INTEGRATED SAFEGUARDS DATA SHEET APPRAISAL STAGE Report No.: ISDSA1273 Public Disclosure Copy Date ISDS Prepared/Updated: 12-Oct-2012 I. BASIC INFORMATION 1. Basic Project Data Country: Jordan Project ID: P127702 Project Name: JO: ODS III - HCFC Phase-out Project (P127702) Task Team Tracy Hart Leader: Estimated 15-Nov-2012 Estimated 31-Jan-2013 Appraisal Date: Board Date: Managing Unit: MNSEN Lending Specific Investment Loan Instrument: Sector: Petrochemicals and fertilizers (90%), Central government administration (10%) Theme: Environmental policies and institutions (50%), Pollution management and environmental health (50%) Financing (In USD Million) Financing Source Amount Borrower 0.00 Montreal Protocol Investment Fund 3.00 Public Disclosure Copy Total 3.00 Environmental B - Partial Assessment Category: Is this a Yes Repeater project? 2. Project Objectives The project development objective is to support Jordan in its overall efforts to meet its first Montreal Protocol HCFC phase-out obligations of (i) a freeze of HCFC consumption at baseline levels by 2013; and (ii) 10% reduction from the baseline level by 2015 through industry conversions to alternative technology which also result in net climate benefits. 3. Project Description The proposed project, consisting of a “sector plan� for HCFC phase-out in air-conditioning manufacturing is to contribute to the estimated 20 ODP tonnes in phase-out needed for Jordan while minimizing the longer-term impact on the climate and ozone layer (i.e. reducing the amount of future equipment requiring HCFC-22 servicing). In addition, the project will reintroduce a standing line of MLF assistance that is dedicated specifically to strengthening the focal point for the Montreal Page 1 of 9 Protocol in Jordan: the national ozone unit in the Ministry of Environment (MoE). Thus, given the similar objectives and scope of the proposed project with those under the ongoing Public Disclosure Copy Jordan ODS II Project (P049706), it is proposed that new project arrangements build upon the existing infrastructure and capacity established in MoE to deliver the required assistance to beneficiaries and stakeholders. In that sense, the proposed project can be considered to be a continuation of the previous one and will consequently include a combination of investment, technical assistance, and policy and regulatory interventions which will be carried out in tandem to assure sustainable HCFC phase-out while enabling Jordan to manage its overall ODS program. Funding from the MLF for sector plans follows a performance-based, programmatic approach. The advantages of this approach are flexibility given to the country to utilize the funding in the most effective manner and to reprogram funding as needs evolve; the inclusion of a regulatory and policy framework and technical assistance to create an enabling environment; long-term funding commitment by donors that allows the government to secure buy-in for phase-out from an otherwise reluctant private sector; and, the guarantee provided to the MLF of continued phase-out through independent verification audits of HCFC import data. Funding is thus released to the World Bank in tranches upon the country’s achievements of agreed consumption targets. Component 1: Investment in HCFC Consumption Reductions (US$1,923,850) Investments will be made in residential AC manufacturers in Jordan and complement the already approved Petra project. This component therefore includes coordination of conversions of six enterprises: one under UNIDO, three under this project, and two, which are not eligible for MLF financing, will convert on their own in compliance with future Government regulatory actions to ban HCFC-based manufacturing. The conversion entails a change in HCFC-22-based technology to, what is considered by industry as currently the only commercially viable alternative technology on the market, HFC-410A. The three project enterprises will receive funding for new manufacturing equipment and technology and for operating costs. Public Disclosure Copy Component 2: Technical Assistance (TA) Activities, Policies and AC Sector Plan Management (US $417,300) To support implementation of investment interventions under the project, assistance will be provided for technical experts who will support beneficiaries to prepare project proposals and equipment specifications, project completion reports, and to complete the conversions (technical support). It will also include support to increase technical capacity of local authorities in order to allow them to monitor and enforce HCFC-related policies for new and existing industrial installations, including customs officers in order to ensure effective contro lof HCFC imports and products containing HCFCs. A demonstration activity that targets partly the servicing sector will also be introduced. This TA activity will provide training to service technicians to employ good practice in servicing HCFC-22 air-conditi oning units to avoid excess leakage over time, to retrofit AC units to alternative refrigerants and, to be prepared for handling alternative refrigerants ranging from HFCs to natural refrigerants, in anticipation of evolving technologies worldwide. The projectwill put a special focus on strengthening Jordan’s capacity to implement energy conservation and energy efficiency in the residential air-conditioning sector by reaching out to the Page 2 of 9 MEMR, National Energy Research Center and related agencies to ensure there is complementarity and synchronization of initiatives on EE for the sector. In addition, through the sector plan, additional TA will be pursued to help the sector including non-eligible enterprises improve and Public Disclosure Copy optimize energy performance of components and the entire system to achieve