Initial Environmental Examination (DRAFT)

February 2012 PRC: Shanxi Energy Efficiency and Environment Improvement Project   Prepared by the Shanxi Provincial Government for the Asian Development Bank This environmental impact assessment is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature.

ii

CURRENCY EQUIVALENTS (Inter-bank average exchange rate as of September 2011)

Currency Unit - Yuan (CNY)

CNY 1.00 = US$ 0.1566 US$ 1.00 = 6.384 CNY (mid-rate)

For the purpose of calculations in this report, an exchange rate of

$1.00 = 6.4 CNY has been used.

ABBREVIATIONS

ADB Asian Development Bank

AF Associated Facility

AP Affected Person

CBM Coal Bed Methane

CFB Circulating Fluidized Bed

CGS Chain Grate Stoker (Boiler)

CHP Combined Heat and Power

CHSP Community Health and Safety Plan

CMM Coal Mine Methane

CNY Chinese Yuan

DHS District Heating System

EA Executing Agency

EHS Environment, Health and Safety

EHS World Bank Group’s Environment, Health and Safety Guidelines

EIA Environmental Impact Assessment

EIAS Environmental Impact Assessment Statement (PRC)

EIRF Environmental Impact Registration Form

EMoP Environmental Monitoring Plan

EMP Environmental Management Plan

EPB Environmental Protection Bureau

EPC Engineering, Procurement and Construction

FGD Flue Gas Desulphurization

FIRR Financial Internal Rate of Return

FSR Feasibility Study Report

GDP Gross Domestic Product

GHG Green House Gas

GIP Good International Practice

GLC Ground Level Concentration

GRM Grievance Redress Mechanism

GWP Global Warming Potential

iii

HES Heat Exchange Station

HGS Heat Generating Station (e.g. boiler house)

IA Implementing Agency

IEE Initial Environmental Examination

IGCC Integrated Gasification Combined Cycle Combustion

IGP International Good Practice

LAP Land Acquisition Plan

LRP Labor Retrenchment Plan

MEP Ministry of Environmental Protection

MSDS Materials Safety Data Sheet

NDRC National Development and Reform Committee

NGO Non-Governmental Organization

OHS Occupational Health and Safety

OHSP Occupational Health and Safety Plan

OSE On Site Engineer (Contractor)

PMO Project Management Office

PMO GO Project Management Office Grievance Officer

PMU Project Management Unit

PPE Personal Protective Equipment

PPTA Project Preparatory Technical Assistance

PRC People’s Republic of China

PRS Pressure Regulation Station (CMM)

REA Rapid Environmental Assessment

RTU Remote Terminal Unit

SCADA Supervisory Control and Data Acquisition

SFB Shanxi Provincial Finance Bureau

SPDRC Shanxi Provincial Development and Reform Commission

SPG Shanxi Provincial Government

SPPC Subproject Public Complaints Center

SPS Safeguard Policy Statement, ADB

SR1 Environmental Safeguard Requirements 1, ADB SPS

TA Technical Assistance

TEIAR Tabular Environmental Impact Assessment Report (PRC)

TOR Terms Of Reference

US EPA United States Environmental Protection Agency

WACC Weighted Average Cost of Capital

WHO World Health Organization

iv

WEIGHTS AND MEASURES

BOD5 Biochemical Oxygen Demand, five days

CH4 Methane

cm centimeter

CO2 Carbon Dioxide

COD Chemical Oxygen Demand

dB(A) A-weighted sound pressure level in decibels

DO Dissolved Oxygen

DOD Dissolved Oxygen Deficit

GJ Giga-joule

ha Hectare

kcal Kilo Calories

kg Kilogram

km Kilometer

kWh Kilo Watt Hours

M Meter m/s Meters per Second m³ Cubic Meters mg/l Milligrams per Liter mg/m3 Milligrams per Cubic Meter mg/Nm3 Milligrams per Standard Cubic Meter MW Megawatt

NH3-N Ammonia Nitrogen

Nm3 Standard Cubic Meter

NO2 Nitrogen Dioxide

NOx Nitrogen Oxides oC Degrees Celsius

pH A measure of the acidity or alkalinity of a solution

pm person-month (an input equivalent to 1 person working for 1 month)

PM10 Particulate Matter smaller than 10 micrometers

SO2 Sulfur Dioxide

tce Total Coal Equivalent

TN Total Nitrogen

TSP Total Suspended Particulates

Disclaimer: This environmental impact assessment is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

v

CONTENTS

EXECUTIVE SUMMARY .......................................................................................................... XIV

I. INTRODUCTION 1

A. The Proposed Project ................................................................................... 1

B. Report Purpose ............................................................................................. 1

C. Structure of IEE ............................................................................................. 1

D. Approach to IEE Preparation........................................................................ 3

II. POLICY, LEGAL AND INSTITUTIONAL FRAMEWORK 6

A. ADB Environmental Assessment Requirements ........................................ 6 1. Safeguard Policy Statement (SPS) ...................................................... 6 2. Project Environmental Categorization ................................................. 8

B. PRC’s Environmental Assessment Requirements ..................................... 8 1. PRC Environmental Legal and Regulatory Framework ....................... 8 2. PRC Environmental Assessment Process ........................................... 9 3. Project Environmental Assessment Process ..................................... 10

C. Environmental Standards ....................................................................................... 11 1. Relevant PRC Environmental Standards ........................................... 11 2. ADB Policy on Environmental Standards .......................................... 11 3. Key Guidelines and Standards Utilized ............................................. 12

a. Ambient Air Quality ................................................................ 12 b. Surface Water Quality ............................................................ 12 c. Noise ...................................................................................... 12 d. Boiler Plant Emissions ........................................................... 12 e. Industrial Noise Emissions ..................................................... 15

III. DESCRIPTION OF THE PROJECT 16

A. Overview ............................................................................................... 16 1. Goals and Components ..................................................................... 16 2. Heat Sources and Boiler Type ........................................................... 17 3. Emission Control Systems ................................................................. 18 4. Pipelines ............................................................................................ 19 5. HESs ................................................................................................. 19 6. Pressure Regulating Stations ............................................................ 20 7. SCADA and EMC .............................................................................. 20 8. System Safety.................................................................................... 21 9. Occupational Health and Safety ........................................................ 21

B. Implementation Arrangements................................................................... 21

C. Location ............................................................................................... 23

D. Impact and Outcome ................................................................................... 23

E. Outputs ............................................................................................... 23

F. Rationale ............................................................................................... 23

G. Special Elements ......................................................................................... 24 1. Energy Efficiency ............................................................................... 24 2. Environmental Benefits ...................................................................... 25

vi

3. Coal-Mine Methane ........................................................................... 25 4. Private Sector Development .............................................................. 26 5. Social Support for Low-income Consumers ...................................... 26

H. Cost and Financing ..................................................................................... 26

I. Implementation Schedule ........................................................................... 26

J. Detailed Subproject Descriptions .............................................................. 29 1. Jinzhong Subproject .......................................................................... 29 2. Licheng Subproject ............................................................................ 31 3. Qin Subproject ................................................................................... 36 4. Zhongyang Subproject ....................................................................... 41 5. Liulin Subproject ................................................................................ 46

K. Associated and Existing Facilities............................................................. 50 1. Secondary Heating Systems ............................................................. 50 2. Jinzhong Subproject .......................................................................... 51 3. Zhongyang Existing Facilities ............................................................ 51 4. Liulin Coal Mines ............................................................................... 51 5. Safety and Public Complaints ............................................................ 52

IV. DESCRIPTION OF THE ENVIRONMENT 53

A. Shanxi Province .......................................................................................... 53

B. Subproject Physical and Ecological Resources ...................................... 54 1. Yuci District, Jinzhong Subproject ..................................................... 55

a. Location and Topography ...................................................... 55 b. Climate ................................................................................... 55 c. Air Quality .............................................................................. 55 d. Noise ...................................................................................... 57 e. Hydrology and Water Quality ................................................. 57 f. Ecology .................................................................................. 58 g. Subproject Site Setting .......................................................... 59

2. Licheng County, Changzhi City ......................................................... 59 a. Location and Topography ...................................................... 59 b. Climate ................................................................................... 60 c. Air Quality .............................................................................. 60 d. Hydrology and Water Quality ................................................. 60 e. Noise ...................................................................................... 61 f. Ecology .................................................................................. 61 g. Subproject Site Setting .......................................................... 62

3. Qin ..................................................................................................... 62 a. Location and Topography ...................................................... 62 b. Climate ................................................................................... 62 c. Air Quality .............................................................................. 63 d. Hydrology and Water Quality ................................................. 64 e. Noise ...................................................................................... 65 f. Ecology .................................................................................. 65 g. Subproject Site Setting .......................................................... 65

4. Zhongyang ......................................................................................... 66 a. Location and Topography ...................................................... 66 b. Climate ................................................................................... 66 c. Air Quality .............................................................................. 67 d. Hydrology and Water Quality ................................................. 67

vii

e. Noise ...................................................................................... 68 f. Ecology .................................................................................. 68 g. Subproject Site Setting .......................................................... 68

5. Liulin .................................................................................................. 69 a. Location and Topography ...................................................... 69 b. Climate ................................................................................... 69 c. Air Quality .............................................................................. 70 d. Hydrology and Water Quality ................................................. 70 e. Noise ...................................................................................... 71 f. Ecology .................................................................................. 71 g. Subproject Site Setting .......................................................... 71

C. Socioeconomic and Cultural Profile .......................................................... 72 1. Shanxi Administrative Divisions ......................................................... 72 2. Project Land Area and Demography ................................................. 72 3. Economic Growth and Employment .................................................. 73 4. Income and Expenditure .................................................................... 73 5. Age Composition and Education ....................................................... 74 6. Poverty Profile in Subproject Areas ................................................... 74 7. Public Utilities .................................................................................... 75

D. Cultural and Heritage Resources ............................................................... 75

V. ASSESSMENT OF ALTERNATIVES 76

A. Heat Source Options ................................................................................... 76 1. Available Heat Source Options .......................................................... 76

a. Renewable Energy Sources .................................................. 76 b. Natural Gas ............................................................................ 76 c. Small Decentralized Heat-Only Coal Stoker-Fired Boilers ..... 77 d. Combined Heat and Power Stations ...................................... 77 e. Large Heat-Only Coal-Fired Boilers ....................................... 77 f. Building Insulation .................................................................. 77

2. Preferred Option ................................................................................ 78 3. Environmental Benefits of the Preferred Option ................................ 78

B. Boiler Technology Options ......................................................................... 78

C. No Subproject Option ................................................................................. 79

D. Conclusion ............................................................................................... 80

VI. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 81

A. Preconstruction ........................................................................................... 81 1. Subproject Siting................................................................................ 81

a. Land Acquisition and Resettlement ....................................... 81

B. Construction Phase .................................................................................... 82 1. Air Quality .......................................................................................... 82 2. Noise ................................................................................................. 83 3. Construction and Domestic Wastewater ............................................ 83 4. Construction and Domestic Solid Waste ........................................... 84 5. Hazardous Materials and Wastes ...................................................... 84 6. Flora and Fauna ................................................................................ 85 7. Physical Cultural Resources .............................................................. 85 8. Public Inconvenience ......................................................................... 85

viii

9. Occupational Health and Safety ........................................................ 86 10. Community Health and Safety ........................................................... 87

C. Operation Phase .......................................................................................... 87 1. Air Quality .......................................................................................... 87

a. Air Emissions and Compliance with Standards ..................... 87 b. Atmospheric Dispersion Modeling ......................................... 88

2. Noise ................................................................................................. 94 a. Operation of HGSs and CMM Storage .................................. 94 b. Operation of HESs and PRSs ................................................ 94

3. Erosion .............................................................................................. 95 4. Wastewater ........................................................................................ 95 5. Solid Wastes ...................................................................................... 95

a. Domestic and Industrial Wastes ............................................ 95 b. Fly Ash and Slag .................................................................... 95 c. Boiler Decommissioning ........................................................ 96

6. Hazardous Materials and Wastes ...................................................... 97 7. Occupational Health and Safety ........................................................ 97 8. Community Health and Safety ........................................................... 99 9. Economic Displacement .................................................................... 99 10. Climate Change ............................................................................... 100 11. Project Benefits................................................................................ 101

VII. INFORMATION DISCLOSURE, CONSULTATION, AND PARTICIPATION 102

A. PRC Requirements .................................................................................... 102

B. ADB Requirements .................................................................................... 102

C. Project Public Consultation Activities ..................................................... 103 1. Overview .......................................................................................... 103 2. Round I – Initial Information Disclosure ........................................... 103 3. Round II – Questionnaires ............................................................... 104 4. Round III – EIA Related Public Disclosure and Public and Stakeholder

Consultation Meetings ................................................................................. 105 5. Consultation Results ........................................................................ 106 6. Additional Information Disclosure .................................................... 106

VIII. GRIEVANCE REDRESS MECHANISM 108

A. Introduction ............................................................................................. 108

B. Policy and Legislative Framework ........................................................... 108 1. ADB ................................................................................................. 108 2. PRC ................................................................................................. 108

C. Project GRM ............................................................................................. 109

D. Types of Grievances Expected and Eligibility Assessment .................. 111

E. Grievance Tracking ................................................................................... 111

F. Publicizing the GRM .................................................................................. 112

IX. PROJECT RISKS AND ASSURANCES 113

A. Project Risks and Management Plan ....................................................... 113

B. Project Assurances ................................................................................... 114

ix

X. CONCLUSION 115

APPENDICES 116

A. Mitigation Measures ............................................................................................. 117

B. Environmental Monitoring, Reporting and EMP Revision ................................. 117 1. Environmental Monitoring ............................................................................ 117 2. Environmental Reporting ............................................................................. 117 3. EMP Updating ............................................................................................. 118

C. Implementation Roles and Responsibilities ....................................................... 135 4. SPG and Project Leading Group ................................................................. 135 5. Project Management Office ......................................................................... 135 6. Subproject Implementation Agencies .......................................................... 135 7. Contractors .................................................................................................. 136 8. Project Implementation Consultant.............................................................. 136 9. City EPBs .................................................................................................... 137 10. ADB ......................................................................................................... 137

D. Capacity Building ............................................................................................. 138

E. Budget ............................................................................................. 139

x

List of Tables Table 1: Status of approval of subproject domestic environmental assessments.................. 11 Table 2: Relevant PRC Ambient Air Quality Standard (PRC GB 3095-1996) and international guidelines. ......................................................................................................... 13 Table 3: PRC Surface Water Environmental Quality Standard (GB3838-2002). ................... 14 Table 4: PRC Urban Noise Standard (GB3096-93) and relevant international guidelines. ... 14 Table 5: Relevant PRC Emission Standard of Air Pollutants for Coal-burning, Oil-burning, Gas-fired Boilers (GB 13217-2001) and relevant international guidelines. ............................ 15 Table 6: PRC industrial boundary noise standards and (GB12348-2008) and relevant international guidelines. ......................................................................................................... 15 Table 7: PRC noise standards for construction sites (GB12523-1990) and relevant international guidelines. ......................................................................................................... 16 Table 8: Subproject IAs, locations, and long and short names. ............................................. 17 Table 9: Select subproject design characteristics. ................................................................. 18 Table 10: Project investment plan. ......................................................................................... 27 Table 11: Project and subproject costs and financing plan. ................................................... 27 Table 12: Project implementation schedule (construction phase). ........................................ 28 Table 13: Key Jinzhong Subproject design parameters. ....................................................... 29 Table 14: Key Licheng Subproject design parameters .......................................................... 32 Table 15: Main Licheng HGS Components ........................................................................... 33 Table 16: Licheng subproject coal characteristics. ................................................................ 36 Table 17: Key Qin Subproject design parameters. ................................................................ 37 Table 18: Main Qin HGS Components .................................................................................. 38 Table 19: Qin subproject coal characteristics. ....................................................................... 38 Table 20: Key Zhongyang County subproject design parameters. ........................................ 42 Table 21: Zhongyang Subproject coal characteristics. .......................................................... 45 Table 22: Key Liulin Subproject design parameters .............................................................. 47 Table 23: PM10 monitoring results, Yuci District, Jinzhong Subproject (2011) ....................... 56 Table 24: SO2 monitoring results, Yuci District, Jinzhong Subproject (2011) ........................ 56 Table 25: NO2 monitoring results, Yuci District, Jinzhong Subproject (2011) ........................ 56 Table 26: Ambient acoustic monitoring data, Yuci District, Jinzhong Subproject (2010). ...... 58 Table 27: Xiao River water quality data, Yuci District, Jinzhong Subproject (2010). ............. 58 Table 28: Ambient air quality monitoring results, Licheng County (2009) .............................. 60 Table 29: Qingzhanghe River water quality data, Licheng County (2008) ............................. 61 Table 30: Ambient noise monitoring, HGS site, Licheng County (2011) ................................ 61 Table 31: PM10 monitoring results, Qin County. ..................................................................... 63 Table 32: TSP monitoring results, Qin County. ...................................................................... 63 Table 33: SO2 monitoring results, Qin County. ...................................................................... 63 Table 34: NO2 monitoring results, Qin County. ...................................................................... 64 Table 35: Qingzhanghe River water quality, Qin County (2008). ........................................... 64 Table 36: Ambient acoustic monitoring data, proposed HGS site, Qin County (2011). ......... 65 Table 37: Air quality monitoring results Zhongyang County, 2008-09. .................................. 67 Table 38: Water quality monitoring results, Zhongyang County, 2008-09. ............................ 68 Table 39: Noise quality monitoring results, boundary of Zhongyang HGS site, 2008-09....... 68 Table 40: Air quality monitoring results, Liulin County. .......................................................... 70 Table 41: Shanchuan River water quality data, Liulin Subproject (2010). ............................. 70 Table 42: Ambient acoustic monitoring results, Liulin Subproject (2010). ............................. 71 Table 43: Land area and demographic characteristics. ......................................................... 72 Table 44: GDP and industry structure (2010). ....................................................................... 73 Table 45: Per capita annual income (2010). .......................................................................... 74

xi

Table 46: Age composition (%) in 2010. ................................................................................ 74 Table 47: Education levels of local residents in 2010. ........................................................... 74 Table 48: Urban and rural poor in Project areas (2010). ....................................................... 75 Table 49: Urban Utilities in Subproject Areas (2010). ............................................................ 75 Table 50: Summary of land acquisition impacts. ................................................................... 81 Table 51: Income comparison before and after land acquisition. .......................................... 81 Table 52: Emission control design measures and design stack emission levels, Licheng, Qin and Zhongyang Subprojects. ................................................................................................. 89 Table 53: Maximum predicted subproject GLCs in relation to ambient standards, Licheng, Qin and Zhongyang Subprojects. .......................................................................................... 90 Table 54: Boiler closure and affected workers. .................................................................... 100 Table 55: Re-employment procedures for affected full-time workers. ................................. 100 Table 56: Summary of information disclosure and public consultation during Project preparation. .......................................................................................................................... 104 Table 57: Project Stakeholder Communication Strategy ..................................................... 107

List of Figures Figure 1: Location of subproject sites, Shanxi Energy Efficiency and Environment Improvement Project, PRC. ..................................................................................................... 2 Figure 2: Typical HES building and heat exchangers, Lvliang City. ...................................... 22 Figure 3: Typical household heating stove, Licheng County ................................................. 22 Figure 4: Typical existing low efficiency “stand-alone” coal-fired heating boiler, Qin County. 23 Figure 5: Layout of the Jinzhong heat source, distribution pipeline and HESs. ..................... 30 Figure 6: Shanxi Ruiguang Combined Heat and Power Company Plant, under construction.31 Figure 7: New urban development area to be serviced by the Jinzhong Subproject, northern Yuci District. ........................................................................................................................... 31 Figure 8: Layout of the Licheng HGS, distribution pipeline and HESs. .................................. 34 Figure 9: Licheng Subproject HGS site, located at an abandoned brick factory on the southern boundary of the Licheng County urban area. .......................................................... 34 Figure 10: Layout of the Licheng HGS. .................................................................................. 35 Figure 11: Licheng County urban area. Pipeline will run along right side of the road. ........... 36 Figure 12: Layout of the Qin HGS, distribution pipeline and HESs. ....................................... 39 Figure 13: Layout of the Qin HGS. ......................................................................................... 40 Figure 14: Qin Subproject HGS site, south of the Qin County urban area. ........................... 41 Figure 15: Layout of the Zhongyang County Heating Center HGS, distribution pipeline and HESs. ..................................................................................................................................... 43 Figure 16: Layout of the Zhongyang County Heating Center HGS. ....................................... 44 Figure 17: Zhongyang County Heating Center. The boiler house is located behind the main office building. ........................................................................................................................ 45 Figure 18: Empty bay to be used for CGS boiler, Zhongyang County Heating Center. ......... 45 Figure 19: Liulin Subproject layout of CMM pipeline, storage station and pressure regulating stations. .................................................................................................................................. 48 Figure 20: Liulin Subproject storage station layout. ............................................................... 49 Figure 21: Liulin Gasification Company control room. ........................................................... 49 Figure 22: Existing CMM extraction station and storage tank, Liulin County. ........................ 50 Figure 23: Liulin Subproject CMM storage site. ..................................................................... 50 Figure 24: Shanxi Province topography. ................................................................................ 53 Figure 25: Jinzhong subproject location, topography and landuse. Source: Google Earth 2011, image date 2006. ......................................................................................................... 55

xii

Figure 26: Location of air quality environmental monitoring locations, Yuci District, Jinzhong Subproject. ............................................................................................................................. 57 Figure 27: Licheng subproject location, topography and landuse. Source: Google Earth 2011, image date 2010. ......................................................................................................... 59 Figure 28: Qin subproject location, topography and landuse. Source: Google Earth 2011, image date 2008. ................................................................................................................... 62 Figure 29: Zhongyang subproject location, topography and landuse. Source: Google Earth 2011, image date 2006. ......................................................................................................... 66 Figure 30: Liulin subproject location, topography and landuse. Source: Google Earth 2011, image date 2009. ................................................................................................................... 69 Figure 31: Contour map of maximum predicted 24-hour SO2 GLC (mg/Nm3) for Licheng. .... 91 Figure 32: Contour map of maximum predicted 24-hour PM10 GLC (mg/Nm3) for Licheng. .. 91 Figure 33: Contour map of maximum predicted 24-hour NO2 GLC (mg/Nm3) for Licheng. .... 92 Figure 34: Contour map of maximum predicted 24-hour SO2 GLC (mg/Nm3) for Qin. ........... 92 Figure 35: Contour map of maximum predicted 24-hour PM10 GLC (mg/Nm3) for Qin. ......... 93 Figure 36: Contour map of maximum predicted 24-hour PM10 GLC (mg/Nm3) for Zhongyang.93 Figure 37: Conceptual overview of Project disclosure and public consultation process. ..... 103 Figure 38: Conceptual overview of Project Grievance Redress Mechanism. ...................... 110

xiii

xiv

EXECUTIVE SUMMARY Introduction The Asian Development Bank (ADB) is proposing to finance the Shanxi Energy Efficiency and Environmental Improvement Project (the Project) in the People’s Republic of China (PRC). This report is the Project Initial Environmental Examination (IEE). It has been prepared under the ADB Project Preparatory Technical Assistance Project 7736: Shanxi Energy Efficiency and Environment Improvement Project (PPTA 7736), which undertook the technical, environmental, financial, social, and economic due diligence for the proposed Project. Project Description and Implementation Arrangements The proposed Project will improve energy efficiency and reduce emission of greenhouse gases (GHG) and other pollutants in Shanxi Province by introducing district heating in four secondary cities (the Jinzhong, Licheng, Qin and Zhongyang subprojects) and expanding the coal mine methane (CMM) distribution network in a fifth city (the Liulin subproject). The components of the Project include i) establishing or upgrading district heat generating stations (HGSs) using large high-efficiency pulverized coal (PC) or chain gate stoker (CGS) boilers equipped with flue gas desulfurization (FGD) scrubbers and filter baghouse emission control, installation of pipelines, building heat exchange stations (HESs), the design, building and use of computer monitoring and control systems throughout, and the decommissioning of existing small inner-city low-efficiency and highly polluting coal-fired boilers and household stoves; ii) construction and installation of a CMM gas supply and distribution network for domestic and commercial use year round, and district heating in winter; and, iii) institutional strengthening for the executing agency (EA), subproject implementing agencies (IAs), and the Project Management Office (PMO). Environmental Assessment Process The proposed Project has been classified by ADB as environment category B, requiring the preparation of a project IEE. This IEE is based on domestic environmental assessments prepared for each of the subprojects supported by site visits, stakeholder consultations and additional surveys undertaken by the PPTA 7736 environmental specialists. The IEE utilizes PRC environmental standards or the World Bank Group’s Environment, Health and Safety Guidelines (EHS Guidelines), whichever are more stringent. The domestic subproject assessments are in compliance with the PRC environmental assessment regulatory framework. Under the relevant PRC laws, regulations and guidelines, three subprojects were classified as Category A, requiring the preparation of an Environmental Impact Assessment (EIA), and two were classified as Category B, requiring the preparation of a tabular EIA report. All subproject assessments have been officially approved. Approval of EIAs was undertaken by the Shanxi Provincial Environmental Protection Bureau (EPB), while approval of the tabular EIAs was undertaken by the relevant city EPBs. The Ruiguang Combined Heat and Power (CHP) Plant, which is the heat supply source for the Jinzhong Subproject, is considered an associated facility. A PRC Ministry of Environmental Protection (MEP) approved EIA report for the CHP has been reviewed as part of the Jinzhong due diligence study. Due diligence has also been undertaken for the secondary networks which

xv

will deliver the heat from the district heating subprojects to customers; existing facilities at the Zhongyang subproject; and the coal mines and extraction systems at the Liulin Subproject. Environmental Setting Shanxi Province is located in north-central PRC and borders Hebei Province to the east, Henan Province to the south, Shaanxi Province to the west, and Inner Mongolia to the north. The capital of the province is Taiyuan. Shanxi has a temperate continental semi-arid climate and the subproject areas experience long cold winters and relatively humid and rainy summers. Annual rainfalls average from 450 to 550 mm and minimum and maximum recorded temperatures range from -30 to 38 oC. The Zhongyang and Liulin subprojects are located in the west of the province within the relatively narrow valley plains of the Lvliang Mountains; the Jinzhong subproject is located on the flatter central valley area of the province, and the Licheng and Qin subprojects are on the high broader valleys of the southeastern Taihang Mountains. The subproject sites and surrounding areas are heavily modified agricultural and mixed urban/industrial landscapes. Most natural vegetation cover has been removed, and land area not currently under cultivation is sparsely vegetated with shrubs and grasses. No rare, endangered or threatened floral or faunal species are known to exist in the subproject areas. Based on monitoring undertaken for the domestic environmental assessments, all subproject areas were within PRC ambient air quality standards for SO2 and NO2, though several subprojects showed levels of TSP and PM10 which exceeded PRC standards. High particulate levels in winter months are likely due in part to emissions from inefficient inner-city small heating boilers and family stoves with minimal or no emission control systems. Shanxi is rich in energy and metal resources, particularly in terms of coal and aluminum. Proven coal reserves spread over more than 90 counties amount to 300 billion tons, one third of the proven reserves in the PRC. The industries in the province are predominantly related to mining, coking, and metallurgy, and cause considerable air, water and soil pollution. Shanxi has a population of 35.7 million (2010) of whom 54% are rural. It is a comparatively underdeveloped province with a nominal GDP per capita of $3,173 in 2009, equivalent to 86% of the national average ($3,678), ranking 21st among PRC’s 31 provinces. 35 of Shanxi’s 85 counties (41.2%) are classified as poverty counties, in which a majority or substantial part of their population exist below the current PRC national poverty level of 1,000 CNY per capita annual income. Alternative Assessment A range of district heat source alternatives were assessed including renewable sources, natural gas, heat from existing or planned combined heat and power plants (CHPs), large heat-only coal-fired boilers, and present heat sources using small low-efficiency coal-fired boilers and single family stoves.

- Renewable energy sources are not financially or technically feasible for district heating in Shanxi.

- Existing small, heat-only coal-fired boilers are now rarely proposed by local governments because they have minimal pollution control devices and are highly polluting, have low heat efficiency, and promoting their use is counter to central government policies and programs aimed at reducing energy intensity and improving environmental conditions.

xvi

- Natural gas is a preferred option if available due to its low emission levels compared to other fossil fuels. However it is not feasible in terms of resource availability in the Project area and financial viability, with the exception of CMM at Liulin.

- CHP stations are highly efficient and are the preferred heat source for district heating after natural gas. However, the PRC Government approves only large high-efficiency power generating stations and is closing smaller and less efficient stations. The Jinzhong Subproject will be able to access heat from a new CHP station financed and built by other owners. However, the heating demand in the remaining subproject areas is too small to justify building a CHP facility large enough to gain government approval.

- Large, heat-only coal-fired boilers are widely used for space heating in northern China and are the preferred heating source after natural gas and CHPs. Large, heat-only coal-fired boilers are highly efficient; the proposed PC boilers have an 88% combustion efficiency and the CGS boilers have an 80% efficiency compared to 65% for new small boilers. With appropriate emission control systems such boilers will fully comply with PRC and international emission standards.

The alternative assessment concluded that natural gas and CHPs, if available, are the preferred heat source for district heating in the subproject cities. The Liulin subproject will be able to take advantage of available clean energy CMM sources, and the Jinzhong Subproject will be able to source heat from a new CHP plant in Jinzhong County financed and built by other owners. However in the Licheng, Qin and Zhongyang subprojects there are no available CHPs and the preferred heat source for these subprojects is large high-efficiency PC or CGS boilers. Anticipated Impacts and Mitigation Measures Preconstruction Phase Preconstruction (siting) impacts are related to land acquisition. The siting of the Liulin subproject physical works will necessitate some minor land acquisition, while the remaining subprojects have no land acquisition and resettlement as they will be implemented on government-reserved land or existing premises. No land will be temporarily occupied, and no houses and buildings will be demolished. In total 1.65 ha of collectively owned land will be permanently acquired during project construction, affecting 4 households and 17 persons. To mitigate these impacts a separate Land Acquisition Plan (LAP) has been prepared in accordance with PRC and ADB requirements. Construction Phase Potential construction phase impacts are associated with soil erosion, increased noise and dust levels, liquid and solid wastes, and safety risks to community members and workers. It is important to note there will be no worker camps, as workers can readily access the sites by road and stay in off-site accommodation. Impacts on flora and faunae are minimal due to the degraded state of the subproject locations. There are no reports of physical cultural resources in or around any of the sites, though a chance find procedure will be put in place. To mitigate potential health and safety risks to workers and local communities, prior to the start of civil works construction-phase occupational and community health and safety plans HSPs will be developed that are consistent with the relevant requirements of PRC law and with good international practice. For the Liulin subproject there are additional fire and explosion risks posed by working with CMM, and special attention will be paid to ensuring a safe working environment. Overall, environmental impacts associated with the construction phase are expected to be localized and short term, and can be effectively mitigated through the application

xvii

of good construction and housekeeping practices and the implementation of the community and occupational HSPs. Operation Phase Adverse environmental impacts from the Project during operation include air pollution from the boiler stacks and from coal handling; noise; industrial and domestic wastewaters; and solid wastes including domestic waste, waste from the decommissioning of existing small boilers, and fly ash, bottom ash and FGD byproducts. To mitigate potential impacts from stack emissions i) high efficiency PC or CGS boilers burning low sulfur content coal will be utilized; ii) boilers will be equipped with dual alkali FGD scrubbers and filter baghouse emission control systems to reduce design emission levels to well within PRC standards and EHS Guidelines; and iii) stack height will meet PRC standards and international good practice. Air quality dispersion modeling utilizing AERMOD, a steady-state atmospheric dispersion model designed for dispersion of air pollutant emissions from stationary industrial sources, was undertaken through the domestic environmental assessments for each of the subprojects that will be constructing HGSs. The modeling predicted 24-hour ground level concentrations (GLCs) of PM10, SO2 and NO2 over a 10 km by 10 km area centered on each HGS. The modeling used the subproject design stack emission levels and the worst case meteorological conditions for atmospheric dispersion drawn from over 3 years of metrological data, and was run at each subproject for one full heating season. The results indicate that the maximum predicted emission concentrations are well below both PRC ambient standards and WHO guidelines. Maximum predicted concentrations for PM10 are only 8% of the PRC ambient standard (Qin Subproject); maximum predicted concentrations for SO2 are only 10% of the PRC standard and 12% of the WHO guideline (Qin and Zhongyang subprojects); and the maximum predicted NO2 concentration is 47% of the PRC standard (Licheng Subproject). Further, these worst case situations are expected to occur from only 3.3 to 4.6% of the time during each heating season. Nonetheless, ambient monitoring will be undertaken during the winter heating seasons to ensure that the HGSs do not lead to significant reductions in localized air quality. Fugitive emissions from coal handling and transportation will be mitigated through the use of dust suppression systems and good management practices. To mitigate noise impacts from boiler operation the HGSs design will incorporate layout and noise control techniques such that PRC industrial boundary noise standards (GB12348-2008) are complied with. Noise control techniques will also be used in heat exchange systems and pressure reducing stations. To mitigate potential impacts from inappropriate wastewater discharge i) domestic wastewater will be directed to septic systems; ii) site runoff will be directed to sedimentation basins and will be reused if possible such as for dust control; iii) wastewater from wet fly-ash storage and coal spraying will be recycled to the extent possible to conserve water, and remaining wastewater will be directed to sedimentation basins; iv) areas with oily wastewater discharges will be equipped with oil-water separators before the sedimentation basins; v) procedures will be put in place to ensure appropriate storage and handling of fuels, oils, solvents and other hazardous materials. Domestic and industrial solid wastes will be collected and recycled to the extent possible and then disposed at licensed landfills; all fly ash, bottom ash and FGD byproducts will be stored on

xviii

site and sold to the local construction industry to be used as a raw material for building and road construction. No permanent on site ash disposal will be allowed. Once the subprojects begin operation 275 existing small boilers will be decommissioned by the IAs overseen by the relevant local EPBs; waste materials will be reused, recycled or appropriately disposed, and sites will be rehabilitated if required. Closure of the boilers will result in the loss of 401 jobs, including 80 permanent full time workers and 301 seasonal workers. A Labor Retrenchment Plan (LRP) has been prepared to cover the affected workers. The IAs have agreed to ensure that all full time employees affected by the closure of small boilers will be re-employed in a timely manner; that seasonal workers will be re-employed where possible; and that employment training will be arranged for all affected workers. To mitigate potential health and safety risks to workers and local communities, prior to start-up operation-phase occupational and community HSPs will be developed. As with the construction phase, special attention will be paid to addressing risks posed by working with CMM in the Liulin subproject. Project Benefits Operation of the Project is expected to result in substantial environmental and safety benefits resulting from energy efficiency improvements, reductions in emissions from coal burning, and extraction and utilization of CMM. Project operation will i) result in the closure of 275 small inefficient and polluting inner-city coal-fired boilers and 4,000 household coal-fired stoves; ii) reduce the transportation of coal through urban areas; iii) result in energy savings of an estimated 85,390 tons of coal equivalent (tce) per year; iv) substantially improve local air quality through the estimated annual reduction of emission of 4,121 tons of sulfur dioxide (SO2), 16,234 tons of total suspended particulates (TSP), 6,494 tons of particulate matter (PM10), and 1,942 tons of nitrogen oxides (NOx); v) provide a global public good by reducing the annual emission of 254,379 tons of carbon dioxide (CO2), a greenhouse gas; and vi) improve the safety of miners. In addition, the Project will have significant positive socioeconomic impacts. It will provide cleaner and reliable centralized heating services to 270,000 residents (of whom 133,000 are female), 51 schools and 17 hospitals. By providing cleaner and reliable heating services, the Project will i) reduce cases of respiratory diseases and carbon monoxide poisoning through improved indoor and outdoor air quality; ii) improve living conditions and school environment and hospital conditions during winter; iii) reduce heating expenditures by switching from low-efficiency individual household stoves and decentralized heating systems to centralized energy efficient heating systems; and iv) increase income through job opportunities created during construction and operation. Information Disclosure, Consultation, and Participation Three rounds of environment related disclosure and public consultation have been undertaken, including the public posting of project information notices in prominent government offices related to the IAs, the local EPB offices, in local newspapers and on relevant websites; disclosure of the domestic environmental assessments via EPB and other websites; distribution of 60 to 100 questionnaires per subproject to affected persons; and public and stakeholder consultation meetings. Tabulated questionnaire results indicate that 86%–95% of the consulted public are supportive of the Project. Concerns raised focused on noise and air pollution, and have been addressed through environmental mitigations. Project information will also be provided to beneficiaries at regular intervals during the planning and design phase, including information on the health hazards of using coal heating and cooking stoves;

xix

Grievance Redress Mechanism A grievance redress mechanism (GRM) has been developed for receiving, evaluating and addressing Project-related complaints from affected peoples. The Project GRM consists of 4 escalating stages, with an emphasis on addressing problems locally on site if possible, and escalating to the next management level if a resolution cannot be reached. The GRM includes specific time lines for responding to complaints and taking actions. Environmental Management Plan The Project environmental management plan (EMP) includes mitigation measures; environmental monitoring and reporting; EMP updating; roles and responsibilities; and, capacity building. The EMP will be updated during engineering design and incorporated in the bidding documents and civil works contracts. The EMP will also be updated if necessary during implementation at the same time as the construction and operation phase occupational and community health and safety plans (HSPs) are prepared, or if the environmental monitoring identifies significant impacts or issues that are not appropriately being addressed. Mitigation Measures Construction and operation phase mitigation measures are summarized in the EMP, along with timeframe, lead responsibility for implementation and source of funds. Many of the mitigation measures are associated with good construction and housekeeping practices, others are related to good design. Costs for the mitigation measures are typically included in the Project base costs. Environmental Monitoring The Environmental Monitoring Plan (EMoP) indicates environmental safeguards monitoring (EMP monitoring), which will be undertaken by the Project implementation agencies and their contractors in order to ensure proper environmental impact monitoring of the project. SPG holds final responsibility, while the PMO is responsible for ensuring the environmental safeguards monitoring (EMP monitoring) to be properly conducted. Reporting Project environmental safeguards monitoring (EMP monitoring) reports will be submitted to ADB semi-annually during construction and annually operation. These reports will be prepared by a Project Implementation Consultant Environment, Health, and Safety specialists (PIC EHS specialists), under the supervision of the PMO. Project environmental safeguards monitoring (EMP monitoring) reports can be incorporated into the overall Project Performance Monitoring reports and submitted to ADB, the relevant city level EPBs and the Shanxi EPB. If the Project environmental monitoring report has identified a weakness or deficiency in the implementation of the EMP that has already been addressed, the Project environmental monitoring report will explain the manner by which the issue was resolved. Roles and Responsibilities Key roles and responsibilities with respect to EMP implementation are as follows:

xx

- The Shanxi Provincial Government (SPG) will be the EA with overall responsibility for the execution of the Project.

- The Project Management Office (PMO) will be responsible for overseeing the implementation of subprojects, including ensuring environmental compliance, monitoring and reporting. The PMO is expected to have dedicated environment staff.

- The five subproject Implementation Agencies (IAs) will have direct responsibility for the implementation of the respective subprojects. The IAs will establish Environment, Health and Safety (EHS) units which will have direct responsibility in their respective subprojects for i) EMP implementation, including mitigation measures and health and safety plans; ii) coordination with PIC EHS specialists and EPB staff as they conduct compliance inspection and ambient environmental monitoring; iii) preparation of subproject environmental monitoring reports; and iv) addressing any environmental issues as they arise.

- Consulting services, training and equipment will be provided to the EA, the PMO and the five IAs in the form of a Project Implementation Consultant (PIC) to assist them in i) supervising project management and implementation to ensure successful project completion, and ii) capacity building. The PIC will include international and domestic EHS Specialists who will be responsible for i) providing training on construction and operation phase EMP implementation, including mitigation implementation and environmental monitoring and reporting; ii) conducting environmental compliance monitoring inspections in conjunction with PMO environmental staff; iii) developing construction and operation phase community and occupational HSPs, and providing training on their implementation; iv) preparing semi-annual environmental monitoring reports; and v) assisting PMO environmental staff to respond to any environmental issues that may arise, including complaints received through the GRM.

- The three city-level EPBs will be responsible for i) undertaking the ambient monitoring presented in the Environmental Monitoring Plan (EMoP); ii) reviewing the Project semi-annual environmental monitoring reports and, if appropriate, directing the PMO and IAs to address any subproject deficiencies; iii) coordinating with the IAs on waste management and decommissioning of existing small boilers; and iv) participating in the GRM. The EPBs will also be invited to participate in subproject environmental compliance monitoring inspections.

- ADB is responsible for monitoring and supervising the overall environmental performance of the Project. ADB will also disclose the Project environmental assessment report and subsequent monitoring reports on its website.

Capacity Building The PIC EHS Specialists will be responsible for providing on the job training and capacity building to PMO and IA staff in the areas of environmental mitigation implementation and environmental monitoring (ambient monitoring and compliance inspections). The PIC EHS Specialists will also be responsible for the development of construction and operation phase subproject occupational and community HSPs and for providing training on the plans prior to their implementation. EMP Budget The EMP budget is estimated at $409,200, including $225,000 for environmental safeguards monitoring (EMP monitoring) and $147,000 for PIC EHS Specialists. It should be noted that many of the EMP mitigation measures are associated with good construction and housekeeping practices, and costs for the measures are already included in the Project base costs.

xxi

Conclusion It is concluded that the Project’s potential construction and operation phase adverse environmental impacts can be adequately mitigated through appropriate mitigation measures as outlined in the subproject domestic environmental impact assessments and this IEE. Overall, the Project is expected to result in environmental and socioeconomic benefits that significantly outweigh potential negative impacts.

