INTEGRATED SAFEGUARDS DATA SHEET APPRAISAL STAGE Report No.: ISDSA6056 Public Disclosure Copy Date ISDS Prepared/Updated: 23-Dec-2013 Date ISDS Approved/Disclosed: 26-Dec-2013 I. BASIC INFORMATION 1. Basic Project Data Country: Belarus Project ID: P146194 Project Name: Belarus Biomass District Heating Project (P146194) Task Team Fan Zhang Leader: Estimated 29-Jan-2014 Estimated 15-May-2014 Appraisal Date: Board Date: Managing Unit: ECSEG Lending Investment Project Financing Instrument: Sector(s): Other Renewable Energy (80%), Energy efficiency in Heat and Power (18%), Public administration- Energy and mining (2%) Theme(s): City-wide Infrastructure and Service Delivery (80%), Climate change (20%) Is this project processed under OP 8.50 (Emergency Recovery) or OP No 8.00 (Rapid Response to Crises and Emergencies)? Financing (In USD Million) Public Disclosure Copy Total Project Cost: 90.00 Total Bank Financing: 90.00 Financing Gap: 0.00 Financing Source Amount Borrower 0.00 International Bank for Reconstruction and Development 90.00 Total 90.00 Environmental B - Partial Assessment Category: Is this a No Repeater project? 2. Project Development Objective(s) The Project Development Objective is to scale up the efficient use of renewable biomass in heat and electricity generation in selected towns of Belarus. 3. Project Description The proposed project is expected to improve the energy efficiency of district heating and increase the Page 1 of 8 use of local wood biomass (replacing natural gas for base-load heat generation) in 13 district heating systems (towns) in Brest, Gomel, Grodno, Minsk, and Mogilev oblasts. The selection of participating district heating utilities is based on the following criteria: (i) consumer demand for heat is densely Public Disclosure Copy concentrated and is stable or growing; (ii) there is sufficient wood biomass within a reasonable distance from the heat sources; (iii) wood biomass is supplied by certified forestry enterprises from sustainably managed forests; and (iv) biomass will replace imported fuel (gas or oil) for base-load heat generation. Table 1 lists the participating utilities. Table 1 List of Participating District Heating Utilities Oblast City/Settlement Utility ( Site Owner) Grodno Volkovysk Unitary Utility ‘Volkovysskoe Kommunalnoe Hozyaistvo’ Brest Ivanovo Communal Unitary Diversified Industrial Enterprise ‘Ivanovskoe Zhkh’ Baranovichi Unitary Industrial Utility ‘BaranovichiKommunteploset’ Bereza Brest Oblast Unitary Enterprise ‘Upravlenie Zhkh’ Gomel Zarechie Unitary Utility ‘Rechitskii Raizhilkomkhoz’ Kalinkovichi Unitary Utility ‘Kommunalnik Kalinkovichskii’ Zyabrovka Unitary Utility ‘Gomelskii Raizhilkomkhoz’ Minsk Starye Dorogi Unitary Utility ‘Starodorozhskoe Zhkh’ Kholopenichi Unitary Utility ‘Zhilteploservis’ Cherven Republic Unitary Enterprise ‘Chervenskoe Zhkh’ Mogilov Kadino Unitary Utility ‘Zhilkomkhoz’ Cherikov Unitary Industrial Utility ‘Cherikovskii Zhilkommunkhoz’ Veremeiki Unitary Industrial Utility ‘Cherikovskii Zhilkommunkhoz’ The project has the following three components: Public Disclosure Copy Component 1: District Heating Energy Efficiency (estimated cost: US$23.4 million) This component would include the following energy efficiency investments in the selected district heating systems: (a) Modernization and/or construction of heat substations by installing individual building-level heat substations with temperature controls. Historically, most Belarusian district heating companies have delivered heat using centralized heat substations. With a centralized heat substation, the supply of heat to each building depends on the average demand of the buildings connected to the substation. Converting to individual building-level heat substations with temperature controls would allow the delivery of heat to each building in accordance with its heat demand. Experience in neighboring countries shows that investing in individual building-level heat substations would significantly improve heat supply efficiency and would reduce building-level heat consumption by 15–25 percent. By better matching heat supply to demand at the building level, individual building-level heat substations would also improve the quality of heat service. (b) Reconstruction and/or construction of district heating networks and upgrading of peak-load gas boilers. The reconstruction of heat networks would include replacing obsolete heat pipes that have large heat and water leaks with preinsulated heat pipes and constructing new heat networks. This would significantly reduce losses in heat transmission, which currently amount to up to 50 Page 2 of 8 percent of heat generation for the selected district heating utilities. And installing new peak-load gas boilers to replace outdated ones would increase generation efficiency from the current 75–85 percent to more than 90 percent. Public Disclosure Copy Component 2: Biomass Heat Generation (estimated cost: US$64.9 million) This component would include investment in base-load biomass boilers, biomass-based small combined heat and power (CHP) plants, and in some towns also wood chipping equipment. (a) Biomass boilers and CHP plants. This component would support investments in base-load biomass boilers or small CHP plants using wood chips or wood wastes as the main fuel, to replace existing base-load gas or oil boilers. The investments would cover the design and construction of boiler houses, boilers, and ancillary equipment. (b) Wood chipping equipment and biomass fuel storage facilities. Wood biomass would be harvested by certified forestry enterprises. If forestry enterprises supply only wood logs, the project would finance the purchase of wood chippers. The project would also finance the construction of biomass storage facilities near the boiler houses. Component 3: Technical Assistance and Capacity Building (estimated cost: US$1.5 million) This component would finance capacity building for