New Balkan lignite plants may breach EU pollution legislation before they even operate (legal analysis + video)

Brussels, April 2 — A series of at least five new lignite power plants planned in Western Balkan countries which aspire to European Union membership [1] risk violating Energy Community pollution legislation before they even start generating electricity, warns a new legal briefing [2] by EU-based legal organisation Frank Bold, published today.

Bankwatch’s Pippa Gallop explains the findings of the legal analysis. (Link to video)

As a result of commitments made under the Energy Community Treaty in October 2013 [3], new power plants in the Western Balkans, Moldova and Ukraine will have to comply with the latest EU pollution control legislation – Chapter III of the Industrial Emissions Directive [4] – by 2018.

Due to the fact that it takes around four years to construct a power plant, any plants that have not started construction yet will enter operation only after 2018, and need to have the appropriate pollution control technology built into the planning and permitting process in order to avoid unexpected extra costs to retrofit the plants later.

The Frank Bold expert analysis shows, however, that at least five plants across the Western Balkans — notably in Bosnia and Herzegovina, Serbia and Montenegro – may not be in line with the relevant parts of the EU Industrial Emissions Directive if constructed as planned today.

“What this means in practice is that there is a high risk of unforeseen additional costs to the investors in these plants as well as consumers of electricity, as developers may have to scramble to make last minute technological adaptations to ensure compliance with the IED as we get closer to 2018,” commented Kristína Šabová of Frank Bold.

“What governments in the region need to understand is that there is no option of going around the IED requirements for new plants after 2018, and that failure to plan ahead now may cost heavily later.”

The most stark example of non-compliance with the IED is EFT’s Stanari lignite power plant in Bosnia and Herzegovina – currently under construction – whose environmental permit allows it to emit 2-3 times more SO2, NOx and dust than even the currently binding legislation adopted by the Energy Community (the IED implies a tightening of current standards). This led to an official complaint being submitted to the Energy Community Secretariat by Banja-Luka-based Center for Environment in January this year. [5] The complaint is currently under examination.

Pippa Gallop of CEE Bankwatch Network commented: “Despite the clear European trend of moving away from coal, Balkan governments still have big plans in this sector. If these projects go ahead, compliance with the Industrial Emissions Directive is now the legal minimum condition that needs to be adhered to for anyone still considering coal investments.”

“Balkan authorities had better be advised that the IED is not the end of the story: countries wanting to join the EU can expect further environmental and climate legislation changes which will almost certainly affect their coal investment,” adds Gallop. “In this region too, governments and investors need to understand that building new coal plants is no longer a good investment option, considering the climate and health costs and the high failure rate of such projects.” [6]

The Frank Bold legal briefing is available here: https://bankwatch.org/sites/default/files/FrankBold-briefing-EnCom-IED-02April2014.pdf

Contacts

Kristína Šabová, Frank Bold
kristina.sabova at frankbold.org
Tel.: +420 720 565 672

Pippa Gallop, CEE Bankwatch Network
kristina.sabova at frankbold.org
Tel.: +385 99 755 9787

Notes for editors

[1] The plants which have reached a stage where information is available about their potential pollution levels are:

• Tuzla 7, Federation of Bosnia and Herzegovina, Bosnia and Herzegovina
• Banovici, Federation of Bosnia and Herzegovina, Bosnia and Herzegovina
• Stanari, Republika Srpska, Bosnia and Herzegovina,
• Ugljevik III, Republika Srpska, Bosnia and Herzegovina,
• Pljevlja II, Montenegro
• Kolubara B, Serbia
• Kostolac B3, Serbia

The plants most likely to be non-compliant with the Industrial Emissions Directive are:

• Tuzla 7, Federation of Bosnia and Herzegovina, Bosnia and Herzegovina
• Banovici, Federation of Bosnia and Herzegovina, Bosnia and Herzegovina
• Stanari, Republika Srpska, Bosnia and Herzegovina,
• Pljevlja II, Montenegro
• Kolubara B, Serbia

Ugljevik III and Kostolac B3 have pledged compliance although no adequate examination of the proposed technology’s ability to meet the pollution limits has been published.

[2] Read the briefing here:
https://bankwatch.org/sites/default/files/FrankBold-briefing-EnCom-IED-02April2014.pdf

http://frankbold.org/en/

Frank Bold is a legal organisation operating six branches in three EU countries. Since 1995, Frank Bold serves individuals, municipalities and businesses. It promotes corporate and governmental accountability, and provides legal support to civil society in human rights, environmental and anti-corruption cases.

[3] http://www.energy-community.org/portal/page/portal/ENC_HOME/AREAS_OF_WORK/Environment/LCP

[4] DIRECTIVE 2010/75/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 24 November 2010 on industrial emissions (integrated pollution prevention and control),
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:334:0017:0119:en:PDF

Summary of Industrial Emissions Directive:
http://ec.europa.eu/environment/air/pollutants/stationary/ied/legislation.htm

[5] https://bankwatch.org/news-media/for-journalists/press-releases/bosnia-and-herzegovina-breaches-energy-community-treaty-co

[6] The Western Balkan countries have not yet adopted greenhouse gas emissions reduction targets, which will make it tougher for them to catch up with the EU’s decarbonisation goals. In addition the EU’s reference documents on Best Available Techniques is currently being updated and this is likely to bring stricter standards on emissions from coal power plants when it is finalised, possibly in 2015.

In Germany alone, plans to construct 21 power plants have been abandoned since 2007 while 5 more have been put on hold for years and only two have started operating. A report by Poyry consultants last year concluded that no new coal plants are likely to be built in Germany, Spain and the Netherlands in the foreseeable future. See

https://www.gov.uk/government/publications/poyry-report-to-decc-outlook-for-new-coal-fired-power-stations-in-germany-the-netherlands-and-spain

Closer to the region, the Sostanj unit 6 project in Slovenia represents a stark example of what can go wrong with lignite projects even without legislative changes involved: Project costs have doubled from around EUR 700 million in 2007 to EUR 1.4 billion in 2013 and the plant is expected to run up annual losses of EUR 50 million. Added to that, investigations into potential corruption around the project are still underway.
https://bankwatch.org/news-media/for-journalists/press-releases/slovenia-continues-fall-economic-abyss-lignite-plant-sosta