Environmentalists demand from EU to tackle Chinese firms’ violations

Eight organizations urged the EU to do more to tackle legal breaches by Chinese companies. They said the authorities in Brussels and European governments have to tell the most populous nation to stop building new coal power plants in the 27-member bloc and accession countries and to make it respect the law.

China’s President Xi Jinping has a meeting with European Union leaders via video link today. In a statement, a group of civil society organizations working in Southeastern Europe said Chinese state-owned enterprises have been breaching the EU’s environmental, procurement and state aid law and that they have to be stopped.

German Chancellor Angela Merkel, President of the European Council Charles Michel and President of the European Commission Ursula von der Leyen will attend the China-Germany-EU leaders’ meeting. The environmentalists stressed that despite Chinese policy guidelines, most of the projects breach national and EU rules.

Contracts have been signed to build four coal-fired power plants and rehabilitate another two. China invests in heavy industries and other infrastructure such as motorways and railways in the Western Balkans. At least three more memoranda for new coal plants have been signed.

All Chinese projects breach EU standards

Chinese companies have bought the Smederevo steel plant and the Bor copper mine, and are planning to build a tyre factory in Zrenjanin, all in Serbia. The eight nongovernmental organizations said not one of the Chinese projects is in line with the latest EU pollution control standards, the so-called LCP BREF – best available techniques reference documents for large combustion plants.

The loan guarantee for the Tuzla 7 power plant project in BiH was challenged at the Energy Community Secretariat for alleged state aid violations

Most have very weak environmental assessment studies, and the Drmno mine expansion in Serbia had none at all, they added. Also, the Tuzla 7 power plant project in Bosnia and Herzegovina got a loan guarantee that is now subject to an infringement procedure by the Energy Community Secretariat due to state aid violations.

No tender procedures in Serbia

Serbia has an agreement with the government in Beijing that Chinese projects in the Balkan country do not undergo tender procedures, the NGOs noted.

“Quite often we hear that these are win-win projects. Unfortunately, this is true only for the Chinese side that is producing and exporting all of the equipment and using Chinese workers to install it. For BiH side this is more of a lose-lose case since we will end up with a huge debt and a stranded asset,” stated Denis Žiško from the Center for Ecology and Energy in Tuzla, Bosnia and Herzegovina, who has been closely monitoring the Tuzla 7 and Banovići coal power plant projects.

Lack of environmental law enforcement, transparency

Mirko Popović of the Renewables and Environmental Regulatory Institute (RERI) in Serbia said the recent installation of a non-functional desulphurisation facility in Kostolac thermal power plant, and significant increases of air pollution in Bor and Smederevo, seem to show Chinese investment business models and their relations with political actors in Serbia. The lack of environmental law enforcement and transparency in these cases is worrisome and will significantly undermine Serbia’s EU accession agenda, he claimed.

RERI’s Popović: Lack of environmental law enforcement and transparency will undermine Serbia’s EU accession agenda

The EU must clearly tell China to stop building new coal plants in the EU and accession countries, according to the statement. Together with the compliance with EU law, it must be set as a binding condition in the talks on a comprehensive agreement on investment (CAI), the environmentalist groups underscored.

Energy Community needs more power

They called for improvements in law enforcement in accession countries, including by strengthening the Energy Community Treaty to enable penalties to be issued, and for the introduction of a carbon border tax for electricity to help reinforce the message that coal is no longer economic.

The statement was also signed by CEE Bankwatch Network, Climate Action Network Europe – CAN Europe, Sustainable Energy (VedvarendeEnergi), Center for Ecology and Sustainable Development (CEKOR), Center for Environment and Eco-team from Montenegro.

The contracts in question include the existing Stanari coal power plant in BiH, the rehabilitation of the Pljevlja lignite-powered facility and the construction of the Bar-Boljare motorway in Montenegro and the Budapest-Belgrade railway. Coal-fired thermal power plant Kostolac B3 is under construction and memoranda were signed for Kolubara B in Serbia and coal power plants Kamengrad and Gacko 2 in BiH.