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European Parliament passes resolution to end taxpayer support for fossil fuels projects


With a resounding majority (540 MEPs in favour), the European Parliament today passed a resolution on trade and climate change which calls for the discontinuation of public support, via export credit agencies and public investment banks, for fossil fuel projects. [1] The step was widely welcomed by environmental and development NGOs campaigning on export credit agencies (ECAs) and the European Investment Bank (EIB). [2]

National public finance institutions in industrialised countries, known as ECAs, promote exports and investments in developing countries which significantly contribute to long-term increases in greenhouse gas emissions. It is estimated that ECAs support approximately double the amount in financial terms of oil, gas and mining projects as compared to all of the multilateral development banks combined. Half of all new greenhouse gas-emitting industrial projects in developing countries have some form of ECA support. [3]

The EIB – the EU’s house bank and also named in today’s resolution – is another of the largest public financiers of fossil fuels projects, with approximately EUR 20 billion of support for such operations in the last five years. In 2006, the EIB provided 58 percent of international financial institution financing for fossil fuels, dwarfing the contributions of the World Bank, the International Finance Corporation and others. [4]

In the resolution the European parliamentarians have now decided to take action. The resolution asks the Commission and EU governments to propose legislative instruments that would force ECAs and the EIB to “take account of the climate change implications of the funded projects” and to “impose a moratorium on funding until sufficient data are available”. The resolution also calls on financiers to redouble their efforts to transfer public funds to renewable energy and energy efficient technologies.

Antonio Tricarico, coordinator of CRBM in Italy, said: “While the EU is negotiating reductions in their own greenhouse gas emissions and emphasising the importance of reducing emissions in developing countries, their finance and trade agencies have so far largely ignored the climate implications of their activities. It is high time for this to be properly tackled and corrected.”

Magda Stoczkiewicz, Policy coordinator of CEE Bankwatch Network, said: “Through the EIB and their export promotion agencies, EU governments continue to subsidise billions of euros in exports and investments that encourage fossil fuel-intensive development. These types of investments will remain in place and contribute to climate change for the next 10 to 50 years. Yet the EIB and the ECAs could be playing a much more positive role in the transition to more sustainable energy. Ultimately urgent action is required at the highest governmental levels.”

Judith Neyer, of FERN and co-ordinator of the European ECA Reform Campaign, sees one of the reasons for this policy perversity on fossil fuel subsidies coming down to a lack of transparency: “Currently the disclosure of environmental information at the ECAs and the EIB alike is still seriously lacking. Reporting greenhouse gas emissions will be an important first step to enable the public to analyse the impacts of these institutions portfolios on climate change and will allow governments to start harmonising climate protection objectives with their ECAs financing as well as EIB lending.”

For more information

Antonio Tricarico
CRBM (Rome):
Tel.: +39 328 84 85 448

Magda Stoczkiewicz
CEE Bankwatch Network (Brussels):
Tel.: +32 475 867637

Judith Neyer
FERN (New York):
Tel.: +1 315 3958666

Notes for editors

1. The relevant paragraphs of the European Parliament resolution are:

  • 29: Calls for the discontinuation of public support, via export credit agencies and public investment banks, for fossil fuel projects and for the redoubling of efforts to increase the transfer of renewable energy and energy efficient technologies;
  • 30: Asks the Commission and the Member States to propose legislative instruments in order that Member State Export Credit Agencies and the European Investment Bank take account of the climate change implications of the funded projects when making or guaranteeing loans and impose a moratorium on funding until sufficient data are available, in accordance with advice from the OECD, G8 and the Extractive Industries Review;

2. The EIB campaign includes the following organisations: CEE Bankwatch Network; CRBM, Italy; Friends of the Earth, France; Friends of the Earth International; Urgewald, Germany; WEED, Germany; Bothends, The Netherlands; Bretton Woods Project, UK.

3. Export credit agencies and investment insurance agencies (ECAs) provide government-backed loans, guarantees and insurance to corporations seeking business opportunities in developing countries or emerging markets that are considered too risky (commercially or politically) for conventional corporate financing. ECAs are mostly national, public or publicly mandated agencies that usually support companies from their home country. Most ECAs don’t take into consideration the impacts of the projects they support on the environment or the rights of local peoples, undermining their governments commitments to sustainable development and combating climate change.