1

I. INTRODUCTION

A. The Proposed Project

1. The Asian Development Bank (ADB) is proposing to finance the Shanxi Energy Efficiency and Environmental Improvement Project (the proposed Project) in the People’s Republic of China (PRC). The proposed Project will improve energy efficiency and reduce emission of greenhouse gases (GHG) and other pollutants in Shanxi province by introducing district heating in four secondary cities and expanding the coal mine methane (CMM) gas distribution network in a fifth city. 2. The proposed Project consists of five subprojects located in western, central, and southeastern Shanxi province (Figure 1):

i. Jinzhong Urban District Heating Network Subproject (Jinzhong Subproject); ii. Licheng County District Heating Subproject (Licheng Subproject); iii. Qin County District Heating Subproject (Qin Subproject); iv. Zhongyang Urban District Heating Subproject (Zhongyang Subproject); v. Liulin CMM/CBM Transmission and Distribution Subproject (Liulin Subproject).

B. Report Purpose

3. ADB’s environmental safeguard requirements are presented in Appendix 1 (Safeguard Requirements 1: Environment) of the Safeguard Policy Statement (SPS).1 The proposed Project has been classified by ADB as Environment Category B; an Initial Environmental Examination (IEE) including an environmental management plan (EMP), is required. 4. This report forms the IEE for the proposed Project in compliance with the ADB’s SPS requirements. It has been prepared under the ADB Project Preparatory Technical Assistance Project 7736: Shanxi Energy Efficiency and Environment Improvement Project (PPTA 7736), which undertook the technical, environmental, financial, social, and economic due diligence for the proposed Project. C. Structure of IEE 5. This report is structured as follows:

Executive Summary Summarizes critical facts, significant findings, and recommended actions. I Introduction Introduces the proposed Project, subprojects, report purpose and approach to IEE preparation. II Policy, Legal, and Administrative Framework Discusses PRC’s and ADB’s environmental assessment legal and institutional frameworks.

1 ADB. 2009. Safeguard Policy Statement. Available at: www.adb.org/Documents/Policies/Safeguards/default.asp.

The SPS became effective on 20 January 2010.

2

Figure 1: Location of subproject sites, Shanxi Energy Efficiency and Environment Improvement Project, PRC.

3

III Description of the Project

Describes the Project type, location, impacts and outcomes, outputs, rationale, special elements, cost, budget and implementation schedule; and presents detailed subproject descriptions. IV Description of the Environment Describes relevant physical, biological, and socioeconomic conditions within the Project area of influence. V Anticipated Environmental Impacts and Mitigation Measures Describes impacts predicted to occur as a result of the Project, and identifies suitable mitigation measures. VI Analysis of Alternatives Presents an analysis of alternatives of various Project aspects. VII Information Disclosure, Consultation, and Participation Describes the process undertaken during Project design and preparation for engaging stakeholders; summarizes concerns raised and actions taken to address concerns; and describes planned information measures for carrying out consultation with affected people during Project implementation. VIII Grievance Redress Mechanism Describes the Project grievance redress mechanism (GRM) for resolving complaints. IX Project Risk Assessment and Assurances Presents Project risks, management measures to address them, and Project assurances. X Conclusion and Recommendation Presents conclusions drawn from the assessment and recommendations. Appendices Appendix 1 presents the environmental management plan (EMP), including required construction and operation phase environmental mitigation measures, an environmental monitoring plan (EMoP), occupational and community health and safety plans, reporting requirements, and environmental, health and safety capacity building. Additional appendices provide references and supporting documentation and information.

D. Approach to IEE Preparation

6. This report has been prepared based on domestic environmental assessments prepared for each of the subprojects in compliance with the PRC’s environmental assessment regulatory framework (see Section II.B.2 for additional information on the domestic subproject environmental assessment process), supported by site visits, stakeholder consultations and additional surveys undertaken by the PPTA 7736 environmental specialists. Specifically, key data sources are as follows:

4

Project Description - Subproject Feasibility Study Reports (FSRs) prepared by qualified domestic

feasibility study consultants. - Domestic subproject EIA reports prepared by qualified domestic EIA consultants. - Project preparation undertaken by the PPTA 7736 team, including due diligence

work undertaken by the energy and coal bed methane consultants. Terrestrial Ecological Resources

- Subproject ecological field surveys conducted by domestic EIA consultants from 2008 to 2011.

- Subproject ecological field surveys conducted by the PPTA environmental consultants from March to October 2011.

Topography, Geology, Soil - Subproject field surveys conducted by domestic EIA consultants from 2008 to

2011. - Subproject field surveys conducted by the PPTA environmental consultants from

March to October 2011.

Water Resources - Data collected by the relevant subproject EIA consultants from available

databases (covering up to 8 previous years).

Climate - Data collected by the relevant subproject EIA consultants from available

databases (covering up to 8 previous years).

Air Quality baseline - Data collected by the relevant subproject EIA consultants from available existing

databases (covering from to 3 to 8 previous years). - Data from local EPB monitoring stations in the subproject areas. - Subproject specific air quality monitoring (PM10, SO2, and NO2) undertaken by

the relevant city-level EPBs on behalf of the relevant subproject EIA consultants.

Background Noise - Data collected by the relevant subproject EIA consultants from available

databases (covering from 3 up to 8 previous years). - Subproject specific noise monitoring undertaken by the relevant city-level EPBs

on behalf of the subproject EIA consultants.

Air Quality Modeling - Dispersion modeling undertaken for the four subprojects with HGSs utilizing

AERMOD, a steady-state atmospheric dispersion model designed for short-range dispersion of air pollutant emissions from stationary industrial sources.

Socioeconomic Status

- Socioeconomic surveys and data collected by the domestic EIA consultants and the PPTA 7736 social specialists.

Public Consultation and Information Disclosure

- Subproject information disclosure undertaken by the domestic EIA consultants in 2008, and in March to August 2011.

5

- Subproject public consultations undertaken by the domestic EIA consultants in 2008, and in March to August 2011.

- Subproject public consultation meetings undertaken by the PPTA consultants in May to July 2011.

Energy Efficiency and Emissions Reduction

- Coal saving data sets from domestic feasibility study results and research results from the PPTA energy consultants.

- Analysis on air pollutant emission reduction conducted by the domestic EIA consultants and PPTA environmental consultants using methodologies recommended by the PRC Ministry of Environmental Protection (MEP).

7. Secondary data sources are presented in Appendix 2.

6

II. POLICY, LEGAL AND INSTITUTIONAL FRAMEWORK

A. ADB Environmental Assessment Requirements

1. Safeguard Policy Statement (SPS) 8. This report has been prepared in accordance with the ADB’s Safeguard Policy Statement (SPS) which governs the environmental and social safeguards of ADB's operations. Environmental Safeguard Requirements 1 (SR1) of the SPS outlines the requirements that borrowers/clients are required to meet when delivering environmental safeguards for projects supported by the ADB. These requirements include assessing impacts, planning and managing impact mitigations, preparing environmental assessment reports, disclosing information and undertaking consultation, establishing a grievance mechanism, and monitoring and reporting. SR1 also includes specific environmental safeguard requirements pertaining to biodiversity conservation and sustainable management of natural resources, pollution prevention and abatement, occupational and community health and safety, and conservation of physical cultural resources.2 9. At an early stage in the project cycle (typically the project identification stage) ADB will screen and categorize the proposed project based on the significance of potential project impacts and risks. A project’s environment category is determined by the category of its most environmentally sensitive component, including direct, indirect, induced, and cumulative impacts. Project screening and categorization are undertaken to:

i) reflect the significance of the project’s potential environmental impacts; ii) identify the type and level of environmental assessment3 and institutional

resources required for the safeguard measures proportionate to the nature, scale, magnitude and sensitivity of the proposed project’s potential impacts; and,

iii) determine consultation and disclosure requirements.

10. Rapid environmental assessment (REA) checklists are used to assist in the screening and categorization. ADB assigns a proposed project to one of the following categories:

i) Category A. Proposed project is likely to have significant adverse environmental impacts that are irreversible, diverse, or unprecedented; impacts may affect an area larger than the sites or facilities subject to physical works. A full-scale environmental impact assessment (EIA) including an environmental management plan (EMP), is required.

2 Physical cultural resources are defined as movable or immovable objects, sites, structures, groups of structures,

and natural features and landscapes that have archaeological, paleontological, historical, architectural, religious, aesthetic, or other cultural significance. Physical cultural resources may be located in urban or rural settings and may be above or below ground or under water. Their cultural interest may be at the local, provincial, national, or international level.

3 'Type' refers to strategic environmental assessment (SEA), project environmental assessment, or compliance audit;

'Level' refers to a full environmental impact assessment for Category A projects, and an initial environmental examination for Category B projects.

7

ii) Category B. Proposed project’s potential environmental impacts are less adverse and fewer in number than those of category A projects; impacts are site-specific, few if any of them are irreversible, and impacts can be readily addressed through mitigation measures. An initial environmental examination (IEE), including an EMP, is required.

iii) Category C. Proposed project is likely to have minimal or no adverse

environmental impacts. No EIA or IEE is required although environmental implications need to be reviewed.

iv) Category FI. Proposed project involves the investment of ADB funds to, or through, a financial intermediary.

11. It is important to note that environmental categorization is an ongoing process and is subject to change as more detailed information becomes available as the project preparation proceeds. 12. During the design, construction, and operation of a project the SPS requires the borrower to follow environmental standards consistent with good international practice (GIP), as reflected in internationally recognized standards such as the World Bank Group’s Environment, Health and Safety Guidelines (hereafter referred to as the EHS Guidelines).4 With respect to the proposed Project the most applicable EHS Guidelines are General Environmental, Health, and Safety Guidelines (2007); Environmental, Health, and Safety Guidelines for Thermal Power Plants (2008); and Environmental, Health, and Safety Guidelines for Mining (2007). These guidelines contain performance levels and measures that are normally acceptable and applicable to projects. When host country regulations differ from these levels and measures, the borrower/client is to achieve whichever is more stringent. If less stringent levels or measures are appropriate in view of specific project circumstances, the borrower/client is required to provide full and detailed justification for any proposed alternatives. 13. The SPS also requires due diligence of associated facilities (AFs). These are facilities that are not funded by the project but whose viability and existence depend exclusively on the project, and whose goods or services are essential for successful operation of the project. For example, a transmission line for a power project that has no other power grid connection and which is constructed using non-project funds is an example of an AF. Without the transmission line the power project will not be able to fulfill its function; and the viability of the transmission line depends entirely on the power plant which it serves. 14. AFs are sometimes beyond the control and influence of the borrower/client. However, AFs require due diligence on the part of both the borrower/client and ADB to determine the level of risk to the environment and affected people, and assess if the facility's environmental management is generally consistent with ADB’s safeguard objectives and requirements. Due diligence may be undertaken through a review of documentation or a site visit. ADB may choose not to fund a project if due diligence shows that associated facilities are not under the influence of the borrower/client and their practices are not consistent with ADB’s safeguard objectives and

4 World Bank Group, 2007. Environmental, Health, and Safety General Guidelines. Washington, DC. The EHS

Guidelines contain discharge effluent, air emissions, and other numerical guidelines and performance indicators as well as prevention and control approaches that are normally acceptable to ADB and are generally considered to be achievable at reasonable costs by existing technology. The EHS Guidelines are available at: http://www.ifc.org/ifcext/sustainability.nsf/Content/EHSGuidelines.

8

requirements. However, it is international good practice to first explore with the facility operator/owner whether the facility can be brought into compliance, and if so to agree on required actions and a time-line for their implementation.

2. Project Environmental Categorization 15. The Project has been classified by ADB as Environment Category B, requiring the preparation of an IEE including an EMP. B. PRC’s Environmental Assessment Requirements 16. This IEE and the subproject domestic EIAs upon which it is based have also been prepared in accordance with PRC’s national and local environmental legal and institutional framework and environmental assessment requirements.

1. PRC Environmental Legal and Regulatory Framework 17. The environmental management system in the PRC consists of a well-defined hierarchy of regulatory, administrative and technical institutions. At the national level the People’s Congress has the authority to proclaim national environmental laws; the State Council promulgates national environmental regulations; and the Ministry of Environmental Protection (MEP) issues environmental guidelines. The provincial and local governments can also issue provincial and local environmental regulations and guidelines in accordance with the national ones. In addition, national and local environmental standards and national and local five-year environmental protection plans form an important part of the legal framework. 18. Environmental assessment procedures have been established in the PRC for over 20 years. Relevant PRC laws are summarized below:

i) PRC Law on Environmental Impact Assessment, 2003. ii) PRC Law on Environmental Pollution Prevention and Control of Solid Wastes,

1995, amended in 2005. iii) PRC Water Law, 2002. iv) PRC Law on Air Pollution Prevention and Control, 2000. v) PRC Law on Ambient Noise Pollution Prevention and Control, 1997. vi) PRC Law on Water Pollution Prevention and Control, 1984, amended in 1996. vii) PRC Law on Water and Soil Conservation, 1991. viii) PRC Law on Environmental Protection, 1989.

19. Relevant environmental assessment regulations and guidelines include:

i) Regulation on Environmental Protection of Capital Construction Projects, State Council, 1998.

ii) Regulation on Implementation of the PRC Law on Water and Soil Conservation, State Council, 1993.

iii) Management Guideline on EIA Categories of Construction Projects, Ministry of Environmental Protection, 2008.

iv) Guideline on Jurisdictional Division of Review and Approval of EIAs for Construction Projects, State Environmental Protection Administration, 2003.

v) Guideline on Jurisdictional Division of Review and Approval of EIAs for Construction Projects, 2003.

9

vi) Management Guideline on Preparation of Water and Soil Conservation Plans for Construction Projects, Ministry of Water Resources, State Planning Commission, National Environmental Protection Agency, 1994.

vii) Management Guideline on Preparation, Submission, Review and Approval of Water and Soil Conservation Plans of Construction Projects, Ministry of Water Resources, 1995.

viii) Guideline on Water and Soil Conservation for Highway Projects, Ministry of Water Resources and Ministry of Communications, 2001.

ix) Interim Guideline on Public Participation in EIA, State Environmental Protection Administration, 2006.

x) Technical Guideline on EIA, State Environmental Protection Administration, 2003. xi) (HJ/T 2.1-93) Guideline on EIA Review and Approval Procedure for Construction

Projects, State Environmental Protection Administration, 2006. xii) HJ/T2.-1-93: Technical Guideline for Environment Impact Assessment (General

Provisions). xiii) HJ2.2-2008: Technical Guideline for Environmental Impact Assessment of

Atmospheric Environment (replaces HJ/T2.-2-93: Technical Guideline for Environment Impact Assessment (Air Quality)).

xiv) HJ/T2.-3-93: Technical Guideline for Environment Impact Assessment (Water Quality)

xv) JTJ005-96: Guideline for Environmental Impact Assessment of Highway Construction Projects.

xvi) HJ/T19-97: Technical Guideline for Environmental Impact Assessment (Non-Polluting Ecological Impact).

xvii) HJ/T2.-4-95: Technical Guideline for Environmental Impact Assessment (Acoustical Environment).

xviii) HJ/T19-1997: Technical Guideline for Environmental Impact Assessment-(ecological impact).

20. Relevant Shanxi provincial regulations include:

i) Shanxi Provincial Environmental Protection Regulations (Amended). ii) Shanxi Provincial Air Pollution Prevention and Control Regulations. iii) Shanxi Provincial Industrial Solid Waste Pollution Prevention and Control

Regulation (Amended). iv) Implementation of State Council’s Decisions on Certain Concerns about

Environmental Protection. v) Shanxi Province Water Pollution Prevention and Control Regulations Regarding

Danhe River Basin. vi) Shanxi Province Temporary Rewarding Rules for Reporting Environmental Law-

Violating Behavior. vii) Shanxi Province Temporary Guidance for Resolving Environmental Pollution

Dispute. viii) The Supplement Notice of Enhancing Construction Project Environmental

Protection Administration. ix) Administrative Punishment for Violating Environmental Protection Laws and

Regulations.

2. PRC Environmental Assessment Process 21. Article 16 of the PRC EIA Law (2003) stipulates that an EIA is required for any capital construction project producing significant environmental impacts so as to provide a

10

comprehensive assessment of potential environmental impacts. The MEP Management Guideline on EIA Categories of Construction Projects (2008)5classifies projects into one of three categories:

(i) Category A: Projects with significant adverse environmental impact; an Environmental Impact Statement (EIS) is required.

(ii) Category B: Projects with adverse environmental impacts which are of lesser degree and/or significance than those of Category A; a Tabular Environmental Impact Assessment Report (TEIAR) is required.

(iii) Category C: Projects unlikely to have adverse environmental impact; an Environmental Impact Registration Form (EIRF) is required.

22. The EIS and TEIAR under PRC EIA regulations are similar to an ADB Category A EIA report and Category B report IEE respectively, and the EIRF is equivalent to the ADB Category C. Under the PRC EIA Law (2003), public consultations are not required for TEIARs and EIRFs. 23. MEP Guideline on Jurisdictional Division of Review and Approval of EIAs for Construction Projects (2003) provides two prescribed lists of projects for which the EIAs will require review and approval. The responsibilities for review and approval of EIAs for construction projects not on the lists rest with provincial and municipal Environmental Protection Bureaus (EPBs). The guideline was amended in 2009 to include a list of construction projects for which EIAs will require review and approval by the MEP, and a list of construction projects for which EIAs will be delegated to provincial EPBs. 24. The Management Guideline on EIA Categories of Construction Projects (2008) provides detailed classifications of EIAs into 23 general categories and 198 subcategories on the basis of the nature of project (e.g., water resources development, agriculture, energy, waste management), scale of project (e.g., wastewater treatment plant with a capacity of 5,000 m3/d) and environmental sensitivity of the project site (e.g., protected nature and cultural areas).

3. Project Environmental Assessment Process 25. The proposed Project consists of five subprojects. Under the relevant PRC laws, regulations and guidelines, three subprojects were classified as Category A requiring the preparation of an EIA (Zhongyang, Licheng and Qin), and two were classified as Category B, requiring the preparation of a TEIAR (Jinzhong and Liulin). All subproject assessments have been officially approved. Approval of EIAs was undertaken by the Shanxi Provincial Environmental Protection Bureau (EPB), while approval of the tabular EIAs was undertaken by the relevant city EPBs (Table 1). 26. In addition, the Ruiguang Combined Heat and Power (CHP) Plant, which is the supply source of Jinzhong Subproject, is considered an associated facility. An MEP approved (2009) EIA report for the Ruiguang CHP has been reviewed as part of the CHP due diligence study (see Section III.J.1 and Appendix 4).

5 Amendment to the 2002 Management Guideline of Environmental Protection Categories of Construction Projects.

11

C. Environmental Standards

1. Relevant PRC Environmental Standards 27. The main applicable PRC national ambient environmental standards include:

i) Ambient Air Quality Standard (GB3095-1996), 1996. ii) Standard of Environmental Noise of Urban Area (GB3096-93), 1994. iii) Environmental Quality Standard for Surface Water (GB3838-2002), 2002. iv) Environmental Quality Standard for Soils (GB15618-1995), 1996.

Table 1: Status of approval of subproject domestic environmental assessments.

Subproject EIA Consultant Assessment Type

Assessment Approved By

Approval Status

Jinzhong Urban District Heating Network

Zhonghe New Energy Engineering Company (Taiyuan City)

TEIAR Jinzhong City Environmental Protection Bureau

December 2011

Licheng County District Heating

Shanxi Provincial Eco-environmental Research Center (Taiyuan City)

EIAS Shanxi Provincial Environmental Protection Department

November 2011

Qin County District Heating

Taiyuan Luojiahua Company (Taiyuan City)

EIAS Shanxi Provincial Environmental Protection Department

January 2012

Zhongyang Urban District Heating

Beijing Wanchi Environmental Science and Technology Firm (Taiyuan City branch)

EIAS Shanxi Provincial Environmental Protection Department

July 2009

Liulin CMM/CBM Transmission and Distribution

Beijing Wanchi Environmental Science and Technology Firm (Taiyuan City branch)

TEIAR Lvliang City Environmental Protection Bureau

November 2011

Source: PMO, City and Provincial EPBs. TEIAR = Tabular Environmental Impact Assessment Report; EIAS = Environmental Impact Assessment Statement

28. The main applicable national discharge environmental standards include:

i) Integrated Wastewater Discharge Standard (GB8978-1996), 1998. ii) Integrated Emission Standards of Air Pollutants (GB16297-1996), 1997. iii) Emission Standard of Air pollutants for Coal-Burning Oil-Burning Gas-fired Boiler

(GB 13271-2001).

2. ADB Policy on Environmental Standards 29. During the design, construction, and operation of a project the SPS requires the borrower to follow environmental standards consistent with good international practice (GIP), as reflected in internationally recognized standards such as the World Bank Group’s Environment,

12

Health and Safety Guidelines (hereafter referred to as the EHS Guidelines).6 These standards contain performance levels and measures that are normally acceptable and applicable to projects. When host country regulations differ from these levels and measures, the borrower/client is to achieve whichever is more stringent. If less stringent levels or measures are appropriate in view of specific project circumstances, the borrower/client is required to provide justification for any proposed alternatives.

3. Key Guidelines and Standards Utilized

a. Ambient Air Quality 30. Table 2 presents the relevant PRC Ambient Air Quality Standard (PRC GB 3095-1996) compared with relevant international guidelines. With the exception of SO2 the PRC 24-hour average ambient standards meet or exceed international (e.g. World Health Organization (WHO) and the United States Environmental Protection Agency (US EPA)) guidelines and are utilized in this report.7 In the case of SO2 both the PRC and the WHO standards are utilized.

b. Surface Water Quality 31. Table 3 presents the PRC Surface Water Environmental Quality Standard (GB3838-2002). The EHS Guidelines do not provide ambient surface water standards but state that wastewater discharges should not result in contaminant concentrations in excess of local ambient water quality criteria or, in the absence of local criteria, other sources of ambient water quality. Therefore the PRC surface water quality standards are utilized in this report.

c. Noise 32. Table 4 presents the relevant PRC Urban Noise Standards compared with relevant international guidelines from the WHO. The classes within the standards are not directly comparable, but PRC Class II standards exceed WHO Class II standards and are very close (within 5 dB(A)) to WHO Class I standards. PRC noise standards are utilized in this report.

d. Boiler Plant Emissions 33. Table 5 presents the relevant PRC Emission Standard of Air Pollutants for Coal-burning, Oil-burning, Gas-fired Boilers compared with relevant international standards (EHS Guidelines) for coal-fired boilers. With the exception of TSP, PRC standards meet or exceed the EHS Guidelines and are utilized in this report.

6 World Bank Group, 2007. Environmental, Health, and Safety General Guidelines. Washington, DC. The EHS

Guidelines contain discharge effluent, air emissions, and other numerical guidelines and performance indicators as well as prevention and control approaches that are normally acceptable to ADB and are generally considered to be achievable at reasonable costs by existing technology.

7 The EHS Guidelines refer to WHO ambient air quality guidelines.

13

Table 2: Relevant PRC Ambient Air Quality Standard (PRC GB 3095-1996) and

international guidelines. Pollutant Monitoring

Duration PRC Class II Standard8 (mg/Nm3)

International Standards Remarks

PM10 Annual Average 0.10 WHO 0.070 (Interim target-1) 0.050 (Interim target-2) 0.030 (Interim target-3) 0.020 (guideline) US EPA: No applicable standard

PRC standard close to WHO Interim target-1. However, annual averages are not used in this report.

24-hour Average 0.15 WHO: 0.150 (Interim target-1) 0.100 (Interim target-2) 0.075 (Interim target-3) 0.050 (guideline) US EPA: 0.15 mg/Nm3

PRC standard meets WHO Interim target-1, and US EPA standard

SO2 1-hour Average 0.500 No comparable standard 24-hour Average 0.150 WHO:

0.125 (Interim target-1) 0.050 (Interim target-2) 0.020 (guideline)

PRC standard close to WHO Interim target-1. Both standards will be referred to in this report.

Annual Average 0.060 No comparable standard NO2 1-hour Average 0.120 WHO:

0.20 PRC standard is more stringent than WHO

24-hour Average 0.080 No comparable WHO or US EPA standard

PRC 1 hour and annual average standards are more stringent or equivalent to WHO; PRC 8 hour standard should be considered acceptable.

Annual Average 0.040 WHO: 0.040

PRC standard is equivalent to WHO

Source: Unofficial translation of Chinese original.

8 The Chinese standards for ambient air quality (GB3095-1996) are separated into three grades:

- Grade I is for nature reserves, scenic spots and other areas in need of special protection; - Grade II is for: residential areas; commercial, transportation and residential mixed areas; cultural areas; and

general industrial areas specified in urban planning; as well as rural areas, and is the grade that applies to the subproject areas;

- Grade III areas are specific industrial zones. 

14

Table 3: PRC Surface Water Environmental Quality Standard (GB3838-2002). Parameter Standard for Category III Surface Water9 Temperature (°C) The maximum average weekly water temperature

variations caused by human activities should be ≤1 increase, and ≤2 decrease.

pH 6-9 Dissolved Oxygen 5 Permanganate Index 6 CODMn 20 BOD5 4 NH4-N 1.0 Total P 0.2 Total N 1.0 Cu 1.0 Zn 1.0 F- 1.0 Se 0.01 As 0.05 Hg 0.0001 Cd 0.005 Pb 0.05 Cr6+ 0.05 CN- 0.02 Volatilized Hydroxybenzene 0.005 Oil 0.05 Anionic Surfactant 0.2 S2- 0.2 Fecal coliform bacteria (num/L)(Number/L) ≤

10000

Source: Unofficial translation of Chinese original.

Table 4: PRC Urban Noise Standard (GB3096-93) and relevant international guidelines. PRC Standards

One Hour Leq dB(A) International Standards

One Hour Leq dB(A) Comparison

Class Day Night Day Night 0: special health zone 50 40 WHO Class

I: residential, institutional, educational: 55 WHO Class II: industrial,

WHO Class I: Residential, institutional, educational: 45 WHO Class II: Industrial,

Classes are not directly comparable, but PRC Class II standards exceed WHO Class II standards and are very close (within 5 dB(A) to WHO Class

I: mixed residential; and education areas

55 45

II: mixed with residence, commercial and industrial areas

60 50

III: industrial areas 65 55

9 The PRC Surface Water Environmental Quality Standard (GB3838-2002) classifies water bodies in China into five

categories by function: – Category I refers to water sources and national nature reserves; – Category II refers to Class 1 protection zones for drinking water sources, protection zones for valuable fish

and spawning grounds; – Category III refers to Class 2 protection zones for drinking water sources, general protection zones for fish

and swimming areas; – Category IV refers to general industrial water zones and water recreation areas where no direct contact

with humans occurs; and – Category V refers to agricultural water zones and scenic water areas.

Category III is applicable to rivers in the subproject areas.

15

IV: areas within 10 m on both sides of traffic roadways

70 55 commercial: 70

Commercial: 70

I standards. PRC standards are utilized in this report.

Source: Unofficial translation of Chinese original.

Table 5: Relevant PRC Emission Standard of Air Pollutants for Coal-burning, Oil-burning, Gas-fired Boilers (GB 13217-2001) and relevant international guidelines.

Parameter PRC Standard for Coal Burning Boilers for Heating

EHS Guidelines for Boilers>50 MW to <600 MW

Comparison

Stack Height >40 m, and must be 3 m higher than the height of buildings within a 200 m radius of the stack.

Design stack height according to Good International Practice (GIP) to avoid excessive ground level concentrations and minimize impacts, including acid deposition

PRC standard for small boilers with emission control systems should meet GIP

PM10 80 mg/Nm3 50 mg/Nm3 EHS guidelines exceed PRC standards; both will be referred to in this report.

SO2 900 mg/Nm3 900 – 1,500 mg/Nm3 PRC standards meet or exceed EHS guidelines

NOx 510 mg/Nm3 No PRC NOx

standards for small boilers, EHS guideline utilized in this report.

Source: Unofficial translation of Chinese original.

e. Industrial Noise Emissions

34. Table 6 presents the relevant PRC and international standards for noise at the boundary of an industrial facility. The classes within the standards are not directly comparable, but PRC Class II standards exceed WHO Class II standards and are very close (within 5 dB(A)) to WHO Class I standards. PRC noise standards are utilized in this report. 35. Table 7 presents the relevant PRC and international standards (US EPA, there no such WHO or EHS Guideline standards) for on-site construction noise. The PRC standards meet or exceed international guidelines and are utilized in this report.

Table 6: PRC industrial boundary noise standards and (GB12348-2008) and relevant international guidelines.

PRC Standards Leq dB(A)

International StandardsLeq dB(A)

Comparison

Class Day Night Day Night0: recuperation areas 50 40 WHO Class I:

residential, institutional, educational: 55

WHO Class I: Residential, institutional, educational: 45

Classes are not directly comparable, but PRC Class II standards exceed WHO Class II

I: mixed residential; and education areas

55 45

II: mixed with residence, commercial and

60 50

16

industrial areas WHO Class II: industrial, commercial: 70

WHO Class II: Industrial, Commercial: 70

standards and are very close (within 5 dB (A) to WHO Class I standards). PRC standards are utilized in this report

III: industrial areas 65 55 IV: areas within 10 m on both sides of traffic roadways

70 55

Source: Unofficial translation of Chinese original. Table 7: PRC noise standards for construction sites (GB12523-1990) and relevant

international guidelines. Activity Day Leq dB(A) Night Leq dB(A) International

Standards Leq dB(A)

Comparison

Earthworks 75 55

US EPA: 85 (day, 8 hour exposure)

PRC standards meet or exceed

international standards

Pile Driving 85 Banned Structural Works 70 55 Exterior and interior finishing

65 55

Source: Unofficial translation of Chinese original.

III. DESCRIPTION OF THE PROJECT A. Overview

1. Goals and Components 36. The proposed Shanxi Energy Efficiency and Environment Improvement Project will improve energy efficiency and reduce emission of greenhouse gases (GHG) and other pollutants in Shanxi province by introducing district heating in four secondary cities and expanding the coal mine methane (CMM) gas distribution network in a fifth city.10 37. The Project’s goals are to: i) improve the energy efficiency, quality and reliability of district heating systems; ii) improve the environmental performance of district heating systems by replacing small boilers and single-family heating stoves with modern, computer controlled combustion heat generating stations that will reduce the emission of greenhouse gases (GHG) and other pollutants; iii) use CMM for winter heating and possibly expand the use of CMM to provide cooling to commercial space in the summer; iv) maximize the benefits to the poor assuring that more poor residents have sufficient heating; and v) support the change to market-based heating tariff reforms. 38. The components of the Project include i) establishing or upgrading heat generating stations (HGSs); installation of pipelines; building heat exchange stations (HESs); the design, building and use of computer monitoring and control systems throughout; and the decommissioning of existing low efficiency polluting boilers; ii) construction and installation of a coal mine methane (CMM) gas supply system and a gas distribution network for domestic and commercial use year round, and district heating in winter; and, iii) institutional strengthening for the executing agency (EA), subproject implementing agencies (IAs), and the Project Management Office (PMO). 39. The Project will be implemented through four district heating subprojects and one CMM

10 Methane produced by coal is referred as coalbed methane (CBM) when it is released through wells, which are

drilled from the surface into underground coal seams, and coal mine methane (CMM)10 when it is released through mine shafts in connection with underground coal mining operations. In this document, the term CMM will be used to also include CBM.

17

distribution subproject located within three prefecture-level cities, Lvliang, Changzhi and Jinzhong (Shanxi is divided into eleven such prefecture-level cities/regions). Yuci District forms the urban core of Jinzhong City; however each of the remaining subproject counties and/or districts has its own urban center and for the purposes of this report are considered secondary cities. 40. Table 8 lists the subprojects, their locations and the names of the associated IAs. For the remainder of this report each subproject will be referred to by its short name found in the last column of Table 8. Table 9 provides selected design characteristics for each of the subprojects. 41. Figure 2 shows a typical existing HES; Figure 3 shows a typical low efficiency household level heating stove which will be decommissioned once the Project is operational; and Figure 4 shows a typical low efficiency community boiler which will be decommissioned once the Project is operational. 42. Collectively the five subprojects will deliver clean and efficient heating to 6.8 million m2 of building area through the generation and/or delivery of 456 MW of heat and the construction of 107.06 km of pipelines and 100 HESs. The CMM subproject includes (i) the capture 88.8 million m3 CMM gas per year; (ii) establishment of 100,000 m3 of storage tanks for production variation11; (iii) 12 km of low-pressure pipeline from the coal mines to the storage tanks; (iv) 31.1 km of medium pressure pipeline from the storage tanks to the pressure regulating stations (PRSs); and (v) 20 PRSs to deliver gas to the end-users. Once operational the Project is expected to decommission 275 small boilers with an aggregated capacity of 386 MW currently used for district heating.

Table 8: Subproject IAs, locations, and long and short names.

Implementing Agency Location Subproject Full Name Subproject Short Name

District Heating Subprojects

Jinzhong Ruiguang CHP Heat Supply Co. Ltd.

Yuci District, Jinzhong City

Jinzhong Urban District Heating Subproject

Jinzhong Subproject

Licheng County Wantong Heat Supply Co. Ltd.

Licheng County, Changzhi City

Licheng County District Heating Subproject

Licheng Subproject

Qin County Huayang Heat Supply Co. Ltd.

Qin County, Changzhi City

Qin County District Heating Subproject

Qin Subproject

Zhongyang Heating and Gas Supply Center

Zhongyang County, Lvliang City

Zhongyang Urban District Heating Subproject

Zhongyang Subproject

CMM Subproject

Liulin County Gasification Company

Liulin County, Lvliang City

Liulin CMM Transmission and Distribution Subproject

Liulin Subproject

Source: PPTA 7736 Subproject Feasibility Reports, 2011.

2. Heat Sources and Boiler Type 43. A number of alternatives were considered for the heat sources including renewable

11 Equal to about five full days of gas delivery at maximum demand.

18

energy, gas-fired boilers, combined heat and power (CHP) plant, and high-efficiency coal-fired boilers. Due diligence investigation showed that renewable sources of energy, such as solar and geothermal energy, are not feasible due to financial cost considerations and space limitations; and natural gas is not feasible in terms of resource availability and financial viability. CHPs, whenever possible, are the preferred heat source for district heating. A new CHP plant in Jinzhong, financed and built by other owners, will be the heat source for the Jinzhong subproject. For the Licheng, Qin and Zhongyang subprojects there are no available CHP sources and the preferred heat sources for these subprojects are large, high-efficiency pulverized coal (PC) or chain grate stoker (CGS) fired boilers. (For additional information on heat source and boiler alternatives, please see Chapter V). Boiler size was determined by the total heat load demand of the existing and new urban service areas in each subproject, plus a 15 to 20% safety margin.

3. Emission Control Systems 44. The boilers will be equipped with dual alkali flue gas desulfurization (FGD) scrubbers and filter baghouse emission control systems to reduce levels of sulfur dioxide (SO2) and particulate emissions to well within PRC and international emission standards. 45. Flue gas desulfurization (FGD) is a technology used to remove SO2 from the exhaust flue gases of fossil-fuel boiler plants. Double or dual alkali scrubbing is a non regenerable FGD process that uses a sodium based alkali solution to remove SO2 from combustion exhaust. The sodium alkali absorbs SO2, and the spent absorbing liquor is regenerated with lime or limestone. Calcium sulfites and sulfates are precipitated and either sold to the building trade or disposed of in a landfill. The regenerated sodium scrubbing solution is returned to the absorber loop. The dual alkali process has reduced plugging and scaling problems in the absorber as the sodium scrubbing compounds are very soluble. Dual alkali systems are capable of 95% SO2 reduction. Particulate matter is removed prior to SO2 scrubbing to prevent fly ash erosion of the absorber internals and to prevent any appreciable oxidation of the sodium solution in the absorber due to catalytic elements in the fly ash (Lee, 2005).

Table 9: Select subproject design characteristics.

Design Characteristics District Heating CMM

TotalJinzhong Licheng Qin Zhongyang Liulin

Existing buildings (million m2)

0 1.6 0.98 0.37 0 2.95

New construction (million m2)

3.0 0 0.70 0.15 1.4 5.25

Total area heated (million m2)

3 1.6 1.68 0.52 1.4 8.20

Pipeline (km) 71.24 10.15 14.9 10.8 43.1 150.16

HESs or PRSs for Liulin 58 10 25 7 20 120

Private/Collective Land acquired (ha)

0 0 0 0 1.65 1.65

Subproject heat capacity (MW)

195 116 116 29 NA 456

Boiler type, quantity and capacity (boilers x MW)

CHP (existing)

PC 2x58 PC 2x58 CGS 1x29 NA 5 boilers, 261 MW

Maximum gas NA NA NA NA 52,813 52,813

19

distribution capacity (m3/hr)

Annual CMM utilization (million m3)

NA NA NA NA 88.8 88.8

SCADA Yes Yes Yes Yes Yes 5

EMC Yes No No No No 1

Small boilers de-commissioned

0 121

88 23 43 275

Source: PPTA 7736 Subproject Feasibility Reports, 2011. Note: The Licheng subproject IA acquired 2.35 ha of land prior to the start of the Project which is not included here. In addition, the Qin subproject acquired 3.96 ha of unused state-owned land that is also not included here.

4. Pipelines 46. The heating pipelines will use pre-insulated bonded pipe, by far the most commonly used technology for both new district heating and cooling systems as well as for rehabilitation of existing systems. The pipelines will be installed using the direct-bury method. It is possible that some short sections of the pipelines may need to run overhead to avoid obstacles. Stream crossings will be subsurface using directional drilling methods. 47. During the detailed design phase pipelines will be routed carefully to avoid areas with high population densities and other facilities, such as gas pipelines, electric lines, etc. Detailed stress and hydraulic calculations will be undertaken to ensure the integrity of the pipeline system. Weak points will be identified and evaluated, such as bends, tees and branch connections, reducers and extensions, and if necessary, measures will be implemented to strengthen the system. 48. Pipelines to be installed will not cover the pipeline network inside the buildings and households. Regular dialogue and coordination with all project stakeholders will be undertaken by the project implementing agencies to ensure technical compatibility of new and existing infrastructures with project components and safety of the project at the operational phase. 49. During installation, description and test reports of pipeline and materials will be checked and documented, and installation will be conducted in accordance with related regulations and monitored in detail by engineers and IAs. Welding will be only performed by certificated welders. Radiographic examination will be undertaken to detect any weld defects, and system pressure tests will be performed before the pipelines are put into service. The route of the CMM pipelines will be posted to ensure public awareness and safety. 50. The water source for the primary heating networks is the municipal water supply. Once the water is heated by the HGSs or CHP, it will be circulated in the primary network loop, which is closed. Typical hot water supply temperature is 130 C and the return temperature is 70 C. The return water will be reheated and circulated back to the primary network.

5. HESs 51. A total of 100 HESs will be constructed for the Project, including both traditional and packaged. The Jinzhong subproject will use 58 packaged HESs, and the other district heating subprojects will use traditional HESs. Both HES types utilize the same heat exchanging principle, which exchanges heat between the primary and secondary systems, and are designed to be fully automatic without need for an operator.

20

52. Traditional HESs use efficient and reliable plate heat exchangers. To save pumping energy, the circulating pumps use variable-speed drives. There are also circulating pumps, refilling pumps, filters, control valve, control panel, valves connectors, a water tank, and headers to ensure that the station works efficiently and stably. For each district heating subproject a centralized water treatment facility produces high-quality water to refill the primary circuit to make up for water losses throughout the system. Water will be filtered with a 100 micron mesh to prevent blockages and then softened to prevent scaling with an ion exchange system. Ion exchange is a proven and reliable technology in which water flows through a bed of ion exchange material, and calcium and magnesium ions (hardness) are exchanged for sodium ions. For the Jinzhong Subproject the treated water will also be supplied to the secondary network. 53. In the packaged HESs, the secondary circuits of the district heating system will be refilled using high pressure water from the primary circuit, eliminating the need for a water tank, water treatment devices, and refilling pumps of the traditional HES. All equipment and auxiliary parts will be installed in one small, prefabricated package. The packaged HESs are very compact requiring less land and space than the traditional HESs. In the future, when reliable results are achieved in Jinzhong, the lessons learned can be replicated to other places in Shanxi and northern China.

6. Pressure Regulating Stations 54. Twenty pressure regulation stations will be constructed in the Liulin subproject. These are a proven technology with a solid safety record. Nonetheless, stations will be carefully located in low population areas to minimize risks. Stations will be equipped with pressure and methane monitors and alarm systems linked to electro-magnetic valves that will automatically shut down the gas flow in the event of a problem. Stations will be above ground allowing easy access for maintenance. A subproject Supervisory Control and Data Acquisition (SCADA) with connections to each station will ensure safe and efficient system operation.

7. SCADA and EMC 55. Each district heating subproject will install a Supervisory Control and Data Acquisition (SCADA) system to optimize the entire system’s operational control and to monitor the main system parameters to ensure safe and smooth operation of the district heating system. The SCADA has a central control center inside the regulation center building, regional control centers and local control units and monitoring sensors. The central control center will be responsible for the comprehensive data collection and processing, issuing control orders to regional control centers, coordinating the whole heating system, and communicating with external units. The regional control centers collect data from the local control units and monitoring sensors relay the data to the central control center, and accept and execute orders from the central control center. The local control units and monitoring sensors will be responsible for the control and monitoring of the local HESs. 56. The Jinzhong subproject will install an EMC in combination with the SCADA system to monitor and regulate the whole system, process heat demand, heat consumption, water consumption, and electricity consumption, identify the energy conservation potential and establish targeted strategies to save energy. The EMC system will maximize the energy saving and ensure satisfying heating service. The EMC consists of an energy dispatching and management system, a communications network, and sensors and control units.

21

8. System Safety 57. The IAs rely on the Design Institutes, consultants, vendors, manufacturers’ warranties and government standards and guidelines to ensure overall project design, implementation and operation is safe. In addition, the IAs also rely on the following to ensure safety in the primary and secondary piping systems:

- National and local fire codes are sufficient to protect secondary systems. - HES equipment will have adequate alarms and controls. - Secondary piping systems will be purged before connection to the primary piping

systems. - Maintenance procedures and plans will meet or exceed national and local standards

and follow warranty requirements from equipment manufacturers (HES, boilers, control systems, environmental and emissions control equipment, water treatment systems, etc.).

- Outside of the heating season, the boiler, control system, emissions control systems and piping systems will be properly shut-down and cleaned.

- Temporary shut-down of the heating system will follow industry and government standards and those of equipment manufacturers.

