CrisisWatch

Will Greece ignore the economic omens and go for new coal?

by Theodota Nantsou

In the current dismal economic setting, the construction of the new lignite power plant by Greece's Public Power Corporation constitutes a completely irrational move: the public energy utility will need to disburse 400 million euros for a project that has been proven to be economically non-viable. By insisting stubbornly on the construction of Ptolemaida V, the PPC threatens to entrap Greece in an outdated energy model, at a time when technological progress renders clean energy a cost-competitive basis for the reconstruction of the country’s production model.

The construction of Ptolemaida V is currently at an advanced licensing stage. However, the start of the actual work requires a deposit of 400 million euros within 2015, which will come from PPC’s own funds, at a time when the company is in the worst possible financial state.

WWF Greece addressed the new Minister of Reconstruction of Production, Environment and Energy, Panos Skourletis, and the Executive Board of the German bank KfW, which co-finances the construction of PPC’s mega-lignite plant “Ptolemaida V”.

The decision to construct Ptolemaida V was taken several years ago, when the status of the Greek economy, as well as that of the European and global climate and energy policy, were very different. During the last year and a half though, the data have changed dramatically, and hence the decision to construct Ptolemaida V requires careful reconsideration.

If finally built, Ptolemaida V will be the country's largest lignite-fired plant, with a capacity of 660 MW and an installation cost of at least 1,4 billion euros. Approximately one half of this amount will be provided by a syndicated bond loan to PPC under the guidance of the German government-owned KfW-IPEX Bank and guaranteed by the German Export Credit Agency, Euler Hermes. This money will be used to purchase German-made equipment for the new plant. PPC has already commissioned the construction of Ptolemaida V to a consortium led by TERNA.

WWF Greece informed the Minister and the KfW board about the recent developments in European legislation, which will impose a heavy burden on the finances of Ptolemaida V, thus rendering it an economically non-viable investment. In particular, drastic changes in the modus operandi of the EU’s Emissions Trading System, will lead to a significant increase in the price of CO2 emission allowances, which will in turn cause Ptolemaida V’s operating cost to skyrocket. Moreover, the need to comply with the revised emission limit values for other gaseous pollutants* (as determined by the “Seville” process) will require new, expensive anti-pollution technology even before the new plant begins its operation.

Finally, Ptolemaida V is neither unique nor the cheapest solution in terms of covering base load needs for Greece’s electricity system. WWF Greece’s recent scientific report shows that Ptolemaida V’s base load can alternatively be covered by hybrid combinations consisting of wind, PV and Pumped Hydro Energy Storage (PHES) stations. More importantly, the levelised cost of energy (LCOE) for several of these hybrid solutions is shown to be lower than that of Ptolemaida V. It is significant to note that the study proposes the conversion of seven pairs of existing PPC-owned hydropower stations to PHES units, thus minimizing the corresponding installation cost as well as the environmental impact.  Hence, the proposed solution is realistic, economically more favourable and clearly more sustainable, compared to Ptolemaida V, while its implementation will benefit PPC as well. 

Read more:

  • WWF Greece's letter to the Greek Minister of Reconstruction of Production, Environment and Energy here (in Greek).
  • WWF Greece's letter to the Executive Board of KfW here
  • WWF Greece’s report “Clean Alternatives to Ptolemaida V” here

 

*nitrogen oxides (NOx), sulphur oxide (SO2), particulate matter (PM), mercury (Hg)

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Industries speak for governments in EU pollution standards working group

The ongoing process for the revision of the Industrial Emissions Directive’s environmental performance standards for large combustion plants, including coal power plants, has sparked severe criticism by environmental and corporate watch groups, due to the increased and intransparent participation of industry representatives in national delegations. According to a March 5th report published by Greenpeace, “the whole process has been captured by the coal industry, with the result that the emission limits the EU is about to agree could be extremely lax. Not only would most of the existing plants be allowed to pollute several times more than could be achieved by adopting the best clean technologies available. EU standards would also be significantly weaker than those imposed in other parts of the world, including China.”  

According to Greenpeace, 

•“The United Kingdom nine-person member state delegation has five representatives of large polluters, including coal power plant operators RWE, EDF and E.ON and the Stanlow oil refinery.

•The seven-member Greek delegation is entirely made up of representatives of Public Power Corporation, the operator of some of the dirtiest lignite power plants anywhere in the EU, and Hellenic Petroleum.

•The Spanish twelve-person delegation includes eight industry representatives, including coal power plant operators Endesa and Iberdrola, as well as the electricity producers’ association UNESA.”