the participating district heating utilities and implementation support to the Project Management Unit (PMU), including the following: (a) Improvement of existing social accountability mechanisms. The proposed project would support participating utilities to communicate more proactively with their customers. Support in developing proactive communication plans will be provided to the utilities through a series of training events developed for the deputy directors of the utilities and through expert support in developing communication materials. Public Disclosure Copy For small towns, social accountability efforts would focus on improving the access to and the availability of information for consumers and civil society organizations on district heating services, the structure of bills, benefits of energy efficiency, project design and implementation, and the like. For large towns, the project would support efforts led by the Energy Efficiency Department to review and improve the efficiency of existing grievance redress mechanisms and feedback analysis to enhance service delivery. An expert would analyze the grievances coming to the utilities and reactions provided to them and provide recommendations on how to increase the efficiency of the handling of grievances. In addition, the project would support the monitoring by consumer groups on continuous information provision on all aspects of service delivery. The consumer groups will be engaged in regular monitoring of proactive information sharing by the participating utilities in accordance with the project results framework. The project would also support utilities to develop websites or improve the content of existing websites and citizen charters based on the recommendations from the consumer groups in order to facilitate better information sharing. (b) Support for a shift to energy-content-based biomass pricing. In Belarus, wood biomass pricing is based largely on volume—solid cubic meters of raw material. The project would provide technical assistance to support a government effort to move toward pricing based on the energy content of the timber (that is, a unit price per gigajoule or MWh of delivered biomass), including Page 3 of 8 financing the purchase of equipment to measure the energy content of biomass. This would acknowledge the direct correlation between energy, moisture content, and other parameters of the fuel; encourage greater focus on t he quality of the fuel; and increase efficiency in the use of biomass Public Disclosure Copy resources. (c) Other project implementation support. This would include (i) implementation support consultancy to support the PMU and the district heating utilities in the implementation andsupervision of the project; (ii) training and capacity building for the utilities based on international best practices for energy efficiency improvements in district heating and proven biomass technologies; (iii) annual financial audits of the project accounts; and (iv) other consultancy services. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) The project will finance investments in district heating and biomass heat generation systems at 13 locations in Brest, Gomel, Grodno, Minsk, and Mogilev oblasts of Belarus. Physical works on most of the project sites will take place at existing industrial/district heating footprint. Few sites will involve small-scale greenfield construction. Based on previous experience with similar investments, the rehabilitation/replacement works are not expected to generate any hazardous materials that will require special disposal. The locations where boilers will be converted to use biomass fuels (wood chips and shavings; sawdust) are known, so the basic issue of sustainability of the biomass production is addressed during project design rather than being included in the EMP to be addressed during project implementation. 5. Environmental and Social Safeguards Specialists Alexei Slenzak (ECSEN) Klavdiya Maksymenko (ECSSO) Public Disclosure Copy 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/ Yes The project has been classified as Category 'B' BP 4.01 for the purposes of OP 4.01 on Environmental Assessment. The types of activities to be implemented will have either minor or no adverse environmental impacts and provide significant environmental benefits (reductions in local pollution such as dust and sulfur dioxide emissions and reductions in emissions of greenhouse gases such as carbon dioxide). Negative environmental impacts are primarily associated with construction activities (e.g. dust, noise, disposal of non-hazardous waste) and they will be mitigated through good construction and housekeeping practices. The EMP was prepared as part of design documentation. In every project location there will be public consultations held with prior announcement in the local press and by posting information on the theme, time and place Page 4 of 8 of the consultation in the publicly attended places (office of the utility, local authorities’ office, web-site of the utility). The information on the Public Disclosure Copy project with EMP will also be placed on the websites of the PMU “Belcomenergosberezhenie” and the Energy Efficiency Department. In every place the public consultation will start with a presentation by the Utility and the PMU on the current state of affairs and the project main activities and expected results as related to the locality. The minutes of public consultations for every locality will contain copies of announcements, presentations made, summary of comments received and list of participants. Summaries of the public consultations will be disclosed in the same way as invitation to participate. To ensure that the biomass comes from sustainable sources, the Client would require for each selected site that: (i) wood chips or wood for production of wood chips by district heating utilities are supplied by certified forestry enterprises