Bankwatch

How Ukraine can turn community needs into bankable projects

Dimitar Dimitrovski — Tue, 18 Aug 2026 16:03:01 +0200

Project preparation facilities (PPFs) provide funding and technical expertise to turn investment ideas into projects ready for financing. However, there is a risk that Ukraine’s PPFs could become another gateway through which only the strongest applicants pass, rather than a mechanism to help promising projects develop. PPFs must engage with project developers early on, helping them create sustainable proposals that meet environmental and social standards.

Beyond financial constraints

The Fifth Rapid Damage and Needs Assessment (RDNA5) estimates Ukraine’s recovery and reconstruction needs at almost USD 588 billion over the next decade. At this scale, the country can’t afford to finance poorly justified solutions, underestimate operating costs, or discover environmental conflicts after key decisions are made. Project sponsors often view funding as their biggest problem, but donors and development banks need projects that address genuine needs, feature realistic costs, present clear governance models, and have capable sponsors. Looking at public investment portfolios across local and national levels, a clear gap emerges: too many project ideas remain mere wish lists, while far fewer become viable investment projects.

Building the system

This is why Ukraine urgently needs a mechanism to support public investment project preparation. PPFs don’t simply produce documentation; they turn real needs into projects that can be properly assessed, compared and financed. Ukraine’s nascent framework brings together the Ukraine Government PPF (supported by the World Bank via the PREPARE Ukraine Project) and Ukraine FIRST, administered by the EBRD and EIB. An interagency working group coordinates project allocations to prevent donor duplication. In April 2026, the Ministry of Economy, Environment and Agriculture issued methodological guidelines for project development, with the working group assigning six initial projects from the state’s Single Project Pipeline to PPF programmes. A logical chain is gradually taking shape: national and sectoral priorities → Single Project Pipeline → identification of preparation needs → PPF support → access to financing. Yet a key question remains: who will truly benefit?

Risk of inequality

The biggest risk is that the system will favour well-equipped sponsors. While prioritising large infrastructure projects is to be expected, much of Ukraine’s reconstruction will occur locally – spanning water supply, district heating, waste management, local energy, healthcare, education and transport. Small and medium-sized communities often lack specialists to prepare pre-feasibility studies, financial models or environmental screenings. If PPFs only serve large, ministry-backed initiatives, existing inequalities will deepen, meaning resourced sponsors will advance, while vulnerable communities are left behind.

Reaching out to communities

This is where regional development agencies could play an important role. If given a clear mandate, basic funding, training and access to the system’s tools, they could provide a regional entry point for communities seeking support. For instance, they could help with choosing the right technical solution, make sure the site and necessary information are in place, carry out initial environmental and social checks, assess whether the organisation that will run the project has the capacity to do so, and develop a project proposal for submission to a sectoral or national investment programme. Without this kind of support, better-resourced hromadas with their own project offices will gain the advantage, while communities with the most acute needs will remain outside the system. This isn’t only a matter of fairness. Weak local projects ultimately mean a weak national portfolio.

Ensuring transparency

The same principle should apply to decisions about which projects receive PPF support. PPFs have limited resources, so many applicants will inevitably be turned down. What matters is whether people can understand why decisions were made – and whether they can trust in the process. For selected projects, the public should be able to see how they fit national or sectoral priorities, what social benefits they are expected to bring, how far they have progressed, what preparation they need, and how they could be eventually financed. Projects that are rejected or put on hold should receive plain feedback explaining what needs to improve and whether the sponsor can reapply. It’s also important to track what happens once the studies are complete. How many prepared projects are submitted for financing and approved? How many change after the environmental or economic analysis takes place? How many are dropped because the analysis shows they aren’t viable? That’s not a failure of the PPF. Better to identify these important details before committing public money.

Building in safeguards

Environmental, climate and social considerations need to be part of the process from the beginning. In line with the World Bank’s Environmental and Social Framework, the PREPARE Ukraine Project has published an environmental and social management framework, an environmental and social commitment plan, and a stakeholder engagement plan. This can be a solid foundation. But standards matter only if they influence decisions. Alternative analyses, climate resilience, biodiversity impacts, access to services, resettlement, working conditions and consultation with affected people should all be considered before technical solutions become irreversible. Otherwise, environmental and social impact assessments risk becoming a box-ticking exercise carried out after the most important decisions have already been made. This is where a screening tool based on the ‘do no significant harm’ principle should be used. Communities also need practical support, such as simple templates for early-stage screening, access to environmental and social specialists, funding for data collection, and meaningful consultations. The need for this support is immediate. Ukrainian civil society organisations are already helping communities to develop strategic plans rather than waiting for technical donor assistance from donors. Groups like Ecoclub and Ecodia provide comprehensive planning, new tools for self-assessment and project implementation, and guidance on sustainability. Ultimately, by empowering local communities to build rigorous, sustainable proposals today, Ukraine can ensure its recovery is both equitable and lasting.

Death by a thousand transmission lines

Dimitar Dimitrovski — Thu, 06 Aug 2026 09:56:57 +0200

While integrating more renewables into the grid is one of the most important steps for mitigating climate change, their siting, as well as the siting of the supporting infrastructure, is key for building acceptance of the energy transition in local communities. Montenegro’s state-owned transmission system operator Crnogorski elektroprenosni sistem (CGES) seems to have forgotten this when planning the 400/110/35 kV substation near the peaceful mountain village of Gornja Brezna. A substation might not sound like a major issue, but this is no ordinary neighbourhood facility. What was initially planned as a single project, started in 2016 and 2017 when a substation measuring 125 by 80 metres was built at the site for the needs of the Krnovo wind farm. The expansion now planned would more than double this to 300 by 250 metres – the equivalent of nine football pitches. And that’s just the substation itself, without even counting the three existing transmission lines and at least seven planned ones connected to it. [caption id="attachment_156526" align="aligncenter" width="657"] Some of the planned future connections according to CGES (110 kV blue, 400 kV red). The planned 400 kV Brezna-Gacko interconnection, and the potential connection to the Komarnica hydropower plant are missing. Source: CGES website.[/caption] CGES may argue that the location is convenient from a narrow grid-planning perspective because several existing and planned transmission lines, which are important not just for Montenegro, but also for the wider Western Balkan region, converge there. But this is precisely why a full alternatives assessment and cumulative impact assessment were indispensable before the final decision was taken on the location. It remains unclear whether all reasonable steps have been taken to find a site that does not impact the environment, the community in the village and the nearby rural tourism facilities. Since finding out what awaits them, the local community has formed the Save Brezna initiative. They are challenging the expansion of the substation on all available fronts, including a complaint to the EBRD’s independent project accountability mechanism (IPAM).

A long history of EBRD and EU support

In December 2011, a Western Balkans Investment Framework (WBIF) technical assistance grant was approved for CGES. It entailed the preparation of a feasibility study, preliminary design, and an Environmental and Social Impact Assessment (ESIA) for the potential construction of a 110 kV overhead transmission line from Vilusi to Herceg Novi and the associated 400/110/35 kV Brezna substation. The lead financier on the project was the EBRD, so the bank was aware from the very beginning that a new greenfield substation was planned. The documents commissioned through the grant were apparently completed in 2018. But before that, as mentioned above, in 2016 and 2017, Krnovo Green Energy built the 110/35 kV part of the substation because it needed it to connect its wind farm to the grid. From this point onwards, the planned greenfield 400/110/35 kV substation became an existing 110/35 kV substation with a planned extension to 400 kV. The EBRD is the project’s main financier, with a EUR 28 million loan signed in 2024. The Bank is also supporting other directly linked projects. Back in 2013 the EBRD signed a loan for the construction of the 400 kV Lastva-Pljevlja transmission line that goes through Brezna and recently started test operations. Then in 2015 the Bank signed a loan for the 72 megawatt (MW) Krnovo wind farm, for which the existing substation was built in Brezna. The EBRD is also currently considering support for a 400 kV interconnector from Brezna to Sarajevo in Bosnia and Herzegovina (BiH), for which a technical assistance grant from the Western Balkans Investment Framework (WBIF) was already awarded in 2023. This means that they should have been well aware about some of the impacts of the above projects, both individually and cumulatively.

