The World Bank RESTRUCTURING ISDS China Partnership for Market Readiness (P145586) Integrated Safeguards Data Sheet Restructuring Stage Restructuring Stage | Date ISDS Prepared/Updated: 04-Sep-2017| Report No: ISDSR23208 Regional Vice President: Victoria Kwakwa Country Director: Bert Hofman Senior Global Practice Director: Karin Erika Kemper Practice Manager/Manager: Iain G. Shuker Task Team Leader: Dafei Huang The World Bank RESTRUCTURING ISDS China Partnership for Market Readiness (P145586) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. . I. BASIC INFORMATION 1. BASIC PROJECT DATA Project ID Project Name P145586 China Partnership for Market Readiness Task Team Leader(s) Country Dafei Huang China Approval Date Environmental Category 16-Jun-2014 Not Required (C) Managing Unit Is this a Repeater project? GEN2A PROJECT FINANCING DATA (IN USD MILLION) Total Project Cost Total Financing 8,600,000.00 8,600,000.00 Financing Gap 0.00 OLD_FIN_DTL Financing Source Amount Counterpart Funding 600,000.00 Trust Funds 8,000,000.00 Total 8,600,000.00 2. PROJECT INFORMATION The World Bank RESTRUCTURING ISDS China Partnership for Market Readiness (P145586) Current Project Development Objective The Project Development Objective is to enable China to design a national carbon emissions trading scheme. . Note to Task Teams: End of system generated content, document is editable from here. 1. PROJECT DESCRIPTION 1. This is a recipient-executed technical assistance grant project. The proposed project has two components: 2. Component 1: Enabling Design of Key Building Blocks for a National Emissions Trading Scheme (ETS) (indicative grant financing: US$6.5 million): The component will support technical assistance, studies, including policy research and analysis, and workshops that aim to assist the DDC in developing the key ETS building blocks. Generally, the studies under each sub-component will involve a series of activities that will lead to recommendations for each building block. Stakeholder consultation will be built into the process to ensure relevant governmental agencies, industries and civil societies’ inputs and comments are taken into account. This component consists of seven sub-components: 3. Sub-component 1.1: Development of Methodologies for Coverage, Cap, Allocation and Supplementary Mechanisms (indicative grant financing: US$2.0 million). This sub-component is to provide analytical support on identifying the sectors, and the type of greenhouse gas (GHG) of the ETS. The sub-component will propose recommendations on (a) cap setting methodology and program; (b) an initial allowance allocation methodology; (c) price containment mechanism options; and (d) offset mechanism, including options for basic requirements for linking national ETS with other systems. 4. Sub-component 1.2: Development of a Legal Framework and Oversight System (indicative grant financing: US$1.0 million). The proposed sub-component will provide analytical support for identifying (a) a management system governing the national emissions trading market; (b) a basic legal framework for the national ETS, including administrative rules; (c) a market oversight and compliance system plan, including scope, designated authorities, targets and rules; and (d) treatment of participants and trading products. 5. Sub-component 1.3: Development of a Data Collection and MRV System (indicative grant financing: US$0.8 million). The technical assistance will provide analytical and technical support for proposals on data management, GHG emission accounting standards of enterprises and verification guidelines on selected sectors. 6. Sub-component 1.4: Development of an ETS Registry (indicative grant financing: US$0.5 million). The activities will provide analytical and technical support to special topics that would refine the framework of a national registry that has been already developed, e.g. possible data management system improvements, addressing issues of relationship between the national and local registries (i.e. clarifications of functions of registry at both the national and local levels). The World Bank RESTRUCTURING ISDS China Partnership for Market Readiness (P145586) 7. Sub-component 1.5: Research on Participation of State-owned Enterprises (indicative grant financing: US$0.3 million). This sub-component will provide analytical support to assess barriers and propose measures to facilitate inclusion of State Owned Enterprises in the national ETS. State-Owned-Enterprises (SOEs) are considered in China as special enterprise groups with distinctive characteristics. 8. Sub-component 1.6: Research on Power Sector Issues for a National ETS (indicative grant financing: US$0.3 million). The component will provide supplementary analytical support for special topics relating to the inclusion of the power sector in the national ETS including in areas of scope, cap setting methodology, MRV and other supporting policies that would be needed to include effective participation of the power sector in the ETS. 9. Sub-component 1.7: Provincial Level Enterprise and Economic Data Collection and Consultation (indicative grant financing: US$1.6 million). Provincial engagement will be essential for improving the design of the ETS prior to its roll out. In addition to local engagement activities in other subcomponents, this sub-component will support complementary data collection, analysis, and stakeholder consultation in provinces. A wide potential scope of activities, such as economic and energy data collections and projections or participation of provincial representatives in national consultations, will be tailored to address specific needs to facilitate feedback and vet design aspects of the ETS. 10. Component 2: China PMR Synthesis Report, Consultations and Project Management (indicative grant financing: US$1.5 million): This component will support: (i) project management, including incremental operating costs, (ii) stakeholder and expert consultations; (iii) workshops and study tours; and (iv) a synthesis report for the project summarizing proposals and analysis supporting the national ETS scheme design. The component will finance consulting services and consultation expenses to ensure appropriate quality control is provided for terms of reference and outputs. The project’s proposed restructuring covers two changes of institutional arrangement:  Change of the PMO. The borrower has proposed to relocate the day-to-day project implementation to the National Center for Climate Change Strategy and International Cooperation (NCSC), a research institute affiliated with the NDRC. The PMO will be housed within NCSC. A PMO Director and Executive Director are appointed from within NCSC staff. The PMO Director is the Deputy Director General of NCSC. The Director of the Carbon Market Division will be the Project’s Executive Director, who will perform the daily implementation of the Project. The PMO also comprises a Project Coordinator, a Project Assistant and a Project Accounting Officer, who are not civil servants. The Project Director or his designee, is empowered by the NDRC to sign documents on behalf of the PMO. This includes employment contracts, purchase of equipment and services and other commitments and obligations.  