Spanish environmental law institute considers buying shares for climate activism against coal-fired power plant owners

IIDMA weighs up engagement of fossil fuel companies.

The Madrid-based International Institute for Law and the Environment, (Instituto Internacional de Derecho y Medio Ambiente or IIDMA) is considering buying shares to become an activist shareholder at the AGMs of owners of coal-fired power plants in Spain. The move would be a major escalation of shareholder climate action in the country.
IIDMA is primarily an environmental law firm, akin to London-based ClientEarth in terms of vision and mission. It has been scrutinising implementation by the Spanish authorities of industrial emissions limits enshrined in EU laws.
After seizing an opportunity this year to attend the AGM of Italian utility multinational Enel, the majority shareholder of Spain’s Endesa (owner of five of the 16 coal-fired plants in Spain), IIDMA said it was minded to start a campaign of shareholder activism. IIDMA’s Director Ana Barreira told Responsible Investor: “Our focus is litigation and environmental law, which is a legal area with many ramifications. But we are considering ways to attend AGMs in Spain, so we are thinking of buying shares, particularly of companies with fossil fuel assets.”
IIDMA attended and raised ESG coal-related questions at Enel’s AGM in partnership with Italian and Dutch campaigning organisations Re:Common and PAX prompting commitments from Enel’s CEO Francesco Starace.
First, Enel said it is halting what PAX and Re:Common label as “blood coal imports” from Colombian mines that have allegedly been involved in human rights violations.
Second, following the presentation of an IIDMA briefing about Endesa’s coal-generated plants in Spain and Portugal and their air pollution emissions, Enel management said it will close two of them and won’t ask for more coal subsidies in Spain: Link
Barreira explained that Enel’s strategic plan is to close down all coal-generated plants by 2040.
However, Enel will invest in three other plants in order to meet the limits established by the EU Industrial Emissions Directive. The recently revised Directive has introduced stricter limits for nitrous oxide (NOx), sulphurdioxide (SO2) and dust emissions, although some member states have managed to negotiate exceptions under transition plans, allowing plants to adapt by 2020 or close down. Barreira said such short-term investments to keep afloat coal-generated plants is at odds with the Paris Agreement decarbonisation goals, even if those plants managed to cut pollutants harmful for human health: “We are engaging Iberdrola to shut down their two plants in Spain, as this is not consistent with the renewable energy leadership they say they exert.”
After Endesa, with a capacity of 5,167.8 MW, the second largest player in Spain is Gas Natural with 1,909.3 MW and four coal-generated plants in the North West, according to IIDMA.
In August, Allianz Capital Partners and the Canada Pension Plan Investment Board signed an agreement with Gas Natural to acquire a 20% minority equity interest in its gas distribution subsidiary in Spain. It is not clear yet whether Gas Natural will invest to make these four plants compliant with the EU’s air pollution laws or close them by 2020. IIDMA has already successfully challenged the Spanish authorities in the courts. In July a court upheld IIDMA’s claims that the regional autonomous government of Asturias renewed the permission of a plant owned by EDP (Energias de Portugal), the listed energy company, despite breaching the EU’s NOx, SO2 and dust emissions limits. IIDMA has also sued the Spanish government in relation to its transition plan to freeze the EU limits until 2020, which IIDMA believes it has been done in an unlawful manner: “We started the litigation in March but the government is trying to slow down the proceedings. If the process, which can take at least two years, doesn’t commence as soon as possible it won’t matter if the Supreme Court endorses our case. It would be too late,” Barreira said. IIDMA is also a member of the European Environmental Bureau, a network of environmental citizens’ organisations in Europe, of which Barreira is a vice-president.