End Loans to EU Coal Utilities, Urges NGO
Five utilities continue to enjoy billions of euros in public support, despite showing no commitment to reduce their fossil-fuel dependency, said a report by Bankwatch released September 27.
Czech generator CEZ, Poland’s Energa and Grupa Azoty, Serbia’s Elektroprivreda Srbije, and Bulgarian Energy Holding rely heavily on fossil fuels, mainly coal, for power generation – with some adding new coal-fired capacity – yet have continued to receive soft loans from the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB), the environmental activist group said.
Despite virtually halting their direct investments in coal in the last five years, the EIB and EBRD have provided corporate level financing and extended loans for distribution and renewable energy to these five companies, and “effectively turned a blind eye to the companies' fossil fuels dependence.”
Energa in July approved its 1-GW Ostrolęka C coal-fired power plant project (jointly with fellow Polish state-owned Enea) but only last year Energa and the EIB issued €250 mn ($294mn) in hybrid bonds to upgrade its power network. Ostroleka C, due to open in 2023, will more than double Energa’s carbon dioxide (CO2) emissions, it added. Similar funding has gone to the other four as well, its report said.
Bankwatch's EBRD policy officer Fidanka Bacheva-McGrath said: “EBRD needs to send a strong signal to the market ... It is a joke to 'encourage' a state-owned energy utility to develop a decarbonisation plan when it is building a new coal power plant that will be in operation for decades in the future.” The activist group is not alone in its critique of such generators.
Norway’s $1 trillion+ Oil Fund said March 2017 it would stop holding stock in CEZ because of its dependency on coal. Two months later, a report identified CEZ as one of seven firms most financially exposed to new EU emissions limits. CEZ is 70%-owned by the Czech Republic.
Bankwatch's report acknowledges that the carbon intensity of CEZ’s generation portfolio fell from 555g CO2/kWh in 2011 to 443g in 2017 and that the amount of power it produced from coal has decreased over time, as the amount of electricity/heat produced from gas increased and it has invested in German/Czech renewables. But it said it remained the 10th largest CO2 emitter across the EU in 2017.
Bankwatch's EIB policy officer Anna Roggenbuck said: "EIB should be avoid getting involved with companies facing losses due to a major carbon exposure, and ... ought to support the energy transformation."