in Belarus (as opposed to uncertified enterprises or through self- collection of local wood resources); (ii) confirmation that there is adequate excess material available from existing forest enterprise activities so that the increased demand for them will not lead to changes in forest management or Public Disclosure Copy utilization practices (if project-related increased demand could lead to such changes). Natural Habitats OP/BP 4.04 No Forests OP/BP 4.36 No Pest Management OP 4.09 No Physical Cultural Resources OP/ No The project will not have influence on physical BP 4.11 cultural resources. Standard requirements regarding chance finds will be included in contracts for earth works. Indigenous Peoples OP/BP 4.10 No Involuntary Resettlement OP/BP Yes Most of Tthe specific project sites and 4.12 investments determined during preparation did not require land acquisition. However in Kalinkovichi, Gomel oblast there is a need to Page 5 of 8 acquire the land from the private enterprise. The land is being used as storage place. Therefore the OP4.12 is triggered by the project. The Public Disclosure Copy Abbreviated Resettlement Action Plan will be prepared and duly disclosed in the town of Kalinkovichi in local language (Russian) and in Bank’s Inforshop. Safety of Dams OP/BP 4.37 No Projects on International No Waterways OP/BP 7.50 Projects in Disputed Areas OP/BP No 7.60 II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: The project will have positive environmental impact generally. No serious irreversible environmental impacts were identified. Negative environmental impacts are local and are primarily associated with construction activities (e.g. dust, noise, disposal of non-hazardous waste) and they will be mitigated through good construction and housekeeping practices. Biomass boilers will use wood chips as a principal fuel. The Client will ensure that sustainability of forest use is not undermined by the project. To ensure that the biomass comes from sustainable sources, the Client would require for each selected site that: (i) wood chips or wood material for production of wood chips by district heating utilities are supplied from certified forest enterprises in Belarus (as opposed to uncertified enterprises or through self-collection of local wood resources); (ii) Public Disclosure Copy confirmation that there is adequate material available from existing forest enterprise activities so that the increased demand for them will not lead to changes in forest management or utilization practices (if project-related increased demand could lead to such changes). In accordance with the technical design for Kalinkovichi, Gomel oblast the land plot will need to be acquired from private enterprise. The land is being used by the enterprise as storage place. Relevant resettlement instrument will be prepared and PIU will be in charge of monitoring of its implementation by the utility. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: N/A 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. N/A 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 EMP was prepared by the Client. The EMP contains description of potential environmental impacts and mitigation measures to address those impacts and monitoring plan to oversee the implementation of the proposed mitigation measures. The project implementation unit (PIU) Page 6 of 8 "Belinvestenergosberezhenie" will be in charge of project implementation. The PIU has prior experience of implementation of Bank-financed projects (e.g. Energy Efficiency, Post-Chernobyl Recovery). A designated environmental specialist will supervise implementation of the EMP. Public Disclosure Copy The Abbreviated RAP was prepared by the borrower for Kalinkovichi. The plan was duly disclosed in the town of Kalinkovichi in local language (Russian) and in Bank’s Inforshop. The PMU and the staff of the utilities in charge of the project will be trained in Bank’s safeguards policies. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Local communities, local authorities, and forestry enterprises are key project stakeholders. The EMP was prepared and disclosed by the client in all project locations. B. Disclosure Requirements Environmental Assessment/Audit/Management Plan/Other Date of receipt by the Bank 28-Nov-2013 Date of submission to InfoShop 03-Dec-2013 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors "In country" Disclosure Belarus 28-Nov-2013 Comments: Resettlement Action Plan/Framework/Policy Process Date of receipt by the Bank 29-Nov-2013 Date of submission to InfoShop 04-Dec-2013 "In country" Disclosure Belarus 23-Dec-2013 Public Disclosure Copy Comments: If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/ Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) Yes [ ] No [ ] NA [ ] report? OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/ Yes [ ] No [ ] NA [ ] process framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Yes [ ] No [ ] NA [ ] Sector Manager review the plan? The World Bank Policy on Disclosure of Information Page 7 of 8 Have relevant safeguard policies documents been sent to the Yes [ ] No [ ] NA [ ] World Bank's Infoshop? Public Disclosure Copy Have relevant documents been disclosed in-country in a public Yes [ ] No [ ] NA [ ] place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional Yes [ ] No [ ] NA [ ] responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included Yes [ ] No [ ] NA [ ] in the project cost? Does the Monitoring and Evaluation system of the project Yes [ ] No [ ] NA [ ] include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed Yes [ ] No [ ] NA [ ] with the borrower and the same been adequately reflected in the project legal documents? III. APPROVALS Task Team Leader: Name: Fan Zhang Approved By Regional Safeguards Name: Agnes I. Kiss (RSA) Date: 26-Dec-2013 Advisor: Sector Manager: Name: Ranjit J. Lamech (SM) Date: 26-Dec-2013 Public Disclosure Copy Page 8 of 8