Understated impacts – an honest mistake or an intentional omission?

Considering the obvious potential for cumulative impacts from the many projects connected to the Brezna substation, the EU-financed ESIA should have paid specific attention to this issue. However, the document is not publicly available. And a Non-Technical Summary (NTS) available on the EBRD’s website fails quite obviously even to identify basic facts about the substation project. The first untrue claim in the NTS is that ‘There are no residential or business facilities in the vicinity of SS Brezna. The closest settlement to the SS Brezna is Gornja Brezna (at a distance of approx. 2 km from SS Brezna)’. A quick check on any online map shows that the village is a lot closer to the substation. Actually, if a circle with a two-kilometre radius is drawn around the substation, more than half of the houses are within that area, with the closest ones only around 200 metres away. Independent mapping conducted by Save Brezna gives a clearer picture – around 150 buildings, owned by 75 different families, are within a two-kilometre radius. [caption id="attachment_156528" align="aligncenter" width="644"] Location and size of the substation (blue) and planned transmission lines (red) in relation to the houses of the Gornja Brezna village (small black squares) and the Komarnica river to the north. The orange circle is a two-kilometre radius around the substation.[/caption] Another major issue not dealt with conclusively in the NTS is ground stability. The NTS acknowledged that the existing Brezna substation had already encountered soil and foundation movements and more complex ground conditions than initially assumed, but stated that the results of additional investigations would only become available in February 2024. It has not been updated to include them. Moreover, CGES procurement and remediation records from 2025 and 2026 show that geological investigations, revision and ground remediation issues at the existing site have continued. This means the problem is still unresolved, with no information available to the public on the results or next steps. In these circumstances, treating the 400 kV expansion as a low-risk technical upgrade without full disclosure, independent review, proper geological and geotechnical assessment and serious assessment of alternatives is unacceptable.

Cumulative impacts a key issue

The NTS also completely fails to identify the cumulative impacts of the existing and planned transmission lines linked to the substation. The section on cumulative impacts in the NTS claims that ‘no current or future projects of a similar type and size have been registered in close proximity or in the area directly affected by this construction. Therefore, no cumulative effects due to interaction with other projects are expected.’ This is completely inappropriate since a large high voltage substation is obviously not going to exist as standalone infrastructure. To assess cumulative effects, the projects around it do not need to be of a similar type or size – rather any existing or approved projects that increase the pressure on the environment need to be analysed. In addition to the cumulative impacts of the EBRD-financed projects above, the CGES network development plan also includes a 400 kV interconnector from Brezna to Gacko in BiH, and a plan to connect the highly controversial planned Komarnica hydropower plant to the Brezna substation. Multiple medium voltage 110 kV lines also converge at Brezna with planned lines to the 200 MW Dubrovsko solar plant and 118 MW Bijela wind farm. The spatial plan of Pluzine, the municipality where Brezna is located, also identifies more than 20 locations for further development of solar and wind power. Most of these are near Brezna and even if only some of them materialise, they will add to the cumulative impacts. With all this in mind, the immediate area of the substation, which includes the Gornja Brezna village, will become a connection hub for medium and high voltage transmission lines creating a dense network of cables hanging over people’s properties. It will surround Gornja Brezna from all sides, completely changing the scenery of the area. The lines will also cause a high concentration of habitat loss, ecosystem fragmentation and impacts on birds. This is not to be underestimated considering that the edge of the Komarnica canyon – a potential area for the expansion of the Durmitor National Park and UNESCO site, and now an officially proposed Natura 2000 site – is just one kilometre from the substation and many of the transmission lines will go through it.

ESIA, where art thou?

Fifteen years since the WBIF’s grant for the ESIA, it is clear that a national-level EIA for the whole project or any of its parts has not been carried out, but it is unclear what kind of environmental assessment was carried out under EBRD requirements. The latest available public information comes from documents published on the EBRD website on the upgrade of the substation – namely the Board Report and the NTS. The Board Report clearly states that the WBIF grant resulted in a feasibility study, ESIA and preliminary design for the Brezna substation, that were completed in 2018. Moreover, it adds that an update of the Environmental and Social Impact Assessment and Preliminary Design was completed in December 2022. In addition, the report claims that additional environmental and social due diligence was carried out by a third-party consultant and included a visit of the site, review of the environmental and social studies already available and an environmental and social assessment of the project against the EBRD’s performance requirements. The NTS is also clear that it is based on an Environmental and Social Assessment of the Project carried out in 2018 and 2023. This is no surprise since the summary has to sum up a wider assessment. In March 2026, CGES published a Q&A website on the project where they also confirm that through the preparation of a feasibility study financed by the EU, an Environmental and Social Impact Assessment (ESIA) report has been developed in accordance with European standards. They also mention that an Environmental Impact Assessment (EIA) in line with national legislation will be carried out after completion of the detailed design and prior to the commencement of construction works. The Board Report contradicts this and claims that the site is not in a sensitive area or subject to ongoing Environmental local permitting following screening by the environmental authority, implying that the WBIF-financed ESIA is the only environmental assessment taken into account. But when the Save Brezna initiative tried to get the full assessment from the EBRD, they got a response that an Environmental and Social Impact Assessment was not required for the Brezna project as a Category B project and as such does not exist. As well as contradicting the Board Report, this is not sufficient to prove compliance with the EBRD’s 2019 Environmental and Social Policy, which was in force when the Bank’s loan for the project was approved in 2024. The Bank had to ensure that the project complied with national law, which required at least an initial assessment (screening) of whether a full EIA was necessary. And the Bank’s own categorisation stated that Category B requirements varied: A project is categorised B when its potential environmental and/or social impacts are typically site specific, and/or readily identified and addressed through effective mitigation measures. The scope of environmental and social appraisal will be determined by EBRD on a case-by-case basis. It therefore remains unclear what exact kind of document the NTS was based on, and whether the full document is any less deficient than the NTS in its assessment.

How about the national-level EIA?

CGES’s statement that a national-level EIA is yet to be done seems too late. Based on all available information, the 400 kV substation should have been assessed as one project when it was initially planned, together with at least some of the associated transmission lines which give it a purpose. In a spatial planning document issued by the Ministry of Sustainable Development and Tourism, it is clearly explained that according to the approvals to connect the Krnovo wind farm to the grid from 2011 and 2012, the Brezna substation is to be built in two phases – the first to be completed by Krnovo Green Energy, and the second by CGES. However, since the first phase has already been built, the scope of the expansion project needs to be reconsidered in a way that also considers that a substation does not operate in a vacuum. The national legal threshold in Montenegro that could trigger an assessment according to the criteria used to determine whether the project is subject to an EIA is for the substation to have a voltage of 220 kV or above – and a 400 kV substation clearly fits this threshold. It is also still unclear when this EIA might happen. From the available information on the Environmental Protection Agency website, no decision that the project does not need an EIA has not been issued, but it is not clear whether the EIA process has started. One of the key purposes of the assessment is to evaluate the impacts at an early stage and offer appropriate alternatives while all options are still open. So doing a national-level EIA after this project has already been through salami-slicing, with some of the cumulative impacts already happening on the ground, would not be very meaningful. [caption id="attachment_156530" align="aligncenter" width="698"] Satellite image from June 2025 of the Brezna substation with visible 50-metre wide corridors cut through the forest for the high voltage transmission lines.[/caption] Recent efforts by Bankwatch staff to obtain the existing environmental assessments, studies and decisions from CGES resulted in a response that they are not at liberty to disclose them because they are part of an ongoing investigation by Montenegro's Public Prosecutor's Office. The same documents were requested from national authorities, but for now they have not responded. But these documents are by default public, and they should have been published before any investigation even started. So, the question remains – where are they?

