Comments on the
Draft Energy Operations Policy of the
European Bank of Reconstruction and Development (EBRD) by the Sustainable Energy and Economy Network at the
Institute for Policy
Studies
Comments on the process of public
consultation
The public consultation exercise of the Bank is a welcome improvement on past
policy. However, we would like to see greater effort on the part of the Bank
to reach its stakeholders in the future. While NGOs will continue to coordinate
their responses, they should not be expected to provide this outreach service by
default.
All submissions received as part of the consultation exercise should be made
publicly available on the Bank's website. The Bank's response to each comment
should also be made available. Before the revised document is submitted to the
Board, NGOs should be given sufficient time to review the Energy Operations
Policy (EOP) and send final opinions to individual Executive Directors as they
see fit. We recommend that a month should be made available for this process in
between publication of the new EOP and the Board meeting to which it is submitted.
Substantive comments
The EOP does not suggest that environmental objectives have been sufficiently
mainstreamed by the Bank and a strategic environmental assessment of all energy
and natural resource investments should be conducted immediately.
Equity
Little is being done to assist the people of Central and Eastern Europe in
meeting their energy needs; rather the focus of EBRD lending is on securing
greater access to the region's energy sectors by private entities from EU countries, the US and Japan, and on meeting the energy needs of industry.
Although EBRD is not a concessional lender, it has a responsibility to ensure
that the poorer members of society are not excluded from the emerging market
economies of the region. Social and economic exclusion can only hamper the
transition to democracy. Ensuring that the population can meet its energy
needs, particularly during harsh winters, should become a priority of the Bank.
The Bank should seek opportunities for cooperation with other international and
bilateral donors in this regard, while ensuring that its restructuring programmes support, or at least do not conflict, with this objective.
Energy Efficiency
Energy efficiency should clearly be the most important area for investment by
the Bank. The Bank should establish a benchmarking system for energy efficiency, with clear targets for the region. Measures of energy
efficiency should not be calculated only in limited financial terms, but also in terms of
emission and resource efficiency.
Any investment in new power production, for instance to replace nuclear power,
should focus on the deployment of renewable energy technology. As renewable
energy generation becomes more reliable, so its suitability for base load applications will improve. However, given the current surplus of power in the
region, energy efficiency is likely to be the most effective means of meeting
the region's energy needs without causing undesirable social and environmental
impacts.
Climate Change
The Bank has a responsibility to assist countries in the region with meeting
their obligations under Multilateral Environmental Agreements, especially the
Framework Convention on Climate Change and the Kyoto Protocol. However, the
Bank should not pre-empt decisions of the Conference of the Parties and should
not become involved in emissions trading or the provision of carbon credits
until the legal and institutional framework for the flexibility mechanisms is
well established. If the Bank chooses to finance projects that generate carbon
credits, it should limit its portfolio largely to renewables and energy efficiency, as the World Bank has done. The Bank should also be aware of the
conflicts of interest inherent in making profits on trading transactions over
and above the financial savings inherent in energy efficiency and emissions
reduction projects; its involvement should encourage investment in averting
climate change rather than an increase in the volume of permits traded.
The Bank should, however, develop a system of greenhouse gas accounting for all
its projects. The latent emissions of extraction projects and pipelines should
be calculated in addition to the actual emissions from power generation. The
results must be published annually, as well as being included in environmental
impact assessments and strategic environmental assessments. Publication should
occur in a timely manner and should be in a form that assists the Conference of
the Parties in determining whether or not Bank projects are undermining the
objectives of the Convention and/or the Protocol.
EBRD should make a public statement that it will not engage in
'hot air' trading. Hot air is the term used for assigned amounts based on 1990 levels
under Annex B to the Kyoto Protocol that will not have been used up during the
first commitment period due to economic contraction after the collapse of the
Eastern bloc rather than because of the successful implementation of environmental and/or energy efficiency measures. Hot air trading would not only
destroy the environmental effectiveness of the Protocol, but it would also force
the price of carbon credits downwards through an inflationary phenomenon, thereby eliminating
incentives for emissions reduction and reducing rewards for efficiency gains.
Nuclear power
The environmental community does not view nuclear power as a suitable response
to the climate change imperative given the unacceptability of other risks associated with it. The EBRD should not fund nuclear power and should make a
public commitment, as the World Bank has done, to end its involvement in this
sector. The Bank should abandon its four-year consideration of K2R4.
Other environmental issues
Enabling the EU accession countries to comply with the environmental acquis
should also be a priority. The Bank has a responsibility to engage in capacity
building initiatives to this end.
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