Another company withdraws from controversial Plomin C coal plant in Croatia

Zagreb — Korean company KOSEP has confirmed that it no longer intends to participate in bidding for the controversial 500 MW Plomin C coal power plant in Croatia. KOSEP is the second of the four strategic bidders shortlisted in September 2012 to pull out of the project, after Polish company POL-MOT withdrew in the spring of this year.

The news about KOSEP’s withdrawal was confirmed by Mr Seungnam Han, Deputy Director of KOSEP’s Innovation and New Business Office to Greenpeace Korea.

At the start of 2012, Germany’s RWE was strongly courted by the Croatian project developer HEP for this project but to no avail: RWE announced at its annual meeting in April 2012 that it was not interested in the Plomin C project, nor in other new coal plants in central and eastern Europe.

Two companies are now left in the running for Plomin C: French-Italian-owned Edison and Japan’s Marubeni, which have until the end of October to submit binding bids for the project.

Even if the tender is successful, the financing of the project is still under question as no potential source of funding for the project, estimated at EUR 800 million, has been mentioned publicly.

“The fact that only a maximum of two companies are interested in such a project confirms what we have been saying for more than a year already – that the project is harmful not only because of its health impacts [1], high carbon emissions [2], and increasing Croatia’s dependence on imported coal, [3] but also because coal plants are less and less economically viable in Europe [4]”, said Bernard Ivcic, President of Zelena akcija.

The project is also threatened by a court appeal by environmental organisations Zelena akcija and Zelena Istria together with local people against the environmental permit issued in September 2012 by the Ministry of Environmental and Nature Protection. The appeal is based on the permit’s incompatibility with the Istria County spatial plan, which limits total capacity at the site to 335 MW and stipulates gas as the fuel for any new capacity. The second hearing is expected to take place next week on Friday 11 October in Rijeka, Croatia.

Plomin C is one of more than 20 coal plants planned in south east Europe, in contrast to Western Europe where plans have virtually ground to a halt in recent years [5]. Environmental groups from the region are concerned that such plans are endangering the countries’ abilities to meet EU accession requirements on pollution control and greenhouse gas emissions reductions, as well as crowding out investments in energy efficiency and renewable energy.

Contacts:

Zoran Tomić, Greenpeace
Tel.: +385 (0)91/2345 092

Bernard Ivčić, Zelena Akcija
Te.: +385 (0)99/314 9138

Daul Jang, Greenpeace Korea
djang at greenpeace.org

Notes for editors:

[1] An April 2013 report by Greenpeace Croatia, using European Environment Agency methodology, shows that the planned new 500 MW unit at the Plomin coal power plant in Croatia will cause approximately 17 early deaths annually, along with around 3970 lost working days due to illness and EUR 124.8 million in external costs.
http://www.greenpeace.org/croatia/Global/slovenia/2013/Arctic%20Sunrise/Plomin_final%20web.pdf

[2] This one coal power plant alone will also swallow up a significant portion, if not most of the country’s carbon budget by 2050: According to EU goals Croatia’s entire emissions will be limited to somewhere between 1.566 and 6.264 million tonnes CO2 equivalents (CO2eq) annually, but Plomin C by itself would emit 2.644 million tonnes CO2eq. That leaves hardly any room for other sectors like transport and industry to emit CO2, even though they are projected to be much harder to decarbonise than the energy sector.

[3] Unlike most countries in South East Europe, Croatia no longer has its own lignite reserves. The Croatian government argues that the plant will decrease dependence on imported electricity but instead it will just increase Croatia’s dependence on imported coal, as the country has exhausted its own coal resources.

[4] Local expert prof.dr.sc Enco Tireli – who worked at the Croatian state electricity company HEP for more than 15 years and was construction manager for Plomin 2 – has found that the plant is unlikely to be profitable mainly due to the need to pay for CO2 emissions as part of the EU Emissions Trading Scheme. See his calculations here:
https://bankwatch.org/sites/default/files/PlominC-feasibility-03Oct2012.pdf

One of the few coal power plants to be opened soon in the EU – Luenen in Germany – is expected to generate at least 100 million euros of losses per year, according to the developer of the project.
http://www.ruhrnachrichten.de/nachrichten/region/nordrheinwestfalen/Stadtwerke-befuerchten-hohe-Verluste-mit-Gas-und-Kohlekraftwerken;art5192,2058959

For a wider overview see eg. Ben Caldecott, Bloomberg New Energy Finance, Will old King Coal continue to be a merry old soul? 29 August 2013
http://about.bnef.com/blog/caldecott-will-old-king-coal-continue-to-be-a-merry-old-soul/

[5] In April 2013 research undertaken by Poyry consultants for the UK government concluded that it is highly unlikely that new coal power plants will be built in the Netherlands, Germany or Spain in the foreseeable future.
Poyry Management Consulting: Outlook for new coal-fired power stations in Germany, the Netherlands and Spain, a report to DECC, April 2013
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/194335/Poyry_Report_-_Coal_fired_power_generation_in_Germany.pdf

One of the few coal power plants to be opened soon in the EU – Lunen in Germany – is expected to generate at least 100 million euros of losses per year, claims the developer of the project.
http://www.ruhrnachrichten.de/nachrichten/region/nordrheinwestfalen/Stadtwerke-befuerchten-hohe-Verluste-mit-Gas-und-Kohlekraftwerken;art5192,2058959

The reasons given for Germany having abandoned 22 coal and lignite projects since 2007 and postponing four more are “steeply rising capital costs, fierce local and environmental opposition, the priority dispatch for renewables, the economic downturn, falling demand, low wholesale electricity prices and the expectation of high carbon prices in the future”.

Several of these risks are also relevant for Plomin C.