Environmental and Social Management Plan (ESMP) For

Environmental and Social Management Plan (ESMP) for

“Biogas applications for the Brazilian agro‐industry”

The purpose of the ESMP is to ensure that social and environmental impacts, risks and liabilities identified are effectively managed during the phase of procurement of selected bioenergy pilot projects and during the implementation of the technical assistance components of the proposed project. The ESMP specifies the mitigation, adaptation, prevention and management measures and shows how the project will mobilize organizational capacity and resources to account for the factors evaluated in order to implement the compiled measures. The ESMP also shows how mitigation and management measures will be scheduled.

The key objectives of the ESMP are:

 To outline mitigation measures against the possible degradation of the areas;  To enhance positive aspects brought by the project;  To ensure that the project will comply with relevant environmental legislation of Brazil;  To identify roles and responsibilities and the cost involved;  To propose mechanisms for monitoring compliance;  To provide adequate channels of input for the different stakeholders throughout the project activity; and  To establish proven mechanisms to correct/adjust the findings resulting from the monitoring activity and to include the input received throughout the project activity.

The ESMP is a live document for project activities that will be updated as and when required. The ESMP acts as a quick guide for contractors and project implementers to enhance positive impacts and eliminate or minimize the occurrence of negative impacts through proposed mitigations measures. The ESMP relies on the following key principles:

Compliance with local, national and international laws

The project will empower individuals and groups, particularly the most marginalized, to realize their rights and interests, and to ensure that they fully participate throughout the development and implementation of projects.

Transparency and inclusivity

The project development team will engage in meaningful and transparent consultation with affected communities, particularly with vulnerable groups, to ensure that they can participate in a free, prior and informed manner in decisions about avoiding or managing environmental or social impacts. The inclusivity will be achieved inter alia via face‐to‐face open stakeholder consultations in the local communities, door‐to‐door invitations through the local social networks etc. The project will also aim at achieving at least 40% female representation within capacity building and awareness raising activities.

Systematic assessment and tracking of environmental and social impacts and risks

The project will aim at providing clear and constructive responses to individuals, groups, and communities potentially affected by projects on potential grievances related to the social and environmental performance of the projects,

corrects non‐compliance where it has occurred, and shares the results of its review and any actions taken. During project implementation, any changes likely to have negative social and environmental impacts must be communicated to UNIDO prior to implementation. The key risks to be considered and tracked in a systematic way are described in Section 3 and in Section 4 of this ESMP.

Information will be collected on a real‐time and quarterly basis by the project team and will be treated as confidential within the project, to be kept in computerized form and backed‐up by the central UNIDO office. It will be kept for a minimum of 10 years after project completion.

Harmonisation with other projects and programs

The project will aim at maximizing efficiency and minimizing costs in complying with environmental and social safeguards. The project development team will lead discussions at country level to decide on the use of the most appropriate environmental and social safeguards procedures.

Gender equality

The project will identify and integrate the different needs, constraints, contributions and priorities of women and men and where possible, it will aim at enhancing the positive gender impacts of projects by undertaking to develop mitigating measures to reduce any potential gender specific and disproportionate adverse gender impact.

Climate resilience

The project will ensure that supported activities enhance climate resiliency and avoid unwarranted increases in greenhouse gas emissions.

1. Project Description The project falls under Category B for UNIDO projects and is likely to have less adverse impacts, which will be few in number, site‐specific, and few if any will be irreversible. In most cases impacts can be readily minimized by applying appropriate management and mitigation measures or incorporating internationally recognized design criteria and standards.

The project is expected to deliver tangible socio‐economic benefits for Brazil’s energy and agroindustry sectors, as well as for individual businesses and the men, women and their families involved. Socio‐economic benefits at national level (country) are achieved as a result of avoided imports of fossil fuels for electricity generation and heat applications. Distributed bioenergy systems, as well as other grid‐connected renewable energy plants can displace thermal power and improve the utilization rate of the transmission network, thereby postponing public investments in infrastructure. The direct replacement of diesel‐based electricity represents very substantial savings of public expenditures given its high marginal costs during peak hours. Moreover, diversification of Brazil’s energy mix enables a more economical operation of the national electricity system in function of fuel market prices and improves the country’s position for negotiating long‐term contracts with foreign suppliers.

The proposed project builds upon on‐going biogas related activities in Brazil and makes a contribution to the use of agricultural and agro‐industrial (wet) biomass waste utilization for energy generation within the industry – a field in

which UNIDO holds a comparative advantage – while promoting innovative business models and up‐stream uses of biomass.

A range of barriers have been found in place impeding the efficient development and implementation of energy projects based on agricultural and agro‐industrial waste in Brazil. These barriers extend to the policy and institutional framework, and knowledge and technical capacities, weak economic drivers, lack of business models and successful showcases and limited access to investment capital. The identified weaknesses in the biogas energy value chain give rise to increased project risks, including perceived risks, which can be addressed by demonstration and promotion of best practices and benefits.

At the present stage of market development, there is a great need to mobilize investment capital enabling the industries to benefit from energy generation from agricultural and agro‐industrial organic waste (specifically, manure, cassava starch and slaughterhouse wastewater). The utilization of (wet) biomass waste by national industries contributes to increasing the reliability of electricity and heat supply for energy consumers and diversification of the national energy matrix. Moreover, by incorporating (wet) biomass waste and residues into the industry's value chain, biomass energy generation is supportive to the competitiveness and financial viability of the agro‐industrial sector and the national economy.

