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Romania: New coal plants to be built with EU aid for greening economy

Bucharest – One of the eight Member States applying for EU help consisting of free of charge GHG emissions allowances from 2013 to 2019, Romania intends to implement investments which will lead to maintaining or even increasing the high share of coal in the country’s electricity production, thus contradicting the goals of the EU aid scheme.

Under the EU Emissions Trading System (ETS) legislation [1], new member states will continue to be allowed to give out a limited number of free emissions allowances to domestic eligible power plants until 2019 in order to help these countries cope more easily with the high costs of transitioning to a low-carbon electricity sector. The free allowances are supposed to contribute to the de-carbonisation and diversification of the national electricity production systems.

An analysis published today by CEE Bankwatch Network and Greenpeace Romania [2] shows that, contrary to the goals of the EU ETS Directive for reducing greenhouse gas emissions, the Romanian national plan submitted in September 2011 to the European Commission proposes investments almost exclusively in fossil fuel facilities. Coal facilities alone would have an installed capacity of 2,000 MW, representing 36 percent of the total new capacity proposed for support [3]. Romania is already producing more than 40 percent of its electricity from coal. Out of the total number of 24 investments the Romanian government intends to support, only two [4] are not new fossil fuel capacities. Moreover, the national plan does not include a single wind, hydro, solar or geothermal power plant.

„The Romanian government should have used this opportunity provided by the Commission to propose a national investment plan that truly contributes to greening our energy sector, but instead it has chosen to support the development of new fossil fuel power plants,” comments Bankwatch campaigner in Romania, Diana Popa. „When deciding over whether to accept this national plan or not, the European Commission should reject prolonging Romania’s dependency on coal and instead provide strong guidance to the country to promote the renewables sector.”

The NGO analysis further points out that the Romanian proposed national plan favours three of the biggest national energy companies [5]. Furthermore, the elaboration of the national plan has been done without a Strategic Environmental Assessment of the expected impacts of this plan as well as without a proper engagement of the civil society and general public.

Notes for the editors

1. EU ETS is considered by the European Commission as one of the most important tools in the EU’s strategy to combat climate change and it is a system meant to gradually reduce the total emissions levels of the block using market mechanisms. In its third phase (2013-2020), emissions allowances can no longer be granted for free to power plants and these would have to instead purchase them through auctions or on the secondary market. Only new member states are exempted from this rule until 2019. Romania was one of eight new EU member states to apply to the European Commission for free allowances in September last year.

2. Link to online version of study: https://bankwatch.org/sites/default/files/ETS-Romania-21Feb2012.pdf

3. The Romanian government applied for approx. 75 million tonnes of free allowances in the value of 1.3 billion euros, which it intends to use for 36 installations operated by 31 companies.

4. A biomass cogeneration plant at CET Govora and the rehabilitation of the coal power plant at Turceni.

5. Rovinari CEN, CEN Craiova and Termoelectrica.

For more information, contact:

Diana Popa
Romanian campaigner, CEE Bankwatch Network
diana.popa at bankwatch.org

Kyrgyz lawmakers endorse NGO’s environmental complaints over Kumtor Gold Mine

Bishkek – Both the Kyrgyz government and the parliament took on board this week concerns expressed by environmentalists that the Kumtor gold mine operated by Canadian Centerra Gold Corporation poses serious threats to livelihoods and the environment, including causing the melting of two glaciers in the area.

The Kyrgyz officials were responding to a report prepared by a commission made up of state officials and NGOs exploring water quality around the gold exploitation published in the end of January (1). The commission report included an annex very critical of Centerra, accused of contaminating local waters and glaciers while hiding evidence of such negative impacts from public oversight, authored by US based independent expert Robert Moran (2).

“Our expert commission identified a whole set of problems and risks at the Kumtor mine so we provided many recommendations and even advised to temporarily suspend operations until further analyses are conducted and the problems are solved,” says Kalia Moldogazieva, deputy head of the state commission and director of HDC Tree of Life, a Bankwatch partner in Kyrgystan (3). „We were very happy to see that during a meeting between our government and NGOs taking place February 14, the Vice Prime Minister basically agreed to the necessity of all our recommendations and even added clear deadlines for their implementation.”