EERs that meet the country’s new performance requirements for “A� grade products. An import quota system to curb the supply of HCFCs will be established by January 1, 2013 through support to Jordan’s overall HPMP which is managed by UNIDO. Under the proposed project Jordan will receive support to establish a policy structure that ensures HCFC phase-out in its priority sector, residential air-conditioning, is permanent and sustainable, and to promote the transfer and dissemination of suitable substitute technologies. This includes the introduction of a ban on the use of HCFC-22 in manufacturing AC as well as a ban on imports of HCFC-22-based AC units by the end of 2016. The project focal point in MoE will also work with relevant agencies to pursue regulations regarding minimum energy efficiency standards to complement Jordan’s new AC appliance labeling system and the work being undertaken with USAID and other donors. In addition, the NOU will work with agencies to promote the uptake of more efficient air-conditioning and stimulate local manufacturers to compete on EE. The project will provide support to the focal point, the National Ozone Unit (NOU) within MoE so that it may build a dedicated project team responsible for AC sector plan implementation. The staff and consultants in the NOU will manage activities related to the implementation of investments and TA activities, and ensure that MLF and World Bank policies regarding financial management, use of funds and procurement are followed when implementing subprojects. Component 3: Institutional Strengthening (US$441,999) Support will be provided to the Recipient through the NOU in the Ministry of Environment to enhance the capacity of Government agencies to manage and address all ozone protection issues in the country and to interact with the international ozone protection community. This will include Public Disclosure Copy assistance for coordinating the portfolio of MP projects (with the Bank, UNIDO and GIZ); for awareness raising in industrial sectors and the general public; monitoring and reporting of annual ODS consumption; regular participation in international and regional MP meetings; and facilitating inter-agency coordination and policy and decision-making on ozone-related issues. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) Project investments under Component 1 will take place in three industrial enterprises manufacturing air conditioning (AC) equipment. Technical assistance and training under Component 2 will also benefit two other such enterprises, as well as a sixth facility which is receiving investment under an MLF/ UNIDO project. All project sites have been identified and visited by Bank staff several times. The March 2012 mission reviewed the general standards of environmental management and worker health and safety at the plants to be supported by the project and observed some potentially serious issues of industrial hygiene and worker safety, including apparent lacks of personal protective equipment and inadequate storage of chemicals and hazardous wastes. Subsequent visits to these enterprises in September 2012 have shared these concerns, prepared mitigation plans and timetables for environmental compliance. 5. Environmental and Social Safeguards Specialists Sanne Agnete Tikjoeb (MNSEN) Page 3 of 9 Amal Hijazi (MNSEN) 6. Safeguard Policies Triggered? Explanation (Optional) Public Disclosure Copy Environmental Assessment OP/ Yes The project is expected to have a net positive BP 4.01 impact on the global environment by reducing the use of HCFC-22, which is an ozone depleting substance (ODS) and also a greenhouse gas, with a global warming potential (GWP) of 1,810. While HCFCs have an impact on the global environment, they have limited adverse local impacts, as these chemicals are stable and not considered toxic or dangerous for human health or the local environment. Under the project, three industrial enterprises now manufacturing AC equipment would be supported to switch refrigerants from HCFC-22 to HFC (hydrofluorocarbon)-410A, which is not an ODS. However, HFCs are greenhouse gases - HFC-410A has a GWP of 2,100 CO2 eq., which is slightly higher than HCFC-22. Nevertheless, because the HFCs can be used in smaller volumes, due to their greater refrigerating capacity, and because the new equipment manufactured will use newer technology, which is more energy efficient, the project would result in a net reduction of global warming impact. Like HCFCs, HFCs are stable and not considered Public Disclosure Copy toxic or dangerous for human health or the environment. Nonetheless, HFC-410A is a high- pressure gas which merits extra precaution in transportation, handling and storage, as there remain risks of asphyxiation from higher concentration of the refrigerant gases, especially in confined spaces. The project also presents potential negative environmental and social risks, especially with respect to the health and safety of workers in the project-supported plants, technicians servicing equipment produced in those plants, and possibly to the surrounding populations. These risks include: transporting heavy pieces of equipment; installing and testing such equipment; and, charging equipment with highly compressed gases. These risks would occur at both the manufacturing and servicing levels. All HCFCs and HFCs accidentally vented to the atmosphere Page 4 of 9 during such operations would pose threats of ozone depletion and/or global warming. Public Disclosure Copy Jordan has a relatively good environmental protection framework with regulation on ozone depleting substances, including HCFCs, and other health and worker safety rules governing industry but additional mitigation measures may be necessary to ensure that enterprises are employing good practice in