48003-002: Qingdao Smart Low-Carbon District Energy Project

Home , Laoshan District, Licang District, Shibei District

Initial Environmental Examination

July 2015

PRC: Qingdao Smart Low-Carbon District Energy Project

Prepared by Qingdao Municipal Government and Qingdao Energy Group for the Asian Development Bank.

CURRENCY EQUIVALENTS (as of 19 May 2015) Currency Unit – yuan (CNY) CNY1.00 = $0.161 $1.00 = CNY 6.204

ABBREVIATIONS

ADB Asian Development Bank AP Affected Person AQI Air Quality Index ASL Above Sea Level CEMS Continuous Emissions Monitoring System CHP Combined Heat and Power CNY Chinese Yuan CSEMP Construction Site Environmental Management Plan EA Executing Agency EHS Environment, Health and Safety EHSU Environment, Health and Safety Unit EIA Environmental Impact Assessment EMoP Environmental Monitoring Plan EMP Environmental Management Plan EMS Environmental Monitoring Station EPB Environmental Protection Bureau FGD Flue-Gas Desulfurization FSR Feasibility Study Report GDP Gross Domestic Product GHG Green House Gas GIP Good International Practice GLC Ground Level Concentration GRM Grievance Redress Mechanism HES Heat Exchange Station HH Household HTF Heat Transfer Fluid IA Implementing Agency IEE Initial Environmental Examination IT Interim Target LIEC Loan Implementation Environment Health and Safety Consultant MAC Maximum Acceptable Concentration MDRC Municipal Development and Reform Commission MEP Ministry of Environmental Protection MSDS Material Safety Data Sheet NG Natural Gas

ii OM Operations Manual, ADB PAM Project Administration Manual PCR Physical Cultural Resources PPE Personnel Protective Equipment PPTA Project Preparatory Technical Assistance PRC People’s Republic of China QEG Qingdao Energy Group QEPSTC Qingdao Environmental Protection Science and Technology Center QMG Qingdao Municipal Government SPS Safeguard Policy Statement, ADB TA Technical Assistance TES Thermal Energy Storage TPP Thermal Power Plant WB World Bank WHO World Health Organization WWTP Wastewater Treatment Plant

WEIGHTS AND MEASURES

BOD5 Biochemical Oxygen Demand, five days

CaCO3 Calcium Carbonate cm Centimeter

CO2 Carbon Dioxide COD Chemical Oxygen Demand dB(A) A-weighted sound pressure level in decibels DO Dissolved Oxygen GJ Gigajoules GJ/m2 Gigajoule Per Square Meters GWh Gigawatt Hour ha Hectare hPa Hectopascal kg Kilogram km Kilometer kV Kilovolt kWh Kilowatt Hour Leq Equivalent Continuous Noise Level m Meter m/s Meters per Second m2 Square Meters m³ Cubic Meters mg/l Milligrams per Liter mg/m3 Milligrams per Cubic Meter

iii mg/m3 Milligrams per Standard Cubic Meter µg/m3 Micrograms per Cubic Meter µg/m3 Micrograms per Standard Cubic Meter MW Megawatt MWe Megawatt Electricity Equivalent MWth Megawatt Thermal Equivalent

NO2 Nitrogen Dioxide

NOx Nitrogen Oxides oC Degrees Celsius

O3 Ozone pH A measure of the acidity or alkalinity of a solution PM Particulate Matter

PM10 Particulate Matter smaller than 10 micrometers

PM2.5 Particulate Matter smaller than 2.5 micrometers

SO2 Sulfur Dioxide t/h Tons per Hour TSP Total Suspended Particulates

NOTE

In this report, "$" refers to US dollars.

This initial environmental examination report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “terms of use” section on ADB’s website.

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

iv TABLE OF CONTENTS

EXECUTIVE SUMMARY ...... XV

A. INTRODUCTION ...... XV B. POLICY, LEGAL AND ADMINISTRATIVE FRAMEWORK FOR ENVIRONMENTAL IMPACT ASSESSMENT ...... XV C. PROJECT SCOPE ...... XV D. IMPLEMENTATION ARRANGEMENTS ...... XVI E. BUDGET AND TIME SCHEDULE ...... XVI F. DESCRIPTION OF THE ENVIRONMENT ...... XVI G. ANTICIPATED IMPACTS AND MITIGATION MEASURES ...... XVII H. ALTERNATIVE ANALYSIS ...... XIX I. INFORMATION DISCLOSURE AND PUBLIC CONSULTATIONS ...... XIX J. GRIEVANCE REDRESS MECHANISM ...... XIX K. ENVIRONMENTAL MANAGEMENT PLAN ...... XIX L. CONCLUSION ...... XX

I. INTRODUCTION ...... 1

A. THE PROJECT ...... 1 B. REPORT PURPOSE ...... 3 C. APPROACH TO IEE PREPARATION ...... 3 D. REPORT STRUCTURE ...... 3

II. POLICY, LEGAL AND ADMINISTRATIVE FRAMEWORK ...... 5

A. PRC ENVIRONMENTAL LEGAL FRAMEWORK ...... 5 B. PRC ENVIRONMENTAL IMPACT ASSESSMENT FRAMEWORK ...... 6 C. PROJECT DOMESTIC EIA REPORT ...... 7 D. DUE DILIGENCE REVIEWS OF EXISTING RELATED AND LINKED FACILITIES ...... 7 E. RELEVANT INTERNATIONAL AGREEMENTS ...... 7 F. OTHER RELEVANT GUIDELINES ...... 8 G. APPLICABLE STANDARDS ...... 8 H. APPLICABLE ADB POLICIES, REGULATIONS AND REQUIREMENTS ...... 15

III. PROJECT DESCRIPTION ...... 17

A. THE PROJECT ...... 17 B. PROJECT LOCATION ...... 17 C. PROJECT RATIONAL ...... 17 D. SCOPE ...... 20 E. IMPACT, OUTCOME AND OUTPUT ...... 20 F. IMPLEMENTATION ARRANGEMENTS ...... 20 G. BUDGET, FINANCING PLAN AND TIME SCHEDULE ...... 21 H. KEY PROJECT FEATURES ...... 22 I. PROJECT COMPONENT DESIGN DETAILS ...... 32

v IV. DESCRIPTION OF THE ENVIRONMENT ...... 68

A. LOCATION ...... 68 B. PROVINCIAL OVERVIEW ...... 68 C. PHYSICAL RESOURCES ...... 68 D. ECOLOGICAL AND SENSITIVE RESOURCES ...... 85 E. SOCIO-ECONOMIC AND CULTURAL RESOURCES ...... 87

V. ANTICIPATED IMPACTS AND MITIGATION MEASURES ...... 90

A. ANTICIPATED PRE-CONSTRUCTION PHASE IMPACTS AND MITIGATION MEASURES ...... 90 B. ANTICIPATED CONSTRUCTION PHASE IMPACTS AND MITIGATION MEASURES ...... 92 C. ANTICIPATED OPERATION PHASE IMPACTS AND MITIGATION MEASURES ...... 103 D. ANTICIPATED POSITIVE OPERATION PHASE IMPACTS ...... 151

VI. ALTERNATIVE ANALYSIS ...... 152

A. NO PROJECT ALTERNATIVE ...... 152 B. SMALLER SCALE DISTRICT ENERGY SYSTEMS ...... 152 C. ENERGY SOURCES ...... 153 D. ENERGY EFFICIENT AND ENVIRONMENTALLY FRIENDLY ENERGY SYSTEMS ...... 153 E. PIPELINE NETWORK ...... 154 F. OVERALL ALTERNATIVE ANALYSIS ...... 154

VII. INFORMATION DISCLOSURE AND PUBLIC CONSULTATION ...... 155

A. PRC AND ADB REQUIREMENTS FOR PUBLIC CONSULTATION ...... 155 B. INFORMATION DISCLOSURE ...... 155 C. PUBLIC CONSULTATION MEETINGS ...... 156 D. FUTURE CONSULTATION ACTIVITIES ...... 162

VIII. GRIEVANCE REDRESS MECHANISM ...... 163

A. INTRODUCTION ...... 163 B. ADB’S GRM REQUIREMENTS ...... 163 C. CURRENT GRM PRACTICES IN THE PRC ...... 163 D. PROJECT GRM ...... 163

IX. CONCLUSIONS ...... 166

APPENDIX I: ENVIRONMENTAL MANAGEMENT PLAN ...... 167

A. OBJECTIVES ...... 167 B. IMPLEMENTATION ARRANGEMENTS ...... 167 C. INSTITUTIONAL STRENGTHENING AND CAPACITY BUILDING ...... 169 D. POTENTIAL IMPACTS AND MITIGATION MEASURES ...... 174 E. ENVIRONMENT MONITORING PLAN ...... 174 F. REPORTING REQUIREMENTS ...... 198 G. PERFORMANCE INDICATORS ...... 199 H. ESTIMATED BUDGET FOR MITIGATION AND MONITORING ...... 199

vi I. MECHANISMS FOR FEEDBACK AND ADJUSTMENT ...... 202 J. EPB ENVIRONMENTAL ACCEPTANCE ...... 202

APPENDIX II: RAPID CLIMATE RISK ASSESSMENT ...... 203

APPENDIX III: EXISTING AND ASSOCIATED FACILITY DUE DILIGENCE ENVIRONMENTAL AUDITS AND REVIEWS ...... 213

APPENDIX III-A: COMPONENT 1 LINKED FACILITY DUE DILIGENCE ENVIRONMENTAL REVIEW – HUADIAN COMBINED HEAT AND POWER PLANT ...... 214 A. INTRODUCTION ...... 214 B. ENVIRONMENTAL REVIEW APPROACH...... 214 C. PROJECT DESCRIPTION ...... 214 D. ENVIRONMENTAL MANAGEMENT ...... 218 E. CONCLUSION ...... 220 ANNEXES ...... 221 APPENDIX III-B: COMPONENT 1 LINKED FACILITY DUE DILIGENCE ENVIRONMENTAL REVIEW – LICUN RIVER WASTEWATER TREATMENT PLANT ...... 222 A. INTRODUCTION ...... 222 B. ENVIRONMENTAL REVIEW APPROACH...... 222 C. PROJECT DESCRIPTION ...... 222 D. ENVIRONMENTAL MANAGEMENT ...... 226 E. CONCLUSION ...... 228 ANNEXES ...... 229 APPENDIX III-C: COMPONENT 1 EXISTING RELATED FACILITY DUE DILIGENCE ENVIRONMENTAL REVIEW AND ASSESSMENT – TAINENG THERMAL POWER PLANT ...... 230 A. INTRODUCTION ...... 230 B. ENVIRONMENTAL AUDIT APPROACH ...... 230 C. PROJECT DESCRIPTION ...... 231 D. ENVIRONMENTAL MANAGEMENT ...... 238 E. CONCLUSION ...... 247 ANNEXES ...... 248 APPENDIX III-D: COMPONENT 2 EXISTING RELATED FACILITY DUE DILIGENCE ENVIRONMENTAL REIEW AND ASSESSMENT – HOUHAI THERMAL POWER PLANT ...... 249 A. INTRODUCTION ...... 249 B. ENVIRONMENTAL AUDIT APPROACH ...... 249 C. PROJECT DESCRIPTION ...... 250 D. ENVIRONMENTAL MANAGEMENT ...... 258 E. CONCLUSION ...... 264 ANNEXES ...... 266

APPENDIX IV: POWER, HEAT AND COOLING GENERATION, UTILITIES CONSUMPTION AND COAL AND EMISSIONS REDUCTIONS ...... 267

APPENDIX V: PUBLIC CONSULTATION ...... 269

vii

List of Tables

Table 1: Applicable PRC environmental laws...... 5 Table 2: Applicable PRC environmental management and assessment guidelines...... 6 Table 3: Applicable international agreements...... 7 Table 4: Applicable PRC environmental standards...... 9 Table 5: PRC ambient air quality standards (GB3095-2012) and WHO ambient air quality guidelines, mg/m3...... 10 Table 6: Applicable groundwater standard (Class III, GB/T14848-93 Quality Standard for Ground Water)...... 11 Table 7: PRC Environmental Quality Standards for Noise (GB3096-2008) and relevant international guidelines...... 11 Table 8: PRC Noise Standard for Construction Site Boundary (GB12523-2011) and relevant international guidelines...... 12 Table 9: Relevant PRC Natural Gas Fired and/or Fueled Boiler, Turbine and Engine Emission Standards and Relevant International Guidelines...... 13 Table 10: PRC Noise Standards for Industrial Enterprises at Site Boundary (GB12348- 2008) and relevant international guidelines...... 14 Table 11: PRC Wastewater Quality Standards for Discharge to Municipal Sewers (CJ 343-2010) ...... 15 Table 12: Project Components and Key Features...... 20 Table 13: Implementation Arrangements...... 21 Table 14: Project Budget ($ million) ...... 22 Table 15: Project Financing Plan ...... 22 Table 16: Main Works and Equipment, Component 1 (Shibei District Binhai Energy Systems)...... 39 Table 17: Main works and equipment, Component 2 (Licang District Houhai Energy Systems)...... 45 Table 18: Main Works and Equipment, Qingdao Subway Control Center Unit-Based Energy System...... 47 Table 19: Main Works and Equipment, Unit-Based Energy System at Jieneng Company Headquarter...... 48 Table 20: Main Works and Equipment, Unit-Based Energy System, Dongli Commercial Complex...... 49 Table 21: Key Features of New 28 HESs in Shibei District...... 51 Table 22: Main Works and Equipment, No. 1 and No. 2 Community-Based Energy

viii Systems at Blue Silicon Valley Complex...... 53 Table 23: Main Works and Equipment, Neighborhood Boiler Heating Systems, Jidong Subdistrict...... 56 Table 24: Main Works and Equipment, Component 6 (East Licang District Neighborhood Heating Systems)...... 60 Table 25: Main Works and Equipment, Badahu HES Upgrading...... 62 Table 26: Main Works and Equipment, Municipal Government Complex Unit-Based Heating and Cooling System...... 63 Table 27: Main Works and Equipment, Geothermal Heat Pump, Civil Air Defense Tunnel...... 66 Table 28: Key features of the unit-based solar heating system...... 67 Table 29: Summary Qingdao meteorological data based on observations since 1898. 70 Table 30: Summary Jidong Subdistrict meteorological data, 1994-2013...... 70 Table 31: Data from Qingdao urban core ambient air quality monitoring stations, 2014/2015 heat supply season...... 78 Table 32: Data from Qingdao urban core ambient air quality monitoring station, full 2014 calendar year...... 78

Table 33: Ambient air quality monitoring sampling program, Jidong Subdistrict, 2014. . 79 Table 34: Ambient air quality monitoring data, Jidong Subdistrict, 2014...... 79 Table 35: Groundwater monitoring data, Qingdao Steel Plant, Licang District, January 9 2012. Shading denotes a standard exceedance...... 80 Table 36: Groundwater monitoring data, Jungtuan Village, Jimo City, April and September, 2012. Shading denotes a standard exceedance...... 81 Table 37: Project Components and Ambient Noise Monitoring Sites...... 82 Table 38: Ambient Noise Monitoring Data at Project Component Sites. Shading denotes Exceedance...... 83 Table 39: Data on Qingdao City administrative divisions ...... 87 Table 40: Qingdao major economic indicators (2012)...... 88 Table 41: Primary noise sources at each construction stage...... 96 Table 42: Predicted noise levels of construction equipment by distance...... 97 Table 43: Project coal and emissions savings vs coal-fired boilers...... 104 Table 44: Exhaust Gas Emission Parameters of Subprojects in Qingdao Urban Area (Components 1, 2, 3, 4, 6, 7, and 8)...... 107 Table 45: Sensitive Receptors in Qingdao Urban Area...... 113 Table 46: Exhaust gas emission parameters of subcomponents in Component 5 (Jidong Subdistrict Energy Systems)...... 114 Table 47: Sensitive Receptors, Component 5 (Jidong Subdistrict Energy Systems). 115

ix Table 48: Ten worst case 1-hour SO2, NO2 and PM10 GLCs and corresponding date and positions, Scenario 1 – All Components in Qingdao Urban Area...... 117

Table 49. Frequency Analysis of 1-hour NO2 GLCs, Scenario 1 – All Components in Qingdao Urban Area...... 117

Table 50: Worst case 1-hour SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Scenario 1 – All Components in Qingdao Urban Area...... 119

Table 51: Ten worst case 24-hour SO2, NO2 and PM10 GLCs and corresponding date and positions, Scenario 1 – All Components in Qingdao Urban Area...... 120

Table 52. Frequency Analysis of 24-hour NO2 GLCs, Scenario 1 – All Components in Qingdao Urban Area...... 121

Table 53: Worst case 24-hour SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Scenario 1 – All Components in Qingdao Urban Area...... 123

Table 54: Ten worst annual average SO2 and NO2 and PM10 GLCs and corresponding positions, Scenario 1 – All Components in Qingdao Urban Area...... 124

Table 55: Worst case annual SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Scenario 1 – All Components in Qingdao Urban Area...... 126

Table 56: Ten worst case 1-hour SO2, NO2 and PM10 GLCs and corresponding date and positions, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems)...... 130

Table 58. Frequency Analysis of 1-hour NO2 GLCs, Scenario 2 – Component 5 (Jidong Subdistrict Energy Systems)...... 133

Table 59: Ten worst case 24-hour SO2, NO2 and PM10 GLCs and corresponding date and positions, Component 5 (Jidong Subdistrict Energy Systems)...... 134

Table 60. Frequency Analysis of 24-hour NO2 GLCs, Scenario 2 – Component 5 (Jidong Subdistrict Energy Systems)...... 134

Table 61: Worst case 24-hour SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Component 5 (Jidong Subdistrict Energy Systems)...... 137

Table 62: Ten worst annual average SO2 and NO2 and PM10 GLCs and corresponding positions, Component 5 (Jidong Subdistrict Energy Systems)...... 138

Table 63: Worst case annual SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Component 5 (Jidong

x Subdistrict Energy Systems)...... 140 Table 64: Predicted annual wastewater concentrations and emissions...... 143 Table 65: Main project noise sources and mitigation measures (unit: Leq dB(A)) ...... 145 Table 66: Predicted noise levels at site boundaries of existing and newly built facilities. (unit: Leq dB(A)). Shading denotes exceedances...... 147 Table 67: Project public consultation questionnaire (2015)...... 159 Table 68: Summary data on questionnaire respondents...... 160 Table 69: Public consultation questionnaire results...... 160

List of Figures

Figure 1: Project Location, Qingdao City, Shandong Province, People’s Republic of China...... 2 Figure 2: Project component and subcomponent locations...... 19 Figure 3: Gas turbine generator...... 23 Figure 4: Steam turbine generator...... 23 Figure 5: A combined-cycle gas and steam turbine generator...... 24 Figure 6: Reciprocating engine...... 25 Figure 7: Working principles of a lithium bromide unit...... 27 Figure 8: Configuration of air-source heat pump...... 27 Figure 9: Centrifugal Electrical Heating and Cooling Supply Unit...... 29 Figure 10: Screw-Type Compressor Heating and Cooling Supply Unit...... 29 Figure 11: Parabolic Trough Mirror Construction...... 31 Figure 12: Parabolic Trough...... 31 Figure 13: Project component detailed locations in Qingdao urban core (Components 1-4 and 6-8)...... 33 Figure 14: Component 5 detailed location, Jidong Subdistrict, Jimo City...... 33 Figure 15: Taineng TPP Location, Shibei District, Qingdao...... 34 Figure 16: Taineng TPP and Surrounding Area...... 34 Figure 17: Taineng TPP looking from the north...... 35 Figure 18: Taineng TPP Layout Showing ADB Component 1 Site...... 35 Figure 19: ADB Component 1 site at Taineng TPP...... 36 Figure 20: Community-Based Energy Systems under Component 1 (Shibei District Binhai Energy Systems)...... 37 Figure 21: Component 1 (Shibei District Binhai Energy Systems) heating, cooling and power boundaries...... 38 Figure 22: Taineng TPP Layout and Component 1 (Shibei District Binhai Energy Systems) Energy Systems...... 39

xi Figure 23: Houhai TPP Location, Licang District, Qingdao ...... 41 Figure 24: Houhai TPP and surrounding area ...... 42 Figure 25: Huahai TPP from within, looking to the northwest. From left to right note coal storage building, cooling tower, coal conveyer system, turbine and boiler building, stack, and office building...... 42 Figure 26: Houhai TPP layout showing ADB Component 2 site...... 43 Figure 27: ADB Component 2 site at Houhai TPP. The building, currently used for coal storage, will be refitted and retained...... 43 Figure 28: Houhai Community-Based Energy System Configuration...... 44 Figure 29: System Configuration, Qingdao North Railway Community-Based Energy System...... 44 Figure 30: Layout of Houhai and North Railway Community-Based Energy Stations. . 46 Figure 31: Operational Boundaries of the Areas Served by the Houhai and North Railway Community-Based Energy Systems...... 46 Figure 32: System Configuration of Unit-Based Heating and Cooling Systems in Qingdao Subway Control Center and Jieneng Company Headquarters ...... 48 Figure 33: System Configuration, Unit-Based Energy System, Dongli Commercial Complex...... 50 Figure 34: Typical HES System Configuration for Enhancing Existing District Heating Systems...... 50 Figure 35: Location of community-based commercial complex energy systems and neighborhood gas boiler heating systems, Jidong Subdistrict Energy Systems. ... 52 Figure 36: System Configuration of No. 1 and No. 2 Community-Based Energy Systems at Blue Silicon Valley Complex...... 53 Figure 37: Power, Heating and Cooling Coverage of No. 1 and No. 2 Energy Stations...... 55 Figure 38: Heating Coverage Areas, Neighborhood Boiler Systems, Jidong Subdistrict...... 56 Figure 39: Location of 25 Neighborhood Gas Boiler Heating Systems, Component 6 (East Licang District Neighborhood Heating Systems)...... 59 Figure 40: Locations of Badahu HES, Shinan District...... 61 Figure 41: System Configuration, Badahu HES Upgrading...... 62 Figure 42: Location of Unit-Based Systems at Municipality Building Complex...... 63 Figure 43: System Configuration of Unit-Based Systems at Municipality Building Complex...... 63 Figure 44: Heat Pump Capillary Network (on wall)...... 65 Figure 45: Geothermal Heat Pump System Configuration...... 65

xii Figure 46: Solar Heating System Configuration...... 66 Figure 47: Qingdao topography...... 69 Figure 48: Qingdao climate graph...... 71 Figure 49: Qingdao wind roses, based on data from 1994-2013...... 71 Figure 50: Jidong Subdistrict wind roses, based on data from 1994-2013...... 72 Figure 51: The PRC’s Air Quality Index (AQI) ...... 74 Figure 52: Qingdao average annual AQI compared to the 20 most polluted Cities in the PRC...... 75 Figure 53: Location of Qingdao EPB Automated Continuous Air Quality Monitoring Stations and Jidong Subdistrict Ambient Monitoring Site...... 76 Figure 54: Site conditions at component locations...... 86 Figure 55: Map of Qingdao City administrative divisions ...... 87

Figure 56: SO2 contour map of worst case 1-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.5 mg/m3) ...... 118

Figure 57: NO2 contour map of worst case 1-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.2 mg/m3)...... 118

Figure 58: PM10 contour map of worst case 1-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and there is no relevant standard)...... 119

Figure 59: SO2 contour map of worst case 24-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.15 mg/m3)...... 121

Figure 60: NO2 contour map of worst case 24-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.08 mg/m3)...... 121

Figure 61: PM10 contour map of worst case 24-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.15 mg/m3)...... 123

Figure 62: SO2 contour map of worst case annual average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.06 mg/m3)...... 125

Figure 63: NO2 contour map of worst case annual average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.04 mg/m3)...... 125

Figure 64: PM10 contour map of worst case annual average concentration, Scenario 1 –

xiii All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.07 mg/m3)...... 126

Figure 65: SO2 contour map of worst case 1-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.5 mg/m3) ...... 131

Figure 66: NO2 contour map of worst case 1-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.2 mg/m3)...... 131

Figure 67: PM10 contour map of worst case 1-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and there is no relevant standard) ...... 132

Figure 68: SO2 contour map of worst case 24-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.15 mg/m3) ...... 135

Figure 69: NO2 contour map of worst case 24-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.08 mg/m3)...... 135

Figure 70: PM10 contour map of worst case 24-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.15 mg/m3) ...... 136

Figure 71: SO2 contour map of worst case annual average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.06 mg/m3) ...... 139

Figure 72: NO2 contour map of worst case annual average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.04 mg/m3)...... 139

Figure 73: PM10 contour map of worst case annual average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.07 mg/m3) ...... 140 Figure 74: Public meeting notice in Qingdao Daily newspaper, July 2015...... 157 Figure 75: Public consultation photographs (2015)...... 158 Figure 76: Four Steps of the Project GRM ...... 165

xiv EXECUTIVE SUMMARY

A. Introduction

1. This is the Initial Environmental Examination (IEE) report for the proposed Qingdao Smart Low-Carbon District Energy Project in the People’s Republic of China (PRC). The proposed project will demonstrate coal-free energy efficient small-scale district energy (heating, cooling, and power) systems in eight different locations in Qingdao City. Instead of coal the project will use a mix of cleaner and renewable heat sources such as natural gas; waste heat recovery from industry and municipal wastewater plants; extracted heat from air, wastewater, and geothermal sources using heat pump technology; solar thermal; and heat storage for peak demand shaving. The project will also demonstrate highly energy efficient low temperature district energy networks and demand-side response smart energy management. The cleaner sources of heat combined with highly energy efficient district energy systems will reduce the emission of greenhouse gases and other air pollutants in Qingdao City.