Some core failures are no longer disputed – but what happens next?

The EBRD management, in the assessment report by IPAM, confirms that the project’s baseline social data is wrong and that there are households within 200 metres of the substation. IPAM’s assessment identifies Brezna as an established residential area and an emerging tourism destination, with plans for eco-tourism development. It also confirms that the stakeholder consultation was limited, and interestingly, that no cumulative impact assessment was deemed necessary during the 2024 appraisal of the project. Considering all the available information, it seems that the EBRD Board approved the project based on contradictory, incomplete or even false information. The Board Report claims that an ESIA exists, and yet it is nowhere to be found. If indeed some kind of environmental and social assessment was conducted, as well as supplementary due diligence, it is unclear how no one realised that the project will have a direct impact on this community. It is also unbelievable that no one considered the cumulative impacts of a large substation that is bound to be connected to multiple high voltage transmission lines. And if no cumulative impact assessment was done, how can the NTS claim that there are no cumulative impacts? IPAM is currently considering whether the case meets the criteria to initiate a full Compliance Review. But for the people of Gornja Brezna this is not a simple question of compliance, it is a case that will decide whether the community will continue to exist. For Montenegro it is an even bigger dilemma – if not for the benefit for its citizens, who is the green transition happening for? The EBRD needs to seriously reconsider how it assesses projects if such obvious information is falling through the cracks. The affected local communities have to be properly consulted in every project the Bank supports, and before that they need to be supplied with all the relevant documents so that they can take part in decision making in an informed manner. Many things have gone wrong in this project already, but they can still be mended. While the EBRD did not publish an ESIA for public comments, it is also obvious that some kind of environmental and social assessment was done. This should be made available to the local community as it contains only environmental information – there is no issue of commercial sensitivity here. It would therefore have been much more helpful if the EBRD explained to Save Brezna what kind of study was done and provided a copy of it. Before the project moves forward with any construction, the Montenegrin government and the EBRD must properly reconsider the real scope of the project, disclose all environmental and social documents, prepare a full ESIA with a genuine cumulative impact assessment, and organise meaningful public consultations. The ESIA must include real alternatives for the siting of the additional 400 kV substation capacity, including relocation outside the inhabited village area. Relocation is not an extreme demand; it is the logical consequence of a project that was planned, financed and advanced without properly identifying the affected community, without assessing cumulative impacts, and without giving people a meaningful opportunity to influence the decision while alternatives were still open. If the current location cannot withstand full disclosure, an independent site-suitability review, cumulative assessment and public scrutiny, the 400 kV expansion should not be built there. The importance of the project does not seem questionable to anyone, including the Brezna community, but its location definitely is. The green transition has to be a social transition as well, and people must not suffer disproportionately high impacts simply because they were never considered.

Before the money arrives, the work begins: how Kolašin in Montenegro is preparing for renewable district heating

Dimitar Dimitrovski — Tue, 04 Aug 2026 11:30:59 +0200

Small towns often wait for large investments, national programmes, or international partners before taking action to transition away from fossil fuel-based heating. Yet successful initiatives frequently begin much earlier, with local leadership, technical curiosity, and a willingness to explore practical solutions. This is precisely the path currently being taken by Kolašin, a mountain municipality in northern Montenegro. Since the opening of Montenegro's first highway section and ski centre enlargement, Kolašin has experienced one of the country's fastest urban development booms. It has been described as the largest construction site in the north of Montenegro and one that is not easy to keep under control. This rapid growth makes timing particularly important, as new hotels, apartment buildings and public facilities continue to emerge, and the heating systems being planned today will shape the town's emissions, air quality and energy costs for decades to come.

A frontrunner in climate action

Kolašin has been a signatory of the Covenant of Mayors since 2010, committing itself to local climate and energy action. In 2024, the municipality adopted its Sustainable Energy and Climate Action Plan (SECAP), a strategic document that sets out measures for reducing greenhouse gas emissions, improving energy efficiency, increasing the share of renewable energy, and strengthening resilience to climate change. Among the priorities identified in the SECAP are the gradual phase-out of fossil fuels in municipal buildings and the assessment of opportunities for developing sustainable heating solutions. Recognising that the municipality currently lacks the financial capacity to construct an entire district heating network from scratch, local authorities have chosen a more pragmatic approach. Rather than focusing on large-scale infrastructure immediately, they’ve begun identifying the public buildings where heating-related challenges are most significant and where renewable solutions could demonstrate both technical and economic viability.

Bankwatch supported exchanges of experience

Seeking technical guidance and examples of proven renewable heating solutions, Kolašin’s municipal authority reached out to Bankwatch in 2025. To facilitate knowledge exchange and expose local decision-makers to successful regional practice, Bankwatch supported the municipality's participation in the TOPS District Heating Summit in Zlatibor in summer 2025. The delegation included the Deputy Mayor and the President of the Municipal Assembly, demonstrating strong political support for exploring sustainable heating solutions. A key moment during the visit was the tour of Hotel Olimp, where a water-to-water heat pump system has been operating successfully since 2012 as a proven solution capable of operating reliably in a mountain climate comparable to that of Kolašin. Seeing the system in operation helped municipal representatives move beyond theoretical discussions and begin considering how similar solutions could be adapted to their own public buildings and, potentially, to a small district heating network.

Analysis provides initial proposals

An important step in this process came in summer 2025, when the municipality completed a report assessing the condition of heating installations and proposing improvement measures for public facilities. The analysis highlighted two particularly challenging buildings in the town centre. The first is the Culture Centre and Museum, a protected heritage building still heated with light fuel oil. During the previous heating season, the facility consumed almost 16,000 litres of fuel oil, while its main boiler, installed in 2003, has long exceeded its optimal operational lifespan. The second is the iconic Spomen Dom (Memorial House), a landmark of Yugoslav modernist architecture that was selected by the World Monuments Fund's Modern Century initiative as one of 30 outstanding modern architectural sites worldwide. It was also featured in the Museum of Modern Art's (MoMA) landmark exhibition Toward a Concrete Utopia: Architecture in Yugoslavia, 1948–1980. Although designed with a central heating system, the installation has been out of operation for years, forcing the building to rely on individual electric storage heaters, a technically inefficient and financially burdensome solution. Following the initial technical report, Kolašin is examining integrating heat pump technologies, improving building-level energy efficiency and evaluating the long-term feasibility of a municipal district heating network. For the Culture Centre and Museum complex, the report assesses a hybrid system based on air-to-water heat pumps providing the primary renewable heat source. For Spomen Dom, the municipality is considering a ground-source heat pump solution utilising geothermal probes installed beneath surrounding green areas. The study also explores the longer-term possibility of establishing a small municipal energy centre that could eventually provide renewable heating not only to public buildings but also to nearby residential and commercial consumers.

