Four reasons to keep public money away from Nabucco

1. Do not contradict the EU's policy of human rights' promotion

For many years the Nabucco project has faced problems with guaranteeing sufficient gas supplies. The only country offering enough gas is Turkmenistan, one of the most authoritarian regimes in the world (in a recent Freedom House survey, Turkmenistan received the same score as North Korea).

The recent imprisonment of Turkmen environmentalist Andrey Zatoka, who was subsequently released with a fine and expelled from the country, proves that the situation in the country is still critical.

As the EU recognises Nabucco as its priority project and the EIB is considering financing it, we request that these institutions take into account the serious human rights violations occurring in Turkmenistan, as exemplified by Mr. Zatoka’s case.

Mr. Zatoka is one of numerous political prisoners in Turkmenistan. Many others continue to sit in Turkmen prisons without relevant legal protection. When considering possible cooperation with Turkmenistan within the EU's energy sector, the member states should seek to ensure that they do not undermine their own efforts to improve human rights standards and build democracy.

The absence of pluralism in Turkmenistan and Azerbaijan (another potential supplier of gas for Nabucco) makes public oversight over gas and oil revenues impossible. Furthermore, revenues generated from the extractive industries provide such governments with additional power to frustrate – if not crush – the bottom-up struggle for democracy.

2. Do not support fossil fuels addiction

Nabucco is often described as a means to decrease the greenhouse gas emissions of the EU. This argument is valid only in relation to the general belief that gas is not as bad as coal. If Nabucco reaches its full capacity, in the 2020s, it will import to Europe 31 billion cubic metres of natural gas per year.

This means that in the combustion process approximately 60 million tonnes of additional CO2 will be emitted in Europe per year. This is more than half of Romania's CO2 yearly emissions in 2007 from all sectors. On top of that, methane – the principal component of natural gas – has 25 times higher greenhouse effect potential than CO2. During extraction and transportation a few percent of natural gas leaks into the atmosphere. Taken together, this evidence suggests that natural gas cannot be seen as a low-carbon alternative.

Furthermore there is no proof that gas will replace dirtier energy sources. On top of that no life-cycle analysis of gas from Nabucco has been conducted. It remains unclear how much CO2 will be emitted to generate the energy needed to pump gas the distance of more than 4000 km from Turkmenistan to Austria.

Support for large-scale gas infrastructure projects is rather inconsistent when it comes to ambitious EU climate targets and raises the question of the integrity of EU policies ahead of the extremely important climate summit in Copenhagen in December 2009.

The European Investment Bank and the European Bank for Reconstruction and Development should stop financing fossil fuels projects like Nabucco althogether. The banks' support for fossil fuels contradicts the European Parliament's November 2007 resolution on trade and climate change, calling for "discontinuation of public support via export credit agencies and public investment banks, for fossil fuel projects."

3. Bet on energy efficiency to bring real energy security

In contrast to the focus on supply side measures like the Nabucco pipeline, a study by the Central European University (CEU) from June 2010 details how a bigger emphasis on energy efficiency via a strong retrofit programme in buildings would benefit Hungary: For January - the peak month for imports, and the month of highest risk for energy security - the energy savings achieved by 2030 would be equivalent to 59% of Hungary gas imports reducing dependency on Russian gas.

The often raised arguments that Nabucco will guarantee stable gas supplies to Europe are contradicted by strong indications that the proposed sources of supply may not be trustworthy. The undemocratic political systems and lack of rule of law in the potential supply countries, such as Turkmenistan and Azerbaijan, make long term contracts with them unreliable. This has been seen many times in the energy cooperation of these countries and Russia. On top of that, the transportation of gas for Nabucco near conflict regions in the Southern Caucasus (in Azerbaijan and Georgia) makes the lasting stability of these supplies even more doubtful.

If the EU is serous about its energy and climate targets, the switch from the public financing of fossil fuels towards green investments needs to take place now. The various cost estimations of the investments needed across the EU range from EUR 13 billion at the low end (estimated by the European Commission) up to EUR 44 billion (estimated by the Dutch consultancy Ecofys) to be invested into energy infrastructure by 2020 on an annual basis.

4. Invest in technologies benefiting local people

Unlike big fossil fuels investments, concentration on energy efficiency will not only contribute to energy security and emission reductions, but also can reap numerous ancillary benefits (“double dividend”) for social cohesion and economic development such as reducing energy bills for households and providing new employment and business opportunities, especially in the sector of small and medium enterprises. According to the above mentioned CEU study, a retrofit programme in those enterprise buildings may bring up to 131,000 net jobs by 2020 - with losses in the energy supply sector taken into account.

Previous experience with large-scale politically motivated fossil fuel investments such as the Chad-Cameroon pipeline (financed by the World Bank Group and the EIB - more info here) and the Baku-Tbilisi-Ceyhan pipeline (International Finance Corporation and European Bank of Reconstruction and Development - more info here) has shown that the engagement of international financial institutions does not guarantee benefits for local people. This development model strengthens mainly multi-national oil companies and undemocratic governments.