Component 1 of the project will support the adoption of policy, regulation and institutional coordination to facilitate the uptake of biogas energy solutions including mobility. Component 2 aims to enhance technical know‐how, business models and best practises for biogas applications. Component 3 will demonstrate the commercial viability of the biogas system.

The selected demonstration pilots will be assessed in terms of technical and economic feasibility, socio‐economic and environmental criteria. These demonstration projects will involve technologies for biogas generation as well as the various utilization options (e.g. electricity generation), including upgrading to biomethane.

During the completion process of the portfolio of pilot projects, it will be the responsibility of the selected beneficiaries to ensure compliance with national environmental and social standards. For each identified demonstration project, an analysis and mitigation plan shall be prepared.

The identified sectors are geographically concentrated in three regions of Brazil (South) comprising the following three provinces: Paraná, Santa Catarina and Rio Grande do Sul.

The potential negative environmental and social impacts identified in the ESMP are localized and placed in time with the possibility of mitigation actions. The projected environmental and social risks and proposed mitigation measures for the various stages of the project are presented in Section 3.

1.1 Project intervention area

Paraná: It is located in the South of Brazil with a humid subtropical climate. Paraná is one of the coldest provinces in Brazil with a yearly average of 26 centigrade, the climate is warm, but has only a very few tropical months. The region

has a good distribution of annual rainfall except the north‐western part of the province, where the climate is characterised by tropical weather1.

Santa Catarina: It is located in the South of the country. The weather varies from humid subtropical in the west to oceanic towards the coast. The distribution of rainfalls varies, has dry winters and rainy summers.

Rio Grande do Sul: It is located in the southernmost part of Brazil and has a predominantly humid subtropical climate. It has four relatively well‐marked seasons and the rainfalls are well distributed throughout the year.

1.1.1 Environment a. Geological and soil formations

Paraná: The State of Parana consists of five main topographic zones: a narrow coastal plain, which is separated by the mountains of Serra do Mar from the three plateaus. The coastal region is fringed with dunes and has mangrove swamps. The Serra do Mar with its highest peak of Serra da Graciosa (1888 metres) forms a watershed between the coastal region and the plateaus. The first plateau lies around 800‐900 metres above sea level and is formed mainly of crystalline rock. The second plateau rises up to 1050‐1150 metres high and is formed by basaltic scarp. The third one has slopes downwards until it reaches the Paraná River. The total area of Paraná is almost 200 thousand hectares. More than half of the state is above 600 metres. Around 40% of the region is covered by heavy clay and fertile soil – also called as “purple earth”‐ which is derived from basaltic rocks. This has contributed to the diversified and productive agriculture of this province2.

Santa Catarina: Parallel to the Atlantic Ocean runs the Serra Geral dividing the narrow coastal plain from the larger plateau region in the west of Santa Catarina. The Atlantic coast has several islands, bays, inlets and lagoons, and the area is mostly covered by the humid tropical forest of Serra do Mar3. In this area many shorter streams are found. The northern part of the state is composed by volcano‐sedimentary rocks and granitoids. The Paraná basin is covered by sedimentary and volcanic rocks. The western part of the coastal plain is characterized by flat bottom valleys of rivers, filled by coarse fluvial sediments. The state is suitable for a wide variety of agricultural crops, and there are still many areas not yes used for agricultural purposes. The subsoil is considered rich. Santa Catarina has the third largest ceramic clay reserves in Brazil and the second largest reserves of natural phosphates and quartz. Santa Catharina is the first supplier of metallurgical coal, fluorite and flint stone.

Rio Grande do Sul: The north of Rio Grande do Sul is occupied by the Paraná Plateau, which is composed of basaltic lava solidified into sheets of rock, also known as diabase. The plateau is around 600‐900 metres above sea level. Along the Atlantic coast lie the Geral Mountains, the coast is lined with sandbars and lagoons. A lowland is situated in the south of Rio Grande do Sul where the river Jacuí and its tributary, the Taquari flow. South from the rivers hills with a 300‐450 metres altitude can be found. In the Southwest part of Rio Grande do Sul there are diabase tabular landforms which were cut through by the Uruguay River. b. Hydrography

1 https://www.worlddata.info/america/brazil/climate-parana.php

2 http://tucson.ars.ag.gov/isco/isco10/SustainingTheGlobalFarm/K004-Muzilli.pdf 3 http://www.santacatarinabrasil.com.br/en/solo-e-subsolo/

Surface water

Paraná: The region is traversed by many rivers and streams and surrounded by the Atlantic Ocean to the east, by the Paraná River and Lake Itaipu to the west. Three major rivers cross the second and the third plateaus: Iguacu, Ivai and Tibagi. Iguacu and Ivaia rivers are immediate tributaries of the Parana River, while Tibagi joins the Paranapanema River in the north and later joins the Paraná. The state of Paraná is well supplied by hydric resources; it has a well‐ distributed river basins network that leads the region to be the main hydroelectric supply in the country4.

Santa Catarina: Santa Catarina is surrounded by rivers and the Atlantic Ocean, the northern border of the province is formed by the Iguazu River, whiles the Uruguay and Pelotas rivers form the southern boundary. Canoas River a tributary of the Uruguay crosses the southern part of the Santa Catarina. Several smaller streams and lakes are situated in the state. The ocean cost is shaped by many inlets, large bays and lagoons.

