In a complaint lodged today with the European Investment Bank (EIB), civil society groups protest that the bank systematically underestimated the climate footprint of a fossil fuel mega project, the Southern Gas Corridor, which helped justify providing it with major financial support using EU public money.
Despite commitments to align its activities with the Paris Agreement, the EIB approved last year two loans to the Trans Adriatic Pipeline (TAP) and the Trans Anatolian Pipeline (TANAP) sections of the mega project totalling EUR 2.4 billion. The TAP loan – worth EUR 1.5 billion – is the largest sum of public money ever extended to an energy project. This loan is also covered by an EU guarantee from the European Fund for Strategic Investments.
An analysis undertaken by Bankwatch, Counter Balance, Friends of the Earth Europe and Re:Common reveals that the EIB substantially underestimated the greenhouse gas emissions associated with the project. In the case of the Trans Anatolian Pipeline, the bank’s figures are 2.5 times smaller than those calculated by the project consortium, and for the Trans Adriatic Pipeline the emissions estimated by the bank are 3.5 times smaller.
Colin Roche, Fossil Free Europe campaigner with Friends of the Earth Europe, said:
“This shoddy approach to measuring the climate impact of this gas mega-project highlights the European Investment Bank’s careless disregard for the climate crisis. We have no room left to build anything that emits CO2, so what is the bank doing shackling us to a new generation of fossil fuels? The bank must move its money from fossil fuels to 100% renewables, right now.”
In part, the reason for these striking discrepancies is the EIB’s use of outdated methodologies which do not reflect contemporary scientific understanding of the climate impact of natural gas. According to the complaint, the bank underestimated the global warming effect of methane, known as a relatively short-lived but extremely potent greenhouse gas, up to 86 times more powerful than carbon dioxide, according to the Intergovernmental Panel on Climate Change.
In addition, while a pipeline of the scale of the Southern Gas Corridor is typically planned to be operational for about half a century, the EIB’s carbon footprint assessment does not consider the project over its full lifetime.
Furthermore, the analysis shows the environmental and social impact assessments submitted to the EIB by project promoters also systematically underestimate ‘fugitive emissions’ – unplanned but inevitable releases of methane. These are a widely acknowledged source of greenhouse gas emissions in gas projects, expected throughout the exploration, production, processing, storage and distribution stages of the Southern Gas Corridor. These assessments also exclude key parts of the project such as the gas extraction and the pipelines carrying it through Azerbaijan and Georgia.
In reality, the Southern Gas Corridor’s climate impact could be as devastating as a coal alternative, a 2018 Bankwatch study showed.
In detailing these miscalculations, the complaint filed today argues the EIB has failed to meet its own standards as stipulated in the bank’s Environmental and Social Practices Handbook – namely, it failed to conduct or require a comprehensive climate impact assessment for the project.
The complainants now urge the EIB to undertake the necessary additional assessments of the Southern Gas Corridor’s climate footprint and to propose ways to mitigate it. Until then, the bank must avoid disbursing its loans to TAP and TANAP.
The civil society groups have repeatedly warned of risks to human rights and the environment of this mega-project – including serious risk of corruption, compromised land rights and inadequate public participation throughout the pipelines’ routes, the horrendous human rights record of the Azerbaijani government, the questionable viability of the project and its incompatibility with EU and international climate targets.
This year, the EIB is reviewing its energy lending strategy and the NGOs call on the bank, the world’s largest multilateral lender, to seize this opportunity to live up to its promises to align with the Paris Agreement and finally commit to halting support to fossil fuels.
Anna Roggenbuck, Policy Officer with CEE Bankwatch Network, said:
“It is unacceptable, three years after the Paris Agreement was signed, for the EU’s financial institution to support a giant fossil fuel project without having it thoroughly assessed for climate impacts. This is all the more shocking that the EIB’s calculation of annual emission is a few times lower than its clients’ flawed assessments.”
Xavier Sol, Director of Counter Balance, said:
“It was already clear to us that the motivations behind financing the Southern Gas Corridor were mainly political. We now realise that on the climate front, the EIB’s assessments were not serious – despite its public mandate to invest in a sustainable and responsible manner. It is time to stop ignoring the harmful impacts of gas projects on the climate and put an end to public money injected into dirty projects”
Elena Gerebizza, researcher at Re:Common, said:
“The EIB and the European Commission appear to have overlooked the Southern Gas Corridor’s true climate price tag, on top of other serious environmental issues. EU citizens and residents along the pipeline should not pay the environmental, social and climate cost for this controversial project.”