9. Occupational Health and Safety

58. During detailed design and prior to the commencement of civil works subproject-specific construction-phase Occupational Health and Safety Plan (OHSPs) that are consistent with the relevant requirements of PRC law and with good international practice will be developed by the health and safety specialists. This will allow for safety measures to be designed that are tailored to the final design. 59. To address operational risks, prior to HGS start-up subproject specific operation-phase OHSPs will be developed that are consistent with the relevant requirements of PRC law and with good international practice. B. Implementation Arrangements 60. The borrower is the Government of the PRC, which will make the proceeds of the ADB loan available to SPG through a subsidiary loan agreement and to the municipality and county governments and implementing agencies (IAs) through onlending agreements. The onlending arrangements and details of IA ownership are summarized in the project administration manual (PAM) to be prepared by ADB for the project.12 The municipality and county governments and the implementing agencies will assume the risks for foreign exchange and interest rate variation. 61. The SPG will be the EA and will have overall responsibility for the execution of the Project. A project leading group, consisting of the Shanxi Provincial Development and Reform Committee (SPDRC), SFB, Shanxi Construction Bureau (SCB), and Shanxi Environment Protection Bureau (SEPB) will provide policy direction and operating guidance. The project implementation organization structure is in Appendix 3.

12 The PAM describes how the executing and project implementing agencies will implement the project and deliver

the results on time, with quality, within budget, and in accordance with the Government and ADB’s policies and procedures.

22

Figure 2: Typical HES building and heat exchangers, Lvliang City.

62. The PLG has established a PMO to implement the project. The PMO will be responsible for i) overseeing the implementation of subprojects; ii) ensuring environmental and social safeguard compliance; iii) measuring and verifying energy savings and emission reduction of completed subprojects; and iv) overall monitoring, managing, and quarterly reporting for the project to ADB in accordance with the PAM, as agreed by ADB and the Government. The PMO is expected to have dedicated staff specializing on i) overall project implementation; ii) procurement; iii) environment and social issues; and iv) finance and administration. The existing PMO has 6 staff performing various functions and has agreed to assess and reinforce its manpower support complement vis-à-vis the requirements for effective project implementation. At the local level the Project will be implemented through the five subproject IAs listed in Table 8.

Figure 3: Typical household heating stove, Licheng County (burn box is below chair, as system was not in operation at the time the picture was taken). This stove provides heat for three families. As is the norm with such stoves, there are no emission control systems.

23

Figure 4: Typical existing low efficiency “stand-alone” coal-fired heating boiler, Qin County. This unit heats approximately 10,400 m2 of residential apartment space, and only has a simple gravity-type particulate removal system. Coal is loaded by hand into the burner. The boiler will be decommissioned once the Qin subproject is operational.

C. Location

63. The subprojects are located in western, central, and southeastern Shanxi province, which in turn is located in north central PRC (Figure 1). D. Impact and Outcome

64. The impact will be improved energy efficiency and environment in Shanxi province. The outcome will be improved air quality and reduced GHG emission in five cities and counties in Shanxi province. Once the Project is operational, 275 small boilers with an aggregated capacity of 386 MW will be decommissioned. Overall, the Project will improve energy efficiency of the district heating in the Project area by 27%, resulting in an estimated energy savings of 85,390 tons of coal equivalent (tce) per year, and emission reductions of 4,121 tons of sulfur dioxide (SO2), 16,234 tons of total suspended particulates (TSP), 6,494 tons of particulate matter (PM10), 1,942 tons of nitrogen oxide (NOx) and 254,379 tons of carbon dioxide (CO2). E. Outputs

65. The outputs of the project will be the construction of HGSs, district heating primary pipelines, HESs, control and safety systems, a CMM gas collection and storage system, and gas distribution pipelines and PRSs. F. Rationale

66. The PRC has severe environmental problems, including air pollution associated with rapid economic growth, heavy reliance on coal as the primary fuel and the use of obsolete technology. Estimates indicate that since the 1990s pollution has cost the PRC as much 4% of its GDP and that air pollution accounts for over 50% of this loss. 67. Shanxi has many typical examples of the major pollution and environmental problems that are closely related to the use and transport of coal. Urban heating demand has grown dramatically in the PRC and even faster in Shanxi Province due to rising incomes, privatization of residential housing and housing sector growth. District heating in Shanxi depends primarily

24

on coal. Many of the existing heating system in urban areas are old, inefficient and lack any emission control equipment. Environmental impacts from current heating methods have a disproportionately high effect on the poor; inadequate coverage of district heating in low-income urban areas drives residents to use indoor coal stoves for heating, a major cause of indoor pollution and related respiratory diseases. Urban pollution from small boilers also worsens outdoor air pollution and causes significant cumulative harm to public health. 68. The SPG recognizes the importance of improving energy efficiency in district heating as a priority for improving Shanxi s environmental quality and energy intensity. Large energy efficiency gains can be attained in district heating through i) eliminating inefficient inner city small boilers and single-family heating stoves and replacement with cleaner centralized district heating networks that rely on electronic controls instead of human intervention; ii) improving insulation in pipelines; iii) installation of demand control district heating systems; and iv) implementing tariff and energy conservation reforms in buildings. Households connected to the modern district heating networks enjoy a cleaner and greener living environment in addition to a comfortable heating service. 69. Coal mines in the PRC are rich in CMM/CBM content and underground methane is a threat to the safety of coal miners because of it is highly explosive nature. Methane must be removed during and sometimes prior to coal mining to ensure miner safety. Most of the methane removed in mining operations is not used as an energy source and is emitted as a GHG into the environment. In addition to the four district heating subprojects, the proposed Project will extract CMM from several mines, process it and use it as an energy source for district heating. Effective and efficient methane extraction and utilization will reduce GHG emissions and air pollution, improve the safety of coal mines and reduce local use of coal. 70. The proposed Project has a strong rationale as part of ongoing energy intensity improvement in the PRC under the Eleventh Five-Year Plan, 2006-2010, which aims for 20% improvement in energy intensity compared to 2005. The ongoing emphasis on energy intensity improvement is also reinforced in the Twelfth Five-Year Plan, 2011-2015 and beyond to meet PRC's objective to achieve 40% - 45% carbon intensity improvement by 2020 compared to 2005. The Project also supports the goals of improving energy efficiency and resource utilization outlined in the PRC's Medium and Long-Term Energy Conservation Plan (2005), and the 2006 Decision of the State Council on Enhancing Energy Conservation (No. 28), which emphasizes energy conservation, particularly in the heating subsector. The CMM subproject is consistent with the PRC’s gas development plan to capture and use more of its CMM resources. 71. The proposed Project is consistent with ADB’s Strategy 2020, which emphasizes environmentally sustainable growth and with the ADB PRC country partnership strategy 2008–2010, which focuses on resource efficiency and environmental sustainability. The Project is also consistent with the 2011-2013 pipeline of ADB projects for the PRC, and supports ADB’s Energy Efficiency Initiative. G. Special Elements

1. Energy Efficiency

72. The five subprojects will upgrade heating service to 2.95 million m2 of existing buildings and 5.25 million m2 of new buildings, and increase the combustion efficiency by 15 to 23%

25

compared to small boilers13 and by as much as 50% compared to single-family heating stoves. Overall the Project will improve the energy efficiency of district heating in the Project area by 27%, resulting in an estimated energy savings of 85,390 tce per year.

2. Environmental Benefits

73. Four of the subprojects will close 275 small low efficiency boiler houses and eliminate the need for approximately 4,000 single-family heating stoves that are now in use to heat 2.95 million m2 of existing buildings.14 The coal-fired boilers to be decommissioned do not have FGD emission systems and most either have no particulate removal systems or the systems in place are substandard and/or non-operational. Even more problematic, domestic heating stoves have no emission controls whatsoever. The emissions from the decentralized inefficient coal-fired boilers and single family heating stoves make a significant impact on air quality in the subproject areas during the heating season. 74. The high-efficiency boilers installed by the subprojects will be equipped with dual alkali FGD scrubbers and filter baghouse emission control systems to reduce levels of SO2 and particulate emissions to well within PRC and international emission standards. As a result of improved energy efficiency and improved emission control systems the Project is expected to lead to net annual emissions reductions of 4,121 tons of sulfur dioxide (SO2), 16,234 tons of total suspended particulates (TSP), 6,494 tons of particulate matter (PM10), 1,942 tons of nitrogen oxide (NOx) and 254,379 tons of carbon dioxide (CO2).

3. Coal-Mine Methane

75. In 2008, the last year with available data, Shanxi Province operations extracted 2.2 billion m3 of CMM but utilized only 770 million m3 (35%). No mention is made of what happens with the non-utilized portion, which is equivalent to 1.5 million tons of methane with a nominal Global Warming Potential (GWP) of 21:1 (100 year time horizon) compared to CO2. If the unutilized 65% was released to the environment it will have the same impact over a century as about 30 million tons of CO2. By investing in the CMM component of the Project, ADB is helping to speed up the transformation of this important resource from an environmental liability to a significant environmentally friendly benefit. 76. It is difficult to assess the danger in coal mining as an occupation and accurately quantify the loss of life and serious injury that results from mining over 700 million tons of coal a year in Shanxi Province. CMM projects do not guarantee mining without accidents but removing the methane from the mine transforms one of the biggest risks into an environmental and commercial benefit. 77. Shanxi Province has only developed a minor fraction of the CMM/CBM available. The Liulin Subproject will use 88.8 million m3 per year. By 2015 Shanxi expects to produce over 0.51 billion m3 of CMM per year and 1.22 billion m3 of CMM by 202015. If 10% of those totals could be

13 The PC boilers have an 88% combustion efficiency and the CGS boiler has an 80% efficiency, compared to 65%

for new small boilers. Existing small boilers likely have a significantly lower efficiency. 14 These stoves are estimated to provide heat to approximately 13,000 people. 15 This amount is equivalent to 6 times the capacity of the Liulin Subproject by 2015 and over 13 times its capacity by

2020 or a little more than one per year of CMM alone. Roughly, CMM is one-third of the CBM reserve and the CBM gas reserves are approximately one-third of all the gas sources in Shanxi Province.

26

diverted during the summer to provide cooling it has the potential to transform markets and reduce GHG emissions considerably.16 It is more efficient to use CMM to drive chillers than to burn it to make power to drive an electric chiller.17

4. Private Sector Development

78. The Feasibility Study Report (FSR) for the Liulin Subproject forecasts that about 10% of its expected CMM capacity will go to commercial customers for use in absorption chillers to provide air conditioning during the summer. It predicts that approximately 0.1 million m2 of shopping centers and hotels will burn CMM to drive absorption chillers that provide air conditioning instead of consuming electricity. This could be a good private sector development benefit.

5. Social Support for Low-income Consumers

79. The poor and vulnerable people in the subproject areas will receive subsidy policies to assist them in paying for district heating supply. In Lvliang City low-income households pay 40% of the heating tariff for the first 60 m2 of heated space, with the remainder paid by the local finance bureau, though they must pay the full rate for any areas in excess of 60 m2. In Jinzhong low-income households pay 15% heating tariff for the first 60 m2 of heated space, though again they must pay the full tariff on areas in excess of 60 m2. In Changzhi City low-income households pay 3.2 CNY/m2 per month which is equivalent to a 30% discount from the average residential tariff in most of the subproject areas. H. Cost and Financing 80. The project investment cost is estimated at $166.22 million as summarized in Table 10. The IAs will provide $66.22 million in owner equity and borrow the remaining $100.00 million from ADB. IA equity includes internally generated funds from the parent company or local government contributions. The ADB loan will be used for civil works, equipment and supplies, consulting services, training, and interest during construction and commitment charges on the ADB loan. The government will finance land acquisition, civil works, project management and other local costs, and contingencies. Table 11 shows the tentative financing plan. I. Implementation Schedule 81. The proposed Project loan agreement is expected to be signed in March 2012, with loan effectiveness in June 2012. The proposed implementation period will be 5 years (2012-2016), consisting of a three year construction period and a two year operation period. For the purposes of this report “operation phase” refers to the first two years of operation, which is the period during which ADB will have a hands-on monitoring and supervision role. However, the design life of the Project is 25 years less construction time. Table 12 presents the Project implementation schedule.

_________________________ 16 Using 10% of the projected CMM production by 2020 could be enough to provide cooling to almost 1.25 million m2

of commercial, hospital, academic or tourism floor space. That same amount of gas would be available for heating in the winter.

17 Burning CMM/CBM to generate electricity is at most 35% efficient. Then using that electricity to drive a water

chiller for air conditioning is also inefficient. It is better to use the gas directly to drive absorption chillers.

27

Table 10: Project investment plan.

Item Jinzhong Licheng Qin Zhongyang Liulin TotalA. Base Costa 1. Civil works 16.11 4.63 8.63 2.05 0.81 32.24 2. Equipment 39.12 11.26 10.20 2.16 10.62 73.36 3. Installation Cost 4.85 4.74 9.39 1.10 3.38 23.46 4. Others 6.30 3.67 5.43 0.72 2.32 18.43 Subtotal (A) 66.38 24.30 33.65 6.03 17.12 147.49

B. Contingencies 1. Physical Contingencies 3.31 1.17 1.67 0.30 0.85 7.30 2. Price Contingencies 3.54 1.51 2.05 0.38 0.76 8.24 Subtotal (B) 6.85 2.68 3.73 0.68 1.60 15.54C. Financial Charges During Development 1.41 0.65 0.68 0.15 0.30 3.19 Total (A+B+C) 74.65 27.63 38.05 6.86 19.03 166.22

a The base cost includes taxes and duties estimated at $ 13.42 million, of which $11.68 is for ADB financed components. The taxes and duties to be financed by ADB are not considered to be excessive and are in compliance with the country partnership strategy, 2008–2010 (ADB. 2008. Country Partnership Strategy: People’s Republic of China, 2008–2010. Manila).

b Includes interest during construction and commitment charges. Source: Finance Memorandum of Understanding, Shanxi Energy Efficiency and Environment Improvement Project, 18 November 2011, based on Project feasibility study reports and Asian Development Bank estimates. Note: Totals may not tally due to rounding.

Table 11: Project and subproject costs and financing plan.

Total ADB Loan Equity Subproject Amount

% Amount

% Amount

% ($ million) ($ million) ($ million)

Jinzhong DHS 74.65 44.91 43.29 57.99 31.36 42.01

Licheng DHS 27.63 16.62 18.29 66.19 9.34 33.81

Qin DHS 38.05 22.89 22.76 59.80 15.30 40.20

Zhongyang DHS 6.86 4.13 4.52 65.86 2.34 34.14

Liulin CMM 19.03 11.45 11.15 58.61 7.88 41.39

Total 166.22 100.00 100.00 60.16 66.22 39.84

Source: Draft Memorandum of Understanding, Shanxi Energy Efficiency and Environment Improvement Project Fact-finding Mission, 25 October – 03 November 2011, based on Project feasibility study reports and Asian Development Bank estimates. Note: Totals may not tally due to rounding

28

Table 12: Project implementation schedule (construction phase).

3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Jinzhong District Heating Subproject

Design and tender documentation

Tender invitation, assessment, and contract award

Civil works construction of HESs

Equipment and pipeline installation (HES and SCADA)

Testing and commissioning

Licheng District Heating Subproject

Design and tender documentation

Tender invitation, assessment, and contract award

Civil works construction of HESs

Equipment and pipeline installation (HES and SCADA)

Testing and commissioning

Qin District Heating Subproject

Design and tender documentation

Tender invitation, assessment, and contract award

Civil works construction of HESs

Equipment and pipeline installation (HES and SCADA)

Testing and commissioning

Zhongyang District Heating Subproject

Design and tender documentation

Tender invitation, assessment, and contract award

Civil works construction of HESs

Equipment and pipeline installation (HES and SCADA)

Testing and commissioning

Liulin CMM Subproject

Design and tender documentation

Tender invitation, assessment, and contract award

Civil works of valve stations, office buildings

Pipelines layout

Equipment installation and commissioning

2016

Item

2011 2012 2013 2014 2015

Source: PPTA 7736 Draft Final Report.

28

29

J. Detailed Subproject Descriptions

1. Jinzhong Subproject

82. The Jinzhong Subproject is located in the Yuci District of Jinzhong City, in central Shanxi Province. The Jinzhong Subproject will not build a HGS but instead the IA, the Shanxi Ruiguang CHP Heat Supply Co. Ltd., will purchase 195 MW of heat each heating season from the Shanxi Ruiguang CHP, a state-of-the-art plant that has just finished construction but has not yet started operation. The Jinzhong Subproject will install 71.24 km of pre-insulated bonded pipeline and build 58 HESs to provide heating services to 3 million m2 of new buildings in the northern urban development area of Yuci District. The subproject also includes a water treatment facility to produce additional water for refilling both the primary and secondary pipeline networks, and a SCADA and EMC which in combination will monitor and regulate the whole system, process heat demand, heat consumption, water consumption, and electricity consumption, identify the energy conservation potential and establish pointed strategies to save energy. As the area being serviced is new, the subproject does not include the replacement of any existing small boilers. 83. The major subproject design parameters are summarized in Table 13, and Figure 5 presents a map showing the overall layout of the heat source, HESs and pipeline network. Figure 6 shows the Ruiguang CHP. Coal for the CHP will be sourced from the local Yuci Beishan, Xingan, Cishan and Dongyao coal mines, located between 10 and 20 km from the CHP.

Table 13: Key Jinzhong Subproject design parameters. No. Indicators Unit Values

1 Total Heating Areas Million m2 3 2 Maximal Total Heat Load MW 195 3 Average Total Heat Load MW 139 4 Heating Capacity Provided by CHP MW 195 5 Total Heating Capacity of the CHP MW 845 6 Heating Efficiency of the CHP % 90 7 Standard Coal Consumption Per GJ Kg/GJ 39.62 8 Supply and Return Water Temperature 130/70 9 Flow Rate of Primary System t/h 5503

10 Length of Primary Heating Network km 71.24 11 HES 58 12 Total Annual Heat Energy Consumption GJ/a 1220832 13 Energy Consumption Per m2 Heating Area GJ/(a.m2) 0.407 14 Annual Standard Coal Consumption ×103 t/a 48.4 15 Standard Coal Consumption Per m2 Heating Area kg/(a.m2) 16.1 16 Annual Water Consumption ×103 t/a 360 17 Water Consumption Per m2 Heating Area t/m2 0.12 18 Annual Electricity Consumption Million kWh/a 5 19 Electricity Consumption Per m2 Heating Area kWh/(a.m2) 1.67 20 Total Capital Investment Million CNY 470

Source: PPTA 7736 Jinzhong Subproject Feasibility Report, 2011. 84. There will be no land acquisition for the Jinzhong Subproject as the CHP already exists. The pipeline will be installed on flat lands along the sides of existing roads and the HESs will be in built-up downtown areas or near residential areas that will receive the heating service. The pipeline will cross Jian Stream, a tributary of the Xiao River, on the outskirts of the downtown area of Yuci District. Jian Stream only flows intermittently during the June to August rainy period. Construction crews will use directional drilling to install the pipeline under stream, thus minimizing potential local environmental impacts.

30

Figure 5: Layout of the Jinzhong heat source, distribution pipeline and HESs.

85. The estimated cost of the subproject is $74.65 million. The Jinzhong IA will provide $31.36 million in owner equity and borrow the remaining $43.29 million from ADB. The Jinzhong IA wants to begin to provide heating services to customers at the start of the 2012-2013 heating season.

31

Figure 6: Shanxi Ruiguang Combined Heat and Power Company Plant, under construction.

Figure 7: New urban development area to be serviced by the Jinzhong Subproject, northern Yuci District.

2. Licheng Subproject

86. The subproject is located in Licheng County, in the northern part of Changzhi City, southeastern Shanxi Province. The subproject will build an HGS containing 2 high-efficiency 58 MW PC boilers, decommissioning 121 small boilers. The HGS will incorporate a SCADA system, a water supply and sanitation system, heating and venting systems, and a fire suppression system. The Licheng Subproject will also install 10.15 km of pre-insulated bonded pipeline and build 10 HESs to provide heating services to 1.6 million m2 of building area (38.5% new construction and 61.5% existing structures). The Licheng County Wantong Heat Supply Co. Ltd. will be the subproject IA.

32

87. The major subproject indicators are summarized in Table 14, while Table 15 summarizes the HGS building components. Figure 8 shows the overall layout of the HGS, HESs and pipeline network, Figure 9 shows a site photo and Figure 10 provides the HGS layout plan.

Table 14: Key Licheng Subproject design parameters No. Indicators Unit Values 1 Total Heating Areas Million m2 1.6 2 Maximal Total Heat Load MW 99 4 Boiler House Capacity MW 116 5 Boiler Quantity and Capacity MW 2x58 6 Boiler Efficiency % 88 7 Standard Coal Consumption Per GJ kg/GJ 38.8 8 Supply and Return Water Temperature 130/70 9 Flow Rate of Primary System t/h 1662.7

10 Length of Primary Heating Network km 10.15 11 HES 10 12 Total Annual Heat Energy Consumption GJ/a 786140 13 Energy Consumption Per m2 Heating Area GJ/(a.m2) 0.5 14 Annual Coal Consumption ×103 t/a 36.2 15 Coal Consumption / m2 Heating Area Kg/(a.m2) 22.6 16 Standard Coal Consumption ×103 t/a 30.5 17 Standard Coal Consumption / m2 Heating Area kg/(a.m2) 19.1 18 Coal Sulfur Content % 0.62 19 Emission Control Systems Desulphurization Type dual alkali FGD Efficiency % ≥85 Particulate Type Baghouse Filter Efficiency % ≥98 Stack Height M 80

20 Emissions

PM10 mg/Nm3 12.0-25.0

(PRC Standard: 80 EHS Guideline 50)

SO2 mg/Nm3 48.0-67.5

(PRC Standard: 900)

NOx mg/Nm3 110

(No PRC Standard EHS Guideline 510)

21 Annual Water Consumption ×103 t/a 325 22 Water Consumption Per m2 Heating Area t/m2 0.20 23 Annual Electricity Consumption Million kWh/a 3.53 24 Electricity Consumption Per m2 Heating Area kWh/(a.m2) 2.21 25 Small Boilers to be dismantled # 116

Source: PPTA 7736 Licheng Subproject Feasibility Report, 2011. 88. The Licheng Subproject HGS will be on a parcel of relatively flat state-owned land located on the southern edge of the urban area of Licheng County. It is the site of a former brick factory that has been shut down (Figure 9). The emission source is expected to be approximately 550 m from the nearest residence. The pipeline will be installed on the sides of existing roads and the HESs will be in built-up downtown areas or near to residential areas that will receive the heating service. Idle land will be used to the maximum extent possible.

33

Table 15: Main Licheng HGS Components No. Name Dimensions

1 Boiler House L=21m B=63m H=30.5m 2 Fan and Bag House L=41m B=14m 3 Chimney L=41m B=7.5m H=13.2m 4 Coal Conveying Shed D=3.5m H=80m 5 Pulverizing Coal Shed L=15m B=6m H=8m 6 Coal Loading Shed L=63m B=30m H=8m 7 Underground Coal Bunker L=9m B=6m 1 Floor 8 Coal Bunker L=32m B=8.1m 3 Floors 9 Door House L=50m B=14m 2 Floors 10 Office L=28m B=9m 1 Floor 11 Complex L=16m B=13m 1 Floor 12 Bathroom L=30m B=10m 1 Floor 13 Canteen L=19m B=6m 1 Floor 14 Trunk Shed L=63m B=8.1m H=27m 15 Electric truck scale L=32m B=8m H=12m 16 Ash water pool L=25m B=8m H=12m 17 Transformer Station V=400 m3 18 Auxiliary Room L=21m B=63m H=30.5m 19 Fire water tank L=41m B=14m

Source: PPTA 7736 Licheng Subproject Feasibility Report, 2011. 89. The Licheng Subproject area has no suitable locally available coal and will purchase the higher quality coal needed for PC boilers from either the Datong Coal Mine in northern Shanxi Province or the Yulin Qishan Coal Mine in Shaanxi Province, approximately 600 km away. Coal will be transported by truck. According to the local IA, this is the most economical method and source to purchase the relatively small amounts of coal required. Table 16 presents the coal characteristics from the Datong Coal Mine. 90. The HGS will utilize dual alkali FGD scrubber and filter baghouse emission control systems to reduce levels of SO2 and particulate emissions to well within PRC and international emission standards (see Table 14). Local cement companies are expected to buy the fly ash, bottom ash and FGD byproducts to use as inexpensive raw materials for their processes. 91. The estimated cost of the project is $27.63 million. The ADB loan will provide $18.29 million, and the Licheng IA will provide the remaining $9.34 million in owner equity. The Licheng IA wants to begin to provide heating services to customers at the start of the 2012-2013 heating season.

34

Figure 8: Layout of the Licheng HGS, distribution pipeline and HESs.

Figure 9: Licheng Subproject HGS site, located at an abandoned brick factory on the southern boundary of the Licheng County urban area.

35

Figure 10: Layout of the Licheng HGS.

36

Figure 11: Licheng County urban area. Pipeline will run along right side of the road.

Table 16: Licheng subproject coal characteristics.

Name of Subproject

Moisture Content (%)

Ash (%)

Volatile Matter

(%)

Sulfur Content

(%)

Low Heating Value MJ/kg kcal/kg

Licheng 6.37 12.6 31.7 0.62 24.65 5,896

Source: PPTA 7736 Licheng Subproject Feasibility Report, 2011.

3. Qin Subproject

92. Qin County is located in the northwestern part of Changzhi City, south-central Shanxi Province. The Qin Subproject will build a HGS containing two high-efficiency PC boilers, each 58 MW in size, de-commissioning 88 small boilers. The HGS will incorporate a SCADA system to ensure safe and efficient operation, a water supply and sanitation system, heating and venting system, and a fire suppression system. 93. The Qin Subproject will also install 14.88 km of pre-insulated bonded pipeline and build 10 HESs to provide heating services to 1.68 million m2 of building area (42% new construction and 58% existing structures). The Qin County Huayang Heating Co. Ltd. will be the IA for the subproject. 94. The major subproject design parameters are summarized in Table 17, while Table 18 summarizes the HGS building components. Figure 12 presents a map showing the overall layout of the HGS, HESs and pipeline network, and Figure 13 provide a HGS layout plan. 95. The HGS will be located on a parcel of collectively owned land acquired prior to the project. The site is relatively flat land in a valley surrounded by shrub land and farmland, approximately 4 km south of the urban center of Qin County (Figure 14). The pipeline will be installed on the sides of existing roads and the HES will be in built-up downtown areas or near residential areas that will receive the heating service. These are relatively flat areas.

37

Table 17: Key Qin Subproject design parameters.

No. Indicators Unit Values 1 Total Heating Area Million m2 1.68 2 Maximal Total Heat Load MW 96 4 Boiler House Capacity MW 116 5 Boiler Quantity and Capacity MW 2x58 6 Boiler Efficiency % 88 7 Standard Coal Consumption Per GJ kg/GJ 38.8 8 Supply and Return Water Temperature 130/70 9 Flow Rate of Primary System t/h 1662.667

10 Length of Primary Heating Network km 14.9 11 HES 25 12 Total Annual Heat Energy Consumption GJ/a 831759 13 Energy Consumption Per m2 Heating Area GJ/(a.m2) 0.5 14 Annual Coal Consumption ×103 t/a 48.5 15 Coal Consumption Per m2 Heating Area Kg/(a.m2) 28.9 16 Standard Coal Consumption ×103 t/a 32.2 17 Standard Coal Consumption Per m2 Heating Area kg/(a.m2) 19.2 18 Coal Sulfur Content % 0.62 19 Emission Control Systems

Desulphurization Type dual alkali FGD Efficiency % Particulate Type Baghouse Filter Efficiency % ≥95 Stack Height M 80

20 Emissions ≥85

PM10 mg/Nm3 40.45

(PRC Standard: 80 EHS Guideline 50)

SO2 mg/Nm3 40.24-49.83

(PRC Standard: 900)

NOx mg/Nm3 155.41

(No PRC Standard EHS Guideline 510)

21 Annual Water Consumption ×/a 810 22 Water Consumption Per m2 Heating Area t/m2 0.48 23 Annual Electricity Consumption Million kWh/a 6.82 24 Electricity Consumption Per m2 Heating Area kWh/(a.m2) 4.06 25 Small Boilers to be dismantled # 88

Source: PPTA 7736 Qin Subproject Feasibility Report, 2011. 96. High quality bitumous coal for the Qin subproject will be transported by truck from the Shangzhuang Coal Mine, located in Xiangyuan County of Changzhi City, approximately 25 km from the HGS site. Table 19 presents the Qin subproject coal characteristics. 97. The HGS will utilize dual alkali FGD scrubber and filter baghouse emission control systems to reduce levels of SO2 and particulate emissions to well within PRC and international emission standards (see Table 17). Local cement companies are expected to buy the fly ash, bottom ash and FGD byproducts to be used as inexpensive raw materials for their processes. 98. The estimated cost of the project is $38.05 million. The Qin IA will provide $15.30 million in owner equity and borrow the remaining $22.76 million from ADB. The Qin IA wants to begin to provide heating services to customers at the start of the 2012-2013 heating season.

38

Table 18: Main Qin HGS Components No. Name Dimensions

1 Boiler House L=66m B=20m H=30m 2 Fan and Bag House L=66m B=18m H=18m 3 Chimney D=4.5m H=80m 4 Coal Conveying Shed L=29m B=5m H=8m 5 Pulverizing Coal Shed L=30m B=25m H=15m 6 Coal Loading Shed L=16m B=8m H=5m

7 Underground Coal Bunker

L=15m B=6m H=5m

8 Coal Bunker L=42m B=50m H=8m 9 Door House L=9m B=6m 1 Floor 10 Office L=48m B=14m 3 Floors 11 Complex L=52m B=14m 2 Floors 12 Bathroom L=28m B=9m 1 Floor 13 Canteen L=16m B=13m 1 Floor 14 Trunk Shed L=30m B=10m 1 Floor 15 Electric truck scale L=19m B=6m 1 Floor 16 Ash water pool L=45m B=12m Depth=4m 17 Transformer Station L=16m B=13m 1 Floor 18 Auxiliary Room L=38m B=9m H=12m 19 Fire water tank V=400m3

Source: PPTA 7736 Qin Subproject Feasibility Report, 2011.

Table 19: Qin subproject coal characteristics.

Name of Subproject

Moisture Content (%)

Ash (%)

Volatile Matter

(%)

Sulfur Content

(%)

Low Heating Value MJ/kg kcal/kg

Qin 8 19.02 7.85 0.62 19.53 4,665

Source: PPTA 7736 Qin Subproject Feasibility Report, 2011.

39

Figure 12: Layout of the Qin HGS, distribution pipeline and HESs.

40

Figure 13: Layout of the Qin HGS.

41

Figure 14: Qin Subproject HGS site, south of the Qin County urban area.

4. Zhongyang Subproject

99. Zhongyang County is located in the central part of Lvliang City prefecture region, in mid-western Shanxi province. The urban center of Zhongyang County is approximately 18 km southeast of Lvliang City proper, within a valley plain. The Zhongyang Subproject will build one high-efficiency 29 MW CGS boiler within an existing HGS, the Zhongyang County Heating Center, located approximately 4 km southeast of the urban center of Zhongyang County. The HGS has 3 existing hot water CGS boilers with total of 87 MW heating capacity, and room in the boiler house for one additional boiler. With the installation of the subproject boiler the total heating capacity of the HGS will be increased to 116 MW, resulting in the decommissioning of 23 existing small boilers. The subproject will include a SCADA system to ensure safe and efficient operation, a water supply and sanitation system, heating and venting system, and a fire suppression system. The subproject will make use of some systems and facilities already in place, such as the coal handling system, the ash and slag handling system, and the control system. 100. The Zhongyang Subproject will also install 10.8 km of pre-insulated bonded pipeline and build 7 HESs to provide heating services to 0.52 million m2 of new construction. As the subproject is providing heating service to a new urban area, no small boilers will be replaced. The Zhongyang County Heating Center will be the IA for the subproject. 101. The major subproject characteristics are summarized in Table 20. Figure 15 presents a map showing the overall layout of the HGS, HESs and pipeline network, and Figure 16 provides a HGS layout plan. 102. The Zhongyang Subproject will acquire no land because it will make use of boiler space available within the Zhongyang County Heating Center. The heating pipeline will be installed on the sides of existing roads and the HESs will be in built-up downtown areas or near residential areas that will receive the heating service. 103. The subproject will get its coal from the Sheke Coal Mine in Zhongyang County, approximately 20 km away from the HGS, or other similar mines. Table 21 presents the coal characteristics.

42

104. The HGS will utilize dual alkali FGD scrubber and filter baghouse emission control systems to reduce levels of SO2 and particulate emissions to well within PRC and international emission standards (see Table 20).18 Local cement companies are expected to buy the fly ash, bottom ash and FGD byproducts to use as inexpensive raw materials for their processes.

Table 20: Key Zhongyang County subproject design parameters. No. Design Parameters Unit Values 1 Total Heating Areas Million m2 0.52 2 Maximal Total Heat Load MW 25 4 Boiler House Capacity MW 29 5 Boiler Quantity and Capacity MW 1x29 6 Boiler Efficiency % 80 7 Standard Coal Consumption Per GJ kg/GJ 42.7

8 Supply and Return Water Temperature ℃ 130/70

9 Flow Rate of Primary System t/h 416 10 Length of Primary Heating Network km 10.8 11 HES 7 12 Total Annual Heat Energy Consumption GJ/a 213880 13 Energy Consumption Per m2 Heating Area GJ/(a.m2) 0.4 14 Annual Coal Consumption ×103 t/a 9.4 15 Coal Consumption Per m2 Heating Area Kg/(a.m2) 18.1 16 Standard Coal Consumption ×/a 9.1 17 Standard Coal Consumption Per m2 Heating Area kg/(a.m2) 17.5 18 Coal Sulfur Content % 0.62 19 Emission Control Systems

Desulphurization Type dual alkali FGD Efficiency % Particulate Type Baghouse Filter Efficiency % ≥95

Stack Height M 60 20 Emissions

PM10 mg/Nm3 40.45

(PRC Standard: 80 EHS Guideline 50)

SO2 mg/Nm3 67.50

(PRC Standard: 900)

NOx mg/Nm3 178.11

(No PRC Standard EHS Guideline: 510)

21 Annual Water Consumption ×/a 325 21 Water Consumption Per m2 Heating Area t/m2 0.63 23 Annual Electricity Consumption Million kWh/a 1.1 24 Electricity Consumption Per m2 Heating Area kWh/(a.m2) 2.12 25 Small Boilers to be Dismantled # 23

Source: PPTA 7736 Zhongyang Subproject Feasibility Report, 2011.

18 In the Zhongyang subproject EIA it was initially proposed to utilize a FGD for both particulate and SO2 removal

with a CGS boiler (e.g. no baghouse). However the IA subsequently agreed to utilize the same emission control systems as the other subprojects (dual alkali scrubber and baghouse). To be conservative emission characteristics for the Zhongyang Subproject are based on the worst case for each parameter (PM10, SO2 and NOx) from the other three subprojects utilizing HGSs and the same emission control systems, including the Lvliang subproject which was subsequently dropped from the Project.

43

Figure 15: Layout of the Zhongyang County Heating Center HGS, distribution pipeline and HESs.

44

Figure 16: Layout of the Zhongyang County Heating Center HGS.

45

Figure 17: Zhongyang County Heating Center. The boiler house is located behind the main office building.

Figure 18: Empty bay to be used for CGS boiler, Zhongyang County Heating Center.

Table 21: Zhongyang Subproject coal characteristics.

ame of Deposit Moisture

Content (%) Ash (%)

Volatile Matter

(%)

Sulfur Content

(%)

Heating Value MJ/kg kcal/kg

Zhongyang 6.37 12.6 31.7 0.62 24.65 5,896

Source: PPTA 7736 Zhongyang Subproject Feasibility Report, 2011. 105. The estimated cost of the subproject is $6.86 million. The Zhongyang Subproject will provide $2.34 million in owner equity and borrow the remaining $4.52 million from ADB. The Zhongyang Subproject wants to begin to provide heating services to customers at the start of the 2012-2013 heating season.

46

5. Liulin Subproject

106. Liulin County is located in the western portion of the Lvliang City prefecture region, in the western part of Shanxi Province. Liulin County’s urban center is located in a valley approximately 22 km southwest of Lvliang City proper, along one of the main roads leading west to Shaanxi province. The subproject will capture CMM from mines located to the north of the Liulin County urban center and provide it to urban end users. 107. Natural gas is a naturally occurring gas mixture consisting primarily of methane; the Liulin Subproject CMM has a methane content of 41%. Natural gas has been used by humans for hundreds of years, and is considered to be one of the cleanest, safest, and most useful of all energy sources. It is a vital component of the world's supply of energy, and in the US accounts for 24% of the total energy consumed. It is used for residential, commercial and industrial cooking, heating and cooling; in the transportation sector; and as a base ingredient in many products. It was selected for the Liulin subproject as it is the preferred heat source for district heating, if available. In addition, its use will improve coal mine safety and reduce GHG emissions. 108. The Liulin Gasification Company will be the IA for this subproject. The company has signed an agreement with a local mining company to buy CMM from three of its nearby mines, totaling about 450,000 normal cubic meters per day (Nm3/day) with a methane (CH4) content of approximately 41% by volume. The subproject will construct i) gas supply pipelines from the gas extraction points at each of the three coal mines to the gas storage station (10 km); ii) a gas storage station with one storage tank having a capacity of 100,000 m3; iii) 20 pressure regulating stations; iv) gas distribution pipelines of low (12 km) and medium pressure (21 km); and v) a SCADA system. The gas storage facility will be located far from the urban area at one of the mines, and will store approximately five days of peak use. The IA’s existing CMM project only has one day of peak gas storage capacity, and the proposed subproject is required to help the IA meet its existing and future district heating demands. At the gas storage facility the gas will be pressurized for transit through medium-pressure pipelines to the pressure regulating stations which will adjust the pressure and send it to the end-users, primarily gas-fired boiler houses to produce winter heating. Several sites were considered for the storage station, but this site was the best in terms safety, low environmental impacts, and access to the CMM. 109. The Liulin County government has issued a policy promoting the replacement of existing small coal-fired boiler with gas boilers once the gas supply is available, and once operation begins 43 coal-fired boilers will be decommissioned and replaced by gas-fired boilers. These small boilers are owned by different owners. The county government will subsidize the owners between 20% to 40% of the costs to build the new boilers, and will oversee and coordinate the replacement process. 110. The subproject will incorporate a SCADA system to ensure safe and efficient operation, a water supply and sanitation system, heating and venting system, and a fire suppression system. The Liulin Gasification Company has already been running a CMM system for ten years. An Environment, Health and Safety (EHS) plan is in effect, including monitoring of methane levels at all major points, and they comply fully with PRC GB 50028-93 (revised 1998) Code for design of city gas engineering. In its ten year operation there have been no safety incidents. 111. The major subproject characteristics are summarized in Table 22, while Figure 19 shows the layout of the CMM pipeline, storage station and pressure regulating stations, Figure 20 shows the storage station layout, Figure 21 shows the existing Liulin Gasification Company control room, and Figure 22 shows an existing CMM extraction station and a storage tank in

47

use at Liulin County.

Table 22: Key Liulin Subproject design parameters

No. Design Parameters Unit Values 1 Total Gas Storage Capacity Million m3 0.1 2 Medium Pressure Gas Pipeline km 31.1 3 Low Pressure Gas Pipeline km 12 4 Pressure Regulation Station (Panel) set 20 5 SCADA set 1 6 Maximum Gas Supply Capacity Nm3/h 59538 7 Total Annual Gas Supply Million m3/a 88.8 8 Annual Electricity Consumption Million kWh/a 2.43 9 Annual Water Consumption t/a 4120

10 Land Acquisition ha 1.65 11 Total Capital Investment Million CNY 118 12 Coal Equivalent Conservation tce/a 31,897

Source: PPTA 7736 Liulin Subproject Feasibility Report, 2011.

112. The Liulin Subproject will acquire 1.65 ha of collectively owned land for the gas storage facility, pipelines and pressure regulating stations. The CMM storage and transmission stations will be located on the premises of an operating coal mine located in an industrial coal mining area approximately 5 km north of the urban area. The site is classified and used for industrial purposes, though there is some informal agriculture also occurring (Figure 23). Other locations were considered but this site was the best in terms safety, low environmental impacts, and access to CMM. The pipeline will be installed on relatively flat land on the sides of existing roads and the pressure regulating stations will be distributed throughout the service area (Figure 19).

113. The estimated cost of the project is $19.03 million. The Liulin IA will provide $7.88 million in owner equity and borrow the remaining $11.15 million from ADB. The Liulin IA wants to begin to deliver CMM to new customers at the start of the 2012-2013 heating season.

48

Figure 19: Liulin Subproject layout of CMM pipeline, storage station and pressure regulating stations.

49

Figure 20: Liulin Subproject storage station layout.

Figure 21: Liulin Gasification Company control room.

50

Figure 22: Existing CMM extraction station and storage tank, Liulin County.

Figure 23: Liulin Subproject CMM storage site. K. Associated and Existing Facilities

1. Secondary Heating Systems 114. The district heating subprojects do not deliver heat directly to the customers. The HESs will transfer the heat to secondary pipeline networks which will deliver the heat to the customers. These secondary networks are associated facilities (AFs). Existing heating infrastructures and technical parameters have been considered and taken into account in the design to ensure compatibility. All proposed district heating systems under the project will use hot water as the heat media and are considered low temperature and low pressure systems. In the primary heating networks, which are to be constructed by the Project, the working pressure is 1.6 MPa, the water supply temperature is 130 °C, and the return water temperature is 70 °C. In the secondary heating networks the supply temperature is 85 °C and the return temperature is 60 °C. These are low temperature and pressures and will allow for safe operation of the systems. In areas with existing buildings these secondary networks already exist; in new urban areas the secondary networks will be constructed as the urban areas are developed. 115. For existing built areas the technical specifications of the existing secondary systems

51

have been reviewed and are compatible with the primary heating networks and HESs to be constructed by the Project. In some cases the secondary systems may be degraded, and this could affect Project performance. In such cases the IAs will be responsible for assessing the network and rehabilitating it to acceptable performance levels. If secondary pipeline is not acceptable and cannot/will not be upgraded, the IAs will not connect the project pipe to it. For new urban areas, the secondary networks will be designed and built to be compatible with the primary heating networks built by the Project.