Next steps

The process is now entering a new phase. During July and September 2026, a series of meetings is taking place in Kolašin with municipal representatives, technical experts, national institutions, and potential partners. These meetings are focusing on refining the technical concept and discussing financing opportunities. Engagement with Montenegro's Ministry of Energy, Environmental Protection Fund (Eko Fond), and other stakeholders is expected to support the identification of institutional and financial pathways for project development. To continue these efforts, a dedicated district heating workshop and conference is planned for autumn 2026. The event will present the current status and development pathway of Kolašin’s heating transition, bringing together key stakeholders, including local and national institutions, international experts and potential financing partners, to discuss technical solutions, financing models, and the next implementation steps. Building on the experience of Žabljak’s district heating initiative, also supported by Bankwatch, the conference will focus on identifying practical technical and financial models and defining clear next steps for advancing Kolašin’s heating transition.

More national and international support needed for the next phase

The story of Kolašin is not primarily about the size of the investment being considered. It is about creating the conditions for a successful transition: identifying the right starting point, building technical evidence, engaging stakeholders, and developing a project that can attract future support. Across the Western Balkans, many small municipalities face similar challenges: needing a new district heating system or having an ageing existing one, limited investment capacity, and increasing pressure to reduce emissions. Kolašin’s experience shows that local governments can take the first steps by developing realistic, well-prepared projects, but turning these initiatives into implemented solutions will require stronger support from national governments, development banks, national and EU funds.

Signs of trouble: Drainage pipe near the pristine Bunica river spring causes outcry as Corridor Vc construction affects Mostar communities

Michaela Kozminova — Thu, 30 Jul 2026 11:50:30 +0200

The Bunica Spring, near Mostar, is one of the country's most important karst springs and a unique natural oasis. The river and surrounding landscape form an area of exceptional ecological value and provide a habitat for diverse wildlife. The Bunica also holds significant importance for the local community. Nearby households depend on the groundwater resources connected to the area and the river supports recreation, local livelihoods and everyday community life. Its ecological and social value has already prompted formal actions for stronger and lasting legal protection. Against this background, the decision to place such a large drainage outlet so close to the spring and river calls for much closer scrutiny.

Unexpected flash flooding after start of works

These concerns about the drainage pipe are connected to other concerns local residents have. Following the start of construction works on the Tunnel Kvanj section of Corridor Vc in late 2025, the nearby settlement of Parila experienced severe surface runoff and flash flooding after heavy rainfall. Residents observed that these events occurred after extensive earthworks and vegetation removal on the hillside above the settlement. [gallery size="medium" ids="156504,156506,156508"]

The scale of excavation and land disturbance associated with the installation of the drainage pipe near homes and cultivated land beside the Bunica River. Photo: Sead Šašivarević.

Soon afterwards, the community was shocked to see a huge underground pipeline, with an opening nearly nearly the height of an adult, emerging from the stripped hillside and pointing towards the Bunica River. No clear explanation of why it had been installed was provided by the authorities or project promoter JP Autoceste FBiH (JPAC), nor an assessment of how much water it could carry or what might happen when the next heavy rains came.

High risks in a sensitive ecosystem

[caption id="attachment_156512" align="alignright" width="368"] The emerald waters of the Bunica River, reflecting the surrounding forested karst landscape.[/caption] Local residents are concerned that the new drainage system may alter the natural hydrological regime around the Bunica River or harm its sensitive karst ecosystem. Residents are particularly concerned about the area’s groundwater, the private wells used for drinking water by nearby households, and the Bunica bathing area, which is currently being restored by the city of Mostar. They also fear that, during heavy rainfall, the pipe could release large volumes of muddy runoff into the river, causing severe turbidity. It is distressing to imagine this captivating, crystal-clear emerald river suddenly overwhelmed by a torrent of murky water. Residents are also seeking clarification as to whether the current drainage solution formed part of the original approved project or represents a design modification introduced after construction had already begun. In a statement published in the media, JPAC said that the drainage system does not discharge motorway runoff into the Bunica River. According to the company, the external drainage system collects only natural surface runoff that already flows towards the Bunica catchment, while motorway runoff would be collected separately, treated and discharged in accordance with the project documentation and water permits. The company further states that the project does not introduce additional water into the Bunica River, does not alter its natural hydrological regime and that the protection of the river has been an integral part of the project's design from the outset.

Where things stand in late July

The local community welcomes these assurances and appreciates JPAC publicly addressing the issue. However, JPAC’s response and their covering of the pipe’s discharge point have not fully eased the concerns that have been raised. Is it really necessary to place such a large pipe so close to the spring and one of the area’s most beautiful and sensitive rivers? Given the ecological and social importance of the site, the intervention appears to have been approached far too lightly. Better and less intrusive solutions may have been possible. If, on the other hand, the pipe was not part of the original design, this raises an equally serious concern: was it introduced hastily in response to problems that emerged during construction, rather than through careful and transparent planning? Additional official information became available in late July in a response issued by the Federal Ministry of Environment and Tourism to a parliamentary question. According to the Ministry, the drainage solution now being implemented was developed in response to uncontrolled surface runoff that occurred during motorway construction in late 2025 and affected several residential properties in the nearby settlement of Parila. The Ministry added that the solution had been agreed upon in early 2026 following discussions with affected residents, and that the drainage pipe was installed in June 2026. [caption id="attachment_156510" align="alignright" width="225"] A flap now covers the pipe opening, but the pipe has not been sealed or removed as requested by local community. Photo: Azra Duraković[/caption] This timeline raises additional questions regarding the permitting process. The environmental permit was issued in May 2019 —well before the drainage solution was developed to address the surface runoff that occurred during construction in late 2025. As a result, the local community is seeking clarification on the approvals, technical assessments, and environmental documentation that support this subsequent intervention. Although the Ministry’s response provides useful context on how and when the drainage solution was developed, it does not include the underlying approvals or the technical and environmental documentation requested by the community. As July draws to a close, neither this response nor JPAC’s public statement has fully addressed residents’ concerns. The initial relief at reports that the pipe had been sealed has also quickly faded. According to the latest information from the site, no cap has been installed to stop water from flowing through the pipe into the river. Instead, only a flap has been placed over the opening to prevent material from entering from the outside. Given this, residents are still seeking access to technical documentation and scientific evidence supporting these conclusions.

The community’s requests

Given the above, the community requests clarification from JPAC regarding:

the hydrological analyses demonstrating that the natural drainage regime of the Bunica River will remain unchanged;

the hydrogeological studies confirming that the drainage system will not affect the Bunica karst spring, groundwater or nearby private wells;

the technical justification for replacing an originally planned open drainage channel with a large underground pipeline;

whether alternative drainage solutions were assessed during the planning and design process, including options that would avoid or minimise discharge towards the Bunica River, and why the current solution was ultimately selected;

the complete design of the drainage discharge system, including the exact location and function of all discharge points, infiltration structures, retention facilities and any other components through which collected water is ultimately released or infiltrated;

the environmental assessment of potential impacts on the Bunica bathing area and local drinking water sources;

the technical criteria and hydrological modelling used to demonstrate that the selected drainage solution represents the optimal option for protecting both the local community from flooding and the Bunica River and its karst groundwater system;

whether the drainage solution currently being constructed represents a subsequent design modification after the initial environmental permitting process, and if so, through which approval procedure that modification was assessed and authorised;

the long-term monitoring programme that will verify the effectiveness of the proposed protection measures; and,

whether this design modification required amendments to the original project documentation, environmental approvals or construction permits.

