BankWatch, a network of organizations that monitors international public finance in Central and Eastern Europe, has a released a report in which it urges the European Bank for Reconstruction and Development (ERBD) to divest from fossil fuels projects, including natural gas and oil.
According to BankWatch, the ERBD—which aims to support the private sector of the region covered by BankWatch—has the potential to promote investments in sustainable and renewable energy, while supporting the economy of countries in transition and setting the standard for how public finance institutions should support decarburization to a zero-carbon economy.
BankWatch’s report analyzed how EBRD’s energy-related projects from 2014 to 2020 have failed to send a clear message to the countries it supports that their own initiatives should aim to be in alignment with Paris Agreement Bank’s Energy Sector Strategy (2019-2023). Instead, the ERBD is repeating its past irreversible mistakes, allowing fossil gas investments to continue, the report states.
While BankWatch does point out that the EBRD has steadily increased its investments in renewable energy sources in the last few years, it also notes that their efforts so far are not sufficient to make a meaningful contribution to the mitigation of climate change. Nor do they lead to the long-lasting and sustainable adaptation of such green investments in its countries of operation.
In the last six years, the EBRD has invested more in fossil fuels than in renewables. In 2020, more than 70 per cent of fossil fuel financing went to major national coal and gas companies.
The report is firm in its recommendation that the EBRD stop financing new oil and gas projects; divest from companies that hold coal, oil or gas assets; demand decarburization plans as a condition of investing in companies that rely on fossil fuels; and exclude support for large-scale forest biomass.
In addition, BankWatch also calls on the ERBD to focus on bringing economic stability and environmental health to the communities they support, ensuring that projects comply with the EBRD’s Environmental-Social Policy and EU law.
Mentioning Albania, the Bankwatch report noted that there are entire regions like the “Western Balkans where traditionally gas has not been used much – Albania, Kosovo and Montenegro have no access or limited access to gas at present.”
Pushing for gas investments means investing in extremely expensive infrastructure, in some cases from scratch, along the entire demand chain (transnational transmission and distribution pipelines, gas boiler installations), resulting in blocked assets that would lock these countries into another fossil fuel dependency, as well as dependence on imports.
The lifespan of these projects is at least 30 years, and on top of that there are typically delays in planning and construction (on average five to ten years at EU level). This would delay the transition to a zero-carbon economy, because investing in gas slows down the uptake of renewable energy, showing once again the lack of vision and planning for a common sustainable future for developing countries.
Meanwhile, in May a Dutch court ordered the oil and gas giant Shell to cut emissions by almost half within 2030, deeming the company responsible for climate change. Shell has also found themselves in hot water in Albania when it was discovered they were looking for oil around the Vjosa River in southern Albania, despite its claims they haven’t done any drilling yet. Yet, photos from Block 4 show machinery and areas of ground that have been disturbed as a part of the work being carried out.
Given the Dutch ruling, BankWatch’s report, and Albania’s binding signature on the Paris Agreement, an investment by Shell could spell long-term trouble for the country, both legally and environmentally.