Greece blows smoke at the EU

The cash-strapped country suggests looser rules on greenhouse gas emissions in order to boost economic growth.

Πηγή: ALJAZEERA
By John Psaropoulos
March 5 2014

Athens, Greece - Officials here are raising the prospect of softer greenhouse gas emissions rules for European Union members that are in an economic recession. The economically stricken country floated the idea two days after the European Commission launched an ambitious new plan to curb emissions. It was an apparent bid to pit the EU Council of Ministers, which Greece is presiding over until June, against the European Commission.

Europe has set itself a goal of largely decarbonising its energy industry by 2050. The Commission's goal is to reduce greenhouse gas emissions by 40 percent below 1990 levels by 2030. The main mechanism for achieving that is the EU Emissions Trading Scheme, or ETS, the world's largest carbon market.

Beginning this year, European industry must pay for every tonne of carbon dioxide it emits (or any other greenhouse gas it emits in CO2-equivalent terms), because the ETS will stop handing out almost a billion euros' ($1.37b) worth of free offsets after eight years of operation. The idea is to offset carbon emissions and encourage the use of more environmentally friendly sources of energy.

Greek Environment and Energy Minister Yiannis Maniatis has proposed that strict adherence to these rules could cost Greece 1.1 percent of its economy and 32,700 jobs. "The obligation of European companies to buy all or part of their CO2 emissions rights leads to increased energy costs and adversely affects their competitiveness," a statement [Gr] from the ministry said.

For Greece, the rules mean an annual bill of about 540m euros ($700m) at current low carbon prices, a sum it can hardly afford to pay. The country's economy has shrunk by almost one-third in recent years, and is still in recession today.

Steel yields

In February, two of Greece's biggest iron and steel manufacturers said they were laying off or suspending about 320 workers, partly because of stagnant manufacturing and construction sectors, but mostly because of the high cost of electricity. Late last year Viohalko, a steel producer responsible for about 12 percent of Greece's exports, relocated its head office to Brussels, purportedly for similar reasons.


"Greek heavy industry pays more than twice as much for electricity as neighbouring Italy."

- Andreas Skindilias, CEO of Halyvourgiki

"If the present situation continues, steel manufacturing [in Greece] has an expiry date," Nikos Mariou, who manages steel manufacturer Sidenor, told a national newspaper.

"Greek heavy industry pays more than twice as much for electricity as neighbouring Italy," said Andreas Skindilias, the CEO of Halyvourgiki, one of the companies laying off workers. "They pay about 32 euros ($44) per megawatt hour. We pay 80 euros ($111). Spain and France are also cheaper. These are the countries we compete with for the North African market."

The Greek steel market has fallen from 1.8m tonnes before the crisis to about 350,000 tonnes, according to Halyvourgiki, so exports are the industry's only hope of survival here. "No industry in the world can survive with these energy rates," said Skindilias.

Greece already suffers from an unemployment rate of 28 percent, the highest in the EU, and the government appears to be galvanised by the prospect of further mass layoffs. It announced measures that could reduce energy costs by 150m euros ($200m), such as the so-called "interruptibility" measure, whereby power utilities can ask large consumers to interrupt their operations at short notice, to enable them to divert power to rising household demand. That significantly lowers generation costs, and utilities are prepared to pay for the facility.

The cost of carbon

Greece may think that its proposal to soften emissions rules will fall on sympathetic ears, because it is emblematic of a broader European concern. The continent suffers from high energy costs when compared with the United States, according to the International Energy Agency, a Paris-based think-tank. "Natural gas in the United States still trades at one-third import prices to Europe… European industrial consumers [pay] almost twice as much as their counterparts in the United States," said the International Energy Agency's2013 World Energy Outlook.

The goal Europe has set itself, however, is to produce cleaner energy at competitive rates. Greece faces a particular problem here. The country's worst carbon offender is its energy industry, responsible for more than three-quarters of the country's greenhouse gas emissions, as compared with a global average of two-thirds. Greek power plants pumped 92 million tonnes of CO2 into the atmosphere in 2011, the last year for which figures are available.