4. In the 2002-2006 period, the EIB lent EUR 23.7 billion to the energy sector, with 76 percent of its total energy investments going to fossil fuels, primarily gas.

See a recent Bankwatch analysis of EIB energy investments 2002-2006.

Distribution of EU funds in Poland seen as flawed by local officials


The selection of projects for billions of euros of EU funding in Poland is widely perceived by Polish municipalities to be politically-driven and non-transparent, new research conducted by Bankwatch member group the Institute of Environmental Economics (IEE) has found. [1]

The alarming findings are based on an anonymous questionnaire survey of 160 Polish municipalities on how they view the process of appraisal and selection of projects that applied for funding to the European Regional Development Fund (ERDF) between 2004 and 2006. [2] The results show that 49 percent of the municipalities believe that the project selection procedure was non-transparent and 44 percent that it was not objective. Fifty-two percent of the respondents see politically-driven choices as one of the main weaknesses of the project selection system. [3]

Anna Dworakowska, of the Institute of Environmental Economics, said: “Our research findings back up the argument that there is a clear need for improving the project selection process for EU funded projects in Poland and other member states. The lack of a correct project selection process means that EU funds are not being spent on the most necessary and beneficial projects.”

Previous IEE research has found that regional politicians and officials in Poland often overrule independent evaluation by experts. Projects that received the highest number of points on the ranking list by experts are subsequently often turned down, while projects evaluated as much worse receive EU money without any objective grounding and explanation. [4]

Anna Dworakowska said: “The problem is that no one from the municipalities will speak up openly because if they do they could say farewell to EU money for the next couple of years. Our anonymous questionnaires allowed municipal officials to say what they think”

The IEE has also experienced difficulties in obtaining any information about selected projects in Poland. It has had to start legal actions in order to receive only very short descriptions of financed projects.

Anna Dworakowska said: “The Polish government must first of all ensure that those experts evaluating projects are truly independent. There must also be less room for regional officials to arbitrarily change the experts ranking, and wherever it happens there should be a proper justification. Finally, more information about the financed projects must be publicly available.”

Poland is currently finalising its negotiations with the European Commission on the plans and rules for using the EU funds in the 2007-2013 period that will see EUR 67 billion disbursed in Poland alone.

Martin Konecny, EU funds project coordinator for CEE Bankwatch Network and Friends of the Earth Europe, said: “These research findings should also serve as a wake-up call to the European Commission at the start of the 2007-2013 funding period. The Commission should not tolerate billions of EU taxpayers resources in Poland being spent on projects that have not been evaluated as the best ones. A system where regional officials can override expert evaluation and arbitrarily select projects without explanation allows huge potential for corruption.”

For more information

Anna Dworakowska
Institute of Environmental Economics, Krakow
Tel.: +48 12 631 90 80
Mob.: +48 607 94 00 47
Email: ania AT iee.org.pl

Martin Konecny
EU funds project coordinator, Brussels
Tel.: +32 25 42 01 85
Mob.: +32 484 601283
Email: martin.konecny AT foeeurope.org

Magda Stoczkiewicz
Policy Coordinator at CEE Bankwatch Network, Brussels
Tel.: +32 25 42 01 88
Mob.: +32 475 867637
Email: magdas AT bankwatch.org

Notes for editors

[1] The research report and summary (in Polish) can be downloaded from the Institute’s website.

Key results of the IEE survey:

“How do you evaluate transparency of the project selection process in the Integrated Regional Development Operational Programme?”

  • very transparent: 3%
  • rather transparent: 37%
  • rather little transparent: 38%
  • very little transparent: 11%
  • difficult to say: 12%

“How do you generally evaluate the objectivity of the project selection process in the Integrated Regional Development Operational Programme?”

  • very objective: 4%
  • rather objective: 37%
  • rather little objective: 31%
  • very little objective: 13%
  • difficult to say: 15%

“What are the main weaknessess of the project selection and appraisal system?”

  • too many institutions involved in project selection: 63%
  • politically-driven decisions: 52%
  • lack of proper justification for decisions refusing the financing: 48%

[2] The questionnaires were sent by post to officials responsible for structural funds management in their municipality.

