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17.11.2010
Fossil fuel growth agenda at EBRD revealed by new energy lending numbers
Prague, Czech Republic -- As the European Bank for Reconstruction and Development (EBRD) today published its annual Transition Report with the promise of a 'new growth agenda' for the countries of central and eastern Europe, CEE Bankwatch Network warned that the international development bank must prioritise the region's transition to a low-carbon economy by pulling back from the fossil fuel growth agenda that its energy investments have driven in the 2006-2009 period.
According to Bankwatch analysis based on EBRD data on signed loans, the bank's fossil fuel lending for coal, oil and gas power projects increased dramatically between 2006 and 2009, from a total of approximately EUR 250 million in 2006 to over EUR 1.3 billion in 2009, with a sharp leap in these investments recorded between 2008 and 2009. [1]
Bankwatch's analysis has also found that while the EBRD has been making significant investments in energy efficiency – an average of around EUR 533 million per year, peaking in 2008 at close to EUR 640 million [2] – its investments in renewable energy have been disappointingly low, at around EUR 80 million per year in the 2006-2009 period. The figures are for all energy efficiency investments except those made by the EBRD for fossil fuel-powered thermal power station upgrades, other fossil fuel projects and transport projects, some of which the EBRD includes in its own energy efficiency accounting.
These findings follow shortly after the G20 meeting in South Korea, where the group of the world's leading economies again reiterated their commitment to phase out fossil fuel subsidies [3] and deliver an international deal to tackle climate change at the Cancun climate change summit starting later this month.
Fidanka Bacheva-McGrath, Bankwatch's EBRD coordinator, said: “It is shocking that the shareholders of the EBRD, including the EU member states that are headed to Cancun and that have firm commitments on cutting CO2 emissions, have permitted the bank to ramp up its dirty energy lending in the last few years. Yes, the EBRD is doing more for energy efficiency, but if the bank is to promote a transition to a low-carbon economy as it has promised, it needs to nip its fossil fuel growth agenda in the bud and accelerate verifiably clean renewable energy and energy efficiency investments.”
Among the EBRD's most recently approved energy investments is a EUR 250 million loan (contract still to be signed) for a new state-of-the art block at the Sostanj lignite fired power plant in Slovenia, that will lock the country in to a carbon intensive economic model for decades, hindering its plans for an ambitious climate policy. The EBRD has also just announced it will be taking an equity stake of up to USD 30 million in Central Europe Oil Company that aims to redevelop a number of mature and underdeveloped hydrocarbon reservoirs in central Europe. Yet since taking office in 2008, the EBRD's president Thomas Mirow has stated to NGOs that one of the dominant problems with the growth model promoted in central and eastern Europe is over-dependence on commodities.
Reacting to today's EBRD announcement that it is revamping its assessment of the economic progress of its 29 countries of operation by taking more account of the role of the state and public institutions, Fidanka Bacheva-McGrath commented: “It's taken the EBRD 20 years and an economic crisis to realise that its promotion of the free market has to have some limits. What's missing today, though, is any inclusion of environmental considerations into how the EBRD measures the economic health of central and eastern Europe's countries. At the heart of how it makes investment decisions, concerns about the business environment are understandably included, but the real environment is still not getting a look in. Will it take another 20 years and the effects of a looming climate crisis before the penny finally drops at the bank?”
For more information, contact:
Fidanka Bacheva-McGrath
EBRD coordinator, CEE Bankwatch Network
Tel: +359 899 876 095
Email: fidankab@bankwatch.org
Notes for editors
1. The Bankwatch analysis of EBRD energy lending for 2006-2009 is available in pdf at: http://www.bankwatch.org/documents/EBRDenergylendingfigures2006_2009.pdf
While figures for EBRD energy lending in 2010 are available on the EBRD's website, these represent figures approved for lending, and can often differ significantly from final amounts actually signed and disbursed for projects. At this stage in 2010 it is not possible to establish the real amounts signed or disbursed.
2. These energy efficiency figures do not count fossil fuel-powered thermal power station upgrades and other fossil fuel projects that the EBRD’s Sustainable Energy Initiative classifies as energy efficiency projects. These enable the extended use of fossil fuels and crowd out funding from truly sustainable technologies, and are likely to result in an increase in CO2 emissions over a plant’s lifetime. If such projects are counted as energy efficiency projects, the EBRD’s energy efficiency investments are worth nearly EUR 803 million on average between 2006 and 2009.
3. EBRD loans for the fossil fuel sector are subsidies as they represent the use of public money to support – both economically and politically – fossil fuel projects and in turn to stimulate the involvement of other private sector investors in the sector.