2. Jinzhong Subproject 116. The Ruiguang combined Heat and Power (CHP) Plant is the heat supply source for the Jinzhong Subproject. The Ruiguang CHP is viable on its own and its existence does not depend exclusively on the proposed Jinzhong Subproject, and as such does not technically qualify as an AF. However, its goods or services (in this case, heat) are essential for successful operation of the subproject, and given its significance to the subproject it has been treated as an AF. A due diligence report was prepared by the consultant team based on: i) the MEP approved (2009) Ruiguang CHP Environmental Impact Assessment (EIA) report; ii) the draft EIA report for the Jinzhong subproject prepared by Guodian Northern China Power Company; iii) the CHP Feasibility Study Report prepared by Guodian Northern China Power Company, and iv) site inspections and discussion with the staff from Jinzhong City EPB and Jinzhong Public Investment Company conducted by the PPTA consultants. The due diligence review determined that the CHP has completed all required environmental assessment procedures and complies with all relevant national environmental and safety laws, standards and regulations (see Appendix 4).

3. Zhongyang Existing Facilities 117. The Zhongyang Subproject will build one high-efficiency 29 MW CGS boiler within an existing HGS, the Zhongyang County Heating Center. As noted previously, the HGS has 3 existing hot water CGS boilers with total of 87 MW heating capacity, and room in the boiler house for one additional boiler. The subproject will make use of some systems and facilities already in place, such as the coal handling system, the ash and slag handling system, and the control system. A Tabular Environmental Impact Assessment Report (TEIAR) was prepared for the heating center and was approved by the Shanxi EPB in 2009. The PPTA 7736 domestic Environmental Safeguard Specialist has reviewed the TEIAR and conducted site inspections, and has confirmed that the facility is in compliance with relevant national environmental and safety laws, standards and regulations.

4. Liulin Coal Mines 118. The Liulin subproject will obtain 88.8 million m3 per year of CMM with a methane (CH4) content of approximately 41% by volume from three nearby mines: the Shanxi Liulin Coal Mine, the Liulin County Hechang Coal Mine, and the Shanxi Liulin Jiajiagou Coal Mine. The PPTA international Gas Distribution Specialist undertook a due diligence review of the coal mines and extraction systems. The three mines produce 450,000 normal cubic meters (Nm3) per day, of CMM with a methane content of 41%. The maximum subproject hourly CMM demand is forecast to be 52,831 Nm3/h, which was the basis for the pipeline system design. The Gas Distribution Specialist also confirmed that the CMM extraction systems are technically sound, meet required safety standards, and will be fully compatible with the gas storage system to be constructed by the Project.

52

5. Safety and Public Complaints 119. During the due diligence process the consulting team investigated safety records and if complaints had been received from local residents, covering existing secondary heating systems, the Ruiguang CHP Plant (Jinzhong subproject), the Zhongyang County Heating Center, and the Liulin Coal Mines and CMM extraction. No accidents were reported over the last three years, and nor were any complaints received. 120. In addition, as noted above:

- The supply temperature of the secondary pipelines is 85 °C, the return temperature is 60 °C, and the maximum pressure is 0.6 MPa. These are low temperature and pressures and will allow for safe operation of the systems.

- - Based on site visits and reviews of the national environmental assessment reports, the

due diligence review of the Ruiguang combined Heat and Power (CHP) Plant (Jinzhong subproject) and the Zhongyang existing facilities found them to be in compliance with relevant environment and safety standards.

- The Gas Distribution Specialist confirmed that the CMM extraction systems are technically sound, meet required safety standards, and will be fully compatible with the gas storage system to be constructed by the Project.

53

IV. DESCRIPTION OF THE ENVIRONMENT

A. Shanxi Province 121. Shanxi Province is located in north-central PRC, and borders Hebei Province to the east, Henan Province to the south, Shaanxi Province to the west, and Inner Mongolia to the north. The capital of the province is Taiyuan (Figure 1). 122. Shanxi Province has an area of 156,000 km2, equivalent to 1.6% of the size of the PRC. Most of the province is part of the Loess Plateau, with the higher ground of Taihang Mountains to the east and the Lvliang Mountains to the west, and a series of broad flatter valleys and basins in the center through which the Fen River runs (Figure 24). The highest peak is Mount Wutai (Wutai Shan) in northeastern Shanxi at an altitude of 3,058 masl. The Great Wall of China forms most of the northern border with Inner Mongolia. The Zhongtiao Mountains run along part of the southern border and separates Shanxi from the east-west part of the Yellow River. Mount Hua is to the southwest.

Figure 24: Shanxi Province topography.

54

123. The Yellow River forms the western border with Shaanxi Province. The Fen and Qin rivers, tributaries of the Yellow River, run north-to-south through the province, and drain much of its area. The north of the province is drained by tributaries of the Hai River, such as the Sanggan and Hutuo rivers. 124. Shanxi has a temperate continental semi-arid climate (designation Bsk in the Köppen climate classification system). Winters are long, dry and cold, and average January temperatures are below 0 °C. Summers are warm and relatively humid, and average July temperatures are between 21 to 26 °C. Spring is extremely dry and prone to dust storms. Shanxi is one of the sunnier parts of the PRC, and early summer heat waves are common. Annual precipitation averages around 350–700 mm, with 60% of it concentrated between June and August. 125. Shanxi is rich in energy and metal resources, particularly in terms of coal and aluminum. Proven coal reserves spread over more than 90 counties amount to 300 billion tons, one third of the proven reserves in the PRC. The industries in the province are predominantly related to the mining of coal and metals, coking and metallurgy, and cause considerable air, water and soil pollution.

126. Shanxi has a population of 35.7 million (2010) of whom 54% are rural. It is a comparatively underdeveloped province with a nominal GDP per capita of $3,173 in 2009, equivalent to 86% of the national average ($3,678), ranking it 21st among PRC’s 31 provinces. Among Shanxi’s 85 counties 35 (41.2%) are classified as poverty counties, in which a majority or substantial part of their population exist below the current PRC national poverty level of a per capita annual income of CNY 1,000. B. Subproject Physical and Ecological Resources

127. The subproject districts and counties are located in western, central, and southeastern Shanxi province (Figure 1) within the Loess Plateau. The subproject areas are characterized by long cold winters and hot and rainy summers with frequent flooding. Annual rainfalls average from 450 mm to 550 mm, with the two southernmost subprojects on the higher end of the range. Minimum and maximum temperatures range from -30C to 38C and elevations range from 600 to 2,000 masl. The Zhongyang and Liulin subprojects in the west of the province are located in the plains of relatively narrow valleys of the Lvliang Mountains; the Jinzhong subproject is located in the flatter central valley area of the province, and the Licheng and Qin subprojects are in the high broader valleys of the Taihang Mountains. 128. Erosion rates in the subproject districts and counties vary widely according to topography. In the intensely cultivated and developed alluvial valley plains erosion is moderate. This contrasts sharply with the hilly and mountainous areas which have numerous steep slopes and gullies and minimal vegetative cover, and which experience significant erosion. The subproject areas have been intensely developed for long periods of time, and very little natural remnant vegetation exists except at elevations above 1,700 masl. 129. The following section provides a detailed description of each subproject area. Baseline ambient monitoring at the subproject sites was undertaken during the preparation of the subproject environmental assessments by the relevant prefecture level EPBs under contract to the domestic EIA consultants.

55

1. Yuci District, Jinzhong Subproject

a. Location and Topography

130. Jinzhong City is located in central Shanxi Province on the northeast edge of the Taiyuan basin, a typical large-scale Cenozoic faulted basin that is an important source of groundwater. Yuci District, the only district and the political and economic center of Jinzhong City, is located in the middle of the city, though the district as a whole has an area of 1,311 km2. Yuci District is located approximately 400 km directly southwest of Beijing and 25 km southeast of Taiyuan City. The subproject area is on an alluvial plain area and is generally quite flat (Figure 25).

b. Climate 131. Yuci District temperatures range from −20 to 25 oC, and the annual average temperature is 5.8 oC. The average annual precipitation is about 460 mm and the average annual evaporation capacity is 1,550 mm with a relative humidity of 50%. The average depth of seasonal frozen soil is 135 cm and the frost season is from later October to early April. The winter heating season lasts for 137 days. The wind is predominantly from the west-northwest and east-northeast with a maximum speed of 25 m/s and an average annual speed of 3.0 m/s.

Figure 25: Jinzhong subproject location, topography and landuse. Source: Google Earth 2011, image date 2006.

c. Air Quality

132. Ambient air and noise quality monitoring was undertaken for the HGS site and surrounding area in 2011 (Figure 26). The monitoring results are presented in Table 23 to Table 25. Average 24-hour concentrations of PM10 ranged from 0.021-0.145 mg/Nm3, which although in compliance with the relevant PRC air quality standard (GB3095-1996) of 0.15 mg/Nm3, indicates that the area is receiving significant particulate emissions, most likely due at

CHP Site

New urban growth area, Yuci District

Jinzhong City Center

56

least in part to winter heating boiler emissions. The average 24-hour concentrations of SO2 in the air ranged from 0.032-0.134 mg/Nm3, which was in compliance with the relevant PRC air quality standard (GB3095-1996) of 0.15 mg/Nm3. Results were lowest at the District Government Campus and at the proposed HGS site. The average 24-hour concentrations of NO2 ranged from 0.009-0.077 mg/Nm3, which was in compliance with the relevant PRC air quality standard (GB3095-1996) of 0.08 mg/Nm3, though marginally in the case of the highest values. In the winter heating months pollutant concentration can be expected to be higher than in the non-heating months.

Table 23: PM10 monitoring results, Yuci District, Jinzhong Subproject (2011)

Sampling Station

No Samples 24-hour Average PM10

Concentration Range (mg/Nm3)

PRC 24-hour Average Standard

(mg/Nm3)

Standards Met?

1 7 0.098-0.144

0.15

Yes

2 7 0.110-0.145 Yes

3 7 0.021-0.086 Yes

4 7 0.040-0.090 Yes

5 28 0.040-0.145 Yes

Source: Jinzhong Subproject EIA. Sampling Station Location: 1 = Mingqia Town; 2=Xiaonangzhuan Village; 3=District Government Campus; 4 = District EPB Campus; 5= Proposed HGS Site

Table 24: SO2 monitoring results, Yuci District, Jinzhong Subproject (2011)

Sampling Station

No Samples 24-hour Average SO2

Concentration Range (mg/Nm3)

PRC 24-hour Average Standard

(mg/Nm3)

Standards Met?

1 7 0.097-0.134

0.15

Yes

2 7 0.096-0.122 Yes

3 7 0.032-0.109 Yes

4 7 0.065-0.116 Yes

5 28 0.032-0.134 Yes

Source: Jinzhong Subproject EIA. Sampling Station Location: 1 = Mingqia Town; 2 = Xiaonangzhuan Village; 3 = District Government Campus; 4 = District EPB Campus; 5 = Proposed HGS Site

Table 25: NO2 monitoring results, Yuci District, Jinzhong Subproject (2011)

Sampling Station

No Samples 24-hour Average NO2

Concentration Range (mg/Nm3)

PRC 24-hour Average Standard

(mg/Nm3)

Standards Met?

1 7 0.041-0.066

0.08

Yes

2 7 0.033-0.077 Yes

3 7 0.009-0.025 Yes

4 7 0.010-0.016 Yes

5 28 0.009-0.077 Yes

Source: Jinzhong Subproject EIA. Sampling Station Location: 1 = Mingqia Town; 2 = Xiaonangzhuan Village; 3 = District Government Campus; 4 = District EPB Campus; 5 = Proposed HGS Site

57

Figure 26: Location of air quality environmental monitoring locations, Yuci District, Jinzhong Subproject.

d. Noise

133. The domestic EIA consultant also conducted the noise monitoring in March 2010 for proposed subproject water treatment center site and HESs (Table 26). The results show that the ambient noise levels in both areas were within PRC standards for both day and night times.

e. Hydrology and Water Quality

134. There are four major rivers running through Yuci District: the Xiao, Tu, Longmen and Jian rivers. In addition these are fed by a number of smaller streams. Of the four rivers the Xiao is the longest, with a total length of 137 km, 38.7 km of which are in Jinzhong City. The average width ranges from 0.5-1 km, and the annual average flow is about 180 million m3. Yuci District belongs to water-rich area and has abundant groundwater resources.

= Air Quality Monitoring

= Sensitive Receptor

58

135. During the preparation of the Jinzhong subproject domestic EIA water quality monitoring was conducted at the Xiao River. The monitoring results, presented in Table 27, show that the water quality met all relevant standards.

Table 26: Ambient acoustic monitoring data, Yuci District, Jinzhong Subproject (2010).

Location Sampling

Station Leq dB(A) PRC Standard dB(A) Standard

Exceeded? Day Night Day Night

Water Treatment

Center

1 (North) 48.6 42.9

<60 <50

No

2 (West) 49.0 40.6 No

3 (South) 46.1 39.5 No

4 (East) 45.9 39.7 No

HESs

5 53.3 46.8

<60 <50

No

9 54.3 42.0 No

13 53.7 48.8 No

21 45.6 40.7

<55 <45

No

25 44.5 38.8 No

31 44.8 39.2 No

39 48.3 41.5 No

41 47.4 38.2 No

47 49.3 41.8 No

52 50.5 39.2 No

57 52.3 41.8 <60 <50

No

58 51.7 46.1 No

Source: Jinzhong Subproject EIA.

Table 27: Xiao River water quality data, Yuci District, Jinzhong Subproject (2010).

Parameter Sampling Date / Value (mg/L) PRC Standard (GB3838-

2002)

Standard Exceeded?

Oct Nov Dec

pH 8.42 8.38 7.88 6-9 No DO 7.82 8.58 11.0 >2 No Permanganate Index 2.3 1.7 1.7 <15 No BOD5 0.8 1.4 1.3 <10 No NH3-N 0.325 0.731 0.906 <2.0 No Oil 0.01 0.01 0.01 <1.0 No Volatile Phenol 0.0025 0.0009 0.0005 <0.1 No COD 5 5 9 <40 No TN 0.064 1.34 1.34 <2.0 No TP 0.014 0.014 0.047 <0.4 No Fluoride 0.51 0.52 0.40 <1.5 No Cr6+ <0.004 <0.004 <0.004 <0.1 No Cyanide <0.004 <0.004 <0.004 <0.2 No Sulfide 0.056 0.025 0.067 <1.0 No Anionic Surface Active Agent

<0.05 <0.05 <0.05 <0.3 No

Fecal coliform bacteria (num/L)

800 170 1100 <40,000 No

Source: Jinzhong Subproject EIA.

f. Ecology

136. The subproject area can be characterized as a heavily modified landscape, and the broad plain on which it is located has been fully developed for agricultural, industrial, and urban

59

residential purposes. Forest cover is insignificant, there is little good habitat, and biodiversity is low. Animals typically found in Yuci include common rodents and birds. No rare or endangered flora or fauna have been recorded in the subproject area, and there are no protected areas in the vicinity of the subproject.

g. Subproject Site Setting

137. The subproject area is quite flat. The pipeline will be installed on flat lands along the sides of existing roads and the HES will be in built-up downtown areas or near residential areas that will receive the heating service. The pipeline will cross Jian Stream, a tributary of the Xiao River. The crossing point is on the outskirts of the downtown area of Yuci District. Jian Stream is not wide and water flows intermittently and only during the rainy period in June to August. Construction crews will use directional drilling to install the pipeline under the stream, thus minimizing potential local environmental impacts.

2. Licheng County, Changzhi City

a. Location and Topography

138. Licheng County is one of 13 counties and districts of Changzhi City, located in southeastern part of Shanxi province in the Taihang Mountains. The county has a land area of 1,115 km2, and is approximately 480 km southwest of Beijing, 180 km southeast of Taiyuan, and 21 km northeast of Changzhi City. Mountains make up 58% of the total area, hills about 31%, and alluvial valley plains 11%. The county has higher elevations in the northwest and lower elevations in the southeast. Average county elevation is about 800 masl, while the highest point is 2020 masl and the lowest is 622 masl.

Figure 27: Licheng subproject location, topography and landuse. Source: Google Earth 2011, image date 2010.

Licheng County urban center

HGS Site

60

b. Climate

139. The mean annual precipitation of Licheng County is between 520 and 550 mm and is highly seasonal; 80% of the annual precipitation occurs between May and October. Temperatures can range from –22.0 to 39.3 0C, and the annual average temperature is 10.7 0C, while at the subproject site the annual average annual temperature is 11.2 0C. The region is subject to frequent prolonged drought conditions coupled with periods of freezing temperatures during the winter.

c. Air Quality

140. Baseline ambient air quality monitoring results for Licheng County urban area were obtained from the Changzhi EPB by the domestic EIA consultant and are presented in Table 28. Average 24-hour PM10 concentrations ranged from 0.015-0.32 mg/Nm3 (PRC standard: 0.15 mg/Nm3) with 15.5% of days not meeting the standard. The average 24-hour SO2

concentrations ranged from 0.010-0.295 mg/Nm3 (PRC standard is 0.15 mg/Nm3), with 5% of days not meeting the standard. The average 24-hour NO2 concentrations ranged from 0.002-0.08 mg/Nm3 (relevant PRC air quality standard is 0.08 mg/Nm3), which was in compliance with the PRC standard, though the highest levels were at the limit. Overall the results indicate an airshed that is polluted with exceedances of PM10 and SO2 standards, most likely during the winter heating months as a result of operation of existing boilers combined with arid conditions and wind erosion.

Table 28: Ambient air quality monitoring results, Licheng County (2009)

Item Sampling

Type Number Samples

Range (mg/Nm3)

Maximum Exceedance of Standard (%)

Days Exceeding Standard

(%)

Days that Met the

standard (GB3095-

1996)

PM10 24-hr

Average 361 0.015-0.320 213.33 15.51 84.49%

SO2 24-hr

Average 361 0.01-0.295 196.67 5.54 94.46%

NO2 24-hr

Average 361 0.002-0.08 66.67 0 100%

Source: Licheng Subproject EIA.

d. Hydrology and Water Quality

141. There are more than 17 rivers with permanent flows in Licheng County, the two largest being the Qingzhanghe and the Zhuozhang rivers. The length of the Qingzhanghe River is about 3.5 km in the county area, with an average annual runoff of 380 million m3. The Zhuozhang River is about 39.6 km in length, and is a typical mountain river. It has a gradient of 4.5% within the county area, an elevation of between 650 to 760 masl, and an annual average runoff of 7.2 million m3. There are 41 springs and 3 reservoirs with a total capacity of 4 million m3 in the county area. 142. There are no National or Provincial Water Quality Monitoring stations in Licheng County, but the Changzhi City EPB does conduct simplified monitoring. Table 29 presents the monitoring data for the Qingzhanghe River for 2008. In general the river water environmental quality meets applicable standards, with the exception of total nitrogen (TN), which can likely be attributed to human activity and the discharge of untreated domestic wastewater.

61

Table 29: Qingzhanghe River water quality data, Licheng County (2008)

Parameters (Annual average in mg/L except pH or if otherwise indicated)

Station One Station Two Station Three Standard for Class III Surface Water Body

Temperature ( ） 11.8 11.2 12.2

Water temperature variation by manmade activities should not exceed weekly average maximum rise 1 or drop 2

pH 8.29 8.26 8.32 6-9 DO 7.96 8.03 8.07 5 Permanganate index 2.53 2.54 2.54 6 COD 10.5 12.1 11.7 20 DOD 2.38 2.56 2.41 4 NH3-N 0.440 0.460 0.329 1.0 Total phosphorus 0.051 0.062 0.05 0.2 Total nitrogen 2.09 2.26 2.26 1.0 Volatile Phenol 0 0 0 0.005 Oil 0 0 0 0.05 Anionic surface active agent

0 0 0 0.2

Sulfide 0 0 0 0.2 Source: Licheng Subproject EIA. Note: A “0” value indicates that the result is lower than the detection limit of the applicable monitoring instrument.

e. Noise

143. The domestic EIA consultant conducted noise monitoring in May 2011 at the HGS site (Table 30). The results indicate that the site ambient acoustic environmental quality was within applicable standards for both day and nighttime.

Table 30: Ambient noise monitoring, HGS site, Licheng County (2011)

Time Location

Day Night

L10 L50 L90 Leq PRC

Standard L10 L50 L90 Leq PRC Standard

East 52.4 49.9 47.7 51.7 60 met 44.5 43.7 42.0 44.1 50 met South 51.3 49.4 46.9 50.2 60 met 45.3 43.9 42.2 44.5 50 met West 50.7 48.6 46.8 49.4 60 met 43.2 41.8 40.1 42.4 50 met North 51.0 49.5 47.0 49.9 60 met 43.5 41.7 40.2 42.8 50 met Nearest Resident

to the North 50.5 48.9 46.7 49.7 60 met 43.7 42.1 40.9 43.0 50 met

Source: Licheng Subproject EIA.

f. Ecology

144. The subproject area can be characterized as a heavily modified agricultural and urban landscape. Originally the area in and around the subproject site was vegetated with deciduous hardwood forests. However, both primary and secondary forests have long since been removed. Land area not currently under cultivation is sparsely vegetated with shrubs and grasses. The only forested areas in the subproject area have been planted along the river margins and in the villages. No endangered or otherwise protected flora species are known to exist in the project area. Animals present are mostly domestic livestock. No rare, endangered, or threatened fauna species were identified within the project area.

62

g. Subproject Site Setting

145. The Licheng Subproject HGS will be on a parcel of relatively flat state-owned land, located on the southern periphery of the Licheng urban area. It is the site of a former brick factory that has since been shut down (Figure 9 and Figure 27), and agricultural land. The pipeline will be installed on the sides of existing roads and the HESs will be in built-up downtown areas or near residential areas that will receive the heating service. Idle land will be used to the maximum extent possible.

3. Qin

a. Location and Topography

146. Qin County is located in southeastern Shanxi in the high broad valleys of the Taihang Mountains. The county has a total land area of 1,319 km2, and is approximately 480 km southeast of Beijing, 125 km south of Taiyuan, and 75 km northwest of Changzhi City. Landforms in Qin County include mountainous areas (approximately 60% of the total area), loess hills and sloping plains (30% of the area), and alluvial plain valleys (10% of the total area). The average elevation in the county is approximately 1,000 masl, with the highest elevation being 1,748 masl, and the lowest being 916 masl.

Figure 28: Qin subproject location, topography and landuse. Source: Google Earth 2011, image date 2008.

b. Climate

147. Qin County’s mean annual precipitation is between 460 and 500 mm and is highly seasonal: 60% of the annual precipitation occurs during the summer. Temperatures can range from 37.5 0C during the summer months to –27.0 0C in winter in the downtown area, and the average annual temperature is 9.7 0C downtown and 10.5 0C at the subproject site. The region is subject to frequent prolonged drought conditions coupled with periods of freezing

Qin County urban center

HGS site

63

temperatures during the winter. The winter heating season generally lasts for 138 days from 10 November until 16 March.

c. Air Quality

148. Ambient air quality monitoring was undertaken during the domestic EIA preparation, results are presented in Table 31 to Table 34. The 24-hour average levels of PM10 were highest in the downtown center and lowest at the HGS site. There were no exceedances of the PRC 24-hour average standard of 0.15 mg/Nm3 (GB3095-1996) at the HGS site, while all 7 of the downtown samples exceeded the standard. Similarly, 6 of the 7 downtown 24-hour average TSP samples exceeded the PRC standard of 0.3 mg/Nm3, while there were no exceedances at any of the other sampling locations, including the proposed HGS site. 149. The 24-hour average concentrations of SO2 ranged from 0.010-0.012 mg/Nm3, which were in compliance with PRC standard of 0.15 mg/Nm3 (GB3095-1996) at all sampling stations. The 24-hour average concentrations of NO2 ranged from 0.008-0.013 mg/Nm3 which was also in compliance with PRC standard of 0.08 mg/Nm3 (GB3095-1996). Overall the results indicate that the urban air quality in Qin County meets standards with respect to SO2 and NO2, but is poorer in terms of particulates, likely due at least in part to winter heating emissions from small boilers and household stoves. In addition, the air quality is considerably better at the proposed HGS site.

Table 31: PM10 monitoring results, Qin County.

Sampling Station

PRC 24-hour Average

Standard

(mg/Nm3）

No Samples 24-hour Average

PM10 Concentration Range (mg/Nm3)

No. Samples Which Exceed the Standard

1

0.15

7 0.168 - 0.190 7 2 7 0.129 - 0.150 1 3 7 0.131 - 0.174 3 4 7 0.102 - 0.144 0 5 7 0.088 - 0.129 0

Source: Qin County Subproject EIA. Sampling Stations: 1 = Downtown; 2 = Huzhang Village; 3 = Changsheng Village; 4= Duanliu Village; 5 = proposed HGS site.

Table 32: TSP monitoring results, Qin County.

Sampling Station

PRC 24-hour Average

Standard

(mg/Nm3）

No Samples 24-hour Average

TSP Concentration Range (mg/Nm3)

No. Samples Which Exceed the Standard

1

0.30

7 0.297 - 0.330 6 2 7 0.190 - 0.247 0 3 7 0.211 - 0.247 0 4 7 0.181 - 0.206 0 5 7 0.191 - 0.209 0

Source: Qin County Subproject EIA. Sampling Stations: 1 = Downtown; 2 = Huzhang Village; 3 = Changsheng Village; 4 = Duanliu Village; 5 = proposed HGS site.

Table 33: SO2 monitoring results, Qin County.

Sampling PRC 24-hour No Samples 24-hour Average SO2 No. Samples

64

Station Average Standard

(mg/Nm3）

Concentration Range (mg/Nm3)

Which Exceed the Standard

1

0.15

7 0.011 - 0.012 0 2 7 0.011 0 3 7 0.011 - 0.012 0 4 7 0.010 - 0.012 0 5 7 0.010 - 0.011 0

Source: Qin County Subproject EIA. Sampling Stations: 1 = Downtown; 2 = Huzhang Village; 3 = Changsheng Village; 4 = Duanliu Village; 5 = proposed HGS site.

Table 34: NO2 monitoring results, Qin County.

Sampling Station

PRC 24-hour Average

Standard

(mg/Nm3）

No Samples

24-hour Average NO2 Concentration

Range (mg/Nm3)

No. Samples Which Exceed the Standard

1

0.08

7 0.010 - 0.012 0 2 7 0.010 - 0.011 0 3 7 0.009 - 0.011 0 4 7 0.008 - 0.010 0 5 7 0.011 - 0.013 0

Source: Qin County Subproject EIA. Sampling Stations: 1 = Downtown; 2 = Huzhang Village; 3 = Changsheng Village; 4 = Duanliu Village; 5 = proposed HGS site.

d. Hydrology and Water Quality 150. Qin County is the upper watershed for many rivers in the region, and is considered to be well off in terms of water resources. There are more than 20 streams and rivers in the county with permanent flows, the main ones being the Zhuozhang and Qingzhanghe Rivers. The Zhuozhang is a typical mountain river, having a gradient of between 4.0 to 8.0% within the county area. There are also more than 50 springs and 20 small reservoirs and lakes in the county area, and many areas have been designated as water resources protection zones in the upstream of the Zhuozhang River and in the high mountain areas. However, the proposed Subproject HGS site and pipeline alignment are at least 10 km away and downstream from any water protection area or significant water resource area. 151. As with Licheng County there is no national or provincial water quality monitoring station in Qin County, and the Changzhi City EPB only conducts simplified monitoring. Table 35 presents the monitoring data for the Qingzhanghe River for 2008. In general, the river water environmental quality meets applicable standards, with the exception of TN, which can likely be attributed to human activity and the discharge of untreated domestic wastewater.

Table 35: Qingzhanghe River water quality, Qin County (2008). Parameters (Annual average, in mg/L except pH or if otherwise indicated)

Station One Station Two Station Three Standard for Class III Surface Water Body

Temperature ( ） 11.8 11.2 12.2 Water temperature variation by

65

manmade activities should not exceed weekly average maximum rise 1 or drop 2

pH 8.25 8.24 8.32 6-9 DO 8.96 8.23 8.37 5 Permanganate index 2.51 2.44 2.32 6 COD 9.5 10.1 8.7 20 DOD 2.18 2.18 1.85 4 NH3-N 0.41 0.38 0.32 1.0 Total phosphorus 0.032 0.042 0.038 0.2 Total nitrogen 2.02 2.11 1.56 1.0 Volatile Phenol 0 0 0 0.005 Oil 0 0 0 0.05 Anionic surface active agent

0 0 0 0.2

Sulfide 0 0 0 0.2 Source: Qin County Subproject EIA. Note: A “0” value indicates that the result is lower than the detection limit of the applicable monitoring instrument.

e. Noise

152. The domestic EIA consultants conducted ambient noise monitoring in May 2011 at 4 locations immediately adjacent to the proposed HGS site in Qin County (Table 36). The results indicate that the site ambient acoustic environmental quality were within applicable standards for both day and night time.

Table 36: Ambient acoustic monitoring data, proposed HGS site, Qin County (2011). Sampling

Station Time

L10 dB(A)

L50dB(A)

L90dB(A)

LeqdB(A)

PRC StandarddB(A)

1 Day time 41.6 39.0 36.8 39.7 60

Night 37.9 36.0 34.2 36.2 50

2 Day time 40.5 38.5 36.8 38.9 60

Night 37.0 35.1 32.9 35.4 50

3 Day time 42.0 36.9 35.3 40.5 60

Night 39.9 37.4 35.2 38.0 50 4 Day Time 39.8 37.3 36.2 38.6 60 Source: Qin County Subproject EIA.

f. Ecology

153. The subproject area can be characterized as a heavily modified mixed agricultural and industrial landscape. The subproject area consists of scrubland, farmland and industrial land. Originally the area in and around the subproject site was vegetated with deciduous hardwood forests. However, both primary and secondary forests have long since been removed. Land area not currently under cultivation is sparsely vegetated with shrubs and grasses. The only forested areas in the subproject area have been planted along the river margins and in the villages. The flat area is characterized mainly by farmland and orchards, with some tree farms on the river flood plains. No endangered or otherwise protected plant species are known to exist in the project area. Animals present are mostly domestic livestock and common avifauna and rodents. No rare, endangered, or threatened species were identified within the project area.

g. Subproject Site Setting 154. The HGS will be located on a parcel of collectively-owned land acquired prior to the

66

project. The site is relatively flat land in a valley surrounded by shrub land and farmland, approximately 11 km from the city center (Figure 14 and Figure 28). The pipeline will be installed on the sides of existing roads and the HES will be in built-up downtown areas or near residential areas that will get the heating. These areas are relatively flat areas.

4. Zhongyang

a. Location and Topography 155. Zhongyang County of Lvliang City is located in mid-western Shanxi province in the Lvliang Mountains. It has a land area of 1,433 km2, and is approximately 540 km directly southwest of Beijing, and 140 km directly southwest of Taiyuan. The urban area of Zhongyang County is located in a valley approximately 19 km directly southeast of Lvliang City proper (Figure 29). 156. Zhongyang County includes high limestone mountains, lower hills, and alluvial valley plains. It drains to the Yellow River to the west, and the landform shows a shallow inclination from the higher east to the lower west. Altitudes vary between 940–1,300 masl.

Figure 29: Zhongyang subproject location, topography and landuse. Source: Google Earth 2011, image date 2006.

b. Climate

157. The Zhongyang winter heating season generally lasts for 143 days from 4 November until 26 March. Temperatures can range from −28.6 to 38 oC, and the average annual temperature is 8.6 oC. Average annual precipitation is about 460 mm and the average annual

Zhongyang County Heating Center

Zhongyang County urban center

67

evaporation capacity is 1,850 mm with a relative humidity of 55%. The average depth of seasonal frozen soil is 165 cm and the frost season is from early October to late April. The wind is predominantly from the west-northwest and east-northeast with a maximum speed of 29 m/s and an average annual speed of 3.0 m/s.

a. Air Quality

158. As part of the environmental assessment process for the existing HGS at Zhongyang, the domestic EIA consultant undertook ambient air quality monitoring in 2008 (non-heating season) and 2009 (heating season) at several locations downtown urban locations; results are presented in Table 37. Average 24-hour PM10 concentrations ranged from 0.013-0.863 mg/Nm3 (PRC standard is 0.15 mg/Nm3), indicating significant exceedances of the standard during the heating season. Average 24-hour SO2 concentrations ranged from 0.004-0.862 mg/Nm3 (PRC standard is 0.15 mg/Nm3), which also showed significant exceedances in both heating and non-heating seasons. Average concentration of NO2 ranged from 0.003-0.079 mg/Nm3 (relevant PRC air quality standard GB3095-1996 limit is 0.08 mg/Nm3), which was in compliance with the PRC standard, though the highest values were just below the limit. Overall the air quality in the area is poor, particularly during the winter heating months. It should be noted that the monitoring occurred at urban downtown stations, not at the HGS site.

Table 37: Air quality monitoring results Zhongyang County, 2008-09.

Sampling Station Parameter 24-hour Average Results, mg/Nm3

Heating Season, Nov-Dec of 2008 Jan-Mar,

County Government Building

SO2 0.047-0.862 PM10 0.014-0.312 NO2 0.003-0.079

County Construction

Bureau Building

SO2 0.065-0.859 PM10 0.026-0.183 NO2 0.006-0.072

Non Heating Season, Apr-Oct of 2008

County Government Building

SO2 0.005-0.793 PM10 0.013-0.189 NO2 0.007-0.037

County Construction

Bureau Building

SO2 0.004-0.432 PM10 0.016-0.147 NO2 0.007-0.043

Source: Zhongyang Subproject EIA.

b. Hydrology and Water Quality

159. The proposed Subproject area is located in the Nanchuan River watershed. The Nanchuan River has a total length of 59 km and an annual average flow of 36.7 million m3. The water quality of the rivers is influenced by the more than 10 factories discharging wastewater into the tributaries of the upper basin. Effluents from coal mines also contribute pollutants to the river. Zhongyang County is also home to the Chengjiawan Reservoir, located south of the urban center and approximately 5 km southwest from the subproject site. The reservoir is designed for control flood and irrigation. 160. The Shanxi Provincial Environmental Monitoring Station conducted water monitoring at one section of the Nanchuan River in 2008. The monitoring results, presented in Table 38, indicate that the river was showing signs of pollution, though only oil levels significantly exceeded the standard. Major pollution sources include untreated local domestic wastewater and industries.

68

Table 38: Water quality monitoring results, Zhongyang County, 2008-09.

Sampling time

Parameter, mg/L (except pH) PH NH3-N COD BOD5 Oil

2008.8.14 7.1 0.746 14 3.3 0.268 2008.8.15 7.5 0.745 18 3.4 0.260 2008.8.16 7.2 0.770 18 3.5 0.267

PRC Standard (Class III) 6‐9 ≤1.0 ≤20 ≤4 ≤0.05

Source: Zhongyang Subproject EIA.

c. Noise

161. The domestic EIA consultant conducted noise monitoring in March 2008 at the HGS site.

162. . The results indicate the site is relatively noisy during both day and night, though PRC standard were not exceeded.

Table 39: Noise quality monitoring results, boundary of Zhongyang HGS site, 2008-09.

Point Date

Results of Monitoring dB（A）

Day TimePRC Standard: 60

Night Time PRC Standard: 50

L10 L50 L90 Leq L10 L50 L90 Leq

East 8.14 53.2 50.7 49.8 51.3 51.2 48.8 47.7 49.3 8.15 53.4 50.9 49.9 51.5 49.3 46.7 46.2 47.3

South 8.14 53.1 50.5 49.5 51.2 51.1 48.6 47.6 49.2 8.15 53.2 50.6 49.6 51.3 49.2 46.5 46.1 47.2

West 8.14 53.3 50.8 49.6 51.4 51.2 48.8 47.7 49.4 8.15 53.5 50.9 49.8 51.6 49.4 46.7 46.3 47.4

North 8.14 53.5 50.9 49.7 51.6 51.4 48.9 47.8 49.7 8.15 53.7 51.1 49.9 51.7 49.5 46.8 46.4 47.7

Range 51.2-51.7 47.2-49.7 Source: Zhongyang Subproject EIA.

d. Ecology

163. The subproject area can be characterized as a heavily modified industrial landscape. Originally the area in and around the subproject site was vegetated with deciduous hardwood forests. However, both primary and secondary forests have long since been removed, and land area not currently under cultivation is sparsely vegetated with shrubs and grasses. Based on ecological surveys undertaken by the domestic EIA consultants, site visits by the PPTA environmental specialists and information from the Lvliang EPB, no endangered or otherwise protected plant species are known to exist in the project area. 164. Faunal diversity is also very low. Based on ecological surveys and information from the Lvliang EPB, there are no known reports of any rare, endangered or threatened species in the vicinity of the subproject area.

e. Subproject Site Setting

165. The Zhongyang County Heating Center is located approximately 4 km southeast of the urban center of Zhongyang County in a heavily industrialized zone. The pipeline will be installed on the sides of existing roads and the HES will be in built-up downtown areas or near to resident

69

areas that will receive the heating service.

5. Liulin

a. Location and Topography

166. Liulin County is located in mid-western Shanxi Province within the Lvliang Mountains.19 It has a land area of 1,287 km2, and is approximately 550 km directly southwest of Beijing and 155 km directly southwest of Taiyuan. The urban area of Liulin County is located in a valley approximately 23 km southwest of Lvliang City proper. 167. Liulin County includes high limestone mountains, lower hills, and alluvial valley plains. It drains to the Yellow River to the west, and the landform shows a shallow inclination from east to west. Altitudes vary between 1,050–1,230 masl.

Figure 30: Liulin subproject location, topography and landuse. Source: Google Earth 2011, image date 2009.

b. Climate

168. As with the other counties and districts of Lvliang City, the Liulin County climate is characterized by a long cold winter and hot and rainy summer, with frequent flooding. Temperatures can range from −24 to 32 oC, and the average annual temperature is 4.8 oC. Average annual precipitation is about 450 mm and the average annual evaporation capacity is 1,700 mm with a relative humidity of 55%. The average depth of seasonal frozen soil is 165 cm and the frost season is from mid-October to mid-April. The wind is predominantly from the west-

19 Lvliang City is made up of one district, ten counties and two provincial counties.

CMM storage site

Liulin County urban area

70

northwest and east-northeast with a maximum speed of 26 m/s and average annual speed of 3.0 m/s.

c. Air Quality

169. As part of the preparation of the Liulin subproject environmental assessment the domestic EIA consultant obtained ambient air quality, noise level and water quality from the Lvliang City EPB. Air quality monitoring results are presented in Table 40. The monthly average 24-hour concentration of SO2 ranged from 0.040-0.128 mg/Nm3 (PRC standard is 0.15 mg/Nm3), which was in compliance with the PRC standard. The monthly average 24-hour concentration of NO2 ranged from 0.008-0.023 mg/Nm3 (PRC standard is 0.08 mg/Nm3), which was in compliance with PRC standard. The monthly average 24-hour concentration of PM10 ranged from 0.034-0.155 mg/Nm3 (PRC standard is 0.15 mg/Nm3), with the highest levels slightly exceeding the standards.

Table 40: Air quality monitoring results, Liulin County.

Month

Parameters (Monthly average of 24 hr concentrations, mg/Nm3) Month

Parameters (Monthly average of 24 hr concentrations, mg/Nm3)

PM10 SO2 NO2 PM10 SO2 NO2 January 0.155 0.128 0.019 July 0.045 0.047 0.013 February 0.128 0.089 0.015 August 0.034 0.040 0.019

March 0.157 0.066 0.019 September 0.045 0.041 0.023 April 0.101 0.101 0.033 October 0.068 0.057 0.016 May 0.052 0.054 0.020 November 0.080 0.097 0.011 June 0.059 0.073 0.023 December 0.123 0.093 0.008

Annual 0.087 0.073 0.018 Source: Liulin Subproject EIA.

d. Hydrology and Water Quality

170. Major rivers running through Liulin County include the Shanchuan and the smaller Quchang River. The Yellow River is located at the western boundary of Liulin County, and the dominate water flow direction is from east to west; thus these and other small streams in the area are all tributaries to the Yellow River. Water quality of these rivers is influenced by effluents from coal mines and electroplating factories. 171. Water quality monitoring was undertaken at three sites on the Shanchuan River (Table 41). The results indicate that the river water quality complied with the majority of the relevant standards, though limits for COD and fluoride where exceeded.

Table 41: Shanchuan River water quality data, Liulin Subproject (2010). Sampling

Station Measure

Parameter (mg/L except pH)pH CODcr BOD5 NH3-N Mn Oil Sulfide Fluoride

1

Average 7.90 106 33.3 0.029 0.01 0.13 0.005 3.42 PRC

Standard (Class V)

6-9 ≤40 ≤10 ≤2.0 ≤0.1 ≤1.0 ≤1.0 ≤1.5

Standard Met?

Yes No No Yes Yes Yes Yes No

2

Average 7.94 59 22.3 0.025 0.01 0.15 0.006 2.13 PRC

Standard (Class V)

6-9 ≤40 ≤10 ≤2.0 ≤0.1 ≤1.0 ≤1.0 ≤1.5

71

Standard Met?

Yes No Yes Yes Yes Yes Yes No

3

Average 8.02 16 5.3 0.025 0.01 0.17 0.005 2.10 PRC

Standard (Class V)

6-9 ≤40 ≤10 ≤2.0 ≤0.1 ≤1.0 ≤1.0 ≤1.5

Standard Met?

Yes Yes Yes Yes Yes Yes Yes No

Source: Liulin Subproject EIA.

e. Noise

172. Ambient noise monitoring results are presented in Table 42. The results indicate that noise levels at the sampling stations were fully in compliance with PRC standards during both the day and nighttime.

Table 42: Ambient acoustic monitoring results, Liulin Subproject (2010).