Much of those emissions came from the Public Power Corporation (PPC), the former state monopoly responsible for 70 percent of electricity production which now faces an estimated bill of 150m euros ($200m) for last year's CO2 emissions. That is almost 40 euros ($55) per household - and hundreds of thousands of households have had their power cut because they can't pay their bills. This is because the PPC still generates most of its electricity from lignite, a dirty form of coal that is currently Greece's only abundant energy resource. In fact, Greece is the world's 15th largest producer of coal, coming third in the EU after Germany and Poland.

The PPC will not divulge comparative figures, but claims that lignite-derived electricity is far cheaper than that generated from imported oil and gas. It is so committed to the fuel that it is preparing to invest 1.4bn euros ($1.8bn) in a new plant in northern Greece.

The Greek chapter of the World Wildlife Fund (WWF) commissioned a study showing that the new plant may not be viable once heavy industry weighs into the carbon market, raising the price of carbon offsets.

"This study has shown that in a few decades' time these units will even have negative cashflows under specific circumstances, and might also require tax exemptions and state support in general," said the WWF's Michalis Prodromou. "That is due to the change of the economic and energy environment as we head towards high energy efficiency policies, increased renewable energy penetration and so on."

The WWF has called on Greece to place greater emphasis on energy conservation, and to place a higher target than the EU-mandated 27 percent on energy from renewable sources.

Delayed deregulation

Lignite fuelled Greece's post-war recovery, and many people in the power industry argue that if Greece hopes to preserve its heavy industry, lignite must continue to form a part of its energy mix for the foreseeable future. But the record shows that its dominance as an energy source, and the PPC's exclusive right to mine it, have acted as a brake on cleaner energy and a functioning energy market.

Greece effectively delayed the EU-mandated liberalisation of its electricity market by six years, bowing to political pressure from the PPC's labour union. Since 2001, private investment has been in cleaner gas-fired plants and renewables, but these have had difficulty competing with the PPC because of the cheapness of lignite. The result was that many independent power producers pulled out of their investments.

In 2008, Greece became the first country to be suspended from emissions trading under the Kyoto Protocol, the world's first treaty reining in greenhouse gases, after the country inaccurately reported its carbon emissions.

Maniatis has been notably silent on the softening of emissions rules he requested. Both he and Deputy Minister Asimakis Papageorgiou turned down repeated requests for interview for this story, as did the PPC.

If history is any guide, the Greek government may be trying to protect the value of the PPC as it grooms the company for privatisation next year. Greek governments have spent years protecting state monopolies. They are still coming to terms with the European challenge to protect both industry and the environment.

UK banks fund deadly cluster-bomb industry

Both the U.S. and the British used several types of cluster munitions, including those that have caused severe humanitarian problems in the former Yugoslavia and Afghanistan. (Human Rights Watch "U.S. Use of Clusters in Baghdad Condemned" 16 April 2003)

Πηγή: The Independent 

By Jerome Taylor

Tuesday, 16 August 2011

British high-street banks, including two institutions that were bailed out by taxpayers, are investing hundreds of millions of pounds in companies that manufacture cluster bombs – despite a growing global ban outlawing the production and trade of the weapons.

The Royal Bank of Scotland, Lloyds TSB, Barclays and HSBC have all provided funding to the makers of cluster bombs, even as international opinion turns against a weapons system that is inherently indiscriminate and routinely maims or kills civilians.

One year ago this month, Britain became an active participant in the Convention on Cluster Munitions, a global treaty that bans the use, production, stockpiling and transfer of cluster bombs. To date, 108 countries have signed the treaty, which also forbids parties from assisting in the production of cluster weapons.

Yet there has been no attempt by the Coalition Government to rein in banks and investment funds that continue to finance companies known to manufacture the weapons.

Each cluster bomb is composed of 200 to 700 bomblets

Using a loophole in the legislation, financial institutions can continue to back cluster-arms manufacturers as long as they don't invest in the bombs directly. The loophole has prompted Amnesty International to launch a national campaign calling on the Government to legislate against any indirect investment in cluster weapons. 

An investigation by Dutch arms experts into how financial institutions continue to invest in the industry has revealed that the virtually state-owned RBS is the UK's worst offender. Saved by the public purse after its collapse during the credit crisis, taxpayers now own 83 per cent of the bank. But that has not stopped it from investing hundreds of millions of pounds in the arms trade.

