EIB halts loan for Budapest Airport expansion over breach of EU environmental law

The European Investment Bank (EIB) has halted the payment of a EUR 200 million loan to expand the Budapest Airport in Hungary because the authorities haven’t analyzed how the investment could contribute to air pollution, noise pollution, and greenhouse gas emissions. According to CEE Bankwatch Network, the case represents a violation of EIB’s policy and EU environmental law.

The EIB granted Budapest Airport EUR 200 million in December 2018 for the new investments needed to secure conditions for a 50 percent increase in passenger traffic within the next eight years. A guarantee also backed the loan from the European Union budget under the European Fund for Strategic Investments, Bankwatch noted.

However, two Hungarian civil society groups: the National Society of Conservationists – Friends of the Earth Hungary (MTVSZ) and the Association for Civilized Air Transport, with the support of Bankwatch, submitted complaints. It triggered the investigation by the EIB’s Complaint Mechanism.

The investigation by the EIB’s Complaint Mechanism was triggered by complaints from NGOs

The investigation report, published in late 2021, has revealed that no environmental impact assessment has been done for the project and found that the residents have been deprived of their right to be consulted on the plans to expand the airport and on measures to mitigate the impacts, Bankwatch said.

Civil society groups now urge the Hungarian authorities to ensure that noise levels from the airport are in line with EU and World Health Organization standards and support the most affected residents, including offering to buy out homes in the loudest areas and subsidizing full insulation in houses further afield.

The disbursement of the loan has been discontinued at least until the EIB receives the decision of the Hungarian authorities on whether a full environmental impact assessment is required for the expansion of the airport. Bankwatch stressed a proper evaluation should account for the cumulative impacts of the different project components.

The EIB’s due diligence for the project lacked basic necessary documentation

The report also confirmed allegations raised by the civil society groups regarding failures within the EIB in screening the project’s compliance with the bank’s policies and informing the public about the project and its implications.

The EIB’s due diligence for the project lacked necessary documentation and therefore had no grounds to conclude it complies with the bank’s standards, Bankwatch said.

The environmental impacts and the climate footprint of larger airports must be adequately assessed.

Teodóra Dönsz-Kovács, a campaigner with the MTVSZ, said the Hungarian government and the airport operator should take joint responsibility for addressing the impacts of the current operation of the airport regardless of whether the government buys the airport, as it intends, or not.

According to Zoltán Frik, President of the Association For Civilized Air Transport, the report gives new hope and impetus to the residents to continue their struggle. He added that the environmental impacts and the climate footprint of larger airports must be properly assessed.

Anna Roggenbuck, Policy Officer with CEE Bankwatch Network, announced that the EIB is currently revising its environmental and social policies and adopting a new policy within weeks.