The transparency of the working groups set up by the European Commission with advisory mandate that contributes to legislative decision-making has been put under the scrutiny of the European Ombudsman.  In the context of a 2014 own-initiative inquiry concerning the composition of Commission expert groups, Ombudsman Emily O’ Reilly carried out a public consultation which highlighted major flaws and called for greater transparency and balanced representation of all relevant interests: “The overall tenor of the contributions received is negative as regards the current situation. Stakeholders argue that there are major deficiencies persisting with regard to the composition and transparency of Commission expert groups. The main problems identified by stakeholders are (i) the inconsistent categorisation of organisations that are members of expert groups, (ii) the perceived continued dominance of corporate interests in a high number of expert groups, (iii) a lack of data on the expert groups register, and (iv) the appointment of individuals who are closely affiliated with a specific stakeholder group as experts in their personal capacity, linked to the absence of an effective conflict of interest policy.”

In 2014, a report by business watchdog Corporate Europe had criticised the Barroso II Commission for increasing intransparency in the process of its law-making functions. According to Corporate Europe, “European corporations have been very successful in exploiting the crisis to forward their own agendas, and the help of the European Commission has been instrumental in that effort. That is partly due to the composition of the Commission, but there is more to it than that.”

Read more: Greenpeace EU, Euractiv, Corporate Europe ObservatoryEuropean Ombudsman

 

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Greece changes government and environmental policy 

The announcement of Greece’s new Government was followed by the surprising abolition of the Ministry for Environment, Energy and Climate Change and its merger with agriculture and industry under the title “Ministry for Productive Restructuring, Environment and Energy”. Panayiotis Lafazanis, an experienced MP, will head the ministry as Minister. Yiannis Tsironis, a member of the Ecologists-Greens party, was appointed as Alternate Minister in charge of the environmental sector of the new ministry.

Environmental groups reacted with disappointment at what they called a signal that the environment agenda will be further downgraded. They also stated that sustainable development requires checks and balances that ensure the clear distinction between environmental policy and administration and heavy footprint sectors, such as agriculture and industry. After years of campaigning for the separation of the policy domains of environment and public infrastructures, whose cohabitation led to the constant sidelining of the environment for over twenty years, the establishment in 2009 of the Ministry of Environment, Energy and Climate Change was cautiously welcomed as a positive step towards the modernisation of Greece’s environmental performance. However, an obvious lack of political will, accompanied by an unprecedented rollback in important laws and policies and weakening of its administrative capacity over the last three years, made the need for a robust and effective environmental ministry even stronger.

In a joint statement, the environmental groups ANIMA, Archelon, Arcturos, Mediterranean SOS Network, Hellenic Society for the Protection of Nature, HOS/Birdlife Greece, Callisto, MEDASSET and WWF Greece stated that they “would like to be in the pleasant position of simply offering their congratulations to the new Prime Minister Alexis Tsipras and wishing him a term that will be positive for the environment, quality of life and the commons”, but instead they find themselves in the difficult position of asking the new government to reconsider the abolition of the environmental ministry.

In relation to specific construction plans that threaten ecologically sensitive areas, SYRIZA has on many occasions held a positive position. A few days before the January 25th national elections, SYRIZA tweeted to WWF Greece that it stands clearly against the “useless pharaonic project” of the Acheloos River diversion. The party has also taken a clear position against the controversial and environmentally harmful gold mining investment in Halkidiki. In addition, during the election campaign, Alexis Tsipras publicly reconfirmed the intentions of SYRIZA to abolish the Hellenic Republic Asset Development Fund, whose portfolio includes the privatisation of lands protected under nature conservation law.

On the energy policy front, SYRIZA faces a crucial and urgent dilemma right from the start, as the construction of the new 660 MW lignite plant Ptolemaida V is scheduled to start in early 2015. On the one hand, soaring unemployment rates in the lignite centre of Western Macedonia (which increased when two lignite plants were destroyed by fire in early November and were closed down) is creating pressure to proceed with the construction. On the other hand, SYRIZA has expressed its commitment to an ‘ecological transformation’ of the energy model. Clearly, such a commitment cannot be met if Ptolemaida V, which is scheduled to operate between 2020-2050 (at least), is constructed, since it will maintain the dependence of Greece’s energy system on coal.

Read more: Joint NGO statement (in Greek), The Times of Change, The Guardian, Reporterre (in French).

 

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Thousands of citizens call on the KfW Bank Group to stop investing in coal, starting from Greece

WWF Greece and WWF Germany met with the KfW Bank Group, in order to hand over the petition signed by 15,000 citizens calling the development bank to refrain from financing a new coal plant by PPC: “Ptolemaida V” in Northern Greece. WWF and KfW also had the opportunity to discuss the prospects for a truly sustainable Greek economy, focusing on the necessary shift to a clean, innovative and competitive energy model. During the meeting, WWF Greece’s Director Demetres Karavellas discussed with Dr Norbert Kloppenburg, member of the Executive Board of KfW, the need for influential financial institutions to divest from coal and lead the world towards a clean energy path. According to WWF Greece, Ptolemaida V is not a viable investment, since its true costs outweigh its stated benefits. Also present at the meeting were Mr Markus Scheer, Member of the Management Board of KfW IPEX-Bank, and Eberhard Brandes, Director of WWF Germany.