B. Policy, Legal and Administrative Framework for Environmental Impact Assessment

2. Environmental impact assessment (EIA) procedures have been established in the PRC for over 20 years. Domestic EIA studies are required to be undertaken by relevant PRC environmental laws and regulations. National and local legal and institutional frameworks for EIA review and approval ensure that proposed projects are environmentally sound, designed to operate in line with applicable regulatory requirements, and are not likely to cause significant environment, health, social, or safety hazards.

3. The Safeguard Policy Statement (SPS 2009) establishes the ADB’s EIA requirements. The project has been classified by ADB as environment category B, requiring the preparation of an IEE (this report). All applicable requirements of the SPS have been addressed in this IEE.

C. Project Scope

4. The project will be implemented through nine components:

No. Component Energy Source / Technology 1 Shibei District Binhai Energy Systems Waste heat recovery from industry, natural gas, and wastewater 2 Licang District Houhai Energy Systems Natural gas 3 Licang and Shibei Districts Unit-Based Natural gas Heating and Cooling Systems 4 Shibei District Heat Exchange Stations Natural gas 5 Jidong Subdistrict Energy Systems Natural gas 6 East Licang District Neighborhood Natural gas Heating Systems 7 Shinan District Unit-Based Heating and Natural gas and absorption heat pump Cooling Systems 8 Shibei District Geothermal and Solar Geothermal heat pump and solar Heating Systems heating 9 Smart Energy Management System Heating networks and energy control management

D. Implementation Arrangements

5. The Qingdao Municipal Government (QMG) will be the executing agency (EA) responsible for overall guidance during project preparation and implementation. The QMG consists of the Qingdao Municipal Finance Bureau and the Qingdao Municipal Development and Reform Commission (MDRC). The Qingdao Energy Group (QEG) will be the project implementing agency (IA). The QEG will sign on-lending agreements with the QMG and will be responsible for day-to-day management during project preparation and implementation.

E. Budget and Time Schedule

6. The project cost is estimated at $274.5 million. The PRC government has requested a loan of $130 million from ADB’s ordinary capital resources to help finance the project. The loan will have a 25-year term, including (i) a grace period of 5 years; (ii) a straight-line repayment method; (iii) an annual interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility; (iv) a commitment charge of 0.15% per year; and (v) other terms and conditions set forth in the draft loan and project agreements. The average loan maturity is 15.25 years, and the maturity premium payable to ADB is 0.10% per year.

F. Description of the Environment

Location and Topography

7. The project will be implemented at eight different component locations in Qingdao City, located on the southeastern facing coast of the Shandong Peninsula, Shandong Province, in northeast PRC. Qingdao is a sub-provincial level city comprised of six urban districts and four county-level cities. Seven of the eight components are clustered near the urban core in Shinan, Shibei and Licang Districts, though Component 5 (Jidong Subdistrict Energy Systems) is located 25 km to the northeast in Jidong Subdistrict of Jimo City, a county level city under Qingdao City. Topography in the urban core area is generally flat, though there are several low mountains in the southern area. The Laoshan Mountains separate the urban core of Qingdao from Jidong Subdistrict of Jimo City where Component 5 is located.

Meteorology and Climate

8. Qingdao has an eastern temperate coastal-influenced continental monsoon climate with four distinct seasons: late springs, moderately warm summers, cool autumns and long winters. The southeast monsoon occurs from April to September, while the northwest monsoon occurs from October to March and comes from the Eurasian continent.

Water Resources

9. There are total of 224 rivers in the Qingdao City administrative area, 33 of which have a basin area over 100 km2 and are classified it into three river systems: the Dagu River System, the Beijiaolai River System and the Coastal Rivers System. Three of the project components are located adjacent to rivers.

10. A system of 8 surface water reservoirs form the main water supply source for the Qingdao urban area and Jimo Subdistrict, including Jihongtan Reservoir, 32 km northwest of the city center with a reservoir capacity of 0.147 billion m3, and Laoshan reservoir, 18 km northeast of the city center with a capacity of approximately 56 million m3.

xvi

Ecological and Sensitive Resources

11. All project sites are within city limits in highly developed and modified industrial and urban environments. Surrounding land uses include industrial, mixed commercial, and residential. Original vegetation cover has been previously removed, and existing site vegetation is typically completely absent. There are no known rare or endangered flora or fauna, parks, nature reserves or areas with special national, regional or local ecological significance within or adjacent to any of the sites.

Socioeconomic Conditions

12. Qingdao’s urban population was 2.8 million in 2013, and by the end of 2014 the total permanent population (urban and rural) was 9.0 million. Like many cities in the PRC, Qingdao is experiencing rapid urban growth. In 2012 the built-up urban area of Qingdao increased by 374.64 km2, a growth rate of 7.8%.

13. Qingdao is a major economic center, an important international trade and transportation hub, and one of the PRC’s most important coastal port cities. The secondary and service sectors are the main contributors to the city’s economy. Qingdao’s foreign trade reached US$ 77.91 billion in 2013, of which US $41.99 billion was from export value.

14. The Qingdao Port is one of the key economic drivers in the region and a transportation hub for northern PRC. The Qingdao airport is one of busiest airports in Shandong province and serves more than 20 international passenger and cargo airlines, as well as providing connections to 47 large and medium-sized cities in the PRC. Qingdao is well connected to the highway network; there are five National and four Provincial Expressways that either begin in or pass through the city, and total road length is over 4,300 km. Qingdao is home to the Jiaozhou Bay Bridge, the longest bridge over water in the world.

Physical Cultural Resources

15. Qingdao has a rich history, a unique combination of Chinese and German influenced architecture, and a number of natural and cultural scenic tourist attractions. However, the project activities are all on long developed sites within city limits in highly developed and modified industrial and urban environments. There are no known Physical Cultural Resources (PCRs) within or adjacent to any of the sites.

G. Anticipated Impacts and Mitigation Measures

16. Anticipated positive and negative environmental impacts of the proposed project were assessed based on the domestic feasibility study report (FSR); a technical due diligence review of the FSR undertaken by ADB PPTA district heating specialists; a domestic Environmental Impact Assessment (EIA) report prepared by the Qingdao Environmental Protection Science and Technology Center (QEPSTC); due diligence environmental reviews and assessments of linked and existing related facilities undertaken by national and international environmental consultants; ambient air quality data for the Qingdao urban core area obtained from Qingdao EPB automated continuous air quality monitoring stations; ambient air quality monitoring in Jidong Subdistrict undertaken by QEPSTC; ambient noise monitoring undertaken by Shandong Seatone Detection Evaluation Technology Ltd.; noise modelling undertaken by national environmental consultants; cumulative air quality dispersion modelling undertaken by QEPSTC; public consultations led by the IA and QEPSTC and assisted by ADB PPTA international and national environmental consultants; and site visits, surveys, modelling and consultations undertaken by ADB PPTA national and international environmental consultants.

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17. Pre-construction, construction phase and operation phases were each considered separately. The results of the assessment analysis indicates that during the pre-construction phase issues are very limited, and are mostly associated with ensuring appropriate incorporation of mitigation measures into the project design. The project will not entail any permanent or temporary physical displacement or economic displacement.

18. Potential negative construction phase environmental impacts are short-term and localized, and are associated with soil erosion, construction noise, fugitive dust, disruption of traffic and community services, and risks to worker health and safety. These can be effectively mitigated through good construction and health and safety practices.

19. Potential negative operation phase impacts are associated with boiler emissions, waste and wastewater, noise, and health and safety risks to workers. To minimize emissions and associated impacts the project will provide coal-free energy efficient small-scale district energy utilizing a mix of cleaner and renewable heat sources such as Low NOx natural gas- fired boilers, turbines and engines with design emission levels that are in compliance with the most stringent of PRC national and Shandong provincial standards; waste heat recovery from industry and municipal wastewater plants; extracted heat using heat pump technology; and parabolic trough solar heating. Atmospheric dispersion modelling shows that even the worst case 1-hour, 24-hour and annual averaging period predicted SO2, NO2 and PM10 ground level concentrations (GLCs) resulting from project emissions are fully in compliance with PRC standards.

20. To mitigate noise impacts the project will use low-noise equipment and noise elimination, shock absorption, insulated enclosures and sound dampening materials on exterior walls. Appropriate personal noise protective equipment (PPE) will be provided to the workers who are likely to be exposed to high noise level environments. Wastewater will be treated on site and at municipal wastewater treatment plants, and solid wastes will be collected and recycled or appropriately disposed.

21. As for climate risk assessment to the project, rapid assessment was done and concludes that the risk is medium and the most significant is sea level rise. No specific design modifications appear to be required or justified at design stage, since critical structures are roughly two to four meters above current sea level. Project design lifetime is estimated at 25 years, so that indicative rates of sea level rise of even 1 cm per year suggest that no more than 25 cm of SLR would be anticipated over the project lifespan. These slow- onset risks can be addressed adequately through adaptive incremental interventions.

22. The project will deliver significant positive long-term social impacts to beneficiaries through the delivery of 1,003 megawatt (MW) of heating, 176 MW of cooling, and 79 megawatt of electricity load capcities. This will provide an estimated population of 420,400 in eight locations in Qingdao City with access to clean and highly efficient district energy including 18.3 million m2 of heating area, 1.7 million m2 of cooling area, and 107.9 MWh of electricity. Due to the use of natural gas, the project will annually emit around 493,520 tons of carbon dioxide (CO2), When compared to the equivalent production of energy through traditional coal-fired sources, which is a business-as-usual scenario, once operational the project will: (i) result in annual energy savings equivalent to 537,900 tons of standard coal, thereby providing a global public good by avoiding the annual emission of 1,398,455 tons of CO2, a greenhouse gas; (ii) improve local air quality through the estimated annual reduction of emissions of sulfur dioxide (SO2) by 12,909 tons, nitrogen oxides (NOx) by 3,765 tons, and particulate matter (PM) by 5,379 tons; and (iii) eliminate the negative impacts of coal transportation through urban areas by truck or train.

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H. Alternative Analysis

23. The district heating area in Qingdao has increased rapidly from 16.18 million m2 in 2004 to 69.02 million m2 in 2014, an annual growth rate of 15.8%. There is an urgent need to construct new heating infrastructure, but traditional coal-based large scale district heating systems is no longer an option in Qingdao due to worsening air quality. The project’s implementation will (i) help meet rapidly increased heating and cooling demand; (ii) significantly reduce coal consumption; (iii) improve air quality; and, (iv) reduce GHG emissions. Base on the analysis of alternatives, the project has selected a range of appropriate small-scale district energy systems, sustainable energy sources, high energy efficient systems, thermal storage systems, low NOx burners, pipelines, and heat exchange stations (HESs).

I. Information Disclosure and Public Consultations

24. Project public information was disclosed on the IAs website in June 2015, and the Qingdao EPB posted the domestic EIA report on its website also in June 2015. The ADB will post this IEE on its website in July 2015.

25. The IA undertook two public consultation meetings in July 2015 in which information was presented on the project status, potential environmental impacts and proposed mitigation measures. Meeting participants were asked to complete a questionnaire, and two rounds of questionnaire based surveys were also undertaken in the Qingdao urban area and Jidong Subdistrict areas. A total of 154 questionnaires were distributed. Most of the respondents work and live within a 5 km radius of a project component, and 70.1% knew about project either from the internet, newspapers or information signs. Air quality, noise and dust were identified as the top three issues during both the construction phase and the operation phase. However, most participants also indicated that potential air, waste water, solid waste and noise impacts can be appropriately mitigated. Overall 93.5% of respondents indicated that they support the proposed project.

J. Grievance Redress Mechanism

26. A project-level grievance redress mechanism (GRM) has been established to receive and facilitate resolution of complaints about the project during the construction and operation phases. The GRM includes procedures for receiving grievances, recording/ documenting key information, and evaluating and responding to the complainants in a reasonable time period. Any concerns raised through the GRM will be addressed quickly and transparently, and without retribution to the affected person.

K. Environmental Management Plan

27. A comprehensive EMP was developed to ensure: (i) implementation of identified mitigation and management measures to avoid, reduce, mitigate, and compensate for anticipated adverse environment impacts; (ii) implementation of monitoring and reporting against the performance indicators; and (iii) project compliance with the PRC’s relevant environmental laws, standards and regulations and the ADB’s SPS. The EMP includes an environment monitoring plan (EMoP) to monitor the environmental impacts of the project and assess the effectiveness of mitigation measures, and a capacity building and training program focused on health, safety and environment. Organizational responsibilities and budgets are clearly identified for execution, monitoring and reporting. The EMP is presented in Appendix I.

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L. Conclusion

28. The project environmental assessment process has: (i) selected appropriate technologies to reduce the emission of pollutants; (ii) identified potential negative environment impacts and appropriately established mitigation measures; (iii) received public support from the project beneficiaries and affected people; (iv) established effective project GRM procedures; and (v) prepared a comprehensive EMP including environmental management and supervision structure, environmental mitigation and monitoring plans, and capacity building and training.

29. Overall, any minimal adverse environmental impacts associated with the project can be prevented, reduced, or minimized through the appropriate application of mitigation measures. It is therefore recommended that: (i) the project’s categorization as ADB environment category B is confirmed; (ii) this IEE is considered sufficient to meet ADB’s environmental safeguard requirements for the project, and no additional studies are required; and (iii) the project be supported by ADB, subject to the implementation of the commitments contained in the EMP and allocation of appropriate technical, financial and human resources by the EA and IA to ensure these commitments are effectively and expediently implemented.

I. INTRODUCTION

A. The Project

1. This is the Initial Environmental Examination (IEE) report for the proposed Qingdao Smart Low-Carbon District Energy Project in the People’s Republic of China (PRC).

2. The proposed project will demonstrate coal-free energy efficient small-scale district energy (heating, cooling, and power) systems in eight different component locations in Qingdao City, located on the eastern coast of Shandong Province in northeast PRC (Figure 1). Instead of coal the project will use a mix of cleaner and renewable heat sources such as natural gas; waste heat recovery from industry and municipal wastewater plants; extracted heat from air, wastewater, and geothermal sources using heat pump technology; solar thermal; and heat storage for peak demand shaving.

3. The project will also demonstrate highly energy efficient low temperature district energy networks and demand-side response smart energy management. The cleaner sources of heat combined with energy efficient district energy systems will reduce the emission of greenhouse gases and other air pollutants in Qingdao City.

4. The project will be implemented through nine components:

5. The Qingdao Municipal Government (QMG) will be the executing agency (EA) responsible for overall guidance during project preparation and implementation. The QMG consists of the Qingdao Municipal Finance Bureau and the Qingdao Municipal Development and Reform Commission. The Qingdao Energy Group (QEG) will be the project implementing agency (IA). QEG will sign on-lending agreements with QMG and will be responsible for management during project preparation and implementation.

Figure 1: Project Location, Qingdao City, Shandong Province, People’s Republic of China.

6. Upon project implementation, polluting household coal-based stoves, individual electric heaters and air conditioners that are currently in use in project ares will be shot down or no longer in use. The carbon dioxide emissions of the project will be around 490,000 tons per annum due to the use of natural gas. However, comparing to the business-as-usual scenario, the project will annually (i) avoid 537,900 tons of standard coal, (ii) reduce 1,398,455 tons of carbon dioxide (CO2); (ii) improve local air quality through the estimated annual reduction of emissions of sulfur dioxide (SO2) by 12,909 tons, nitrogen oxides (NOx) by 3,765 tons, and particulate matter (PM) by 5,379 tons; and (iii) eliminate the negative impacts of coal transportation through urban areas by truck or train. The project will not cause any loss of jobs due to its environmental interventions.

7. A rapid climate risk assessment was performed by an external climate adaptation expert (Appendix II). Main climate risk is associated with sea level rise as the project location is in coastal city of Qingdao. The expert’s assessment concludes, however, No specific design modifications appear to be required or justified at design stage, since critical structures are roughly two to four meters above current sea level. These slow-onset risks can be addressed adequately through adaptive (incremental) interventions.

B. Report Purpose

8. ADB’s environmental safeguard requirements are specified in the Safeguard Policy Statement (SPS 2009). The project has been screened and classified by ADB as Environment Category B, requiring the preparation of an IEE including an environmental management plan (EMP). This IEE has been prepared in compliance with the ADB’s SPS requirements.

C. Approach to IEE Preparation

9. This IEE report has been prepared based on the project domestic Feasibility Study Report (FSR)1; a technical due diligence review of the FSR undertaken by ADB PPTA district heating specialists; a domestic simplified tabular Environmental Impact Assessment (EIA) report prepared by the Qingdao Environmental Protection Science and Technology Center (QEPSTC) 2 ; due diligence environmental reviews and audits of existing and associated facilities undertaken by ADB PPTA national and international environmental consultants; ambient air quality data for the Qingdao urban core area collected from Qingdao EPB automated continuous air quality monitoring stations; ambient air quality monitoring in Jidong Subdistrict undertaken by Shandong Seatone Detection Evaluation Technology Ltd.; ambient noise monitoring undertaken by QEPSTC; noise modelling undertaken by ADB PPTA national environmental consultants; cumulative air quality dispersion modelling undertaken by QEPSTC; public consultations led by the IA and QEPSTC; and site visits, surveys, modelling and consultations undertaken by ADB PPTA national and international environmental consultants.

D. Report Structure

10. This IEE report consists of an executive summary, nine chapters and five appendixes. The report is structured as follows:

1 Qingdao Smart Low Carbon District Energy System Reconstruction and Expansion Project Feasibility Study Report, 2015, prepared by China Aviation Planning and Construction Development Co. Ltd. Hereafter referred to as the Qingdao Project Domestic FSR (2015). 2 Construction Project Environmental Impact Assessment (EIA) Report No. HB150051: Qingdao Smart Low- Carbon Energy System Reconstruction Project. Prepared June 24, 2015. Hereafter referred to as the Domestic EIA Report (2015).

3 Executive Summary Summarizes critical facts, significant findings, and recommended actions.

I Introduction Introduces the proposed project, report purpose, approach to IEE preparation and IEE structure.

II Policy, Legal, and Administrative Framework Discusses PRC’s and ADB’s environmental assessment legal and institutional frameworks, status of approval of the domestic EIA reports, and applicable environmental guidelines and standards.

III Description of the Project Describes the project rationale, scope, components, location, key features, implementation arrangements, budget and time schedule.

IV Description of the Environment Describes relevant physical, biological, and socioeconomic conditions within the project area.

V Anticipated Environmental Impacts and Mitigation Measures Describes impacts predicted to occur as a result of the project, and identifies the mitigation measures which will be implemented. .

VI Analysis of Alternatives Presents an analysis of project alternatives undertaken to determine the best way of achieving the project objectives while minimizing environmental and social impacts.

VII Information Disclosure, Consultation, and Participation Describes the process undertaken for engaging stakeholders and carrying out IEE disclosure and public consultation.

VIII Grievance Redress Mechanism Describes the project grievance redress mechanism (GRM) for resolving complaints.

IX Conclusion and Recommendation Presents conclusions drawn from the assessment and recommendations.

Appendixes Appendix I presents the environmental management plan (EMP), including required construction and operation phase environmental mitigation measures, an environmental monitoring plan (EMoP), reporting requirements, and capacity building. Other appendices present due diligence reviews of existing and associated facilities, supporting documentation and approvals, and coal and emission reduction factors and calculations.

4 II. POLICY, LEGAL AND ADMINISTRATIVE FRAMEWORK

11. This IEE and the domestic EIA upon which it is based have been prepared in accordance with both the PRC’s national and local environmental legal and institutional framework and environmental assessment requirements, and applicable ADB policies, regulations, requirements, and procedures.

A. PRC Environmental Legal Framework

12. The environmental protection and management system in the PRC consists of a well- defined hierarchy of regulatory, administrative and technical institutions. At the top level the People’s Congress of the PRC has the authority to pass and revise national environmental laws; the Ministry of Environmental Protection (MEP) under the State Council promulgates national environmental regulations; and the MEP either separately or jointly with the Administration of Quality Supervision, Inspection and Quarantine issues national environmental standards. Provincial and local governments can also issue provincial and local environmental regulations and guidelines in accordance with the national ones. In addition, national and local five-year environmental protection plans form an important part of the legal framework.

13. Key PRC environmental laws are listed in Table 1. The implementation of environmental laws is supported by a series of associated management and technical guidelines issued by the MEP, summarized in Table 2.

Table 1: Applicable PRC environmental laws.

No. Title of the Law Year Issued/Updated 1 Environmental Protection Law 2014 2 National Environmental Impact Assessment Law 2002 3 Water Law 2002 4 Water Pollution Prevention and Control Law 2008 5 Air Pollution Prevention and Control Law 2000 6 Noise Pollution Control Law 1996 7 Solid Waste Pollution Prevention and Control Law 2005 8 Water and Soil Conservation Law 2010 9 Forest Law 1998 10 Wild Fauna Protection Law 2004 11 Energy Conservation Law 2007 12 Cleaner Production Promotion Law 2012 13 Urban and Rural Planning Law 2007 14 Land Administration Law 2004 Source: ADB PPTA consultants.

5 Table 2: Applicable PRC environmental management and assessment guidelines.

Code and/or Year No. Guideline Issued/Updated 1 Guideline for Technical Review of EIA on Construction Projects HJ 616-2011 2 Management Guideline on EIA Categories of Construction Projects 2008 Further Enhance the Management of EIA and Preventing 3 2012 Environmental Risks Guideline on Jurisdictional Division of Review and Approval of EIAs for 4 2009 Construction Projects 5 Guideline on EIA Categories of Construction Projects 2015 6 Interim Guideline on Public Consultation for EIA 2006 7 Technical Guidelines for EIA – General Program HJ 2.1-2011 8 Technical Guideline for EIA – Atmospheric Environment HJ 2.2-2008 9 Technical Guideline for EIA – Surface Water HJ/T 2.3-1993 10 Technical Guideline for EIA – Acoustic Environment HJ 2.4-2009 11 Technical Guideline for EIA – Groundwater Environment HJ 610-2011 12 Technical Guideline for EIA – Ecological Impact HJ 19-2011 Technical Guidelines for Environmental Risk Assessment for 13 HJ/T 169-2004 Construction Projects Source: ADB PPTA consultants.

14. In addition to environmental laws and regulations, there are occupational health and safety laws and regulations the IA must comply with, including the PRC Safety Production Law (2014), State Administrative Regulations of Safety Production (2003), and PRC Prevention and Control of Occupational Diseases Law (2011).

B. PRC Environmental Impact Assessment Framework

15. EIA procedures have been established in the PRC for over 20 years. Article 16 of the PRC Law on Environmental Impact Assessment (2003)3 stipulates that an EIA document is required for any capital construction project producing significant environmental impacts. Projects are classified into three categories:

(i) Category A: projects with significant adverse environmental impacts, for which a full EIA report is required; (ii) Category B: projects with adverse environmental impacts which are of a lesser degree and/or significance than those of Category A, for which a simplified tabular EIA report is required; and (iii) Category C: projects unlikely to have adverse environmental impacts, for which an EIA registration form is required.

16. A full EIA report for category A and a simplified tabular EIA report for category B are similar to ADB’s EIA and IEE reports, respectively. The registration form of an EIA is similar to an ADB Category C project (see section II.H for more information on ADB’s EIA requirements).

3 National Environmental Impact Assessment Law, published on Oct 28 2002 and implemented in Sep 1, 2003.

6 17. In 2008 the MEP issued “Management Guideline on EIA Categories of Construction Projects” (revised 2015). The MEP guidelines provide detailed EIA requirements for 23 sectors and 199 subsectors based on the project’s size, type (e.g., water resources development, agriculture, energy, waste management, etc.), and site environmental sensitivity (e.g., protected nature reserves and cultural heritage sites).

18. The MEP’s “Guidelines on Jurisdictional Division of Review and Approval of EIAs for Construction Projects” (2009) defines which construction project EIAs require MEP review and approval, and which EIAs are delegated to the provincial EPBs.

C. Project Domestic EIA Report

19. The project was categorized as B under the PRC National EIA Law and Qingdao EPB requirements. A simplified tabularDomestic EIA Report covering all components was prepared by the Qingdao Environmental Protection Science and Technology Center (QEPSTC) and was approved by the Qingdao EPB on 6 July 2015.