Rio Grande do Sul: Rio Grande do Sul’s hydrological landscape is water abundant. There are two river systems (eastern and western) in the state. The eastern system, close to the Atlantic coast, is formed by the Jacuí, Sinos, Caí, Gravataí and Camaquã, which flow into the Lake dos Patos (Lagoa dos Patos), and the Jaguarão which flows into the Lake Mirim (Lagoa Mirim). In addition to Lagoa Mirim (3 994 km²) and Lagoa dos Patos (10,000 km2), several small lakes can be found on the sandy and swampy peninsulas on the Atlantic coast. Rio de la Plata drainage basin occupies the western part of the province, there are many streams flowing in the Uruguay, such as Ijuí, Ibicuí, Quaraí, Canoas and Pelotas rivers. There are several smaller lakes in the southwestern part of the province as well.

Groundwater5

Paraná: The Guarani Aquifer, one of the world’s largest aquifer systems is present in the state of Paraná, with a volume of about 40,000 cubic kilometres, a thickness of between 50 metres and 800 metres and a maximum depth of about 1,800 metres. It is estimated to contain 37, 000 m3 of water.

Santa Catarina: In Santa Catarina exploitable groundwater comes from the Guaraní Aquifer.

Rio Grande do Sul: The province is located in the region of the Guaraní Aquifer. c. Biological environment

Flora

Paraná: This province has extraordinary bio‐diversity in Brazil; it counts with four important ecoregions: Araucaria Forest, Brazilian Inland Atlantic Rainforest, Brazilian Coast Atlantic Rainforest, and Campos Gerais (savannah/steppe). Several national parks can be found in Paraná, the Superagui National Park is considered as one of the most important coastal ecosystems in the world. They estimate around 7000 vegetal species and out of these almost 5000 suffer from degraded habitats and are at risk of extinction.

Santa Catarina: The whole state lies in the rain forest zone, with exemption of the coastal area that results in one of the greatest bio‐diversity; around 20 thousand different plants have been registered in this province. The coastal

4 http://tucson.ars.ag.gov/isco/isco10/SustainingTheGlobalFarm/K004-Muzilli.pdf 5 http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0100-06832013000600010

planes have less vegetation, mangrove swamps, shallows, beach ridges and dunes are common in this area. The central area of the state is mostly covered by the Araucaria moist forest which is dominated by the Brazilian pines. The westernmost part of the plateau, the Uruguay Valley is occupied by the Paraná‐Paraíba interior forests with semi‐ deciduous flora. The province has managed to preserve a 4 times greater proportion than the Brazilian average of its rain forests6, extensive reforestation programs are now being pursued.

Rio Grande do Sul: Most of the province is covered by tall‐grass prairie, however, in higher areas or in deeper river valleys pine and tropical forest can be found. A belt of evergreen tropical moist forests lie along the coastal strip (Serra do Mar coastal forests). Subtropical forests, characterized by evergreen, laurel‐leaved trees can be found western from the coast in the high plateaus whiles the Araucaria moist forests is dominated by the Brazilian pines. Further to the west, in lower slopes of the plateau the forests are semi‐deciduous. Southern part of the province is covered by the Uruguayan Savanna or Pampa.

Fauna

Paraná: All four ecoregions in Paraná are highly important for the planet’s biodiversity conservations since it’s the home of numerous threatened animal species. 21 mammal‐, 117 bird‐, 12 reptile‐ and 17‐ butterfly species are threatened in Paraná and are considered globally at risk. The most common mammals are the tapir, guaraxaim, guaraxaim, caititu, howler, jaguar, jaguatirica, tatu, paca and deer. Paraná is home to many bird species such as parrot, toucan, woodpecker, canary and blue shrike. Otters, tortoise, alligators can be found in the Paraná River and certain coastal rivers. Species of hake, mullet, sea bass and sole are part of the diverse fish fauna of the area.

Santa Catarina: Almost the whole province lies in the rain forest zone that leads to its extraordinary biodiversity. Over 1300 different mammal, bird, reptile and amphibian species have been registered in the province. The presence of 170 different types of bird species have been observed only on the island of Santa Catarina, among them albatrosses and penguins. Marine mammals, such as dolphins and whales are also frequent near the coast.

Rio Grande do Sul: Rio Grande do Sul is situated within the transition zone between the Brazilian forests and the field regions, which results in an extreme variety of habitats7. Due to the province`s privileged geographical situation over 573 species of birds have been registered. In Rio Grande do Sul 141 mammal species have been recorded, one third of the total number of mammals known in Brazil. Coastal and inland waters are abundant with anchovies, dolphins, kingfish, flatfish, mullets and shrimps. Around 300 species living in this province are in threat of extinction and 10 are already extinct8. The province is the natural habitat for deer, rodents, otters, armadillos, monkeys, and porcupines.

1.1.2 Demographics

Paraná: Paraná is the 6th most populous state in Brazil, with a population of eleven million and out of which only 14.6% live in rural areas. The largest city is Curitiba that has close to two million inhabitants. The population of Paraná is concentrated in ten major urban areas. These zones have recorded significant population increases (from rural areas and other states) in the last decade. The demographic changes represent a great challenge for both the increasing urban and aging rural areas.

6 http://www.santacatarinabrasil.com.br/en/ecossistemas/ 7 http://coralx.ufsm.br/ifcrs/fauna.htm 8http://www.fzb.rs.gov.br/conteudo/4444/?RS_tem_280_esp%C3%A9cies_de_animais_amea%C3%A7adas_de_extin%C3%A7%C3%A3o

Santa Catarina: Santa Catarina lies on 95 346 km2 and has one of the highest standards of living in Brazil, being a major industrial and agricultural center. The population of Santa Catarina is over six million and it is constantly growing by approximately 2% per year. The majority (83%) of the population lives in cities. The capital is Florianópolis, which is situated on an island; however, the most populous city is Joinville with only 550 thousand inhabitants. The population has mostly Portuguese ancestry; however, in the north of Santa Catarina there are large German communities. Around 4% of the population has Native American ancestry.