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As crisis offers excuse for fossil fuel revival, reactions mount against coal

The recent decision of an Italian chief prosecutor to order the closure of two power stations at Vado Ligure is probably the first legal case for manslaughter and environmental damage opening against the coal-fired energy industry. On another case, the Court of Rovigo sentenced two former CEOs of ENEL to a two-year prison term for the severe pollution derived by the operations of the Porto Tolle Power Plant. Environmental groups WWF Italy, Greenpeace and Legambiente have expressed hope that this judgment will signal the end of coal conversion projects in Porto Tolle. However, the impact of these important legal developments on the energy policies of EU member states is yet to be seen.

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Media-Web, March 2014

How Germany's development bank will fund a giant lignite plant in Greece | Energy Desk - Greenpeace UK (24 March 2014).

"KfW is one of the few Western development banks left that has no policy phasing out new coal investments. ¶ In October last year US president Obama pushed through new guidance from the US Treasury that it wouldn’t finance coal plants abroad - through the World Bank and other international development institutions - unless they had CCS or in very rare cases where there is no other economically feasible option in the world’s poorest countries (which does not include Greece). ¶ The World Bank also reiterated its plans to stop investing in new coal projects unless in poor countries where renewables would be too expensive. ¶ A couple of months later, similar plans to halt investment in most coal plants were revealed by the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB). ¶ The EIB decided not to invest in Ptolemaida 5, ending rumours that it might in January this year."

Funding for new coal undermines Greece’s potential for a living economy | New Europe (23 March 2014).

"The recent decision of Italian chief prosecutor Francantonio Granero to order the closure of two power units at Vado Ligure has revealed the well hidden killer assumption of coal: human deaths and environmental damage. In Greece, plans by the Public Power Corporation for a EUR 1,4 billion lignite burning power plant, Ptolemaida V, undermine the crisis stricken country’s potential for sustainable economic recovery. ¶ In planning, when a killer assumption is identified, it is time to rethink the project. The case of coal is replete with killer assumptions. The time has come for financial institutions to clean their investment portfolios from fossil fuels and start supporting the necessary shift towards sustainable economic recovery across Europe."

Profiting from crisis - How corporations and lawyers are scavenging profits from Europe’s crisis countries | Corporate Europe Observatory (10 March 2014).

"Profiting from Crisis looks closely at how corporate investors have responded to the measures taken by Spain, Greece and Cyprus to protect their economies in the wake of the European debt crisis. In Greece, Poštová Bank from Slovakia bought Greek debt after the bond value had already been downgraded, and was then offered a very generous debt restructuring package, yet sought to extract an even better deal by suing Greece using the Bilateral Investment Treaty (BIT) between Slovakia and Greece. In Cyprus, a Greek-listed private equity-style investor, Marfin Investment Group, which was involved in a series of questionable lending practices, is seeking €823 million in compensation for their lost investments after Cyprus had to nationalise the Laiki Bank as part of an EU debt restructuring agreement. In Spain, 22 companies (at the time of writing), mainly private equity funds, have sued at international tribunals for cuts in subsidies for renewable energy. While the cuts in subsidies have been rightly criticised by environmentalists, only large foreign investors have the ability to sue, and it is egregious that if they win it will be the already suffering Spanish public who will have to pay to enrich private equity funds."

WWF seeks to forge new, sustainable narrative for crisis-wracked citizens| Kathimerini (6 March 2014)

"Following in the footsteps of its counterparts around the world, WWF Greece appears to hereby move beyond familiar eco-centric territory, adopting a more holistic understanding of sustainability. The campaign's agenda addresses issues such as energy conservation, sustainable consumption, urban living, and balanced nutrition – along the lines of WWF's “Livewell” program for a healthy and sustainable diet.

So far more than 1,300 people and 85 schools have signed up with the program, which has occasionally joined forces with other, more niche platforms such as the Boroume (We Can) initiative against food waste, and the City of Errors network for civic engagement. More than 1,000 people took part in a festival against food waste organized together with Boroume in Athens earlier this year."

Official disquiet grows over EU states' efficiency plans | Euractiv (6 March 2014)

"EU countries see energy savings as a "luxury", neglect building sector roadmaps, and are producing national action plans unlikely to meet a 2020 energy efficiency target, according to government officials and advisers surveyed by EurActiv."

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