D. Due Diligence Reviews of Existing Related and Linked Facilities

20. Component 1 (Shibei District Binhai Energy Systems) will be located within the premises of the existing Qingdao Energy Taineng Thermal Power Plant (Taineng TPP) and will source waste heat from the Huadian Qingdao Combined Heat and Power Plant (Huadian CHP) and the Licun River Wastewater Treatment Plant (Licun River WWTP). Component 1 uses available land within the premise of Taineng TPP and is not related to any of Taineng TPP’s production and operation. No added capcity or modification would be made in Taineng TPP. The Huadian Qingdao Combined Heat and Power Plant (Huadian CHP) and the Licun River Wastewater Treatment Plant (Licun River WWTP) are considered as associated faciltiies as they are not funded as part of the project; their viability and existence depend exclusively on the project; and their services are essential for successful operation of the project. No added capcity or modification would be made in Huadian CHP and Licun River WWTP. Even though the ADB Safeguard Policy Statement (SPS) does not require, environmental due diligence on these facilities was performed.

21. Component 2 (Licang District Houhai Energy Systems) will be also located within the premises of the Houhai TPP. Component 2 uses available land within the premise of Houhai TPP and is not related to any of Houhai TPP’s production and operation. No added capcity or modification would be made in Houhai TPP Even though the ADB Safeguard Policy Statement (SPS) does not require, environmental due diligence on Houhai TPP was also performed.

22. Due diligence reviews of the project existing related and linked facilities are presented in Appendix III.

E. Relevant International Agreements

23. The PRC has signed a number of international agreements regarding environmental and biological protection. Those which have potential application to the project are listed in Table 3.

Table 3: Applicable international agreements.

No. Agreement Year Purpose 1 United Nations Framework Convention on 1994 Stabilization of greenhouse gas Climate Change concentrations in the atmosphere 2 Kyoto Protocol to the United Nations 2005 Further reduction of greenhouse gas

7 No. Agreement Year Purpose Framework Convention on Climate Change emissions 3 Montreal Protocol on Substances That 1989 Protection of the ozone layer Deplete the Ozone Layer Source: ADB PPTA consultants.

F. Other Relevant Guidelines

24. During the design, construction, and operation of a project the ADB SPS requires the borrower to follow environmental standards consistent with good international practice (GIP), as reflected in internationally recognized standards such as the World Bank Group’s Environment, Health and Safety Guidelines (hereafter referred to as the EHS Guidelines).4 The EHS Guidelines contain discharge effluent, air emissions, and other numerical guidelines and performance indicators as well as prevention and control approaches that are normally acceptable to ADB and are generally considered to be achievable at reasonable costs by existing technology. When host country regulations differ from these levels and measures, the borrower/client is to achieve whichever is more stringent. If less stringent levels or measures are appropriate in view of specific project circumstances, the borrower/client is required to provide justification for any proposed alternatives.

25. The EHS Guidelines include General EHS Guidelines (covering environment; occupational health and safety; and community health and safety) and Industry Sector Guidelines. Relevant guidelines referenced in this report include the General EHS Guidelines and the EHS Guidelines for Thermal Power Plants.

G. Applicable Standards

26. The environmental quality standard system that supports the implementation of the environmental protection laws and regulations in the PRC is classified into two categories by function: ambient environmental standards and pollutant emission/discharge standards. The main standards applicable to the project are presented in Table 4.

1. Ambient Air Quality

27. Ambient air quality limits are intended to indicate safe exposure levels for the majority of the population, including the very young and the elderly, throughout an individual’s lifetime. Limits are given for one or more specific averaging periods, typically one-hour average, 24- hour average, and/or annual average. The PRC’s recently updated Ambient Air Quality Standards (GB3095-2012) has two classes of limit values; Class 1 standards apply to special areas such as natural reserves and environmentally sensitive areas, and Class 2 standards apply to all other areas, including urban and industrial areas. The PRC standards for Class 2 areas are applicable for the project.5

28. The World Health Organization (WHO) Air Quality Guidelines are recognized as international standards and are adopted in the World Bank Group’s Environment, Health and Safety (EHS) Guidelines. In addition to guideline values, interim targets (IT) are given for each pollutant by the WHO as incremental targets in a progressive reduction of air pollution.

4 World Bank Group, Environmental, Health, and Safety Guidelines, April 30, 2007, Washington, USA. http://www.ifc.org/ifcext/enviro.nsf/Content/EnvironmentalGuidelines 5 On 29 February 2012, the China State Council passed the roadmap for ambient air quality standards with the aim of improving the living environment and protecting human health. The Ambient Air Quality Standards (GB 3095-2012) prescribes the first-ever limits for PM2.5. It also modified the previous area classifications by combining Class III (special industrial areas) with Class II (residential, mixed use areas).

8 The WHO guidelines and corresponding PRC standards are presented in Table 5.

 For TSP, there are PRC standards but no corresponding WHO guidelines.

 For PM10 PRC Class 2 annual average and 24-hour average standards meet WHO IT-1 guidelines (there are no 1-hour average standards or guidelines for either PRC or WHO).

Table 4: Applicable PRC environmental standards.

No. Standard Code/Date 1 Ambient Air Quality Standards GB 3095-2012 2 Groundwater Quality Standard GB/T 14848-93 3 Surface Water Quality Standards GB 3838-2002 4 Sea Water Quality Standard GB 3097-1997 5 Environmental Quality Standards for Noise GB 3096-2008 6 Noise Standards for Construction Site Boundary GB 12523-2011 7 Noise Standards for Industrial Enterprises at Site Boundary GB 12348-2008 8 Integrated Emission Standard of Air Pollutants GB 16297-1996 9 Integrated Wastewater Discharge Standard GB 8978-1996 Emission Standards of Air Pollutants from Coal-Burning, Oil-Burning GB 13271-2014 10 and Gas-Fired Boilers 11 Integrated Emission Standard of Air Pollutants in Shandong province DB 37/2376-2013 12 Wastewater Quality Standards for Discharge to Municipal Sewers CJ 343-2010 Emission Standards of Air Pollutants from Thermal Power Plant in DB 37/664-2013 13 Shandong Province Emission Standards of Air Pollutants from Coal-Burning, Oil-Burning DB 37/2374-2013 14 and Gas-Fired Boilers in Shandong Province 15 Qingdao Urban Fugitive Dust Pollution Control Regulation October 10, 2002 16 Shandong Fugitive Dust Pollution Control Regulation March 1, 2012 17 PRC National Standard for Wind Power Classification GB/T 28591-2012 Limits and Measurement Methods for Crankcase Pollutants from GB 11340-2005 18 Heavy-duty Vehicles Equipped with P.I. Engines Emission Limits and Measurement Methods for Exhaust Pollutants GB 17691-2005 19 from Vehicle Compression-Ignition and Gas Fueled Ignition Engines Limits and Measurement Methods for Exhaust Pollutants from GB 18285 -2005 20 Vehicles Equipped with Ignition Engines Under Two-Speed Idle Conditions and Simple Driving Mode Conditions Limits and Measurement Methods for Emissions from Light Duty GB 18352-2005 21 Vehicles Source: ADB PPTA Consultants.

 For PM2.5 PRC Class 2 annual and 24-hour standards meet WHO IT-1 guidelines (there are no 1-hour standards or guidelines for either PRC or WHO). 3  For SO2 WHO only has a 24-hour average guideline (.125 mg/m ), which is slightly 3 lower than the PRC standard (.150 mg/m ). However, SO2 levels are low in the project area, and the project will only contribute extremely low levels of SO2, so the very minor difference is inconsequential.

 For NO2 the PRC standard is equivalent to the WHO annual average guidelines,

9 there is no WHO 24-hour average guideline; and the 1-hour average PRC standard is equivalent to the WHO guideline.

29. Overall the PRC standards show a high degree of equivalency to the WHO guidelines or IT-1 values, and are adopted for use in the EIA report.

Table 5: PRC ambient air quality standards (GB3095-2012) and WHO ambient air quality guidelines, mg/m3.

Standard TSP PM10 PM2.5 SO2 NO2 O3 CO WHO Ambient Air Quality Guidelines Annual mean -- .020 .010 -- .040 -- -- Annual mean IT-1 -- .070 .035 ------24-hr mean -- .050 .025 .020 ------24-hr mean IT-1 -- .150 .075 .125 ------8-hr mean ------.100 --

8-hr mean IT-1 ------.160 -- 1-hr mean ------.200 .030 1-hr mean IT-1 ------PRC Ambient Air Quality Standard (Class 2) Annual mean .200 .070 .035 .060 .040 -- -- 24-hr mean .300 .150 .075 .150 .080 -- .004 8-hr mean ------.160 -- 1-hr mean ------.500 .200 .200 .010 Source: WHO Air Quality Guidelines (2006) in the EHS Guidelines (2007), and PRC GB 3095-2012.

2. Groundwater

30. The EHS Guidelines do not provide ambient ground water standards but state that wastewater discharges should not result in contaminant concentrations in excess of local ambient water quality criteria or, in the absence of local criteria, other sources of ambient water quality. Therefore the PRC groundwater water quality standards are utilized in this report. The applicable standard is Class IV (Qingdao urban area) and Class III and IV (Jidong Subdistrict in Jimo City) of GB/T14848-93 Quality Standard for Ground Water (Table 6).

10 Table 6: Applicable groundwater standard (Class III, GB/T14848-93 Quality Standard for Ground Water). No Item Unit Limit (Class III) Limit (Class IV) 1 pH - 6.5-8.5 5.5-6.5, 8.5-9 2 Sulfate mg/L ≤250 ≤350 3 Volatile Phenols mg/L ≤0.002 ≤0.01 4 Total hardness (CaCO3) mg/L ≤450 ≤550 5 Ammonia nitrogen mg/L ≤0.2 ≤0.5 6 Molybdenum mg/L ≤0.1 ≤0.5 7 Cyanide mg/L ≤0.05 ≤0.1 8 Chloride mg/L ≤250 ≤350 9 Cadmium mg/L ≤0.01 ≤0.01 10 Cr VI mg/L ≤0.05 ≤0.1 11 Arsenic mg/L ≤0.05 ≤0.05 12 Zinc mg/L ≤1.0 ≤5.0 13 Fluoride mg/L ≤1.0 ≤2.0 14 Lead mg/L 0.05 ≤0.1 15 Permanganate index mg/L 3.0 ≤10 16 Iron mg/L 0.3 ≤1.5 17 Manganese mg/L ≤0.1 ≤1.0 18 Copper mg/L ≤1.0 ≤1.5 19 Selenium mg/L ≤0.01 ≤0.1 20 Total coliforms /L ≤3.0 ≤100 Source: Based on domestic EIA Report.

3. Noise

31. Table 7 presents the relevant PRC Urban Noise Standards compared with relevant international guidelines from the WHO (as presented in the EHS Guidelines). The classes within the standards are not directly comparable, but PRC Class II standards exceed WHO Class II standards and are within 5 dB(A) of WHO Class I standards. PRC noise standards are utilized in this report.

Table 7: PRC Environmental Quality Standards for Noise (GB3096-2008) and relevant international guidelines. PRC Standards International Standards Comparison Leq dB(A) One Hour Leq dB(A) Class Day Night Day Night 06-22h 22-06h 07-22h 22-07h 0: special health zone 50 40 WHO Class I: WHO Class I: Classes are not I: mixed residential; and 55 45 residential, Residential, directly education areas institutional, institutional, comparable, but II: mixed residence, 60 50 educational: educational: PRC Class II commercial and 55 45 standards exceed industrial areas WHO Class II III: industrial areas 65 55 WHO Class II: WHO Class II: standards. PRC IV: A(road traffic areas) 70 55 industrial, Industrial, standards are B (road traffic commercial: Commercial: utilized in this aareas) 70 60 70 70 report.

Source: Unofficial translation of Chinese original by the ADB PPTA consultant.

11 4. Turbine and Boiler Plant Emissions

32. Table 9 presents the relevant PRC national and Shandong Province gas turbine and gas boiler emission standards compared with relevant international standards (EHS Guidelines). The PRC standards exceed the EHS Guidelines, and the most stringent of the national and provincial standards are applicable to the project.

5. Industrial Noise Emissions

33. Table 8 presents the relevant PRC and international standards (US EPA, there no such WHO or EHS Guidelines standards) for on-site construction noise. The PRC standards are more stringent than international guidelines, and are utilized in this report.

Table 8: PRC Noise Standard for Construction Site Boundary (GB12523- 2011) and relevant international guidelines. Day Leq dB(A) Night Leq dB(A) International Comparison Standards Leq dB(A) PRC standards US EPA: 85 (day, meet or exceed 70 55 8 hour exposure) international standards Source: Unofficial translation of Chinese original by the ADB PPTA consultant.

12 Table 9: Relevant PRC Natural Gas Fired and/or Fueled Boiler, Turbine and Engine Emission Standards and Relevant International Guidelines. Parameter Emission Standards of Air Emission Standards of Emission Standards of Air EHS Guidelines for Small Comparison Pollutants from Coal- Air Pollutants from Pollutants from Coal- Combustion Facilities Burning, Oil-Burning and Thermal Power Plant Burning, Oil-Burning and Emissions Guidelines Gas-Fired Boilers in Shandong Province Gas-Fired Boilers in (3MWth – 50MWth) (Table 3 of GB 13271-2014) (Table 2 DB 37/664- Shandong Province 2013) (Table 2 of DB 37/2374- (Applies to newly built 2013) natural gas boilers less than (Applies to all new 65 t/h, in key protection natural gas turbines and (Applies to new natural gas regions (e.g. Qingdao), and gas-fired engine boilers less than 65 t/h) gas-fired engine generators generators more than less than 45.5 MW) 45.5 MW) Design stack height Stack height is determined Stack height is determined according to Good according to the according to the International Stack PRC standard meets requirements in the NA requirements in the Practice (GIP) to avoid Height GIP approved EIA, and must be approved EIA, and must be excessive ground level ˃ 8 m. ˃ 8 m. concentrations and minimize impacts. PM 20 mg/Nm3 5 mg/Nm3 10 mg/Nm3 NA No EHS guideline.

3 3 3 SO2 50 mg/Nm 35 mg/Nm 100 mg/Nm NA No EHS guideline. 50 mg/Nm3 (gas turbines) PRC standard is more 3 3 3 NOx 150 mg/Nm 250 mg/Nm 240 mg/Nm stringent than the 100 mg/Nm3 (gas EHS guidelines engines) Source: Unofficial translation of Chinese original standards by the ADB PPTA consultant, and World Bank 2007.

Note: DB 37/664-2013 applies to all types of gas turbines in Shandong Province and its standards are applicable. DB 37/2374-2013 and GB 13271-2014 jointly apply to gas boilers, and the most stringent standard in each are applicable.

13 34. Table 10 presents the relevant PRC and international standards for noise at the boundary of an industrial facility during operation. The classes within the standards are not directly comparable, but PRC Class II standards exceed WHO Class II standards and are within 5 dB(A) of WHO Class I standards. Taking into consideration the mixed residential, commercial and industrial characteristics of the component sites, the PRC noise standards are utilized in this report.

Table 10: PRC Noise Standards for Industrial Enterprises at Site Boundary (GB12348-2008) and relevant international guidelines.

PRC Standards International Standards Comparison Leq dB(A) Leq dB(A) Class Day Night Day Night 06-22h 22-06h 07-22h 22-07h 0: recuperation areas 50 40 WHO Class I: WHO Class I: Classes are not residential, Residential, directly I: mixed residential; and 55 45 institutional, comparable, but education areas institutional, educational: educational: PRC Class II II: mixed with residence, 60 50 55 45 standards exceed commercial and WHO Class II industrial areas WHO Class II: standards and are WHO Class II: very close (within III: industrial areas 65 55 industrial, Industrial, 5 dB (A) to WHO IV: areas within 10 m on 70 55 commercial: commercial: Class I standards). both sides of traffic 70 70 PRC standards roadways are utilized in this report Source: Unofficial translation of Chinese original by the ADB PPTA consultant.

6. Wastewater Emissions

35. Table 11 presents the relevant PRC wastewater emission standards. The EHS Guidelines indicate that wastewater discharged to public or private wastewater treatment systems should: meet the pretreatment and monitoring requirements of the sewer treatment system into which it discharges; not interfere, directly or indirectly, with the operation and maintenance of the collection and treatment systems, or pose a risk to worker health and safety, or adversely impact characteristics of residuals from wastewater treatment operations; and be discharged into municipal or centralized wastewater treatment systems that have adequate capacity to meet local regulatory requirements for treatment of wastewater generated from the project.

36. Project components will discharge wastewater to the municipal sewer systems for treatment at one of three municipal wastewater treatment plants (WWTPs). The components wastewater discharges will be required to meet Class B maximum acceptable concentrations (MACs) in Wastewater Quality Standards for Discharge to Municipal Sewers (CJ 343-2010), and the WWTP discharges are required to meet Class 1A of Discharge Standard of Pollutants for Municipal Wastewater Treatment Plants (GB 18918-2002).

14 Table 11: PRC Wastewater Quality Standards for Discharge to Municipal Sewers (CJ 343-2010) Maximum acceptable concentration No Pollutant (MAC) mg/L (except pH and chromacity) Class B 1 pH 6.5-9.5 2 SS 400 3 COD 500 4 Ammonia nitrogen 45 5 TDS 2000 6 Chromacity 70 7 BOD 350 8 Total phosphorus 8 Source: Unofficial translation of Chinese original by the ADB PPTA consultant.

H. Applicable ADB Policies, Regulations and Requirements

37. The major applicable ADB policies, regulations, requirements and procedures for EIA are the Environmental Safeguards – A Good Practice Sourcebook (2012), and the Safeguard Policy Statement (SPS, 2009), which jointly provide the basis for this IEE. The SPS promotes good international practice as reflected in internationally recognized standards such as the World Bank Group’s EHS Guidelines. The policy is underpinned by the ADB Operations Manual for the SPS (OM Section F1, 2010).

38. The SPS establishes an environmental review process to ensure that projects undertaken as part of programs funded through ADB loans are environmentally sound, are designed to operate in line with applicable regulatory requirements, and are not likely to cause significant environment, health, social, or safety hazards.

39. At an early stage in the project cycle, typically the project identification stage, ADB screens and categorizes proposed projects based on the significance of potential project impacts and risks. A project’s environment category is determined by the category of its most environmentally sensitive component, including direct, indirect, induced, and cumulative impacts. Project screening and categorization are undertaken to:

i) reflect the significance of the project’s potential environmental impacts;

ii) identify the type and level of environmental assessment and institutional resources required for the safeguard measures proportionate to the nature, scale, magnitude and sensitivity of the proposed project’s potential impacts; and,

iii) determine consultation and disclosure requirements.

40. ADB assigns a proposed project to one of the following categories:

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

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

iii) Category C. Proposed project is likely to have minimal or no adverse environmental impacts. No EIA or IEE is required although environmental implications need to be reviewed.

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

41. The project has been classified by ADB as environment category B, requiring the preparation of an IEE (this report).

42. The SPS 2009 requires a number of additional considerations, including: (i) project risk and respective mitigation measures and project assurances; (ii) project-level grievance redress mechanism; (iii) definition of the project area of influence; (iv) physical cultural resources damage prevention analysis; (v) climate change mitigation and adaptation; (vi) occupational and community health and safety requirements (including emergency preparedness and response); (vii) economic displacement that is not part of land acquisition; (viii) biodiversity conservation and natural resources management requirements; (ix) provision of sufficient justification if local standards are used; (x) assurance of adequate consultation and participation; and (xi) assurance that the EMP includes an implementation schedule and measurable performance indicators. These requirements, which may not be covered in the domestic EIA, have been considered, and all applicable environmental requirements in the SPS 2009 are covered in this IEE.

16 III. PROJECT DESCRIPTION

A. The Project

43. The proposed project will demonstrate coal-free energy efficient small-scale district energy (heating, cooling, and power) systems in eight different locations in Qingdao City. Instead of coal the project will use a mix of cleaner and renewable heat sources such as natural gas; waste heat recovery from industry and municipal wastewater plants; extracted heat using heat pump technology from various sources such as air, wastewater, and geothermal; solar thermal; and heat storage for peak demand shaving. It will also demonstrate highly energy efficient low temperature district energy networks and demand- side response smart energy management. Upon the project implementation, polluting coal- fired house stoves will be shut down, and individual electric heaters and air conditioners will be no longer in need in the project areas. The cleaner sources of heat combined with highly energy efficient district energy systems will reduce the emission of greenhouse gases and other air pollutants in Qingdao City.

B. Project Location

44. The project will be implemented at eight different component locations in Qingdao City, located on the eastern coast of Shandong Province, in northeast PRC (Figure 1). Qingdao is a subprovincial level city and is comprised of six urban districts and four rural county-level cities. Seven of the eight components are clustered near the urban core in Shinan, Shibei and Licang Districts, though Component 5 (Jidong Subdistrict Energy Systems) is located 25 km to the northeast in Jidong Subdistrict of Jimo City, a county-level city under Qingdao City (Figure 2).

C. Project Rational

45. Qingdao, the 18th largest city in the PRC, is situated in the northeastern part of the country. The winter temperature drops to as low as –17 degree Celsius (°C), and sub-zero temperatures typically last for 5 months a year; under this climate heating service is an essential requirement for sustaining people’s livelihoods. Current district heating coverage in Qingdao is approximately 69 million m2, and demand is increasing substantially due to rapid ongoing urban expansion. The existing system is a large scale district heating system driven by coal-fired heat source plants (HSPs) or combined heat and power (CHP) plants. However, the expansion of the existing coal-based district heating system to meet the increased demand is not an option as Qingdao has been experiencing significant pollution problems in the winter heating seasons including hazy skies and high levels of particulates. Thus, other alternatives to meet the growing heat demand are urgently required.

46. Instead of a conventional large scale heating system, the project aims to build a wide range of smaller scale heating systems, including unit-based (, which is uselly installed within existing buildings and provides energy services to one or groups of buildings), neighborhood-based and community-based systems heating up to several million m2. These small scale systems are more flexible allowing (i) the use of different clean and renewable energy sources; and (ii) co-generation and/or tri-generation so that the systems can provide not only heating but also cooling and electricity to end-users who are not currently covered by existing district heating networks. The project will also provide small scale energy system supporting measures, such as additional boilers and/or heat exchangers, that will be added to the existing heating network in order to increase heat supply capacity and to enhance

17 overall system efficiency.

18 Figure 2: Project component and subcomponent locations.

No Project Component Subcomponent Map Key District Industrial Waste Heat Recovery System Shibei District Binhai Energy 1 Binhai Community-Based Energy System PC1 Shibei Systems Wastewater Heat Recovery System Licang District Houhai Energy Houhai Community Based Energy System 2 PC2 Licang Systems Qingdao North Railway Community Based Energy system Qingdao Subway Control Center Unit-Based Energy PC3-1 Licang System Licang District Unit-Based Jieneng Company Headquarter Unit-Based Energy 3 PC3-2 Shibei Heating and Cooling Systems System Dongli Commercial Complex Unit-Based Heating and PC3-3 Licang Cooling System Shibei District Heat Exchange 4 NA PC4 Shibei Stations No 1 Commercial Complex Energy System Jidong Subdistrict Jidong Subdistrict Energy 5 No 2 Commercial Complex Energy System PC5 (Jimo County Systems Neighborhood Boiler Heating Systems Level City) East Licang District 6 NA PC6 Licang Neighborhood Heating Systems Badahu HES Upgrading PC7-1 Shinan District Unit-Based 7 Municipal Government Complex Unit-Based heating and Shinan Heating and Cooling Systems PC7-2 cooling system Shibei District Geothermal and Geothermal Heat Pump 8 PC8 Shibei Solar Heating Systems Unit-Based Solar Heating Jidong Subdistrict Smart Energy Management Licang District 9 NA NA System Shibei District Shinan District

Source: Qingdao Project Domestic FSR, (2015) and Google Earth (2015).