[3] For example, one of the typical answers received in the survey was the following: Regional management’s decisions are 100% political, the municipalities that did not have connections stood very low chances for receiving co-financing.

[4] For example, in 2005 the Management of the Podlaskie Region (the regional body which makes the final decisions) approved ERDF financing for projects which were at the following places according to the ranking by experts: 2, 6, 7, 12 and 16. Only these five projects out of 21 applications received funding. So the project that ranked 16th according to the experts was selected by the regional officials while projects assessed on the 1st, 3rd, 4th and 5th place were passed over. As a justification, the project description form was simply copied and pasted from the project application.

Albanian referendum aims to put a break on Italian oil and gas plans for renowned Vlora Bay

Vlora, Albania – The city council of Vlora in Albania this week approved a citizens’ initiative to hold a public referendum on the development in the picturesque Bay of Vlora of a 200,000 ton oil and gas terminal that is being promoted by the Italian La Petrolífera Italo Rumena company. If constructed, the terminal would become another component of a controversial industrial and energy park located less than six kilometres north of Vlora, a city of more than 150,000 inhabitants.

The sprawling energy park plans include the hosting of an outlet to the Adriatic for the AMBO pipeline and several thermo power plants. Some of the projects within the energy park have already received the backing of certain international financial institutions such as the World Bank despite protests and warnings from Vlora’s citizens that the park will bring detrimental impacts to the waters and coastal ecosystems of the Vlora Bay, will threaten tourism and fishing, and will harm their quality of life.[1]

Aleksander Mita, of the Civic Alliance for the Protection of the Bay of Vlora, said: “The city council’s approval of the referendum is an important milestone in our campaign. Whether the referendum takes place or not depends ultimately on the state Central Electoral Committee which approves requests for referenda according to the Albanian Constitution. We have reason to believe that the committee could block the referendum. In 2005 it did not allow a referendum on the Vlora power plant even though 14,000 people in Vlora requested one.”

The 50 million euro oil and gas terminal would be constructed on the site of a former caustic soda and PVC factory contaminated by mercury. [2] Although decontamination of the site by the Czech Geotest company allegedly started in 2002, people in Vlora argue that they have been informed neither about the progress of the decontamination nor about plans to rehabilitate the site. According to the last census 141 families live at or in proximity of the site and have heard nothing about potential resettlement.

Gani Mezini, of the Civic Alliance for the Protection of the Bay of Vlora, commented: “We call upon Petrolífera Managing Director Guido Ottolenghi to withdraw from this project. The Bay of Vlora will suffer irreparable harm from the development of the oil industry and from the immense tanker traffic accompanying it. We are ready to repurchase the land at a premium price and completely decontaminate and rehabilitate it.”

The project’s opponents say that La Petrolífera Italo-Rumena obtained a concession from the Albanian government in 2004 that involves extremely disadvantageous conditions for Albania. The Italian company is looking to construct the storage deposit in a public ocean-front property of 150,000 square metres, having paid the Albanian government a price of 1 euro for the entire area. Under the deal, the property will become exclusively Italian after a period of 30 years. La Petrolífera has also reserved the right to be the sole operator in the Bay of Vlora.

With this agreement La Petrolífera Italo-Rumena will control 50-60 percent of the Albanian oil market and will be able to influence internal market prices. In addition the Italian company has arranged tax breaks from the Albanian government which can only help it to squeeze all other local operators from the market, say the local opponents.

Caterina Amicucci, of the Campagna per la Riforma della Banca Mondiale based in Rome, said: “A referendum in Vlora is absolutely vital. It is clear that the agreement between La Petrolífera Italo-Rumena and the Albanian government was signed in the exclusive interests of the economic lobbies close to the former prime ministers Fatos Nano and Silvio Berlusconi. This agreement will not only create a monopoly situation for a foreign company in the Albanian energy sector, but also provides full legal immunity for Petrolífera should there be any environmental and social damage in Vlora Bay.”