In October 2010, RBS was part of a banking syndicate that provided the American arms manufacturer Alliant Techsystems with a $1bn (£600m) five-year credit facility, with RBS itself loaning $80m. It has also underwritten $110.1m in bonds to Alliant Techsystems and Lockheed Martin.

The partially state-owned Lloyds, which was bailed out by the taxpayer with an injection of £20bn of state funds, has also invested in Lockheed Martin, the US arms giant that has a long track record of making cluster munitions. In November 2009, Lloyds contributed $62.5m as part of a 12-bank syndicate when Lockheed issued bonds for a total of $1.5bn.

Other British high street banks have also played a role in investing in arms companies known to make cluster weapons. In April 2009, Barclays and HSBC were involved in a major financing deal with Textron, a US arms manufacturer that builds a "sensor fused weapon" – the world's most powerful cluster bomb. Alliant Techsystems makes the weapon's rocket motor.

Textron issued $757.4m worth of bonds and shares with the financial aid of a 10-bank syndicate. HSBC and Barclays combined underwrote $44.6m worth of loans. Barclays then went on to invest a further $75m in a separate Textron bond deal five months later.

The report on the banks, a joint piece of research by the Dutch and Belgium NGOs IKV Pax Christi and Netwerk Vlaaneren, reveals that since May 2008, 166 financial institutions across the world have invested an estimated $39bn in the eight largest cluster-munitions manufacturers.

None of these investments is illegal. But they will lead to further concerns about the moral behaviour of the banking industry at a time of public anger over its role in the credit crisis and bankers' bonuses.

The majority of investors in cluster munitions are from countries such as China, Russia and the US, which have refused to sign up to the global ban. Those countries are also the world's largest producers of sub-munitions.

But financial investment has also come from banks within nine countries that have signed up to the treaty. Australia, Britain, Canada, France, Germany, Italy, Japan, Switzerland and the Netherlands have yet to pass legislation that specifically forbids indirect investment in cluster-bomb producers.

Belgium, Ireland, Luxembourg and New Zealand are the only countries that have banned banks from directly or indirectly financing cluster bombs. Within the financial industry there are signs that some banks are beginning to distance themselves from cluster-bomb makers. Since the publication of the Pax Christi report, HSBC said it has brought in a new investment policy that forbids it from investing in companies that make such weapons. The bank would not confirm whether that means it has ended its relationship with Textron. But Mark Hemingway, the head of media relations at HSBC, told The Independent: "We have exited relationships with clients if the requirements of our policy are not being met."

A spokeswoman for Barclays said the company's investment policy "explicitly prohibits financing trade in landmines, cluster bombs or any equipment designed to be used as an instrument of torture". Barclays would not confirm whether it would no longer invest in Textron but The Independent understands no new investments have been made since 2010. The relationship has also been discussed by senior execs at the bank.

In contrast, Lloyds and RBS resolutely defended their investments. A spokesman for Lloyds said: "Lloyds does not knowingly finance or otherwise support the manufacture of any weaponry that breaches UK, US, EU or UN legislation, or weapons which have been outlawed by International Treaty. These include, amongst others, bans on anti-personnel mines and cluster munitions."

RBS said it had been assured by arms companies that they don't make cluster bombs. "We do not invest in cluster munitions. We have received assurances from our defence-sector clients that that they are not in breach of the Convention on Cluster Munitions," a spokesperson said.

But Oliver Sprague, an arms expert at Amnesty, said: "High street banks like Royal Bank of Scotland are making a mockery of UK law by shamefully investing in companies that make weapons the UK Government and 108 other countries have clearly and quite rightly banned. Given the UK Government's clear decision to ban cluster munitions, no UK financial institutions should be assisting their production."

Laura Cheeseman, who is the director of the Cluster Munition Coalition, which spearheaded the lobbying drive for the ban on cluster weapons, said: "The UK and other countries that have already signed the ban treaty should pass strong national legislation to make sure they are not contributing to the production of weapons that they have outlawed."

(PS: US, Russsia and China have refused to sign the ban of using cluster-bombs and these also happen to be the same nations that are the largest manufacturers of the bombs. Finally on December 2010 a secret deal let Americans sidestep cluster bomb ban by UK.)