[caption id="attachment_156500" align="aligncenter" width="626"] Clear waters of Bunica.[/caption] The local community is not opposing the construction of Corridor Vc. Rather, it is asking for transparency and access to the technical studies on which the company's actions were based. Given the exceptional ecological importance of the Bunica River and the international financing of the project, local residents believe that making this information publicly available would help build trust, strengthen dialogue and demonstrate compliance with both national legislation and international environmental and social standards. We respectfully invite the international financial institutions supporting the Corridor Vc project to review these concerns and encourage a transparent dialogue between the investor, the competent authorities and the local community. Ensuring public access to the relevant technical documentation and providing clear, evidence-based answers would strengthen public confidence that the Bunica River and its unique karst ecosystem are being effectively protected. Institutional silence will only further weaken the community’s already fragile trust. Projects carried out in the public interest should not be managed in this way. This unresolved situation shows why continued public scrutiny and strong environmental safeguards are essential. Protecting the Bunica is not only about protecting a river. Access to the relevant technical documentation, a clear explanation of how this location was chosen and evidence that less-intrusive options were considered would go a long way towards rebuilding trust and showing that both meaningful community involvement and the protection of the river were treated as genuine priorities.

‘Changing lives’ in Bishkek: The cost of a green transport failure

Michaela Kozminova — Thu, 16 Jul 2026 12:36:37 +0200

Wasted green investment

Between 2011 and 2018, the EBRD invested EUR 15 million in Bishkek’s public transport system through sovereign loans, helping the Kyrgyz capital expand its trolleybus network. Additionally, more than EUR 8 million in technical cooperation grants were approved, among other purposes, for the preparation of Bishkek’s public transport development strategy, the design of a new public transport route network, and a review of the city’s strategic planning documents, including its urban transport master plan. In 2020, the EBRD provided an additional EUR 25 million loan to finance the rehabilitation of a bus depot and the purchase of buses running on compressed natural gas (CNG), co-financed with a capital grant of up to EUR 8 million to support implementation of a Green City Action Plan for Bishkek. In April 2024, the City of Bishkek announced plans to replace the city’s trolleybus network with buses and transfer its trolleybuses to the City of Osh. Bishkek’s mayor said the transition would be supported by new financing from the Asian Development Bank (ADB), comprising a USD 25 million grant and a USD 25 million loan for the purchase of electric buses intended to replace 95 diesel and 25 outdated trolleybuses. The removal of the capital’s trolleybus network began in June, although Bishkek City Council did not formally approve the transfer of 100 of these trolleybuses to Osh until August. By November, trolleybus services had been completely phased out, resulting in public transport shortages, increased use of car and CNG buses, worsening air quality and carbon emissions, loss of jobs for public transport workers, and reduced accessibility for passengers with special mobility needs. The impacts of the reform of Bishkek’s public transport system over the past two years have been analysed by local researchers with the support of Bankwatch. Their findings show that ‘the fleet renewal alone has not made public transport genuinely attractive or efficient’, as only 18% of the active fleet can be described as fully comfortable, inclusive, safe and environmentally friendly.

Residents seek solution to no avail

Since May 2024, people in Bishkek have reached out to both the EBRD and the ADB, requesting information on the Banks’ positions regarding the loss of the city’s trolleybuses. They have raised concerns about the anticipated negative impacts of removing the city’s most inclusive and environmentally friendly mode of public transport, while demanding more transparency and public participation in decision-making. In May 2024, an open letter signed by more than 1,600 people was submitted to the Bishkek mayor’s office concerning the planned removal of the trolleybuses and the Osh transfer. In June, when the city authorities initiated a perfunctory public consultation, local residents and environmental experts used the opportunity to submit 300 individual written appeals to Bishkek City Council demanding the retention of the trolleybus system. Beyond the consultation process, opposition to the decision continued through peaceful artistic protests, as well as legal action. Instead of engaging with local residents and the two banks, however, the city authorities responded with silence, with police blocking public gatherings and carrying out illegal detentions. Yet, despite this official suppression, the protesters’ arguments received major legal backing from within the government itself. According to an official opinion issued by the Kyrgyz Ministry of Natural Resources, Ecology and Technical Supervision on 9 April 2025, the dismantling of the trolleybus system violated the Kyrgyz Republic’s Nationally Determined Contribution under the Paris Agreement and risked causing adverse environmental impacts. In an update issued on 18 March 2025, the EBRD announced that the trolleybus fleet through its final loan would be converted into electric buses. However, no details or assessments were provided to the public, raising more questions than answers. By mid-2025, the EBRD’s Bishkek trolleybus loans had been repaid.

Accountability and remedy for harm

In August 2025, the environmental organisation Bishkek Smog submitted a complaint to the EBRD’s Independent Project Accountability Mechanism (IPAM). They requested a problem-solving process, provided that the Kyrgyz authorities agreed to engage voluntarily and in good faith in facilitated dialogue. Alternatively, they requested a compliance review to determine whether the EBRD had followed its 2008 Environmental and Social Policy (ESP). Nearly a year has passed since the complaint was submitted, and with Bishkek decision makers unwilling to engage in a voluntary mediation process, it has become apparent that a facilitated problem-solving approach is no longer viable. Consequently, in a letter sent to IPAM on 1 July 2026, the requesters formally called on the mechanism to initiate a compliance review. This review now represents the main avenue for redress to determine whether the EBRD failed to follow its ESP, with the ultimate goal of developing a management action plan to remedy the harms caused by dismantling the trolleybus system.

What do requesters expect?

The August 2025 complaint, submitted on behalf of Bishkek’s affected residents, represents the interests of people with disabilities, women, young people, retired people, trolleybus company workers, and environmentalists, with support from by international organisations, experts and human rights defenders. The majority of these individuals requested confidentiality due to fears of reprisals. They highlight the environmental and social harms resulting from the loss of the trolleybuses:

violation of the right to access to information and public participation in decision-making;

loss of jobs for trolleybus company workers without providing opportunities for retraining and employment on CNG or electric buses;

increased air pollution in Bishkek, leading to health risks;

negative climate impacts due to failure to deliver long-term greenhouse gas emission reductions;

worsening reliability and quality of public transport services;

expected higher costs and barriers to affordable public transport services;

reduced accessibility for vulnerable groups, including people with disabilities, mothers and women (gender impacts); and

damage to cultural heritage.

While the requesters acknowledged the EBRD’s limited leverage to influence decisions made by the City of Bishkek, they argue that, according to the 2008 ESP, the EBRD should have initiated an environmental and social assessment of the consequences of dismantling the trolleybus system, including impacts on air pollution and employment. Such an assessment was either not carried out at all, or not conducted transparently with the participation of those whose lives were changed for the worse. The EBRD must be accountable for whether it took all measures available and required under its ESP to defend the public interest and ensure appropriate mitigation of adverse impacts resulting from significant material changes to its Bishkek transport projects.

Western Balkans gets second chance at just transition: Can new support platform deliver?

Dimitar Dimitrovski — Wed, 15 Jul 2026 10:09:52 +0200

Local authorities, trade unions and other stakeholders affected by the just transition in the Western Balkans have been eager for a support platform ever since the Initiative for Coal Regions in Transition in the Western Balkans and Ukraine (CRiT WBUA) ended at the end of 2023. The initiative wasn’t perfect, but it did create some forward momentum. Coal region redevelopment was again deprioritised in the Western Balkans after the end of the initiative, placing local authorities in the very difficult position of knowing what was coming but having very few options. With no dedicated EU funding stream, things were moving forward only in North Macedonia, where funding from the global Climate Investment Fund had been secured. But even there, progress remains limited. Two and a half years later, although there is still no dedicated EU funding for the transition of coal regions in the Western Balkans, the long-awaited new support project has finally started.