Rio Grande do Sul: Rio Grande do Sul has a total area of 281 748 km2 and has a population of 11.2 million, of which only 14.9 % live in rural areas. The biggest city is Porto Alegre with a population of 1.5 million. Less than 1% of the population has Native American ancestry. There is a significant representation of the traditional gaucho as well as cattle ranchers.

1.1.3 Local economies

Paraná: Paraná thanks to its favourable climate has one of the most developed plantations in Brazil. Paraná is one of Brazil’s main producers of coffee, mate tea, cotton, peanut and ramie. Corn, rice, cassava, potatoes, beans oats, rye, barley and wheat are as well cultivated widely in this region. Sugarcane is grown mainly in the north of Paraná. The fruit production in this region includes pineapples, grapes, oranges and bananas. Livestock herds have been improved in the recent years thanks to the government measures, pigs, sheep, cattle, and horses are raised. Dairy products and wool are produced mainly in the northern and eastern parts of the state. Paraná counts with a relevant industrial and tertiary sector as well. The state is rich in natural resources, such as groundwater, coal and oil shale.

Santa Catarina: Santa Catarina, a major industrial and agricultural centre; despite its small size, it contributes significantly to the national economy9. Wood manufacturing forms a major part of Santa Catarina`s industry. Most of Brazil`s wheat is cultivated in this province, so is a large proportion of tobacco, cotton, rice, wheat, maize, beans, garlic and apple. Fishing, fish and food processing are important as well. This region is one of the country`s leading poultry, pork, oyster and edible mussels producers10. Agriculture makes an important contribution to the population’s income. The Irati Formation reserves, which are partly in the state of Santa Catarina, are rich in oil, liquefied gas, shale gas and sulphur.

Rio Grande do Sul: Rio Grande do Sul is considered as one of the most prosperous Brazilian states, the province is known for its grain production, viticulture, ranching and its industry. A substantial portion of Brazil’s rice is cultivated on the floodplain of the Jacuí and Taquari rivers. Wheat, corn, grapes, tobacco are grown on the Paraná Plateau and the terraces above the Jacuí River. The southern plains serve as vast pastures for cattle and sheep herds. Pig farming also forms part of state’s livestock industry. Rio Grande do Sul has an extensive amount of natural resources, such as sulphur, oil, shale gas and liquefied gas.

1.1.4. Environmental pressures

Rapid urbanization and industrialization as well as an intensification of agriculture and cattle ranching have resulted in a major environmental threat to Southern Brazil in the last decades, leading to deforestation, biodiversity loss, air and water pollution along with an increase of GHG emissions, land degradation, a fall in pasture quality and pollution.

9 http://www.fao.org/fileadmin/user_upload/soils/docs/Bartz_et_al_2014_Appl_Soil_Ecol.pdf 10 http://www.santacatarinabrasil.com.br/en/agricultura-pecuaria-e-maricultura/

Furthermore, due to continuous population growth, waste generation has increased, demanding adequate waste management to be provided by the government and municipalities. In addition, Brazil faces the issue of increasing energy consumption, limited management capacity of this demand and the inefficient use of non‐renewable resources.

1.2 Component risks

As the pilot projects will be constructed on sites (farms) where large‐scale agricultural activities are already being carried out, the main environmental and social impacts that may arise from these projects are most likely to occur during the construction phase. Potential impacts encompass air pollution and noise caused by the construction equipment, machinery, soil excavation, in addition to the consumption of large amounts of water and high electricity usage. It is expected that these potential impacts will be of a short‐lasting nature i.e. only entail short‐term effects.

The environmental risks that may occur during the operational phase are summarized below:

Effluent leakages Feedstock for biogas plants (i.e. animal manure) may contain contaminants such as bacteria, viruses, trace quantities of toxic materials and the like. In the case that a leakage of effluent from pipelines, storage or bioreactors occurs, this may contaminate the biologically active portion of the soil or could reach groundwater or surface water directly.

Gas leakages Chemical emissions to air from cleaning products, building materials, and fuel transfer may reduce local air quality. A minimal amount of pollution may occur from the substrate/feedstock during operations.

Increase in agricultural activity The expansion of land utilisation either for expansion of the main agricultural activity and/or to cultivate (energy) crops or plantations for energy may lead to encroachments of virgin land, resulting in associated impacts. In addition, it may contribute to soil erosion. Increased demand on crops for energy can influence food prices, leading to negative market distortions and increases in end‐user prices.

Transportation Emissions of nitrogen and sulphur oxides from the combustion of transport fuels used for the transport of biomass and/or fertiliser may reduce local air quality. The pilot projects will mainly use feedstock material produced on‐farm; however, additional environmental impacts may arise from transporting supplementary feed to the system. Similarly, fertilizers are likely to have an end‐use close by; however, increased fuel consumption at least to some extent is likely.

2. Operational Safeguards (OS)

UNIDO distinguishes between the following operational safeguards:

OS 1: Environmental and Social Assessment OS 2: Protection of Natural Habitats

OS 3: Involuntary Resettlement OS 4: Indigenous People OS 5: Pest Management OS 6: Physical Cultural Resources OS 7: Safety of Dams

Below, each OS is analysed in terms of its application in the country:

OS 1: Environmental and Social Assessment

For each pilot project a health risk for the population related to the quantity and quality of the effluents, emissions or waste produced should be conducted. In the area of influence, the population that could be affected by the atmospheric pollutants released in each stage of the project should be identified. The energy generation through (wet) biomass is generally responsible for odours. Because of this, a map with the potential sources and receptors of them has to be prepared, highlighting distances and landforms that impact in their propagation.