On February 15, deputies in the Kyrgyz parliament have even called for a revision of the 2009 contract between Centerra and the Kyrgyz state quoting explicitly environmental concerns raised in the state commission report, alongside worries about the limited economic benefits accrued to the Kyrgyz people from the gold exploitation.

The Kyrgyz officials’ stances come in the midst of a worker strike at the Kumtor mines begun on February 7 as workers fight against contributions for the national social fund to be deducted from their pay-checks. Centerra officials announced yesterday that the strike has led to the halting of Kumtor operations apart of basic maintenance levels (4).

“The authorities’ response to environmental concerns is very much welcome,” says Bankwatch’s Central Asia officer Vladena Martsynkevych. „We are also hoping that these recent developments will make the European Bank for Reconstruction and Development – which in November 2010 offered Centerra Gold a 150 million US dollars three-year revolving debt facility – reconsider its approach to investments in mining projects: support for fast-profit gold operations, as in this case, may be very tempting, but a public bank should rather focus on helping resource-rich countries diversify their economies. At the same time the EBRD should steer away from mining projects that bring considerable risks, but do not demonstrate significant additionality in terms of addressing environmental and social problems.”

Notes to the editors:

1. The Interagency Commission – made up of Kyrgyz NGOs and state agencies’ representatives and created by governmental decree – conducted a site visit and sampling of water quality in September 2011. Read the state commission report at: http://treelife.org.kg/index.php/ru/kumtor

2. Last fall, Robert Moran was invited by Kyrgyz environmental NGOs to join the state commission visiting the mine but was finally refused entrance to the mine without an explanation. Read Moran’s report at: https://bankwatch.org/sites/default/files/Kumtor-MoranReport-31Jan2012.pdf

and Robert Moran’s resume at: http://www.mineriaysociedad.unsj.edu.ar/descargas/cv_expositores/8_20100…

3. See the website of Kyrgyz NGO “Human Development Center (HDC) Tree of Life”: http://treelife.org.kg/

4. Kumtor is the biggest gold mine operated by a Western company in Central Asia and gold extracted here accounts for approximately 90 percent of Centerra’s annual output.

For more information, contact

Vladlena Martsynkevych
Bankwatch Central Asia officer
vladlena AT bankwatch.org

Billions of EU funds wasted on dead-end investments

New map shows socially and environmentally harmful projects in central and eastern Europe

The online version of the map ‘Roadmap to sustainability or dead-end investments’ is available at: https://bankwatch.org/billions/

Brussels – Substantial environmental and social harm is being caused by controversial projects costing billions of euros of EU money, according to research published today by Friends of the Earth Europe and CEE Bankwatch Network. [1]

The groups have mapped 33 harmful projects in Central and Eastern Europe with total costs of sixteen billion euros. The projects, which include highways passing through protected nature sites, waste incinerators and airports, are being paid for – or being considered for financial support in the future – by Cohesion Policy Funds in the current EU budget. [2]

The map includes projects from Bulgaria, Macedonia, Hungary, Czech Republic, Slovakia, Poland and Estonia.

The projects will cause damage such as increased pollution, loss of biodiversity, increased risk of flooding, and displacement of local communities.

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

    “As we wait for the European Council and Parliament to have their say on the next European budget, this map shows that controversial projects are unfortunately not limited to a few isolated exceptions. EU money has the potential to bring lots of benefits to central and eastern European countries but if nothing changes it will bring substantial environmental and social harm throughout the region.”

    “These projects are mistakes Europe cannot afford to make. Future legislation must specifically prohibit the use of Cohesion Policy funds for detrimental projects.”

The research shows that almost 6.5 billion euros has been spent on detrimental projects. Almost 5 billion euros are set to go the same route, and projects totalling another 5 billion are currently considered for financing in the seven central and eastern European countries.