19 D. Scope

47. The project consists of nine components, summarized in Table 12.

Table 12: Project Components and Key Features. Heating Cooling Length Power Area Area of No. Component Supply Characteristics and Special Features (million (million pipeline (MWh) m2) m2) (km) 1 Shibei District Binhai Energy 6.7 0.8 25.6 84.5 Community-based Energy Systems; Systems Heating, cooling and power supply systems using waste heat from CHP and wastewater plant, heat storage, and peaking gas boiler. 2 Licang District Houhai Energy 0.7 0.3 59.8 16.4 Community-based Energy Systems; Systems Heating, cooling and power supply systems using 3 Licang and Shibei Districts 0.1 0.2 0.0 0.0 Unit-based energy systems; Using gas- Unit-Based Heating and driven lithium bromide heating and cooling Cooling Systems supply units. 4 Shibei District Heat 5.0 0.0 0.0 47.2 Enhancing existing district heating networks Exchange Stations by additionally installing HESs with heat exchangers, peaking gas boilers, and air heat pumps 5 Jidong Subdistrict Energy 2.1 0.4 22.5 27.4 Two community-based energy systems; and Systems ten neighborhood gas boiler heating systems 6 East Licang District 3.1 0.0 0.0 28.3 Twenty five neighborhood gas boiler heating Neighborhood Heating systems Systems 7 Shinan District Unit-Based 0.4 0.0 0.0 0.0 Unit-based energy systems Heating and Cooling Systems 8 Shibei District Geothermal 0.1 0.1 0.0 0.0 Enhancing existing district heating network and Solar Heating Systems with underground heat pump; and unit- based solar heating system 9 Smart Energy Management Heating networks and energy control and System management Total 18.2 1.8 107.9 203.8

E. Impact, Outcome and Output

48. The project impact will be improved air quality and reduced greenhouse gas emissions in Shandong Province. The outcome will be improved energy efficiency, a cleaner environment in Qingdao City and a reduction in cases of respiratory and heart diseases. The output will be a smart low-carbon district energy system demonstrated in eight locations in Qingdao City.

F. Implementation Arrangements

49. The Qingdao Municipal Government (QMG) will be the executing agency (EA) responsible for overall guidance during project preparation and implementation. The QMG consists of the Qingdao Municipal Finance Bureau and the Qingdao Municipal Development and Reform Commission (MDRC). The Qingdao Energy Group (QEG) will be the project implementing agency (IA). QEG will sign on-lending agreements with QMG and will be responsible for day-to-day management during project preparation and implementation. The

20 implementation arrangements are summarized in Table 13 and described in detail in the project administration manual (PAM).

Table 13: Implementation Arrangements. Aspects Arrangements Implementation period January 2016–December 2020 Estimated completion Physical completion: 31 December 2020 date Loan closing: 30 June 2021 Management (i) Oversight body The project leading group: Chair: Vice-governor of Qingdao Municipal Government Members: Representatives from the Municipal Development and Reform Commission, Finance Bureau, Utility Bureau, Planning Bureau, Housing and Urban-Rural Development Commission, Land and Resources Bureau, and Environment Protection Bureau (ii) Executing agency Qingdao Municipal Government (iii) Implementing agency Qingdao Energy Group (iv) Implementation unit Project management office at the Qingdao Energy Group, four staff Procurement ICB 2 contracts $27.3 million NCB 15 contracts $101.7 million Consulting services ICS method 39 person-months $1.0 million through a firm Retroactive financing The Qingdao Municipal Government has requested advance contracting and/or advance and retroactive financing. This will include the recruitment of consulting contracting services, and the procurement of goods. The amount to be retroactively financed will not exceed $26 million (equivalent to 20% of the ADB loan) and may finance costs incurred prior to loan effectiveness but not earlier than 12 months before the signing date of the loan agreement. Disbursement The loan proceeds will be disbursed in accordance with ADB's Loan Disbursement Handbook (2015, as amended from time to time) and detailed arrangements agreed upon between the government and ADB. Direct payment will be primarily used for the payment of goods and capacity building. Other disbursement methods will also be used, as appropriate. ADB = Asian Development Bank, ICB = international competitive bidding, ICS = individual consultant selection, NCB = national competitive bidding. Sources: Qingdao Municipal Government and Asian Development Bank estimates.

50. Support for project management including consulting services and training will be provided to the EA and IA to assist them in (i) technical design; (ii) supervising project implementation; (iii) environmental management, monitoring and reporting; and (iv) knowledge sharing.

G. Budget, Financing Plan and Time Schedule

51. The project cost is estimated at $274.5 million (Table 14). The government has requested a loan of $130 million from ADB’s ordinary capital resources to help finance the project. The loan will have a 25-year term, including (i) a grace period of 5 years, (ii) a straight-line repayment method, (iii) an annual interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility, (iv) a commitment charge of 0.15% per year, and (v) such other terms and conditions set forth in the draft loan and project agreements. The average loan maturity is 15.25 years, and the maturity premium payable to ADB is 0.10% per year. The financing plan is presented in Table 15.

21 Table 14: Project Budget ($ million) Item Amounta A. Base Costb

1. Shibei District Binhai Energy Systems 90.8 2. Licang District Houhai Energy Systems 45.0 3. Licang and Shibei Districts Unit-Based Heating and Cooling Systems 9.0 4. Shibei District Heat Exchange Stations 26.7 5. Jidong Subdistrict Energy Systems 28.2 6. East Licang District Neighborhood Heating Systems 11.1 7. Shinan District Unit-Based Heating and Cooling Systems 5.8 8. Shibei District Geothermal and Solar Heating Systems 3.5 9. Smart Energy Management System 19.1 10. Project implementation consulting services 1.0 Subtotal (A) 240.2 B. Contingenciesc 26.5 C. Financial Charges During Implementationd 7.9 Total (A+B+C) 274.5 a Includes taxes and duties of $22.7 million to be financed from government resources and the Asian Development Bank (ADB) loan resources. The amount of taxes and duties to be financed by ADB is based on the principles that (i) the amount of taxes and duties financed by the ADB loan does not represent an excessive share of the project, (ii) the taxes and duties apply only to ADB-financed expenditures, and (iii) the financing of taxes and duties is relevant to the success of the project. Government financing of taxes and duties will be provided through, cash contribution. b In June 2015 prices. c Physical contingencies computed at 5% of base cost. Price contingencies computed at average of 1.4% on foreign exchange costs and 3% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ordinary capital loan has been computed at the 5-year US dollar (USD) fixed swap rate plus an effective contractual spread of 0.50% and maturity premium of 0.10%. Commitment charges for an OCR loan are 0.15% per year to be charged on the undisbursed loan amount. Note: Numbers may not sum precisely because of rounding. Sources: Qingdao Municipal Government and Asian Development Bank estimates.

Table 15: Project Financing Plan Source Amount ($ million) Share of Total (%) Asian Development Bank - Ordinary capital resources (loan) 130.0 48.0 Government - Qingdao Energy Group 144.5 52.0 Total 274.5 100.0 Note: Numbers may not sum precisely because of rounding. Sources: Qingdao Municipal Government and Asian Development Bank estimates.

52. The detailed design and construction period for the project will be approximately 5 years, commencing in January 2016. The project expected lifetime is 25 years.

H. Key Project Features

53. A range of equipment is used for power generation, heating and cooling supply energy system. The following section describes major equipment used in the different project components.

22 1. Power Generation

a) Gas Turbine Generator

54. A gas turbine, also called a combustion turbine, is a type of internal combustion engine. Typically it consists of a compressor, combustion chamber, turbine, and power generator. Atmospheric air flows into a compressor producing high-pressure air. The high- pressure air passes through a combustion chamber where it is ignited to generate high temperature flow. This high-temperature high-pressure gas enters a turbine, where it expands rotating the turbine and producing shaft work, which is used to drive an electric generator. The energy that is not used for shaft work exits as high-temperature turbine exhaust gas. Figure 3 illustrates the configuration of a gas turbine generator. Gas turbine generators are used in the component 1.

Figure 3: Gas turbine generator.

b) Combined Cycle Gas Turbine and Steam Turbine Generator

55. Similar to a gas turbine, a steam turbine is a device that extracts thermal energy from pressurized steam and uses it to do mechanical shaft rotating work. As the turbine generates rotary motion, it used to drive an electrical generator. Figure 4 illustrates the configuration of a steam turbine generator.

Figure 4: Steam turbine generator.

23 56. Combining two or more thermodynamic cycles can result in improved power generation system overall efficiency and reduced fuel costs. The exhaust gas from a gas turbine is fed into a heat recovery boiler unit to increase temperature and produce high temperature steam. This high temperature steam is then fed into a steam turbine to generate rotating shaft work to drive a power generator. A combined-cycle gas and steam turbine generator can achieve a best-of-class real thermal efficiency of around 54% in base-load operation, comparing to a single cycle steam turbine generator whose efficiency is around 35-42%. Combined cycle gas and steam turbine generators are used in the component 2.

Figure 5: A combined-cycle gas and steam turbine generator.

c) Gas Engine-Generator

57. An engine-generator is the combination of an electrical generator and an internal combustion reciprocating engine (Figure 6) mounted together to form a single piece of equipment. Combustion of a fuel occurs with air in a combustion chamber. The expansion of the high-temperature and high-pressure gases produces direct force an engine component such as pistons, which provide rotary force to a crankshaft, which drives an electrical generator.

58. Engine-generators may run on gasoline, diesel, natural gas, propane, bio-diesel, water, wastewater gas or hydrogen. Most of the smaller units use gasoline (petrol) as a fuel, while larger units utilize diesel, natural gas and propane (liquid or gas). Some engine- generators may also operate on diesel and gas simultaneously (bi-fuel operation). Gas engine generators are used in the component 5.

24 Figure 6: Reciprocating engine.

2. Heating and Cooling Generation

a) Lithium Bromide Heating and Cooling Supply Units

59. Lithium bromide heating and cooling supply units are also called chillers or heaters depending on whether being used for heating and/or cooling. Lithium bromide heating and cooling supply units can work without electricity, using different heat sources such as waste heat, exhaust gas, solar-heated water, natural gas, propane or geothermally-heated water. Lithium bromide is used as the absorbent while water is used as the refrigerant (instead of ozone-depleting Freon). The advantages of this type of system include utilizing waste heat and alternative energy sources, consuming zero electricity, eliminating the use of ozone- depleting refrigerants, and the dual function ability to provide cooling and/or heating.

60. The principle of operation of a lithium bromide unit is based on absorption and evaporation of a refrigerant (water). The refrigerant is condensed in one coil to release its heat; its pressure is then reduced and the refrigerant is evaporated to absorb heat. If the system absorbs heat from the interior of a building, it provides cooling; if it releases heat to the interior of a building, it provides heating. The unit consists of two loops (Figure 7). The loop on the right represents the absorption medium (lithium bromide solution) and the circulation loop at the left represents the refrigerant (water/water vapor). Other types of absorption medium and refrigerant are ammonia as the refrigerant and water as the absorption medium. The difference in lithium bromide units is that the evaporated water is pressurized in a compressor, but is instead absorbed into the lithium bromide solution. A relatively low-power pump can then pump the solution up to a higher pressure. The next step is removing the water from the lithium bromide solution, which is where the heat source

25 comes in; the heat essentially boils the water out of the solution, starting the cycle again. The main advantages of absorption heat pumps is that they can deliver a much higher temperature lift, their energy performance does not decline steeply at higher temperature lifts, and they can be customized for combined heating and cooling applications.

61. The main components of a lithium bromide unit are the evaporator, condenser, generator and absorber. An absorption heat pump moves high temperature prime energy into the desorber, which produces high pressure vapor. The high-pressure vapor is condensed in the condenser where the heat is recovered into a process stream. Subsequently, the high-pressure condensate from the condenser is throttled to a lower pressure in the evaporator, where the waste heat is recovered to vaporize the low-pressure condensate. Concentrated working fluid from the desorber contacts the low-pressure vapor from the evaporator in the absorber. This creates heat that is recovered into a process stream. The working fluid is then returned to the desorber to complete the cycle.

62. In a typical lithium bromide unit waste heat at low temperature is delivered to the evaporator, and prime heat at high temperature is delivered to the generator. An amount of heat equivalent to the sum of the high and low temperature heat inputs can be recovered at an intermediate temperature via the condenser and absorber. This is analogous to a thermo- compression heat pump, in which high-pressure steam is used to increase or lift low- pressure waste vapor to a higher pressure and temperature. However, in the case of the high-lift absorption heat pump, the temperature lift can be 93 to 148 °C, rather than the -6 to 10 °C of the thermo-compression system. However, lithium bromide unit also have a higher purchase cost. Lithium bromide heating and cooling supply units are used in the components 1, 2, 3, 5, and 7

b) Air-Source Heat Pump

63. A heat pump consists of a compressor and an evaporator coil and heat exchanger and expansion valve. A refrigerant liquid with a boiling point as low as -40 °C circulates within the system. This liquid absorbs the heat from surrounding heat sources (for instance, waste water, sea water, ground or, in the case of an air-source heat pump, air) and then evaporates at a heat exchanger (evaporator). The resulting refrigerant gas is compressed to augment the heat energy, raising the vapor temperature to around 75 °C. The heat is passed to the space heating / hot water system via a heat exchanger (condenser). The refrigerant gas condenses back to its liquid state, passes through the expansion valve and the cycle repeats.

64. Air-source heat pumps can operate at a wide range of temperatures. It does not need to be a warm summer day for the pumps to function; the units will be able to extract heat from the air even at -25 °C. Air source heat pumps are used in the component 4.

26 Figure 7: Working principles of a lithium bromide unit.

Figure 8: Configuration of air-source heat pump.

27 c) Waste Water Heat Pump

65. A waste water heat pump is similar to an air-source heat pump. Waste water is used as the heat source, the temperature of which is stabilized at around 10 °C to provide the most stable performance. Electrical energy is required to power the heat pump. As the heat source temperature is stable and typical refrigerants can be used to assure stable equipment performance, a well-designed system should release up to five times as much electrical energy as it consumes.

66. Waste water heat pumps require specially designed heat exchangers to extract heat from the waste water. Depending on the water used (raw wastewater or treated water), the heat exchanger material or format will have to be tailor designed. Waste water heat pumps is used in the component 1.

d) Ground Source Heat Pump

67. A ground source heat pump is similar to an air-source heat pump. Ground source (geothermal) heat is used to evaporate the refrigerant. Various geothermal heat sources can be used such as soil 1 meter or deeper that usually has a stable temperature level, rock in a deep drilled well, and others. There are various technical solutions for extracting heat from ground sources, and the heat exchanger should be designed based on a heat source survey including an assessment of source temperature level and total energy amount. A ground source heat pump is used in the component 8.

e) Centrifugal Electrical Compressor Heating and Cooling Supply Unit

68. A centrifugal-type compressor unit has a two-stage compressor and a single-stage economizer cycle. In the vaporizer (exchanges heat of water with refrigerant), the temperature of the heat source water is higher than the refrigerant, so that heat (Q1) is transferred from the heat source water to the refrigerant. The refrigerant is vaporized at a temperature corresponding to the saturated vapor pressure within the vaporizer, and then suctioned into the centrifugal-type compressor to be compressed by the high speed primary impeller. After being cooled down by the refrigerant from the economizer, it is further compressed by the secondary impeller to be sent to the condenser.

69. Next electric power (W), which is an energy input to the centrifugal-type compressor, becomes heat energy transferred to the refrigerant, which is heated, pressurized, and sent to the condenser (the heat exchanger). The hot water flowing between the plates, the temperature of which is lower than that of the refrigerant gas, removes the heat from the refrigerant gas within the condenser. It is then condensed at a temperature corresponding to the saturated vapor pressure within the condenser. At that time, the hot water is warmed up by the refrigerant with the quantity of heat Q2, being equal to adding Q1 and W. Then, the heat from the heat source water is transferred to the hot water. In addition, the condensed refrigerant liquid is sent to the economizer, and after being cooled down by the refrigerant that is decompressed by a sub-expansion valve, it is further decompressed by the main expansion valve into the vaporizer to be vaporized again. The refrigerant after being decompressed by the sub-expansion valve becomes a gas and is suctioned into the secondary impeller and thereby one cycle is completed. The same process is continuously repeated, so that heat is continuously transferred from the heat source water to the hot water.

70. The compressor is driven by electricity (W as power input to the unit). When different refrigerants are utilized the unit will have different operational temperatures. Depending on the intended application the unit can be used as heat pump (heat released from condenser), or chiller (heat is extracted by evaporator). Centrifugal compressor units have a wide heat

28 supply capacity ranging from several MW to 12 to 13 MW. Centrifugal electrical chillers are used in the components 2, 3, 5, and 7.

Figure 9: Centrifugal Electrical Heating and Cooling Supply Unit.

f) Screw-type Compressor Heating and Cooling Supply Unit

71. The main difference between a screw-type compressor and a centrifugal-type compressor is the use of a screw compressor. The other equipment components are similar to the centrifugal compressor unit illustrated above. The compressor is driven by electricity. Depending on application, this unit can also be used as heat pump (heat released from the condenser) or as chiller (heat is exacted by the evaporator). When a screw-type compressor unit is used as heat pump, it operates at a higher temperature during air and water heat generation compared to the other heat pumps. A partial stream of the condensate is expanded to a middle pressure level. The created liquid-vapor mixture is then evaporated to saturation by subcooling the rest of the condensate, and then injected into the compressor. A screw-type compressor unit has a typical heating capacity ranging from about 700 kW to 4 MW. Screw type compressor heat pumps are used in the component 1.

Figure 10: Screw-Type Compressor Heating and Cooling Supply Unit.

29 3. Boiler Technologies

a) Low NOx boiler/Burner

72. According to a 2007 survey of industrial natural gas boilers in the PRC, natural gas boilers typically have a NOx emission of 137.31 mg/m3. This emission level is in compliance with both the PRC national natural gas boiler emission standard of 150 mg/m3 (PRC Emission Standards of Air Pollutants for Coal-burning, Oil-burning, Gas-fired Boilers GB 13217-2014), and the 2007 EHS Guidelines of 240 mg/m3 for boilers. However, to in order to maximize environmental benefits, low NOx natural gas boilers with less than 100 mg/m3 NOx emissions will be used in this project.

73. A low NOx boiler is designed to optimize flame shape. Staged combustion technology is used, resulting in a cooler flame which suppresses thermal NOx formation. The swirl-stabilized primary area is responsible for producing a very stable flame. Combustion chambers are designed to match the low NOx burners. In addition, smart fuel- air compound control generates the optimum conditions for the combustion air through a joint fan with a frequency converter. The combination of low NOx combustion, large combustion chambers, smart control systems and efficient combustion technology benefits the environment as well as the operator, and ensures that NOx emissions are less than 100 mg/m3. Low NOx boilers are used in the components 1, 2, 4, 5, 6, and 7.

b) Gas Vacuum Boiler

74. A gas vacuum boiler is similar to an ordinary gas boiler but combines the combustion chamber and heat transfer tubes. The inner part of the tubes is for hot water media and the rest is for air. The “U” shape tube works as a heat exchanger, which runs in a vacuum condition. The pressure in the combustion chamber is under atmospheric pressure; therefore, there is no risk of gas leakage. Gas vacuum boilers are used in the components,3, 4, and 7.

4. Solar Heating using Parabolic Trough

75. A parabolic trough is a type of solar thermal collector. The energy of sunlight is collected using reflective mirrors. The mirrors are parabolic in shape and are usually made of low-iron glass with silver coated back surfaces. This type of glass has good sunlight irradiance transmission due to its low iron content, which prevents sun rays being absorbed by the glass. Ultra-white thin glass is used for the mirrors to ensure a solar energy reflection rate of over 94%. The glass is composed of one low iron glass layer, coated by high reflection silver at the back, and then protected by a copper layer and a final weather resistant layer further back. This structure increases the strength of the mirror, minimizing breakage and helping to ensure a long life time. The mirrors will be periodically cleaned using water or brushes.

76. The concentrated solar energy is transferred to a low temperature heat transfer fluid (HTF) that is distributed in the receiver-absorber tubes and the solar field pipes. The project will use a non-toxic petroleum-based mineral HTF mineral oil with a boiling point of 320 °C. The heat receiver-absorber tubes, which are located in the focus line of the reflective mirror, contain the HTF mineral oil. The mirrors are mounted to a supporting structure with tracing and driving systems to track the sun from sunrise to sunset. Parabolic trough based solar heating is used in the component 8.

30 Figure 11: Parabolic Trough Mirror Construction.

Figure 12: Parabolic Trough.

5. Thermal Energy Storage

77. Thermal energy storage (TES) allows excess thermal energy to be collected for use hours, days or months later. TES can be installed at individual buildings, multiuser buildings, districts, towns or even at a regional scale depending on the technology utilized. Storage mediums include water or ice-slush tanks ranging from small to massive; masses of native earth or bedrock accessed with heat exchangers in clusters of small-diameter boreholes (sometimes quite deep); deep aquifers contained between impermeable strata; shallow, lined pits filled with gravel and water and top-insulated; and eutectic, phase-change materials. Energy demand can be balanced between day and night time; summer heat from solar collectors can be stored inter-seasonally for use in winter; and cold obtained from winter air can be provided for summer air conditioning.

78. In the Unit-Based Solar Heating Subcomponent of Component 8 (Shibei District Geothermal and Solar Heating Systems), water tanks will be used for TES.

79. In the Industrial Waste Heat Recovery System subcomponent of Component 1 (Shibei District Binhai Energy Systems), a steam accumulator will be for TES. A steam accumulator is an insulated steel pressure tank containing hot water and steam under pressure. When heat needs to be stored from steam, additional steam is blown into the bottom of the steam accumulator drum, which is half-filled with cold water. Some of the steam condenses and heats the water and the remainder fills the space above the water

31 level. When the accumulator is fully charged, the water level in the drum will be about three- quarters full. At that stage, the temperature and pressure are high. When the steam needs to be used, the steam value on the top of the drum will be opened and the pressure in the drum will fall. The reduced pressure will cause more water to boil so that the accumulator can supply steam till it has to be re-charged. Thermal energy storages are used in the component 1, 7, and 8.

6. Heating Pipelines

80. The project will utilize direct-buried pre-insulated bonded pipeline, which is by far the most commonly used technology for new district heating primary networks. Steel pipes and insulation materials made of polyurethane foam (PUR) and high density polyethylene (HDPE) are bonded into one piece in a sandwich-like structure. Compared to onsite insulated pipe buried in a tunnel, direct-buried pre-insulation bonded pipe has many advantages including lower capital costs, reduced heat losses and improved energy efficiency, better anti- corrosive and insulation performance, longer service life, and shorter installation cycles. Although pre-insulated bonded pipe is designed for direct-bury installation, some sections of pipeline may need to run overhead and/or use trench laying modes, depending on local site conditions. The project pipe networks will utilize two-pipe systems: one for heat supply with 110-130 °C temperature water, and the other for hot water return flow with a temperature of 60-70 °C.

81. Pre-insulated plastic pipes will be used for secondary heating supply networks. . Construction of secondary networks is easier when bendable plastic pipes are used. The pipes will be direct-buried, and will also utilize a twin-pipe system where both the supply and return pipes can be jacketed into one insulation sleeve. The supply water temperature will be 50 to 60 °C, and the return water temperature will be 35 to 40 °C.

7. Achieving Low Energy Intensity

82. Due to the above energy-efficient and low-emission design features, the project is expected to achieve an energy intensity of 0.35 gigajoule per square meters (GJ/m2), which is far below the PRC’s average of 0.56 GJ/m2.

I. Project Component Design Details

83. This section describes each project component in detail. Figure 13 shows the location of the urban core components while Figure 14 shows the Jidong Subdistrict component.

32 Figure 13: Project component detailed locations in Qingdao urban core (Components 1-4 and 6-8).

Figure 14: Component 5 detailed location, Jidong Subdistrict, Jimo City.

33 1. Shibei District Binhai Energy Systems

a) Location and Scope

84. Component 1 (Shibei District Binhai Energy Systems) will be installed within the premises of the existing Taineng Thermal Power Plant (TPP), which is located on a 27 ha site at No. 1 Zheping Road in Shibei District, in an ndustrial zone. The component 1 has no connection with current power production at Taineng TPP. Figure 15 shows the location of Taineng TPP in relation to Qingdao City, Figure 16 shows the Taineng TPP and surrounding area, and Figure 17 shows a view of the TPP looking from the north.

Figure 15: Taineng TPP Location, Shibei District, Qingdao.

Source: Google Maps, 2015.

Figure 16: Taineng TPP and Surrounding Area.

Licun River

Licun River WWTP

Taineng TPP

Road and Railway

Source: Google Maps, 2015 and ADB PPTA Consultants.

34 Figure 17: Taineng TPP looking from the north.

Source: ADB PPTA Consultants.

85. Figure 18 shows an aerial view of the TPP including the boiler house building and stacks. Component 1 of will be located in a triangular shaped area on the northwestern corner of the TPP site in an area previously used for temporary coal and ash storage (Figure 19).

Figure 18: Taineng TPP Layout Showing ADB Component 1 Site.

ADB Component Location

Boiler Building

Stacks

Source: Google Maps 2015 and Qingdao Energy Taineng Thermal Power Co. Ltd., 2015.

35 Figure 19: ADB Component 1 site at Taineng TPP.

Source: ADB PPTA Consultants.

86. Component 1 includes three community-based energy systems: (i) Industrial Waste Heat Recovery System; (ii) Binhai Community-Based Energy System; and (iii) Wastewater Heat Recovery System. The three system components are integrated as follows:

(i) Industrial Waste Heat Recovery System: The hot steam generated from the nearby Huadian Qingdao Combined Heat and Power (CHP) Plant will be utilized for spacing heating (Appendix III provides due diligence of the Huadian Qingdao CHP as an associated facility). The hot steam from the Huadian Qingdao CHP will be transported to the industrial heat recovery energy station by pipeline. Using steam and water heat exchangers, hot water will be produced and supplied for base load space heating. When heat demand increases, gas-fired hot water peaking boilers will be used. In addition, hot water storage tanks will be used as TES units to enhance the stability of the space heating supply system.