handling and manufacturing. The Recipient (through NOU staff) has prepared an Environmental and Social Impact Assessment (ESIA) and Environmental and Social Management Plan (ESMP). The ESIA/ESMP addresses the general standards of environmental management and worker health and safety at the plants to be supported by the project, as well as specific provisions for the safe transportation, storage and handling of the gases and other materials related to the project investments. In addition, capacity building and training of worker for the safe handling of equipment and materials would be an integral part of the project. The ESIA/ESMP includes consultation documentation and grievance mechanism details and has been disclosed in Jordan on the main Public Disclosure Copy page of the Ministry of Environment web site (www.moenv.gov.jo). It is anticipated that each subproject ESMP would be modified as needed for the specific conditions in each recipient industrial plant and incorporated in the Sub-Grant Agreement for that firm. Such Sub-Grant Agreements would also require that the recipient firm remain in compliance with all applicable environmental and labor law permits. A potential legacy risk is posed by the CFCs recovered and stored from the ODS II Project, which amount to 3.58 tons. The Government of Jordan will continue to cover the costs of safely storing this recovered CFC (estimated to be $500 a month at the national halon bank)through the institutional strengthening (IS) component of ODS II until a funding source can be identified to Page 5 of 9 cover the costs of transportation and destruction of the unwanted substances in another country with suitable facilities. There is a possibility that Public Disclosure Copy this CFC is not disposed of prior to the closure of ODS II. In that case, the IS componen t in the new proposed project would pick up the cost of safe storage. Natural Habitats OP/BP 4.04 No As the project activities will take place within existing industrial facilities, no impact on natural habitats is anticipated. Forests OP/BP 4.36 No For the same reason, no impact on forests is expected Pest Management OP 4.09 No The project does not include the procurement or use of pesticides. Physical Cultural Resources OP/ No Project activities will take place within BP 4.11 industrial facilities, and thus will have no impact on cultural resources. Indigenous Peoples OP/BP 4.10 No The project is not located in an area with indigenous peoples. Involuntary Resettlement OP/BP No The involuntary resettlement policy will not be 4.12 triggered; the project will not entail any land acquisition or loss of access to resources. Social issues are defined as worker health and safety measures mentioned above in OP/BP 4.01. Safety of Dams OP/BP 4.37 No The project does not depend on the safe functioning of dams and does not invest in dams. Public Disclosure Copy Projects on International No Project activities will have no impact on Waterways OP/BP 7.50 international waterways. Projects in Disputed Areas OP/BP No The project is not located in known areas of 7.60 territorial dispute. 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 l arge scale, significant and/or irreversible impacts: The project will have a positive impact on the global environment by reducing the use of HCFCs, which are ozone-depleting substances and greenhouse gases with a global warming potential (GWP) ranging from several hundred to several thousand times that of CO2. While HCFCs have an impact on the global environment, they have limited local impact as these chemicals are stable and not considered toxic or otherwise dangerous for the environment. The project will include investment activities with three AC manufacturers. No closure of these enterprises is expected, but one enterprise (Abu Haltam) is currently building a new factory on the same site. Page 6 of 9 HFC-410A has been selected as a refrigerant to replace HCFC-22. R-410A air conditioners (up to 175 kW) are currently commercially available in the US, Asia and Europe. A significant portion of the duct-free products sold in Japan and Europe now use R-410A as the preferred refrigerant. Public Disclosure Copy Approximately 8% of the US Ducted Residential Market in 2004 used R-410A as the refrigerant. After 1 January 2010, air conditioners sold in the US Ducted Residential market will predominately utilize R-410A as the HCFC-22 replacement. System pressures with this blend are approximately 50 percent higher than with HCFC-22. System designers have addressed the higher operating pressures of R-410A through design changes such as heavier wall compressor shells, pressure vessels (accumulators, receivers, filter driers etc.), heat exchangers and refrigerant tubing. The Environmental Health and Safety Guidelines (EHS) serve as a technical reference. The EHS Guidelines have general and industry-specific examples of Good International Industry Practice (GIIP), as defined in IFC's Performance Standard 3 on Pollution Prevention and Abatement. The EHS Guidelines contain the performance levels and measures that are normally acceptable to the World Bank Group and are generally considered to be achievable in new facilities at reasonable costs by existing technology. When host country regulations differ from the levels and measures presented in the EHS Guidelines, projects are expected to achieve whichever is more stringent. If less stringent levels or measures are appropriate in view of specific project circumstances, a full and detailed justification for any proposed alternatives is needed as part of the site-specific environmental assessment. This justification should demonstrate that the choice for any alternate performance levels is protective of human health and the environment. In this ESMP, relevant guidelines from the World Bank Group EHS guidelines are incorporated into mitigation measures. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: Public Disclosure Copy There are no indirect, cumulative, or long-term impacts caused by the project. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. The technology choices for Phase 1 are well proven and robust, which would be feasible from a technical or economic point of view. And they are all “low� GWP options. Continuing with the use of HCFCs is not an option for Jordan due to its obligations under the Montreal Protocol. 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. An Environmental and Social Management Plan (ESMP) has been prepared by the Borrower to guide foam enterprises to address all of the issues noted above relating to environmental or OHS risks. The ESMP was prepared following relevant national legal documents, the Bank’s OP 4.01 and The World Bank Group OHS guidelines. The World Bank has reviewed and found acceptable the ESMP. Some of the most typical mitigation measures are the following: (i) proper chemical storage; (ii) good practice of chemical handling; specifically, careful handling to avoid uncontrolled reactions and conditions resulting in fire and explosion and careful handling to avoid inhalation and skin contact resulting in eye, respiratory system and skin irritation and respiratory sensitization; (iii) Communication and training workers about the potential risks; (iv) Preparation of appropriate emergency preparedness and response measures; (v) use of proper labor safety devices; (vi) use of Page 7 of 9 efficient and adequate extraction ventilation; (vii) conduct a safety audit at each production workshop before production start-up; and (viii) put in place appropriate measures for solid waste collection as per legal requirements Public Disclosure Copy of the Government of Jordan (if not already completed). Each participating enterprise in the project will be legally required to follow the environmental and safety provisions of the ESMP. The ESMP describes the measures that will be taken by the project implementing agency, the MOE/NOU, to supervise monitoring of compliance and to ensure enforcement. The World Bank has evaluated the capacity of both MOE/NOU, the joint monitoring agencies of the GOJ with oversight for manufacturing and labor inspections and that of the A/C production companies, each of the three of which has been visited by technical specialists. The project management unit falls under the National Ozone Unit set up in MOE. This Unit has been implementing for 15 years a similar project so they are very familiar with relevant World Bank and GoJ requirements. Their capacity has been evaluated and appropriate training on safeguards has been carried out under the current project. The A/C production companies have good operational procedures in place and are in compliance with good-practice occupational, health and safety measures as well as with environmental requirements. However, an audit of the production facility will be carried out before A/C production start-up using HFC-410A and they will also be legally required to follow the OHS and environmental requirements of the ESMP. The project will support training and capacity building for the foam enterprises in these areas as specified in more detail in the ESMP. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Because there are no likely impacts of the A/C production enterprises that extend beyond the plant itself, the stakeholders from an environmental perspective are the enterprises themselves and their labor force. Stakeholders have been consulted on the content and approach of the environmental management Public Disclosure Copy plan during a series of technical meetings and workshops in September 2011, March 2012, and September 2012. Participants included MOE/NOU representatives, the enterprises themselves, representatives from local governments, and environmental and social experts from the Bank, both staff and consultants. The feedback from stakeholders was only on very technical points and has been incorporated in the final ESMP. The project would not result in any reduction of employment or wages; in fact, there is a growing market in Jordan for producing AC equipment for domestic sale as well as for export to other countries in the Middle East. Other countries in the Middle East are also tightening their ODS protocols, including on imports. There is no retraining needed in this change in protocol and no change in the type or ratio of labor used in the manufacturing. No adverse social impacts are expected. For a more thorough macroeconomic analysis of effects of technology switching, see the economic and financial section of the Project Appraisal Document. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other Date of receipt by the Bank 04-Oct-2012 Date of "in-country" disclosure 09-Oct-2012 Date of submission to InfoShop 10-Oct-2012 Page 8 of 9 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors If the project triggers the Pest Management and/or Physical Cultural Resources policies, the Public Disclosure Copy 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: N/A C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP 4.01 - Environment Assessment Are the cost and the accountabilities for the EMP incorporated Yes [ ] No [ ] NA [ ] in the credit/loan? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the Yes [ ] No [ ] NA [ ] World Bank's Infoshop? 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 [ ] Public Disclosure Copy 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: Tracy Hart Approved By Regional Safeguards Name: Maged Mahmoud Hamed (RSA) Date: 15-Oct-2012 Coordinator: Sector Manager: Name: Hoonae Kim (SM) Date: 10-Oct-2012 Page 9 of 9