More dirty coal on the radar as EBRD announces new strategy for Kosovo

The EBRD’s new country strategy for Kosovo, announced by the bank on May 3 after Bankwatch Mail Issue 56 went to press, has confirmed what NGOs and others had feared in the consultation process for the EBRD’s first strategy in its new country of operation: that financial support for a new major lignite power plant is very much on the EBRD’s radar, despite evidence that Kosovo does not need such a power plant as well as the potential undermining of EU climate goals.

This article is from Issue 56 of our quarterly newsletter Bankwatch Mail

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Note: This online article differs from the version to be found in the pdf file of Bankwatch Mail 56. It has been updated to reflect the provisions in the EBRD's final Kosovo strategy.

The new Kosovo strategy (pdf) states that

“the Bank will consider engagement in the implementation of the greenfield thermal power plant and coal mine rehabilitation project ‘Kosovo C’ that is planned to start construction in the second half of the strategy period, provided the project complies with EBRD environmental and social standards, its policy on financing energy projects and delivers high transition impact.”

Ahead of the May 1 EBRD board date for voting on the bank’s first Country Strategy for Kosovo, Austrian MEP Ulrike Lunacek (of The Greens/EFA group) urged the European Commission, represented on the EBRD board, not to support the draft strategy “in its current form”.

The EBRD and the EIB are currently reviewing their energy lending policies. We call for an end to coal subsidies.

Data, demands and expert comments

Citing a European Parliament Resolution – voted on April 18 – on the European integration process of Kosovo that included an emphatic call on Kosovo, with the financial assistance from the EU and donors such as the EBRD, to focus on developing a clean energy future in line with EU climate commitments, Lunacek’s April 25 letter notes particularly that “MEPs have learned with great concern that the (draft EBRD) document clearly indicates the bank's interest in investing in construction of the new Kosovo e Re lignite power plant.”

The Austrian MEP referred to an analysis produced by the University of Berkeley (pdf) that has shown this slated power plant investment to be unnecessary if Kosovo, already reliant on lignite for 97 percent of generated electricity, was to sort out its huge energy wastage and starts to tap its renewable energy resources. The Berkeley analysis details how, in the period up to 2025, Kosovo can meet its energy needs through energy efficiency improvements, wind and hydro energy, as well as biomass and geo-thermal. Such a scenario would also result in three times more jobs created in the country.
 
Bankwatch and other NGOs that provided comments to the draft strategy had communicated their concerns to the EBRD that the highly rushed consultation process (the commenting period closed less than two weeks before the scheduled board date) was entirely inappropriate given the complex economic, environmental and social conditions prevailing currently in the country.

Other than Kosovo’s energy future, Bankwatch pointed to a range of acute issues – including the national poverty level, unemployment rate, corruption rate and poor track record of meaningful consultation and public participation in national decision-making – as ample reason for the EBRD to tread carefully in its setting of priorities for Kosovo within the new country strategy.

Bankwatch called on the EBRD to withdraw the Kosovo country strategy from the board schedule for May 1, and to subsequently update the draft strategy, submit it for a second round of public consultation, and then proceed with final approval once further inputs have been taken into account and changes reported back to the NGOs that commented on it.