JET Balkans project kicks off without key stakeholders

Implemented by Expertise France in partnership with the Slovenian Centre for International Cooperation and Development, the EUR 5 million project ‘supports the preparation of fair, credible and practical transition pathways by connecting evidence, dialogue, policy coordination, financing preparation and regional knowledge-sharing’. At the kick-off event in Sarajevo in June 2026, high-level decision makers in the just transition field were notably missing. This was hardly surprising, given the lack of interest that governments have shown in the topic. However, what was more surprising was that there was only one representative from civil society. Civil society organisations have kept the topic alive during the vacuum period, actively supporting affected coal communities despite operating with very limited resources.

Lack of clarity at local level

The premise of the project is that the just transition is now an implementation challenge. It begins by mapping transition pressures, affected territories, sectors and groups. This is followed by policy alignment, alongside territorial and workforce support for workers, municipalities and local economies in the affected regions. The fourth component focuses on preparing financing pathways, developing project pipelines and implementing selected pilot projects. Dialogue and cooperation are only the fifth component, which one can only hope will actually run throughout the entire duration of the project. It was emphasised that the project will build on what is already there, which is welcome considering that a lot has already been prepared. For the missing parts, the project will offer technical assistance for policy alignment, although what this involves is still unclear. While the project team may have a comprehensive plan, the process would be much more productive if local stakeholders, including civil society at both local and regional levels, received more details about how the project goals will be achieved so that they can provide support. At this point, it is still unclear to the public what the mapping will look like and how policy alignment will be approached. While the added value of this project is that it foresees pilot projects, these are still a long way off, with the details yet to be decided.

What we need to move forward

The project’s setup, with a national coordinator in each of the six Western Balkan countries – even Albania, which doesn’t use coal in its energy sector – gives more hope for moving the just transition process forward from within the countries than the previous support platform did. Still, as neither political will nor the promise of EU financial support for a just transition is present, implementation will likely be difficult. This makes it even more important to include local authorities in all activities, since they are currently the most interested in taking care of people in their communities. In 2024, several mayors from coal-dependent municipalities even signed a just transition manifesto that was sent to the Directorate-General for Neighbourhood and Enlargement, asking for support for the process. Broader groups of local people must also be included and consulted as much as possible, as must civil society organisations, which continuously follow and support the process on the ground. To put local people’s valuable experience to meaningful use, they and other civil society stakeholders need clarification on:

what can be expected from the mapping carried out as part of the project;

which policies will be aligned and with what, so that civil society can prepare to provide input in a timely manner; and

what can be expected from pilot projects and project pipelines.

Our previous asks from the CRiT WBUA initiative still apply to the JET Balkans project:

Presence on the ground is key. Events should be held in coal regions, not only in capitals, and should not always be associated with energy- and climate-related issues. At the local level, the just transition is a development challenge first and foremost.

Existing knowledge and expertise should be used whenever possible. The work carried out by civil society during the vacuum period – for example, a declaration by Serbian civil society and the Vision for Bitola initiative developed by Eko-svest in North Macedonia – is key to preparing up-to-date redevelopment plans and projects.

Supporting local stakeholders, particularly trade unions, but also directly workers and their families, in understanding their role in the redevelopment of their region is what will move this process forward or halt it completely. It’s up to the platform to facilitate the participation of all affected groups and up to civil society to support this, provided timely cooperation exists.

Local redevelopment plans for the regions, equivalent to the EU’s territorial just transition plans, should be drafted and include a pipeline of redevelopment projects. Education of the new workforce should feature prominently.

Any funding channelled by this or any other just transition support mechanism must be conditioned on these local, participatory plans, exclude any kind of support for fossil fuels, and incentivise reasonably fast coal phase-out dates.

We and other civil society groups working on the just transition in the Western Balkans are looking forward to working with the new support platform to give the process a much-needed boost.

Serbia’s district heating utilities approaching breaking point due to gas import dependence

Dimitar Dimitrovski — Tue, 14 Jul 2026 09:54:00 +0200

Serbia’s warning sign

Rather than racing ahead with costly new commitments, however, the region’s governments should look closely at Serbia’s district heating sector, which is approaching breaking point due to its reliance on imported gas. This increasingly chronic problem is the clearest example in the region so far of the risks associated with gas-dependent heating systems. Today, gas accounts for around 78% of fuel used in Serbia’s district heating sector, with around 90% of supplies imported. This has resulted in financial instability for heating companies, often driven by sharp fluctuations in international gas markets rather than domestic energy policy.

Financial exposure revealed

Even with significant overemployment in the sector – estimated at around 15% of total costs, with staffing levels far exceeding operational needs – fuel costs dominate. In 2024, the latest year for which data is available, fuel costs accounted for 60.5% of total district heating expenditure, leaving utilities highly exposed to fluctuations in imported gas prices. The consequences for the sector’s financial performance are devastating. In 2024, Serbian district heating companies recorded combined losses of EUR 22.3 million, while liquidity shortages reached EUR 189 million. In practical terms, nearly EUR 200 million in working capital is missing from the system. And the trend is worsening. Financial data shows that Serbia’s district heating sector has experienced a steady decline in performance over the past eight years. In 2024, out of Serbia’s 51 district heating utilities, 27 operated at a loss, while 24 reported positive financial results. Compared to 2023, total losses almost tripled, while 15 utilities have accumulated losses exceeding the value of their capital. One of Serbia’s last coal-fired district heating plants, in Kragujevac, was replaced by a gas installation in October 2022, with financing from the European Bank for Reconstruction and Development (EBRD). Just two years later, Kragujevac recorded the largest financial loss of any district heating utility in Serbia, amounting to EUR 10.3 million in 2024. This highlights the financial risks of new investment in imported fossil gas, where optimistic feasibility assumptions carry a high risk of leaving utilities with losses and long-term debt. These developments should raise concerns across the Western Balkans, where the push for new gas infrastructure continues.

Regional policy risks

Montenegro is still pursuing a government-to-government (G2G) initiative on infrastructure, including plans for a liquefied natural gas (LNG) terminal in Bar and three associated gas plants. Albania is also progressing with a planned LNG terminal and at least one power plant. Serbia is expanding its domestic gas network and planning new interconnectors, with new gas plants foreseen in Niš and Novi Sad, while North Macedonia is building a new gas interconnector with Greece and planning additional gas-fired generation. Bosnia and Herzegovina is also advancing the Southern Gas Interconnection with Croatia, whose planned capacity would be six times higher than current gas demand. The project relies on outdated demand and cost assumptions, increasing the risk of stranded assets and underutilised infrastructure. However, new pipelines and gas plants do not eliminate dependence – they create it. Unlike renewable energy sources, almost all gas consumed in the Western Balkans must be purchased on external markets, exposing consumers, public budgets and utilities to price volatility and supply disruptions. This is particularly relevant for Albania, Montenegro and Kosovo, which are currently almost entirely gas-free, as they are not connected to international gas transmission networks. Even for the three Western Balkan countries that do have gas import infrastructure – Serbia, North Macedonia and Bosnia and Herzegovina – the central energy security question is not how to safeguard additional gas supplies, but how to reduce the need for imported gas.