(ii) Binhai Community-Based Energy System: This energy system will have (a) power generation unit; (b) exhaust heat recovery unit; (c) heating and cooling supply unit; and (d) peaking boiler unit. Using natural gas as the energy source, a gas turbine will produce electricity. The exhaust gas from the gas turbine will be fed into a heat recovery unit to heat water. The heated water will enter a lithium bromide unit, where hot and/or cold water can be produced for spacing heating and cooling. During the heating season if the heat load is not sufficient a peaking boiler unit can provide additional heat to the system. The electricity generated from this energy system will be used for pumping systems at the wastewater heat recovery energy system, described below.

(iii) Wastewater Heat Recovery System: At a wastewater treatment plant wastewater temperature ranges between 12 °C and 28 °C, with the average being 26 °C in summer and 13.6 °C in winter. This subcomponent will utilize heat recovery from wastewater at the nearby Licun Wastewater Treatment Plant. Using heat pump units, recovered heat from wastewater will be converted to hot water for space heating.

36 87. Figure 20 shows how three system subcomponents are interconnected, though it should be noted that each system component has different heating, cooling and power supply boundaries as seen in Figure 21. Figure 22 shows the layout of the three system subcomponents within the Component 1 site at the Taineng TPP.

Figure 20: Community-Based Energy Systems under Component 1 (Shibei District Binhai Energy Systems).

37 Figure 21: Component 1 (Shibei District Binhai Energy Systems) heating, cooling and power boundaries.

b) Main Works and Equipment

88. Table 16 provides a list of Component 1 main works and key equipment.

38 Figure 22: Taineng TPP Layout and Component 1 (Shibei District Binhai Energy Systems) Energy Systems.

Table 16: Main Works and Equipment, Component 1 (Shibei District Binhai Energy Systems). Project Works Description Binhai Community-Based Energy System Main Power generation units 2 x 12.9 MW SGT 400 Gas turbine and generators equipment will be used to generate power. Heat exchange units 1 x 32 MW steam and water heat exchanger (t=130/70°C) will be used ; Building based heat exchangers at residential buildings: 1 x 8.4 MW steam and water heat exchangers (t=130/70°C) Peaking boilers for heating 2 x 7 MW gas-fired steam boilers (P=1.6MPa) will be used as peaking boilers to supply additional heat. Heat recovery system 2 x 17.5 MW heat recovery boilers (P=1.6MPa) will recover high temperature exhaust gas from turbines. The steam from heat recovery boilers will be used for lithium bromide chillers. Heating and cooling supply 5 x 6.98 MW SXZ8-698DH Lithium bromide chillers system will be used to generate heating or cooling Outputs Annual power supply 69,690,000 Kwh Annual heat supply 383,700 GJ Annual cool supply 99,500 GJ Heat supply area 752,000 m2

39 Project Works Description Cooling supply area 350,000 m2 Utility Annual power consumption 13,700,000 Kwh consumption Annual gas consumption 32,723,000 Nm3 Annual water consumption 178,000 tons Wastewater Heat Recovery System Main Heat pump units 5 centrifugal heat pumps with refrigerating capacity equipment 7400 kW and heating capacity: 8000 kW 3 screw-type heat pumps with refrigerating capacity 2840 kW Heating Capacity: 3000 kW Pumping units 4 x 2500 m3/h submersible wastewater pumps (H=15m) 4 x 3200 m3/h circulation pumps (H=30m) 3 x 15 m3/h make-up pumps (H=30m) Outputs Annual heat supply 447,700 GJ Annual cool supply 129,800 GJ Heat supply area 1,100,000 m2 Cooling supply area 450,000 m2 Utility Annual power consumption 41,120,000 Kwh consumption Annual gas consumption 314,200 tons Annual water consumption 315,000 tons Industrial Waste Heat Recovery System Main Heat exchange units 12 x 24 MW shell-and tube steam-water heat equipment exchangers ( P=1.6MPa t=120/60 °C) Heat storage unit 40 x 36 GJ steam-heat accumulators Peaking boiler unit 5 x 29 low NOX hot water boilers (peaking boilers) (P=1.6MPa t=120/60 °C) Outputs Annual heat supplied 2,190,000 GJ Floor area heated 4,800,000 m2 Utility Annual power consumption 5,040,000 KWh consumption Annual gas consumption 19,010,000 Nm3 Annual water consumption 210,000 tons Pipelines Network Primary Primary Heating/cooling A total of 21.84 km of primary heating/cooling pipeline pipeline network pipelines will be constructed. Environmental Protection Emissions Low emissions turbines and generators, which meet the relevant standards Noise Low-noise equipment with noise reduction measures like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Public Utilities Water supply Production and domestic water source is municipal water. Gas supply Natural gas will be supplied by existing gas pipe networks. Power supply Two-circuit power will be supplied by Heihe transformer substation. Wastewater Production and domestic wastewater will be discharged to the municipal wastewater pipeline network Source: Qingdao Project Domestic FSR, (2015) and the ADB PPTA consultants.

40 2. Licang District Houhai Energy Systems

a) Location and Scope

89. Component 2 (Licang District Houhai Energy Systems) will consist of two community- based energy system subcomponents: (i) Houhai Community-Based Energy System and (ii) Qingdao North Railway Community-Based Energy System. The community-based energy systems will be built within the premise of the existing Houhai TPP (Appendix III provides a due diligence report of the Houhai TPP). The Houhai TPP plant is located on a 12 ha site at No. 8 Cangxing Road, Licang District, on the eastern shores of Jiaozhou Bay (Figure 23), in an industrial zone. However, the north and east site boundaries are adjacent to a mixed residential, commercial and industrial zone. (Figure 24). Figure 25 shows the Houhai TPP site from within, looking to the northwest. The component 1 has no connection with current power production at Taineng TPP.

Figure 23: Houhai TPP Location, Licang District, Qingdao

Source: Google Maps, 2015.

41 Figure 24: Houhai TPP and surrounding area

Jiazohou Bay Adjacent Residential Areas

Houhai TPP

Railway Station

Airport

Source: Google Maps, 2015 and ADB PPTA Consultants.

Figure 25: Huahai TPP from within, looking to the northwest. From left to right note coal storage building, cooling tower, coal conveyer system, turbine and boiler building, stack, and office building.

Source: Qingdao Houhai Thermal Power Co. Ltd., 2015.

90. Figure 26 shows and aerial view of the TPP including the boiler house building and stacks. Component 2 will be located in a trapezoidal shaped area on the southeastern corner of the TPP site in an area currently used for coal storage (Figure 27).

42 Figure 26: Houhai TPP layout showing ADB Component 2 site.

Stack

Boiler Building

Cooling Tower

ADB Component 2 Location (Currently used for coal storage)

Source: Google Maps 2015 and Qingdao Houhai Thermal Power Co. Ltd., 2015

Figure 27: ADB Component 2 site at Houhai TPP. The building, currently used for coal storage, will be refitted and retained.

Source: ADB PPTA Consultants.

91. The Houhai Community–Based Energy System will have gas and steam combined cycle power and steam generation. Using natural gas as the energy source, a gas turbine will generate electricity. The exhaust gas from the gas turbine will be fed into a waste heat recovery boiler, where recovered heat will generate high temperature steam. The steam will then be fed into a steam turbine to produce electricity. The electricity generated will be consumed for internal use and also will be fed into existing low voltage substations located in nearby communities. The high temperature exhaust steam from the turbine will be supplied to the existing steam network system in the nearby communities.

Figure 28: Houhai Community-Based Energy System Configuration.

92. The Qingdao North Railway Community-Based Energy System will have (i) power generation unit; (ii) lithium bromide heating and cooling supply unit; (iii) peaking boiler; and (iv) peaking chiller. Natural gas engines will generate electricity and the exhaust gas from the gas engines will be fed into lithium bromide units where high temperature gas is converted into hot water for space heating or into cold water for space cooling. During the heating season when the heat demand increases, gas-fired hot water boilers will supply additional heat. During the cooling season when the cooling demand increases, electrical chillers will supply additional cooling to the system. Electricity generated by the gas-fired engines will be sent to the local district via the existing grid transmission distribution network. Figure 29 illustrates how the system will work.

Figure 29: System Configuration, Qingdao North Railway Community-Based Energy System.

b) Main Works and Equipment

93. Table 17 provides a list of key equipment to be used in the Component 2 community- based energy systems.

c) Site Layout and System Coverage

Figure 30 presents the layout of the two community-based energy systems, while

44 94. Figure 31 presents the operational boundaries of the community areas served.

Table 17: Main works and equipment, Component 2 (Licang District Houhai Energy Systems). Project Works Description Houhai Community-Based Energy System Main 1. Gas turbine generator 2 x 18 MW LM1800 gas turbines equipment 2. Heat recovery boiler 2 x 25t/h heat recovery boilers (P=4.9MPa) 3. Steam turbine generator 1 x 5 MW CC4.9-4.9/1.1/0.5 steam turbine Outputs Annual power supply 124,840,000 Kwh Annual heat supply 319,800 GJ Annual cool supply 39,900 GJ Heat supply area 500,000 m2 Cooling supply area 140,000 m2 Utility Annual power consumption 7,675,300 Kwh consumption Annual gas consumption 54,192,000 Nm3 Annual water consumption 83,800 tons Qingdao North Railway Community- Based Energy System Main Power generation unit 2 x 1416 kW JMS420 gas engines equipment Lithium bromide heating 2 x BZHE300 lithium bromide units with cooling and cooling supply unit capacity 3489kW and heating capacity 2687kW (exhaust gas with afterburner) Peak heat supply unit 2 x 2.8MW gas-fired hot water boilers will provide additional heat to the system Peak cooling supply unit 3 x 3517 kW centrifugal electrical chillers (1000RT) will be used to provide additional system cooling. Outputs Annual power supply 6,190,000 Kwh Annual heat supply 100,300 GJ Annual cool supply 50,000 GJ Heat supply area 196,000 m2 Cooling supply area 160,000 m2 Utility Annual power consumption 2,963,300 Kwh consumption Annual gas consumption 4,613,200 N m3 Annual water consumption 62,800 tons Pipelines Network Secondary Secondary heating/cooling A total of 16.35 km of secondary heating/cooling pipeline pipeline network pipelines will be constructed. Environmental Protection Protection Emissions Low emissions turbines and generators, which meet measures the relevant standards Noise Low-noise equipment with noise reduction measures like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Public Utilities Water supply Both production and domestic water comes from municipal water supply network. Gas supply Natural gas will be supplied by existing gas pipe networks. Power supply Electricity will be supplied by existing grid. Wastewater Production and domestic wastewater will be discharged to the municipal wastewater pipeline network Source: Qingdao Project Domestic FSR, (2015) and ADB PPTA Consultants.

45 Figure 30: Layout of Houhai and North Railway Community-Based Energy Stations.

Figure 31: Operational Boundaries of the Areas Served by the Houhai and North Railway Community-Based Energy Systems.

46 3. Licang and Shibei Districts Unit-Based Heating and Cooling Systems

a) Location and Scope

95. Component 3 (Licang and Shibei Districts Unit-Based Heating and Cooling Systems) consists of three subcomponent unit-based energy systems: (i) Qingdao Subway Control Center Unit-Based Energy System; (ii) Jieneng Company Headquarter Unit-Based Energy System; and (iii) Dongli Commercial Complex Unit-Based Heating and Cooling System.

96. A unit-based energy system refers to a small scale power, heating and/or cooling supply system where the energy station is installed adjacent to or in a building, and system outputs are supplied to the building.

b) Main Works and Equipment

97. Qingdao Subway Control Center Unit-Based Energy System: the Qingdao subway control center is located at the west side of Hexi Station of No. 3 Subway Line, on the southwest corner of the intersection of Heilongjiang Road and Zhengzhou Road, in Licang District. The unit-based energy system will utilize gas-fired lithium bromide units to produce hot and/or cold water for space heating and cooling to the building. Table 18 presents the main works and equipment.

Table 18: Main Works and Equipment, Qingdao Subway Control Center Unit-Based Energy System. Project Works Description Main works Lithium bromide heating 2 BZ200 direct gas-fired lithium bromide units with and cooling supply unit 2,326 kW cooling capacity and 1534 kW heating capacity; and one set of BZ100 direct gas-fired lithium bromide units with 1,163 kW cooling capacity and 767 kW heating capacity will produce hot water for space heating during heating season and cold water for space cooling during cooling season. Pumping unit Small pumps will be used to circulate water in the system Outputs Annual heat supply 35,000 GJ Annual cool supply 16,600 GJ Heat supply area 85,000 m2 Cooling supply area 53,000 m2 Environmental Noise control Low-noise equipment with noise reduction measures Protection like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Utility Annual power consumption 819,000 kWh consumption Annual gas consumption 2,433,300 N m3 Annual water consumption 41,900 tons Public utilities Power supply Electricity will be supplied by existing grid. Water supply Both production and domestic water comes from municipal water supply network. Gas supply Natural gas will be supplied by existing gas pipe networks. Wastewater Wastewater from the project will be discharged to a municipal wastewater treatment plant.

47 98. Jieneng Company Headquarter Unit-Based Energy System: The head office of Jieneng Company is located at No. 177 North Ruihai Road in Shibei District. The total floor area of the building is 20,000 m2. The unit-based heating and cooling station will be installed in the basement floor, and will supply heating and cooling services to the entire building.

99. Table 19 presents main works and equipment of the unit-based system. Figure 32 shows how the unit-based heating and cooling systems will work in the Qingdao Subway Control Center and Jieneng Company Headquarter Energy Systems.

Table 19: Main Works and Equipment, Unit-Based Energy System at Jieneng Company Headquarter. Project Works Description Main works 1. Lithium bromide 2 BZ200 direct gas-fired lithium bromide units with heating and cooling supply 1,163 kW cooling capacity and 897 kW heating unit capacity will produce hot water for space heating during heating season and cold water for space cooling during cooling season. 2. Pumping unit Small pumps will be used to circulate water in the system Outputs Annual heat supply 16,400 GJ Annual cool supply 6,600 GJ Heat supply area 20,000 m2 Cooling supply area 20,000 m2 Environmental Noise control Low-noise equipment with noise reduction measures Protection like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Utility Annual power consumption 241,500 kWh consumption Annual gas consumption 621,000 N m3 Annual water consumption 10,500 tons Public utilities Power supply Electricity will be supplied by existing grid. Water supply Both production and domestic water comes from municipal water supply network. Gas supply Natural gas will be supplied by existing gas pipe networks. Wastewater Wastewater from the project will be discharged to a municipal wastewater treatment plant.

Figure 32: System Configuration of Unit-Based Heating and Cooling Systems in Qingdao Subway Control Center and Jieneng Company Headquarters .

100. Dongli Commercial Complex Unit-Based Heating and Cooling System: The Dongli commercial complex is located at East Jiushui Road in Licang District. The complex includes three commercial buildings and one mixed residential/commercial building. Gas-

48 fired lithium bromide heating and cooling units will provide heating and cooling to three commercial buildings within the complex, supported by peaking boilers and chillers to meet additional heating and cooling demands. Heating only service will be provided by gas-fired vacuum hot water boilers to the mixed residential and commercial building. The unit-based energy station will be installed in the underground level of the commercial complex. Table 20 presents main works and equipment, while Figure 33 describes how the system works.

Table 20: Main Works and Equipment, Unit-Based Energy System, Dongli Commercial Complex. Project Works Description Main Lithium bromide heating 2 x BZ250 gas-fired lithium bromide units with 2,908 equipment and cooling unit kW cooling capacity and 2,245 kW heating capacity and one BX300 gas-fired lithium bromide unit with 3,489 kW cooling capacity and 2,687 kW heating capacity will provide heating during heating season and cooling during cooling season. Peaking boiler unit One gas-fired vacuum hot water boiler with 2.1 MW capacity will provide heating to a mixed residential and commercial building at the complex and also will serve as a peaking boiler for the lithium bromide heating and cooling unit. Peaking chiller unit One centrifugal electrical chiller with 2,407 kW capacity will provide additional cooling to the lithium bromide heating and cooling unit during peak cooling demand. Outputs Annual heat supply 84,800 GJ Annual cool supply 33,400 GJ Heat supply area 142,000 m2 Cooling supply area 106,000 m2 Environmental Emissions control Low emissions boilers, which meet the relevant Protection standards Noise control Low-noise equipment with noise reduction measures like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Utility Annual power consumption 1,785,100 kWh consumption Annual gas consumption 3,497,900 N m3 Annual water consumption 62,800 tons Public utilities Water supply Both production and domestic water comes from municipal water supply network. Gas supply Natural gas will be supplied by existing gas pipe networks. Power supply Electricity will be supplied by existing grid. Wastewater Production and domestic wastewater will be discharged to the municipal wastewater pipeline network

49 Figure 33: System Configuration, Unit-Based Energy System, Dongli Commercial Complex.

4. Shibei District Heat Exchange Stations

a) Location and Scope

101. Component 4 (Shibei District Heat Exchange Stations) will enhance the existing district heating systems in Shibei District by installing additional heat exchange stations (HESs). Figure 13 shows the locations of the 28 proposed new HESs.

102. Each HES will be equipped with (i) heat exchange unit; (ii) peaking boiler unit; and (iii) air pump unit. The heat exchange units will use automatic plate heat exchangers. Peaking boilers will be gas-fired modular cast iron boilers with a range of heating capacities, including 30 sets of 0.7 MW 211A-13; 30 sets of 1.4 MW 211A-25; 30 sets of 2.1 MW 211A-37; and 40 sets of 2.6 MW 211A-46 boilers. Four sets of electrical air heat pumps with 65 kW heating capacity will be installed at each HES. Figure 34 presents a typical HES system configuration, while Table 21 provides a list of key HESs features.

Figure 34: Typical HES System Configuration for Enhancing Existing District Heating Systems.

50 Table 21: Key Features of New 28 HESs in Shibei District. No. HES Location Head Load Heating Area 1 Heat supply project in Wanke City (A4) 8 MW 200,000 m2 2 Heating system renovation project in Heya Village 4.5 MW 90,000 m2 (commercial residential building) 3 Heat supply project in Ruinazixuan 1.475 MW 29,500 m2 4 Heat supply project in Honghaijiayuan 5 MW 100,000 m2 5 Phase II heat supply project for security housing in Luoyang 10.436 MW 260,900 m2 Road 6 Heat supply project in Taiyang Island 4 MW 80,000 m2 7 Renovation project in Artwork plant 2.3 MW 46,000 m2 8 Heating system renovation project in Zhonghaihenan and 39 MW 780,000 m2 Nanzhuang(No 1,2,3,4,5 and 8 plots ) 9 Baolixiangbinuoji (south district and north district) 11.185 MW 223,700 m2 10 D area of renovation project in Shuiqinggou 6 MW 120,000 m2 11 Heat supply project in Yingxiu Garden 2 MW 50,000 m2 12 Heat supply project in Yousifang (No 99, South Chongqing 6 MW 120,000 m2 road) 13 Heat supply project in Lvdi Real estate 11.2 MW 280,000 m2 14 Heda central city 7.5 MW 150,000 m2 15 No 187, Ruichang road (Huanyu) 2.5 MW 50,000 m2 16 Renovation project in No 4 plant of Guomian 4.5 MW 90,000 m2 17 Housing for survivors project in Jinhua Road 4 MW 100,000 m2 18 Zhongyeyingjun 2 MW 50,000 m2 19 Newly built housing for survivors project in Tianyijingyuan 2 MW 50,000 m2 20 Residence in Gongzhiqingjiang Road 4 MW 80,000 m2 21 Project in Jinhua Road (Hanhe cable plant) 10 MW 200,000 m2 22 Renovation project in Area ABC of Haierhenanzhuang 28 MW 700,000 m2 23 Xinduxinyuan in No 249, South Chongqing Road 2.988 MW 74,700 m2 24 Wanke Zitai 7.6 MW 190,000 m2 25 Phase II Xingwang project 1.2 MW 30,000 m2 26 Renovation project in Area B of Daqingshuigou 10 MW 200,000 m2 27 Renovation project in Xiaoqingshuigou 30 MW 600,000 m2 28 Wenshajun 4 MW 10,000 m2 TOTAL 231.384 MW 5,044,800 m2

5. Jidong Subdistrict Energy Systems

a) Location and Scope

103. Component 5 (Jidong Subdistrict Energy Systems) contains (i) two community-based energy systems in the Blue Silicon Valley commercial complex (No. 1 and No. 2 Commercial Complex Energy Systems), located in Jidong Subdistrict in eastern coastal Jimo City; and (ii) 10 neighborhood gas boiler heating systems to be installed in six communities in Jidong Subdistrict. Currently residents in these areas rely on individual coal-fired household stoves that are inefficient and polluting. Figure 35 shows the locations of two community-based commercial complex energy systems and the neighborhood gas boiler heating systems.

51 Figure 35: Location of community-based commercial complex energy systems and neighborhood gas boiler heating systems, Jidong Subdistrict Energy Systems.

b) Main Works and Equipment

104. No. 1 and No. 2 Commercial Complex Energy Systems, Blue Silicon Valley Commercial Complex: Each community-based energy system will have its own energy station but serve different heating/cooling networks. Each energy station will be equipped with (i) power generation unit; (ii) heating and cooling supply unit; and (iii) peak heating and cooling unit to support the system. Natural gas-fired engine generators will produce electricity which will be supplied to commercial and office buildings within the Blue Silicon Valley Commercial Complex. The exhaust gas from the gas-fired engine generators will be fed into lithium bromide heating and cooling units to produce hot water for space heating during the heating season and cold water for space cooling during the cooling season. Gas- fired hot water boilers will serve as peaking heat sources and electrical chillers will serve as peaking cooling sources. Figure 36 describes how the system configuration at the No. 1 and 2 energy stations while Table 22 presents the main works and equipment. Figure 37 shows the power, heating, and cooling coverage areas for both No. 1 and No. 2 Energy Stations.

