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Created on: 2016-07-31 00:00:00
Last update: 2022-11-11 00:00:00 BankTrack
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|Sector||Biomass Electric Power Generation, Coal Electric Power Generation , Coal Mining, Electric Power Distribution, Hydroelectric Power Generation, Nuclear Electric Power Generation, Pipeline Transportation of Natural Gas, Solar Electric Power Generation, Wind Electric Power Generation|
EPH (Energetický a Průmyslový Holding) is a Czech-based multinational company operating predominantly in the Central European energy sector. The company operates the Eustream pipeline, which transports gas between Russia and the EU, as well as gas storage facilities in Slovakia, Czechia and Austria. It also produces energy from a variety of sources, including coal, biomass, gas, oil, solid fuels, thermoelectric, hydroelectric, nuclear, wind and photovoltaic. Across Europe, the company currently operates seven biomass plants or units that mainly burn wood, four coal power plants that co-fire with wood, and five coal power plants. In addition, EPH operates Mibrag and Leag, two of the largest coal mining companies in Germany.
Why this profile?
EPH has taken over many coal assets that were divested from by other utilities because of climate and pollution reasons. As a result, rather than being closed down rapidly as required by the Paris Agreement, these assets stay in operation longer than they otherwise would have. These assets continue to exacerbate climate change even when converted to allegedly cleaner energy sources such as biomass or gas, threatening a socially just energy transition in Europe.
What must happen
Banks should avoid financing to EPH because of its significant coal operations. EPH even continues to invest in new coal power and plans to keep its coal power stations operational until 2038, whereas limiting global warming to 1.5 degrees means coal should be phased out in OECD countries by 2030. Additionally, EPH is converting coal power plants to burning wood biomass which emits more carbon, per-unit of energy, than coal. EPH fails to align its business model with the goals set in the Paris Climate Agreement. (See also the Principles for Paris-aligned Financial Institutions).
Impact on human rights and communities
Health impacts: In 2018, a report by Europe Beyond Coal found EPH to be the second most harmful coal company to health in Europe. EPH operates a major share of the lignite power plants in Germany, which have negative health impacts on communities living in close proximity to the plants. The report links an estimated 1,460 premature deaths to EPH’s operations in 2016, along with other respiratory and cardiovascular diseases caused by the company’s activities.
In 2012, EPH’s subsidiary Biomasse Crotone, which operates two biomass power plants in Southern Italy, was sued by local farmers for lack of compliance with air pollution monitoring policies. They also reported a high incidence of tumours and lung diseases in the area, later confirmed by the regional healthcare agency.
In October 2022, Biomasse Crotone among other energy companies was accused of illegal waste trafficking, association with criminal groups and fraud against the Italian National Energy Service Manager (Gse). Until 2017, their plants were allegedly burning wood chip biomass mixed with rubbish and waste, such as tar, asphalt and tires, releasing toxic substances and harming the health of nearby communities.
Impact on climate
Carbon emissions: EPH is Europe’s third most polluting power utility, with annual coal CO2 emissions of about 62.5 million tonnes CO2 in 2021 – nearly as much as Italy’s entire power sector. In 2019, EPH was estimated to be responsible for about 11% of all coal-related CO2 emissions in the EU. According to the 2022 Global Coal Exit List, EPH’s annual thermal coal production is 37.5MT. Of the power it produces, 32% is generated by coal.
EPH claims to be a leader in decarbonisation, and it has committed to reduce its CO2 emissions from existing power plants by 60% by 2030, as well as to reaching net zero emissions by 2050. However, it has been consistently acquiring coal plants and prolonging their lifespan. EPH acquired Vattenfall's lignite German power plants in 2016, among the top CO2 polluters in the EU. Between 2019 and 2022 the group acquired coal assets in Germany and France, gas-fired plants in the Netherlands, thermal power plants in Ireland, and biomass power plants in Italy. While such deals are often justified by the seller as efforts to reduce their own exposure to CO2 emissions, they routinely result in plants staying operational for longer. Companies should rather take responsibility for closing down their coal and biomass projects, while engaging in site rehabilitation.
