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World’s largest public lender almost doubles support to fossil fuels in past 4 years


Brussels — The European Investment Bank has increased its fossil fuel lending from 2.8 billion euros to 5 billion euros between 2007 and 2010, according to a study published today by environmental NGO CEE Bankwatch Network [1].

The EIB is the European Union’s house bank, committed to furthering the EU’s goals, including reducing CO2 emissions by 20 percent by 2020 and by 80-95 percent by 2050 compared to 1990 levels. Energy represents the second largest lending category in the bank’s overall portfolio which has reached 72 billion euros in 2010, making this institution a bigger lender than the World Bank. In the analysed four year period, fossil fuels represent the largest energy lending category, with 16 billion euros given by the EIB to fossil fuels compared to 13 billion euros to new renewables [2] in the same period.

“Our study highlights once more the secret hypocrisy at the heart of EU climate action,” comments Piotr Trzaskowski, Bankwatch energy coordinator. “While the EU appears to be the world’s most progressive actor in the global struggle against climate change, the financial arm of the union is putting billions of euros of public money into energy infrastructure that will lock in countries into a fossil-fuel dependent path for four-five decades. While the bank has made a commendable push to increase lending to renewables in the past years, we fear positive effects are lost because of massive investments in fossil fuels.”

According to the Bankwatch study, a mere 5 percent of all energy investments of the bank has gone to energy efficiency, while at the same time the bank has continued to finance coal power plants, including large new installations in Germany and Slovenia [3]. In the new EU member states, the EIB has predominantly supported high-carbon types of energy, thus petrifying the current unsustainable energy system in the eastern part of the EU.

“It is imperative that the EIB revises its energy policy in line with climate science as well as with EU 2050 climate objectives,” says Anna Roggenbuck, Bankwatch EIB coordinator. “The EIB should immediately stop lending to coal, the most carbon intensive type of energy generation, and develop and implement a plan to phase out lending to other fossil fuels and prioritise energy efficiency as the most important area of intervention.”

 

For more information, contact:

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

Piotr Trzaskowski
Bankwatch energy coordinator
piotr.trzaskowski AT bankwatch.org
+48 228920086

Notes for the editors:

1. Read the Bankwatch study at: https://bankwatch.org/publications/carbon-rising-european-investment-bank-energy-lending-2007-2010

2. Bankwatch methodology (categorisation of projects) differs from the EIB one. Please consult Bankwatch methodology on page 29 of the study.

3. Read more about the new coal plant in Slovenia financed by the EIB:
https://bankwatch.org/our-work/projects/sostanj-lignite-thermal-power-plant-unit-6-slovenia

Independent analysis questions economic viability of TES 6


Ljubljana – An independent analysis commissioned by Bankwatch and Focus published today reveals a number of unsubstantiated claims and methodological mistakes in the investment plan for the TEŠ 6 lignite plant in Slovenia [1]. Correct calculations show that the internal rate of return is in reality lower than estimated by the project promoter, state-owned TES. Had the rate of return been calculated properly, the project would not have qualified for the EIB loan of 440 million euros it is set to receive.

The report, entitled ‘A critical examination of the investment proposal for Unit 6 of the Sostanj power plant’ [2], is a review of assumptions and calculations in the investment plan for the new block at Šoštanj lignite-fired power plant prepared by Dutch consultancy CE Delft [3].

The report highlights several methodological mistakes in the calculations from the investment plan. Lignite prices, lignite consumption at TES 6 after 2028 and CO2 costs have all been underestimated in the calculations made by project promoter TES, while the expected demand for the electricity produced by the plant is overestimated. All of these elements have made it possible for promoter TES to present the Slovenian government and potential foreign investors with a higher expected rate of return for the new block than it is in fact realistically possible.

“Our government conditioned a state guarantee for TES 6 on a rate of return at 9 percent, but this analysis shows that the plant is unlikely to yield even 7%, therefore under Slovenian conditions this project should not be granted state support in the form of a state guarantee,” says Lidija Živčič from Focus. “This also means that the European Investment Bank should not be lending money for this plant, as their loan is conditioned on the state guarantee.”