OS 2: Protection of Natural Habitats

Although with different levels of diversity and significance as it is described in the regional table below, each province has natural habits to be protected. So it will be essential to assess whether the project produces negative effects over the quantity and quality of the natural resources, namely the soil, the water and the air. For doing this it will be necessary:

 To assess the differences between the levels of noise of the project and the surroundings. The native wildlife that uses the place for nesting, reproduction and feeding should be specially considered. To evaluate the effect of the use of energy during each project phase on the wildlife and the soil or potential geologic fault that could interfere in the vibration propagation.  To identify the wildlife wealth, as well as its quantity and mobility, of the place and surroundings of the project. If the mobility of the wildlife is low, environmental management measures with the aim of protecting these species should be identified, especially for the activities of land preparation.  To characterize the natural flora of the place, its wealth and quantity. It is also important to identify the ecosystems that build up the flora and wildlife, like forests, and to assess the proximity to wetlands specially taking into account the intervention related to the electrical lines.  To determine the characteristics of the basin (if the project is placed in the high, medium or low area of it, if it is endorheic, exorheic or arheic, its drainage divide, its surface runoff regime) and the drainage network.  To identify if the place where the project will be located encourages erosion as a response of the changes that can occur in the vegetable cover as well as in the soil texture and structure.

OS 3: Involuntary Resettlement

Firstly, it is necessary to identify if there is a population in the area of the project. In this case, it should be characterized in order to know if they form a community with human, economic and cultural relationships. After this, it should be determined whether the project takes into account its resettlement, including the displacement and the re‐localization.

The significance of the change in the life, habits and traditions of the community will have to be assessed by using a activities (such as warehouses, farmyards or barns), the natural resources used by them as well as the access geographical, demographical, sociological, socio‐economic and social welfare approach. The distances between the project and the human settlements should be represented considering each part of their ways.

OS 4: Indigenous People

In almost every province of the country indigenous people can be found. However, their distribution and quantity varies from one to another. In general, they live in small and disperse communities, but there are some exceptions. So, it is important to consider the impacts that the biogas / biomethane pilot projects could produce on these groups of people.

OS 5: Pest Management

When working with biogas projects that include the later utilization of the digestate resulting from the anaerobic degradation, the innocuousness of this sub‐product should be controlled, especially in processes that deal with manure or waste from slaughterhouses. Wrong conditions in one of the processes, like low retention times, could result in a non‐stabilized effluent. Then, if this effluent is scattered on the soil, a proliferation of pathogens, antibiotics and hormones can occur. This should be controlled through an adequate management plan for each pilot project.

OS 6: Physical Cultural Resources

Before the development of each pilot project, the existence of places with scientific value because of their antiquity, singularity or historical heritage should be verified. In any of these cases, the potential alteration or damage of the site should be assessed as well as if it is reversible. Moreover, the interactions with other secondary effects (for example, effect on tourism due to a decrease in the historical or landscape value) need to be assessed. The area of influence of the project should be also assessed with the aim of preventing the alteration of popular expressions of any community or people.

OS 7: Safety of Dams

Not applicable.

In addition to these general observations, the following table describes the province‐specific issues to take into account regarding each Operational Safeguard.

Province Paraná Santa Catarina Rio Grande do Sul

In addition to the environmental and social management plan that each pilot project should present, each province has specific legislation related to the requirement of Environmental Impact Assessments11.

All the technologies considered to All the technologies considered to All the technologies considered to produce bioenergy in these sectors have produce bioenergy in these sectors have produce bioenergy in these sectors have OS 1: Environmental and in general the same environmental and in general the same environmental and in general the same environmental and Social Assessment social impacts. As anaerobic digestion social impacts. As anaerobic digestion social impacts. As anaerobic digestion processes take place and the province processes take place and the province processes take place and the province has water streams and reservoirs, it is has water streams and reservoirs, it is has water streams and reservoirs, it is important to assess the composition, important to assess the composition, important to assess the composition, quantity and disposal requirements of quantity and disposal requirements of quantity and disposal requirements of the effluents produced to prevent water the effluents produced to prevent water the effluents produced to prevent water contamination. contamination. contamination.

The proposed project is not expected to The proposed project is not expected to The proposed project is not expected to have any impact on natural habitats as it have any impact on natural habitats as it have any impact on natural habitats as it is located in an area in which agricultural is located in an area in which agricultural is located in an area in which agricultural activities have been long established. activities have been long established. Rio activities have been long established. Santa Catarina is a province with high Grande do Sul is a province with high Paraná is a province with high levels of OS 2: Protection of levels of biodiversity significant levels of biodiversity significant biodiversity significant ecological Natural Habitats ecological diversity, natural resources ecological diversity, natural resources diversity, natural resources (such as the (such as the Guarani Aquifer, oil, coal, (such as the Guarani Aquifer, oil, coal, Guarani Aquifer, oil, coal, natural gas) natural gas) and natural habitats natural gas) and natural habitats and natural habitats (Araucaria moist (Araucaria moist forest, Paraná‐Paraiba (Araucaria moist forest, Paraná‐Paraiba forest, Serra do Mar). So it will be forest). So it will be essential to assess forest, Serra Geral). So it will be essential essential to assess whether the project whether the project produces negative to assess whether the project produces produces negative effects. effects. negative effects. OS 3: Involuntary It is important to evaluate potential involuntary resettlement and the related mitigation measures, but there are no specific Resettlement provincial issues related with this OS.

