Serbia’s Chinese-Built Coal-Fired Power Plant Deals Blow to Climate and Health

Photo: TT/AP

Just Finance International Calls for Chinese Authorities to Make Good on Xi Overseas Coal Exit Pledge

Belgrade, 11 October 2022:- Responding to news that Serbia’s Chinese-built coal-fired Kostolac B3 electricity generation plant is entering its final phase and is expected to be online by September 2023, Just Finance campaigner Boris Mrkela said:

“If the Chinese-backed coal Kostolac B3 power plant is allowed to come online it will be a serious blow to the climate, as well as Serbia’s commitment to become carbon neutral by 2050. Serbia has the opportunity to move away from the health and environmental impacts associated with fossil fuel dependency by abandoning Kostolac B3 and sticking to its commitments.”

“Across the border, In Bosnia and Herzegovina, China is still dragging its feet in relation to ending its involvement in the proposed Tuzla 7 coal-fired power plant, for which it provides financing. Just Finance International is calling on the Chinese authorities to honor President Xi’s September 2021 pledge to ‘not build new coal-fired power projects abroad’, by immediately exiting the Tuzla 7 project”.

Photo: Just Finance International (2022)

During the UN General Assembly in September 2021, Chinese President Xi Jinping stated that “China will step up support for other developing countries in developing green and low-carbon energy, and will not build new coal-fired power projects abroad”. In response, Just Finance International called for China to “introduce a time bound action plan on how to exit the over 30 GW of coal power plant projects and associated facilities its state-owned enterprises and banks finance and which may get built around the world”.

In July 2022, Just Finance International welcomed an announcement by the Federation of Bosnia and Herzegovina (FBIH) government that it would reject a proposal for an alternative Chinese subcontractor for the proposed Tuzla 7 coal fired power plant, and called on the Federation of BiH Parliament to choose to ditch the plant’s construction. 

The European Commission has urged Serbia to step up investment in renewable energy, phase out fossil energy sources and ramp up air quality plans. The Kostolac B3 power plant, operated by Serbian power utility provider and generator Elektroprivreda Srbije (EPS), will have 350 MW capacity and will use 12 million tonnes of coal annually from the Drmno open pit mine. In December 2014, the Serbian government and state-owned China Eximbank signed a US$608 million concessional loan contract covering 85% of the investment. Just Finance International wrote earlier about serious concerns that have dogged the project from the start, such as:

  • No tender was conducted for the main contractor
  • Arbitration for the project would be conducted under rules defined by the lender and subject to Chinese law
  • No environmental impact assessment was conducted before Drmno coal mine was expanded
  • Kostolac B3 is non-compliant with current EU pollution limits, known as the 2017 LCP BREF
  • The Serbian government took the loan on behalf of EPS, which may have been in breach of the state aid obligations Serbia agreed to under the Energy Community Treaty.

Note: Kostolac B3 predates President Xi’s pledge; according to Balkan Green Energy News, at the time of Kostolac B3’s groundbreaking ceremony in 2017, the Chinese government-controlled company China Machinery Engineering Corporation (CMEC) was tasked with finishing construction in late 2021.

Contact: Just Finance Press Desk press@justfinanceinternational.org

Notes:

Serbia’s coal plant Kostolac B3 to come online in September 2023

https://balkangreenenergynews.com/serbias-coal-plant-kostolac-b3-to-come-online-in-september-2023/

Coal combustion: In Kostolac every fourth day not for breathing

https://www.cins.rs/en/coal-combustion-in-kostolac-every-fourth-day-not-for-breathing/

Just Finance International: The debacle of Chinese financed Kostolac B3 coal-fired power station in Serbia

https://justfinanceinternational.org/2021/02/25/the-debacle-of-chinese-financed-kostolac-b3-coal-fired-power-station-in-serbia/

Bankwatch Network: Kostolac B power plant (B1, B2), Serbia

https://bankwatch.org/project/kostolac-b-power-plant-b1-b2-serbia

Reuters: In climate pledge, Xi says China will not build new coal-fired power projects abroad

https://www.reuters.com/world/china/xi-says-china-aims-provide-2-bln-vaccine-doses-by-year-end-2021-09-21/

Just Finance comment on China’s Opportunities to make good on its Coal phase out promise

https://justfinanceinternational.org/2021/10/27/g20-is-opportunity-for-china-to-make-good-on-its-coal-phase-out-promise-just-finance-international/

Adding Coal to the Fire: An overview on where China stands in 2021’s historic exit from international coal projects

https://justfinanceinternational.org/2021/10/27/adding-coal-to-the-fire/

China’s 2021 “international coal-exit’’ pledge: a transparency problem

https://justfinanceinternational.org/2022/03/31/chinas-2021-international-coal-exit-pledge-a-transparency-problem/

Chinese Contractor’s Offer for Bosnia’s Tuzla 7 Coal Power Plant Rejected

https://justfinanceinternational.org/2022/07/15/chinese-contractors-offer-for-bosnias-tuzla-7-coal-power-plant-rejected

About Just Finance International

Just Finance works to ensure that the public budget spent globally on development and infrastructure finance is contributing to the advancement of sustainability for populations and the environment.

https://justfinanceinternational.org/