“With such flaws revealed in the economic fundament of the TES 6 project, the European Investment Bank and the European Bank for Reconstruction and Development now have the opportunity to recognise their initial error and withdraw from a very bad project while they still can,” says Bankwatch’s Piotr Trzaskowski. “There is already a complaint sitting with the European Commission regarding the illegality of tender procedures at TES 6 [4]. Now we are showing that not only this project should be denied public support because it will prevent Slovenia from reaching EU climate goals but also because it does not meet the Slovene government’s conditions for economic viability of this kind of investment. What reason is there left for the EIB and EBRD to stick to a project that can cause serious damage to the reputation of these institutions?”

For more information, contact:

Piotr Trzaskowski
Energy and climate coordinator, CEE Bankwatch Network
Tel: +48509162988
piotr.trzaskowski AT bankwatch.org

Lidija Zivcic
Senior expert, FOCUS association for sustainable development
Tel: +386 15154080
lidija AT focus.si

Notes for the editors:

1. Read more about TES 6 and European public banks’ support for this project: https://bankwatch.org/our-work/projects/sostanj-lignite-thermal-power-plant-unit-6-slovenia

2. The report is available at https://bankwatch.org/sites/default/files/Sostanj-TES6-economics.pdf. The report was commissioned by CEE Bankwatch Network and Focus, Association for Sustainable Development and was prepared with the financial support of the European Climate Foundation.

3. CE Delft is an independent research and consultancy organisation specialised in developing innovative solutions to environmental problems.

Established in 1978 as a not-for-profit organisation, CE Delft remains financially independent and unsubsidised to this day. A wide range of clients – government, industry and NGOs, Dutch as well as international – have already found their way to CE Delft. They recognise the organisation’s expertise and experience and prize its independent attitude. http://www.cedelft.eu

4. Read the complaint submitted by Focus to the European Commission in November 2011: https://bankwatch.org/sites/default/files/Complaint-EC-SostanjPublicProcurement-02Nov2011.pdf

NGOs condemn EBRD financing of biodiversity destruction in Croatia

Zagreb — Croatian environmental organisations Zelena akcija/Friends of the Earth Croatia, the Croatian Biospeleological Society, Transparency International Hrvatska, Srđ je naš, Baobab, Eko Zeleno Sunce, Brodsko ekološko društvo-BED, Center for Environment (B&H), Eko-Zadar, WWF MedPO and regional organisation CEE Bankwatch Network have described as “extremely irresponsible” the approval yesterday by the European Bank for Reconstruction and Development of a EUR 123 million loan for the construction of the Ombla underground hydropower plant near Dubrovnik. [1]

The project, planned by Croatian electricity company HEP, has attracted numerous criticisms on environmental, economic and procedural grounds. It will be situated in an area designated for protection under the EU’s Natura 2000 network due to its valuable cave fauna [2], but its impact on the Natura 2000 site has not yet been assessed.

“HEP is obviously in a great hurry to get this project approved and signed – such a hurry that there is no time to wait for the Natura 2000 impact assessment to be done and no time to carry out a new environmental impact assessment instead of one that dates from 1999”, commented Jagoda Munic of Zelena akcija. “That HEP is trying to get all the documentation and permits in place before Croatia enters the EU and is subject to stricter environmental standards is unfortunately not surprising” she continued, “but the EBRD, as a primarily European public institution [3], should know better than to prematurely approve a project that has not fulfilled the legal requirements. [4]

Croatia’s entry to the EU is not the only deadline that is looming. On 4 December Croatia will be holding parliamentary elections, and the main opposition coalition has already pledged not to go ahead with the Ombla project if it is elected. [5] The hurried approval is presumably an attempt to bring the project to as advanced a stage as possible before the election threatens its future.