11 Please also see section 3) below.

Xokleng, Guarani and Kaingang ethnic The indigenous, mostly Kaingang and Guarani, Nandeva, Xeta and Kaingang OS 4: Indigenous People groups can still be found in this province, Guarani, population is around 24,000. communities can be found in this their number is estimated around They live commonly in the northern province. 10,000. region in the two indigenous reserves. As one of the main activities of this As one of the main activities of this As one of the main activities of this Project is based on anaerobic digestion, it Project is based on anaerobic digestion, it Project is based on anaerobic digestion, OS 5: Pest Management is important to ensure the innocuousness is important to ensure the innocuousness it is important to ensure the of the sub‐products to prevent pest of the sub‐products to prevent pest innocuousness of the sub‐products to propagations. propagations. prevent pest propagations. OS 6: Physical Cultural Resources No specific issues have been identified in addition to the country application analysis of this OS.

OS 7: Safety of Dams N/A

3. Policy, legal, and administrative framework

NATIONAL LEGISLATION FRAMEWORK

Renewable and non‐renewable energy policy/regulation

National Energy Policy (Law 9.478)

The cornerstone for Brazil’s energy policy is the National Energy Policy (1997), which created the National Agency of Oil, Gas and Biofuels (ANP) that serves as the institution through which oil, natural gas and biofuels are regulated. ANP is responsible for overseeing and authorizing activities related to production, quality control, import, export, storage, distribution, retail, marketing, and environmental conservation of oil, gas and biofuels. The National Energy Policy Law also established a National Council for Energy Policy (CNPE) tasked with establishing general guidelines to specific programmes such as natural gas, coal, biofuels, solar energy, wind energy and energy derived from other alternative sources. The Council is also responsible for periodically reviewing the energy matrix applied to different Brazilian regions and including renewable and non‐renewable sources as well as available technologies.

ANEEL Resolution 482/2012 and Ministerial Order 44/15

The National Electricity Agency (ANEEL) was established in 1998 by Decree 2,665. ANEEL Resolution 482/2012 stipulates a net metering system where electric energy injected by the consumer unit with distributed microgeneration or mini‐generation is sold to the local distributor and subsequently compensated by the consumption of active power from that same consumer unit. The resolution was updated in 2015 to allow distributed energy generation in condominium. Ministerial Order 44/15 from MME encourages own energy generation by consumers connected to a high voltage grid. The idea was to incite consumers to have their own energy generation. In addition the Ministerial order ANEEL created a modality for fuel oil, for which the price was fixed.

PROINFA (Federal Law 10.438)

In 2002, support for (non‐conventional) renewable energy‐based electricity generation was initiated under the Alternative Electricity Sources Incentive Program (PROINFA) programme issued by the Ministry of Mines and Energy (MME). The programme aims at establishing the inclusion of 3.300 MW electricity generating capacity from biomass, wind plants, and small hydroelectric centrals into the Brazilian energy grid, thus diversifying the Brazilian energy matrix and increasing renewable energy in Brazil to 10% by 2020. The Brazilian National Development Bank (BNDS) has special financing line available for PROINFA projects as well up to 80% of capital costs at low interest rates (4% per year) and no in rem guarantee required. Draft Bill 433/15 proposed establishing a mandatory minimum of 25% of alternative renewable sources in the Brazilian energy matrix by

2025if passes as Law. In addition, a dedicated fund named Energy Development Account (CDE) was created to finance projects on renewable energy.

Law 10.848/04

Establishes rules on electric energy commercialization and creates the Brazil's power trade chamber (CCEE), which began operations in 2004 and is formed by generation, distribution and energy marketing companies.

Law 10,847 and 10,848, and Decree 5,163

The Government created a new framework for the national electricity sector that foresaw in the establishment of an institution responsible for long‐term energy planning, the Empresa de Pesquisa Energetica (EPE) which overviews supply security in the electricity market through the Electricity Sector Monitoring Commission (CMSE), including the activity of the Mercado Atacadista de Energia Eletrica (MAE) and the Electric Energy Commercialization Chamber (CCEE). Since March 2016, a minimum capacity of 5 MW has been established to enter the CCEE.

ANEEL regulation RN 482

Smaller power plants are classified as mini‐generation (75 kW – 5 MW) which are subject to the ACR but can benefit from the net metering modality. The net metering concept is based on energy credits, allowing electricity consumers to inject electricity from small generators into the distribution grid and utilize this at a later moment.

ANEEL regulation RN 687 (2015)

The regulation modifies some aspects of RN 482 and issues technical regulation for distributed generation, including: (i) extension of the validity of energy credits from 36 to 60 months; (ii) utilization of energy credits across multiple connection points owned by the same user (within the same distribution area); (iii) creation of “shared generation” modality, allowing a group of users to form a consortium or cooperative, feed electricity into the distribution grid and consume it at a later moment (with the benefit to reduce energy costs); (iv) extension of the capacity range for mini‐ generation from 100 kW – 1 MW to 75 kW ‐ 5 MW (3 MW for small hydro); and (v) lowering of the range for micro‐generation to maximum 75 kW.

Ten‐Year Energy Expansion Plan (PDE)

Planning of the energy system is carried out under the guidelines of the Ministry of Mines and Energy (MME), through decennial studies reviewed on an annual basis. The plan consists of defining a reference scenario for the implementation of new facilities in the infrastructure of energy supply technology. Decree No. 7,390/2010, in its Article 3, considers the PDE as the sectoral plan on mitigation and adaptation to climate change for the energy sector. According to Article 5 of this Decree, emissions projections from the energy sector would for 2020 be 868 Mton CO2eq under the

baseline scenario. The adoption of the actions established in PDE will reduce emissions by 234 Mton CO2eq.