52 Figure 36: System Configuration of No. 1 and No. 2 Community-Based Energy Systems at Blue Silicon Valley Complex.

Table 22: Main Works and Equipment, No. 1 and No. 2 Community-Based Energy Systems at Blue Silicon Valley Complex. Project Works Description No. 1 Energy Station Main works Power generation unit 4 X JMS416 gas-fired internal combustion engine generators with 1,127 kW capacity and one JMS 208 gas-fired internal combustion engine generators with 329 kW capacity will produce electricity and supply it for its own use and to nearby commercial and office buildings through low voltage transmission lines. Heating and cooling unit 4 X BZHE125 lithium bromide unit with 1454 kW cooling capacity and 1121 kW heating capacity; one BZHE30 lithium bromide unit with 349 kW cooling capacity and 269 kW heating capacity will produce hot water for space heating during heating season and cold water for space cooling during cooling season. Peaking boiler unit 2 X 10.5MW gas-fired hot water boiler will produce additional heat in peak heating demand. Peaking cooling unit 3 X centrifugal electrical chiller with 2,814 kW (800RT) cooling capacity and 2 X centrifugal electrical chiller with 750 kW cooling capacity will produce additional cold water for space cooling for peak cooling demand. Outputs Annual power supply 6,550,000 kWh Annual heat supply 235,300 GJ Annual cool supply 45,900 GJ Heat supply area 313,000 m2 Cooling supply area 175,400 m2 Utility Annual power consumption 9,083,600 kWh consumption Annual gas consumption 8,985,500 N m3 Annual water consumption 94,300 tons

53 Project Works Description No. 2 Energy Station Main works Power generation unit 4 X JMS416 gas-fired internal combustion engine generators with 1,127 kW capacity and one JMS 208 gas-fired internal combustion engine generators with 329 kW capacity will produce electricity and supply it for its own use and to nearby commercial and office buildings through low voltage transmission lines. Heating and cooling unit 4 X BZHE125 lithium bromide unit with 1454 kW cooling capacity and 1121 kW heating capacity; one BZHE30 lithium bromide unit with 349 kW cooling capacity and 269 kW heating capacity will produce hot water for space heating during heating season and cold water for space cooling during cooling season. Peaking boiler unit 2 X 10.5MW gas-fired hot water boiler will produce additional heat in peak heating demand. Peaking cooling unit 5 X centrifugal electrical chiller with 2,814 kW (800RT) cooling capacity and 2 X centrifugal electrical chiller with 750 kW cooling capacity will produce additional cold water for space cooling for peak cooling demand. Outputs Annual power supply 4,370,000 kWh Annual heat supply 235,300 GJ Annual cool supply 62,000 GJ Heat supply area 301,500 m2 Cooling supply area 221,100 m2 Utility Annual power consumption 1,1260,000 kWh consumption Annual gas consumption 8,795,400 N m3 Annual water consumption 115,200 tons Environmental protection Protection Emissions Low emissions generators and boilers, which meet measures the relevant standards Noise Low-noise equipment with noise reduction measures like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Public utilities Public utilities Water supply Both production and domestic water comes from municipal water supply network. Gas supply Natural gas will be supplied by existing gas pipe networks. Power supply Electricity will be supplied by existing grid. Wastewater Production and domestic wastewater will be discharged to the municipal wastewater pipeline network

54 Figure 37: Power, Heating and Cooling Coverage of No. 1 and No. 2 Energy Stations.

Neighborhood Boiler Heating Systems: A neighborhood gas boiler heating system is a small scale heating system installed in an area not served by district heating systems. Currently inhabitants of these areas rely on individual coal-fired household stoves that are inefficient and polluting. Ten neighborhood gas boiler houses will be installed in Xinmin, Anyuan, Beiping, Xingshi, Shuipo, and Jinguan communities. Table 23 provides the main works and equipment of the neighborhood heating systems, while

105. Figure 38 shows the locations of the boiler houses and heating coverage areas.

55 Table 23: Main Works and Equipment, Neighborhood Boiler Heating Systems, Jidong Subdistrict. Project Works Description Main Low NOx boilers 14 X 2.1 MW gas-fired hot water boilers; 17 X 2.8 MW equipment gas-fired hot water boilers; 4 X 4.2 MW gas-fired hot water boilers Heating pipelines 27.4 km secondary pipelines Outputs Annual heat supply 882,600 GJ Heat supply area 1,405,000 m2 Environmental Emissions control Low NOx boilers, which meet the relevant standards Protection Noise control Low-noise equipment with noise reduction measures like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Utility Annual power 3,034,600 kWh consumption Annual gas 29,985,600 N m3 Annual water 232,500 tons Boiler house Location Boiler house capacity No. 1 Xinmin community 4 x 2.8 MW gas-fired hot water boiler 2 Anyuan community 3 x 2.8 MW gas-fired hot water boiler 3 Beiping community 3 x 2.1 MW gas-fired hot water boiler 4 Beiping community 4 x 2.1 MW gas-fired hot water boiler 5 Beiping community 4 x 2.1 MW gas-fired hot water boiler 6 Beiping community 4 x 2.8 MW gas-fired hot water boiler 7 Xingshi community 4 x 2.8 MW gas-fired hot water boiler 8 Shuipo community 4 x 4.2 MW gas-fired hot water boiler 9 Jingtuan community 4 x 2.1 MW gas-fired hot water boiler 10 Jingtuan community 3 x 2.1 MW gas-fired hot water boiler TOTAL 35 MW

Figure 38: Heating Coverage Areas, Neighborhood Boiler Systems, Jidong Subdistrict.

Xinmin Community

Anyuan Community

Beiping Community (Top: Boiler No. 4, Bottom: Boiler No. 3)

Beiping Community (Top: Boiler No. 5; Bottom: Boiler No.6)

Xingshi Community

Shuipo Community

Jingtuan Community (Left: Boiler No. 9, Right is Boiler No.10)

58 6. East Licang District Neighborhood Heating Systems

a) Location and Scope

106. Component 6 (East Licang District Neighborhood Heating Systems) will build 25 neighborhood gas boiler heating systems in east Licang District, where people currently depend on coal-fired household stoves and/or small inefficient coal-based boilers without pollution controls. Figure 39 shows the location of the neighborhood gas boiler heating systems and their heating coverage areas.

Figure 39: Location of 25 Neighborhood Gas Boiler Heating Systems, Component 6 (East Licang District Neighborhood Heating Systems).

a) Main Works and Equipment

107. Table 24 summarizes the main works and equipment of the 25 neighborhood gas boiler heating systems.

Table 24: Main Works and Equipment, Component 6 (East Licang District Neighborhood Heating Systems). Project Works Description Main Low NOx boilers 15 X 0.93MW gas-fired hot water boilers; 67 X 2.1 MW equipment gas-fired hot water boilers Heating pipelines 26.23 km secondary pipelines Outputs Annual heat supply 1,413,000 GJ Heat supply area 3,052,000m2 Environmental Emissions control Low NOx boilers, which meet the relevant standards Protection Noise control Low-noise equipment with noise reduction measures like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Utility Annual power 2,415,100 kWh consumption Annual gas 54,986,600 N m3 Annual water 426,300tons Boiler house Location Boiler house capacity no. 1 Shiyuan Yaju (original UK 2 x 2.1 MW gas-fired hot water boilers garden) 2 Poly Moly Mansion 6 x 2.1 MW gas-fired hot water boilers 3 Dongli Xinyuan (II) high building 2 x 2.1 MW gas-fired hot water boilers 4 Zhongnan century city 2-02-01 1 x 2.1 MW and 1 x 0.93 MW gas-fired hot water boilers (Sujia) 5 Zhongnan century A2-09-01、 2 x 2.1 MW gas-fired hot water boilers A2-06 (Sujia) 6 Fire protection dorm (East wing 2 x 2.1 MW gas-fired hot water boilers of Wanda C ） 7 Green city -Rose（A-1-4） 2 x 2.1 MW gas-fired hot water boilers 8 Green city –Cheng East（A-1-9) 2 x 2.1 MW and 2 x 0.93MW gas-fired hot water boilers 9 Wanda. Yuegong（10-4-2-C4） 4 x 2.1 MW gas-fired hot water boilers 10 Shangzang village (E-1) 2 x 2.1 MW and 2 x 0.93MW gas-fired hot water boilers 11 Shangzang village (E-3) 2 x 2.1 MW and 2 x 0.93MW gas-fired hot water boilers 12 Lufang village (G) 2 x 2.1 MW gas-fired hot water boiler 13 Liujia xiahe (B1-08) 2 x 2.1 MW and 2 x 0.93MW gas-fired hot water boilers 14 Zhuangzi（A2-16-01） 2 x 2.1 MW and 2 x 0.93MW gas-fired hot water boilers 15 Yujia xiahe 2 x 2.1 MW and 1 x 0.93MW gas-fired hot water boilers 16 Wangjia xiahe 2 x 2.1 MW and 1 x 0.93MW gas-fired hot water boilers 17 Jiakai city S8 plot(high rise 6 x 2.1 MW gas-fired hot water boilers building) 18 Jiakai city S20 (multi-floor 2 x 2.1 MW gas-fired hot water boilers residential) 19 Jiakai city S6-3(High rise 6 x 2.1 MW gas-fired hot water boilers residential) 20 Shangzanglu transformation B-1 4 x 2.1 MW gas-fired hot water boilers 21 Shangzanglu transformation B-2 2 x 0.93MW gas-fired hot water boilers 22 Shangzanglu transformation C-1 4 x 2.1 MW gas-fired hot water boiler 23 Shangzanglu transformation C-2 4 x 2.1 MW gas-fired hot water boiler 24 Zhuanzi, Sujia, Liujia xiahe 2 x 2.1 MW gas-fired hot water boiler transformation A2-14 25 Zhuanzi, Sujia, Liujia xiahe 2 x 2.1 MW gas-fired hot water boiler transformation A2-15 TOTAL 154.65 MW

7. Shinan District Unit-Based Heating and Cooling Systems

a) Location and Scope

108. Component 7 (Shinan District Unit-Based Heating and Cooling Systems) consists of

60 (i) upgrading of the existing Badahu HES; and (ii) unit-based heating and cooling supply system at the Qingdao Municipal Government Building Complex.

b) Main Works and Equipment

109. Badahu HES Upgrading: The Badahu HES is located at southeast corner of the intersection of Ningxia and Nanjing roads in Shinan District, Qingdao City (Figure 40). The HES is located at the end of existing heating network in an area that is currently experiencing an increase in population density and thus higher heating demands. In order to meet this demand, the HES will be upgraded through the installation of a lithium bromide heat pump unit and two peaking boilers (Table 25).

Figure 40: Locations of Badahu HES, Shinan District.

61 Table 25: Main Works and Equipment, Badahu HES Upgrading. Project Works Description Main works Lithium bromide heating One LCC-345-53.3/39-50/60 lithium bromide heat pump pump unit unit with 3,454 kW heating capacity and one LCC-264- 53.3/30-50/60 lithium bromide heat pump unit with 2,645 kW heating capacity will produce hot water for space heating during heating season and cold water for space cooling during cooling season. Peaking boiler unit 2 x 5.1 MW and 2 x 3.969 MW vacuum gas-fired boilers will produce additional heat during peak heating demand. Outputs Annual heat supply 139,200 GJ Heat supply area 326,000 m2 Utility Annual power consumption 11,666,900 kWh Annual gas consumption 6,729,600 N m3 Annual water consumption 44,000 tons Environmental Emissions Low emissions heat pumps and low NOx boilers, which Protection meet the relevant standards Noise control Low-noise equipment with noise reduction measures like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Public utilities Water supply Both production and domestic water comes from municipal water supply network. Gas supply Natural gas will be supplied by existing gas pipe networks. Power supply Electricity will be supplied by existing grid. Wastewater Production and domestic wastewater will be discharged to the municipal wastewater pipeline network

Figure 41: System Configuration, Badahu HES Upgrading.

110. Municipal Government Complex Unit-Based Heating and Cooling System: A unit-based heating and cooling supply system will be installed in the Qingdao Municipal Government Building Complex located at Middle Hong Kong Road in Shinan District (Figure 42). The complex has three buildings, No. 1-2 Building, No. 3 Building and No. 4 Building. No. 1-2 and No. 3 buildings will each have one gas-fired steam boiler providing hot water to the building. No. 4 building will be equipped with (i) electrical hot water boiler heat supply unit; (ii) cooling supply unit and (iii) heating/cooling storage unit. In the heating supply unit,

62 electrical hot water boilers will produce hot water for space heating and electrical chillers will provide cold water for space cooling. To support heating and cooling, a hot/cold water storage pool will be installed (Figure 43). Table 26 summarizes main works and equipment provides key feature of the Municipal Government Complex Unit-Based Heating and Cooling System.

Figure 42: Location of Unit-Based Systems at Municipality Building Complex.

Figure 43: System Configuration of Unit-Based Systems at Municipality Building Complex.

Table 26: Main Works and Equipment, Municipal Government Complex Unit-Based Heating and Cooling System. Project Works Description

63 No. 1-2 and No. 3 Municipal Buildings Main works Hot water supply unit 2 x 2t/h gas-fired steam boilers will provide hot steam, which will be converted into hot water for washing and dinning at No.1-3 buildings. No. 4 Municipality Building Main works Heat supply unit 2 X 1.4 MW electrical hot water boilers will provide hot water for space heating. . Cooling supply unit 2 X 1.2 MW electrical chillers will provide cold water for space cooling Heating/Cooling storage 600 m3 volume of water pool will be used as storage unit unit. Total Outputs Annual heat supply 51,400 GJ Annual cool supply 6,800 GJ Heat supply area 125,000 m2 Cooling supply area 22,000 m2 Total Utility Annual power consumption 945,000 kWh consumption Annual gas consumption 1,079,500 N m3 Annual water consumption 10,500 tons Environmental Emissions Low NOx boilers, which meet the relevant standards Protection Noise control Low-noise equipment with noise reduction measures like noise elimination, damping, sound insulation, optimized site layout, and noise enclosures. Public utilities 1. Water supply Both production and domestic water comes from municipal water supply network. 2. Gas supply Natural gas will be supplied by existing gas pipe networks. 3. Power supply Electricity will be supplied by existing grid. 4. Wastewater Production and domestic wastewater will be discharged to the municipal wastewater pipeline network

8. Shibei District Geothermal and Solar Heating Systems

111. Component 8 (Shibei District Geothermal and Solar Heating Systems) includes (i) a geothermal heat pump; and (ii) unit-based solar heating.

112. Geothermal heat pump: In Qingdao City there are a number of underground civil air defense tunnels built in the sixties and seventies during the cold war period. These are deep tunnels and can be favorable locations for geothermal heat pumps. The component will enhance the heat source of an existing district network through the installation of a capillary type ground source heat pump in a 4.5 km² length civil air defense tunnel running underground from Kaifeng Road to Beiling through Dean Road. The total length of the tunnel is about 1500 m and the depth of tunnel ranges between 10-30 m. The temperature of the walls at this tunnel is stable at around 15 °C. Some of the existing district heating network pipelines also pass through this tunnel.

113. Using a capillary type geothermal heat pump (Figure 44), heat will be extracted from the tunnel and will be supplied to the existing district heating network. Table 27 provide key feature of the geothermal heat pump, while Figure 45 shows the heat pump system configuration.

64 Figure 44: Heat Pump Capillary Network (on wall).

Figure 45: Geothermal Heat Pump System Configuration.

65 Table 27: Main Works and Equipment, Geothermal Heat Pump, Civil Air Defense Tunnel. Project Works Description Main work Ground source heat pump 2 x 2.6 kW capillary heat pump (Heat supply power: unit 473 kW) Pumping unit 3 x 450 m3/h circulation pumps and 3 x 220 m3/h circulation pumps will circulate water in the heating supply network. Outputs Annual heat supply 48,000 GJ Annual cooling supply 12,000 GJ Heat supply area 100,000 m2 Cooling supply area 38,200 m2 Utility Annual power consumption 2,908,600 kWh Annual water consumption 11,000 tons Environmental Noise control Low-noise equipment with noise reduction measures Protection like noise elimination, damping, sound insulation, and noise enclosures. Public utilities Water supply Both production and domestic water comes from municipal water supply network. Gas supply Natural gas will be supplied by existing gas pipe networks. Power supply Electricity will be supplied by existing grid. Wastewater Production and domestic wastewater will be discharged to the municipal wastewater pipeline network

114. Unit-Based Solar Heating: a solar heating system will be installed in the rooftop of a residential building in Shibei District. The solar heating system will use parabolic trough technology with hot water heat storage (Figure 46). A non-toxic petroleum-based mineral heat transfer oil with a boiling point of 320 °C will be used as the HTF.

Figure 46: Solar Heating System Configuration.

66 Table 28: Key features of the unit-based solar heating system. Project Works Description Main works Heat supply unit Parabolic trough technology will be installed in the roof of the building. Heat storage unit Hot water storage tank will be used. Outputs Annual heat supply 8,223 GJ Heat supply area 20,000 m2 Utility Annual power consumption 170,000 kWh Annual water consumption 1,310 tons Public utilities Water supply Both production and domestic water comes from municipal water supply network. Gas supply Natural gas will be supplied by existing gas pipe networks. Power supply Electricity will be supplied by existing grid. Wastewater Production and domestic wastewater will be discharged to the municipal wastewater pipeline network

9. Smart Energy Management System

115. Component 9 (Smart Energy Management System) includes (i) heat supply network dispatching center monitoring system; (ii) heat supply network operation energy management system; (iii) heat supply network HES monitoring system; and (iv) comprehensive building energy-saving control system. The component will utilize a range of computer software, computer system servers, computer hardware, and ancillary electronic and electrical devices. The main control office will be installed at the QEG headquarters in Qingdao.

67 IV. DESCRIPTION OF THE ENVIRONMENT

A. Location

116. The project will be implemented at eight different component locations in Qingdao City, located on the southeastern facing coast of the Shandong Peninsula, Shandong Province, in northeast PRC (Figure 1). Qingdao is a sub-provincial level city comprised of six urban districts and four county-level cities. Seven of the eight components are clustered near the urban core in Shinan, Shibei and Licang Districts, though Component 5 (Jidong Subdistrict Energy Systems) is located 25 km to the northeast in Jidong Subdistrict of Jimo City, a county level city under Qingdao City (Figure 2).

B. Provincial Overview

117. Shandong Province lies on the east coast of the PRC at the lower reaches of the Yellow River. It is the second most populous province in the PRC and in 2013 had a population of 97.33 million. It has a land area of 157,100 km2 and a coastline length of 3,100 km. The province is comprised of 17 municipalities and 140 counties and county level cities.

118. Shandong has a temperate climate, with hot, rainy summers and dry, cold winters. Mean annual temperature ranges from 10.5 to 13.5 oC; the average temperature in July is 24.5 oC and the average temperature in January is 0.2 oC. Mean annual precipitation ranges from 550 to 950 mm, increasing from the northwest to the southeast.

119. The province is divided into four topographical zones: (i) Northwestern Shandong Plain, formed by deposits of the Yellow River; (ii) Jiaolai Plain, between central-south Shandong and Jiaodong hilly regions, bounded by bays in the north and south and traversed by the Jiaolai, Weihe and Dagu rivers; (iii) Central-South Shandong Hilly Area, with elevations >1,000 masl; and (iv) Jiaodong Hilly Area, the main part of the Shandong Peninsula, which includes Qingdao City.

120. Shandong ranks first among PRC provinces in agriculture production with key crops including cotton, wheat, tobacco, sorghum and maize, as well as peanuts for which the province is especially well-known, providing nearly a quarter of the entire country's production. Shandong also has extensive deposits of natural gas, gold, iron, diamonds, and bauxite. In 2013, the total provincial GDP was CNY 5.468 trillion and per capita GDP was CNY 56,464.

C. Physical Resources

1. Geography and Topography

121. Qingdao City is located on the southeast coast of the Shandong Peninsula, which extends into the Yellow Sea. Geographically Qingdao City extends from 119°30′ to 121°00′ E longitude, and from 35°35′ to 37°09′ N latitude. It borders three prefecture-level cities, Yantai to the northeast, Weifang to the west, and Rizhao to the southwest. The main urban part of the city is centered on the east coast of Jiazhou Bay.

122. Qingdao City's total jurisdiction area occupies 10,654 km2. About 25% of Qingdao is hilly, 15% is mountainous, 38% is plains, and 22% is wetlands and marsh. Most project components are clustered near the urban core, and topography in this area is generally flat, though there are several low mountains in the southern part of the urban core including, from west to east, Zhushui Mountain, Zhongshan Park, and Fushan Mountain. Further to the east

68 the Laoshan Mountains separate the urban core of Qingdao from Jidong Subdistrict of Jimo City where Component 5 (Jidong Subdistrict Energy Systems) is located (Figure 47). Mount Laoshan is 1,132.7 masl, and is the highest coastal mountain in the PRC and the second highest mountain in Shandong Province. On the western side of Jiaozhou Bay there are several mountains including Daxiaoshan Mountain, Cangwushan Mountain and Tiejueshan Mountain.

Figure 47: Qingdao topography.

Source: Google Maps, 2015.

123. Qingdao has a 730.64 km long coastline. Jiazhou Bay is 32 km long and 27 km wide and has a surface area of 362 km², approximately two-thirds the area of 100 years ago. There are 69 islands in Qingdao with a total area of 21.1 km2. Most islands are no more than 20 km from the coast, with the most distant, Qianliyan Island, being 64 km from land. Only 10 islands have permanent residents.

2. Meteorology and Climate

124. Qingdao has an eastern temperate coastal-influenced continental monsoon climate with four distinct seasons: late springs, moderately warm summers, cool autumns and long winters. The southeast monsoon occurs from April to September, while the northwest monsoon occurs from October to March and comes from the Eurasian continent.

125. Based on over 100 years of meteorological data recorded since 1898, the annual average temperature in Qingdao is 12.7 oC., the maximum recorded temperature is 38.9 0C and the lowest recorded temperature is -16.9 oC. The hottest month is August with an average temperature of 25.3 oC; the coldest month is January with an average temperature of -1.2 oC. On average there are 11.4 days per year with a daily maximum temperature higher than 30 oC, and 22 days with a daily minimum temperature lower than -5 oC. Annual average precipitation is 662.1 mm and the lowest recorded annual precipitation is 308.2 mm. Annual average wind speed is 5.2 m/s, and winds blow from the SSE direction in the summer and the NNE direction in the winter. Annual average relative humidity is 73%;

69 highest humidity levels are in July and the lowest are in December.

Table 29: Summary Qingdao meteorological data based on observations since 1898.  Annual average temperature is 12.7 oC.  Extreme high temperature is 38.9 oC (July 15, 2002)  Extreme low temperature is -16.9 oC (January 10,1931)  Average temperature of annual hottest month is 25.3 oC  Average temperature of annual coldest month is -1.2 oC

 Annual average atmospheric pressure is 1,015.9 hPa  Annual average water vapor pressure is 12.9 hPa  Maximum water vapor pressure is 37.5 hPa (July 5, 1978)  Minimum water vapor pressure is 0.3 hPa (December 2, 1987)

 Annual average relative humidity is 73%  Minimum average relative humidity is 4% relative humidity (December 2, 1987)

 Annual average precipitation of 671.5 mm  Maximum annual precipitation is 1,227.6 mm (1975)  Minimum annual precipitation is 380.1 mm (1992)  Maximum precipitation in 15 minutes is 23.7 mm (July 26, 1982)  Maximum daily precipitation is 225.4 mm

 Annual average wind speed is 5.4 m/s  Maximum wind speed is 32.0 m/s (June 25, 1971)  Annual prevailing wind direction is SSE (15%)

 The maximum depth of frozen soil is 490 mm  Winter heating outside design temperature is -6 oC.  Outdoor mean temperature during heating period is 0.9 oC Source: Qingdao Domestic EIA, 2015.

126. Jidong Subdistrict is separated from the Qingdao urban area by the Laoshan Mountains, and has its own unique climatological characteristics. Table 30 presents summary data obtained for the period 1994-2013 from the Jimo meteorological station.

Table 30: Summary Jidong Subdistrict meteorological data, 1994-2013. o  Annual average temperature 13.2 C o  Highest recorded temperature 38.6 C o  Lowest recorded temperature -14.2 C

 Annual average relative humidity 66.90 %

 Annual average sunshine 2401.2 hours

 Annual average precipitation 733.8 mm  Maximum annual precipitation 1004.7 mm  Minimum annual precipitation 532.7 mm

 Annual average wind speed 2.4 m/s  Prevailing wind direction is SW with a wind frequency of 13% (see Figure 50).  Secondary prevailing wind direction is E with a wind frequency of 9%.  Annually calm winds occur an average of 16% of the time Source: Jimo meteorological station, 2015.

70 Figure 48: Qingdao climate graph.

Source: http://www.qingdao.climatemps.com/

Figure 49: Qingdao wind roses, based on data from 1994-2013. N N N NW NE NW NE NW NE

W E W E W E

SW SE SW SE SW SE S S S January.一月,静风1.00% 1% calm winds. 四月,静风2.00%April. 2% clam winds. July七月,静风2.00%. 2% clam winds. N N N 25.0 NW NE NW NE 20.0 15.0 10.0 5.0 W E W E W E

SW SE SW SE S S S October十月,静风2.00%. 2% clam winds. Annual全年,静风2.00%. 2% clam winds. 图例(%)Legend Source: Qingdao meteorological station. Calm wind defined as wind speed less than 0.5 m/s.

71 Figure 50: Jidong Subdistrict wind roses, based on data from 1994-2013.

N N NNW 20 NNE NNW 15 NNE NW 15 NE NW 10 NE 10 WNW ENE WNW 5 ENE 5 W 0 E 系列1W 0 E 系列1

WSW ESE WSW ESE

SW SE SW SE SSW SSE SSW SSE S S

Spring, calm wind is 9% Summer, calm wind is 13% N N NNW 10 NNE NNW 10 NNE 8 8 NW NE NW NE 6 6 WNW 4 ENE WNW 4 ENE 2 2 W 0 E 系列1W 0 E 系列1 WSW ESE WSW ESE

SW SE SW SE SSW SSE SSW SSE S S

Autumn, calm wind is 23% Winter, calm wind is 19% N NNW 15 NNE NW 10 NE

WNW 5 ENE W 0 E 系列1

WSW ESE

SW SE SSW SSE S

Annual, calm wind is 16%

Source: Jimo meteorological station. Calm wind defined as wind speed less than 0.5 m/s.

3. Surface Water Resources

127. There are total of 224 rivers in the Qingdao City administrative area, all of which are primarily rain fed. Of these, 33 have a basin area over 100 km2 and are classified it into three larger river systems: the Dagu River System, the Beijiaolai River System and the Coastal Rivers System.

128. The drainage area of the main urban area of Qingdao City is approximately 194 km2 and is divided into 5 drainage areas: the Tuandao drainage area, the Maidao drainage area, the Haibo River drainage area, the Licun River drainage area and the Loushan River drainage area. The 5 drainage areas include 24 major river channels with a total length of 100 km, 83 km of which is in the main urban area.

129. In terms of the proposed project, three components are located adjacent to two rivers:

72  Component 1 (Shibei District Binhai Energy Systems) is located south of the Licun River;  Component 3 (Licang and Shibei Districts Unit-Based Heating and Cooling Systems), Subcomponent 1 (Qingdao Subway Control Center Unit-Based Energy System), is located north of the Licun River;  Component 8 (Shibei District Geothermal and Solar Heating Systems) is located south of the Moshui River.