Alternatives and resilience

Serbian experts and heating utilities recently addressed this pressing issue at a panel discussion that deserves close attention across the region. They argue that investments in geothermal energy, solar thermal systems, heat pumps, energy efficiency and seasonal heat storage offer a more sustainable model – one based on domestic resources, lower exposure to global commodity markets and greater resilience to price shocks. At a time when Europe is moving towards electrification and reducing fossil fuel consumption, Western Balkan countries face a stark choice: continue investing heavily in infrastructure that deepens dependence on imported gas, or prioritise renewable-based technologies that strengthen energy security and reduce long-term economic vulnerability. The financial condition of Serbia’s district heating sector suggests that the cost of choosing the first option is extremely high – and likely to result in a dead end.

Spending without substance: Czech flagship industry programme fails to track climate impact

Dora Crnčević — Fri, 10 Jul 2026 12:54:42 +0200

With more than CZK 81 billion (EUR 3.3 billion) at its disposal, the Operational Programme Technologies and Applications for Competitiveness (OP TAC) is designed to help companies innovate, strengthen their technological capacity and reduce their energy intensity. In practice, however, the OP TAC’s evaluation framework remains heavily skewed towards monitoring the pace of spending rather than assessing whether the money is actually delivering meaningful results. Without rigorous, transparent monitoring of outcomes, it’s impossible to determine whether the billions in public funding are serving their intended purpose. Why OP TAC matters in the Czech context OP TAC is part of a broader ecosystem of national level programmes through which the Czech Republic channels EU cohesion policy funding. These operational programmes cover a wide range of areas, including the environment, transport, employment, research and regional development. The programme stands out not because its design is unique, but because it plays a central role in supporting the competitiveness and decarbonisation of Czech industry. It’s also one of the largest programmes in terms of budget and among the most significant for the country’s long-term energy transition. The Centre for Transport and Energy, a Czech-based Bankwatch member group, focuses closely on OP TAC because we have a direct seat at the table. Through our membership in the programme’s monitoring committee – the only seat reserved for civil society among its 42 members – we have gained a unique, first-hand insight into how the programme is being implemented, what information is being shared and where the gaps lie. This insider perspective allows us to monitor the programme’s functioning in a way that wouldn’t be possible in operational programmes where civil society has no representation. Chasing spending targets, ignoring real-world impact Throughout the work of the monitoring committee, the same issue resurfaces: the programme’s actual impact is impossible to assess. Discussions tend to revolve around financial absorption, the number of calls launched, the volume of applications submitted and the amount of funding approved. Meanwhile, outcome and performance indicators – the metrics that show whether the programme is achieving its goals – receive only marginal attention. This imbalance was once again evident at the committee’s most recent meeting in March 2026. Despite managing billions intended to support innovation, energy savings and circular economy measures, the programme’s real-world impacts remain largely secondary in the monitoring process. Yet the European Commission is clear: EU Member States must not only report on how quickly they spend EU funds, but also systematically monitor indicators and regularly assess the programme’s concrete results and achievements. Financial performance alone is not enough. Environmental indicators must not be sidelined Within the monitoring committee, the Centre for Transport and Energy has consistently argued that environmental indicators must be treated as a core part of programme evaluation. These include:

energy savings;

greenhouse gas emission reductions;

renewable energy deployment; and

circular economy outcomes.

We have repeatedly called for these indicators to be systematically included in the materials prepared for the committee, accompanied by short explanations of key trends and developments. So far, however, these proposals have been rejected, often on the grounds that there is ‘insufficient interest’ among committee members in receiving such information. This is particularly concerning given that the European Commission itself explicitly highlighted the need to strengthen the use of indicators within monitoring committees. The reluctance to integrate environmental data into regular reporting undermines the committee’s ability to fulfil its oversight role. Buried data, blind oversight What makes the situation even more problematic is that the data is already available. Internal documents prepared by the Ministry of Industry and Trade include indicators on energy savings, greenhouse gas emissions, renewable energy capacity and the volume of waste used as secondary raw material, along with corresponding targets and commitments. However, this information appears only occasionally, often as supplementary material and only upon request. It’s not integrated into the regular monitoring cycle, nor is it presented in a way that allows committee members to evaluate progress or identify shortcomings. For a programme of this scale and importance, such an approach is inadequate. Closing the accountability gap The operational programme manages more than CZK 81 billion intended to support innovation, energy efficiency and circular economy projects. Without systematic monitoring of indicators, it’s impossible to determine whether these funds are delivering the intended outcomes. The monitoring committee, whose role is to oversee the programme’s implementation, cannot act as a guarantor of accountable public spending if it lacks access to the data needed to evaluate performance. If the programme is to be evaluated credibly, it’s not enough to track how many billions have been allocated or disbursed. What matters is whether the programme is delivering tangible results and measurable impacts. This evidence based assessment should be one of the committee’s core responsibilities – one it has so far been unable to fully discharge. Strengthening the monitoring of indicators is not a bureaucratic exercise. It’s essential for ensuring that public money is spent effectively, that environmental goals are met and that the Czech Republic’s industrial transformation is grounded in real progress rather than optimistic assumptions. As long as indicators remain sidelined, the programme will continue to operate in an accountability vacuum, and the opportunity to steer the programme towards meaningful impact may be lost.

A new chapter for the EIB Group Complaints Mechanism?

Michaela Kozminova — Thu, 09 Jul 2026 12:51:23 +0200

For years, civil society organisations have warned that the current policy falls short of the UN Guiding Principles on Business and Human Rights and international best practice. The hard truth is that the mechanism has failed to deliver. It has simply been unable to achieve its mission independently, efficiently, or in a meaningful way for the very people it is supposed to protect. Yet people continue to turn to the EIB-CM to raise concerns about EIB-financed projects. According to the EIB-CM’s 2025 annual report, 21 admissible complaints were registered that year. Despite deploying approximately 90% of its financing within the EU, 88% of these complaints came from outside the EU. The vast majority of these complaints were submitted by individuals seeking redress for the negative impacts of projects on housing and land, living conditions and livelihoods (mostly related to resettlement), as well as inadequate stakeholder engagement. While we welcome the EIB’s recent consultative efforts and have actively taken part, consultation alone isn’t enough. Together with a coalition of partner organisations, we’ve put forward a number of recommendations to improve the mechanism. If the EIB Group wants to uphold its reputation for sustainability and accountability, it needs to turn these recommendations into reality.

When accountability fails

Our experience shows that numerous complaints from local communities and civil society organisations have not been adequately addressed, while the institutional response to EIB-CM findings has frequently been insufficient, resulting in ongoing harm to affected communities. One notable example is the expansion of Budapest’s Liszt Ferenc International Airport, which the EIB agreed to finance in 2018. The project aims to increase passenger traffic by 50% over eight years. Residents living near the airport, supported by Friends of the Earth Hungary (MTVSZ), filed a complaint alleging inadequate public consultation and raising concerns about the project’s environmental impacts, including its contribution to climate change, increased air and noise pollution, and wider social impacts on affected communities. In 2021, the EIB-CM concluded that the project failed to comply with both EU environmental legislation and the EIB’s own environmental and social standards, issuing a series of recommendations. Yet these recommendations have still not been fully implemented, despite the Bank being required to do so within 24 months of the conclusions report. Another example concerns the construction of the Corridor Vc motorway south of Mostar in Bosna and Herzegovina, financed jointly by the EIB and the European Bank for Reconstruction and Development (EBRD). In 2017, affected residents filed a complaint about the project’s environmental and social impacts. The EIB-CM initially concluded in 2019 that there were no instances of maladministration. The complainants subsequently submitted an updated complaint to the EIB-CM and, shortly after, with the EBRD’s Independent Project Accountability Mechanism (IPAM). In autumn 2021, the EIB-CM again found no shortcomings in the route selection process or public consultations. However, in early 2024, the IPAM reached the opposite conclusion, finding that the route selection process had not complied with the EBRD’s Environmental and Social Policy. It recommended a new alternative alignment analysis along with a proper environmental and social impact assessment. Regrettably, many of the underlying issues, including the flawed route selection, remain unresolved. As a result, several new complaints have already been submitted to the IPAM in 2026.

