On 10th December, the European Bank for Reconstruction and Development's board of directors will decide on a new energy policy. Samantha Smith of WWF's Global Climate & Energy Initiative examines why the Bank should stop funding coal power plants, and prevent locking countries into a 50 year dependence on a fuel that is fatal for people and the climate.
In the last few months institutions that specialise in development finance like the World Bank, the European Investment Bank, the French Development Bank as well as the Export - Import bank of the United States have been lining up to announce an end to investments in coal.
The penny has finally dropped. Nearly all of the largest public financial institutions now realise coal is a poor long-term investment for countries that are trying to follow a path to sustainable development. Sustainable in this context means that socially just solutions are found that are economically stable and within the limits of our planet. We know that coal has a high impact on the environment and on public health. Instead of locking nations into dirty energies for the next 50 years (the usual lifespan of a coal fired plant) - that is more suited to the 19th century and is directly related to many health problems - they have decided to look at a just transition to green energy technologies.
And yet one institution, the European Bank for Reconstruction and Development (EBRD), is so far absent from this list of converts. A quick look at its "Energy Investment Portfolio", shows that nearly half of its finance between 2006 -2011 has been directed towards fossil fuels and only a paltry 11% of energy investments have gone to supporting sustainable renewables.
In the 34 countries where it operates - from Eastern countries of the European Union to Central Asia, including former Yugoslavia and transition economies of the former Soviet Union - the EBRD has established a legacy that flies in the face of the international consensus of fighting climate change and supporting an energy transition that will bring jobs, better health and long-term wellbeing.
In the Balkans, where the EBRD has been traditionally supportive of fossil fuel plants, it seems interested in a significant investment in a coal fired future in Kosovo. If approved, the 600 MW lignite plant will still be there in 2050; this means that Kosovo will therefore have huge trouble attaining any international obligations to keep average temperatures below an increase in 2 degrees.
Money would be better spent in helping the Kosovar authorities reduce the 67% loss of its energy through theft, technical loss, and energy inefficiency. Addressing this loss must be a first priority. We must also look at renewable solutions that will build capacity and environmental resilience for the long-term. The EBRD made this decision in Serbia where it recently refused to invest in in a 750 MW coal fired plant. Why won't it do the same everywhere?
Times are changing and international and national financial institutions are quickly moving away from coal. Banks with a higher capitalisation and with more experience than the EBRD are closing their doors to the worst climate killers. It is high time that the EBRD did so too. The next step will be to phase out support for all fossil fuels and support a fossil-fuel free future.
The bank cannot ignore the fact that emissions from coal burning plants in Croatia, Serbia, and Turkey have been responsible for the premature death of 5,042 people and have cost these governments up to €12 billion a year in health-related illnesses such as respiratory and cardiovascular conditions. Has this been factored into the EBRD's risk analysis?
On 10th December the Bank's directors will meet in London and decide if they are going to primarily support energy savings and renewable energy investments. They have a public duty to ensure that none of the projects they fund goes against our wellbeing either on a globally or a regionally level. The time for coal has passed and a public bank like the EBRD that plans for the future needs to fully accept this.
WWF infographics: Why the EBRD must quit coal NOW