One of the reasons for the widespread scepticism about the Ombla hydropower plant is the leaked technical due diligence report carried out by consultants for the EBRD from September this year, which found that the project was technically risky and that it could only be implemented if heavily subsidised by the government or by raising electricity prices. [6] The EBRD and the project sponsor HEP later claimed that this version of the report had only inadvertently been labelled final and that once the consultant better understood the project, the conclusions changed in its favour. [7]

“All in all the Ombla project raises more questions than answers, and in approving it, the EBRD is sending completely the wrong messages to Croatia,” concluded Karst expert Ivo Lučić, Ph.D. “The bank claims that the project will promote best corporate practices, but so far all it has promoted is the destruction of cave fauna and habitats and cutting corners on environmental legislation. On top of that, the project is likely to have a cross border influence on watersheds in Bosnia and Herzegovina, which is not yet fully understood – one more argument against this premature approval by the EBRD.”

For more information, contact:

Jagoda Munić
Zelena akcija/Friends of the Earth Croatia
+385 (0)98 1795 690.

Jana Bedek
Croatian Biospeleological Society
+385 (0)91 5761 172


Dr. Ivo Lučić
Karst expert
+385 (0)98 347 669


Notes for editors

1. For a description of the project see http://www.ebrd.com/pages/project/psd/2011/42219.shtml

2. Including five species of protected bats, the eccentric-looking proteus anguinus or human fish, and several endemic species of aquatic cave snails.

3. The EBRD is 60 percent owned by the EU and its Member States. Other shareholders include the US, Canada, Australia, New Zealand, Japan and the bank’s beneficiary countries in eastern Europe and the Former Soviet Union.

4. Last week Zelena akcija filed an official complaint about the Ombla project and its non-compliance with Croatian legislation and the EBRD’s own Environmental and Social Policy to the EBRD’s Project Complaint Mechanism. The complaint can be found here: https://bankwatch.org/publications/official-complaint-ebrd-ombla-hydropower-project-croatia

5. http://www.kukuriku.org/plan21/pitanja-i-odgovori/he-ombla/

6. The exact quotes are: “Undertaking the project in full, as designed at present, carries a high risk of the project not achieving its objectives” and that “the project fails to recover both investment outlays and recurrent costs, in fact yielding a considerable cost in commercial terms …. the project could only be implemented if it was heavily subsidized by the government”. (Tractabel Engineering; Projektni Biro Split: Ombla Hydropower Project – European Bank for Reconstruction and Development – Technical Due Diligence – Final Report Rev. C September 2011)

7. See the EBRD and HEP explanation at: https://bankwatch.org/documents/EBRDresponse-OmblaHPP-07Nov2011.pdf

Updated on November 23 to include one more organisation in the list of signatories

European public banks must disengage with Egypt’s military junta

In light of the violence against civilians on the streets of Egypt today, CEE Bankwatch Network is requesting that the European Investment Bank and the European Bank for Reconstruction and Development immediately cease discussions and negotiations with the Egyptian government and authorities on all levels about potential financial involvement in the country until the Supreme Council of the Armed Forces (SCAF) cedes power to civilian leaders, the country has a legitimately-elected civilian government in control of the army, and military trials come to an end.

In spite of repeated warnings from local and international civil society groups [1], the two European institutions have rushed into cooperation with the SCAF-controlled interim government, without a legitimate civilian government first in place. While the EIB and EBRD are mandated to promote democracy in Egypt, they have collaborated for the last year with military rulers “guilty of abuses in some cases worse than those committed under Hosni Mubarak.” [2]

At the same time as the Egyptian military was ruthlessly imprisoning activists for simply expressing discontent with the political situation in the country, the EBRD organised together with the interim government a conference in Cairo on investment opportunities in Egypt [3]. During the October 26 event, Jonathan Charles of the EBRD declared that as long as “Egypt remains committed to democracy” the EBRD „will continue to be supportive” and have a lot of policy dialogue with the current leaders. [4]

Bankwatch International Affairs Director Petr Hlobil says, “With over 30 people now dead in the streets of Cairo at the hands of the military council’s security forces, it is impossible for the EIB and EBRD to still claim that the Egyptian leadership is committed to democracy. It is time for the two banks to withdraw from the country until a civil government is in place and acknowledge that it was a mistake to recklessly and hastily engage the military junta.”

