Croatian coal power plans advancing despite legal violations and economic unfeasibility
Bankwatch Mail | 8 October 2012
It has been a busy time of late for the planned EUR 800 million, 500 MW Plomin C coal power plant. The Croatian government is pressing ahead with the project under the assumption that it will – along with the equally controversial EBRD-financed Ombla hydropower plant – save Croatia’s ailing economy. Yet it is far from certain who will actually participate in the project, let alone finance it.
This article is from Issue 53 of our quarterly newsletter Bankwatch Mail
Like the controversial Šoštanj unit 6 project in Slovenia, Plomin C threatens to prevent Croatia from following long-term EU climate goals by locking in high levels of CO2 emissions until beyond 2050. But will international financial institutions such as the EBRD and the EIB learn from Šoštanj and keep a safe distance this time? Or will they dive right in again and come out with their noses bloodied?
On the surface, Plomin C looks to be advancing quickly. However a closer look shows that the project is riddled with serious flaws.
On September 20 a resolution was issued by the Croatian ministry of environment approving the project’s EIA, and an IPPC permit was issued. NGOs Zelena akcija and Zelena Istra have made it clear that they plan to challenge these approvals in court – the project is in conflict with the Istria County spatial plan, according to the groups, as the plan clearly states that any new unit at the site must run on gas and that the total capacity of all units at the site may not exceed 335 MW. The existing Plomin 2 has a capacity of 210 MW and the new unit is planned to have 500 MW.
A few days later, on 28 September, four companies were shortlisted after a call for expressions of interest for a strategic partner for the project had yielded 6-7 candidates (a far cry from the initial 45 which minister of economy Radimir Cacic had claimed in media reports in August). The four companies are Edison from Italy, KOSEP from South Korea, Marubeni from Japan and Pol-Mot from Poland.
Apart from Edison, these are hardly big names in the European energy market – Pol-Mot is better known as a manufacturer of tractors and automotive components. Conspicuous by its absence was German company RWE, the strategic partner for the existing Plomin 2 plant, and considered to be a hot favourite for Plomin C, in spite of having clearly stated at its annual meeting in April that it was not planning to invest in the project.
Worryingly, the Croatian government seems to be completely ignoring advice from prominent expert Prof. Dr. Enzo Tirelli, who led the construction of Plomin 2. In July this year Tirelli published an economic analysis that found that constructing a new unit at Plomin using imported coal will prove to be economically unviable.
It is to be hoped that potential investors and financiers of the project will not push forward so blindly and will stop to hear the unmistakeable message coming from countries like the UK, US and Germany, where tens and – in the case of the US – more than a hundred coal plant plans have been stopped, partly for economic reasons, and partly because of local opposition.