For more information, contact:

Aleksander Mita
Civic Alliance for the Protection of the Bay of Vlora
Tel: +355 33 25313
Mob: +355 (0)69 226 0212
Email: aleksander.mita AT gmail.com

Gani Mezini
Civic Alliance for Protection of the Bay of Vlora
Tel: +355 33 25 313
Mob: +355 69 24 46 010
Email: gani.mezini AT gmail.com

Caterina Amicucci
Campagna per la Riforma della Banca Mondiale
Tel: +39 06 782 6855
Mob: +39 349 852 0789
Camicucci AT crbm.org

Notes for editors:

1. The USD 112 million Vlora oil-fueled power plant will be built with public money from the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank. The Albanian Macedonian Bulgarian Oil Corporation promoting the 894,5 km long AMBO pipeline designed to facilitate the transfer of 30-40 million tons of crude oil per year from the Caspian region to the Adriatic Sea has been in discussion over project financing with the European Bank for Reconstruction and Development, the World Bank’s insurance agency MIGA, the International Finance Corporation, the US Overseas Prime Investment Corporation and an Export-Import Bank.

2. It is estimated that the plant released up to 70 tons of mercury into the air, soil and marine sediments until its closure in 1992.

Rosia Montana – no improvement in sight for tarnished gold project

The recent public debate organised in Bucharest to discuss the controversial USD 500 million Rosia Montana gold mine project have been disrupted and debased by the actions of the projects sponsor, the Canadian company Rosia Montana Gold Corporation (RMGC), allege Romanian groups. The Bucharest-based TERRA Mileniul III and the Centre for Legal Resources maintain that the discussions taking place as part of the gold project’s environmental impact assessment (EIA) procedure have been tainted by RMGC’s bussing in of rowdy supporters of the project and also because of crucial missing project documentation.

Emilian Burdusel, director of the Ecological Club UNESCO Pro Natura, who participated at the public debates which concluded on August 25, stated: “As the mediation from the environmental authority representatives was far from ideal, the Rosia Montana public debates in Bucharest deteriorated into a farce, with the minimum conditions for a decent debate completely lacking. It was remarkable to witness the vice-president of RMGC, John Aston, intent on making provocative comments, answering questions in an accusatory manner which provoked the audience even more, thus generating an even greater scandal. The environmental authority should have stopped the debate and reorganised it with much clearer rules and much better mediators.”

Having assessed the risks and problems related to the RMGC project [1], the groups believe that the Romanian State will not benefit from the Rosia Montana project, which is also jeopardising 974 households in the projects vicinity, with an estimated 2,000 people threatened with resettlement.

Ionut Apostol, executive director of TERRA Mileniul III, a CEE Bankwatch Network member group, said: “The RMGC project should have been rejected a long time ago, based on a simple analysis of the costs and benefits for the Romanian State. Given the devastation in store for local communities, it’s astonishing that the potential royalty from this project for the state budget is only two percent of the annual mining production value.”

The Romanian groups have been alarmed by the ‘low-moderate’ risk assessment that RMGC has attached to the conclusions of the EIA presented for public consultation. Yet with the extraction of 13 million tonnes of ore per year, Rosia Montana would be the largest gold mine operation in Europe. Notably, RMGC is a mining company with no previous mining portfolio whatsoever.

Still missing from the public consultation are: key documentation related to the technical capacity and experience of RMGC for cyanide mining operations; the promoter’s financial capacity; explanations regarding the illegal mining operations that the promoter has conducted so far in Romania, which were sanctioned both by the Environmental Guard and courts of law; explanations about the criminal investigation regarding the establishment of RMGC SA.

Moreover, the project’s potential is being called into question. Justin Andrei, an independent geophysics expert based in Bucharest and former Head of the Geological Institute of Romania, stated that: “The gold-bearing mass containing the richest content, an average of 2 grams/tonne of gold, is due to be extracted in the first 5-6 years of the project. Subsequently the content will drop below 1.2 grams/tonne of gold, and RMGC could then be tempted to go for bankruptcy.” Mine closure and environmental and social regeneration would then be left to the Romanian government.

Detailed comments on the environmental impact assessment for the Rosia Montana project have been submitted to the Ministry of Environment. Catalina Radulescu, lawyer within the Centre for Legal Resources, stated that “for all these reasons, we asked the Romanian authorities, i.e. the Romanian Government through the Ministry of Environment, to reject RMGCs request for environmental permit”.