“Money must no longer be squandered on such foolish investments,” adds Trilling. “It is vital that the next one trillion euro EU budget offers possibilities for overcoming the current recession and de-carbonising economies. Courageous action is needed to overturn the legacy of bad planning and realise the beneficial potential of EU funds.” [3]

For more information please contact

Markus Trilling
EU Funds coordinator for Friends of the Earth Europe and Bankwatch
markus.trilling AT foeeurope.org
Tel: 02 893 1031, 0484 065 636

Notes for the editors

1. The publication contains a country listing of the projects, background descriptions and total amounts of EU Funds granted. The online version of the map is available at: https://bankwatch.org/billions/

It offers the possibility to view the data by country, type of project, or size of investment.

The map is the fourth edition produced by CEE Bankwatch and Friends of the Earth Europe. The groups have been monitoring EU Structural and Cohesions fund spending on the ground in central and eastern Europe since 1997.

2. Cohesion Policy Funds amounted to 344 billion euros out of the total 975 billion euro EU budget for the 2007-2013 period.

Read more about the EC’s legislative proposals for the new EU Budget at: http://ec.europa.eu/regional_policy/what/future/proposals_2014_2020_en.cfm

3. Read Bankwatch and Friends of the Earth Europe’s more detailed recommendations for EU regional funds 2014-2020 and how they can put Europe on a sustainable development path, ‘Funding Europe’s future’ October 2011, at: http://www.foeeurope.org/publications/publications2011.html

Read recommendations for a green EU budget from the Coalition for Sustainable EU Funds at: https://bankwatch.org/publications/changing-perspectives-how-eu-budget-can-shape-sustainable-future

Kyrgyzstan: Independent expertise exposes damage done by Kumtor gold exploitation

Bishkek — Canadian company Centerra Gold, owner and operator of Kumtor Mine, the largest gold mine in Central Asia managed by a Western company, has been contaminating local waters and glaciers while hiding evidence of such negative impacts from public oversight, reveals a report authored by an independent US-based expert published today by CEE Bankwatch Network (1). Had it operated in its home country Canada, Centerra’s practices would have caused the company serious trouble with the law.

Some of the contents of the report authored by hydrogeologist and geochemist Robert Moran (2):

  • Kumtor Gold has mined out parts of two local glaciers (Davidov and Lysyi) to access the ores
  • the company has been disposing waste rock on the glaciers, aggravating their melting and thus threatening the entire local water system whose main source are the glaciers
  • mining uses roughly 4.38 billion litres of water per year, seriously increasing competition for this scarce resource in Central Asia
  • Petrov Lake, at the same time the biggest regional contributor to trans-boundary Naryn River and the mine’s main water source, is being polluted
  • the water returned to the hydrological system after mining is polluted: water testing has shown that numerous chemical pollutants have high concentrations around the mine area, sometimes exceeding international water quality standards; local fish populations have been decreasing
  • since mining began, Kumtor Gold has produced 89 million tons of tailings, some of which are deposited in unstable conditions potentially causing a hazard in case of an earthquake; yearly, the company uses about 3650 tons of cyanide whose concentration in the waters released from the mine is unstudied
  • access to information for the public is restricted while state authorities do not have the means to properly monitor the company

“Kumtor Operating Company controls the mine like a private fiefdom, restricting access only to its close associates,” says Robert Moran. “Despite claims by Centerra and the European Bank for Reconstruction and Development – which is financing Centerra and should be monitoring its practices – the company does not truly allow open access to outside technical experts with respect to water quality testing.” Last fall, Moran was invited by Kyrgyz environmental NGOs to join a state commission (3) visiting the mine to conduct an independent technical audit. Nevertheless, finally Moran’s entrance to the mine was refused by without an explanation.

“Our expert commission identified a whole set of problems and risks at the Kumtor mine so we provided many recommendations and even advised to temporarily suspend operations until further analyses are conducted and the problems are solved,” says Kalia Moldogazieva, deputy head of the state commission and “HDC Tree of Life” (4) director. “The situation at the mine is very serious: even though we doubt operations will be halted, we at least hope the company will take on board our advice and start addressing the problems urgently.”

