As the European economy continues to collapse under a deepening energy crisis that now threatens to derail implementation of the European Green Deal, proposals from the European Investment Bank (EIB) and other international financial institutions (IFIs) to scale up investment in green energy projects should be Welcome news.
However, local communities that could be affected by these projects have ample cause for concern given the worrying track record of these institutions in causing direct harm through their investments.
Unless the EIB and other financial institutions consult local communities throughout the investment planning process, follow their own rules on loss prevention and take action when damage occurs, Europe will only shift the costs of its energy crisis onto the Global South.
In my work with the Accountability Counsel, I have seen what happens when the EIB and other IFIs fund renewable energy infrastructure projects without proper consultation with communities, resulting in harm such as economic loss and displacement and disregard for tribal peoples’ rights to their lands and its territories, and retaliates against affected communities for raising these concerns. Since 2018, the EIB-funded 220 kV Marsyangdi Corridor Hydroelectric Power Plant, a hydropower project in Nepal’s Lamjung District, has displaced hundreds of residents, caused environmental degradation including deforestation and negatively impacted the livelihoods of indigenous communities.
As a result of a grievance filed by FPIC and Rights Forum, a coalition of affected communities, an investigation by the EIB’s independent grievance mechanism found that the EIB not only violated indigenous peoples’ right to free, prior and informed consent (FPIC). respected , but the implementation of his hydroelectric project caused severe environmental and social damage.
Almost a year and a half after the damage was independently verified, communities affected by the project have still not been consulted and the Nepalese government has used violent repression against community members in retaliation for defending their rights. Authorities recently brutally beat a single mother and arrested her two sons and another community member for protesting the project’s construction on her land.
Despite knowing of this violence and that its investment violated its own environmental and social policies, the EIB was unwilling or unable to stop the damage and put things right. The EIB has suspended disbursements for the project but has yet to complete the required FPIC process or implement an FPIC protocol proposed by local communities. The EIB Complaints Mechanism has yet to publish a monitoring report or conduct an on-site visit to assess whether its recommendations are being followed and therefore does not appear to have any real enforcement or remedial powers.
The case of Nepal is an example of the significant cost to local communities of EIB financing for renewable energy. However, the EIB is certainly not alone in causing unintended harm as a result of top-down project planning and lack of accountability for ESG investments.
In fact, the World Bank has and funds energy projects in Nepal that are harming local communities. In 2015, the Accountability Mechanism of the World Bank determined that the 220 kV Khimti-Dhalkebar transmission line failed to meet the bank’s environmental and social commitments, and currently local communities claim that the World Bank is funding another transmission line in Nepal that breaches its commitments violates rights. These egregious examples show that the problem of harmful internationally funded projects is far bigger than the sources of funding, and speaks to the lack of accountability in financial institutions across the global North.
Currently, the expansion of alternative energy infrastructure is not only of crucial importance for overcoming the acute energy crisis in Europe, but also for containing further climate catastrophes.
In Panama, the International Finance Corporation (IFC) funded a transmission line without consulting indigenous communities. After a historical investigation, the World Bank Accountability Mechanism found that the IFC failed to respect community members’ right to free, prior and informed consent and ordered remedial action before the project could proceed.
This example shows that financial institutions can still correct their mistakes by investing responsibly, respecting the human rights of local communities and making progress in combating climate change.
However, the current way the EIB designs and implements green energy investments is unacceptable and local communities are paying the price. Until development banks repair the damage their energy projects have already caused and demonstrate that they can implement projects while respecting the rights of local communities, they cannot be trusted to drive green infrastructure development.
Whether through lack of will or lack of ability, the EIB is failing the Nepalese communities and there is no reason to believe that their similar projects would be better off elsewhere.
Europe’s urgent need for alternative energy sources must not eclipse the rights to life and livelihood of communities in the Global South.
Sutharee Wannasiri is a community counselor at Accountability Counsel, a nonprofit organization that provides legal counsel to communities facing human rights violations as a result of internationally funded projects.
https://www.ibtimes.com.au/who-pays-cost-europes-energy-crisis-1838299?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution Who bears the costs of the European energy crisis?