130. Fresh water resources are scarce in Qingdao, and the area suffers from water shortages. Both surface and groundwater sources are used. Chanzhi Reservoir located in Laixi 85 km north of Qingdao is Qingdao's largest reservoir with a storage capacity around 0.4 billion m3.

131. A system of 8 surface water reservoirs form the main water supply source for the Qingdao urban area and Jimo Subdistrict, including:

 Jihongtan Reservoir, 32 km northwest of the city center. The reservoir has a storage capacity of 0.147 billion m3, and receives water diverted from the Yellow River.  Laoshan reservoir, 18 km northeast of the city center, with a storage capacity of approximately 56 million m3).

132. The annual average surface water resource in Qingdao is estimated at 2 billion m3 and the annual average groundwater resource is estimated at 1 billion m3. Once double counting of water in both surface and groundwater estimates are accounted for, available water resources are estimated at 1.5 billion m3. The available per capita water resource is 313 m3 and the average water resource per mu (666.7 m2) is 306 m3, which are 12% and 15% respectively of the national averages, and below the worldwide-recognized standard for water shortage — 500 m3 per capita. As a result, groundwater resources are over exploited.

4. Environmental Quality

133. The following section is based on data from the Qingdao Environmental Status Reports (2013 and 2014).

a) Overview

134. In 2013 Qingdao's overall environmental quality was generally stable. Major pollutant emissions - chemical oxygen demand (COD), ammonia nitrogen (NH3-N), sulfur dioxide (SO2), and nitrogen oxides (NOx) - were reduced by 3.45%, 2.79%, 2.80% and 8.84% respectively compared to 2012. A new national ambient air quality standard was implemented (Ambient Air Quality Standards GB3095-2012)6 and over the year 72.9% of days had an air pollution index (API) below 100 in the urban area, which is considered to be good. However PM10, PM2.5 and NOx levels were often problematic, and at times exceeded both 1 hour and 24 hour PRC standards.

135. Water sources for the urban area centralized drinking water system met the relevant standards (Surface Water Quality Standards, GB 3838-2002), and water quality in the main rivers was generally good - 72.1% of river functional zones met the relevant standards. Marine water quality is also generally good. Water quality at Yellow Sea (not including Jiaozhou Bay) monitoring points met Class II sea standard or better (Sea Water Quality

6 Ambient Air Quality Standards GB3095—2012 has two classes of limit values; Class 1 standards apply to special areas such as natural reserves and environmentally sensitive areas, and Class 2 standards apply to all other areas, including urban and industrial areas. The PRC standards for Class 2 areas are applicable for the Project.

73 Standard, GB 3097-1997). Water quality of Jiaozhou Bay was relatively stable, but only 58.7% of the bay met the Class II sea water quality standard, an increase of 5.8% compared to 2012.

b) Air Quality

i. Qingdao Air Quality Index

136. In 2012 a new Air Quality Index (AQI) was introduced in the PRC, replacing the old Air Pollution Index (API) (see Figure 51).

Figure 51: The PRC’s Air Quality Index (AQI)

The Air Quality Index (AQI) was introduced in 2012 and replaces the old Air Pollution Index (API). The MEP measures airborne pollution using its Air Quality Index (AQI). The AQI is based on the concentration levels of six major atmospheric pollutants: sulphur dioxide (SO2), nitrogen dioxide (NO2), suspended particulates smaller than 10 microns in diameter (PM10), carbon monoxide (CO), ozone (O3), and suspended particulates smaller than 2.5 microns in diameter (PM2.5). The index is employed at monitoring stations in 367 cities across the nation.

The MEP measures and assigns an individual air quality score (IAQI) to each of the six pollutants over a period of one, eight, or 24 hours. A city’s final AQI is the highest of those six scores with that particular pollutant being the city’s major pollutant. When the index is lower than 50, the ministry does not name the major pollutant. The AQI ranges from zero to over 300:

Source: Li Li and Dong-Jun Liu (2014) and http://multimedia.scmp.com/china-air-pollution-in-2014/

137. In 2014 in the Qingdao urban area 262 days (71.8%) had an AQI below 100. Of those 262 days, PM2.5 was the major pollutant for 38.2% of the time, O3 was the major pollutant for 29.6% of the time, and PM10 was the major pollutant for 29.4% of the time. The average annual AQI in 2013 was 84 (Figure 52).

Figure 52: Qingdao average annual AQI compared to the 20 most polluted Cities in the PRC.

Average 2013 AQIs of the PRC’s 20 most polluted cities:

Qingdao average annual 2013 AQI: How to read the average annual AQI:

Source: http://multimedia.scmp.com/china-air-pollution-in-2014/ based on MEP data.

138. In 2104 in Qingdao 9 days had an AQI of 201 or higher (compared to 23 days in 2013) the result of regional haze and poor atmospheric diffusion. All occurred during the heating season, and the major pollutant was PM2.5. Research on particulate matter sources in Qingdao indicate that 40% of PM2.5 is from coal fired emission, 22% is from urban fugitive dust, 20% is from vehicle emissions, and the remainder is from industrial exhaust, service industry emissions, household emissions and other sources.

139. Since November 2013 Jimo City, Jiaozhou City, Pingdu City, Laixi City and Huangdao District (hereafter referred to as the four cities and one district) have published their monitoring data according to the new ambient air quality standard. The percentage of days when the API was below 100 was 44.3% in November 2013 and 60% in December in 2013.

ii. Ambient Air Quality Monitoring

140. The Qingdao EPB has 19 automated continuous air quality monitoring stations (Figure 53). Monitoring station coverage is very good for project components located in the Qingdao urban core area, but is poor for Component 5 in Jidong Subdistrict. Data was

75 collected from the network of stations for most important pollutants in the urban area (SO2, NO2, PM10 and PM2.5) both to further characterize ambient conditions (discussed below) and to support dispersion modelling (see Chapter V), while a program of ambient monitoring was undertaken in Jidong Subdistrict.

Figure 53: Location of Qingdao EPB Automated Continuous Air Quality Monitoring Stations and Jidong Subdistrict Ambient Monitoring Site.

Source: Qingdao EPB, 2015.

Qingdao Ambient Air Quality Monitoring Data

141. Data from four urban core automated continuous air quality monitoring stations in the three Districts where most of the project components are located, are presented in Table 31 to Table 33. From these tables it can be observed that:

- SO2 levels during the 2014/2015 heating season were low and generally in compliance with PRC standards. Exceedances of the 1 hour average standard only occurred for 0.01 % of the averaging periods for two out four stations, and exceedances of the 24 hour average only from 0.6 to 1.4 % of the averaging periods for three stations. Similarly, 1 hour and 24 hour average SO2 levels during the 2014 calendar year were low and fully in compliance with PRC standards. The maximum recorded 1 hour level was 292 µg/m3 (the standard is 500 µg/m3). The annual 3 average concentration of SO2 in 2014 was 37 µg/m , which complied with the PRC standard of 60 µg/m3.

76 - One hour NO2 levels during the 2014/2015 heating season were generally in compliance with PRC standards. Exceedances of the 1 hour average standard only occurred for 0.02 to 0.4 % of the averaging periods for three out of four stations. However, exceedances of the 24 hour average standard were more common, and all 4 stations recorded exceedances ranging from 4.7 to 14.0 % of the averaging periods. The maximum recorded 24 hour level was 167 µg/m3 (the standard is 80 µg/m3). One station recorded exceedances for 1.3% of the 1 hour averaging periods during the 2014 calendar year. The maximum recorded 24 hour level was 384 µg/m3 (the standard is 200 µg/m3). All four stations recorded exceedances of the 24 hour average standard, with exceedances ranging from 2.5 to 21.6 % of the averaging periods. The maximum recorded 24 hour level was 241 µg/m3 (the standard is 80 3 3 µg/m ). The annual average concentration of NO2 in 2014 was 43 µg/m which slightly exceeded the PRC air quality standard of 40 µg/m3.

- All four stations recorded significant exceedances of the average 24 hour PM10 standard during the 2014/2015 heating season, with exceedances occurring for 10.8 to 36.4 % of the averaging periods. The maximum recorded 24 hour level was 538 µg/m3 (the standard is 150 µg/m3). All four stations also recorded significant exceedances of average 24 hour PM10 standard during the during the 2014 calendar year, with exceedances occurring for 20.7 to 39.7 % of the averaging periods. The maximum recorded 24 hour level was 415 µg/m3 (the standard is 150 µg/m3). The 3 annual average concentration of PM10 in 2014 was 107 µg/m , which exceeded the PRC standard by 37 µg/m3.

- All four stations also recorded significant exceedances of average 24 hour PM2.5 standard during the 2014/2015 heating season, with exceedances occurring for 19.9 to 31.8 % of the averaging periods. The maximum recorded 24 hour level was 290 µg/m3 (the standard is 75 µg/m3). All four stations recorded significant exceedances of average 24 hour PM2.5 standard during the during the 2014 calendar year, with exceedances occurring for 24.6 to 36.7 % of the averaging periods. The maximum recorded 24 hour level was 229 µg/m3 (the standard is 75 µg/m3). The annual 3 average concentration of PM2.5 in 2014 was 59 µg/m , which exceeded the PRC standard by 24 µg/m3.

142. Overall it can be seen the two most serious pollutants in the Qingdao urban area are particulate matter (PM10 and PM2.5) and NOx, while SO2 is not considered to be a serious issue.

Jidong Subdistrict Ambient Air Quality Monitoring Data

143. As noted above, the Qingdao EPB automated continuous air quality monitoring stations do not provide good coverage for Component 5 in Jidong Subdistrict. In order to better understand ambient conditions in the area and to provide necessary data for the dispersion modeling, monitoring was undertaken continuously over a 7 day period from November 17 to 23, 2014 (during the heating season) for SO2 and NO2 (1-hour average concentrations) and SO2 and NO2 and PM10, (24-hour average concentrations) by the by the Qingdao Environmental Protection Science and Technology Center (QEPSTC) (see Table 33). Wind direction, wind speed, air temperature, barometric pressure, cloud cover and other meteorological parameters were also monitored. The monitoring site is shown in Figure 53.

77 Table 31: Data from Qingdao urban core ambient air quality monitoring stations, 2014/2015 heat supply season. Pollutant / Averaging Period / Standard East Shinan South Licang Sifang Station, Licang District % Averaging Periods Exceeding Unit (GB3095- District District Shibei District Station Standard 2012) Station Station 1 Hour Average µg/m3 500 1-345 1-518 1-313 1-596 SO2 Averaging Periods % / 0 0.01 0 0.01 Exceeding Standard (%) 1 Hour Average µg/m3 200 1-170 1-347 1-354 1-206 NO2 Averaging Periods % / 0 0.4 0.04 0.02 Exceeding Standard (%) 24 Hour Average µg/m3 150 6-151 6-177 8-130 5-177 SO2 Averaging Periods % / 0.6 1.4 0 0.6 Exceeding Standard (%) 24 Hour Average µg/m3 80 6-110 4-167 5-162 16-126 NO2 Averaging Periods % / 4.7 14.0 9.5 9.0 Exceeding Standard (%) 24 Hour Average µg/m3 150 18-410 14-305 19-354 20-538 PM10 Averaging Periods % / 13.8 10.8 15.7 36.4 Exceeding Standard (%) 24 Hour Average µg/m3 75 6-229 5-242 9-290 7-280 PM2.5 Averaging Periods % / 19.9 24.8 23.8 31.8 Exceeding Standard (%) Notes: i) the heat supply season is 141 days. ii) shading denotes significant percentage (>10%) of averaging periods exceeding PRC ambient standards GB3095-2012. Source: Qingdao EPB, 2015.

Table 32: Data from Qingdao urban core ambient air quality monitoring station, full 2014 calendar year. Pollutant / Standard East Shinan South Licang Averaging Period / Sifang Station, Licang District Unit (GB3095- District District % Averaging Periods Exceeding Shibei District Station 2012) Station Station Standard 1 Hour Average µg/m3 500 4-247 1-248 1-233 1-292 SO2 Averaging Periods % / 0 0 0 0 Exceeding Standard (%) 1 Hour Average µg/m3 200 1-152 1-384 4-155 5-183 NO2 Averaging Periods % / 0 1.3 0 0 Exceeding Standard (%) 24 Hour Average µg/m3 150 6-125 8-137 11-130 15-121 SO2 Averaging Periods % / 0 0 0 0 Exceeding Standard (%) 24 Hour Average µg/m3 80 9-99 9-241 11-109 18-128 NO2 Averaging Periods % / 2.5 21.6 5.1 16.7 Exceeding Standard (%) 24 Hour Average µg/m3 150 34-346 29-298 33-316 54-415 PM10 Averaging Periods % / 24.6 20.7 24.8 39.7 Exceeding Standard (%) 24 Hour Average µg/m3 75 11-229 22-169 22-220 26-225 PM2.5 Averaging Periods % / 24.6 34.5 35.6 36.7 Exceeding Standard (%) Notes: i) shading denotes significant percentage (>10%) of averaging periods exceeding PRC ambient standards GB3095-2012. Source: Qingdao EPB, 2015.

78 Table 33: Ambient air quality monitoring sampling program, Jidong Subdistrict, 2014. Sampling Pollutant Sampling Times Sampling Period Frequency One hour average: 02:00, 08:00, 45 minutes sampling time for SO , NO 4 times/day 2 2 14:00, 20:00 one hour concentration 20 hours sampling time for PM , SO , NO 1 time/day Daily average: 4:00-24:00 10 2 2 daily concentration Source: QEPSTC, 2015.

144. Results from the monitoring program in Jidong Subdistrict are presented in Table 34. From this data it can be observed that ambient air quality in Jidong is good and fully in compliant with relevant standards (Class II GB 3095-2012). This is due to the separation of Jidong Subdistrict from the Qingdao urban area by the Laoshan Mountains, and the much lower levels of pollutant generation in Jidong Subdistrict.

Table 34: Ambient air quality monitoring data, Jidong Subdistrict, 2014. 1 Hour Average Concentration 24 Hour Average Concentration Averaging Averaging Worst Case Worst Case Periods Periods Site Parameter Range Exceedance Range Exceedance Exceeding Exceeding (mg/m3) of Standard (mg/m3) of Standard Standard Standard (%) (%) (%) (%) SO2 0.007-0.039 0 0 0.011-0.032 0 0 Jingtuan NO2 0.012-0.056 0 0 0.016-0.036 0 0 village PM10 / / / 0.062-0.128 0 0 Notes: i) shading denotes significant percentage (10%) of averaging periods exceeding PRC ambient standards GB3095- 2012. Source: QEPSTC, 2015.

iii. Acid Rain

145. The annual average pH of precipitation in Qingdao in 2014 was 6.48, which was 0.12 higher than in 2013. Acid rain (defined as a pH less than 5.6) occurred 1.0% of the time. In the four cities and one district, annual average pH ranged from 5.72 to 7.70.

iii. Pollutant Emissions

146. In 2014 emissions of SO2, NOx, and PM in Qingdao were 91,100 tons, 101,700 tons and 45,800 tons respectively. SO2 and NOx emissions were 5.90% and 6.56% lower respectively compared to 2013 levels, while emission of PM increased by 8.83% compared to 2013.

147. In 2014 emissions of SO2, NOx, and PM from industrial sources were 64,000 tons, 58,500 tons and 32,200 tons respectively. Industrial emission of SO2 and NO2 were 7.65% and 9.94% lower respectively compared to 2013, while industrial emissions of PM increased by 15.8%. Emissions of SO2, NOx, and PM from household sources were 27,100 tons, 2,600 tons and 9,800 tons respectively, an increase of 1.49%, 1.30% and 1.49% respectively compared to 2013.

c) Water Quality

i. Surface Water

148. A system of 8 surface water reservoirs forms the main water supply source for the

79 Qingdao urban area. Water quality in all reservoirs met the relevant standards (Surface Water Quality Standards, GB 3838-2002).

149. There are 61 river functional zone monitoring sections in 30 main rivers in Qingdao, and 72.1% of these zones met the relevant surface water quality standards. There are 4 provincial monitoring sections in the main stem of the Dagu River, and water quality of all 4 sections met the relevant standards. In some Qingdao rivers such as the Licun River, Changle River and Lianwan River, water quality is negatively affected by wastewater and other pollutants, and there are 22 high pollution load points that have been identified. Water quality generally improved at these sites in 2014; average concentrations of COD and ammonia nitrogen were reduced by 10.2% and 6.5% respectively compared to 2013.

ii. Ground Water

150. Groundwater monitoring data was obtained from two locations: the Qingdao Steel Plant, located north of Zunyi Road, Licang District, in urban Qingdao; and Jingtuan Village in Jimo City. Groundwater in the Qingdao Urban area should meet Class 4 criteria of GB/T14848-93, and the results indicate that the groundwater is in compliance with the standard (Table 37). Groundwater in the Jimo City area should meet Class 3 criteria of GB/T14848-93, and the results indicate that the groundwater is almost fully in compliance with the standard (Table 38). However, ground water extraction is not allowed for the project. Thus, no ground water will be used.

Table 35: Groundwater monitoring data, Qingdao Steel Plant, Licang District, January 9 2012. Shading denotes a standard exceedance. Item Unit Limit No 1 No 2 No 3 No 4 No 5 5.5-6.5, pH 7.50 7.86 7.50 7.00 7.08 8.5-9 Total hardness mg/L 550 416 293 366 459 504 Total dissolved solids mg/L 2000 836 654 918 1254 1210 Sulfate mg/L 350 47.2 31.7 28.7 41.6 35.7 Fluoride mg/L 2 0.52 0.48 0.32 1.43 0.92 Chloride mg/L 350 154 132 183 301 286 Ammonia nitrogen mg/L 0.5 0.04 0.12 0.07 0.05 0.08 Arsenic μg/L 50 ND ND ND ND ND Volatile Penol mg/L 0.01 ND ND ND ND ND Nitrate nitrogen mg/L 30 23.0 15.0 21.2 24.5 12.6 Nitrite nitrogen mg/L 0.1 0.006 ND 0.008 0.005 ND Cyanide mg/L 0.1 ND ND ND ND ND Permanganate index mg/L 10 1.0 0.9 1.7 2.6 1.5 Total mercury μg/L 1 ND ND ND ND ND Lead μg/L 100 ND ND ND ND ND Cadmium μg/L 10 ND ND ND ND ND Iron mg/L 1.5 0.14 0.19 0.2 0.23 0.26 Manganese mg/L 1 ND ND ND ND 0.02 Chromium VI mg/L 0.1 ND ND ND ND ND Total coliform Unit/L 100 <3 <3 <3 <3 <3 Temperature oC 8 9 9 8 10 Note: ND = Not Detected.

80 Table 36: Groundwater monitoring data, Jungtuan Village, Jimo City, April and September, 2012. Shading denotes a standard exceedance. Date No Item September 26, Limit April 26, 2012 2012 1 pH 7.53 7.73 6.5～8.5 2 Ammonia nitrogen 0.18 0.04 ≤0.2 Permanganate 3 1.3 1.49 ≤3.0 index 4 Total hardness 448 646 ≤450 5 Sulfate 34 39 ≤250 6 Nitrate nitrogen 2.98 5.87 ≤20 7 Nitrite nitrogen No detection 0.005 ≤0.02

iii. Marine Water

151. Water quality in offshore areas is generally good. Water quality at Yellow Sea (not including Jiaozhou Bay) monitoring points met Class II sea water standard or better (Sea Water Quality Standard, GB 3097-1997). In 2013 only 58.7% of Jiaozhou Bay met the Class II sea water quality standard. In 2014 water quality improved and 63.4% of the bay met the Class II sea water quality standard, an increase of 4.7% compared to 2013 The main pollutant was inorganic nitrogen, and the most polluted areas were the northwest and northeast areas of Jiaozhou Bay.

iv. Wastewater Emissions

152. Annual wastewater emission in 2014 was 508.783 million tons, an increase of 37.0135 million tons compared to 2013. Industrial wastewater accounted for 109.894 million tons, and domestic wastewater 398.5239 million tons. The annual emission of COD and ammonia nitrogen were 143,700 tons and 12,190 tons respectively, a reduction of 0.41% and 0.23% compared to 2012.

153. The annual COD emission in 2014 from industrial wastewater was 8,100 tons, a reduction of 1.90% compared to 2013, while the annual ammonia nitrogen emission from industrial wastewater was 690 tons, a reduction of 5.08% compared to 2013. The annual emission of COD from domestic wastewater were 24,700 tons, a reduction of 0.50% compared to 2013. The annual ammonia nitrogen emissions from domestic wastewater was 6,100 tons, the same as 2013.

154. The annual emissions of COD and ammonia nitrogen in 2014 from agricultural sources (including crop production, aquaculture, livestock and poultry) were 110,600 tons and 5,350 tons respectively, a reduction of 0.28% and 0.10% compared to 2013.

d) Ambient Noise Monitoring

155. Shandong Seatone Detection Evaluation Technology Ltd. undertook noise monitoring at various community based energy stations, neighborhood boiler houses, HESs, and their adjacent sensitive receptors. The monitoring was carried out at over a 24-hour period on 16 and 27 July, 2015. Weather conditions were sunny and cloudless with wind speed less than 5.0 m/s, which is in compliance with relevant PRC meteorological requirements for noise monitoring. Monitoring utilized HS 6298 and Aiwa AWA6228 multi-functional ambient noise detectors in accordance with the relevant requirements in Noise Standards for Industrial Enterprises at Site Boundary (GB12348-2008). Table 37 presents the locations of the ambient noise monitoring sites, while Table 38 presents the results.

Table 37: Project Components and Ambient Noise Monitoring Sites. No. Project Component Subcomponent Ambient Noise Monitoring Sites Shibei District Binhai Industrial Waste Heat Recovery A total of 4 monitoring sites: North, South, Energy Systems System East, and West site boundaries of Taineng PC1 (three subcomponents are Binhai Community-Based Energy TPP (the closest sensitive receptor is located within the premise System located at east side of Taineng TPP) of the Taineng TPP) Wastewater Heat Recovery System Licang District Houhai Houhai Community Based Energy Energy Systems System A total of 4 monitoring sites: North, South, PC2 (two subcomponents are East, and West site boundaries of Houhai Qingdao North Railway Community located within the premise TPP Based Energy System of the Houhai TPP Qingdao Subway Control Center PC3-1 Unit-Based Energy System Shibei and Licang Districts NA (As subcomponents will be installed Jieneng Company Headquarter PC3-2 Unit-Based Heating and inside the existing buildings. Therefore, no Unit-Based Energy System Cooling Systems ambient noise was monitored) Dongli Commercial Complex Unit- PC3-3 Based Heating and Cooling System A total of 100 monitoring sites: North, South, Shibei District Heat PC4 NA East, West site boundaries of proposed 25 Exchange Stations boiler houses A total of 4 monitoring sites: North, South, No 1 Commercial Complex Energy East, and West site boundaries of No 1 System commercial complex energy station A total of 4 monitoring sites: North, South, Jidong Subdistrict Energy No 2 Commercial Complex Energy PC5 East, and West site boundaries of No 2 Systems System commercial complex energy station A total of 24 monitoring sites: North, South, Neighborhood Boiler Heating East, West sides of each community (a total Systems of 6 communities) East Licang District A total of 112 monitoring sites: North, South, PC6 Neighborhood Heating NA East, West site boundaries of proposed 28 Systems HES locations A total of 4 monitoring sites: North, South, Badahu HES Upgrading East, and West site boundaries of Badahu Shinan District Unit-Based HES PC7 Heating and Cooling Municipal Government Complex A total of 2 monitoring sites: North and West Systems Unit-Based heating and cooling site boundaries of No. 4 Municipal system Government Building NA (Equipment does not involve noise Geothermal Heat Pump Shibei District Geothermal generation) PC8 and Solar Heating Systems NA (Equipment does not involve noise Unit-Based Solar Heating generation) Smart Energy Management NA (Equipment does not involve noise PC9 NA System generation)

156. The results indicate that for existing facilities:

- Ambient daytime and nighttime noise levels at the site boundaries of the Taineng TPP (Component 1 Shibei District Binhai Energy Systems) meet the applicable Class III standards (65 dB(A) daytime, 55 dB(A) nighttime) in Noise Standards for Industrial Enterprises at Site Boundary (GB12348-2008).

- Ambient daytime and nighttime noise levels at the site boundaries of Houhai TPP (Component 2 Licang District Houhai Energy Systems) meet the applicable Class III

82 standards (GB12348-2008) with the exception of the north boundary, where construction is being undertaken at an adjacent property at the time of noise monitoring was done. In addition, the results also indicate that daytime and nighttime noise levels at adjacent sensitive location of Houhai TPP meet the applicable Class II standards (60 dB(A) daytime, 50 dB(A) nighttime) in PRC Environmental Quality Standards for Noise (GB3096-2008).

157. With respect to the other project components, the results indicate that:

- Ambient daytime and nighttime noise levels at the proposed sites of boiler rooms and HESs meet the applicable Class II standards (60 dB(A) daytime, 50 dB(A) nighttime) in PRC Environmental Quality Standards for Noise (GB3096-2008).