The European Bank for Reconstruction and Development has been providing debt and equity financing to Centerra Gold since 1995, yet the bank has failed to reassure critics of the Kumtor mine by providing transparent information about the mine’s impacts or the company’s performance and compliance with environmental and social standards. In spite of repeated serious accidents at the Kyrgyz mine and numerous accusations of bad practices (5), in November 2010, the EBRD decided to support Centerra Gold with a 150 million US dollars three-year revolving debt facility (i.e. the EBRD will provide the funds on demand from Centerra).

„It is high time that the EBRD restricts its investments in mining operations on glaciers and in nature protected areas by introducing in its mining policy,” says Bankwatch’s EBRD coordinator Fidanka Bacheva McGrath. „It is understandable that the current high prices of commodities, and especially unprecedented peaks of the price of gold, are driving the interest of investors, and the sector offers lucrative short-term profits to mining companies, resource-rich countries and financial institutions like the EBRD. Yet EBRD’s role in this context, as an institution mandated to use public money to promote sustainable development in post-socialist countries, should be different. First of all it should support resource-rich countries in diversifying their economy, and second, it should not finance mining projects that bring considerable risks, but do not demonstrate significant additionality in terms of addressing environmental and social problems.”

Notes for the editors:

1. Read the complete report in English at: https://bankwatch.org/sites/default/files/Kumtor-MoranReport-31Jan2012.pdf

2. See Robert Moran’s resume here: http://www.mineriaysociedad.unsj.edu.ar/descargas/cv_expositores/8_20100929202203_CV_Robert_Moran.pdf

3. The Interagency Commission – made up of Kyrgyz NGOs and state agencies’ representatives and created by governmental decree – conducted a site visit and sampling of water quality in September 2011. Read the state commission report at: http://treelife.org.kg/index.php/ru/kumtor

4. See the website of Kyrgyz NGO “Human Development Center (HDC) Tree of Life”: http://treelife.org.kg/

5. Read more about the Kumtor gold mine at: https://bankwatch.org/our-work/projects/kumtor-gold-mine-kyrgyzstan

6 Read Bankwatch recommendations for the EBRD investments in gold mining: https://bankwatch.org/publications/pointers-ebrds-forthcoming-mining-sector-strategy

7. See a photo gallery from the Bankwatch visit to Kumtor: http://www.flickr.com/photos/martsynka/sets/72157628221718463/

8. See a short documentary on the Kumtor mine:

For more information, contact:

Robert Moran (PhD)
Hydrogeologist, author of the report
remwater AT gmail.com

Vladlena Martsynkevych
Bankwatch Central Asia officer
vladlena AT bankwatch.org

Bankwatch report and video: Mongolia’s mining bonanza poses threat to locals and planet

A new report launched today by CEE Bankwatch Network, urgewald and OT Watch (1), following on-the-ground research in Mongolia, details the impact of the country’s mining boom on local populations, shedding light on the ignored side of one of the biggest business stories of today: Mongolia’s planned public offering of the state-owned Erdenes Tavan Tolgoi and the rights to one of the world’s largest untapped coal reserves. (2)

The report, entitled “Spirited Away – Mongolia’s mining boom and the people that development left behind” is accompanied by an original video produced by Bankwatch (3) including interviews with herders from both Oyu Tolgoi and Tavan Tolgoi, the main mining deposits in the country (3).

Sukhgerel Dugersuren from Mongolian NGO OT Watch and co-author of the report: “As foreign and Mongolian companies are preparing for massive coal, gold and copper exploitations in the Gobi desert, locals have been dangerously sidelined: infrastructure building and pollution have put immense pressure on traditional herding practices – already suffering from the impacts of extreme winters, with still very little in the way of jobs or social services offered in exchange to populations displaced to municipal centres. The greatest concern is the water scarcity and expected long-term shortages, yet affected people are left out of decision-making on this issue.”