For more information:

Ionut Apostol
Executive Director, TERRA Mileniul III
Tel: +4021 312 68 70

Email: ionut AT bankwatch.org

http://terraiii.ngo.ro

Catalina Radulescu
Lawyer, The Centre for Judicial Resources
Tel: +4021 212 96 90

Email: cradulescu AT crj.ro
http://www.crj.ro

Notes for editors:

[1] These risks and problems include: the elimination of invaluable archaeological sites; the loss of cultural and historical heritage; the risk of dam breaching accidents within the mines tailings pond; the overflow of contaminated water from the tailings pond; the generation of acid water mobilising heavy metals which would pollute the entire area; hydrogen cyanide emissions in the tailings pond; accidents during cyanide transport (two 16 ton cyanide trucks on the road every day); the irredeemable transformation of the Rosia Montana area; the destruction of a vital Romanian community.

Is the EIB cooling climate change or fueling it? New report sceptical about EU bank’s investments in renewables

With the European Commission sponsored Green Week underway in Brussels, a new study has found that the European Investment Bank’s commitment to investing in renewable energy is in serious doubt owing to the EIB’s opaque information procedures and its definition of renewable energy projects. “Positives undermined: the EIB’s lending for renewable energies”, published by CEE Bankwatch Network and Friends of the Earth International (FoEI), demonstrates how this European institution is part of the problem rather than part of the solution when it comes to combating climate change. [1]

At the Bonn Renewables conference in June 2004, the EIB declared that the bank’s lending for renewable energies has been significant, totaling over EUR 1.6 billion in the period 1999-2003 of which approximately EUR 300 million was lent through intermediary banks for the financing of small and medium sized renewable energy projects. Also at Bonn the EIB announced an ambitious target of increasing its funding for renewables by up to 50 percent of its financing for electricity generation in the EU by 2010.

To verify the EIB’s declarations, and as a result of the EIB’s refusal to present detailed information on renewable projects financed through its global loans to financial intermediaries, CEE Bankwatch Network and FoEI asked 386 intermediary banks to provide a list of renewable energy projects financed from EIB monies in the period 1999 to 2003.

As detailed in the new study, responses from the 73 banks which did respond revealed no evidence about a concrete renewable energy project being financed. Some of the respondents claimed no renewable projects have been financed or are in the funding pipeline, even though the EIB pointed to them as having provided financing for renewables. Other banks refused information in general based on ‘data protection’.

The study also looks at various problematic aspects of renewable energy projects financed from the EIB’s direct loans – some of them, especially large hydropower projects which the EIB clearly includes as renewable investments, are of serious concern in terms of their negative environmental and social impacts. The Nam Theun 2 Hydroelectric Project in Laos, backed for funding by the EIB in April 2005, fails to comply with six of the seven Strategic Priorities laid out by the World Commission on Dams. [2] These include the resettlement of affected indigenous people, economic unfeasibility as well as negative environmental impacts.

Magda Stoczkiewicz, leading the EIB reform campaign for CEE Bankwatch and FoEI, commented: “As this study amply demonstrates, the EIB needs profound reforms to gain credibility with the public. It urgently needs to change its access to information policy so that thorough information related to its operations and projects is available. Such non-transparent behaviour from European institutions such as the EIB is among the reasons for EU citizens deciding to turn their backs on the European Union.”

As well as having a poor record in financing renewables, the EIB remains a significant supporter of road and air transport as well as fossil fuels. Pouring more money into fossil fuel projects leaves a legacy of further harmful emissions, increasing the global threat of climate change – and leaves the EIB with a substantial carbon footprint of its own.

Stoczkiewicz continued: “The EIB must drastically reduce its support for carbon heavy sectors such as road and air transport and fossil fuels and instead focus on real investments for renewables, energy efficiency and environmentally friendly transport modes. Currently, when it comes to combating climate change, the EIB is a part of the problem rather than part of the solution.”

View this new study, at the Bankwatch website.

For more information contact:

Magda Stoczkiewicz
CEE Bankwatch/FoEI
Tel: +31 475 867637

In French:
Greig Aitken,
Tel: +420 777 847 430

Notes for editors:

1. The study was released during the first ever street exhibition of posters on the EIB entitled “EIB: Public Funds for Public Benefit”, a part of civil society’s call to the European Investment Bank’s Governors and European policy-makers to work together to make the EIB an institution that supports people and the environment in a transparent manner.

