The European Bank for Reconstruction and Development (EBRD) is preparing a new five-year strategy in which the Bank will close the door on financing all coal projects regardless of whether clean coal technology is planned for their execution, Nandita Parshad, the Bank’s managing director for energy and natural resources said.
Parshad in an exclusive interview with Anadolu Agency summarized the Bank's energy strategy that will set the scope of its work over the next five years, and which will see natural gas as the greenest transition fuel to a lower carbon, and 100 percent renewables-based energy world.
"Five years ago, we were talking about renewables and maybe keeping the door open a bit for coal options. But now, the world has changed. Climate change has become a much, much more important issue and gas has become a more viable option in countries that did not have gas before, with projects like the Trans Anatolian Natural Gas Pipeline (TANAP) and the Trans Adriatic Gas Pipeline (TAP)," she explained.
Over the next five years, one of the key drivers will be the dramatic fall in the cost of renewables, she asserted.
"In terms of emphasis, we say in the strategy that we are going to focus mostly on renewables, with gas as a possible transition fuel, but clean gas. It is not good enough to just transport gas. Transportation needs to be done in the cleanest way. For example, TANAP and TAP are designed according to the relevant European Union standards and the EBRD’s performance requirements. Historically, they also have some of the lowest emissions in gas pipeline building," Parshad underlined.
She added that one of the challenges with gas is that its transportation creates emissions, and hence she contended that emissions reduction in the gas chain is very important.
Parshad also indicated that air quality, a growing concern in big cities, is another key driver in the coming five years globally.
"Cities will have to look at how they will become greener, how to electrify more. If they are going to have more sources of electricity, which means electricity generation has to go up, then the question will be what the cleanest way to drive that is," she said.
- Renewables becoming more competitive
Parshad underlined that renewables are becoming much more competitive.
"We are very clear in the draft strategy that we are not supporting coal any more with no qualification [in all coal projects]. We have not financed any coal in Turkey and we are not planning to finance any. If you look at the cost, it is not cheap. Coal-fired power plants take between four and five years to be built. Renewables, on the other hand, are becoming cheaper and faster to build. There are now many economic advantages in doing renewables. It is the right thing to do," she asserted, adding that the world’s installed capacity of renewables is also on the rise.
Parshad cited China as an example of a country that is investing the most in renewables, particularly in solar and other renewables equipment.
"As they invest, the prices come down to benefit everyone globally. So I think, everyone now can benefit from cheap sources of manufacturing in China. Whether that advantage will change over time depends on how quickly the industry grows," she emphasized.
She also advised that an upcoming game-changer in the energy industry would be battery storage.
Parshad said the Bank is currently focusing on conducting pilot projects to demonstrate how batteries can properly be used in the system, which she argued was worth investing in now in order to quickly mobilize such projects.
Between 2006 and August 2018, the Bank's total financial commitment to renewable energy generation amounted to €6.3 billion while total installed renewable capacity worldwide stands at 10,161 megawatts.
- TAP $1 billion financing to close by end of 2018
In addition to renewables financing, Parshad said the EBRD provided a US$500 million loan to TANAP along with funding from other institutions.
"The focus is now on TAP. We are very keen to take the gas from TAP through Albania, Greece and Italy. As a result, there will be new infrastructure investments in these countries," she said, adding that these investments are dependent on demand growth which in turn will require increased gas flows.
"TAP is also designed for reverse flows to allow for more flexible use of resources," she said.
"We are planning to close TAP financing by the end of this year. It is a huge project, and the EBRD will provide €500 million," she said.
An equivalent amount from commercial institutions in the form of B bank loans under the EBRD’s preferred creditor status umbrella is expected to match the EBRD’s contribution, she stated.
TANAP has 16 billion cubic meters of gas transport capacity per year. In June 2018, gas deliveries to Turkey began. TANAP will connect to TAP on the Turkey-Greece border to deliver a further 10 billion cubic meters to Europe.
TAP is expected to be operational by mid-2020 while the TANAP project plans to be ready for gas transit to the border by the middle of next year.
By Nuran Erkul Kaya