Relocation of Designated Account. The DA of the CPMR Project has been proposed to relocated from the MOF to the execution agency NCSC. The NCSC will also be responsible for managing the DA including disbursing grant payments, and contracting independent external auditors annually to audit the project accounts. The World Bank RESTRUCTURING ISDS China Partnership for Market Readiness (P145586) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. . 3. PROJECT LOCATION AND SALIENT PHYSICAL CHARACTERISTICS RELEVANT TO THE SAFEGUARD ANALYSIS (IF KNOWN) This is a national technical assistance project with no physical footprint, nor will it lead to subsequent physical investments. 4. ENVIRONMENTAL AND SOCIAL SAFEGUARDS SPECIALISTS ON THE TEAM Peishen Wang, Social Safeguards Specialist Aimin Hao, Social Safeguards Specialist Xiaodan Huang, Environmental Safeguards Specialist SAFEGUARD_TABLE 5. SAFEGUARD POLICIES TRIGGERED Safeguard Policies Triggered Explanation Environmental Assessment (OP) (BP 4.01) Yes Natural Habitats (OP) (BP 4.04) No Forests (OP) (BP 4.36) No Pest Management (OP 4.09) No Physical Cultural Resources (OP) (BP 4.11) No Indigenous Peoples (OP) (BP 4.10) No The World Bank RESTRUCTURING ISDS China Partnership for Market Readiness (P145586) Involuntary Resettlement (OP) (BP 4.12) No Safety of Dams (OP) (BP 4.37) No Projects on International Waterways (OP) No (BP 7.50) Projects in Disputed Areas (OP) (BP 7.60) No KEY_POLICY_TABLE II. KEY SAFEGUARD POLICY ISSUES AND THEIR MANAGEMENT A. SUMMARY OF KEY SAFEGUARD ISSUES 1. Describe any safeguard issues and impacts associated with the Restructured project. Identify and describe any potential large scale, significant and/or irreversible impacts. Associated Safeguards Risks. The technical assistance project funds the design of a national carbon emissions trading scheme, which will assist mitigation of greenhouse gas emissions in a cost-effective manner. Project activities are policy research and analysis, technical studies, workshops and training to enable China to design a national carbon emissions trading scheme. The project does not include any physical works, nor will it result in any immediate direct physical investments. The project is likely to have minimal or no adverse impacts. It is anticipated to have positive impacts. Therefore, the project was classified as Category C during the PCN review and clearance of the project as per OP4.01. No separate safeguards instrument is required. As a result, the Bank’s safeguard policy does not require a formal environmental assessment to be produced. However, the counterpart will be asked to incorporate directly environmental and social safeguards policies into the relevant project activities such as sub-component 1.1. and sub-component 1.2. Screening for the application of safeguards policies will be done for each sub-components studies and term of reference developed as needed. The key Terms of Reference will be reviewed by the Bank. The restructuring in September 2017 only involves change of PMO and relocation of DA, the project activity contents remain unchanged. Therefore, there is no change of environmental and social safeguards category and no need for any further action. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area. See section 1. The World Bank RESTRUCTURING ISDS China Partnership for Market Readiness (P145586) 3. Describe any potential alternatives (if relevant) considered to help avoid or minimize adverse impacts. See section 1. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. The borrower and involved agencies have very good to limited knowledge and experience in applying the World Bank policies. The Bank will ensure when reviewing TOR that the adequate safeguards expertise is associated to activities and studies taking into account safeguard policy issues. 5. Identify the key stakeholders and describe the mechanism for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The project design aims to enable China to design national carbon emissions trading scheme that will cap carbon emissions, a mitigation instrument that is expected to control carbon emissions in China. As such, the studies will investigate design options based on international and domestic experience. The project design includes through its studies workshops, interviews and analysis that incorporates views of relevant stakeholders that may be involved in the emissions trading scheme. The final outcome of the project is a proposal by the NDRC Department of Climate Change to the Vice Chairman of NDRC. The proposal is expected to be processed through an internal vetting process involving a wide range of central government agencies. DISCLOSURE_TABLE B. DISCLOSURE REQUIREMENTS ENV_TABLE Environmental Assessment/Audit/Management Plan/Other Date of receipt by the Bank Date of submission for disclosure 19-Apr-2014 21-Apr-2014 For Category ‘A’ projects, date of distributing the Executive Summary of the EA to the Executive Directors “In country� Disclosure Country Date of Disclosure China 15-Sep-2017 Comments COMPLIANCE_TABLE The World Bank RESTRUCTURING ISDS China Partnership for Market Readiness (P145586) C. COMPLIANCE MONITORING INDICATORS AT THE CORPORATE LEVEL EA_TABLE OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? No PDI_TABLE The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank for NA disclosure? Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups NA and local NGOs? ALL_TABLE All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been NA prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project NA cost? Does the Monitoring and Evaluation system of the project include the NA monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal NA documents? III. APPROVALS Dafei Huang Task Team Leader(s) Todd M. Johnson Approved By Safeguards Advisor Practice Manager/Manager . The World Bank RESTRUCTURING ISDS China Partnership for Market Readiness (P145586) Note to Task Teams: End of system generated content