Oil & climate

Workers' children living at the Bibi-Heybat oil fields near Baku

CEE Bankwatch Network remains very concerned that the international financial institutions are still a long way from being leaders in promoting activities aimed at reducing human impacts on climate. Indeed the IFIs are too often key supporters of projects aimed at developing the use of fossil fuel, the kind of projects which of course have a very damaging climate impact not to mention their usually detrimental social implications .

One of the ways in which Bankwatch is tackling this situation is by calling for the establishment of ambitious but readily achievable targets for renewable energy and energy efficiency lending within each of the IFIs. Such a first step would lead on to the phasing out of fossil fuel investment and help the market penetration of renewables and energy efficiency projects. So far only the EIB has set up such a target (at 50 percent of its energy portfolio). The World Bank has adopted a gradual increase for renewables but this remains unacceptably low. The EBRD is currently in the process of adopting such a target to guide its future energy lending.

The other main aspect of Bankwatch's work in this field is dealing with the specific impacts of major oil and gas projects:

The Sakhalin II oil and gas development project, now (with recently announced huge cost overruns taken into account) projected to cost USD 20 billion. This project will affect the world's last 100 or so Western Pacific grey whales, it will destroy the marine environment and it will threaten the livelihood of tens of thousands of fishermen. Gazprom, together with Shell, Mitsui and Mitsubishi through the Sakhalin Energy consortium, is constructing two new oil and gas platforms in the north of Sakhalin, two 800 kilometre oil and gas pipelines running from the top to the bottom of the island, a Liquid Natural Gas production plant and an oil and LNG terminal in Aniva Bay. The project is slated to be supported through loans for the second phase by the the Japanese Bank for International Cooperation, the UK 's Export Credits Guarantee Department, the US Export-Import Bank and private banks. Bankwatch is working closely with our Russian member group Sakhalin Environmental Watch to monitor pipeline construction and major environmental damages from the project.

The Baku-Tbilisi-Ceyhan Export Oil Pipeline (BTC) and the South Caucasus Gas Pipeline are under construction and are scheduled to start operating fully in the fourth quarter of 2005. BTC is being financially backed by the IFC, the EBRD, the US Export-Import Bank, the UK 's Export Credits Guarantee Department, and a host of other export credit agencies. During the project preparation and construction Bankwatch has highlighted a number of serious problems, including problems with land compensation, damage to the properties of local communities, and serious pipeline impacts on environmentally sensitive areas.

Bankwatch also monitors other oil and gas pipeline developments in both Central Asia and the Balkan region.