2. International Rivers Network: An Analysis of Nam Theun 2 Compliance with World Commission on Dams Guidelines, 2001.

World Bank Spins Renewable Energy Conference. Ignores Extractive Industries Review. Continues Oily Business As Usual.

Environmentalists and development advocates today decried the World Bank’s announcement of support for renewable energy as mere spin. Stating that the proposed increase is marginal at best and does nothing to address the Bank’s ongoing bias towards fossil fuels, the groups called on the Bank to adopt the recommendations of its own studies and phase out support for coal and oil while dramatically increasing its support for renewable energy.

“Marginally increasing the funding for renewables is not enough because the World Bank’s own numbers show that lending for polluting fuels is growing even faster.” said Stephan Singer of WWF International.

The targets were announced as the first public Bank response to its Extractive Industries Review (EIR), which was initiated in 2000 by Bank President James Wolfensohn. The EIR was formed to evaluate whether or not Bank support for Big Oil and King Coal contributes to the Bank’s mission of poverty alleviation. The answer, after two years of consultation and study, was that they do not. The EIR recommended phase-outs of Bank support for coal and oil, and a phase-in of renewables by increasing lending by 20% of the total energy lending portfolio each year.

“They’re not even close to the EIR recommendation. They’re pledging 20% of a cent when they were asked to give 20% of a dollar” said Steve Kretzmann of the Institute for Policy Studies (IPS). According to IPS’ analysis of the Bank’s lending, over the past decade (1994 to 2003), the World Bank Group approved over $24.8 billion in financing for fossil fuel extractive and power projects. At the same time, the World Bank Group approved just $1.06 billion in renewable energy projects. They preferred fossil fuels over renewables by a 23:1 ratio. [1]

The new targets announced by the World Bank today are far short of the EIR recommendations, and would only increase the very small renewables and efficiency portfolio by 20% of itself annually – or about 1% of the total energy portfolio, which is less than projected global growth in demand for energy. “At this rate, it will take the Bank Group nearly twenty years before their renewables portfolio reaches current levels of funding for fossil fuels – it’s absurd” said Janneke Bruil of Friends of the Earth International.

“While we welcome the World Bank at least setting a target here in Bonn, the money is not enough and to be credible the Bank must phase out support for fossil fuels by 2008” said Daniel Mittler of Greenpeace International.

“The $200 million that the Bank is pledging for renewables is roughly the cost of their contribution to just one of the many fossil fuel projects they support annually” said Petr Hlobil of CEE Bankwatch Network.

Disturbingly, Bank Group figures for renewables include support for large dams, which are widely criticized for their high costs and social and environmental impacts. “The World Bank Group includes in its renewables portfolio some of its most controversial large hydropower projects. If it continues to perversely define large hydropower as renewable, this could consume the bulk of the Bank’s pledged increase in renewables support” said Patrick McCully, of the International Rivers Network

Contacts in Bonn:

Stephan Singer,
WWF International,
32-496-550 709
(English, German)

Daniel Mittler,
Greenpeace International,
49-171-876 53 45
(German, English)

Steve Kretzmann,
Institute for Policy Studies,
1-202-497-1033 (English)

Regine Richter,
Urgewald,
49-170-29 30 725
(German, English)

Petr Hlobil,
CEE Bankwatch,
420-603-154 349
(Czech, English, Russian)

Janneke Bruil,
Friends of the Earth International,
44-795-287 69 29
(Dutch, German, English, Spanish)

Antonio Tricarico,
CRBM,
39-328-84 85 448 (Italian, English)

Patrick McCully,
International Rivers Network,
1-510-213-1441 (English, Spanish)

Sebastien Godinot,
Les Amis de la Terre,
33-6-68 98 83 41 (French, English)

Notes

[1] Analysis by Institute for Policy Studies, www.seen.org. Note that the World Bank Group’s figures seem
higher for renewables support because of their inclusion of large hydropower projects, efficiency (both supply and demand side) and a 14, rather than 10 year timeframe.