Monitoring Station and Location

Day dB(A)PRC Standard: 60

Night dB(A) PRC Standard: 50

Leq L10 L50 L90 SD Leq L10 L50 L90 SD 1 east 47.0 49.0 46.4 44.4 1.8 40.4 41.6 39.1 37.3 2.4 2 north 47.0 48.8 47.1 43.6 2.2. 40.0 41.4 39.7 38.4 1.2 3 north 47.5 49.0 47.4 45.7 1.4 40.7 41.8 40.4 39.5 0.9 4 north 46.8 48.3 46.7 44.3 1.5 41.6 43.7 41.3 38.4 2.1 5 west 46.5 48.7 46.1 43.8 1.9 40.3 41.6 40.0 38.7 1.2 6 south 47.3 48.9 47.0 44.4 1.9 40.5 41.8 40.3 38.7 1.1 7 south 46.1 47.4 46.1 43.8 1.3 39.8 41.7 38.7 37.3 1.9 8 south 47.3 49.3 47.1 44.5 1.9 39.1 40.8 38.6 37.0 1.4 9 other 41.8 43.0 41.7 40.2 1.1 37.0 37.9 37.0 35.6 1.0

Source: Liulin Subproject EIA.

f. Ecology 173. The subproject area can be characterized as a heavily modified mixed urban/industrial landscape. Originally the area in and around the subproject site was vegetated with deciduous hardwood forests. However, both primary and secondary forests have long since been removed, and land area not currently under cultivation is sparsely vegetated with shrubs and grasses. The only forested areas in the subproject area have been planted along the river margins and in the villages. Based on ecological surveys undertaken by the domestic EIA consultants, site visits by the PPTA environmental specialists and information from the Lvliang EPB, no endangered or otherwise protected plant species are known to exist in the project area. 174. Due to poor habitat quality faunal diversity is low, both for vertebrates and invertebrates. Animal communities observed in the project area are dominated by species commonly associated with shrubland and grassland communities. Mammalian species are mostly smaller rodents. No rare or endangered species or have been recorded at the subproject sites and routes, and there are no parks or protected areas in the vicinity.

g. Subproject Site Setting 175. As noted previously the urban area of Liulin County is located in a valley approximately 23 km southwest of Lvliang City proper. The CMM extraction facilities will be in 3 coal mines located outside of the Liulin County urban area, and the CMM storage facility will also located at

72

one of the coal mines about 5 km from the urban area (see Figure 30). The storage facility site and surrounding area is classified as industrial land and are heavily utilized by a number of mines; as such the area is almost completely denuded of natural vegetation. There is however some small scale farming occurring at the proposed storage facility site, and compensation will be required for the loss of this land. 176. The pipeline will be installed on relatively flat land on the sides of existing roads in built-up downtown areas or near to resident areas that will receive the heating service. C. Socioeconomic and Cultural Profile 177. This section is based largely on the PPTA-7736 interim Poverty and Social Assessment (PSA).

1. Shanxi Administrative Divisions 178. Shanxi is divided into eleven prefecture-level cities: i) Taiyuan; ii) Changzhi; iii) Datong; iv) Jincheng; v) Jinzhong; vi) Linfen; vii) Lvliang; viii) Shuozhou; ix) Xinzhou; x) Yangquan; and xi) Yuncheng. These are in turn subdivided into 119 county-level divisions (23 districts, 11 county-level cities, and 85 counties).

2. Project Land Area and Demography

179. The subprojects are situated within five counties and/or districts of three prefecture level cities of Shanxi Province, namely Zhongyang County (Zhongyang Subproject) and Liulin County (Liulin Subproject) of Lvliang City; Yuci District of Jinzhong City (Jinzhong Subproject); and Licheng County (Licheng Subproject) and Qin County (Qin Subproject) of Changzhi City. The five project districts and counties had a total population of approximately 1.43 million in 2010, including about 0.71 million inhabitants living in urban areas. Geographic and demographic information about the subproject areas are presented in Table 43.

Table 43: Land area and demographic characteristics. City/District/ County

Associated Subproject

Land Area km2

House-holds (HH)

Avg.HH Size

Population

Urban-ization Rate (%)

Gender Ratio Female= 100

Lvliang City 21,095 1,038,792 3.41 3,727,057 36.6 107.83Zhongyang County

Zhongyang 1,433 47,711 2.97 141,728 40.6 111.53

Liulin County Liulin 1,288 107,542 320,681 29.5 107.86

Jinzhong City 16,400 1,002,346 3.01 3,249,425 47 109.04Yuci District Jinzhong 1,311 194,449 2.93 635,651 72.9 101.62

Changzhi City 13,896 923,466 3.41 3,334,564 41 105.34Licheng County Licheng 1,101 48,043 3.20 158,541 29.1 107.61 Qin County Qin 1,297 49,355 3.36 172,205 26.2 109.21

Shanxi Province 10,330,200 3.24 35,712,111 46.0 105.56Source: Statistical Communiqué of Lvliang, Jinzhong, Changzhi, Lishi, Yuci, Liulin, Licheng, and Qin County, 2010 180. The urbanization rate has increasing rapidly in Shanxi Province concurrent with its recent rapid economic growth. For example, the urbanization rate rose from 35.9% in 2000 to 46.0% in 2009. However, the urbanization rate varies considerably amongst the subprojects. As Yuci is the main urban district of Jinzhong City, the urbanization rate is higher than other subproject areas. Abundant coal resources provided Liulin County robust economic growth, but

73

contributed little to its urbanization. Licheng and Qin counties are predominantly rural due to their relatively remote location and lack of natural resources. 181. In general, gender ratio is inversely proportional to urbanization rate, and data from Table 43 shows that the subproject areas are consistent with this theory. Yuci district has higher urbanization rates and lower gender ratios; and predominantly rural Liulin, Licheng, and Qin counties have higher gender ratios.

3. Economic Growth and Employment 182. In recent years Shanxi Province has experienced fast and steady economic growth. The annual growth rate increased 13.9% in 2010 over 2009’s rate. Among subproject areas the growth rate of Lvliang City in 2010 was 21%, much higher than provincial level and other cities such as Jinzhong and Changzhi. Of the subproject counties/districts, Liulin County ranked highest in terms of per capita GDP due to its high number of secondary industries; Qin County ranked bottom due to its very low level of industrialization. Additional information is presented in Table 44.

4. Income and Expenditure 183. Shanxi Province is one of the lesser-developed provinces of China, and economic development level and living standards are lower than the national average. In 2010 the annual per capita disposable income of urban residents in Shanxi was CNY 15,648 and the net per capita income for farmers in rural areas was CNY 4,736, which were 18.1% and 20% lower than the national levels, respectively. Per capita disposable income of urban residents in all subproject areas was also lower than the national level in 2010, and with the exception of Yuci, lower than the provincial level.

Table 44: GDP and industry structure (2010). City/District/ County

Subproject GDP CNY 10,000

Increase of GDP over the Previous Year%

Per CapitaGDP CNY

Proportion of Primary, Secondary and

Tertiary Industries

Lvliang City 8,455,000 21 22,685 5.1:69.6:25.3Zhongyang County

Zhongyang 1,850,804 25.6 60,922 1.0:88.5:10.5

Liulin County

Liulin 1,850,804 25.6 60,922 1.0:88.5:10.5

Jinzhong City 7,638,000 14 23,506 8.5:54.9:36.6Yuci District Jinzhong 1,223,122 9.2 22,030

Changzhi City 9,202,000 13.7 27,596 4.4:65.4:30.2Licheng County

Licheng 212,852 13 13,426 10.2:46.4:43.4

Qin County Qin 106,320 13 6,174 29.8:8.7:61.5 Shanxi Province

90,881,000 13.9 26,385 6.2:56.8:37

Source: Statistical Communiqué of Shanxi, Lvliang, Jinzhong, Changzhi, Lishi, Yuci, Liulin, Licheng, and Qin County, 2010 184. In general, the income of residents, and in particular urban residents, is proportional to the economic growth level in the area. The income levels in the subproject areas match their economic growth situation, with the exception of Liulin. Apparently, local residents in Liulin have not been the beneficiaries of the abundant local coal resources. Additional information on income is presented in 185. Table 45.

74

Table 45: Per capita annual income (2010).

City/District/ County Per Capita Disposable Income

of Urban Residents (CNY)

Per Capita Net Income of Rural Residents

(CNY) Lvliang City 15,278 3,890

Zhongyang County 11,672 3,159 Liulin County 14,992 4,522

Jinzhong City 16,379 5,809 Yuci District 17,394 6,766

Changzhi City 17,123 5,960 Licheng County 9,599 4,263 Qin County 9,460 2,746

Shanxi Province 15,648 4,736 National Average 19,109 5,919 Source: Statistical Communiqué of the national, Shanxi, Lvliang, Jinzhong, Changzhi, Lishi, Yuci, Liulin, Licheng, and Qin County, 2010

5. Age Composition and Education 186. Table 46 and Table 47 present the age composition and education level of local residents in subproject areas. The aging population level in all subproject areas and in Shanxi is lower than the national average. Labor supply is sufficient. In urban districts like Yuci, the education level is much higher than in the counties.

Table 46: Age composition (%) in 2010. Age (years)

Zhongyang County

Liulin County

Yuci District

Licheng County

Qin County

Shanxi Province

NationalAverage

0-14 16.1 21.7 14.4 20.7 18.5 17.1 16.6 15-64 76.45 72.72 77.0 71.8 73.4 73.3 74.5 >65 7.45 5.58 8.6 7.6 8.1 7.6 8.9

Source: Communiqué of Sixth National Census, in Lishi, Liulin, Yuci, Licheng and Qin, Shanxi and China, 2010

Table 47: Education levels of local residents in 2010.

Education Level Zhongyang

County Liulin

County Yuci District

Licheng County

Qin County

Per 100,000 peoplePreliminary school 27456 28,498 18,641 26,467 26,102 Middle school 48762 42,620 38,021 49,554 47,539 Senior high school and professional technical schools

12,759 12,661 19,505 10,763 12,135

College and above 4,532 5,319 15,645 3,991 4,881 Illiterate20 2.92 2.99 2.56 1.48 2.74

Source: Communiqué of Sixth National Census, in Lishi, Liulin, Yuci, Licheng and Qin, 2010

6. Poverty Profile in Subproject Areas

187. In 2001 the State Council Leading Group Office of Poverty Alleviation and Development issued the list of national poverty reduction targeted counties, designating 592 poverty counties, mainly in the central and western areas of China. In 2009, there were 35 poverty counties in

20 Population aged 15 years and over who are unable to read.

75

Shanxi Province; however, of all subject areas, only Zhongyang County was on the list. Table 48 presents the detailed information of urban and rural poor in the subproject areas.

Table 48: Urban and rural poor in Project areas (2010).

City/District/County Urban Poverty Line

CNY/month Urban Poor (persons)

Urban Poor Rate (%)

Lvliang City 216 108,000 --Zhongyang County 215 7,897 13.7 Liulin County 235 7,697 8.14

Jinzhong City 239 56,000 --Yuci District 275 9,734 2.1

Changzhi City 224 -- --Licheng County 205 3,059 6.64

Qin County 205 4,668 10.35 Shanxi Province 231 915,000 5.3 National 251 -- -- Source: http://www.mca.gov.cn, the official website of Ministry of Civil Affairs of the PRC Statistical Communiqué of

the Lishi, Yuci, Liulin, Licheng, and Qin County, 2010 Note: The urban poor are the people covered by UMLSS

7. Public Utilities

188. Although public utilities in Shanxi Province and subproject areas have been improved substantially in recent years, some services are still not well supplied and need further improvement. The urban districts such as Yuci have relatively high district heating supply rates (64.7%). On the other hand, Licheng and Qin counties have not been supplied any district heating to date. The proportion of natural gas (CBM/CMM) coverage in Liulin is about 31%. With economic growth and population increases, the current heating systems urgently require upgrading in order to meet the need of rapid urbanization and environmental improvement. Table 49 shows the public utilities in the subproject areas as of the end of 2010.

Table 49: Urban Utilities in Subproject Areas (2010).

Item Lvliang City Jinzhong City Changzhi City

Zhongyang County

Liulin County

Yuci District

Licheng County

Qin County

Daily garbage service (%) 89 99 40 Building area serviced by district

heating (10,000 m2）

31 1,304 0 0

District heating supply proportion to total building area (%�

36 64.7 0 0

Natural gas access rate (%� 31 0 65 Sewage treatment rate (%� 90 98 93

Source: Statistical Communiqué of the Lishi, Yuci, Liulin, Licheng, and Qin County, 2010

D. Cultural and Heritage Resources 189. Shanxi Province is known as the museum of ancient Chinese culture, having abundant historic and cultural resources and written historical records that date back 3,000 years. Of the 35 United Nations Educational, Scientific and Cultural Organization (UNESCO) designated World Heritage Sites in the PRC, two are in Shanxi: the Pingyao Ancient City and the Yungang Grottoes of fifth-century Buddhist cave art in Datong City. However, the subproject boiler house sites or pipeline alignments will not go through or near any historic sites.

76

V. ASSESSMENT OF ALTERNATIVES

A. Heat Source Options

1. Available Heat Source Options 190. A number of alternatives were considered for the district heat sources, including (i) renewable sources (geothermal heat pumps, biomass, solar and solid waste incineration); (ii) natural gas fired boilers; (iii) combined heat and power plants (CHPs); (iv) large heat-only coal-fired boilers; and (v) present heat sources using small heat-only coal-fired boilers and single family heat-only coal stoves. Nuclear energy was not considered because of the difficulty of government approval and safety concerns associated with the recent Fukishima Daiichi nuclear disaster in Japan.

a. Renewable Energy Sources 191. Renewable energy sources are not financially or technically feasible for district heating in Shanxi:

– While there are many small examples of using medium to low-temperature geothermal

water for space heating, this is generally not viable for larger centralized municipal systems. First, heat pump heating systems normally operate at a lower temperature (55 0C feed temperature and 45 0C return temperature) and are suitable only for a direct connection to end-users. Second, a system large enough to provide such heating requires a considerable expanse of underground piping that in an urban area would conflict with other underground engineering works. Finally, during the winter when the heat is needed, the ground cools and absorbs some of the available heat, degrading the heat pump efficiency.

– Large centralized biomass heat energy generating stations are not feasible for district heating using current renewable technologies. Biomass fuel supply price fluctuations and heat content make it a difficult but potentially feasible option; however, while the HGS and pipelines will be on relatively flat land, most of the land surrounding the subprojects is hilly terrain, and is not suitable for biomass generation, thus making a sufficient biomass supply highly unlikely.

– Unlike other provinces in the PRC the use of solar energy in Shanxi Province is not

widespread for district heating, and is generally limited to individual solar water heaters, although Taiyuan has some pilot projects integrating solar energy for lighting and electricity in some buildings.

– Municipal solid waste either has too low of a heat value when burning relatively cleanly

or it has a higher heat value derived from a high percentage of plastics which when burned produces toxic emissions making this technology unsuitable for urban heat generation.

b. Natural Gas 192. Natural gas is a preferred option if available due to its low emission levels compared to other fossil fuels. However it is not feasible in terms of resource availability in the Project area and financial viability, other than in Liulin County. From 2000 to 2008 Shanxi averaged just

77

under 200 million m3 per year of natural gas production.21 In 2008, the last year with data for natural gas production, it produced just over 500 million m3 of natural gas.22 The supply is too small and dispersed to be used in the subproject areas for heating supply. This is not surprising; with the exception of Beijing, natural gas is not used for centralized district heating systems in cities and/or towns in the PRC. However, in specific circumstances the extraction of CMM to deliver to urban customers to produce heat is a realistic option, such as in Liulin County.

c. Small Decentralized Heat-Only Coal Stoker-Fired Boilers 193. Small heat-only coal stoker-fired boilers are now rarely proposed by local governments because doing so is counter to central government policies and programs aimed at reducing energy intensity and improving environmental conditions. Existing boilers typically have minimal pollution control devices, have low heat efficiency, and are highly polluting; many cities in the PRC are implementing programs to demolish and replace them.

d. Combined Heat and Power Stations 194. Combined heat and power (CHP) stations are highly efficient and are the preferred heat source for district heating. However, the PRC Government approves only large high efficiency power generating stations and is closing smaller and less efficient stations. The Jinzhong subproject will be able to access heat from a new CHP station financed and built by other owners. However, the heating demand in the other subproject areas is too small to justify building a CHP facility large enough to gain approval from the National Development and Reform Committee (NDRC).

e. Large Heat-Only Coal-Fired Boilers 195. Large, heat-only coal-fired boilers are widely used for space heating in northern China and are the preferred heating source after CHPs. Large, heat-only coal-fired boilers are highly efficient; the proposed PC boilers have an 88% combustion efficiency and the CGS boiler has an 80% efficiency, versus 65% for new small boilers and even lower efficiency for existing small boilers. Large, heat-only coal-fired boilers generally use a high-temperature and high-pressure primary system that transfers heat to a lower temperature, lower pressure secondary system that delivers heat to end-users through hot water-to-air radiators. With appropriate emission control systems such boilers will meet PRC and international emission standards.

f. Building Insulation 196. Improved building insulation is not a realistic option for providing district heating in the subproject cities. Improved insulation alone is not a heat source, and it would still require the use of existing stoker boilers and household heating stoves which are highly polluting. However, insulation is extremely important to further improve the overall efficiency of centralised district heating initiatives (e.g. by reducing energy consumption), and government policy promotes insulation and regulates its use.

21 The Liulin CMM project is equivalent to 18% of this 8-year average for the entire province. 22 2010 Energy Statistics Yearbook.

78

2. Preferred Option 197. The initial due diligence review indicated that available heating options are large and small heat-only coal-fired boilers, CHP and natural gas (e.g. CMM). Natural gas and CHPs, if available, are the preferred heat sources for district heating. The Liulin Subproject will be able to take advantage of available CMM sources, and the Jinzhong Subproject will be able to source heat from a new CHP plant in Jinzhong County financed and built by other owners. However in the Licheng, Qin and Zhongyang subprojects there is no CMM source and no available CHPs; the preferred heat source for these subprojects is large efficient coal-fired boilers.

3. Environmental Benefits of the Preferred Option 198. An environmental benefits analysis was undertaken of the proposed Project versus the existing, baseline situation. The analysis estimated differences in annual coal consumption and emissions of CO2, SO2, NO2, TSP and PM10.

– The baseline scenario for the district heating and CMM component assumed existing small boilers and single-family stoves would remain in use to service existing buildings and new, small, heat-only coal-fired boilers would be built to meet the additional heating demand.

– For the proposed Project the analysis assumed large centralized heat-only coal-fired boilers for the Licheng, Qin and Zhongyang subprojects, heat purchased from the CHP for the Jinzhong subproject, and CMM for Liulin.

199. The analysis results indicate that the proposed Project will reduce coal use by an estimated 129,493 standard tons of coal per year and provide energy savings equivalent to 85,390 tons of coal equivalent (tce).23 The estimated net annual emission reductions resulting from the reduced coal use and emission control systems are 254,379 tons of CO2; 4,121 tons of SO2; 1,942 tons of NO2; 16,234 tons of TSP; and 6,494 tons of PM10. The emission reductions are expected to result in significant improvements in air quality in the subproject areas, and associated improvements in human health. In addition, the Project will reduce the transportation of coal through urban areas. See Appendix 5 for the full environmental benefits analysis. B. Boiler Technology Options 200. The Shanxi government is driving the district heating sector to improve its energy efficiency and to reduce pollution, primarily through the use of more efficient circulating fluidized bed (CFB) and pulverized coal (PC) combustion technologies and the decommissioning of existing small low efficiency and highly-polluting stoker-fired boilers. PC combustion is a proven technology that has been in use for nearly a century, and advances over time have improved reliability and combustion efficiency and reduced emissions. The emerging CFB boiler technology is different in many ways from PC combustion. One of the main advantages of CFB combustion technology is that it can efficiently burn a wide range of low quality fuels. CFBs are often recommended for low grade, high ash coals which are difficult to pulverize. In addition, SO2 can be partially removed during the combustion process by adding limestone to the fluidized bed. However, CFB combustion technology has some significant disadvantages, including slightly lower thermal efficiency than PC combustion, lower reliability, higher coal and

23 Based on Project standard ton coal savings in tce less the tce equivalent of CMM combustion in the Liulin

subproject (see Appendix 4).

79

electricity consumption, higher operation and maintenance costs, and the inevitable erosion on the boiler tubes and boiler tube failure which pose a danger to the operation. Therefore, it is widely recognized that CFB boilers are suitable for low grade, high ash coals which are difficult to pulverize, while, PC boilers are suitable for high quality coal which is easy to pulverize, ensuring reliable and efficient operation. In terms of local coal quality, efficiency, and operation reliability and efforts for repairing and maintenance, PC boilers are the recommended choice for the Project, and will be utilized in the Licheng and Qin subprojects. 201. It is important to recognize that large CGS boilers are still the most commonly used technology in the district heating sector in the PRC, primarily due to their low capital cost, reliability, medium to high energy efficiency and long history of utilization in the sector. In exceptional cases, such as the Zhongyang subproject, CGS boilers are still the most suitable technology. 202. The Zhongyang subproject already has three 29 MW CGS boilers in its HGS, and it plans to expand from 87 MW to 116 MW to meet the additional heat demand. The boiler house was originally designed to have four CGS boilers with 116 MW of heat capacity (see Figure 18). The civil works for four CGS boilers has been completed, but only three were installed. All the auxiliary equipment and services such as the coal handling system, the ash and slag handling system, the control system, the air and flue gas system, etc., were designed and sized to handle four CGS boilers. This selection of the fourth boiler needs to be undertaken carefully to be compatible with operation and maintenance of the existing CGS boilers. In terms of construction, reliability, compatibility, operation and maintenance, and cost, CGS boiler combustion is the preferred option for the Zhongyang Subproject. 203. While the energy efficiency of large-size CGS boilers can reach 80%, that is less than that of CFB and PC combustion technologies that have energy efficiencies of over 87%. However, it is much higher than the 65% efficiency of new small stoker boilers; compared to them the large, hot-water only CGS boilers are 15% more efficient. The efficiency gap is even larger when compared to existing small stoker boilers which are believed to frequently have very low efficiency rates. The new CGS boiler will be equipped with dual alkali flue gas desulfurization (FGD) scrubbers and filter baghouse emission control systems to reduce levels of sulfur dioxide (SO2) and particulate emissions to well within PRC and international emission standards. C. No Subproject Option 204. The most obvious alternative to the Project is not to have it at all. However, this is unacceptable for the following reasons:

i) The existing heating systems in the Project areas are old and inefficient. The Project will upgrade heating service to 2.95 million m2 of existing buildings and 5.25 million m2 of new buildings and increase the combustion efficiency by 15 to 23% compared to small boilers, and by as much as 50% compared to single-family heating stoves. The net annual energy savings are 85,390 tce per year.

ii) Most existing boilers in the Project area do not have emission control equipment. Environmental impacts from current heating methods have a disproportionately high effect on the poor. Inadequate coverage of district heating in low-income urban areas drives residents to use indoor coal stoves for heating, a major cause of indoor pollution and related respiratory diseases. Urban pollution from small boilers also worsens outdoor air pollution and causes significant cumulative harm to public health.

80

The subproject high-efficiency PC and CGS boilers will be equipped with FGD scrubber and filter baghouses emission control systems to reduce levels of SO2 and particulate emissions to well within PRC and international emission standards. The net annual emissions reductions from reduced coals use are: 254,379 tons of CO2; 4,121 tons of SO2; 1,942 tons of NO2; 16,234 tons of TSP; and 6,494 tons of PM10, which are expected to bring significant improvements in air quality during the winter heating season. The Project will also reduce the transportation of coal through urban areas;

iii) There is a clear community desire for the proposed Project; between 86 to 95% of the public consulted are supportive of the Project.

D. Conclusion 205. The proposed Project, which will introducing district heating in four urban areas using a combination of large and energy efficient heat-only PC and CGS fired boilers and heat purchased from an existing CHP, and which will expand the CMM gas distribution network in a fifth urban area, was found to be the most technically and financially feasible and environmentally beneficial option to meet the heating requirements of the subproject cities.

81

VI. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 206. This Chapter identifies potential subproject environmental impacts and presents appropriate mitigation measures. Potential impacts are identified related to the preconstruction (project siting), construction and operation phases. Many of the mitigation measures are related to good international standard design practice, others with good construction and housekeeping practices. A. Preconstruction

1. Subproject Siting

a. Land Acquisition and Resettlement 207. The Project is classified as category B for involuntary resettlement. The siting of the Liulin subproject physical works will necessitate some minor land acquisition, while the remaining subprojects have no permanent land acquisition and resettlement as they will be implemented on government-reserved land or existing premises. In total 1.65 ha of land will be permanently acquired during project construction. Land acquisition will affect a total of 4 households and 17 persons (Table 50). No houses and buildings will be demolished.

Table 50: Summary of land acquisition impacts. Component Permanent Land

Acquisition (ha) Temporary Land

Occupation Number of Affected

People 1. 1 gas storage and distribution station

Yes, 1.65 ha of collectively-owned land

No 17

2. 20 gas pressure regulating stations

No, use existing boiler houses No 0

3. Gas pipeline of 26.48 km No, install along roads Yes 0 Total 1.65 17Source: LAP.

208. To mitigate these impacts a separate Land Acquisition Plan (LAP) has been prepared in accordance with PRC and ADB requirements.24 Landowners will be compensated such that the income of affected households will increase after the land acquisition as i) the compensation amount is far greater than income loss caused by the land acquisition, and ii) predicted annual interest earned by depositing the compensation amount is also greater than income lost as a result of the land acquisition (Table 51). The total budget for the land acquisition of the subproject is estimated at CNY 2.320 million. The land acquisition will start in December 2011 and will be completed by the end of March 2012.

Table 51: Income comparison before and after land acquisition.

Household Affected Persons

Compensation Received (CNY)

Interest Income from Bank Deposit

(CNY)

Income Lost (CNY)

Net Income Increased

(CNY) No.1 5 74,400 2,604 343 2,261 No.2 3 31,000 1,085 583 502 No.3 2 49,600 1,736 160 1,576 No.4 7 310,000 10,850 0 10,850 Total 17 465,000 16,275CNY = Chinese yuan Source: LAP based on social survey undertaken by PPTA 7736.

24 Resettlement Plan, October 2011. PRC: Shanxi Energy Efficiency and Environment Improvement Project (Liulin

CMM/CBM Transmission and Distribution Subproject). Prepared by: Liulin Coal Gas Supply Company.

82

209. The SPG has committed to ensure that i) the LAP is implemented in accordance with its terms; ii) all land and rights-of-way required by the Project are made available in a timely manner; iii) the provisions of the LAP, including compensation and entitlements for affected peoples, are carried out promptly and efficiently in accordance with the government's applicable laws and ADB's Involuntary Resettlement Policy; iv) compensation and resettlement assistance is given to the affected peoples prior to dispossession and displacement; v) counterpart funds for land acquisition and resettlement activities are provided in a timely manner; vi) any obligations in excess of the LAP budget estimates are met; vii) the affected peoples are compensated such that they are at least as well off as they would have been in the absence of the project; vii) the LAP is updated upon completion of the detailed design and detailed measurement survey and submitted to ADB for approval prior to commencement of land acquisition; ix) works contracts include requirements to comply with the resettlement plan and entitlements for permanent and temporary impacts to affected peoples; and x) implementation of the LAP is monitored, evaluated, and reported to ADB. B. Construction Phase 210. Potential construction phase impacts are associated with soil erosion, increased noise and dust, liquid and solid wastes, and safety risks to community members and workers. It is important to note there will be no worker camps, as workers can readily access the sites by road and stay in off-site accommodation. Overall environmental impacts associated with the construction phase are expected to be localized, short term, and can be effectively minimized through the application of appropriate mitigation measures.

1. Air Quality 211. Anticipated sources of air pollution from construction activities at the subproject sites and routes include i) dust generated from earth excavation, loading, hauling, and unloading; ii) dust generated from the movement of vehicles and heavy machinery on unpaved access and haul roads; iii) dust from aggregate preparation, concrete-mixing, and haulage activities; iv) odor from asphalt melting, mixing, and spreading; and v) exhaust from vehicles and equipment. 212. To minimize potential air quality impacts the following mitigation measures will be implemented during construction:

i) Water trucks will be used to wet the construction sites and routes where fugitive dust

is being generated as required taking into consideration weather conditions and site location (e.g. increased spraying during dry and windy days and near residential or commercial areas).

ii) Materials will be covered during transportation to avoid spillage or dust generation. iii) Material piles will be stored in appropriate places and covered, seeded or sprayed to

minimize fugitive dust. iv) Any planned paving or vegetating of areas will be done as soon as possible after the

surface the materials are removed, to stabilize the soil. v) Aggregate preparation and storage areas, concrete mixing plants and asphalt plants

will be located at least 200 m downwind, based on the prevailing wind direction, from the nearest residential areas.

vi) Dust suppression equipment will be installed in concrete-batching plants. vii) Vehicles and construction machinery will be properly maintained and will complying

with relevant PRC emission standards. viii) Upon completion of construction disturbed sites will be revegetated or otherwise

83

rehabilitated to stabilize the soil. ix) Ambient air quality will be measured bi-annually during construction by the city EPBs

(see Appendix 1). Additional monitoring may be undertaken when necessary (e.g., if complaints are made by local communities). Fines may be imposed and the costs of remedial action charged to the contractors if they default on their duty to implement the air pollution measures contained in the EMP.

2. Noise

213. Noise can be expected during construction due to machinery operation and transport activities. Construction activities may involve bulldozers, graders, excavators, concrete-mixing plants, rollers, and other heavy machinery. Noise intensity from the operation of these large machines is typically in the range of 76–98 decibels at the site (1 m from operating machinery). The transport of material, aggregate, concrete and waste material to and from sites will also cause noise impacts along the haulage routes. Activities with intensive noise levels may not only have an impact on the residents, but may cause injury to construction workers operating the equipment or working near it. 214. The installation of heat and CMM pipelines are linear activities. When a section is finished, construction activities will move on to the next locality. Therefore, noise impacts on a specific location from the construction activities will be temporary, lasting from several weeks to a few months. On the other hand, installation of pipelines will take place in close proximity to the heating client areas – residential and commercial areas. 215. To minimize potential noise impacts, the following mitigation measures will be implemented during construction:

i) Equipment and machinery will be properly maintained and equipped with silencers so as to conform to the PRC standard GB12523-90.

ii) Operation of machinery generating high levels of noise and the movement of heavy vehicles along urban roads will be restricted to between 6:00 am and 10:00 pm in accordance with PRC regulations.

iii) Noise reduction barriers will be used around high noise construction or transportation activities within 200 m of sensitive receptors (schools, hospitals and residential areas).

iv) Noise levels will be monitored at sensitive areas on a monthly basis (see Appendix 1). If noise standards are exceeded equipment condition will be checked and mitigation measures implemented to rectify the situation, such as additional sound barriers, moving noise sources away from the sensitive receptor, etc.

216. Protection of workers from noise is discussed further under Occupational Health and Safety (see Section VI.B.9).

3. Construction and Domestic Wastewater 217. Construction wastewater is produced from the maintenance and cleaning of mechanical equipment, vehicle maintenance, mixing and curing concrete, and site runoff. Some oil-containing wastewater can result from machinery repairs, and leakage can occur from the improper storage of fuels, oils and hazardous materials. There will also be domestic wastewater generated by workers on the construction sites. If discharged in an improper manner wastewater has the potential to significantly impact surface and groundwater systems.

84

218. To minimize potential impacts, the following mitigation measures will be implemented during construction:

i) Construction site and equipment wash-down runoff will be directed to sedimentation basins, and wastewater will be reused if possible such as for dust control. Solid waste residue in the basins will be cleared as required and transported to designated landfills.

ii) For areas with oily wastewater discharges oil-water separators will be installed before the sedimentation basin.

iii) Appropriate temporary sanitation and waste collection facilities will be provided for workers, either using septic disposal systems or portable toilets. – Effluent from portable toilets will be collected and treated by an appropriately

licensed company in accordance with relevant regulations. – Toilet facilities will be regularly cleaned and disinfected so as to avoid breeding of

flies and mosquitoes. – Workers will be provided with access to clean water sources.

iv) Hazardous materials and wastes are dealt with below.

4. Construction and Domestic Solid Waste 219. Construction wastes may include excavated spoil materials, building and road works rubble, and domestic waste generated by workers. Inappropriate construction and domestic waste storage and disposal can affect soil, groundwater and surface water resources. 220. To minimize potential impacts from construction and domestic solid waste, the following mitigation measures will be implemented during construction:

i) Domestic waste bins will be provided. ii) Construction wastes such as spoil and various building materials such as steel,

timbers, etc., will be utilized on site to the extent possible. iii) All wastes which cannot be used will be routinely collected by an appropriately

licensed company for recycling (e.g. waste oil/grease, oily clothing rags, metals, salvageable wood and building materials, etc.) and/or final disposal in a licensed waste facility (e.g. for non-recyclable materials).

iv) Surplus spoil will be transported to suitable spoil disposal sites approved by the local EPB.

v) No on-site landfills will be permitted at any construction site. vi) No burning of wastes will be permitted at any construction site. vii) Waste management will be undertaken in consultation with local authorities.

5. Hazardous Materials and Wastes

221. Inappropriate storage of hazardous materials and wastes can lead to soil and water pollution and risks to human health. To minimize potential impacts:

i) For storage of fuels, oils, solvents and other hazardous materials contractors will be

required to develop a hazardous materials plan incorporating good international practices, including: – All toxic, hazardous, or harmful construction materials including petroleum

products must be transported in spill proof tanks with filling hoses and nozzles in working order, and stored in designated areas with impermeable surfaces and protective berms such that spillage or leakage will be contained from affecting

85

surface water or groundwater systems. – Chemical safety data sheets (CSDSs) will be posted for all hazardous materials. – Oil absorbents will be readily accessible in marked containers. – Good housekeeping procedures will be established to avoid the risk of spills in

the first place. – Spills will be dealt with immediately, and personnel will be trained and tasked

with this responsibility. ii) Hazardous wastes should:

– Be handled by workers who have received training in handling and storage of hazardous wastes and have the requisite PPE.

– Be temporarily stored in closed containers away from direct sunlight, wind and rain in secure designated areas with impermeable surfaces and protective berms such that spillage or leakage will be contained from affecting surface water or groundwater systems.

– Be collected and disposal by licensed contractors on an as needed basis.

6. Flora and Fauna 222. The subproject areas are heavily modified agricultural and mixed urban/industrial landscapes. Most natural vegetation cover has been removed, and land area not currently under cultivation is sparsely vegetated with shrubs and grasses. No rare, endangered or threatened floral or faunal species are known to exist in the subproject areas, and impacts on flora and fauna will be minimal. Nonetheless, the following mitigation measures will be implemented during construction:

i) Trees and shrubs will only be removed if they impinge directly on the permanent works or approved necessary temporary works.

ii) Temporary sites will be rehabilitated and replanted with appropriate native vegetation; iii) Roadside pipeline routes will be revegetated with a mix of native vegetation species

similar to the mix and composition found locally. iv) Stream crossings will be subsurface utilizing directional drilling techniques.

7. Physical Cultural Resources

223. No physical cultural resources have been identified within 200 m of any of the subproject sites that will temporarily or permanently lost. Nonetheless, a chance find procedure will be put in place during the construction phase. If physical cultural resources are encountered during construction:

i) All works at the find site will be halted and the relevant local heritage authority and the PMO will be notified.

ii) The find will be assessed by a competent expert. iii) Procedures to avoid, minimize or mitigate impacts to the physical cultural resources

will be developed by the expert in cooperation with the relevant local heritage authority.

iv) Construction will resume only after thorough investigation and with the permission of the relevant local heritage authority.

8. Public Inconvenience

224. Construction activities can cause public inconvenience, particularly with respect to traffic

86

congestion, planned interruptions in municipal services and utilities, and unexpected interruptions in municipal services and utilities as a result of damage to pipelines for water supply, drainage, heating supply and gas, as well as damage to underground power and communication cables. 225. To minimize public inconvenience the following mitigation measures will be implemented during construction:

i) Subproject traffic control and operation plans will be prepared by the contractor and will be approved by the local traffic management administration before construction. The plans will include provisions for diverting or scheduling construction traffic to avoid morning and afternoon peak traffic hours, regulating traffic at road crossings, and selecting transport routes to reduce disturbance to regular traffic.

ii) During detailed design construction activities will be planned so as to minimize disturbances to utility services. Notice will, be provided to the public as to planned service interruptions.

iii) Consultation will be undertaken with relevant municipal authorities to determine the location of underground services prior to the start of work.

9. Occupational Health and Safety

226. The construction of a civil works poses an inherent risk of injury to workers from accidents, fires and other emergencies, and hazardous working environments. To mitigate these potential impacts, during detailed design and prior to the commencement of civil works subproject-specific construction-phase Occupational Health and Safety Plan (OHSPs) that are consistent with the relevant requirements of PRC law and with good international practice will be developed. The OHSPs should:

i) Identify and minimize, so far as reasonably practicable, the causes of potential hazards to workers.

ii) Provide preventive and protective measures, including modification, substitution, or elimination of hazardous conditions.

iii) Provide for the provision of appropriate personal protective equipment (PPE) to minimize risks, including ear protection, hard hats and safety boots.

iv) Provide for adequate safety protection equipment including firefighting systems. v) Provide adequate signage in risk areas. vi) Provide procedures for limiting exposure to high noise or heat working environments

in compliance with PRC noise standards for construction sites (GB12523-1990) and relevant international guidelines.

vii) Provide training for workers, and establish appropriate incentives to use and comply with health and safety procedures and utilize PPE.

viii) Provide training for workers on the storage, handling and disposal of hazardous wastes.

ix) Provide procedures for documenting and reporting occupational accidents, diseases, and incidents.

x) Provide emergency prevention, preparedness, and response arrangements. 227. Contractors will be required to disseminate information (in local languages) on the risks of sexually-transmitted infections, including HIV/AIDS, in health and safety programs to those employed during Project implementation. Specific provisions to this effect will be included in bidding documents and Works contracts.

87

228. For the Liulin subproject there are additional risks posed by working with CMM. In addition to the above requirements, the Liulin OHSP should pay specific attention to:

i) Mine ventilation and air source for underground workers. ii) Emergency evacuation procedures and provision of refuge bays. iii) Dust control. iv) Fire and explosion prevention and control strategies. v) Other aspects as necessary.

229. The construction phase subproject OHSPs will be developed by the Project Implementation Consultant (PIC) EHS Specialists working in close cooperation with the design consultants.

10. Community Health and Safety 230. Potential community health and safety impacts resulting from Project construction, especially during the pipeline laying and HES and PRS construction include threats from hazardous activities, heavy equipment traffic, and traffic congestion. 231. To mitigate these potential impacts, during detailed design and prior to the commencement of civil works subproject construction-phase Community Health and Safety Plans (CHSP) will be developed during the project preparation and will be available to all contractors one month prior to construction. All contractors will be required to comply with. The CHSPs will include:

i) Safety signage procedures to keep the public away from active works sites and hazardous areas.

ii) Site speed limit signage, and the requirements for all project vehicles to comply with PRC traffic regulations.

iii) Community emergency response procedures. iv) Emergency contacts and communication systems / protocols. v) Procedures for interaction with local and regional emergency and health authorities.

C. Operation Phase 232. Adverse environmental impacts from the Project during the operation include i) air pollution from the boiler stacks and from coal handling; ii) noise; iii) industrial and domestic wastewater disposal; and iv) management and disposal of solid wastes, including domestic wastes, wastes from the decommissioning of existing small boilers, and fly ash, bottom ash and FGD byproducts.

1. Air Quality

a. Air Emissions and Compliance with Standards 233. Emissions from the district heating subproject boilers have the potential to result in significant localized air pollution during their operation in the winter heating seasons. To mitigate potential impacts:

i) The SPG through the PMO and the IAs shall ensure that the boilers are designed, constructed, and operated in accordance with relevant PRC national and local government environmental laws, regulations, procedures, and guidelines.

88

ii) Only high-efficiency PC or CGS (in the case of Zhongyang) boiler technology will be utilized.

iii) Boilers will be equipped with dual alkali flue gas desulfurization (FGD) scrubbers and filter baghouse emission control systems to reduce design emission levels to well within emissions standards stipulated in Emission Standard of Air Pollutants for Coal-burning, Oil-burning, Gas-fired Boilers (GB 13217-2001) and in the World Bank Environmental, Health, and Safety Guidelines for Thermal Power Plants.

iv) Boiler house design stack height will meet PRC standards and international good practice.

v) Only low sulfur coal will be utilized (< 1% sulfur content). vi) Ambient monitoring will be undertaken during the winter heating seasons to ensure

that the HGS emissions do not lead to significant reductions in localized air quality. 234. Table 52 summarizes emission control design mitigations and design emission levels. All predicted emission levels are fully in compliance with relevant PRC standards and EHS guidelines. 235. In addition, fugitive emissions from coal handling and transportation and from temporary ash storage may form a secondary cause of localized air quality decline. To mitigate potential impacts:

i) Coal truck loads will be covered. ii) Dust suppression systems (e.g. water spraying, coverings) will be installed at all coal

handling and transfer points and in coal handling yards. iii) Ash will be stored on a temporary basis only in impervious storage tanks, and dust

generation from ash tanks will be prevented by maintaining a layer of water over the surface and/or keeping ash covered prior to sale to the building industry.

b. Atmospheric Dispersion Modeling 236. The domestic subproject EIAs included air quality dispersion modeling to predict ambient concentrations arising from boiler emissions. Modeling was undertaken for the four subprojects with HGSs utilizing AERMOD, a steady-state atmospheric dispersion model designed for short-range (up to 50 kilometers) dispersion of air pollutant emissions from stationary industrial sources. AERMOD models air dispersion based on planetary boundary layer turbulence structure and scaling concepts, including treatment of both surface and elevated sources, and both simple and complex terrain. There are two input data processors that are regulatory components of the AERMOD modeling system: AERMET, a meteorological data preprocessor that incorporates air dispersion based on planetary boundary layer turbulence structure and scaling concepts, and AERMAP, a terrain data preprocessor that incorporates complex terrain using digital elevation data. AERMOD is recommended by PRC Ministry of Environmental Protection (MEP) technical guideline HJ2.2-2008, and is a US EPA recommended dispersion model.25

25 See http://www.epa.gov/ttn/scram/dispersion_prefrec.htm#rec.

89

Table 52: Emission control design measures and design stack emission levels, Licheng, Qin and Zhongyang Subprojects.