Coal to biomass conversion: EPH operates a significant number of biomass-fired plants and is converting more coal-powered plants to biomass. The IPCC has said that biomass emits more carbon emissions than almost any other fuels. According to a recent report by Fern, EPH is projected to burn about 4.2 million tons of wood in its biomass and coal power plants in 2022 alone, corresponding to 6.2 million tons of CO2. Burning this amount of wood will, however, only produce around 4.5 GWh of electricity which is only 5.3% of Czechia’s estimated power consumption.
Converting coal plants to biomass is among EPH’s main “decarbonisation” strategies. One example is the reopening of the Gardanne plant in France in February 2022, after an investment of 300 million euros.
Impact on nature and environment
Forest destruction: Burning wood for energy not only exacerbates climate change through increased carbon emissions, it also drives forest destruction around the world. EPH holds all or a majority of the shares of 11 biomass plants in Czech Republic, UK, Italy, France and Slovakia, which burn wood chips or pellets from various logging companies in Central Europe. EPH claims to source wood from local and national suppliers, as well as from wood remainders of local forests, but its biomass supply chains lack transparency. Biomass power plants operated by EPH in the UK and Italy have been linked to unsustainable forestry practices. The huge demand for biomass has been boosting the growth of the European logging sector, dominated by companies such as Graanul Invest, the largest European pellet producer which is also involved in unsustainable forestry practices including logging in protected forests.
A 2022 Italian investigation found that about 1 million tons of wood is burned every year by EPH’s two biomass power plants in Calabria, Italy: the Crotone and Strongoli plants operated by EPH subsidiary Biomasse Crotone. Although detailed information is not made available by Biomasse Crotone, over half of the ships of wood chips that arrive in the harbour which serves these plants arrive from Tuscany, central Italy. Wood biomass producers in this region are routinely accused of causing biodiversity loss, soil degradation and preventing forest regeneration through irresponsible logging practices. In 2022, illegal logging was also reported near the EPH plants in Calabria and attributed to biomass sourcing, leading to a series of arrests and ongoing investigations.
In 2016, EPH acquired the Lynemouth power station in the UK, the second biggest biomass plant in the UK after Drax. Around 1.6 million tonnes of wood pellets are burned in Lynemouth a year. These wood pellets are supplied by Pinnacle Renewable Energy (that was recently acquired by Drax) and Enviva. Both of these wood pellet suppliers use unsustainable forestry practices, including clear-cutting forests, using whole trees to make pellets and damaging protected forest areas.
Coal and gas development still a possible future in Czech Republic thanks to companies like EPH
In the Czech Republic, national energy companies for decades have driven dependence on coal and are now promoting themselves as key players for a gas-based energy transition. However, these companies, including EPH, have been building coal-fired power plants and mines thanks to the financial support of banks and insurance groups. Read more here.
UniCredit loses its “best in class” credentials by Reclaim Finance after financing EPH
In September 2020, UniCredit adopted a coal policy that ranked the best practise in Reclaim Finance’s Coal Policy Tool. But less than a year later, the bank lost its ‘best of class’ credentials for participating in a billion euro financing operation for European coal addict EPH. Read more here.
Société Générale risks missing its divestment plans by financing EPH
Société Générale’s coal policy has not withstood the test of time, allowing the bank to continue financing key coal players like EPH, which operates coal-fired power stations burning 40 million tons of coal per year and generating 20% of the company's annual turnover. As per the bank’s coal policy, it should no longer be able to finance EPH since the company has no plan to exit coal by 2030. Read more here.
Environmental organisations call on major European and American banks to stop bankrolling EPH
A group of environmental organisations has sent a series of open letters to major banks involved in granting over EUR three billion in loans to Czech energy company EPH since 2012. The letters call attention to the role of these banks in financing the expansion of EPH into Europe's old fossil fuel assets to the point where the company is set to become the third-most polluting utility on the continent, despite only having existed for seven years. Signatories of the letters comprise BankTrack, E3G, urgewald and Sandbag. Friends of the Earth France has signed the letter directed at Société Générale.
EPH and PPF Investments sign agreement for the acquisition of Vattenfall’s German lignite activities
A consortium of EPH and its financial partner PPF Investments Ltd., announced the signing of an agreement for the acquisition of lignite operations in Saxony and Brandenburg from Vattenfall AB (source: EPH).