Backing Serbian coal, China undermines pledge to fight climate change
A Serbian environmental NGO, the Renewables and Environmental Regulatory Institute (RERI), took legal action against the national electricity company EPS, in January, for exposing Serbs to toxic emissions from coal-fired power stations.
“Our thermal power stations are among the largest emitters of sulfur dioxide in Europe. In 2018 and 2019, ten of EPS’s thermal power plants respectively emitted six times more SO2 than the national limit, ”said Hristina Vojvodić, RERI lawyer.
In 2006, Serbia ratified the Treaty establishing the Energy Community, the mission of which is to extend the EU’s energy market to its southern and eastern neighbors. From 2018, the country was required to implement a National emissions reduction plan (NERP) to limit pollutants, mainly from coal-fired power plants. Energy community members should also work towards decarbonization, accelerating the transition to cleaner energy sources.
Instead, however, Serbia continued to build and plan new coal-fired power stations and expand a lignite mine. These are financed by state-to-Chinese state loans, built by Chinese companies, and have negative environmental impacts. By approving such loans, China is undermining its pledge to tackle climate change, and Serbia is further delaying its phase-out of coal.
Coal has ‘cult status’ in Serbia
Serbia has been a candidate for EU membership since 2012, although the road has since been bulge. Currently, it meets around 70% of its electricity needs with lignite. “In Serbia, coal has cult status,” said Mirko Popović, RERI program director. Serbian coal-fired power stations are old and polluting – some were built in the 50s and 60s – the construction of modern and less polluting factories is presented as a welcome improvement.
Construction of Kolubara B, a new factory near the capital Belgrade, is expected to start this year. The project was halted three decades ago in the midst of the break-up of Yugoslavia, and then again in 2014 when the European Bank for Reconstruction and Development abandoned it, when it had switched from coal. Then, in 2018, the Serbian Minister of Mines and Energy announced a technical study of the project had been completed. And last year, the government signed a preliminary agreement with PowerChina to install a 350 MW unit by the end of 2024. Kolubara B is expected to replace a plant of the same name built in 1979, as well as the Morava plant. , installed in 1969. These two should be decommissioned by 2024, in accordance with the requirements of the Industrial Emissions Directive (IED), which was designed to ensure that large thermal power plants apply “best available techniques” and minimize pollution.
Construction of Block 3 of the Kostolac coal-fired power plant near Požarevac is underway, with the China Machinery Engineering Corporation (CMEC) in charge of the construction. China Exim Bank provided a loan of US $ 608 million for construction in 2014, as well as for the expansion of the Drmno open-pit lignite mine in the Kostolac basin, again with a subcontract for CMEC. The mine’s expansion, producing 9 to 12 million tonnes of coal per year, was completed in January 2020.
Milorad Grcic, managing director of the Serbian state-owned company EPS, during the opening of the Kostolac power station (Image: Alamy)
Then, in September 2020, a group of civil society organizations working in Southeastern Europe wrote to the EU saying that Chinese state-owned enterprises violated EU environmental laws in the region. They stressed that none of the operational Chinese projects in Serbia (such as the Smederevo steel plant, the Bor copper mine or the Zrenjanin tire plant) “complied with the latest pollution control standards of the EU ”. They also noted that “most had very weak EA studies and the Drmno mine expansion in Serbia had none at all”.
Even projects meant to improve environmental conditions in the country, such as the desulphurization system built to upgrade existing blocks 1 and 2 of the Kostolac power plant, “have apparently failed,” noted Pippa Gallop, a researcher from southeastern Kostolac. Europe with Bankwatch. .
Bankwatch, an NGO monitoring the activities of international financial institutions in Central and Eastern Europe, documented a number of irregularities. The construction of the system started in 2015, before the conclusion of its environmental impact study (EIA); the public consultation took place when the system was half-built; and the building permit was issued in record time after this consultation. According to Gallop: “In 2017, the Serbian government declared the opening of the desulphurization unit. There was the whole ceremony, and then… nothing happened. Three years later, the unit is still not functioning. “
The Sino-Serbian strategic partnership began in August 2009 with a memorandum of understanding on infrastructure development between Presidents Boris Tadić and Hu Jintao. A second memorandum of understanding on energy cooperation was signed in May 2010, and the relationship was further strengthened in 2013 with a joint declaration signed by then-President Tomislav Nikolić and Xi Jinping..
The partnership has resulted in numerous infrastructure and energy projects funded by state-to-state loans and built by Chinese state-owned enterprises. Between 2010 and 2019, Chinese direct investments in Serbia reached US $ 1.9 billion. “In recent years, Serbia has [presented] itself as one of the biggest Chinese investment poles among the BIS countries, ”said Vuk Vuksanović, researcher at the Belgrade Center for Security Policy.
As Serbia welcomes more energy projects, will Chinese companies ignore or circumvent common European environmental standards on which Serbia has agreed? “China is providing a quick solution to some of the socio-economic plagues associated with degraded infrastructure. But the point is that China does not meet the same set of standards as the EU, ”said Vuk Vuksanović. He argued that the direct deals with China, without a competitive bidding, benefited the Serbian elite. “It’s good for them to be the ones who facilitated these agreements and the arrival of Chinese capital in the country, to cut ribbons on construction sites.”
In 2017, the Serbian government declared the opening of the desulphurization unit. So… nothing happened. Three years later, the unit is still not functioning.
Pippa Gallop, Bankwatch researcher
These “tied loan” agreements, under which Chinese political banks provide financing on the condition that a contract is issued with a Chinese company, are not limited to Serbia. “Other countries also have export banks, but ‘traditional donors’ – Western countries – are generally against ‘tied aid’. These types of loans and contracts are particularly characteristic of the Belt and Road initiative, ”said Jonas Mardell, researcher at the Mercator Institute for China Studies in Berlin.
In the EU, large public projects must be the subject of an open tender, excluding a tied loan agreement. “It is not unusual for these deals to be made in secret, and it may be normal for Chinese companies to want to avoid tenders, but it really depends on what the host country is willing to do for the money. “Mardell said.
In Serbia, direct deals and limited public scrutiny of these projects are facilitated by a lack of opposition to the ruling Progressive Party (SNS), which obtained a majority of 62.6% in one parliamentary election in June 2020. Dissenting voices are also lacking in the media. The country ranks 93rd in the 2020 Global Press Freedom Index, and Reporters Without Borders Noted “The number of attacks on the media has risen sharply, while officials increasingly use inflammatory rhetoric against journalists.”
RERI’s Hristina Vojvodić says that in Serbia decision-making often takes place behind closed doors. “It’s almost as if the bigger the project, the less transparent it is.” The public was effectively ignored during the public comment on Kolubara B. “The public participation deadline was posted at the very last moment, and we don’t even know if the public comments were considered. Also, it is not known if Kolubara B is simply a replacement for the obsolete units or if his final capacity is going to be greater than that, ”she said.
China Dialogue repeatedly asked EPS for comment, but received no response.
The environmental impact of Serbia’s Chinese investments is receiving some attention in the EU. In January, a group of MEPs (MEPs) signed a letter to Olivér Várhelyi, European Commissioner for Neighborhood and Enlargement, in order to “underline the persistent environmental damage resulting from several heavy industrial projects in Serbia by Chinese companies”. They also pointed out that, given that several projects are under development near Serbia’s borders with Hungary and Romania, any potential ecological effects are likely to have an impact on neighboring EU countries as well. . “It is therefore in the interest not only of Serbia but of the European community in general to ensure that these effects are mitigated in magnitude and intensity”, concludes the letter.