Regine Richter, a co-author of the report and finance institutions campaigner at urgewald, points to the global impacts of Mongolian coal mining: “Mongolia possesses 12 billion tons of proven coal reserves, while the carbon content of globally known fossil fuel reserves is already five times more than the amount that must be adhered to over the coming decades, if we are to limit global warming to manageable levels. Therefore the climate impacts of coal mining in Mongolia should be given a serious consideration, if not by the Mongolian government, then definitely by international public banks financing these mining projects, who should be using tax-payers money for preventing climate change, not exacerbating it.” (4)

The report finds that these problems are not recognized enough by public banks investing in Mongolian mining, such as the European Bank for Reconstruction and Development or the World Bank (via International Finance Corporation).

The EBRD is a special focus of the report as the bank is currently preparing its new Mining Operations Policy. The bank has already invested in the development of the Tavan Tolgoi coal deposit and is considering investment in the Oyu Tolgoi gold mine, as well as in several other mining projects in Mongolia (5).

Although the bank claims to add value to extractive industry projects through bringing higher standards in mitigating environmental and social problems, the report concludes that such investments are essentially misguided. In the context of central and local authorities in Mongolia lacking the capacity to adequately plan and control the rapid mining developments, it becomes clear that EBRD moneys are in fact fueling short-term commercial interests while disregarding long-term risks.

“We really expect the EBRD to stop and think twice before investing more money into Mongolian mining,” said Fidanka Bacheva-McGrath, Bankwatch EBRD coordinator and co-author of the report. “The bank has two decades of experience from other resource-rich countries, like Azerbaijan and Kazakhstan, who have developed unhealthy dependency on export of commodities and fluctuations of their prices on the global market. So the bank should have learned a lesson and should diversify its portfolio in Mongolia, considering other sectors of the economy that can bring longer-term benefits for the country’s people, namely municipal and environmental services, infrastructure and agriculture.”

Notes for the editors:

1. The report is available online here: https://bankwatch.org/sites/default/files/spirited-away-mongolia-mining.pdf

2. Some of the latest information about the public offering: http://online.wsj.com/article/SB10001424052970204301404577172292914843580.html

3. The video is available here: https://bankwatch.org/news-media/blog/video-spirited-away-mongolias-mining-boom-and-people-development-left-behind

4. Read more about the impact that exploiting these reserves can have on climate targets at: http://www.carbontracker.org/wp-content/uploads/downloads/2011/07/Unburnable-Carbon-Full-rev2.pdf

5. The Tavan Tolgoi deposit (TT), located around 270 km north of the Chinese border, holds an estimated 6.4 billion metric tonnes of coal, about a quarter of which is expected to be the high quality coking coal necessary for steel production and the rest thermal coal. To date the vast majority of the deposit has not been tapped.

Oyu Tolgoi (OT) is the world’s largest undeveloped gold and copper mine. OT is 66 percent-owned by Ivanhoe Mines Mongolia Inc,a joint venture between Ivanhoe and Rio Tinto, and the Mongolian state that retains a 34 percent stake. OT is situated 160 kilometres southeast of TT en route to the Mongolian-Chinese border crossing of Gashuun Sukhait.

For more information, contact:

Fidanka Bacheva McGrath
Bankwatch EBRD coordinator
fidankab AT bankwatch.org

Regine Richter
Urgewald finance institutions campaigner
+49-170-2930725

Croatian civil society groups ask new government to withdraw from Ombla hydro project

Croatian environmental groups today held a protest action outside of the Croatian parliament calling on the country’s new government not to go ahead with the controversial EBRD-financed EUR 150 million Ombla HPP project.

Holding a giant pay-in slip with the EBRD named as the recipient, the groups aimed to highlight the folly of taking on new massive public debt for an environmentally destructive project whose economic viability is questionable at a time when Croatia is suffering from economic crisis and external debt at 100 percent of GDP .

The majority of the Ombla project is due to be financed through a syndicated loan of which EU 80 million is to be provided by the EBRD, with the remaining EUR 43.2 million from commercial banks. The loan was approved in November and hastily signed just days before Croatia’s 4 December parliamentary election. However disbursement is conditional on a biodiversity assessment being carried out so the project cannot start yet.

Images of the action are available online here