Emission Control Design Parameters

Unit DHS Subprojects

Licheng Qin Zhongyang Boiler Technology Type PC PC CGS Coal Sulfur Content % 0.62 0.62 0.62 Emission Control Systems

Desulphurization Type Dual alkali FGD Dual alkali FGD Dual alkali FGD Efficiency % ≥85% ≥85% ≥85%

Particulate Type Baghouse Filter Baghouse Filter Baghouse Filter Efficiency % ≥98% ≥95% ≥95%

Stack Height M 80 80 60 Emissions

PM10 PRC Standard: 80 EHS Guideline 50

mg/Nm3 12.0-25.0 40.45 40.45

SO2

PRC Standard: 900 EHS Guideline 900-1500

mg/Nm3 48.0-67.5 40.24-49.83 67.50

NOx No PRC Standard EHS Guideline: 510

mg/Nm3 110 155.41 178.11

Source: National subproject EIA Reports. Note: Jinzhong emissions are addressed in the due diligence report, see Appendix 4.

237. The modeling predicted 24-hour ground level concentrations (GLCs) of PM10, SO2 and NO2 over a 10 km by 10 km area centered on each HGS.26,27 The modeling used the design emission levels presented in Table 52 and worst case meteorological conditions for atmospheric dispersion drawn from over 3 years of metrological data, and was run at each subproject for one full heating season. With regards to the relationship between NOx and NO2, to be conservative the total conversion method was adopted, and it was assumed that all NOx was converted to NO2. Results are thus presented as NO2 and are compared directly to relevant NO2 ambient standards. 238. Table 53 presents the maximum predicted average 24-hour PM10, SO2 and NO2 GLCs for the four HGSs. Representative maximum predicted GLC contour maps from the domestic subproject EIAs are presented from Figure 31 to Figure 36. The results indicate that the maximum predicted GLCs are well below both PRC ambient standards and WHO guidelines. Maximum predicted GLCs for PM10 are only 8% of the PRC ambient standard (Qin subproject); maximum predicted GLCs for SO2 are only 10% of the PRC standard and 12% of the WHO guideline (Qin and Zhongyang subprojects); and the maximum predicted GLC for NO2 is 47% of the PRC standard. Further, these worst case situations are expected to occur only 3.3 to 4.6% of the time during each heating season. Nonetheless, ambient monitoring will be undertaken during the winter heating seasons to ensure that the HGSs do not lead to significant reductions in localized air quality.

26 Modeling was also undertaken for a one hour averaging period. However, no information was provided on

frequency of predicted results, making them difficult to interpret, and the results were thus not included in the IEE. 27 Emissions for the Jinzhong subproject were assessed as part of the MEP approved (2009) EIA report for the

Ruiguang Combined Heat and Power (CHP) Plant (see Section III.J.1). No modeling was undertaken for the Liulin subproject as further to HJ2.2-2008: Technical Guideline for Environmental Impact Assessment of Atmospheric Environment it is considered clean energy due to its very low emission levels.

90

Table 53: Maximum predicted subproject GLCs in relation to ambient standards, Licheng, Qin and Zhongyang Subprojects.

Subproject Pollutant Maximum Predicted 24-hour

GLC (mg/Nm3)

PRC Ambient Standard and

WHO Guideline (mg/Nm3)

% of relevant PRC Ambient Standard and

WHO Guideline

Location (distance

downwind in M)

Expected Frequency(# days and % of

time)Licheng PM10 0.0018

PRC: 0.150 WHO: 0.150

1.2% 1.2%

4732 6 days (4%)

SO2 0.012

PRC: 0.150 WHO 0.125

8.0% 9.6%

5232 6 days (4%)

NO2 0.0376

PRC: 0.080 No WHO standard

47.0% -

3732 6 days (4%)

Qin PM10 0.012

PRC: 0.150 WHO: 0.150

8.0% 8.0%

900 5 days (3.3%)

SO2 0.015

PRC: 0.150 WHO 0.125

10.0% 12.0%

900 5 days (3.3%)

NO2 0.027

PRC: 0.080 No WHO standard

33.8% -

900 5 days (3.3%)

Zhongyang PM10 0.009

PRC: 0.150 WHO: 0.150

6.0% 6.0%

900 7 days (4.6%)

SO2 0.015

PRC: 0.150 WHO 0.125

10.0% 12.0%

1200 7 days (4.6%)

NO2 0.022

PRC: 0.080 No WHO standard

27.5% -

1400 7 days (4.6%)

Source: National subproject EIA reports. Notes: 1. For PM10 0.150 mg/Nm3 = WHO interim target-1 and US EPA standard.

2. For SO2, 0.125 mg/Nm3 = WHO interim target-1. 3. No NO2 data presented in Zhongyang EIA. 4. Frequency based on 150 day heating season.

91

Figure 31: Contour map of maximum predicted 24-hour SO2 GLC (mg/Nm3) for Licheng.

Figure 32: Contour map of maximum predicted 24-hour PM10 GLC (mg/Nm3) for Licheng.

Concentration Area

Concentration Area

92

Figure 33: Contour map of maximum predicted 24-hour NO2 GLC (mg/Nm3) for Licheng.

Figure 34: Contour map of maximum predicted 24-hour SO2 GLC (mg/Nm3) for Qin.

Concentration Area

93

Figure 35: Contour map of maximum predicted 24-hour PM10 GLC (mg/Nm3) for Qin.

Figure 36: Contour map of maximum predicted 24-hour PM10 GLC (mg/Nm3) for Zhongyang.

94

2. Noise

a. Operation of HGSs and CMM Storage 239. Operation of subprojects HGSs (Licheng, Qin and Zhongyang) and the CMM storage unit (Liulin) will generate noise that can impact adjacent receptors. Principal sources of noise will include boilers, coal pulverisers, reciprocating engines, fans and ductwork, conveyors, pumps, compressors, motors, etc. To mitigate potential impacts:

i) The HGSs and CMM storage units will be designed such that PRC industrial boundary noise standards (GB12348-2008) are complied with (Class II for HGSs; Class III for the Liulin CMM works). This will include but not be limited to the following: a. Layout will be designed such that high noise locations are situated as far as

possible from sensitive receptors, and/or noise barriers such as berms and vegetation are used to limit ambient noise at the boundary where sensitive noise receptors are present.

b. The use of noise control techniques including, but not limited to acoustic machine enclosures; selecting structures and building materials according to their noise isolation effect to envelop the building; using mufflers or silencers in intake and exhaust channels; using sound absorptive materials in walls and ceilings; using vibration isolators and flexible connections (e.g., helical steel springs and rubber elements); and applying a carefully detailed design to prevent possible noise leakage through openings or to minimize pressure variations in piping.

ii) Noise levels will be monitored at sensitive areas at each subproject twice per heating season (see Appendix 1) during operation. If noise standards are exceeded, equipment conditions will be checked, and mitigation measures will be implemented to rectify the situation, such as additional sound barriers, moving noise sources away from the sensitive receptor, etc.

b. Operation of HESs and PRSs

240. Operation of HESs and PRSs, which are distributed through the service areas, have the potential to cause ongoing impacts to residential areas. Such stations are ubiquitous in China, and are widely accepted in residential areas. Interviews with residents adjacent to existing HESs in subproject areas indicated no noise related complaints. Nonetheless, to mitigate potential impacts:

i) HESs and PRSs will have a buffer distance of at least 10 m from the nearest household or other sensitive receptors.

ii) Noise control techniques will be utilized, including, but not limited to: a. acoustic machine enclosures; b. selecting structures according to their noise isolation effect to envelop the

building, and using sound absorptive materials in walls and ceilings; c. using low-noise water pumps with noise levels controlled to within 55 dB(A) at a

distance of 1 m from the pump house. iii) Noise levels will be monitored at sensitive areas on a monthly basis, as noted above.

241. Worker exposure to operational phase noise is covered under OHS, below.

95

3. Erosion 242. There is the potential for site erosion to cause water pollution, localized land degradation, and air quality problems. To mitigate potential impacts, contractors will be required to develop site erosion plans, including the use of vegetation and soil stabilization measures and structural erosion control measures.

4. Wastewater 243. Operational wastewater will include domestic wastewater, site drainage, wastewater from scrubbers and fly-ash storage, and wastewater from coal dust suppression spraying. Inappropriate management of wastewater has the potential to negatively impact surface and groundwater quality. To mitigate potential impacts:

i) All subproject sanitation facilities will discharge to septic systems that meet relevant PRC standards.

ii) Site runoff will be directed to sedimentation basins, and wastewater will be reused if possible such as for dust control. Solid waste residue in the basins will be cleared as required and transported to designated landfills.

iii) Wet fly-ash and FGD byproducts will be directed to impervious storage tanks with a sufficient design capacity.

iv) Wastewater from wet fly-ash storage and coal spraying will be recycled to the extent possible to conserve water, and wastewater will be directed to sedimentation basins.

iii) For areas with oily wastewater discharges oil-water separators will be installed before the sedimentation basins.

5. Solid Wastes

244. The operation phase will generate wastes that could affect soil, air and water quality if not managed properly. This includes domestic solid wastes produced by facility staff, industrial wastes such as fly-ash and sludge from the oil-water separators, and hazardous wastes resulting from production activities. In addition significant wastes will be generated during the decommissioning of small boilers. To minimize potential impacts from operation phase solid wastes the following mitigation measures will be implemented.

a. Domestic and Industrial Wastes

i) Domestic and industrial waste bins will be provided. ii) All wastes will be routinely collected by an appropriately licensed company for

recycling (e.g. waste oil/grease, oily clothing rags, metals, salvageable wood and building materials, etc.) and/or final disposal in a licensed waste facility (e.g. for non-recyclable materials).

iii) No on-site landfills will be permitted at any construction site. iv) No burning of wastes will be permitted at any construction site. v) Waste management will be undertaken in consultation with local authorities.

b. Fly Ash and Slag

i) All fly-ash and slag will be stored on site in impervious storage tanks and sold to the

local construction industry as a raw building material and to be used as material for

96

road construction.28 ii) No permanent on site ash disposal will be allowed.

c. Boiler Decommissioning

245. Once the project is operational 275 small boilers with an aggregated capacity of 386 MW will be decommissioned. This has the potential to generate significant impacts from the inappropriate disposal of waste materials. To mitigate potential impacts:

i) Boiler decommissioning will be undertaken by the IAs under the authority of the local county/district governments in coordination with the boiler owners, and will be overseen by the relevant local city EPBs.

ii) All demolition wastes will be routinely collected by appropriately licensed waste management companies for reuse, recycling (e.g. equipment; steel, iron and other metals; salvageable wood and building materials; etc.) or final disposal in a licensed waste facility (e.g. for non-recyclable materials). Waste management will be undertaken in consultation with local authorities.

iii) No on-site landfills will be permitted at any demolition site. iv) No burning of wastes will be permitted at any demolition site. v) It is understood that household stoves will be retained by owners to act as a backup

in case of temporary failure of the district heating systems. However, if they so desire, homeowners who choose to decommission their stoves should be given access to the services of the waste management companies noted above.

vi) As part of the Project Stakeholder Communication Strategy, Project information will be provided to beneficiaries at regular intervals during the planning and design phase, including information on the health hazards of using coal heating and cooking stoves and advantages of adopting district heating.

241. Regarding potential impact of asbestos from demolition of small boilers, domestic EIA reports confirmed that there will be no asbestos impact during the decommission of smaller boilers. Asbestos was banned to be used in the boiler and heating sectors in the PRC in 1990. However, to avoid the unexpected risk from asbestos, the following mitigation measures will be conducted during the demolition works.

(i) Asbestos risk assessment will be conducted by the project city EPB under the supervision of the Shanxi Hazardous Wastes Disposal Center (SHWDC), which is currently under construction and will be ready by the time when the decommissioning of small boilers will occur. SHWDC will be a licensed professional unit in Shanxi Province for disposal of dangerous and hazardous wastes, including asbestos. The assessment will identify the presence, absence and amount of asbestos and ACM in each of the small boilers, and define an action plan for all small boilers, including labeling requirements, control mechanism (from elimination, removal or isolation to safe working practices), health and safety requirements, as well as a plan of action and procedures for disposal of the asbestos and ACM. The plan will be based on the World Bank EHS standards (April 2007) and the Good Practice Note “Asbestos: Occupational and Community Health Issues (May 2009)”. The risk assessment will be shared with the local EPBs, the Provincial PMO and ADB;

28 Based on experience in the subproject counties and districts there is a very strong existing demand for waste ash,

and given the high degree of ongoing urban development and expansion this demand is expected to continue or expand for the foreseeable future.

97

(ii) SHWDC will be responsible for the removal, transport and disposal of the asbestos and ACM. SHWDC shall identify, properly label and pack asbestos as well as demolition debris contaminated with asbestos during the deconstruction. Asbestos and ACM will be transported by SHWDC in sealed vehicles to a designated hazardous waste landfill. The associated costs to handle, remove, transport, and dispose asbestos and ACM will be included in the Project.

(iii) Asbestos and ACM will be monitored after deconstruction of small boilers where asbestos has been identified during the risk assessment. The monitoring will consist of a visual inspection to confirm that all identified ACM have been removed, and a clearance monitoring of airborne asbestos to confirm safe working environment. SHWDC will conduct the visual inspection; a licensed laboratory will be identified to conduct the clearance monitoring. The inspection and monitoring program for the asbestos and ACM has been included in the monitoring program of the EMP.

(viii) A site contamination investigation will be undertaken in consultation with the local city EPB, and if necessary site specific plans taking into account the World Bank’s Group General EHS Guidelines on Construction and Decommissioning will be developed to address any site contamination. The plans will be reviewed by the local EPB and ADB. Contaminated spoil will be transported to suitable spoil disposal sites approved by the local EPB, and clean fill provided. The site will be rehabilitated to a level suitable for its proposed future use; the local EPB will approve the rehabilitation, and will require additional rehabilitation actions if necessary.

6. Hazardous Materials and Wastes

246. Inappropriate storage of hazardous materials can lead to soil and water pollution and risks to human health. To minimize potential impacts:

i) For storage of fuels, oils, solvents and other hazardous materials:

– All toxic, hazardous, or harmful construction materials including petroleum products must be transported in spill proof tanks with filling hoses and nozzles in working order, and stored in designated areas with impermeable surfaces and protective berms such that spillage or leakage will be contained from affecting surface water or groundwater systems.

– CSDSs will be posted for all hazardous materials. – Oil absorbents will be readily accessible in marked containers. – Good housekeeping procedures will be established to avoid the risk of spills in

the first place. – Spills will be dealt with immediately, and personnel will be trained and tasked

with this responsibility. ii) Hazardous wastes should:

– Be handled by workers who have received training in handling and storage of hazardous wastes and have the requisite PPE.

– Be temporarily stored in closed containers away from direct sunlight, wind and rain in secure designated areas with impermeable surfaces and protective berms such that spillage or leakage will be contained from affecting surface water or groundwater systems.

– Be collected and disposal by licensed contractors on an as needed basis.

7. Occupational Health and Safety 247. The operation of district heating HGSs, distribution pipelines and HESs pose a risk of injury to workers from accidents, fires and other emergencies, and hazardous working

98

environments. To mitigate these potential impacts, during detailed design and prior to start-up subproject specific operation-phase Occupational Health and Safety Plans (OHSPs) that are consistent with the relevant requirements of PRC law and with good international practice will be developed. The OHSPs should:

i) Identify and minimize, so far as reasonably practicable, the causes of potential hazards to workers.

ii) Provide preventive and protective measures, including modification, substitution, or elimination of hazardous conditions.

iii) Provide for the provision of appropriate personal protective equipment (PPE) to minimize risks, including ear protection, hard hats and safety boots.

iv) Provide for appropriately stocked first aid kits and first aid stations. v) Provide procedures to protect workers from the potential health hazards emanating

from the handling, transport and disposal of asbestos or asbestos contaminated materials.

vi) Provide for adequate safety protection equipment including firefighting systems. vii) Provide adequate signage in risk areas. viii) Provide procedures for limiting exposure to high noise or heat working environments

in compliance with relevant PRC noise standards for construction sites (GB12523-1990), occupational and health standards (GBZ 2.1-2007 Occupational exposure limits for hazardous agents in the workplace) and relevant international guidelines.

ix) Provide procedures to protect workers from the potential health hazards emanating from the handling, transport and disposal of asbestos or asbestos contaminated materials.

x) Provide training for workers, and establish appropriate incentives to use and comply with health and safety procedures and utilize PPE.

xi) Provide training for workers on the storage, handling and management of hazardous wastes.

xii) Provide procedures for documenting and reporting occupational accidents, diseases, and incidents.

xiii) Provide emergency prevention, preparedness, and response arrangements. 248. For the Liulin subproject there are additional risks posed by working with CMM. In addition to the above requirements, the Liulin OHSP should pay specific attention to:

i) Mine ventilation and air source for underground workers. ii) Emergency evacuation procedures and provision of refugee bays. iii) Dust control. iv) Fire and explosion prevention and control strategies, including:

a. conducting fire hazard assessments on a recurrent basis; b. identifying fire hazard areas using warning signs, and prohibiting all persons from

smoking, using open flame lamps, matches or other types of ignition sources in the designated fire hazard areas, unless under strict protocols(e.g. welding protocol);

c. avoiding use of oil filled transformers underground; d. appropriate storage of flammable materials; e. installation of a fire detection and extinguishing system.

v) Working in a CMM Environment, including: a. preventing ignitions by installing automatic gas detectors and alarms where

electrically powered equipment is used and restricting items made of, or containing, aluminum, magnesium, titanium, or light metal alloy unless there is no possibility of friction or impact, or they are adequately coated with non-sparking

99

material; b. hand-held tools should be placed in a non-sparking storage and appropriate

permits obtained before use; c. use of fire resistant hydraulic fluids in all underground equipment; d. management of CMM in working areas; when 1 percent of methane is present,

all electrical and mechanical equipment should be switched off. When 1.5 percent of methane is present everyone except for those equipped, trained, and required for normalizing the situation should be evacuated and all potential sources of ignition should be deactivated and disconnected at the power source.

e. Installing and using fire doors. 249. The operation phase subproject OHSPs will be developed in detail by the PIC OHS Specialists working in close cooperation with the design consultants.

8. Community Health and Safety 250. Potential community health and safety impacts resulting from Project operation include threats to safety from hazardous activities, heavy equipment traffic including coal transport, inappropriate storage and handling of hazardous materials, and risks posed by working with CMM. 251. To mitigate potential impacts, during detailed design and prior to start-up subproject specific Community Health and Safety Plans (CHSPs) will be developed and will include:

i) Safety signage procedures to keep the public away from active works sites and hazardous areas;

ii) Site speed limit signage, and the requirements for all project vehicles to comply with PRC traffic regulations;

iii) Community emergency response procedures; iv) Emergency contacts and communication systems / protocols. v) Procedures for interaction with local and regional emergency and health authorities.

252. For the Liulin subproject there are additional risks posed by working with CMM, and the Liulin operation-phase CHSP should pay specific attention to ensuring community safety around subproject works, including providing safety signage along CMM pipeline routes. 253. The operation phase subproject CHSPs will be developed by the PIC OHS Specialists working in close cooperation with the design consultants.

9. Economic Displacement 254. The Project will result in the loss of 401 jobs after the closure of the small boilers in the Zhongyang, Qin and Licheng subprojects, including 80 permanent full time workers and 321 seasonal workers (Table 54). A separate Labor Retrenchment Plan (LRP) has been developed in accordance with the PRC Labor Contract Law (2008) and ADB’s safeguard policies.29 The IAs of the three subprojects will implement the LRP and the Project Management Office (PMO) will supervise its implementation. The plan will be implemented from April 2012 to June 2015.

29 Labor Retrenchment Plan, PRC: Shanxi Energy Efficiency and Environment Improvement Project. Prepared by:

Project Management Office of Shanxi Energy Efficiency and Environment Improvement Project for the Shanxi Provincial Government and the Asian Development Bank. October 2011.

100

Table 54: Boiler closure and affected workers.

Subproject Number of boiler houses to be closed

Affected Workers Full Time Seasonal

Zhongyang 20 6 21 Licheng 101 21 203 Qin 88 53 97 Subtotal

209 80 321

Total 401

Source: LRP. Note: does not include boilers to be closed in Liulin subproject as all workers will be employed in the replacement gas boilers, and there will be no loss of employment.

255. Under the LRP the IAs have agreed that the 80 full-time employees in the Zhongyang, Licheng and Qin subprojects will be re-employed in a timely manner in the HESs, such that they will be at least as well off as they would have been in the absence of the project. The re-employment procedures under the LRP are summarized in Table 55. The IAs will inform seasonal workers of the status of the boiler closure before the end of the final heating season. The IAs have also agreed to re-employ casual workers where possible.

Table 55: Re-employment procedures for affected full-time workers. Actions Responsible Agency Timing 1 Detailed survey on affected

workers, consultation and participation on their willingness

PMO and IAs supported by relevant local government offices

April-May 2012

2 Report the survey results to local governments

PMO and IAs June 2012

3 Issue official documents Local government offices June 2012 4 Interview affected formal workers in 2012 4.1 Sign agreement IAs, affected institutions and

enterprises supported by PMO, relevant local government offices

August and October 2012 for the first group of 44 formal workers (Zhongyang: 6, Licheng: 13 and Qin: 25)

4.2 Provide training 4.3 Sign labor contract

5 Interview affected formal workers in 2013 5.1 Sign agreement IAs, affected institutions and

enterprises supported by PMO, relevant local government offices

August and October 2013 for the second group of 20 formal workers (Licheng: 6 and Qin: 14)

5.2 Provide training 5.3 Sign labor contract 6 Interview affected formal workers in 2014 6.1 Sign agreement IAs, affected institutions and

enterprises supported by PMO, relevant local government offices

August and October 2014 for the third group of 16 formal workers (Licheng: 2 and Qin: 14)

6.2 Provide training 6.3 Sign labor contract IAs = implementing agencies, PMO = project management office. Source: LRP, based on social surveys under in PPTA 7736.

256. Training on technical aspects of the new district heating system will be provided to all full-time workers and all interested seasonal workers. Training topics will include pipe maintenance, boiler operation and maintenance, laboratory techniques, machine maintenance, electric maintenance, eating relay station equipment maintenance, etc. The training course will be four hours a day for one week. The total training cost is estimated at CNY 176,300, to be funded out of Project base costs.

10. Climate Change 257. Operation of the Project will result in emissions of CO2e in excess of 100,000 tons/yr, and as per the ADB SPS the PMO will report annually on GHG emissions. The Project is not subject to GHG reduction targets under PRC’s commitment to the Kyoto Protocol, but it seeks to

101

minimize GHG emissions by adopting clean and efficient technologies; overall the Project will result in reduced emission of 254,379 tons of CO2 per year, providing a global public good.

11. Project Benefits 258. Operation of the Project is expected to result in substantial environmental and safety benefits resulting from energy efficiency improvements, reductions in emissions from coal burning and extraction and utilization of CMM. Project operation will:

i) result in the closure of small inefficient and polluting inner-city coal-fired boilers and household coal-fired stoves;

ii) reduce coal use by 129,493 standard tons of coal per year; iii) reduce the transportation of coal through urban areas; iv) result in energy savings of 85,390 tons of coal equivalent (tce) per year; v) substantially improve local air quality through the annual reduction of emission of

4,121 tons of sulfur dioxide (SO2), 16,234 tons of total suspended particulates (TSP), 6,494 tons of particulate matter (PM10), and 1,942 tons of nitrogen oxide (NOx);

vi) provide a global public good by reducing the annual emission of 254,379 tons of carbon dioxide (CO2), a greenhouse gas; and

vii) improve the safety of miners.

259. In addition, the project will have significant positive socioeconomic impacts. It will directly benefit about 270,000 residents (of which 133,000 are female), 51 schools (benefiting 10,400 children) and 17 hospitals. By providing cleaner and reliable heating services, the project will:

i) reduce cases of respiratory diseases and carbon monoxide poisoning through improved indoor and outdoor air quality. Owing to a lack of benchmarking data in project sites, it is difficult to quantify improvement of indoor air quality. Only qualitative improvement can be stated based on a logical reasoning of improved heating systems;

ii) improve living conditions, and school environment and hospital conditions during winter;

iii) reduce heating expenditure by switching to centralized energy efficient heating systems from individual household stove and decentralized heating systems; and

iv) increase income through job opportunities created during construction and operation (estimated at 1,758 full-time jobs during construction and 942 full-time jobs during operation).

260. Access to reliable district heating and CMM gas supply will improve the standard of living in the subproject areas. The increased use of CMM gas and improved district heating will reduce the use of such fuels as raw coal, wood, and coal briquettes for indoor heating and cooking, which will benefit public health, particularly for the poor and women who spend most of the time indoors, as well as reduce the labor needed to acquire and burn fuel. About 30,000 households will use CMM gas for cooking. 261. It is expected that the centralized heating system will save women one hour per day that had been spent for taking care of heating during the winter. Under the minimum living standard security program poor households, including poor female headed households, will receive a 70% subsidy on their heating tariff from the local government and the heating companies will waive the entire connection fee. In total it is estimated that the project will benefit a female population of 339,300.

102

VII. INFORMATION DISCLOSURE, CONSULTATION, AND PARTICIPATION 262. Information disclosure involves delivering information about a proposed project to the general public and to affected communities and other stakeholders, beginning early in the project cycle and continuing throughout the life of the project. Information disclosure is intended to facilitate constructive engagement with affected communities and stakeholders over the life of the project. Consultation goes beyond information disclosure. It involves two-way communication between the borrower/client and the affected communities and stakeholders, and active participation of affected communities and stakeholders in project design and implementation. 263. The information disclosure and public consultation and participation processes undertaken for the proposed Project comply with both PRC and ADB requirements. A. PRC Requirements 264. Relevant provisions in the Environmental Protection Law of PRC (2003) and the Regulations on the Administration of Construction Project Environmental Protection (Order of the State Council, No. 253) require that environmental impact assessment reports shall solicit the opinions of concerned units and inhabitants of the project construction site. However, under the Environmental Protection Law of PRC (2003), public consultation requirements differ among the subprojects. For Category A subprojects (for which an EIA will be prepared) two rounds of public consultation are required, including information dissemination, a questionnaire exercise and an analysis and incorporation of comments. Public consultation is not required for Category B subprojects (for which a TEIAR will be prepared) or Category C subprojects (for which an EIRF will be prepared). B. ADB Requirements 265. In order to make key documents widely available to the general public, SR1 of the ADB’s SPS requires the submission of the draft and finalized EIA (for Category A projects) and the final IEE (for Category B projects) to ADB for posting on the ADB website.30 In addition, the borrowers/client is to take a proactive disclosure approach and provide relevant information from environmental assessment documentation directly to affected peoples and stakeholders. 266. SR1 also requires that the borrower/client carry out meaningful consultation with affected people and other concerned stakeholders, including civil society, and facilitate their informed participation. Meaningful consultation goes beyond information disclosure. It involves two-way communication between the borrower/client and the affected communities and stakeholders, and active participation of affected communities and stakeholders in project design and implementation. For environment category A projects, such consultations will necessarily include consultations at the early stage of EIA field work and when the draft EIA report is available during project preparation, and before project appraisal by ADB.

30 Specifically, SR1 requires that the borrower/client will submit to ADB the following documents for disclosure on

ADB’s website: (i) a draft full EIA (including the draft EMP) at least 120 days prior to ADB Board consideration, and/or

environmental assessment and review frameworks before project appraisal, where applicable; (ii) the final EIA/IEE; (iii) a new or updated EIA/IEE and corrective action plan prepared during project implementation, if any;

and (iv) the environmental monitoring reports.

103

C. Project Public Consultation Activities

1. Overview 267. A total of three rounds of environment related Project disclosure and public consultation have been undertaken. Figure 37 provides a conceptual overview of the Project disclosure and consultation process, while Table 56 lists the key activities for each subproject.

Figure 37: Conceptual overview of Project disclosure and public consultation process.

2. Round I – Initial Information Disclosure

268. The first round of public consultation involved information disclosure undertaken by the subproject IAs and EIA consultants at various times from April to June 2011. 269. The EIA consultants on behalf of the IAs issued public notices on the proposed subprojects in accordance with the requirements of the National Interim Guidelines on Public Participation in the EIA Process (2006). These public notices were posted in prominent government offices related to the IA, the local EPBs, in local newspapers and on some relevant websites. For example, the Licheng subproject posted its notice at the main entrance to the Construction Bureau. The public notices included a description of the proposed activities and a summary of potential environmental issues, and invited readers to provide comments to the construction bureau or EIA consultant via e-mail, letters, telephone or any other means. The other subprojects conducted similar information dissemination activities.

Define the public consultation scope and methodology 

Round 1: Public information disclosure

Round 3: Public meetings to communicate findings of draft national EIAs and receive and incorporate additional comments 

Disclose the results to the IAs

Collect and analyze findings

Round 2: Questionnaires, surveys and discussions 

104

Table 56: Summary of information disclosure and public consultation

during Project preparation. Subproject Information

Disclosure Questionnaires (# persons surveyed)

Public Consultation Meetings

Stakeholder Consultation Meetings

Jinzhong Subproject

June 2011, domestic EIA consultant website, Shanxi EPB website and local newspaper

July 2011 (60) Communities and enterprises along the pipeline route, local heat users. June 2010.

Local EPB and local Housing and Construction Bureau. Local heating enterprises and specialists, local Financial Bureau, Universities

Licheng Subproject

April 2011, Changzhi EPB website, Shanxi EPB website

May 2011 (60) Villages nearby the boiler plant, communities along the pipeline route, local heat users. April to May 2011.

Local EPB and local Housing and Construction Bureau. Local heating enterprises and specialists, local Financial Bureau

Qin Subproject April 2011, Shanxi EPB website

May and June 2011 (80)

Villages nearby the boiler plant, communities along the pipeline route, local heat users. April to June 2011.

Local EPB and local Housing and Construction Bureau. Local heating enterprises and specialists, local Financial Bureau

Zhongyang Subproject

August 2011, Shanxi EPB website

May to Jun 2009 Villages nearby the boiler plant, communities along the pipeline route, local heat users. May to Jun 2009 and August 2011

Local EPB and local Housing and Construction Bureau. Local heating enterprises and specialists, local Financial Bureau

Liulin Subproject June 2011, domestic EIA consultant website, Shanxi EPB website

July 2011 (60) Communities and enterprises along the pipeline route, local heating and gas users. July 2010

Local EPB and local Housing and Construction Bureau. Local heating enterprises and specialists, local Financial Bureau

Source: Subproject EIAs.

3. Round II – Questionnaires 270. After the disclosure of the public notices the IAs and domestic EIA consultants randomly distributed questionnaires among the residents and the public within the vicinity of each subproject (see Appendix 6).31 The distribution rate was 60 to 100 questionnaires per subproject, with return rates of between 85 to 97%. 271. The breakdown of comments and responses to the questionnaires is described in considerable detail in the subcomponent domestic EIAs. In general, the respondents supported the construction of the proposed subprojects. They believed that the subprojects would improve environmental quality and living conditions, and indicated that they would support the implementation of the subprojects as long as reasonable recommendations were implemented regarding soil erosion, noise, air pollution and resettlement issues. Noise concerns related mainly to pipeline construction and HES operation, while air pollution concerns related to operation of the boilers. Mitigation measures addressing these concerns were incorporated into the domestic EIAs and have been incorporated into the EMP of this 31 Questionnaires for the Zhongyang and Lvliang subprojects were distributed in 2009 and 2010 respectively.

105

IEE. Resettlement issues are addressed by the land acquisition planning and compensation process.

4. Round III – EIA Related Public Disclosure and Public and Stakeholder Consultation Meetings

272. From May to September 2011 the domestic EIA consultants with support from the PPTA domestic consultant carried out a third round of public stakeholder consultation meetings in the subproject districts and counties. The public consultation meetings focused on people from areas where potential impacts might occur, and due attention was paid to ensuring appropriate representation with respect to age, gender, poverty and ethnic categories. The objectives of the consultations were to communicate findings from the draft domestic EIAs to the public, and to gather information on public concerns about the subprojects before finalizing the EIAs. 273. The third round of stakeholder consultations and disclosure exercises included:

i) dissemination of project information to local residents, including a summary of the draft EIA findings;

ii) public consultation meetings with groups directly affected by the proposed project, and

iii) distribution of additional public consultation questionnaires. 274. Meetings were held in the five subproject counties or districts, each attended by between 30 to 50 participants. Concise subproject descriptions including potential environmental impacts and mitigation measures were distributed to the public prior to or during the public meetings, and additional questionnaires were disseminated to the attendees. Local media were invited to report on the project and the public consultations. 275. Concerns expressed during the third consultation round typically related to land acquisition, heating quality, and air quality. In summary:

i) most people consulted were concerned about the quality of existing heating

systems and local air quality; ii) most knew about the proposed subprojects through the media and public

meetings, and were aware of the environmental assessment work undertaken; iii) most understood the importance of the subprojects and supported their

implementation; iv) some concerns were expressed with respect to the potential for high noise

levels during construction, erosion, domestic solid wastes and spoil disposal; and

v) less than half considered the inconvenience during construction a problem, and most were satisfied with the mitigation measures proposed to address the anticipated adverse environmental impacts.

276. All concerns and suggestions received during the public consultations meetings and associated mitigation measures were incorporated into the Project design, domestic subproject EIAs, and this Project IEE. Examples include:

i) The use of noise reduction barriers around high noise activities within 200 m

of sensitive receptors, and restrictions on the use of noisy machinery and the movement of heavy vehicles along urban roads between 10:00 pm and 6:00 am.

ii) The development of site erosion control plans. iii) The provision of domestic solid waste bins and routine collection of wastes for

recycling or final disposal in a licensed waste facility.

106

iv) Dust control through water spraying and load covering. v) The transportation of surplus spoil to suitable spoil disposal sites approved by

the local EPB. 277. During the third round of consultations the EIA consultants also conducted stakeholder interviews with representatives from relevant municipal agencies including local EPBs, and with enterprises close to or along the proposed pipelines. All consulted stakeholders expressed their support to the project and believe it will benefit local economies and environmental conditions, enhance living standards, and promote the development of local public utilities. They hoped that the negative impacts could be minimized by strengthening environmental protection and soil erosion protection. Some consulted stakeholders also expressed the hope that the executing agency and the implementing agencies would ensure good project quality through good design and quality construction.

5. Consultation Results 278. Overall the results of the questionnaires, public consultation meetings and stakeholder consultations indicate that 86%–95% of those consulted are supportive of the Project, with the rest being unsure. The expected benefits include promotion of sustainable urban development, protection of people from the threat of air pollution, better access to heating facilities, better prospects for regional cooperation, better prospects for external investment and better prospects for socioeconomic development. 279. Concerns raised related to noise pollution, air pollution and land acquisition, and have been addressed through the incorporation of appropriate mitigation measures and good design. Those concerns beyond the scope of the EIA, such as with respect to resettlement, were conveyed to the relevant PPTA specialists and authorities.

6. Additional Information Disclosure 280. In addition to the disclosure and consultation described above, additional environmental information on the subprojects and the Project as a whole has and will be disclosed through a Project Stakeholder Communication Strategy including but not limited to the following:

i) the subproject domestic EIA reports are available for review at the Shanxi EPB;

ii) copies of the subproject EIA reports will be made available upon request; iii) the draft English IEE will be available for review at www.adb.org for 120 days

before the Project is considered by the ADB Board; iv) the finalized IEE will be available at www.adb.org; v) as described in Chapter VIII (GRIEVANCE REDRESS MECHANISM), a sign

will be erected at each subproject site providing the public with Project related information and summarizing the GRM process.

vi) Project information will be provided to beneficiaries at regular intervals during the planning and design phase, including information on the health hazards of using coal heating and cooking stoves and advantages of adopting district heating; and,

vii) during construction and implementation all environmental monitoring reports will be made available at www.adb.org.

281. The overall Project Stakeholder Communication Strategy is presented in Table 57.

107

Table 57: Project Stakeholder Communication Strategy Information Means of

Communication Responsibility Audience Frequency

Report and Recommendation of the President (RRP) with links to relevant documents

ADB Website ADB ADB, Government of PRC, Chinese Civil Society and individuals

Once

Project information during the planning and design phase

Discussions and stakeholder consultations

EA Project beneficiaries Regular intervals during the planning and design phase

Status of subproject implementation during construction

Posted on-site EA and contractors

Project beneficiaries All the time at all sites

Project Performance Reports and Project Information Documents

ADB Website ADB ADB, Government of PRC, Chinese Civil Society and individuals

Quarterly

Monthly progress reports EA Website EA ADB, Government of PRC, Chinese Civil Society and individuals

Monthly

Project Completion Report ADB Website ADB ADB, Government of PRC, Chinese Civil Society and individuals

Once

Source: Shanxi Energy Efficiency and Environment Improvement Project, Draft Project Administration Manual, 18 January 2012.

.

108

VIII. GRIEVANCE REDRESS MECHANISM A. Introduction 282. Extensive information disclosure and public consultation and participation have been undertaken through the Project environmental assessment processes (see Chapter VII) and through the LAP and LRP processes, and the Project’s emphasis on public participation will continue through the detailed design, construction and operation phases. Public support and need for the Project is strong, and significant grievances are unlikely. However, unforeseen issues may occur, and even with strong public support construction phase complaints can still be expected. In order to address complaints if or when they arise, a Project grievance redress mechanism (GRM) has been developed. 283. The Project GRM includes a procedure for receiving grievances, recording/ documenting key information, and evaluating and responding to the complainants in a reasonable period of time. Any concerns raised through the GRM will need to be addressed quickly and transparently, and without retribution to the affected person (AP). B. Policy and Legislative Framework

1. ADB 284. The ADB’s SPS requires IAs to establish a GRM to receive and facilitate resolution of AP’s concerns and complaints about the Project’s environmental performance. The GRM should be scaled to the risks and adverse impacts of the Project; should address affected people’s concerns and complaints promptly, using an understandable and transparent process; should be readily accessible to all sections of the community at no cost and without retribution; and, should not impede access to the PRC’s judicial or administrative remedies.

2. PRC 285. PRC Decree No. 431 Regulations on Letters and Visits (2005) codifies a complaint mechanism at all levels of government, and safeguards the complainants from any retaliation. In 2007 the national regulation was adapted to address environmental complaints in Decree No. 34 of SEPA on Environmental Letters and Visits System. 286. In the current system, when people are adversely affected by a project they can appeal to the project (e.g. contractors or IAs, either directly or through community committee), local government including the local EPB (district/county or city), or the PRC judicial system. If it is an environmental complaint the local EPB will take the leading coordination role. 287. In practice, during the construction stage complaints are most commonly directed to contractors. It the contractors' responses are unsatisfactory, the AP will contact the district/county or city EPB, who will first record the complaint and then go to the site to listen to explanations from the contractors’ side. In case of discrepancies, the district/city EPB may need to consult with the IA and/or PIC to acquire relevant information. This kind of fact finding or site investigation is usually time intensive, delaying the mediation process.

288. The major weaknesses of the current system are (i) lack of a specialized unit to address grievances; and (ii) lack of a timeframe specifying when actions and responses must be undertaken. These weaknesses have been addressed in the Project GRM.

109

C. Project GRM 289. The Project GRM consists of four escalating stages, with an emphasis on addressing problems locally on site if possible, and escalating to the next management level if a resolution cannot be reached. The PMO has overall responsibility for establishing and maintaining the GRM. 290. Key players in the Project GRM include:

i) Affected Person (AP). The AP submits the complaint. ii) Contractor’s On Site Engineer (OSE). Each contractor will appoint an OSE. The

OSEs phone number, fax, address, email address will be disclosed through a notice board at each subproject site. The OSE will provide the first line of response to grievances during the construction stage, and will develop the response in close coordination with the relevant SPCC.

iii) Subproject Public Complaints Center (SPCC). Each subproject IA will establish a SPCC staffed by members of the environmental management unit of the IA. The SPCC’s phone number, fax, address, email address will be disclosed through a notice board at the subproject site. The SPCC are responsible for overseeing the grievance responses at the subproject level, including assessing complaint eligibility; keeping detailed records on each complaint; and keeping the PMO GO informed as to complaints received and their resolution.

iv) PMO Grievance Officer (PMO GO). The PMO GO has overall responsibility for overseeing the Project GRM process, and for addressing complaints that cannot be resolved at the subproject level by the relevant SPCC. This position was established within the PMO at the outset of the PPTA, and will be continued during Project construction and operation.32

v) GRM focal points. These are entry points at which a complaint may be received. These include the OSEs, SPCCs and PMO GO, as well as community leaders, neighborhood organizations, and county/district EPBs.

291. The four stages of the Project GRM are presented below and summarized in Figure 38:

Stage 1: Contractor Level During the construction stage the AP submits the complaint to the contractor’s OSE (or any onsite construction personnel) or through other GRM access points (community leaders, neighborhood organizations, county/district EPBs, who will forward the complaint to the OSE). The OSE immediately informs the relevant SPCC as to the complaint, and seeks their decision as to complaint eligibility and a recommended course of action. The OSE must give a clear response to the AP within one week, including the decision on complaint eligibility and proposed course of action. The contractors will implement any agreed-upon solution and convey the outcome to the SPCC and AP within one week of action being taken. If the AP is satisfied with the contractor’s response and subsequent actions taken the process ends. The OSE will inform the SPCC as to the status of the complaint/grievance resolution.

32 During the PPTA the PMO GC advised and supervised the EIA consultants in conducting information disclosure

and public consultations (see Chapter VII).

110

Note: OSE – On Site Engineer; SPCC – Subproject Public Complaints Center; AP – Affected Person; PMO – Project Management Office; PMO GO – Project Management Office Grievance Officer; PIC Project Implementation Consultant.

Figure 38: Conceptual overview of Project Grievance Redress Mechanism.

