Environmentalists Sue European Investment Bank Over Loan for Spanish Biomass Plant

A London-based environmental legal group, ClientEarth, sued the European Investment Bank last week over a $69 million loan for the development of a wood-fired power plant in La Coruna in Northern Spain.
Environmentalists Sue European Investment Bank Over Loan for Spanish Biomass Plant

According to Bloomberg News and the Houston Chronicle, ClientEarth sued the bank, one of the European Union's largest financial institutions, in the EU General Court in Luxembourg on January 8.

The court's website confirms the lawsuit was filed, but provided no further details or links to court documents.

However, in a lengthy statement on the organization's website ClientEarth's attorneys said they believe the plant that is the subject of the loan is highly inefficient and does not meet the EIB's financing thresholds for renewable technologies.

They claim they demanded a review of the bank's investment in the project to correct "manifest errors of assessment," but the EIB refused to undertake one. As a result ClientEarth has initiated what it says it the first legal action of its kind pitting an NGO against the bank.

“This case shines a light on the lack of transparency in the European Investment Bank’s approach to funding projects, some of which have a huge environmental impact," said ClientEarth lawyer Anna Heslop in a written statement.

“Despite using public money, the EIB provides only minimal information about its funding decisions and refuses to subject those decisions to the scrutiny required by EU law, including the Aarhus Regulation," Heslop continued. “We hope a positive judgment will open the way for NGOs to hold the EIB to account on its funding of all kinds of projects which affect the environment, such as those with a significant climate impact.”

The Aarhus Regulation enables environmental NGOs meeting certain criteria to request an internal review under environmental law of acts adopted, or omissions, by Community institutions and bodies.

"By declaring that ClientEarth’s request was inadmissible on 30 October 2018, the EIB denied an NGO this right guaranteed by international and EU law," ClientEarth said.

The bank has not formally responded to ClientEarth's assertions, but a representative told Renewable Energy Magazine, “The Board of the European Investment Bank approved a €60 million financing for the Curtis Biomass Power Generation Plant in April 2018. As per EIB due diligence requirements, this project was appraised and deemed to be in line with our lending objectives and considered economically, financially, technically and environmentally sound.”

In relation to ClientEarth’s request to perform an internal review of the mentioned decision of the Board of Directors of April 12, 2018, approving the financing proposal for the project, the spokesperson added, “The Bank does not share ClientEarth’s view that such approval is an administrative act subject to internal review, and therefore finds Client Earth’s request inadmissible under the Aarhus Regulation.”

The EIB has confirmed that an application from the Court of Justice has been received and said “Such application will be handled in accordance with EIB’s procedures. As explained, the Bank considers that ClientEarth’s action was already refused in the context of an internal review as inadmissible under the Aarhus Regulation.”

According to an analysis published last summer by S&P Global, the financial consultancy, Greenalia Biomass Power Curtis Teixeiro, S.L.U. is seeking to borrow just over $143 million (€125 million) to build, start up, and operate the  49.9 MW biomass plant, along with the feed-in lines, substations, and other installations necessary to connect the plant to the distribution network of Teixeiro, a town in the municipality of Curtis in the province of La Coruña, Spain.

The company was awarded the right to build this power capacity in a Spanish auction conducted by the Ministry of Energy in January 2016.

Once operational in 2020, the project will generate 324 GWh per year using approximately 498,000 tons of forest biomass, S&P Global said.

“Europe is at the forefront of transformation in the global energy sector and rapid technological change, and is committed to ambitious 2030 energy and climate targets and long-term decarbonization by 2050," said Andrew McDowell, European Investment Bank Vice President responsible for energy.

"As the EU Bank, the European Investment Bank has a unique technical and financial experience supporting energy projects and backing EU energy and climate policy," he said.

 "Over the coming months, my colleagues and I will work closely with stakeholders to see how the impact of the EIB’s energy investment can better reflect and accelerate this change. I am looking forward to discussing with energy experts from a broad range of stakeholders in February how the EIB can strengthen support for ongoing transformation in the energy sector in the years ahead,” McDowell concluded.

ClientEarth has enjoyed considerable success across Europe holding national and local governments to account over inadequate clean-air protection.

The group won a decision in the United Kingdom's Supreme Court by demonstrating that the government consistently breached EU clean-air regulations.

It also partnered with German NGO Deutsche Umwelthilfe to bring cases against local governments in Europe's biggest economy that ultimately resulted in the worst-polluting diesel cars being pulled off the road.

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