Block 7 could become a "stranded asset", investments in coal power plants to cease

SARAJEVO, (Patria) - Leaders of the Group of 20 countries, including China, have agreed to halt financing for coal-fired power plants starting this year, following similar agreements undertaken by members of the Group of 7 countries and the Organization for Security and Co-operation in Europe (OSCE).

China, as the world's leading financier of coal-fired power plant construction, is still involved in over 1.7 GW of planned coal-fired power plants in the Western Balkans and Southeast Europe. Among these is Kostolac B3 with a capacity of 350 MW, which is under construction.

OSCE countries, including European Union members, Japan, Korea, and others, agreed last week to immediately ban any form of state financial aid for the construction of power plants abroad by the end of 2021. This marks the first internationally binding agreement to eliminate export support for the construction of power plants abroad.

This agreement is not binding for China, which is not an OSCE member. However, in October this year, the Bank of China, a leading bank that has been involved in numerous coal-fired power plant construction projects worldwide in recent years, broke with the practice of other Chinese banks and became the first financial institution in China to suspend financing for new coal-fired power plants and mining projects abroad.

In September, during his address at the United Nations General Assembly session, Xi Jinping pledged that China would withdraw from new coal-fired power plant construction projects worldwide. This further calls into question the legitimacy of the planned construction project of Block 7 in Tuzla, whose construction is financed by a loan from China Exim Bank. The construction of this power plant has not yet begun due to unresolved issues regarding illegal state aid, obtaining all necessary permits, and changes in technology proposed by Gezhouba.

Denis Žiško from the Aarhus Centre Tuzla, who is monitoring the planned Tuzla 7 project, says: "This has been a risky undertaking for our country from the moment it accepted a loan of 614 million euros from China Exim Bank for a project that will primarily benefit Chinese companies and their workers." Žiško added: "The question is why Chinese authorities continue to pressure our country to invest in a project that will end up as a 'stranded asset'?"

"Chinese investments in coal in Bosnia and Herzegovina are still present, but under the guise of secret collaborations with our institutions and private investors for the construction of power plants - as is currently the case with TE Ugljevik 3. A memorandum of cooperation with CNEEC was signed in secret, without prior consultation with the public and the local community," explains Majda Ibraković from the "Center for Environment" in BiH. "We demand that China fulfill its promises and withdraw from planned power plant projects in Bosnia and Herzegovina by not deepening the public debt that would arise from the realization of these projects," Ibraković added.

Zvezdan Kalmar from the "Center for Ecology and Sustainable Development" in Serbia says: "Not only are all Chinese coal projects in the Western Balkans not in line with the latest EU standards for pollution control, but most of them are burdened with irregularities in the process of issuing environmental permits and impact studies." Kalmar also believes that: "China must immediately halt coal projects abroad whose construction has begun without all permits being secured and public consultations conducted meaningfully. Such an example is the Kostolac B3 power plant in Serbia, which is currently under construction."

Wawa Wang, director of Just Finance International, stated: "We support the decision of the G20, and especially China's commitment, to stop financing coal-fired power plants worldwide with public funds. The public and civil society have long questioned the legitimacy and legality of Chinese state-owned enterprises involved in the construction of coal-fired power plants in the Western Balkans and the rest of the world. Our research has shown that China is behind at least 13 GW of active and planned coal-fired power plant projects worldwide – financing has already been secured for some, but construction has not yet begun. China must immediately withdraw from all active projects for the undertaken commitments to have a real impact on climate preservation."

Ioana Ciuta, energy coordinator at CEE Bankwatch Network, says: "At this stage of climate emergency, we must reach an agreement to halt financing for all forms of fossil fuels, and on the other hand, we haven't even cut off the lifeline for coal projects. The economy, environment, and public health will continue to suffer if China leaves the door open in Southeast Europe for all these ill-considered coal-based energy projects."