Stage 2: SPCC Level

If the complaint is with respect to subproject operation, or the AP is not satisfied with the response received during Stage 1, the AP submits an oral or written complaint to the relevant subproject SPCC either directly or through the local GRM focal points. For oral complaints the SPCC must make a written record, and for either oral or written complaints the SPCC must inform the PMO GO as soon as the complaint is received. The SPCC will consult the AP, the contractor (if relevant), the PMO, ADB and other

Stage 1: Contractor LevelAP submits the complaint directly to the contractor’s OSE, or via SPCC, community

leaders, neighborhood organizations, and county/district EPBs. Contractor must: - Record complaint - Consult with SPCC as to complaint eligibility - Respond to AP within one week. - Implement any agreed-upon solution. - Convey the outcome to the SPCC and AP within one week of action being taken.

Yes Process complete, outcome reported to ADB in Project Performance Reports

Complaint Resolved?

Stage 2: SPCC Level AP submits complaint to the relevant subproject SPCC.

SPCC must: - Record complaint - Consult the AP, the contractor (if relevant), the PMO, PIC environment specialists and

other relevant parties - Identify solutions - Give a clear response to the AP within two weeks - Inform the PMO GO as to the status of the resolution. Contractor must: - Implement any agreed-upon solution - Convey the outcome to the SPCC and AP within one week of action being taken.  

No

Stage 3: PMO LevelSPCC forwards the complaint to the PMO GO and informs the AP accordingly.

PMO GC must: Inform and consult with provincial and local EPB, PIC environment specialists, and ADB to identify alternative approaches to resolve the issue that are appropriate to the the AP. Contractors during construction and/or the PIC/IA during operation will: - Implement any agreed-upon solution - Convey the outcome to the AP, SPCC and the PMO GO within two weeks of action

being taken.

Complaint Resolved?

No

YesProcess complete, outcome reported to ADB in Project Performance Reports

111

relevant parties; assess the eligibility of the complaint (if this has not already been done in Stage 1); identify solutions; and give a clear response to the AP within two weeks. The PIC environment specialists can assist the SPCC in preparing the response. The contractors during construction and/or the PIC/IA during operation will implement any agreed-upon solution and convey the outcome to the SPCC and AP within one week of action being taken. If the AP is satisfied with the response the process ends. The SPCC will inform the PMO GO as to the status of the resolution.

Stage 3: PMO Level

If the AP is not satisfied with the response received during Stage 2 the SPCC will formally forward the complaint to the PMO GO and inform the AP accordingly. The PMO GO will inform and consult with provincial and local EPB, PIC environment specialists and ADB to identify alternative approaches to resolve the issue that are appropriate to the AP. The contractors during construction and/or the PIC/IA during operation will implement any agreed-upon solution, and convey the outcome to the AP, SPCC and the PMO GO within two weeks of action being taken.

D. Types of Grievances Expected and Eligibility Assessment 292. Public grievances addressed by the GRM will most likely relate to environmental issues during the construction phase, as comprehensive consultations with potential APs during project preparation confirmed their basic support of, and desire for, the Project. Grievances may relate to damage to public roads due to heavy machinery operation and/or transportation of heavy equipment and materials; traffic disturbances and increased traffic congestion; dust levels; construction noise; improper disposal of waste materials; etc. Construction-related grievances can be numerous, and responding to them effectively in consultation with the SPCC is a key responsibility of the contractors. 293. Once a complaint is received and filed, the SPCC will identify if complaints are eligible. Eligible complaints include those where i) the complaint pertains to the Project; and ii) the issues arising in the complaint fall within the scope of environmental issues that the GRM is authorized to address. Ineligible complaints include those that are: i) not Project-related; ii) outside the mandate of the environment GRM (such as issues related to resettlement, allegations of fraud or corruption); and iii) other company or community procedures are more appropriate to address the issue. Eligible complaints will be recorded and the GRM process engaged. If a complaint is deemed ineligible, the AP will be informed of the decision and the reasons for rejection. E. Grievance Tracking 294. The tracking and documenting of grievance resolutions within the SPCCs will include: i) tracking forms (e.g. the name of the AP (individual or organization); the date and nature of the complaint; follow up actions taken; the final decision on the complaint; how and when relevant project decision was communicated to the complainant; and whether management action has been taken to avoid recurrence of community concerns in the future); ii) staff to update the database routinely; iii) systems with the capacity to analyze information so as to recognize grievance patterns, identify any systemic causes of grievances, promote transparency, publicize how complaints are being handled, and periodically evaluate the overall functioning of the mechanism; iv) processes for informing stakeholders about the status of a case; and v) procedures to retrieve data for reporting.

112

F. Publicizing the GRM 295. Billboards will be erected at each subproject providing the public with Project related information and summarizing the GRM process.

113

IX. PROJECT RISKS AND ASSURANCES A. Project Risks and Management Plan 296. Overall, risks associated with the project have been adequately addressed. The integrated benefits and impacts are expected to outweigh the costs. Major risks and mitigating measures are described in detail in the risk assessment and risk management plan accessible in Table 58.

Table 58: Project Risk Assessment and Management Plan Risks Assessment

without Mitigation

Management Plan or Measures Assessment with

Mitigation Tariff Reform Future heating tariff increases may be insufficient to ensure the financial sustainability of the heating sector or to encourage demand-side energy-efficiency improvements.

Medium Established mechanisms for adjusting heating tariffs currently exist based on full cost recovery plus profit, and the government is committed to the continued operation of a market-based heating sector without recourse to subsidies. The government is implementing heating tariff and policy reforms, including the installation of heat valves and meters in apartments and the establishment of billing based on usage rather than flat area rates. The institutional strengthening and capacity building component under Part C of the Shanxi Energy Efficiency and Environment Improvement Project provides assistance to implement tariff and regulatory reform.

Low

Project Management Project implementation may be delayed because of (i) delays in approval process, (ii) inadequate project management capacity of the PMO, (iii) low institutional capacity and inadequate experience of implementing agencies to implement their respective subprojects, and/or (iv) limited counterpart funds.

Medium Efforts have been made to avoid delays by incorporating lessons learned from the implementation of similar loans in other provinces (para 12) (i) The rigorous examination of

individual subprojects readiness and early approval of feasibility reports and EIAs should avoid potential delays

(ii) The PMO has gained some experience through implementation of Loan 1715-PRC: Shanxi Environmental Improvement Project and Loan 2146-PRC: Coal Mine Methane Development Project

(iii) An institutional strengthening and capacity building component is being made part of the loan to strengthen the capacities of the implementing agencies

(iv) Implementing agencies are backed by the financial strength of their owners to make equity contributions; municipal and county governments consider the project a top priority and assures availability of counterpart funds

Low

Corruption Corruption may take place at project management including procurement and disbursement.

Medium ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the Government of the PRC and SPG. Relevant provisions of ADB’s anticorruption policy are included in the loan regulations and all

Low

114

Risks Assessment without

Mitigation

Management Plan or Measures Assessment with

Mitigation documents and contracts during the bidding and implementation of the project. Risks associated with project management, including procurement and disbursement, will be mitigated by (i) engaging a procurement agency to advise and assist in the procurement of goods and services and the engagement of other consultants and (ii) having full-time officials at the PMO review bidding, construction, and operations, as well as conduct periodic inspection of the contractors’ activities, and (iii) having the Shanxi Finance Bureau review fund withdrawals and settlements.

Insufficient CMM to support the Gas Distribution Project

CMM available for the CMM gas distribution project is not sufficient to support requirements.

Low Long term contracts with three coal mines with capacity to produce CMM beyond the needs of the project have been signed. Should CMM supply from these mines be insufficient in the future, other mines in nearby areas can also supply. Shanxi has the largest CMM resource in PRC

Low

Overall Medium Low Source: Shanxi Energy Efficiency and Environment Improvement Project, Risk Assessment and Risk Management Plan, 2012. ADB = Asian Development Bank, CMM= coal mine methane, PIA = project implementing agency, PMO = project management office, PRC = People's Republic of China, SPG = Shanxi Provincial Government Sources: Executing and project implementing agencies., and ADBSource: Shanxi Energy Efficiency and Environment Improvement Project, Risk Assessment and Management Plan, January 2012. B. Project Assurances 297. The Government and the SPG have assured ADB that implementation of the project shall conform to all applicable ADB policies including those concerning anticorruption measures, safeguards, gender, procurement, consulting services, and disbursement as described in detail in the PAM and loan documents. Further, the Government and the SPG have agreed with ADB on certain covenants for the project, which are set forth in the loan and project agreements. 298. Disbursement of the loan proceeds for each subproject will be conditional on the government’s certification, in form and substance satisfactory to ADB, that the applicable municipal government or county government, and the implementing agency concerned, have executed and delivered the relevant onlending agreement, which will include the terms and conditions as required in the loan agreement, and which has become effective and binding upon the parties thereto in accordance with its terms. 299. SPG and the implementing agencies shall ensure that the project is designed, constructed, and operated in accordance with relevant PRC’s national and local environmental laws, regulations, procedures, and guidelines; ADB's Safeguard Policy Statement (2009) and Environmental Assessment Guidelines (2003); and the project environmental management plan (EMP) (Appendix 1) presented in this IEE. SPG will ensure the boilers constructed under the project comply with both PRC gas emissions standards stipulated in Emission Standard of Air Pollutants for Coal-burning, Oil-burning, Gas-fired Boilers (GB 13217-2001) and in the World Bank Environmental, Health, and Safety Guidelines for Thermal Power Plants. Environmental monitoring reports will be submitted to ADB two times per year during construction and annually for 2 years during operation. The EMP, with mitigation measures, a monitoring plan and institutional arrangements, will be updated during engineering design and incorporated in the bidding documents and civil works contracts.

115

X. CONCLUSION 300. The proposed Project will improve energy efficiency and reduce emission of greenhouse gases (GHG) and other pollutants in Shanxi Province by introducing district heating in four secondary cities (the Jinzhong, Licheng, Qin and Zhongyang subprojects) and expanding the coal mine methane (CMM) distribution network in a fifth city (the Liulin subproject). 301. The IEE is based on approved domestic environmental assessments prepared for each of the city subprojects supported by site visits, stakeholder consultations and additional surveys undertaken by the PPTA 7736 environmental specialists. 302. Based on the analysis conducted in this IEE and the domestic environmental assessments, it is concluded that the Project’s potential construction and operation phase adverse environmental impacts can be adequately mitigated through appropriate mitigation measures as outlined in the subproject domestic environmental impact assessments and this IEE. 303. otential construction phase negative impacts are expected to be site-specific, short term (other than a small amount of land acquisition), and will be effectively mitigated through the application of good construction and housekeeping practices and the implementation of construction phase community and occupational health and safety plans. There will be no significant negative impacts on air quality, water quality, biodiversity and natural resources including rare or endangered species, or physical cultural resources. For the Liulin subproject there are additional risks posed by working with CMM, and special attention will be paid to ensuring a safe working environment.

304. Operation of the Project is expected to result in significant long-term environmental and safety benefits resulting from energy efficiency improvements, reductions in emissions from coal burning, and extraction and utilization of CMM. Project operation will i) result in the closure of 275 small inefficient and polluting inner-city coal-fired boilers and 4,000 household coal-fired stoves; ii) reduce coal use by an estimated 129,493 standard tons of coal per year; iii) reduce the transportation of coal through urban areas; iv) result in energy savings of an estimated 85,390 tons of coal equivalent (tce) per year; v) substantially improve local air quality through the estimated annual reduction of emission of 4,121 tons of sulfur dioxide (SO2), 16,234 tons of total suspended particulates (TSP), 6,494 tons of particulate matter (PM10), and 1,942 tons of nitrogen oxides (NOx); vi) provide a global public good by reducing the annual emission of 254,379 tons of carbon dioxide (CO2), a greenhouse gas; and vii) improve the safety of miners.

305. In addition, the Project will have significant positive socioeconomic impacts. It will directly benefit about 270,000 residents, 51 schools and 17 hospitals. By providing cleaner and reliable heating services, the Project will i) reduce cases of respiratory diseases and carbon monoxide poisoning through improved indoor and outdoor air quality; ii) improve living conditions and school environment and hospital conditions during winter; iii) reduce heating expenditures by switching to centralized energy efficient heating systems from individual household stove and decentralized heating systems; and iv) increase income through job opportunities created during construction and operation.

306. Overall, it is concluded that the Project will result in environmental and socioeconomic benefits that significantly outweigh site-specific and short term negative impacts.

116

APPENDICES

Appendix 1: Environmental Management Plan (EMP)

Appendix 2: References

Appendix 3: Project Implementation Organization Structure

Appendix 4: Ruiyang CHP Due Diligence Report, Jinzhong Subproject

Appendix 5: Environmental Benefits Analysis

Appendix 6: Sample Round I Public Participation Web-Disclosure: Qin Subproject

Appendix 7: Sample Round II Public Participation Questionnaire: Zhongyang Subproject Appendix 8: Sample Round II Public Participation Questionnaire Results: Zhongyang Subproject

117

APPENDIX 1: ENVIRONMENTAL MANAGEMENT PLAN (EMP)

1. This appendix presents the Project environmental management plan (EMP), including mitigation measures; environmental monitoring and reporting; EMP updating; capacity building; and roles and responsibilities. A. Mitigation Measures

2. The construction and operation phase mitigation measures identified in Chapter VI of the Project Initial Environmental Examination (IEE) report are summarized in Table 1, along with timeframe, lead responsibility for implementation and source of funds. Costs for the mitigation measures are typically included in the Project base costs. B. Environmental Monitoring, Reporting and EMP Revision

1. Environmental Monitoring

3. The construction and operation phase environmental monitoring plan (EMoP) is presented in Table 2. The EMoP focuses on environmental safeguards monitoring (EMP monitoring) in order to ensure that foreseen environmental adverse impacts are properly mitigated through measures set forth in the EMP. EMoP specifies all environmental safeguards monitoring (EMP monitoring) sites that are suitably set to monitoring the Project impacts. 4. The implementation agencies will contract local environmental monitoring bodies to conduct monitoring. The IAs will ensure environmental safeguards monitoring (EMP monitoring) to be properly and timely conducted, under supervision of the PMO. Specifics of monitoring measurement are indicated in the EMoP. 5. Domestic environmental assessments combined with the site specific monitoring undertaken for each subproject prior to start-up will serves as subproject specific baselines. Table 3 provides details of EMoP.The cost of environmental safeguards (EMP) monitoring is included within the capacity building budgets. The cost for the PIC EHS , estimated at a total of $147,000. (Table 5).

2. Environmental Reporting

6. Project environmental safeguards monitoring (EMP monitoring) reports will be submitted to ADB semi-annually during construction and annually during operation. Project environmental monitoring reports will be prepared by the PIC EHS specialists and the PMO, based on the results of environmental safeguards monitoring (EMP monitoring) and monthly environmental monitoring reports, which will be will be prepared by the contractors and submitted to the PMO. 7. If the project environmental monitoring report has identified a weakness or deficiency in the implementation of the EMP that has already been addressed, the Project environmental safeguards monitoring (EMP monitoring) report will explain the manner by which the issue was resolved. The semi-annual and annual environmental safeguards monitoring (EMP monitoring) reports are stand-alone documents but these will also be incorporated into the overall Project Performance Monitoring reports, including being presented in full as one of the appendices. Table 3 summarizes environmental safeguards (EMP) reporting requirements.

118

3. EMP Updating

8. The EMP will be updated during engineering design and incorporated in the bidding documents and civil works contracts. The EMP will also be updated if necessary during implementation at the same time as the construction and operation phase occupational and community health and safety plans (HSPs) are prepared (see below), or if the environmental monitoring identifies significant impacts or issues that are not appropriately being addressed.

. Project Phase/

Aspect Potential

Environmental Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation Cost Source

Environmental Issues Associated with Preconstruction Phase Subproject Siting

Land acquisition i) Land Acquisition Plan (LAP) developed and implemented in accordance with PRC applicable laws and ADB requirements. 17 affected persons to receive a total of 465,000 CNY in compensation.

Prior to any physical works

PMO Included in Project Base Cost budget

Environmental Issues Associated with Construction Phase Air Quality Nuisance and human

health impacts from dust, odor, and vehicle exhaust.

i) Water trucks will be used to wet the construction sites and routes where fugitive dust is being generated as required taking into consideration weather conditions and site location (e.g. increased spraying during dry and windy days and near residential or commercial areas).

ii) Materials will be covered during transportation to avoid spillage or dust generation.

iii) Material piles will be stored in appropriate places and covered, seeded or sprayed to minimize fugitive dust.

iv) Any planned paving or vegetating of areas will be done as soon as possible after the surface materials are removed, to stabilize the soil.

v) Aggregate preparation and storage areas, concrete mixing plants and asphalt plants will be located at least 200 m downwind, based on the prevailing wind direction, from the nearest residential areas.

vi) Dust suppression equipment will be installed in concrete-batching plants.

vii) Vehicles and construction machinery will be properly maintained and will comply with relevant PRC emission standards.

viii) Upon completion of construction, disturbed sites will be re-vegetated or otherwise rehabilitated to stabilize the soil.

During construction

Contractor Included in Project Base Cost budget

Noise Noise impacts from construction machinery operation, transport activities.

i) Equipment and machinery will be properly maintained and equipped with silencers so as to conform to the PRC standard GB12523-90.

ii) Operation of machinery generating high levels of noise and the movement of heavy vehicles along urban roads will be restricted to between 6:00 am and 10:00 pm in accordance with PRC regulations.

iii) Noise reduction barriers will be used around high noise construction or transportation activities within 200 m of sensitive receptors (schools, hospitals and residential areas).

iv) If noise standards are exceeded, equipment conditions will be checked, and mitigation measures will be implemented to rectify the situation, such as additional sound barriers, moving noise sources away from the sensitive receptor, etc.

During construction

Contractor Design mitigations included in Project Base Cost budget.

Table 1: Project environmental management plan: environmental impacts, mitigation measures, time frame, implementation responsibility and cost source - preconstruction, construction and operation phases

119

119

120

Project Phase/ Aspect

Potential Environmental

Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

Wastewater Surface and groundwater contamination from construction wastewater, domestic wastewater.

i) Construction site and equipment wash-down runoff will be directed to sedimentation basins, and wastewater will be reused if possible such as for dust control. Solid waste residue in the basins will be cleared as required and transported to designated landfills.

ii) For areas with oily wastewater discharges, oil-water separators will be installed before the sedimentation basin.

iii) Appropriate temporary sanitation and waste collection facilities will be provided for workers, either using septic disposal systems or portable toilets.

– Effluent from portable toilets will be collected and treated by an appropriately licensed company in accordance with relevant regulations.

– Toilet facilities will be regularly cleaned and disinfected so as to avoid breeding of flies and mosquitoes.

– Workers will be provided with access to clean water sources.

During construction

Contractor Included in Project Base Cost budget

Erosion Water pollution, localized land degradation.

i) Contractors will be required to develop site erosion plans, including the use of vegetation and soil stabilization measures and structural erosion control measures.

During construction

Contractor Included in Project Base Cost budget

Solid Waste Soil and surface and groundwater contamination from construction and domestic wastes.

Domestic waste bins will be provided. i) Construction wastes such as spoil and various building materials such

as steel, timbers, etc., are utilized on site to the extent possible. ii) All wastes which cannot be used will be routinely collected by an

appropriately licensed company for recycling (e.g. waste oil/grease, oily clothing rags, metals, salvageable wood and building materials, etc.) and/or final disposal in a licensed waste facility (e.g. for non-recyclable materials).

i) Surplus spoil will be transported to suitable spoil disposal sites approved by the local EPB.

ii) No on-site landfills will be permitted at any construction site. iii) No burning of wastes will be permitted at any construction site. iv) Waste management will be undertaken in consultation with local

authorities.

During construction

Contractor Included in Project Base Cost budget

Project Phase/

Aspect Potential

Environmental Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

Hazardous Materials

Soil and water pollution and risks to human health from hazardous materials.

i) For storage of fuels, oils, solvents and other hazardous materials: – All toxic, hazardous, or harmful construction materials

including petroleum products must be transported in spill proof tanks with filling hoses and nozzles in working order, and stored in designated areas with impermeable surfaces and protective berms such that spillage or leakage will be contained from affecting surface water or groundwater systems.

– Chemical safety data sheets (CSDSs) will be posted for all hazardous materials.

– Oil absorbents will be readily accessible in marked containers. – Good housekeeping procedures will be established to avoid

the risk of spills in the first place. – Spills will be dealt with immediately, and personnel will be

trained and tasked with this responsibility.

During construction

Contractor Included in Project Base Cost budget

Soil and water pollution and risks to human health from hazardous waste.

i) Hazardous wastes should: – Be handled by workers who have received training in handling

and storage of hazardous wastes and have the requisite PPE. – Be temporarily stored in closed containers away from direct

sunlight, wind, water/moisture(?) and rain in secure designated areas with impermeable surfaces and protective berms such that spillage or leakage will be contained from affecting surface water or groundwater systems.

– Be collected and disposed by licensed contractors on an as needed basis.

During construction

Contractor Included in Project Base Cost budget

Flora and Fauna Vegetation cover removal.

i) Trees and shrubs will only be removed if they impinge directly on the permanent works or approved necessary temporary works.

ii) Temporary sites will be rehabilitated and replanted with appropriate native vegetation;

iii) Roadside pipeline routes will be re-vegetated with a mix of native vegetation species similar to the mix and composition found locally.

iv) Stream crossings will be subsurface utilizing directional drilling techniques.

During construction

Contractor Included in Project Base Cost budget

Physical Cultural Resources

Disturbance during construction.

Chance find procedure: i) All works at the find site will be halted and the relevant local heritage

authority and the PMO will be notified. ii) The find will be assessed by a competent expert. iii) Procedures to avoid, minimize or mitigate impacts to the physical

cultural resources will be developed by the expert in cooperation with the relevant local heritage authority.

iv) Construction will resume only after thorough investigation and with the permission of the relevant local heritage authority.

During construction

Contractor Included in Project Base Cost budget

121 121

122

Project Phase/ Aspect

Potential Environmental

Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

Public Inconvenience

Traffic congestion, interruptions in municipal services and utilities.

i) Subproject traffic control and operation plans will be prepared by the contractor and will be approved by the local traffic management administration before construction. The plans will include provisions for diverting or scheduling construction traffic to avoid morning and afternoon peak traffic hours, regulating traffic at road crossings, and selecting transport routes to reduce disturbance to regular traffic.

ii) During detailed design construction activities will be planned so as to minimize disturbances to utility services. Notice will, be provided to the public as to planned service interruptions.

iii) Consultation will be undertaken with relevant municipal authorities to determine the location of underground services prior to the start of work.

During construction

Contractor Included in Project Base Cost budget

Occupational Health and Safety

Risk of injury to workers.

Development and implementation of subproject specific Occupational Health and Safety Plans (OHSPs) which will:

i) Identify and minimize, so far as reasonably practicable, the causes of potential hazards to workers.

ii) Provide preventive and protective measures, including modification, substitution, or elimination of hazardous conditions.

iii) Provide for the provision of appropriate personal protective equipment (PPE) to minimize risks, including ear protection, hard hats and safety boots.

iv) Provide for appropriately stocked first aid kits and first aid stations. v) Provide procedures to protect workers from the potential health

hazards emanating from the handling, transport and disposal of asbestos or asbestos contaminated materials.

vi) Provide for adequate safety protection equipment including firefighting systems.

vii) Provide adequate signage in risk areas. viii) Provide procedures for limiting exposure to high noise or heat

working environments in compliance with PRC noise standards for construction sites (GB12523-1990) and relevant international guidelines.

ix) Provide procedures to protect workers from the potential health hazards emanating from the handling, transport and disposal of asbestos or asbestos contaminated materials.

x) Provide training for workers, and establish appropriate incentives to use and comply with health and safety procedures and utilize PPE.

xi) Provide training for workers on the storage, handling and disposal of hazardous wastes.

xii) Provide procedures for documenting and reporting occupational accidents, diseases, and incidents.

xiii) Provide emergency prevention, preparedness, and response arrangements.

At least 1 month prior to start of physical works

PIC EHS Specialists to develop; Contractor to implement

OHSP development in EMoP budget; implementation included in Project Base Cost budget

Project Phase/

Aspect Potential

Environmental Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

Social Risks Contractors will be required to disseminate information (in local languages) on the risks of sexually-transmitted infections, including HIV/AIDS, in health and safety programs to those employed during Project implementation. Specific provisions to this effect will be included in bidding documents and Works contracts.

Prior to start of physical works

Contractor Included in Project Base Cost budget

CMM Risks The Liulin OHSP should pay specific attention to: i) Mine ventilation and air source for underground workers ii) Emergency evacuation procedures and provision of refuge bays iii) Dust control. iv) Fire and explosion prevention and control strategies, including:

– conducting fire hazard assessments on a recurrent basis; – identifying fire hazard areas using warning signs, and

prohibiting all persons from smoking, using open flame lamps, matches or other types of ignition sources in the designated fire hazard areas, unless under strict protocols (e.g. welding protocol);

– appropriate storage of flammable materials; – installation of a fire detection and extinguishing system.

At least 1 month prior to start of physical works

PIC EHS Specialist to develop; Contractor to implement

OHSP development in EMoP budget; implementation included in Project Base Cost budget

Community Health and Safety

Risk of injury to local community members.

Development and implementation of subproject specific Community Health and Safety Plans (CHSPs) which will include:

i) Safety signage procedures to keep the public away from active works sites and hazardous areas.

ii) Site speed limit signage and the requirements for all project vehicles to comply with PRC traffic regulations.

iii) Community emergency response procedures. iv) Emergency contacts and communication systems / protocols. v) Procedures for interaction with local and regional emergency and

health authorities.

Prior to start of physical works

PIC EHS Specialist to develop; Contractor to implement

CHSP development in EMoP budget; implementation included in Project Base Cost budget.

Environmental Issues Associated with Operation Phase Air Quality Emissions from boiler

stacks may result in significant localized air pollution during the heating season.

i) The SPG through the PMO and the IAs shall ensure that the boilers are designed, constructed, and operated in accordance with relevant PRC national and local government environmental laws, regulations, procedures, and guidelines.

ii) Only PC or CGS (in the case of Zhongyang) boiler technology will be utilized.

iii) Boilers will be equipped with dual alkali flue gas desulfurization (FGD) scrubbers and filter baghouse emission control systems to reduce design emission levels to well within emissions standards stipulated in Emission Standard of Air Pollutants for Coal-burning, Oil-burning, Gas-fired Boilers (GB 13217-2001) and in the World Bank Environmental, Health, and Safety Guidelines for Thermal Power Plants.

iv) Boiler house design stack height will meet PRC standards and

Design of PC/CGS boilers and emission control systems during design phase. Operation of systems during operation.

Design consultants with oversight from PMO and IAs IAs

Included in Project Base Cost budget.

123 123

124

Project Phase/ Aspect

Potential Environmental

Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

international good practice. v) Only low sulfur coal will be utilized (< 1% sulfur content).

Fugitive coal dust may result in localized air pollution.

i) Coal truck loads will be covered. ii) Dust suppression systems (e.g. water spraying, coverings) will be

installed at all coal handling and transfer points and in coal handling yards.

iii) Ash will be stored on a temporary basis only in impervious storage tanks, and dust generation from ash tanks will be prevented by maintaining a layer of water over the surface and/or keeping ash covered prior to sale to the building industry.

During operation.

IAs Included in Project Base Cost budget.

Noise Noise impacts from operation of HGSs and CMM storage units.

i) The HGSs and CMM storage units will be designed such that PRC industrial boundary noise standards (GB12348-2008) are complied with (Class II for HGSs; Class III for the Liulin CMM works). This will include but not be limited to the following:

– Layout will be designed such that high noise locations are situated as far as possible from sensitive receptors, and/or noise barriers such as berms and vegetation are used to limit ambient noise at the boundary where sensitive noise receptors are present.

– The use of noise control techniques including, but not limited to acoustic machine enclosures; selecting structures and building materials according to their noise isolation effect to envelop the building; using mufflers or silencers in intake and exhaust channels; using sound absorptive materials in walls and ceilings; using vibration isolators and flexible connections (e.g., helical steel springs and rubber elements); and applying a carefully detailed design to prevent possible noise leakage through openings or to minimize pressure variations in piping.

ii) If noise standards are exceeded, equipment conditions will be checked, and mitigation measures will be implemented to rectify the situation, such as additional sound barriers, moving noise sources away from the sensitive receptor, etc.

Design of noise control measures during design phase. Operation of systems during operation.

Design consultants with oversight from PMO and IAs IAs

Design mitigations included in Project Base Cost budget.

Noise impacts from HESs and PRSs.

i) HESs and PRSs will have a buffer distance of at least 10 m from the nearest household or other sensitive receptors.

ii) Noise control techniques will be utilized, including, but not limited to: – acoustic machine enclosures; – selecting structures according to their noise isolation effect to

envelop the building, and using sound absorptive materials in walls and ceilings;

– using low-noise water pumps with noise levels controlled to within 55 dB(A) at a distance of 1 m from the pump house.

Design of noise control measures during design phase. Operation of systems during operation.

Design consultants with oversight from PMO and IAs IAs

Design mitigations included in Project Base Cost budget.

Project Phase/

Aspect Potential

Environmental Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

Wastewater Surface and groundwater contamination from domestic wastewater, site drainage, wastewater from scrubbers and fly-ash storage, and wastewater from coal dust suppression spraying.

i) All subproject sanitation facilities will discharge to septic systems that meet relevant PRC standards.

ii) Site runoff will be directed to sedimentation basins, and wastewater will be reused if possible such as for dust control. Solid waste residue in the basins will be cleared as required and transported to designated landfills.

iii) Wet fly-ash and FGD byproducts will be directed to impervious storage tanks with a sufficient design capacity.

iv) Wastewater from wet fly-ash storage and coal spraying will be recycled to the extent possible to conserve water, and wastewater will be directed to sedimentation basins.

v) For areas with oily wastewater discharges, oil-water separators will be installed before the sedimentation basins.

Design of treatment systems during design phase. Operation of systems during operation.

Design consultants with oversight from PMO and IAs IAs

Design mitigations included in Project Base Cost budget.

Solid Wastes Domestic and industrial wastes could affect soil, air and water quality if not managed properly.

i) Domestic and industrial waste bins will be provided. ii) All wastes will be routinely collected by an appropriately licensed

company for recycling (e.g. waste oil/grease, oily clothing rags, metals, salvageable wood and building materials, etc.) and/or final disposal in a licensed waste facility (e.g. for non-recyclable materials).

iii) No on-site landfills will be permitted at any construction site. iv) No burning of wastes will be permitted at any construction site. v) Waste management will be undertaken in consultation with local

authorities.

Design of waste systems during design phase. Operation of systems during operation.

Design consultants with oversight from PMO and IAs IAs

Design mitigations included in Project Base Cost budget.

Fly ash and slag could affect soil, air and water quality if not managed properly.

i) All fly-ash and slag will be temporarily stored on site in impervious storage tanks and sold to the local construction industry as a raw building material and to be used as material for road construction.

ii) No permanent on site ash disposal will be allowed.

Design of waste systems during design phase. Operation of systems during operation.

Design consultants with oversight from PMO and IAs IAs

Design mitigations included in Project Base Cost budget.

125

126

Project Phase/ Aspect

Potential Environmental

Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

Boiler decommissioning could affect soil, air and water quality if not managed properly.

i) Boiler decommissioning will be undertaken by the IAs under the authority of the local county/district governments in coordination with the boiler owners, and will be overseen by the relevant local city EPBs.

ii) All demolition wastes will be routinely collected by appropriately licensed waste management companies for reuse, recycling (e.g. equipment; steel, iron and other metals; salvageable wood and building materials; etc.) or final disposal in a licensed waste facility (e.g. for non-recyclable materials). Waste management will be undertaken in consultation with local authorities.

iii) No on-site landfills will be permitted at any demolition site. iv) No burning of wastes will be permitted at any demolition site. v) It is understood that household stoves will be retained by owners to

act as a backup in case of temporary failure of the district heating systems. However, if they so desire, homeowners who choose to decommission their stoves should be given access to the services of the waste management companies noted above.

vi) As part of the Project Stakeholder Communication Strategy, Project information will be provided to beneficiaries at regular intervals during the planning and design phase, including information on the health hazards of using coal heating and cooking stoves and advantages of adopting district heating.

To be completed within two years of the start of the de-commissioning process.

IAs, EPBs Included in Project Base Cost budget.

126

Project Phase/

Aspect Potential

Environmental Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

In case of asbestos impact during demolishing small boilers could affect soil, air and water quality if not handled, transported, and disposed properly.

To avoid the unexpected risk from asbestos, the following mitigation measures will be conducted during the demolition works.

(i) Asbestos risk assessment for asbestos and asbestos contaminated materials (ACM) will be conducted by the project city EPB under the supervision of Shanxi Hazardous Wastes Disposal Center (SHWDC), The assessment will identify the presence, absence and amount of asbestos and ACM in each of the small boilers, and define an action plan for all small boilers, including labeling requirements, control mechanism (from elimination, removal or isolation to safe working practices), health and safety requirements, as well as a plan of action and procedures for disposal of the asbestos and ACM. The plan will be based on the World Bank EHS standards (April 2007) and the Good Practice Note “Asbestos: Occupational and Community Health Issues (May 2009)”. The risk assessment will be shared with the local EPBs, the Provincial PMO and ADB;

(ii) SHWDC will be responsible for the removal, transport and disposal of the asbestos and ACM. SHWDC shall identify, properly label and pack asbestos as well as demolition debris contaminated with asbestos during the deconstruction. Asbestos and ACM will be transported by SHWDC in sealed vehicles to a designated hazardous waste landfill. The associated costs to handle, remove, transport, and dispose asbestos and ACM will be included in the Project.

(iii) Asbestos and ACM will be monitored after deconstruction of small boilers where asbestos has been identified during the risk assessment. The monitoring will consist of a visual inspection to confirm that all identified ACM have been removed, and a clearance monitoring of airborne asbestos to confirm safe working environment. SHWDC will conduct the visual inspection; a licensed laboratory will be identified to conduct the clearance monitoring. The inspection and monitoring program for the asbestos and ACM has been included in the monitoring program of the EMP.

(iv) A site contamination investigation will be undertaken in consultation with the local city EPB, and if necessary site specific plans taking into account the World Bank’s Group General EHS Guidelines on Construction and Decommissioning will be developed to address any site contamination. The plans will be reviewed by the local EPB and ADB. Contaminated spoil will be transported to suitable spoil disposal sites approved by the local EPB, and clean fill provided. The site will be rehabilitated to a level suitable for its proposed future use; the local EPB will approve the rehabilitation, and will require additional rehabilitation actions if necessary.

During operation

IAs Included in Project base cost budget

Hazardous Inappropriate storage i) For storage of fuels, oils, solvents and other hazardous materials: During IAs Included in

127

127

128

Project Phase/ Aspect

Potential Environmental

Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

Materials and Wastes

of hazardous materials can lead to soil and water pollution and risks to human health.

– All toxic, hazardous, or harmful construction materials including petroleum products must be transported in spill proof tanks with filling hoses and nozzles in working order, and stored in designated areas with impermeable surfaces and protective berms such that spillage or leakage will be contained from affecting surface water or groundwater systems.

– CSDSs will be posted for all hazardous materials. – Oil absorbents will be readily accessible in marked containers. – Good housekeeping procedures will be established to avoid

the risk of spills in the first place. – Spills will be dealt with immediately, and personnel will be

trained and tasked with this responsibility. ii) Hazardous wastes should:

– Be handled by workers who have received training in handling and storage of hazardous wastes and have the requisite PPE.

– Be temporarily stored in closed containers away from direct sunlight, wind, water/moisture and rain in secure designated areas with impermeable surfaces and protective berms such that spillage or leakage will be contained from affecting surface water or groundwater systems.

– Be collected and disposed by licensed contractors on an as needed basis.

operation Project Base Cost budget.

Project Phase/

Aspect Potential

Environmental Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

Occupational Health and Safety

The operation of district heating HGSs, distribution pipelines and HESs pose a risk of injury to workers from accidents, fires and other emergencies, and hazardous working environments.

Subproject specific operation-phase Occupational Health and Safety Plans (OHSPs) to be developed and implemented. OHSPs should: i) Identify and minimize, so far as reasonably practicable, the causes of

potential hazards to workers. ii) Provide preventive and protective measures, including modification,

substitution, or elimination of hazardous conditions. iii) Provide for the provision of appropriate personal protective

equipment (PPE) to minimize risks, including ear protection, hard hats and safety boots.

iv) Provide for adequate safety protection equipment including firefighting systems.

v) Provide adequate signage in risk areas. vi) Provide procedures for limiting exposure to high noise or heat

working environments in compliance with relevant PRC noise standards for construction sites (GB12523-1990), occupational and health standards (GBZ 2.1-2007 Occupational exposure limits for hazardous agents in the workplace) and relevant international guidelines.

vii) Provide training for workers, and establish appropriate incentives to use and comply with health and safety procedures and utilize PPE.

viii) Provide training for workers on the storage, handling and management of hazardous wastes.

ix) Provide procedures for documenting and reporting occupational accidents, diseases, and incidents.

x) Provide emergency prevention, preparedness, and response arrangements.

At least 1 month prior to start of operation.

PIC EHS Specialist to develop; IAs to implement

OHSP development in EMoP budget; implementation included in Project Base Cost budget

Additional risks posed by working with CMM.

In addition to the above requirements, the Liulin OHSP should pay specific attention to: i) Mine ventilation and air source for underground workers. ii) Emergency evacuation procedures and provision of refugee bays iii) Dust control. iv) Fire and explosion prevention and control strategies, including:

– conducting fire hazard assessments on a recurrent basis; – identifying fire hazard areas using warning signs, and

prohibiting all persons from smoking, using open flame lamps, matches or other types of ignition sources in the designated fire hazard areas, unless under strict protocols (e.g. welding protocol);

– avoiding use of oil filled transformers underground; – appropriate storage of flammable materials; – installation of a fire detection and extinguishing system.

v) Working in a CMM Environment, including: – preventing ignitions by installing automatic gas detectors and

alarms where electrically powered equipment is used and restricting items made of, or containing, aluminum, magnesium, titanium, or light metal alloy unless there is no

Prior to start of operation.

PIC EHS Specialist to develop; IAs to implement

OHSP development in EMoP budget; implementation included in Project Base Cost budget

129

129

130

Project Phase/ Aspect

Potential Environmental

Impacts

Proposed Mitigation Measures Timeframe Responsibility for Mitigation

Implementation

Mitigation CostSource

possibility of friction or impact, or they are adequately coated with non-sparking material;

– hand-held tools should be placed in a non-sparking storage and appropriate permits obtained before use;

– use of fire resistant hydraulic fluids in all underground equipment;

– management of CMM in working areas; when 1 percent of methane is present, all electrical and mechanical equipment should be switched off. When 1.5 percent of methane is present everyone except for those equipped, trained, and required for normalizing the situation should be evacuated and all potential sources of ignition should be deactivated and disconnected at the power source;

– Installing and using fire doors. Community Health and Safety

Project operation poses potential community health and safety impacts resulting from hazardous activities, heavy equipment traffic including coal transport, inappropriate storage and handling of hazardous materials.

Subproject specific Community Health and Safety Plans (CHSPs) will be developed. The CHSPs will include: i) Safety signage procedures to keep the public away from active works

sites and hazardous areas; ii) Site speed limit signage, and the requirements for all project vehicles

to comply with PRC traffic regulations; iii) Community emergency response procedures; iv) Emergency contacts and communication systems / protocols. v) Procedures for interaction with local and regional emergency and

health authorities.

Prior to start of operation.

PIC EHS Specialist to develop; IAs to implement

CHSP development in EMoP budget; implementation included in Project Base Cost budget

Additional risks posed by working with CMM.

vi) For the Liulin subproject there are additional risks posed by working with CMM, and the Liulin operation-phase CHSP should pay specific attention to ensuring community safety around subproject works.

Prior to start of operation.

PIC EHS Specialist to develop; IAs to implement

CHSP development in EMoP budget; implementation included in Project Base Cost budget

Boiler De-commissioning

Economic displacement

i) Labor Retrenchment Plan (LRP) developed and implemented in accordance with PRC applicable laws and ADB requirements, including re-employment of 80 full-time workers, re-employment of casual workers where possible, and training for new and seasonal workers on technical aspects of the new district heating systems.

During de-commissioning

PMO Included in Project Base Cost budget

CGS = chain grate stoker (boiler), CHSP = Community Health and Safety Plan, CMM = coal mine methane, CNY = Chinese yuan, CSDS = Chemical safety data sheets, DI = design institute, EIA = environment impact assessment, EMoP = environment monitoring plan, EMC = environmental monitoring contractors, EPB = environment protection bureau, FGD = flue gas desulfurization, GRM = grievance redress mechanism, HGS = heat generating station, HES = heat exchange station, HHWDC = Harbin hazardous waters disposal center, HSP = heat source plant, IA = implementing agency, LAP = land Acquisition Plan, LRP= labor Retrenchment Plan, OHSP = Occupational Health and Safety Plan, PC = pulverized coal, PHO = petition handling office, PIC EHS specialist = Project implementation Consultant Environment, Health, and safety specialist, PMO = project management office, PPE = personal protective equipment, SHWDC = Shangxi hazardous wastes disposal center, SPG = Shanxi provincial government,

Table 2: Environmental monitoring plan (EMoP). Project Phase/

Aspect Potential

Environmental Impacts

Aspects to be Monitored Location Measurement Frequency Responsibility Funding Source

Preconstruction Phase

Land acquisition Loss of Land - Development and implementation of LAP

- Liulin sites - EMP - Prior to commencement of physical works.

- PMO Social Safeguard Specialists, PIC EHS specialists

- LAP Budget

Economic Displacement

Loss of livelihoods - Development and implementation of LRP

- All sites with boiler decommissioning

- EMP - Prior to decommissioning.

- PMO Social Safeguard Specialists, , PIC EHS specialists

- LRP Budget

Construction Phase

Air Quality Decline in air quality - Subproject specific air quality

- Establish baseline

- 4 sites per subproject as identified by the PIC EHS Specialists, with one site being the closest sensitive receptor. Additional monitoring may be undertaken when necessary (e.g., if complaints are made by local communities).