Promising reforms

The draft Complaints Mechanism Policy contains several welcome improvements and addresses some long-standing expectations regarding the EIB-CM’s independence. In particular, we welcome the explicit recognition that the EIB-CM has a mandate to ‘facilitate access to remedy to address the negative environmental and/or social impacts of EIBG Projects’. However, the review should go much further. The revised policy must strengthen the EIB-CM’s independence from the Bank’s operational services, increase its capacity to facilitate effective remedy, and improve transparency and predictability.

Closing the gaps

First, although the draft policy designates the Head of the EIB-CM as the guarantor of the EIB-CM’s independence, it contains no meaningful safeguards governing how the Head or staff are appointed, assessed or protected from conflicts of interest. In this context, introducing clear rules on recruitment, post-employment restrictions, and conflicts of interest would align the EIB Group with international good practice and the policy provisions of peer accountability mechanisms at other multilateral development banks. Second, the EIB-CM’s standing within the EIB’s unique governance structure should be strengthened. The draft policy should clearly define the responsibilities of both the Management Committee and the Board of Directors in ensuring that the EIB Group fulfils its remedy mandate. The Board approves loans under the condition that they comply, or will comply before signature, with the EIB Group’s Environmental and Social Policy. Yet, despite serving as the institution’s ultimate decision-making body and legally accountable for the projects it approves, the Board currently has no role in authorising development of corrective actions where the EIB-CM finds non-compliance and management disagrees to develop corrective actions. The policy should therefore allow the EIB-CM to refer such cases to the Board for a final decision. Third, complainants should be consulted much earlier in the process and not be omitted from discussions between the EIB and its clients when corrective actions are being developed. The views of complainants are central to designing measures that reflect realities on the ground and effectively address verified harm. Transparency should also be a guiding principle throughout the process. Complainants should receive the final compliance conclusions report before corrective measures are developed, enabling them to prepare and engage in consultations. Finally, the EIB-CM’s institutional learning function should not be overlooked. One of its most important roles is to translate case-specific findings and dispute resolution experience into lessons that improve the EIB’s policies, project due diligence, and lending conditions. In line with the EIB Group Evaluation Policy, the Board of Directors should be required to consider the EIB-CM’s reports systematically, use their findings to inform decision-making, and hold the EIB Group accountable for implementing the recommendations.

Building renovation in Latvia will cost EUR 32 billion: Impossible target or unavoidable necessity?

Dora Crnčević — Mon, 29 Jun 2026 14:47:42 +0200

The national building renovation plans must outline how the requirements set out in the revised Energy Performance of Buildings Directive, adopted in 2024, will be achieved. But progress has been slow. So far, only 15 Member States have submitted their plans, with infringement procedures initiated against the remaining countries, including Latvia. The first draft of Latvia’s national building renovation plan has been shared with stakeholders and is expected to be submitted to the Commission shortly. The plan outlines a trajectory for renovating residential and non-residential buildings in order to fully decarbonise the building sector and contribute to achieving climate neutrality by 2050. Although the plan is still in its initial, semi-completed stage, it lays out a potential scenario for the number of buildings that will need to be renovated each year until 2050. It also estimates the amount of public and private funding required to achieve this objective. Massive investment at stake The estimated investment required to meet the renovation targets for Latvia’s building stock by 2050 stands at a staggering EUR 32.33 billion. This is an enormous sum for a country whose annual GDP is approximately EUR 43 billion – a figure set to rise even further when taking inflation into account. To date, only around 4% of apartment buildings in Latvia have been renovated, despite at least 26,600 buildings requiring renovation. At this current pace, it would take around 150 years to fully decarbonise Latvia’s building stock. The goals set at the EU level are clearly ambitious. This is true not just in monetary terms, but also logistically. According to Latvia’s draft plan, a severe shortage of construction labour is expected as the country attempts to renovate 98,000 residential buildings and 39,000 non-residential buildings within the remaining 24 years. Unsurprisingly, discussions are taking place regarding the utility of creating a plan with such targets when it remains completely unclear how they can actually be achieved. Mobilising on all fronts Given the existential nature of the climate crisis, Latvia’s building renovation plan must align with the 2050 climate-neutrality goal. However, achieving this requires a massive mobilisation of collective effort. While many procedural improvements can be made at the national level to speed up delivery, a dedicated EU-level financing programme for building renovation is also vital. Such a programme should pool funds from various sources – including joint loans and revenues from polluting activities – given the extreme difficulty of mobilising such vast sums through the national budget alone. A short-sighted response to the implementation of these seemingly unrealistic goals would be to argue for lower EU renovation targets. Building renovation serves a range of critical purposes beyond reducing greenhouse gas emissions. It extends the technical viability of buildings, improves the safety of residents, reduces dependence on imported fossil fuels, strengthens local economies and lowers vulnerability to global energy shocks. Renovation is also essential for adapting buildings to increasingly frequent extreme weather conditions linked to climate change, including heatwaves and severe storms. Crucially, renovating the extensive building stock built in Latvia during the Soviet era – where economically justifiable – is a massive ask, regardless of the 2050 climate-neutrality goal. Multi-apartment residential buildings constructed during the Soviet occupation account for 72.2% of the total floor area for this type of housing. Some of these buildings have already reached the end of their service life. Without renovation, a housing crisis is inevitable. Redefining the economic picture Building renovation planning should also be considered in the broader context of reliance on imported fossil fuels. Policymakers must account for both the costs of this dependence and the economic benefits of reducing these imports. In 2025, the EU spent approximately EUR 396 billion on fossil fuel imports, equivalent to around EUR 880 per capita. By comparison, the European Commission estimates that the transition to a clean energy system will require EUR 660 billion in public and private funding annually by 2030. Evidently, the bulk of the investment required to shift to clean energy by 2030 will be close to the amount currently spent each year on imported fossil fuels. Unlike spending on imports, however, energy efficiency and renewable energy technologies represent a permanent investment in the local economy. According to the International Energy Agency, the EU saved EUR 51.4 billion in 2025 alone simply by reducing fossil fuel imports. These indirect benefits should be estimated and projected in monetary terms at a national level to understand the true, long-term economic picture and prioritise building renovation accordingly. A shift in public sentiment To add some positive news, the historically sceptical public attitude to apartment building renovations in Latvia is changing course, as demonstrated by the overwhelming demand for support under a recent EU-funded programme launched by the Ministry of Economics. Following the scheme’s launch in April 2025, the entire available budget of EUR 173 million was reserved within a record six weeks, with the rapid uptake partly driven by simplified administrative procedures. The programme received 413 applications, of which 387 remain active. However, the existing budget is only enough to cover roughly 100 projects. To fund all the eligible renovation projects, including those currently on the reserve list, an additional EUR 290 million is urgently needed. To this end, the Ministry is now scrambling to secure extra funds, exploring options such as reducing the intensity of financial support to extend assistance to a larger number of buildings, and a potential EUR 100 million international financing loan, which would allow state agency Altum to provide financing. Given these frantic efforts, however, and the overall lack of coordination at government level, building renovation clearly has yet to receive the urgent political attention and prioritisation it so desperately requires.