Tapping central and eastern Europe’s green potential 25 years on
Bankwatch Mail | 14 May 2014
Environmental writer Roger Manser explains how the warnings of his 1993 book were ignored, and why ambitious green financing action is still a big need in central and eastern Europe.
About the author
Roger Manser is a writer and researcher based in London. He was founder editor, then managing editor of the world’s largest circulation steel newsletter ‘Steel Business Briefing’. You can find Roger on twitter: @RogerManser
This article is from Issue 59 of our quarterly newsletter Bankwatch Mail
(This article is not included in the pdf version of Bankwatch Mail 59.)
Back in 1993, my book The Squandered Dividend (Earthscan) examined the environmental implications of the transition of central and eastern Europe (CEE) from communism to market economy, and raised doubts about the speed and extent to which the countries of the region would be able to halt and clean up their water, land and air pollution.
After all, parts of the region were said to have suffered a massive ecological disaster under communism. Think of the notorious ‘Black Triangle’ comprising Lower Silesia, northern Bohemia and Saxony. In Poland, as I wrote then, “official figures claimed that in the late 1980s some 35 percent of Poland’s population lived in 80 towns and 27 areas which faced severe ecological threats.” It can be argued that this widespread blight contributed to the system’s collapse as a political and economic force in 1989.
The doubts I had about the urgently needed clean-up operation were based on the likely “failure of [the region’s] economic restructuring, the shortage of funds for environmental investments, and the lack of public support for firm environmental legislation.”
A year later, I helped write a report for Greenpeace entitled Poland – the Green Tiger of Europe that insisted that clean production was “the only way forward” for Poland and the other CEE countries.
How has the region fared economically and environmentally since then? Any judgement is necessarily coloured by the changes of the last 20 years. Politically, the belief in social democratic progress prevalent in the early nineties has been partially eclipsed by neoliberalism, namely the primacy of corporations and the market. Globalisation too has moved some of Europe’s manufacturing (and its use of resources and related emissions) to China. And Europe’s environmental policies now prioritise CO2 emissions and climate change, as well as traditional pollutants, such as NOx and water discharges.
Notably, of course, the post ’89 economic tabula rasa was attracting much western interest, with development banks such as the World Bank and the EBRD helping to focus and catalyse investments into CEE – and green ‘talk’ was attached to this effort.
Two years after its inception, I wrote of the EBRD in 1993: “One of the main themes of the EBRD, as originally conceived by the French in the late 1980s, was to improve environmental conditions: it was an emphasis that the British and the Americans apparently rejected in favour of helping private enterprise. The mandate remains, though in a truncated form.”
Essentially, then, a development bank with a pro-active environmental heart was politicked away to become one with an environmentally reactive mind – all EBRD investments continue to be assessed and monitored from the environmental angle, though how far ‘environment’ can be said to imbue the bank’s business model clearly depends on who you talk to.
Parallel economic and political issue also help explain the ‘squandered dividend’ of those early days, as brokered by the likes of the EBRD. Local priorities included restructuring the heavy industrial and energy sectors – these are well documented in Poland for instance, ranging from the environment featuring as a major agenda item in the round table discussions of 1989 between the ruling communist party and Solidarity leaders, through to a policy framework for sustainable development arriving on the floor of the Polish parliament in 1991.
The priorities of the various western financial and economic bodies, however, did not chime with this. On the one hand, the European Community and the Commission were often reluctant to agree to major restructuring in areas such as steel, textiles or fertilizers, as this would have made the region more economically competitive and threatened western European industry.
On the other hand, both the EBRD and World Bank, despite some aspirational glossing, also saw the environment – in reality – as secondary. There were few, if any, clear signs of a committed interest in sustainable restructuring. The priority, plainly, was to get western companies investing in the region, and the economies moving. Unemployment levels were very high at the time.
Basic emission reductions don’t tell the whole story
Overall, it would seem emission reductions have been – and are being – achieved across CEE, but in many cases these have been small to moderate. Thus for example NOx emissions (primarily from energy and road transport) have fallen typically by 30-70 percent between 1990 and 2011, depending on country, according to the European Environment Agency (EEA).
In a recently published analysis of whether economic growth had, crucially, ‘decoupled’ from the emission of nutrients and heavy metals from manufacturing (from 2004 to 2010), the picture was also nuanced. In Poland, the nutrient situation had deteriorated, but the heavy metals situation had improved; in the Czech Republic, the EEA noted absolute decoupling of both nutrients and heavy metals. Regarding emissions from agriculture, the EEA noted ‘relative decoupling’ in the Czech Republic and Poland, meaning that “the resource efficiency has increased, however [alongside] higher absolute emissions.”
It would seem that, as before, governments have prioritised economic growth, particularly since the 2008 crisis, though mostly not as egregiously as under communism.
The decline in NOx emissions, for example, has been held back by increases in vehicle/truck use, as foreseen in The Squandered Dividend. Similarly emissions of particulate matter (PM2.5) have only fallen slightly, perhaps for similar reasons. New trams may have been introduced in many CEE cities, but in most cases they have failed to wean commuters and shoppers from private cars.
The coal ‘own goal’ continues
Perhaps the most outrageous example of CEE governments refusing to consider either the health of their citizens or the environment has been coal’s continued use in some countries as a major fuel for power generation.
In 1988, Poland was dependent on coal for 78 percent of its primary energy demand; by 2012, this had declined to only 55 percent. However some 80-90 percent of its electricity is still supplied by coal. In the Czech Republic, coal also has continued to play a significant role.
Similarly East Germany in 1988 was 70 percent dependent on coal, mostly brown, for meeting its primary energy demands. Today, despite a much larger renewables sector than in Poland, lignite continues to provide just over a quarter of unified Germany’s energy. In fact, villages in eastern Germany – as under communism – continue to be relocated in order to increase mine production. Moreover, 2013 was Germany’s biggest year for lignite-fired energy production since 1990, supplying some 26 percent of its total electricity.
Yet, unlike Germany, Poland’s government has been reluctant to consider alternatives. In the early 1990s, I wrote
“Energy’s key role meant it should have been at the core of moves to restructure the economy. Instead the lack of resources and government dithering created a void, which by 1993 had been filled by conventional wisdom, vested interests and the search for profits.”
Little has changed since. Indeed, Poland has also – notoriously – opposed many of the European Union’s initiatives to reduce CO2 emissions and combat climate change.
Pick up a Polish newspaper these days, and coal remains king, somehow an integral part of the national psyche, backed up by the deep-rooted wedding of the industry to the corridors of power on Warsaw. In the early 1990s, Poland failed to grasp the opportunity to begin restructuring its industry away from coal to clean sources of energy and production. Those poor decisions have been coming home to roost for some time.
Yet change is, quite literally, in the air, with popular movements – for instance in Krakow – rightly pushing the endemic health risks that come with reliance on coal for energy generation. Other parts of the country are also said to be following.
Such movements are buoyed by the prospect of EU funding being channelled at cleaner energy alternatives. And while Poland remains an EBRD beneficiary country, the bank should do all it can to back and accelerate the country’s latent clean energy potential that exists in abundance. It’s about time to realise Poland’s environmental dividend.