- 24-hour average TSP, PM10, SO2, NO2

- Bi-annually - IAs, EMCs, PIC EHS specialist

- EMP Budget

- - - - - - - Dust control mitigations

- Erosion control mitigations - All construction

sites - EMP - Monthly - IAs, EMCs, PIC

EHS specialist - EMP

Budget Noise Noise impacts from

construction and transportation.

- Noise mitigations - HGSs, CMM storage units, HESs and PRSs

- EMP - At start of operation and then periodically

- IAs, EMCs, PIC EHS specialist

- EMP Budget

- Noise levels - 6 sites per subproject

- EMP, 1 hour dB(A) Day and Night

- Bi-annually - IAs, EMCs, PIC EHS specialist

- EMP Budget

131

132

Project Phase/ Aspect

Potential Environmental

Impacts

Aspects to be Monitored Location Measurement Frequency Responsibility Funding Source

Wastewater Surface and groundwater contamination

- Site runoff and equipment wash-down systems

- Worker sanitation systems

- All construction sites

- EMP - Monthly - IAs, EMCs, PIC EHS specialist

- EMP Budget

Solid Waste Soil and surface and groundwater contamination

- Waste collection, storage, recycling and disposal systems

- All construction sites

- EMP - Monthly - IAs, EMCs, PIC EHS specialist

- EMP Budget

Hazardous Materials

Soil and water pollution and risks to human health from hazardous materials

- Handling, storage and disposal of fuels, oils, solvents and other hazardous materials

- Hazardous waste management

- Spill response

- All construction sites

- EMP - Monthly - IAs, EMCs, PIC EHS specialist

- EMP Budget

Flora and Fauna

Unnecessary impacts

- Vegetation removal minimized

- Rehabilitation of temporary sites and pipeline routes

- All construction sites

- EMP - As required - IAs, EMCs, PIC EHS specialist

- EMP Budget

Physical Cultural Resources

Disturbance during construction.

- Chance find procedure - All construction sites

- EMP - Prior to start of construction, and then as required

- IAs, EMCs, PIC EHS specialist

- EMP Budget

Public Inconvenience

Traffic congestion, interruptions in municipal services and utilities.

- Subproject traffic control and operation plans

- All construction sites

- EMP - Prior to start of construction, and then as required

- IAs, EMCs, PIC EHS specialist

- EMP Budget

Occupational Health and Safety

Risk of injury to workers.

- Development and implementation of subproject construction phase OHSPs

- All construction sites

- EMP - Prior to start of construction, and then monthly

- IAs, EMCs, PIC EHS specialist

- EMP Budget

Community Health and Safety

Risk of injury to local community members.

- Development and implementation of subproject construction CHSPs

- All construction sites

- EMP - Prior to start of construction, and then monthly

- IAs, EMCs, PIC EHS specialist

- EMP Budget

Operation Phase

Air Quality Air pollution during the heating season from boiler emissions

- Emission systems - Fugitive dust control

systems

- Boilers - EMP - Prior to start of operation, and then monthly

- IAs, EMCs, PIC EHS specialist

- EMP Budget 132

Project Phase/ Aspect

Potential Environmental

Impacts

Aspects to be Monitored Location Measurement Frequency Responsibility Funding Source

- Subproject air quality - Establish baseline

- At 4 sites per subproject: the sites of the two highest GLCs predicted by AERMOD in the domestic subproject EIAs; the nearest sensitive receptor; and the highest source of fugitive emissions (e.g. coal storage and handling), the latter two as identified by the PIC EHS specialists.

- EMP, 24-hour average TSP, PM10, SO2, NO2

- Twice during heating season

- IAs, EMCs, PIC EHS specialist

- EMP Budget

- - - - - - Noise Noise impacts from

operation of HGSs and CMM storage units, HESs and PRSs.

- Noise mitigations - HGSs, CMM storage units, HESs and PRSs

- EMP - At start of operation and then periodically

- IAs, EMCs, PIC EHS specialist

- EMP Budget

- Noise levels - 6 sites per subproject

- EMP, 1 hour dB(A) Day and Night

- Twice during heating season

- IAs, EMCs, PIC EHS specialist

- EMP Budget

Wastewater Surface and groundwater contamination.

- Septic systems - Wastewater systems,

including oil-water separators

- HGSs - EMP - At start of operation and then periodically

- IAs, EMCs, PIC EHS specialist

- EMP Budget

Solid Wastes Soil, air and water contamination

- Waste collection, storage, recycling and disposal systems

- All subprojects - EMP - At start of operation and then periodically

- IAs, EMCs, PIC EHS specialist

- EMP Budget

- Fly ash storage and sale - All subprojects - EMP - At start of operation and then periodically

- IAs, EMCs, PIC EHS specialist

- EMP Budget

- Boiler decommissioning - All decommissioned boilers

- EMP - At least twice during each decommissioning

- IAs, EMCs, PIC EHS specialist

- EMP Budget

133

134

Project Phase/ Aspect

Potential Environmental

Impacts

Aspects to be Monitored Location Measurement Frequency Responsibility Funding Source

Hazardous Materials and Wastes

Soil and water pollution and risks to human health.

- Handling, storage and disposal of fuels, oils, solvents and other hazardous materials

- Hazardous waste management

- Spill response

- All subprojects - EMP - At start of operation and then periodically

- IAs, EMCs, PIC EHS specialist

- EMP Budget

Occupational Health and Safety

Risk of injury to workers.

- Development and implementation of subproject operation phase OHSPs

- All subprojects - EMP - At start of operation and then periodically

- IAs, EMCs, PIC EHS specialist

- EMP Budget

Community Health and Safety

Risk of injury to local community members.

- Development and implementation of subproject operation phase CHSPs

- All subprojects - EMP - At start of operation and then periodically

- IAs, EMCs, PIC EHS specialist

- EMP Budget

CHSP = Community Health and Safety Plan, CMM = coal mine methane, EMC = environmental monitoring contractors, EIA = environmental impact assessment, EMP = environmental management plan, EPB = environment protection bureau, GLC = ground level concentration, HES = heat exchange station, HGS = heat generating station, IA = implementing agency, km = kilometer, LAP = land Acquisition Plan, LRP= labor Retrenchment Plan, NO2 = nitrogen dioxide, OHSP = Occupational Health and Safety Plan, PC = pulverized coal, PHO = petition handling office, PIC EHS specialist = Project implementation Consultant Environment, Health, and safety specialist, PM10 = particulates matter smaller than 10 micrometers, PMO = project management office, PPE = personal protective equipment, PRS = pressure regulation station ,SHWDC = Shangxi hazardous wastes disposal center, SO2 = sulfur dioxide, SPG = Shanxi provincial government, TSP= total suspended particulates, Notes: i) For the purposes of the EMoP “operation phase” refers to the first two years of operation, which is the period during which ADB will have a hands-on monitoring and

supervision role. ii) The cost of the compliance monitoring is included within the cost of providing the PIC EHS specialists, estimated at a total of $147,000. It is understood that the

ambient data from the EPB permanent monitoring stations will be provided at no cost; however, the site specific ambient air quality and noise monitoring cost is estimated at $225,000. See Table 60 for additional information.

134

135

Table 3: Reporting Requirements Report Prepared by Submitted to Frequency

A. Construction Phase

Monthly environment monitoring report

IAs PMO Monthly

Semiannual environment monitoring report

PMO, PIC EHSs ADB Semiannually

B. Operation Phase

Environmental safeguards monitoring (EMP monitoring) report

PMO, PIC EHSs ADB Annually

ii) ADB = Asian Development Bank, CSC = construction supervision company, EMS = environment monitoring station, EPB = environment protection bureau, IA = implementing agency, LIEC= loan implementation environmental consultant, PMO = project management office.

iii) Source: Domestic environment impact assessment.

C. Implementation Roles and Responsibilities

1. SPG and Project Leading Group 9. The SPG will be the executing agency (EA) with overall responsibility for the execution of the Project. The SPG will ensure that the preparation, design, construction, implementation, operation and decommissioning of the Project and all Project facilities comply with i) all applicable laws and regulations of the PRC relating to environment, health and safety; ii) all measures and requirements set forth in the Project IEE and the EMP; and iii) any corrective or preventative actions set forth in environmental monitoring reports. 10. A project leading group, consisting of the SPDRC, SFB, Shanxi Construction Bureau (SCB), and Shanxi EPB will provide policy direction and operational guidance.

2. Project Management Office 11. The PMO will be responsible for overseeing the implementation of the Project, and is expected to have dedicated staff specializing on environment and social issues. The existing PMO has 5 staff performing various functions and has agreed to assess and reinforce its manpower support complement vis-à-vis the requirements for effective Project implementation. The PMO environmental staff will be responsible for Project environmental management and safeguard compliance, monitoring and reporting. The PMO, supported by the PIC EHS specialists will prepare semi-annual and annual environmental safeguards monitoring (EMP monitoring) reports and submit them to ADB.

3. Subproject Implementation Agencies 12. The five IAs will have direct responsibility for the implementation of the respective subprojects. The IAs will establish EHS units which will have direct responsibility for i) EMP implementation, including mitigation measures and health and safety plans; ii) coordination with PIC EHS Specialists and EPB staff as they conduct environmental monitoring, iii) preparation of monthly subproject environmental monitoring reports; and iv) addressing any environmental issues as they arise.

136

4. Contractors 13. The lead subproject contractors will be responsible for ensuring that all construction activities comply with the EMP requirements. They will also be responsible for preparing monthly environmental compliance reports, the format of which will be developed by the PIC EHS Specialists. The PIC EHS Specialist will also be responsible for verifying and signing the contractor’s reports.

5. Project Implementation Consultant 14. Consulting services, training and equipment will be provided to the EA, the PMO and the five IAs in the form of a Project Implementation Consultant (PIC) to assist them in (i) supervising project management and implementation to ensure successful project completion, and (ii) capacity building. 15. The PIC will include international and domestic EHS Specialists who will be responsible for i) developing templates for contractor monthly environmental compliance reports and for Project environmental monitoring reports to be submitted to ADB; ii) providing training on construction and operation phase EMP implementation, including mitigation implementation, environmental monitoring and reporting (including use of the reporting templates), and health and safety issues (contractors, IAs and the local EPBs will be invited to participate in this training); iii) evaluating environmental safeguards (EMP) monitoring in conjunction with PMO environmental staff; iv) developing construction and operation phase community and occupational health and safety plans, and providing training on their implementation; v) preparing semi-annual and annual environmental safeguards monitoring (EMP monitoring) reports with assistance from the PMO environmental staff; and vi) assisting IA EHS units and PMO environmental staff to respond to any environmental issues that may arise, including complaints received through the GRM. 16. It is anticipated that the International EHS Specialist will provide 4 person-months (pms) of input during the construction phase and 2 pms of input during the operation phase. The National EHS will provide 8 person-months of input during the construction phase, and 14 person months during the operation phase. It is anticipated that all environmental management, environmental monitoring and EHS responsibilities will be handed over to the PMO and IA EHS specialists by the second year of operation. 17. The International EHS Officer should have:

– advanced academic qualifications in environmental science, engineering or occupational health and safety;

– at least 10 years experience in environmental management and monitoring and/or occupational health and safety;

– demonstrated experience in implementation and supervision of EMPs (including occupational health and safety) for major infrastructure projects, including coal-fired district heating projects;

– demonstrated experience in CMM health and safety; – experience in leading multidisciplinary teams; – experience in PRC (desirable); – fluent written and spoken English language (Mandarin language capability is

desirable). 18. The National EHS Officer should have:

137

– advanced academic qualifications in environmental science or engineering and/or occupational health and safety from a recognized local university;

– at least five years experience in industrial environmental management, monitoring and reporting and/or occupational health and safety in PRC;

– experience in CMM health and safety is desirable; and, – ability to communicate effectively verbally and in writing in English.

19. The difficulty in recruiting qualified personnel with both relevant environmental management and occupational health and safety skills and experience is recognized. It is important, however, that between the two EHS Officers these subject areas are appropriately represented.

6. City EPBs 20. The three city-level EPBs will be responsible for ensuring the project to meet all the relevant the PRC environmental laws and regulations. If appropriate, EPBs can direct the PMO and IAs to address any subproject deficiencies.

7. ADB 21. ADB is responsible for monitoring and supervising the overall environmental performance of the Project. ADB will also disclose the Project IEE report and subsequent monitoring reports on its website. 22. If the borrower fails to comply with legal agreements on safeguard requirements, including those described in IEE and EMP, ADB will work with the borrower to bring the subproject back into compliance. If the borrower fails to reestablish compliance, then ADB may exercise legal remedies, including suspension, cancellation, or acceleration of maturity, that are available under ADB legal agreements. Before resorting to such measures, ADB will use other available means to rectify the situation satisfactorily to all parties to the legal agreements, including initiating dialogue with the parties concerned to achieve compliance with legal agreements. 23. Table 4 summarizes the roles and responsibilities of various institutions in relation to the EMP.

Table 4: Institutional Arrangement for the EMP Project Stakeholders Management Roles and ResponsibilitiesShanxi provincial government (SPG) (the executing agency)

(i) Provide overall guidance during preparation and implementation

(ii) Ensure counterpart contributions are provided for project implementation on time

(iii) Hold final responsibility to ensure the project to comply with environmental and social safeguards

Project Management Office (i) Is responsible for overseeing the implementation of the EMP on behalf of SPG by coordinating subprojects

(ii) Ensure the implementation of EMP through a nominated environment officer

(iii) Prepare and submit environmental safeguards monitoring (EMP monitoring) reports to Asian Development Bank

Implementing Agencies

(i) Hold direct responsibility of the implementation of the EMP (ii) Form an environment, health, and safety unit (iii) Ensure environmental safeguards monitoring (EMP monitoring)

through hiring environmental monitoring contractors (iv) Prepare monthly environmental reports and submit them to the

PMO Environment, health, and safety units (i) Is responsible for EMP implementation, including mitigation

measures and health and safety plans

138

Project Stakeholders Management Roles and Responsibilities(ii) Coordinate with PIC EHS Specialists and EPB staff as they

conduct environmental monitoring (iii) Prepare monthly semi-annual subproject environmental

monitoring reports (iv) Address any environmental issues as they arise.

Contractors (construction) (i) Ensure all construction activities to comply with the EMP requirements

(ii) Prepare monthly environmental reports and submit them to the IAs

Environment Monitoring Contractors (EMCs)

(i) Conduct environmental safeguards monitoring (EMP monitoring) during the project implementation

(ii) Provide monitoring results to the IAs Project implementation consultant Environment, health, and safety specialists (PIC EHS specialists)

(i) Developing templates for contractor monthly environmental compliance reports and for Project environmental monitoring reports to be submitted to ADB

(ii) Provide training on construction and operation phase EMP implementation, including mitigation implementation, environmental monitoring and reporting (including use of the reporting templates), and health and safety issues (contractors, IAs and the local EPBs will be invited to participate in this training)

(iii) Evaluate conducting environmental safeguards monitoring (EMP monitoring) in conjunction with PMO environmental staff

(iv) Develop construction and operation phase community and occupational health and safety plans, and providing training on their implementation

(v) Preparing semi-annual and annual environmental safeguards monitoring (EMP monitoring) reports with assistance from assisting the PMO environmental staff to prepare semiannual environmental monitoring reports

(vi) Assisting IA EHS units and PMO environmental staff to respond to any environmental issues that may arise, including complaints received through the GRM.

Asian Development Bank

(i) Provide overall project administration. (ii) Provide orientation to executing agency and implementing

agencies including the project management office. (iii) Review draft bidding documents and approval of bid evaluation

report. (iv) Disburse ADB loan proceeds.

Municipal Environment Protection Bureau (EPB)

(i) Ensure the project to comply with all the relevant PRC laws and regulations

(ii) May direct the PMO and implementing agencies to address any subproject deficiencies, If necessary and/or appropriate

D. Capacity Building 24. The PIC EHS Specialists will be responsible for providing on the job training and capacity building to PMO and IA staff in the areas of construction phase and operation phase environmental mitigation implementation and environmental monitoring (ambient and compliance inspections). This will include the delivery of working sessions on each of these topics prior to the commencement of physical works and again prior to the commencement of operation (see EMP Section C.5 for additional PIC EHS training tasks). Table summarizes institutional capacity building and training program. 25. The PIC EHS Specialist will also be responsible for the development of construction and operation phase subproject CHSPs and OHSPs, as described in Chapter VI, and for providing training on the plans prior to their implementation.

139

E. Budget 26. The Project indicative EMP budget is presented in Table 3. The main cost items are ambient air quality and noise monitoring ($225,000) and PIC EHS Specialists ($147,000).

Table Institutional Strengthening and Training Program

Training Attendees Contents Times Period (days)

Number of

Person

Budget (CNY

10,000) Source of fund

ADB’s and PRC’s environmental laws, regulations and policies

PMO, IAs, contractors

ADB’s safeguard policy statement and other environmental regulations

4 2 30 10

Included in the loan

implementation technical

assistance

Project applicable PRC’s environmental laws, policies, standards and regulations

International environmental management practice in civil constructions

Grievance Redress Mechanism

PMO,IAs, Local EPBs, residential communities, and Stakeholders

GRM structure, responsibilities, and timeframe

2 1 30 4 Types of grievances and eligibility assessment

Implementation of environment monitoring plan

PMO, IAs, contractors,

Impacts and mitigation measures during construction and operation

4 2 30 10 Monitoring and auditing mechanism

Reporting requirements

Corrective action of EMP

Total 10 5 90 24

ADB = Asian Development Bank, CNY = Chinese yuan, CSC = construction supervision company, EMP = environmental monitoring plan, EPB = environment protection bureau, GRM = grievance redress mechanism, IA = implementing agency, PMO = project management office, PRC = the People’s Republic of China

Source: Discussion under project preparatory technical assistance.

141

Table 3: Project indicative environmental management plan budget.

Item Unit Unit Cost

1. Environmental Monitoring Yr 1 Yr 2 Yr 3 Yr 1 Yr 2Ambient Air (PM10, TSP, SO2, NO2) Month 10,000 40,000 40,000 40,000 40,000 40,000

Sound Monitoring Month 1,000 5,000 5,000 5,000 5,000 5,000

Subtotal 45,000 45,000 45,000 45,000 45,000 Total 225,000

2. PIC Health, Safety and Environment SpecialistsInternational HSE Specialist Month 18,000 18,000 27,000 27,000 9,000 -

(1 pm) (1.5 pms) (1.5 pms) (0.5 pms)National HSE Specialist Month 3,000 6,000 18,000 18,000 18,000 6,000

(2 pm) (6 pms) (6 pms) (6 pms) (2 pm)Subtotal 24,000 45,000 45,000 27,000 6,000 Total 147,000

Subtotal by Year 69,000 90,000 90,000 72,000 51,000 Contingency (10%) 6,900 9,000 9,000 7,200 5,100 Total by Year 75,900 99,000 99,000 79,200 56,100

Subtotal Construction Phase (3 years) 273,900 Subtotal Operation Phase (2 years) 135,300 TOTAL 409,200

Note: capacity building costs (manuals, preparation of training materials and manuals, transportation, materials shipping and honorariums for participants) covered by Project Capacity Building budget.

Construction Phase Operation Phase

(Based on 4 sites per subproject at a total cost of $5000, bi-annualy during construction and 2 times per heating season during operation, 4 subprojects (no monitoring for Jinzhong))

(Based on $500 per subproject, 2 times per heating season, 5 subprojects)

142

APPENDIX 2: REFERENCES Beijing Wanchi Environmental Science and Technology Firm, 2009. Zhongyang Urban District Heating Environmental Impact Assessment Statement. Beijing Wanchi Environmental Science and Technology Firm, 2011. Liulin CMM/CBM Transmission and Distribution Tabular Environmental Impact Assessment Report. Guodian Northern China Power Company, 2008. Ruiguang Combined Heat and Power Project Environmental Impact Assessment Statement. IFC, 2007. Environmental, Health, and Safety General Guidelines. IFC, 2007. Environmental, Health, and Safety Guidelines for Mining. IFC, 2007. Environmental, Health, and Safety Guidelines for Thermal Power Plants. Labor Retrenchment Plan, PRC: Shanxi Energy Efficiency and Environment Improvement Project. Prepared by: Project Management Office of Shanxi Energy Efficiency and Environment Improvement Project for the Shanxi Provincial Government and the Asian Development Bank. October 2011. Lee, 2005. Environmental Engineering Dictionary. Government Institutes, Maryland, USA. PPTA 7736, 2011. Interim Report Land Acquisition and Resettlement. PPTA 7736, 2011. Summary Poverty Reduction and Social Strategy. Resettlement Plan, October 2011. PRC: Shanxi Energy Efficiency and Environment Improvement Project. Prepared by Project Management Office of Shanxi Energy Efficiency and Environment Improvement Project for the Shanxi Provincial Government and the Asian Development Bank. Shanxi Provincial Eco-environmental Research Center, 2011. Licheng County District Heating Environmental Impact Assessment Statement. Taiyuan Luojiahua Company, 2011. Qin County District Heating Environmental Impact Assessment Statement. Zhonghe New Energy Engineering Company, 2011. Jinzhong Urban District Heating Network Tabular Environmental Impact Assessment Report.

APPENDIX 3: PROJECT IMPLEMENTATION ORGANIZATION STRUCTURE

Name

Project Implementing Agency (PIA)

1. Jinzhong DHS Jinzhong Ruiyang CHP Heat Supply Co. Ltd.

2. Licheng DHS Licheng County Wantong Heat Supply Co. Ltd.

3. Qin DHS Qin County Huayang Heat Supply Co. Ltd.

4. Zhongyang DHS Zhongyang Heating and Gas Supply Center

5. Liulin CMM Liulin County Gasification Company

Executing Agency (Shanxi Provincial Government)

9

Changzhi Municipal Government/Project Coordination Office

Jinzhong Municipal Government/Project Coordination Office

Lvliang Municipal Government/Project Coordination Office

Jinzhong DHS Qin DHS Zhongyang

DHSLicheng DHS Liulin CMM

Project Leading Group (Vice Governor, SPDRC, SFB, SCB and SEPB)

Project Management Office

140

144

APPENDIX 4:

RUIYANG CHP DUE DILIGENCE REPORT, JINZHONG SUBPROJECT

Prepared by Mr. Huaiquan Liu, PPTA 7736 National Environmental Consultant, 20011

1. Introduction

This Due Diligence Report for Ruiguang Combined Heat and Power (CHP) Plant was prepared by the PPTA Consultants for the ADB Loan Shanxi Energy Efficiency and Environment Improvement Project based on: i) the Environmental Impact Assessment (EIA) Report, which was approved in 2009 by PRC’s MEP, for the CHP prepared by Guodian Northern China Power Company, ii) the CHP Feasibility Study Report prepared by Guodian Northern China Power Company, and iii) the site inspection and discussion with the staff from Jinzhong City EPB and Jinzhong Public Investment Company conducted by the PPTA Consultants.

The designed capacity of the CHP is 2×300MW generator set with the annual power generation capacity of 3.3 billion KWH and the annual heat supply capacity of 6.88 million GJ, which will be the heat source of the proposed District Heating Network Component of the ADB financed Shanxi Energy Efficiency and Environment Improvement Project. The CHP conforms to the City’s master plan for both the electricity demand and the heating supply. The other design parameters are as follows:

� Annual coal consumption: 2.10 million tons;

� Thermal-electricity rate (in heating season): 146.8%;

� Thermal efficiency: 57.04%;

2. Proposed Location of the CHP

Ruiguang Combined Heat and Power (CHP) Plant site located in Shanxi Jinzhong City, Yuci District, Wujinshan Town, east- southern edge of Taiyuan City, about 4 km, and 10 km to north edge of Yuci district. Site covers an area of mainly agricultural land, Within 500 m to the CHP Plant, without any sensitivity and environmental protected objectives were found.

3. Expected Pollutant Emission

The estimated emission concentrations of SO2, flue dust and NOx from the CHP will be 52-151 (varied by different coal sources) milligrams per cubic meter (mg/m3), 15-28 mg/m3 and 130 mg/m3, respectively, which meet the national standards of “Emission Standard of Air Pollutants for Thermal Power Plant” (GB13223-2003). Specifically, emission standards for SO2, flue dust and NOx are 400 mg/m3, 50 mg/m3 and 450 mg/m3, respectively. For strictly complying with the standards, the environmental impacts of the CHP will be mitigated by the following measures according to the EIA Report:

(i) Building a 205 m high boiler stack with the diameter of 6.5 m to disperse and minimize the direct impact of emissions on adjacent areas;

(ii) Using an electrostatic precipitators + desulfurization absorber with a dust removal efficiency of at least 99.9%;

(iii) Using wet calcium flue gas desulfurization (FGD) facility that is at least 92% efficient;

145

II. Using Low nitrogen burners plus selective catalytic reduction (SCR) de-nitrification equipment with the NOx removal rate of at least 70%, the emission concentration will be lower than 195 mg/Nm;

III. Burning low-sulfur coal (0.25%～0.9% sulfur and produced from Yuci Huating local

Coal Mines in Yuci District under Jinzhong City); IV. Installing an online automatic monitor on the smokestack of the CHP to monitor

sulfur dioxide and flue dust (Jinzhong City Environmental Monitoring Station will collect data and calibrate the instruments).

V. Construction of wastewater treatment facilities in slag yard; VI. The slag will be recycled as row material for building material production. The agreement

with local manufacture of building materials for recycling of the slag has been signed; VII. Mufflers will be installed on vents of the boiler and air blowers; and sound-proof

shields will be installed on the power generators, to mitigate the noise impact; VIII. Since the circulating cooling water will be recycled for heating supply, no

industrial wastewater discharge into the sewer system in heating seasons.

Table 1 Expected Air Pollution Emissions of the CHP Pollution Item Emission Concentration Standard

Concentration/ emission rate

Design coal Calibration Coal

SO2 Expected emission concentration (mg/m3)

120.38 88.52 400

Expected hour emission rate (t/h)

0.242 0.184 12

Expected annual emission load (t/a)

1745.6 1324.1

Flue gas Expected emission concentration (mg/m3)

30.04 42.22 50

Expected hour emission rate (t/h)

0.0605 0.0877

Expected annual emission load (t/a)

435.6 631.6

NOx Expected emission concentration (mg/m3)

195 195 450

Expected hour emission rate (t/h)

0.393 0.405

Expected annual emission load (t/a)

2,827.7 1,916.9

4. Mitigation Measures for Noise Impact:

The following sound-proof equipment will be installed to mitigate the noise impact. It’s expected that the noise during the CHP operation will reach the national standard of “Emission Standard for Industrial Enterprises Noise at Boundary” (GB12348-2008).

146

Table 2 Noise Mitigation Measures for Major Equipment dB(A) No. Equipment Quantity Original Noise Mitigation Measure Reduced Noise

1 Boiler steam relief 2 110 Muffler 20－25

2 Steam turbine generator 2 95 Sound-proof shield 20 3 Coal crusher 2 95 Factory workshop sound insulation 20 4 Coal mill 10 100 Sound-proof shield 20 5 Draft fan 4 85 Muffler 20 6 Primary air fan 4 95 Muffler 20 7 Secondary air fan 4 95 Muffler 20

5. Selection of Air Quality Monitoring Points

Based on the local meteorological condition, landform and pollution characteristic of the CHP, 15 air monitoring points have been selected during the EIA survey, which are listed in the table below. During the CHP operation, the air quality parameters of SO2, NOx, TSP, PM10 at above selected points will be monitored by Jinzhong City Environmental Quality Monitoring Station once a month to closely supervise and assess the air pollution impact to the surrounding area from the CHP.

Table 3 Air Monitoring Points

No. Monitoring Point Functional Zone Direction to CHP

Distance to CHP (km)

1 CHP site Background of CHP Site — — 2 Taolao Village Rural Residential Area E 2 km 3 Beidao Town Town Residential Area SE 18 km 4 Yingfang village S 4.3 km

5 Tianshui Urban Residential Area S 8.5 km

6 Hejiawan Village

SW 9.5 km

7 Yangwangjia Village W 1.1 km

8 Fujiaping Village W 4 km

9 Leijiashan Village W 6 km

10 Wangjiapo Village Village W 18 km

11 Zhangjia Village Village

NW 3.5 km

12 Yukou Village N 3.2 km

13 Zhangjiawan Village NE 5.5 km

14 Wangxin Village Village SW 1.5 km 15 Maojia Village Village N 1 km

147

APPENDIX 5: ENVIRONMENTAL BENEFITS ANALYSIS Emission Factors - Coal Baseline, No Emission Systems Standard Coal to CO2 2.493 Source: Xiamen Energy Conservation Center, http://xmecc.xmsme.gov.cn/2010-7/20107293344.htm Standard Coal to S02 0.019 Source: PRC Guidelines for EIA - Atmospheric Environment (HJ 2.2-2008) and domestic EIA reportsStandard Coal to NOx 0.015 Source: PRC Guidelines for EIA - Atmospheric Environment (HJ 2.2-2008) and domestic EIA reports

Standard Coal to TSP 0.075 Source: PRC Guidelines for EIA - Atmospheric Environment (HJ 2.2-2008) and domestic EIA reportsStandard Coal to PM10 0.030 Source: PRC Guidelines for EIA - Atmospheric Environment (HJ 2.2-2008) and domestic EIA reports

Emission Factors - Coal with FGD and Particulate Emission Control Systems (Large boiler(s) and CHP)Standard Coal to CO2 2.493 Source: Xiamen Energy Conservation Center, http://xmecc.xmsme.gov.cn/2010-7/20107293344.htm

Standard Coal to S02 0.005 Source: Domestic subproject EIA ReportsStandard Coal to NO2 0.015 Source: Domestic subproject EIA Reports

Standard Coal to TSP 0.020 Source: Domestic subproject EIA ReportsStandard Coal to PM10 0.008 Source: Domestic subproject EIA Reports

Emission Factors - CMMCO2/m3 Methane 1.88 Source: US EIA, and CMM information provided by Liulin IA. Assumes CMM methane content is 41%. S02/ m

3 CMM 0 Source: Based on CMM information provided by Liulin IA, emission is too low to calculate.NO2/m

3 CMM 0 Source: Based on CMM information provided by Liulin IA, emission is too low to calculate.

TSP/m3 CMM 0 Source: Based on CMM information provided by Liulin IA, emission is too low to calculate.PM10/m3 CMM 0 Source: Based on CMM information provided by Liulin IA, emission is too low to calculate.CH4 m3/ton TCE 825.52 Source: CMM Sector Analysis.

Volume of CMM per Year, m388,800,000 Source: Based on CMM information provided by Liulin IA, emission is too low to calculate.

Baseline: Without ProjectJinzhong Licheng Qin Zhongyang Liulin Total DHS Only CMM Only

Standard Coal (Tons/Year) 64,085 50,294 45,800 11,900 76,000 248,079 172,079 76,000 CO2 (Tons/Year) 159,764 125,383 114,179 29,667 189,468 618,461 428,993 189,468 SO2 (Tons/Year) 1,218 956 870 226 1,444 4,714 3,270 1,444 NO2 (Tons/Year) 961 754 687 179 1,140 3,721 2,581 1,140

TSP (Tons/Year) 4,806 3,772 3,435 893 5,700 18,606 12,906 5,700 PM10 (Tons/Year) 1,923 1,509 1,374 357 2,280 7,442 5,162 2,280

Scenario Assessments:

Standard Coal/Year Jinzhong Licheng Qin Zhongyang Liulin Total DHS Only CMM OnlyBaseline 64,085 50,294 45,800 11,900 76,000 248,079 172,079 76,000 Small Boiler 47,336 41,267 87,323 - 175,926 175,926 - Large Boiler + CHP 46,804 30,482 32,200 9,100 - 118,586 118,586 - CMM - - - - - - - - Project (LB + CHP + CMM) 46,804 30,482 32,200 9,100 - 118,586 118,586 - Savings Baseline vs. Project 17,281 19,812 13,600 2,800 76,000 129,493 53,493 76,000

129,493

CO2 Jinzhong Licheng Qin Zhongyang Liulin Total DHS Only CMM OnlyBaseline 159,764 125,383 114,179 29,667 189,468 618,461 428,993 189,468 Small Boiler 118,009 102,879 217,696 - - 438,584 438,584 - Large Boiler + CHP 116,682 75,992 80,275 22,686 - 295,635 295,635 - CMM - - - - 68,447 68,447 - 68,447 Project (LB + CHP + CMM) 116,682 75,992 80,275 22,686 68,447 364,082 295,635 68,447 Savings Baseline vs. Project 43,082 49,391 33,905 6,980 121,021 254,379 133,358 121,021

254,379

SO2 Jinzhong Licheng Qin Zhongyang Liulin Total DHS Only CMM OnlyBaseline 1,218 956 870 226 1,444 4,714 3,270 1,444 Small Boiler 899 784 1,659 - - 3,343 3,343 - Large Boiler + CHP 234 152 161 46 - 593 593 - CMM - - - - - - - - Project (LB + CHP + CMM) 234 152 161 46 - 593 593 - Savings Baseline vs. Project 984 803 709 181 1,444 4,121 2,677 1,444

4,121

NO2 Jinzhong Licheng Qin Zhongyang Liulin Total DHS Only CMM OnlyBaseline 961 754 687 179 1,140 3,721 2,581 1,140 Small Boiler 710 619 1,310 - - 2,639 2,639 - Large Boiler + CHP 702 457 483 137 - 1,779 1,779 - CMM - - - - - - - - Project (LB + CHP + CMM) 702 457 483 137 - 1,779 1,779 - Savings Baseline vs. Project 259 297 204 42 1,140 1,942 802 1,140

1,942

Savings Baseline vs. Project

Savings Baseline vs. Project

Savings Baseline vs. Project

Savings Baseline vs. Project

148

TSP Jinzhong Licheng Qin Zhongyang Liulin Total DHS Only CMM OnlyBaseline 4,806 3,772 3,435 893 5,700 18,606 12,906 5,700 Small Boiler 3,550 3,095 6,549 - - 13,194 13,194 - Large Boiler + CHP 936 610 644 182 - 2,372 2,372 - CMM - - - - - - - - Project (LB + CHP + CMM) 936 610 644 182 - 2,372 2,372 - Savings Baseline vs. Project 3,870 3,162 2,791 711 5,700 16,234 10,534 5,700

16,234

PM10 Jinzhong Licheng Qin Zhongyang Liulin Total DHS Only CMM OnlyBaseline 1,923 1,509 1,374 357 2,280 7,442 5,162 2,280 Small Boiler 1,420 1,238 2,620 - - 5,278 5,278 - Large Boiler 374 244 258 73 - 949 949 - CMM - - - - - - - - Project (LB + CHP + CMM) 374 244 258 73 - 949 949 - Savings Baseline vs. Project 1,548 1,265 1,116 284 2,280 6,494 4,214 2,280

6,494

SUMMARY

Scenario Std Coal CO2 SO2 NO2 TSP PM10

Baseline (Status Quo) 248,079 618,461 4,714 3,721 18,606 7,442 Alt. 1: Small Boilers 175,926 438,584 3,343 2,639 13,194 5,278 Alt. 2: Large Boiler(s) + CHP 118,586 295,635 593 1,779 2,372 949 Alt. 3: CMM (Liulin Only) - 68,447 - - - -

Alt. 4: Project (Large Boiler(s) + CHP+ CMM)

118,586 364,082 593 1,779 2,372 949

Savings Baseline vs. Project 129,493 254,379 4,121 1,942 16,234 6,494 DHS Only Savings 53,493 133,358 2,677 802 10,534 4,214 CMM Only Savings 76,000 121,021 1,444 1,140 5,700 2,280

TCE Savings (Based on coal savings less TCE equivalent of CMM combustion)Volume of CMM per Year 88,800,000 Density of CMM 1.09 kg/cubic meter 1.090 Mass of CMM per Year 96,792,000 Methane 36,408,000 CMM TCE Value 44,103 Project TCE Savings 85,390 Liulin TCE Savings 31,897 DHS TCE Savings 53,493

Savings Baseline vs. Project

Savings Baseline vs. Project

File source: Alternatives Calculations 17 11 2011.xlsx

149

APPENDIX 6: SAMPLE ROUND I PUBLIC PARTICIPATION WEB-DISCLOSURE -

QIN SUBPROJECT

Qin 环评报审前公示和意见征询

根据《环境影响评价公众参与暂行办法》规定，建设单位或者其委托的环境影响评价

机构在编制环境影响报告书的过程中，应当在报送环境保护行政主管部门审批或者重新审

核前，向公众公告并广泛征求各方意见。

建设单位于 2011 年 7 月 14 日建设单位在山西省环境保护网（http://sxhb.gov.cn）进行

了为期 10 天的环评公示，并提供了环境影响报告书简本，为社会公众提供查询和反映意

见的途径，其间评价单位及建设单位尚未收到任何意见及要求。

网上公示 Published on Shanxi EPB website

150

APPENDIX 7: SAMPLE PUBLIC PARTICIPATION QUESTIONNAIRE - ZHONGYANG SUBPROJECT

公众参与调查表 Questionnaire Table

调查内容 Questionnaire Contents

姓名 Name 性别 Sex 年龄Age

职业

Occupation

文化程度Education

Level

家庭住址Home

Address

联系方式Contact

填表说明：

1.本表是为了了解评价区居民对建设项目的看法，请您从长期居住在本地区对环境质量的直观感觉出发，对本项目的利弊做出判断，为政府部门决策提供依据。

2.请选择您认为最合适的或与意见相近的答案字母划“√”。

3.本表发放范围为该项目评价区周围各阶层、当地居民或团体、组织及政府。 Instruction: 1. This table is to evaluate resident’s understandings and the views to the proposed construction project, please provide your comments in the long-term environmental quality of the intuitive feeling, and give the positive and negative impacts by the proposed project activities to assist the government decisions. 2. Select the most appropriate answer or similar answer with your views and draw the letter with "√".

3. The questionnaire will be distributed to all levels within the project evaluation area, local residents or groups, organizations and government.

意见征询 Advice consultant

151

1.您在接受本调查以前，是否知道中阳县城区集中供热工程项目的建设？

A.知道 B.不知道 1. Before accepting this survey, were you aware of the proposed Zhongyang County District Heating Project? A. Yes; B. No

2.您对本项目的基本态度是什么？

A.支持 B.反对 C.无所谓 2. What is your basic attitude to the proposed Project? A. Support; B. Against; C. Indifferent

3.您认为本项目的选址是否合适？

A.合适 B.不合适 C.无所谓不合适请说明理由：（） 3. What is your opinion for the site selection of the proposed Project? Is it appropriate? A. Yes; B. No; C. Indifferent; D, Please give the further comments if you think this site selection is not appropriate ( )

4.您认为目前中阳县城空气环境质量如何？

A.好 B.较好 C.一般 D.差 4. What do you think of the ambient air quality in this county at present? A. Good; B. Fair; C. General; D. Poor

5.本项目要设四台锅炉，以供县城供热使用，产生的污染物主要为 SO2 和烟尘、锅炉废水和软化水、锅炉炉渣及运煤车辆所产生的噪声，您认为本项目的建设可能带来哪些环境问题？

A.水污染 B.空气污染 C.地下水污染 D.其它 5. The proposed Project is planning to set up four boilers for district heating. The main pollutants produced by the Project are SO2, fly dust, demineralized water, coal boiler slag, and the noise generated by vehicles. What do you think is the most important pollution will be generated by the Project? A. Water pollution; B. Air pollution; C. Underground water pollution; D. Other pollution.

6.您认为本项目对您的生活影响最大的问题是什么？

A.废水 B.废气 C.噪声 D.其它 6. What do you think what is the most serious environment problem caused by this Project to your daily life? A. Wastewater; B. Waste gas emission; C. Noise emission; D. Others

152

7.您认为本项目建设是否对经济发展起到促进作用？

A.是 B.否 C.一般

7. Do you think this Project will play a role in promoting local economic

development?

A. Yes; B. No; C. General

8. 从环保角度讲，您对本项目有何要求或建议： 8. From the environmental protection perspective, do you have any request or suggestion on this Project:

153

APPENDIX 8: SAMPLE PUBLIC PARTICIPATION QUESTIONNAIRE RESULTS -

ZHONGYANG SUBPROJECT

表 13-3 公众参与结果统计表 Statistic data of the Questionnaire

问题 Question 选项

Response

结果统计

Statistic results

人数

# of

people

比例Proportion

（%）

1． 您在接受本调查以前，是否知道中阳县城区集中供热工程项目的建设？

Before you accepting this survey,

were you aware of the proposed

Zhongyang County District Heating

Project?

① 知道 Yes, 75 93.75

②不知道 No 5 6.25

2． 您对本项目的基本态度是什么？ 2, What is your basic attitude to the proposed Project?

1. 支 持

Support 75 93.75

② 无所谓

Indifferent 5 6.25

③ 反对Against 0 0

3． 您认为本项目的选址是否合适？ What is your opinion for the site selection of the proposed Project? Is it appropriate?

① 合适 Yes 74 92.5

④ 不合适

No 0 0

⑤ 无所谓

Indifferent 6 7.5

4． 您认为目前中阳县城空气环境质量如何？

好 Good 1 1.25

较好 Fair 12 15

154

What do you think of the ambient air quality in this county at present?

一般

General 61 76.25

差 poor 6 7.5

5． 本项目设四台锅炉，供县城供热使用，产生的污染物主要为 SO2 和烟

尘、锅炉废水和软化水、炉渣及运煤车辆所产生的噪声，您认为本项目的

建设可能带来哪些环境问题？ The proposed Project is planning to set up four boilers for district heating. The main pollutants produced by the Project are SO2, fly dust, demineralized water, coal boiler slag, and the noise generated by vehicles. What do you think is the most important pollution will be generated by the Project?

水 污 染 Water

pollution 6 7.5

空气污染 Air

pollution 15 18.75

地下水污染Underground

water pollution

11 13.75

其它 other

pollutions 48 60

6． 您认为本项目对您的生活影响最大的问题是什么？

What do you think is the most serious environment problem caused by this Project to your daily life?

废水wastewater

13 16.25

废气 waste gas

emission 13 16.25

噪声 Noise

emission 35 43.75

其它 others 19 23.75

7．您认为本项目建设是否会对经济发展起到促进作用？Do you think this Project

will play a role in promoting local economic development? A. Yes; B. No; C. General

是 Yes 76 95

否 No 0 0

般

General 4 5