The Biofuel Law (Law 12.490)

The law gives extensive support to the incorporation of sugar‐cane bagasse for electricity production and to the development of biofuel technology and production (biodiesel). This law sets a framework for: (i) promoting biomass‐based electricity generation and the use of by‐products from biofuel production for energy production; (ii) attracting investment capital for a biofuel transport and storage infrastructure; (iii) strengthening Brazil’s position in the international biofuel markets; (iv) promoting research and technology development in the field of renewable energies; and (v) mitigation of energy and transport sector GHG emissions by the use of biofuels.

RenovaBio programme

In December 2016, MME launched the RenovaBio programme, which encompasses four lines of action: (a) platform for dialogue with the private sector about the role of biofuels in Brazil’s energy matrix; (ii) economic, financial and environmental sustainability; (iii) framework for commercialization of biofuels; and (iv) support for new types of biofuels.

Agricultural policy and regulation

ABC Plan 2011

The Low‐Carbon Agriculture Plan commits a GHG emission reduction of 6.9 M ton CO2eq from the treatment of 4.4 million m3 of manure over the program period until 2020. It aims to mitigate carbon emissions by promoting best practices in agriculture through the elaboration of State and Municipal plans; training; information; R&D; technological transfer; monitoring, report and validation; synergy with other national plans; and a specific financing line called Programme for Reducing Greenhouse Gas Emissions in Agriculture.

The Brazilian Agro‐energy Plan (PNA) 2006‐2011

The plan aims to expand the presence of biofuels in the national energy matrix. Although national policy and legislation are primarily concentrated on bioethanol and biofuel production, the Brazilian Agro‐energy Plan 2006‐2011 addresses four main products: bioethanol, biofuel planted energy forests (for charcoal); residues from agriculture (including sugarcane bagasse); and forestry.

Resolution No. 3,896

MAPA established a credit line under the ABC Program by Resolution No. 3,896 of the Central Bank of Brazil in 2010, which is open for rural producers including individuals, legal entities and their

cooperatives. Interest rates range from 4.5% and 5.0% and up to 15 years for amortization. The budget for the ABC Plan amounts to R$ 2.2 billion (2017).

PRONAF

The National Programme for Strengthening Family Farming was created with the objective to allow family farms to access investment capital and become more efficient and competitive.

Social Fuel Seal scheme (Decree n. 5.297/2004)

Serves as a mechanism to include family farming within the biodiesel production chain by encouraging companies in the biodiesel industry to enter into commercial agreements with small‐ scale family farms part of PRONAF. This seal serves as a certification system for biofuels and provides tax, federal credit and government‐led procurement of biodiesel for producers.

Environmental Policy and regulation

National Policy on Solid Wastes (Law 12.305/2010)

The policy aims to improve the management of solid wastes in Brazil, including those generated from agricultural and poultry activities, and to set up new practices for waste disposal and recycling.

Climate Change Policy (Law 12.187/09 and Decree 7390/2010)

The policy aims to reduce GHGs to mitigate climate change, creating adaptation and conservation policies and developing a national cap and trade policy. To meet voluntary commitments, Federal Decree N. 7.390/2010 provides for the creation of Sector Plans to apply actions, indicators and targets to reduce emissions and mechanisms to verify compliance. The Ministry of Environment with the Brazilian Development Bank (BNDS) launched a specific credit line called Climate Fund to support projects related to efforts aimed at reducing greenhouse gas emissions and in adapting to climate change.

Programme for Environmental Conservation and Programme to Promote Rural Productive Activities (Law 12.512/11)

Aims at stimulating the generation of jobs and income in a sustainable manner and is executed through non‐refundable transfer of financial resources and the provision of technical assistance services. The programme targets family farmers, traditional communities and settlers in land reform who are in an extreme poverty.

SUB‐NATIONAL LEGISLATION FRAMEWORK

Paraná: Parana Programme for Renewable Energy (State Decree 11.671/14) The programme promotes and encourages the production and consumption of renewable energy by small energy producing industries, contributing to sustainable development in the State of Paraná, with priority given to areas with lower human development levels. The Programme sets out that a specific financing line will be offered for renewable energy projects by the Regional Bank for the Far South Development.

Parana’s Programme on Bioenergy (State Decree 2101/2003) The programme aims to manage and encourage actions for research and development, applications and use of biomass in the state of Paraná, with initial focus on the production and application of biodisel as biofuel to be included in Parana’s energy matrix. The general objective was to demonstrate the technical and economic feasibility of plant oils as a replacement to diesel oil in tractors and machines used on farms.

Parana’s Low Carbon Agriculture (Resolution 125/2011) The program implements guidelines for agriculture with positive carbon balance, aiming to provide stability and growth in food production. One specific goal is to expand the use of technologies for adequate treatment of animals` wastes.

SENAR (Law 8.315/91) Private agribusiness companies participate in the process with research, technical assistance and rural extension, providing farmers’ access to low carbon technologies through The National Rural Training System (SENAR) in Paraná.

Parana’s Policy on Solid Wastes and Regional Plan on Integrated Management of Urban Solid Wastes (State Law 12.493/99) It sets out that the generation of solid waste in the State of Paraná territory should be minimized by adopting low waste generation processes and reuse and / or recycling of solid waste, priority given to reuse and / or recycling despite other forms of treatment and final disposal, except in cases where there is no viable technology.