For more information, contact:

Petr Hlobil
International Affairs Coordinator
CEE Bankwatch Network
petrh AT bankwatch.org
+420-603 154 349

Notes for the editor

1. See Bankwatch and Counter Balance press release: https://bankwatch.org/news-media/for-journalists/press-releases/keep-european-public-banks-out-mediterranean-region-say-ng

and Arab NGOs statement: https://bankwatch.org/news-media/for-journalists/press-releases/civil-society-groups-arab-region-say-western-financial-aid

2. Read Amnesty International study: http://www.amnesty.org/en/news/egypt-military-rulers-have-crushed-hopes-25-january-protesters-2011-11-2

3. Description of conference on EBRD website: http://www.ebrd.com/pages/news/press/2011/111024b.shtml

4. Read more statements from the EBRD during the conference: http://www.thedailynewsegypt.com/banking-a-finance/ebrd-ready-to-work-with-civilian-democratic-government-in-egypt.html

NGO coalition urges EBRD not to finance destruction of national park in Macedonia


Skopje – A coalition of more than 30 Macedonian and international NGOs [1] are calling on the European Bank for Reconstruction and Development (EBRD) not to finance Boskov Most hydro power plant in north-western Macedonia [2]. The project would seriously damage Mavrovo national park, the largest in the country and a potential Natura 2000 site, while at the same time being envisaged to produce a relatively small amount of electricity to be used only for the stabilization of the national energy system.

The 70 MW Boskov Most HPP would be located in the Mavrovo National Park, the area with the richest biodiversity value in Macedonia. Construction is being planned right at a time when the value of the national park is being re-assessed and the park re-proclaimed. The project promoter, Macedonian state owned power company ELEM, is asking the EBRD to financially support the HPP project without taking into account the fact that legal processes connected to the statute of the park are incomplete and a Strategic Environmental Assessment for planned hydro projects in this area is lacking.

According to the environmental NGOs opposing the project, the Environmental Impact Assessment already performed for the project – and on which the EBRD relies for its decision — is faulty. Among its shortcomings, it fails to properly explain the risks posed by the project for the Balkan lynx, which survives in Macedonia exactly at the spot where Boskov Most is planned while being extinct in other neighboring countries.

Importantly, the assessment argues that the HPP would have an overall positive impact on the environment by producing less CO2 emissions compared to if the same amount of electricity were produced from fossil fuels. However, argue the green NGOs, this is a tendentious assessment: the energy produced by the HPP would be used for the stabilization of the energy system in the country and would not come with any practical reduction in fossil fuel usage in Macedonia.

“By investing in Boskov Most HPP, the EBRD is sending the wrong message to Macedonia,” explains Ana Colovic Lesoska, Bankwatch Macedonian national campaigner. “Such a decision literally tells our government that it is acceptable to go around proper legal processes. We would instead expect the EBRD to truly assist Macedonia in our path towards the EU and support the protection and preservation of nature and biodiversity, an important goal of the EU member states. The EBRD ought to put this project on hold until all legal processes regarding the national park are finalized.”

For more information, contact:
Ana Colovic Lesoska
Bankwatch Macedonian National Coordinator
ana AT bankwatch.org
+389 72 72 61 04

Notes for the editors:

1. Read the NGO letter and see the list of signatories at: https://bankwatch.org/sites/default/files/letterEBRD-BoskovMost-28Oct2011_0.pdf

CEE Bankwatch Network is also planning to submit a complaint letter to the EBRD’s Project Complaint Mechanism. According to the NGO, investing in this project would be counter to the Bank’s own policies.

2. The EBRD Board of Directors is scheduled to approve a 65 million Euros loan for the construction of Boskov Most HPP on November 8. The total cost of this project is estimated at 84 million Euros and the developer is Macedonian state owned power plant company ELEM.

