia), Sierra Club (US) and urgewald (Germany), with assistance from other independent experts.

2. The full review of the Environmental and Social Impact Assessment and its implications for the WB loan is available at http://www.bicusa.org/proxy/Document.103001.aspx and the review’s implications for the EBRD at: https://bankwatch.org/sites/default/files/a-useless-sham-OT-ESIA-review-14Dec2012.pdf. An Environmental and Social Impact Assessment conducted by Oyu Tolgoi LLC, the Rio Tinto subsidiary that manages the mine, was released in August 2012, as required by the World Bank Group and the EBRD for projects with significant adverse social and environmental impacts, after eight months of delay.

3. The World Bank’s International Finance Corporation and Multilateral Investment Guarantee Agency are slated to provide US$900 million in loans and up to US$1 billion in political risk insurance respectively, while the amount that the EBRD is considering is still unknown.

4. The full analysis of the World Bank policy violations associated with the coal plant is available at http://action.sierraclub.org/site/DocServer/Tolgoi_assessment_Final.pdf?docID=11801.

For more information, please contact:

Sukhgerel Dugersuren
Executive Director, OT Watch
Tel.: +976 99 185 828
otwatch at gmail.com

Jelson Garcia
Bank Information Center
Tel.: +1 202 624 0622
jgarcia at bicusa.org

Richard Harkinson
London Mining Network
Tel.: +44 7563 238179
research at londonminingnetwork.org

Nicole Ghio
Sierra Club
Tel.: +1 202 675 6270
nicole.ghio at sierraclub.org