Parana’s Policy on Climate Change (State Law 17.133/2012 and Decree 9085/2013) Aims to encourage and implement control actions and progressively reduce anthropogenic emissions, promote, implement and monitor public policies for the development of technical processes and renewable resources technology; identify and assess the impacts of climate change, defining and implementing measures in local communities, especially those particularly vulnerable to the adverse

effects; stimulate financial mechanisms and policies for the development of forestry projects related to carbon capture in planting activities or avoided deforestation and forest degradation.

Santa Catarina: State Policy on Climate Change and Sustainable Development (Law No. 14829) This Law establishes the State Policy on Climate Change and Sustainable Development. This Policy aims at regulating activities within the municipalities of Santa Catarina in developing their policies and plans related to climate change according to this Law, by following the principles listed below: climate change prevention; precaution; stakeholders’ participation, transparency and information; polluter pays principle. The policy aims to reduce the GHG emissions; however, it does not set targets or adaptation strategies.

Rio Grande do Sul: The Gaucho Policy on Climatic Changes (Law No. 13594) The Law does not establish greenhouse gas emissions reduction goals; however, it does create a process for establishing such goals, which are to be based on sectoral emissions inventories and are intended to fulfil Rio Grande do Sul’s share of the national commitment to reduce emissions. The Law also includes provisions for incentives to adopt environmentally sustainable practices, including conservation of energy, water and soil, as well as a state government green procurement policy.

Policy on Biomethane (State Law 4,864/2016) The policy acknowledges the potential benefits of biogas and biomethane for local development. It seeks economic valorization of organic waste and reduction of GHG, proposes mechanisms for fostering the biomethane value chain in this province, and aims to secure biomethane purchases by the state concessionary SULGAS.

Table 1: Main environmental and social risks

Technical details of the Timeline, Cost of Mitigation Mitigating mitigation technology, including (If substantial; to be E&S risks process, equipment, Location frequency, Responsibility covered by the GEF Measure design and operating start and grant or non‐UNIDO procedures end date co‐financing)

Effluent The project will The project will consider Project Throughout Project team N/A leakages consider a several solutions to sites lifetime of Beneficiaries (groundwater sustainable manage the effluents installations contamination, effluent control such as impermeable and soil system. digester’s bottom, tanks pollution) and pipes as well as underground water monitoring. Risks identified during the PIF Gas leakages Monitoring of The project will consider Project Throughout Project team N/A preparation and gas production several solutions to sites lifetime of Beneficiaries verified during to detect avoid gas leakages, such installations project leakages. as the application of preparation efficient sealing, a gas‐ (PPG) tight construction, installation of a safety flare, continuous maintenance of the plant.

Increase in Monitoring of The project will not Areas Semi‐ Project team N/A agricultural agricultural engage in activities that around annually with activities (e.g. activities and utilise new land for the assistance of energy‐crop productivity as energy purposes only. portfolio local

cultivation for well as Feedstock used at of pilot stakeholders co‐digestion to feedstock. project sites shall fulfil projects increase the sustainability criteria. plant’s efficiency)

Increased Monitoring of The project will target Project Throughout Project team N/A transportation supply distance suppliers that guarantee sites lifetime of Beneficiaries to minimize the the most installations Suppliers carbon footprint environmentally friendly caused by the feedstock supply and transportation assure that buyers of of residues as end‐products are well as products preferably in the vicinity. generated.

Table 2: Monitoring of environmental and social risks

Monitoring Parameters Timing/ methods and Sampling/ E&S risks to be Frequency of Definition of Responsibility procedures used monitoring measured measurement thresholds (e.g. sampling) location Effluent leakages Amount of Logs of the Frequently Amount of Project sites Project team (groundwater leaking monitored results monitored, effluent in contamination and effluents (if annually m3 Beneficiaries soil pollution) any) reported

Gas leakages Amount of Logs of the Frequently Amount of Project sites Project team leaking gas (if monitored results monitored, gas in m3/sec any) annually Beneficiaries Risks reported identified during the Increase in Agricultural National / Annually % increase in Areas around Project team PIF agricultural activities productivity Regional data; agricultural the portfolio of with assistance preparation (e.g. energy‐crop beneficiary info Feedstock to be productivity pilot projects of local / and verified cultivation for co‐ Origin of continuously national during digestion to increase feedstock Logs of the monitored, Origin of Project sites stakeholders project the plant’s monitored results annually feedstock preparation efficiency) reported Beneficiaries (PPG) Increased Carbon Logs of Annually Fuel Project sites Project team transportation footprint calculations of consumption Beneficiaries potential and distance

emissions caused Suppliers by transportation of feedstock and end products

4. Capacity development

Management arrangements of the project

The institutional arrangement considered at this stage includes the following organs:

 The Project Steering Committee (PSC) as the highest decision‐making authority, the preliminary composition of which is as follows:  Representative of MCTIC;  Representative of MME;  Representative of ITAIPU;  Representative of CIBiogas;  Representative of MMA;  Representative of UNIDO;  Project Management Expert (PME);  National Policy Expert (NPE).

 For daily management and coordination of project activities, a Project Management Unit (PMU) will be set up by UNIDO. This will include as a minimum a Project Management Expert and a Project Assistant. 4.  The ESMP will be managed within the framework of the overall project, which follows the below structure:

 Other stakeholders, who will intervene in other aspects (apart from management) of the project, will be identified during project implementation. Capacity building – especially with respect to the demonstration pilot projects – is foreseen as part of the project activities.

5. Communication

Following the request approval, the project will annually communicate on implementation progress, including evolution of identified risks and impacts on the project implementation using the PIRs. Periodic reports on the project status based on the template of the GEF 6 Tracking tool will also be made available. The ESMP and the relevant progress report will be disclosed on the UNIDO public website, under the following link: https://open.unido.org/index.html#/projects.