EBRD project summary document: http://www.ebrd.com/pages/project/psd/2011/41979.shtml

NGOs call on the EBRD not to finance “high risk” underground HPP in Croatia


Zagreb — Croatian and international environmental organisations have today called on the European Bank for Reconstruction and Development (EBRD) not to go ahead with a planned EUR 123 million loan for the Ombla hydropower plant near Dubrovnik in Croatia, due to be approved by the bank’s Board of Directors on November 8. [1] In an open letter to the bank, the organisations point to ecological, economic, and procedural problems with the plans, which even the consultants hired by the EBRD to assess the project have described as “high risk”.[2]

“The hydropower plant planned by the Croatian electricity company HEP would involve flooding a cave with high biodiversity value [3] that is due to be protected as part of the Natura 2000 biodiversity network when Croatia enters the European Union. Several important studies are still missing and the Environmental Impact Study is more than 10 years old. It’s an obvious example of rushing to finish destructive projects quickly before Croatia can be held accountable under EU environmental legislation,” said Jana Bedek of the Croatian Biospeleogical Society. “It is shocking that a public bank like the EBRD is considering financing this kind of foul play,” she added.

“However bats and salamanders are not the only ones in danger here. The plant would be built in karst rock formations that are like a Swiss cheese. No one fully understands what is connected to what, and trying to plug these carries a high risk of failure and unintended effects on connected water systems,” added karst expert Dr. Ivo Lucic.

Adding to concerns about the project’s environmental impacts, the EBRD’s consultants Tractabel Engineering and Projektni Biro Split have concluded that “the project fails to recover both investment outlays and recurrent costs, in fact yielding a considerable cost in commercial terms …. the project could only be implemented if it was heavily subsidized by the government”. Their report goes on to add that increasing electricity prices by 200 percent could also solve the problem [4], a move not likely to be welcomed by the Croatian public.

“It is hard to find anything to say in favour of the Ombla project,” concludes Jagoda Munic of Friends of the Earth Croatia. “Considering the high environmental risks, we believe it is unjustified to cause significant disturbance to a proposed Natura 2000 habitat for a project that may never go further than the first stage, in which no electricity would be produced. We therefore ask the EBRD to withdraw from the project.”

For more information contact:

Jana Bedek
Croatian Biospeleological Society
+385 (0)91 5761 172

Dr. Ivo Lučić
karst expert
+385 (0)98 347 669

Jagoda Munić
Zelena akcija/Friends of the Earth Croatia
+385 (0)98 1795 690.

Notes for editors

1/ Read the NGO letter to the EBRD at:
https://bankwatch.org/publications/open-letter-requesting-ebrd-withdraw-ombla-hydroelectric-plant-project

2. “Undertaking the project in full, as designed at present, carries a high risk of the project not achieving its objectives”. Tractabel Engineering; Projektni Biro Split: Ombla Hydropower Project – European Bank for Reconstruction and Development – Technical Due Diligence – Final Report Rev. C September 2011, p.9-10.

3. There are five species of protected bats and Proteus anguinus, the cave salamander (IUCN Red List (VU); FFH Directive: Annex II, IV; Bern Convention: Annex II), Troglocaris anophthalmus, the cave shrimp (IUCN Red List (VU)) and Congeria kusceri, the cave clam (FFH Directive: Annex II, IV).

Among other cave species four taxa are found only in the cave Vilina špilja – Ombla izvor, and nowhere else in the world: Horatia knorri, Lanzaia kusceri, Plagigeria nitida angelovi (all three are aquatic cave snails) and Eukonenia pretneri, the cave palpigrade.

Proof that the cave is far from being fully explored came in 2009 with the discovery of a new Genus of terrestrial isopod in the cave.

4. Tractabel Engineering; Projektni Biro Split: Ombla Hydropower Project – European Bank for Reconstruction and Development – Technical Due Diligence – Final Report Rev. C September 2011, p. 122-123.