- Ambient daytime and nighttime noise levels at the proposed sites of No.1 and 2 Commercial Complex Energy Systems (Component 5, Jidong Subdistrict Energy Systems) meet the applicable Class III standards (65 dB(A) daytime, 55 dB(A) nighttime) in PRC Environmental Quality Standards for Noise (GB3096-2008).

Table 38: Ambient Noise Monitoring Data at Project Component Sites. Shading denotes Exceedance. Applicable Comp. Ambient Noise Monitoring Site Standards Day Time (dBA) Night Time (dBA) (day/night) Taineng TPP (site boundaries) Class III North 65/55 45.1 40.3 PC1 South 65/55 48.8 42.2 East 65/55 49.7 45.6 West 65/55 44.1 38.9 Houhai TPP (site boundaries) Class II and III North 60/50 67.4 56.0 PC2 South 65/55 47.9 42.5 East(sensate receptor is located) 60/50 53.0 48.3 West 65/55 51.9 46.7 Neighborhood Boiler Houses (25 locations) Class II Heat supply project in Wanke City (A4) 60/50 43.0 - 50.2 38.2 Heating system renovation project in Heya Village 60/50 48.7 -52.7 45.8-49.8 (commercial residential building) Heat supply project in Ruinazixuan 60/50 35.2 - 57.3 27.9 - 330.1 Heat supply project in Honghaijiayuan 60/50 43.3 - 51.2 38.4 - 41.1 Phase II heat supply project for security housing in 60/50 48.1 - 53.3 44.5 - 46.9 Luoyang Road Heat supply project in Taiyang Island 60/50 50.4 - 5.6 43.0 - 46.5 Renovation project in Artwork plant 60/50 31.9 - 47.9 29.0 Heating system renovation project in Zhonghaihenan 60/50 37.6 - 54 31.0 - 46.6 PC4 and Nanzhuang(No 1,2,3,4,5 and 8 plots ) Baolixiangbinuoji (south district and north district) 60/50 43.0 - 53.1 46.1 - 48.9 D area of renovation project in Shuiqinggou 60/50 44.9 - 51.7 38.4 - 46.8 Heat supply project in Yingxiu Garden 60/50 35.9 - 36.4 28.9 - 31.8 Heat supply project in Yousifang (No 99, South 60/50 35.2 - 44.1 31.5 - 38.1 Chongqing road) Heat supply project in Lvdi Real estate 60/50 50.1 - 56.3 44.5 - 49.8 Heda central city 60/50 51.2 - 56.9 41.1 - 48.2 No 187, Ruichang road (Huanyu) 60/50 41.6 - 44.2 25.8 - 43.7 Renovation project in No4 plant of Guomian 60/50 43.6 - 45.1 33.9 - 44 Housing for survivors project in Jinhua Road 60/50 49.8 - 51.8 38.7 - 44.6

83 Applicable Comp. Ambient Noise Monitoring Site Standards Day Time (dBA) Night Time (dBA) (day/night) Zhongyeyingjun 60/50 40.8 - 48.7 37.6 - 46.1 Newly built housing for survivors project in 60/50 43.6 - 47.5 35.6 - 43 Tianyijingyuan Residence in Gongzhiqingjiang Road 60/50 54.9 - 56.4 44.5 - 47.1 Project in Jinhua Road (Hanhe cable plant) 60/50 45.0 - 48.9 39.1 - 43.6 Renovation project in Area ABC of Haierhenanzhuang 60/50 47.5 - 58.7 36.2 - 46.5 Xinduxinyuan in No 249, South Chongqing Road 60/50 42.8 - 48.7 36.5 - 39.8 Wanke Zitai 60/50 51.3 - 55.9 49.5 - 52.3 Phase II Xingwang project 60/50 51.0 - 56.3 37.8 - 44.4 Renovation project in Area B of Daqingshuigou 60/50 45.9 - 48.1 42.8 - 45.4 Renovation project in Xiaoqingshuigou 60/50 54.3 - 57.2 36.2 - 45.1 Wenshajun 60/50 49.8 - 55.9 45.3 - 47.2 No 1 Commercial Complex Energy Station (site Class II boundaries) North 60/50 42.4 37.9 South 60/50 46.1 35.4 East 60/50 47.2 36.4 West 60/50 45.3 35.9 No 2 Commercial Complex Energy Station (site Class II boundaries) North 60/50 48.9 33.9 PC5 South 60/50 49.6 36.2 East 60/50 50.3 36.7 West 60/50 49.4 33.4 Neighborhood Boiler Houses Class II Xinmin community 60/50 47.2 - 48.8 32.0 - 35.3 Anyuan community 60/50 45.2 - 47.1 36.0 - 41.1 Beiping community 60/50 46.5 - 48.6 40.0 - 43.3 Xingshi community 60/50 47.3 - 49.2 39.6 - 40.8 Shuipo community 60/50 40.9 - 45.3 39.7 - 43.2 Jingtuan community 60/50 44.1 - 47.7 38.2 - 42.4 Heat Exchange Stations Class II Shiyuan Yaju (original UK garden) 60/50 38.3 - 40.8 32.3 - 39.1 Poly Moly Mansion 60/50 48.1 - 50.4 36.9 - 37.9 Dongli Xinyuan (II) high building 60/50 46.5 - 52.3 36.9 - 37.5 Zhongnan century city A2-02-01 60/50 48.1 - 48.8 38.1 - 39.4 Zhongnan century A2-09-01A2-06 60/50 44.1 - 47.8 40.9 - 42.9 Fire protection dorm (East wing of Wanda C ） 60/50 47.5 - 50.3 37 - 38.5 Green city -Rose (A-1-4) 60/50 41.9 - 54 29.4 - 33.8 Green city –Cheng East (A-1-9) 60/50 44.2 - 49.7 36.8 - 38.8 Wanda. Yuegong（10-4-2-C4） 60/50 43.4 - 51.1 38.8 - 39.4 Shangzang village (E-1) 60/50 50.1 - 51.2 30.6 - 36.7 PC6 Shangzang village (E-3) 60/50 48.8 - 51.9 33.3 - 35.8 Lufang village (G) 60/50 44.5 - 49.6 32.4 - 38.7 Liujia xiahe (B1-08) 60/50 47.4 - 48.3 40.8 - 42.7 Zhuangzi（A2-16-01） 60/50 47.1 - 47.8 39.7 - 41.7 Yujia xiahe 60/50 43.2 - 47.5 32.8 - 39.1 Wangjia xiahe 60/50 42.9 - 49.3 31.9 - 35.2 Jiakai city S8 plot(high rise building) 60/50 45.0 - 53.5 36.6 - 39.2 Jiakai city S20 (multi-floor residential) 60/50 43.1 - 46.4 41.1 - 42.6 Jiakai city S6-3(High rise residential) 60/50 42.1 - 51.5 36.2 - 47.8 Shangzanglu transformation B-1 60/50 44.9 - 46 29.1 - 30.6 Shangzanglu transformation B-2 60/50 42.9 - 50.7 28.1 - 34 Shangzanglu transformation C-1 60/50 49.6 - 50.4 37.2 - 41.2

84 Applicable Comp. Ambient Noise Monitoring Site Standards Day Time (dBA) Night Time (dBA) (day/night) Shangzanglu transformation C-2 60/50 44.6 - 46.9 34.7 - 37.8 Zhuanzi, Sujia, Liujia xiahe transformation A2-14 60/50 47.6 - 58.3 31.6 - 35.4 Zhuanzi, Sujia, Liujia xiahe transformation A2-15 60/50 46.9 - 50.7 32.3 - 33.6 Badahu HES 60/50 47.2 - 48.9 37.0-40.4 PC7 Municipal Government Complex 60/50 56.1 - 56.8 -

e) Solid Waste

158. Annual industrial solid waste production in 2014 in Qingdao City was estimated at 8.66 million tons, of which 95.65% is reported to have been collected and comprehensively utilized and disposed (either treated, reused, recycled, incinerated or landfilled). Industrial wastes included smelting slag, coal ash, tailings, etc. Annual industrial hazardous waste production was 41,900 tons, consisting primarily of mineral oil and acidic and alkali wastes, all of which was comprehensively utilized and disposed. Annual medical waste production was 7,032 tons, all of which was incinerated. Domestic waste collection was 2.21 million tons, all of which was comprehensively utilized and disposed.

D. Ecological and Sensitive Resources

1. Flora

159. The Qingdao City administrative area is located in the Temperate Broadleaf and Mixed Forests biome, in the North China Palearctic Ecozone (WWF, 2015). Vegetation communities in Qingdao includes deciduous broad-leaved forest, coniferous forest, bamboo forest, meadow, swamp, desert vegetation, halophytic vegetation, aquatic vegetation and others. Across the subprovincial level city the vegetation coverage rate is approximately 73.6%. Forest resources in Qingdao include both natural and planted; the total forest resource is about 4.2 million m3 and the forest coverage rate is approximately 27%. Qingdao is home to 152 families, 654 genera and 1,237 species of plants. There are six endemic and rare plants named for the city: Qingdao Lily (Lilium tsingtauense), Qingdao Geranium (Geranium tsingtauense), Qingdao Euonymus alatus, Qingdao Carex (Carex qingdaoensis), Qoingdao Scirpus triqueter and Qingdao Camellia.

2. Fauna

160. In terms of vertebrate distribution, the Qingdao City administrative area is located in the Huanghuai Plain sub-region in the North China Palearctic Ecozone. Climate and vegetation cover are favorable, and animals present include mammals, amphibians, reptiles and birds. Mammals are typically small and there are few larger ones. There are 387 recorded bird species belong to 58 families, which account for 32% of the 1200 known species birds in the PRC. Jiazhou Bay alone is home to 160 bird species. Key waterfowl species include the ancient murrelet (Synthliboramphus antiquus), black-capped kingfisher (Halcyon pileata), caspian tern (Hydroprogne caspia), red-breasted merganser (Mergus serrator), and striated heron (Butorides striata). There are 52 Class I state protected animals in Qingdao including 11 Class I birds, and 55 Class II state protected birds.7

3. Flora and Fauna at Project Sites

161. All project sites are within city limits in highly developed and modified industrial and urban environments. Surrounding land uses include industrial, mixed commercial, and

7 As designated by the List of Wildlife under Special State Protection, promulgated by the Chinese State Council pursuant to Article 9 of the Law of the People's Republic of China on the Protection of Wildlife.

85 residential. Original vegetation cover has been previously removed, and existing site vegetation is typically completely absent as they are developed industrial sites, or disturbed dirt with little or no vegetation cover (Figure 54). There are no known rare or endangered flora or fauna, parks, nature reserves or areas with special national, regional or local ecological significance within or adjacent to any of the sites. Figure 54: Site conditions at component locations.

(i) Component 1 site, Taineng TPP. (ii) Component 1 heating area. (iii) Component 2 site at Houhai TPP. The building, currently used for coal storage, will be refitted and retained.

(iv) Component 3 heating area, (v) Component 4, typical residential area, (vi) Component 5, site for No. 1 Dongli community. Luoyang Road. energy station.

(vi) Component 6, typical residential (vi) Component 7, Qingdao Municipal (vi) Component 8, underground area, Wangjia xiahe area. Government offices. defense tunnel. Source: ADB PPTA consultants.

86 E. Socio-economic and Cultural Resources

1. Administrative Divisions

162. Qingdao is a subprovincial level city and is comprised of six urban districts and four rural county-level cities with a total area of 10,654 km2. The urban population was 2.8 million in 2013, and by the end of 2014 the total permanent population (urban and rural) was 9.0 million (Table 39 and Figure 55).

Table 39: Data on Qingdao City administrative divisions

Land Area Urbanization Population Population Density Subdivision Type (km²) Rate (%) ('000s, 2014) (persons/km²) Shinan District 30.01 100 567.4 18907.03 Urban District Shibei District 63.18 100 1069.0 16919.91 Urban District Licang District 95.52 100 541.4 5667.92 Urban District Huangdao District 2220.10 80 1465.2 659.97 Urban District Laoshan District 389.34 80 427.5 1098.01 Urban District Chengyang District 553.20 80 688.0 1243.67 Urban District Jiaozhou City 1210 68 871.0 719.83 Rural County Jimo City 1727 58 1194.2 691.49 Rural County Laixi City 1522 58 750.7 493.23 Rural County Pingdu City 3166 53 1354.4 427.80 Rural County Source: Qingdao Statistical Bureau, 2015

Figure 55: Map of Qingdao City administrative divisions

87 2. Economy

163. Qingdao is a major economic center, an important international trade port and transportation hub, and one of the PRC’s most important coastal port cities. Table 40 presents key economic indicators for Qingdao. In 2013 GDP grew to over 800 billion CNY, an increase of 9.2% over the previous year. The secondary and service sectors are the main contributors to the city’s economy, with value-added output of CNY 364.14 billion and CNY 401.28 billion respectively, accounting for 45.5% and 50.1% of the city’s GDP. Key industries in the city include electronics, petrochemicals, fine chemicals, automobiles, machinery, metallurgy, building materials, biopharmaceuticals, textiles and garments, and food and beverage processing.

164. In 2013 61.6 million domestic tourists and 1.28 million overseas tourists visited Qingdao, generating tourism revenue of CNY 93.72 billion, up 16.1% from a year earlier. Qingdao’s foreign trade reached US$ 77.91 billion in 2013, a year on year increase of 6.5%, of which, US $41.99 billion was from export value, a year on year increase of 2.9%. The utilized FDI of the city was US$ 5.52 billion in 2013.

Table 40: Qingdao major economic indicators (2012). Indicator Parameter Land Area (km2) 10,654 Population(million) 8.96

GDP (CNY billion) 800.66 GDP Composition Primary Industry (Agriculture) 4.4% Secondary Industry (Industry & Construction) 45.5% Tertiary Industry (Service) 50.1%

GDP Per Capita (CNY) 89,797 Unemployment Rate 2.98%

Fixed Asset Investment (CNY billion) 502.79

Actually Utilized FDI (USD million) 5,520

Total Import & Export (USD million) 77,912

Export (USD million) 41,986

Import (USD million) 35,926 Sales of Social Consumer Goods (CNY billion) 290.43 Source: Qingdao Economic and Social Development Report 2013, in http://www.chinaknowledge.com/CityInfo/City.aspx?Region=Western&City=Qingdao

3. Infrastructure

165. The Qingdao Port is one of the key economic drivers in the region and a transportation hub for northern PRC. Originally constructed in 1892, it is the currently the sixth-largest in the PRC and the world’s eighth-largest seaport. Freight throughput reached 450 million tons in 2013 and container throughput in the same year was 15.52 million twenty- foot equivalent units (TEUs), ranking fourth overall in the PRC. The Port has established 90 sea routes connecting with more than 450 harbors in over 130 countries and regions. The passenger terminal is also a key entry point to Qingdao, and there are international passenger routes to the Republic of Korea and Japan.

166. Qingdao airport is one of busiest airports in Shandong province and serves more than 20 international passenger and cargo airlines, as well as providing connections to 47 large and medium-sized cities in the PRC.

167. Qingdao is well connected to the highway network. There are five National and four

88 Provincial Expressways that either begin in or pass through Qingdao, and total road length is over 4,300 km. Qingdao is home to the Jiaozhou Bay Bridge, which opened on June 30, 2011 and connects the urban part of Qingdao to Huangdao. The bridge’s total length is 41.58 km, 25.9 km of which are over water, making it the longest bridge over water in the world. At the end of 2012 there were 263 bus lines and trolley lines in the Qingdao urban area, and 5,397 buses and trolley buses and 9,693 taxies under operation.

168. Qingdao’s water supply is primarily sourced from six surface water reservoirs. In 2012 annual water consumption was 0.37 billion m3, including 0.149 billion m3 of industrial and commercial water consumption was 0.213 billion m3 of domestic water consumption. The total length of urban sewers is 6,182 km.

169. The heating area in Qingdao was 10.6 million m2 in 2012, and the total area under district heating was 105,030,000 m2. A total of 1,369,300 households use either liquefied natural gas (LNG), coal gas or natural gas. The annual LNG gas supply is 59,700 tons, the coal gas supply is 79,990,000 m3 and the natural gas supply is 689,220,000 m3.

170. Qingdao, like many cities in the PRC, is experiencing rapid urban growth. In 2012 the built-up urban area of Qingdao increased by 374.64 km2, a growth rate of 7.8%; average daily water consumption increased 5.1%, and the total area under district heating increased 11.2%.

4. Project Beneficiaries

171. The project will directly benefit an estimated 420,400 people in the project area by providing cleaner district energy services and improved air quality. The project will also indirectly benefit the remaining urban population in downwind districts of Qingdao through improved air quality by removing the polluting sources from the project area. Among the beneficiary households, 35% of households belong to low-income groups.8 In addition, the project will benefit (i) 15 schools with about 22,000 students, (ii) 55 kindergartens with about 7,000 children, and (iii) patients and staff in 7 hospitals.9

5. Physical Cultural Resources

172. Qingdao has a rich history, a unique combination of Chinese and German influenced architecture, and a number of natural and cultural scenic tourist attractions. However, the project activities are within city limits in highly developed and modified industrial and urban environments. There are no known Physical Cultural Resources (PCRs) within or adjacent to any of the sites.10

8 Defined as those (i) live in low income housing, and (ii) covered by Dibao (the minimum living allowance program). 9 Source: Summary Poverty Reduction and Social Strategy (SPRSS), Qingdao Smart Low-Carbon District Energy Project, People’s Republic of China, 2015. 10 Physical cultural resources (PCRs) are defined as movable or immovable objects, sites, structures, groups of structures, and natural features and landscapes that have archaeological, paleontological, historical, architectural, religious, aesthetic, or other cultural significance. Physical cultural resources may be located in urban or rural settings and may be above or below ground or under water. Their cultural interest may be at the local, provincial, national, or international level. Within the Project area these could include: - Funeral site: graves, cemeteries, shrines, stupas. - Religious buildings: Temples or Pagodas, complete or ruins. - Religious objects: Buddhist images or sculpture. - Sacred sites: sacred caves, forest, hills or cliffs. - Historical sites or objects: artifacts, tools, relics, memorials. - Spirit sites: sites residents believe are occupied by a spirit (house, tree, stone, etc.).

89 V. ANTICIPATED IMPACTS AND MITIGATION MEASURES

173. Anticipated positive and negative environmental impacts of the proposed project were assessed based on the Qingdao Project Domestic FSR (2015); a technical due diligence review of the FSR undertaken by ADB PPTA district heating specialists; a domestic Environmental Impact Assessment (EIA) report prepared by the Qingdao Environmental Protection Science and Technology Center (QEPSTC); due diligence environmental reviews and audits of existing and associated facilities undertaken by national and international environmental consultants; ambient air quality data for the Qingdao urban core area obtained from Qingdao EPB automated continuous air quality monitoring stations; ambient air quality monitoring in Jidong Subdistrict undertaken by QEPSTC; ambient noise monitoring undertaken by Shandong Seatone Detection Evaluation Technology Ltd.; noise modelling undertaken by national environmental consultants; cumulative air quality dispersion modelling undertaken by QEPSTC; public consultations led by the IA and QEPSTC and assisted by ADB PPTA international and national environmental consultants; and site visits, surveys, modelling and consultations undertaken by ADB PPTA national and international environmental consultants.

174. Pre-construction, construction phase and operation phases were each considered separately. The results of the assessment analysis indicates that during the pre-construction phase issues are very limited, and are mostly associated with ensuring appropriate incorporation of mitigation measures into the project design.

175. Potential negative construction phase environmental impacts are short-term and localized, and are associated with soil erosion, construction noise, fugitive dust, disruption of traffic and community services, and risks to worker health and safety. Potential negative operation phase impacts are associated with boiler emissions, waste and wastewater, noise, and health and safety risks to workers.

176. Potential positive operation phase impacts are significant and long-term, and are associated with emissions reductions compared to equivalent heat production from coal-fired boilers.

A. Anticipated Pre-construction Phase Impacts and Mitigation Measures

1. Siting and Land Acquisition

177. The project has 8 components with physical works, as described in Chapter III. These can be classified into those that will be located within existing facilities or buildings (components 1, 2, 3, 5 (gas boilers rooms), 7 and 8), and those in which new facilities will be constructed (components 4, 5 (No. 1 and No. 2 energy stations), and 6). In addition, heating pipeline construction is included in components 1, 2, 4, 5 and 6.

178. According to the social safeguards due diligence undertaken for the proposed project11, the project will not entail any permanent or temporary physical displacement or economic displacement. This is because:

i) agreements have been reached with affected existing buildings and facilities for installation of component works, and in all cases the existing buildings and facilities have sufficient available space;

11 Qingdao Smart Low-Carbon District Energy Project: Initial Poverty and Social Analysis (IPSA), 2015 and Summary Poverty Reduction and Social Strategy (SPRSS), 2015.

90 ii) heating pipelines will be laid underground within the existing pipeline or road right of ways (RoWs).

179. Overall, the social safeguards due diligence indicates that the project will not result in any involuntary land acquisition, resettlement or physical displacement, and there will be no loss of personal property, structures, crops, trees or other assets. There are also no potential adverse impacts on disadvantaged or vulnerable groups, including the poor, women and children, and Indigenous Peoples.

2. Mitigation Measures and Monitoring during Detailed Design

180. Mitigation measures to be adopted during detailed design to minimize the impacts are as follows:

(i) Detailed Design. Environmental mitigation measures indicated in this IEE, the EMP and the domestic EIA will be incorporated into the detailed design. (ii) Bidding Documents and Contracts. Environmental mitigation measures indicated in this IEE, the EMP and the domestic EIA will be included in contracts for civil constructions and equipment installations. All contractors will be required to strictly comply with the EMP. (iii) Environmental monitoring. The environmental monitoring program (EMoP, see Table A-4 in Appendix I) will be incorporated into the design to ensure that environmental impacts are closely monitored and activities of the project construction and operating are closely supervised against the PRC environmental laws, regulations and standards, ADB SPS, and the project EMP and the approved domestic EIA.

3. Grievance Redress Mechanism

181. In accordance with the Grievance Redress Mechanism (GRM) presented in Chapter VIII of the EIA, a staff member within the PMO EHSU will be assigned overall responsibility for the GRM; GRM training will be provided for PMO members and GRM access points; and the GRM access point phone numbers, fax numbers, addresses and emails will be disclosed to the public.

4. Training and Capacity Building

182. An institutional strengthening and training program will be delivered by environmental consultants and experts (see Table A-2 in EMP). The program will include the development of construction and operation phase EHS plans for each component. The training will focus on ADB’s and PRC’s environmental, health and safety laws, regulations and policies; implementation of the EMoP; the GRM; and international good EHS practices in natural gas- fired turbine and boiler operation. Training will be provided to the IA, relevant PMO staff, contractors and Qingdao EPB.

183. The IA shall ensure that the training and capabilities of the Contractor’s site staff are adequate to carry out the designated tasks. No operator shall be permitted to operate critical mechanical equipment without having proper certification.

5. Observation on Air Quality Improvement Activities

184. The closure of coal-fired neighborhood boilers and household stoves will be done by local government as part of air quality improvement policy in Qingdao. The project IA informed that by July 2015, all the coal-fired neighborhood boilers were closed down in the

91 project areas. The LIEC will check, confirm existence of all the coal-based heating sources in the project areas and record it the environmental monitoring reports.

185. Another one is related to air quality improvement activities at existing related facilties. Taineng and Houhai TPPs are currently upgrading equipment to comply with newly introduced stringent air emissions standards. Even though these efforts are not part of the project scope, their status of ongoing emission reduction efforts will be checked and recorded in order to assess system-wide air quality improvement in project areas.

B. Anticipated Construction Phase Impacts and Mitigation Measures

1. Erosion and Spoil

186. Components 1, 2, 3, 5 (gas boilers rooms), 7 and 8 will be located within existing facilities or buildings. For these components, construction activities will not result in significant surface erosion. Construction activities of other components such as land leveling, excavation and filling activities may lead to surface erosion. The most vulnerable soil erosion areas in the construction site include excavation sites, leveling sites, spoil sites, temporary construction sites, and other areas where surface soil is disturbed. Soil erosion can also be more serious on slopes or near water bodies, though based on site visits all construction sites are generally flat and there are no rivers, streams or lakes that are likely to be affected. Soil erosion can also occur after the completion of construction if site restoration is inadequate. Pipeline excavation and burial may also cause localized erosion and mudding of adjacent road. Finally, construction activities may generate surplus spoil.

187. These impacts can be mitigated through typical good construction practice, erosion controls and site maintenance:

(i) At each construction site the potential for storm water runoff will be assessed and appropriate storm water drainage systems to minimize soil erosion will be implemented, including perimeter bunds and establishment of temporary detention and settling ponds to control topsoil runoff. (ii) Land excavation and filling will be balanced so as minimize the requirement for fill transportation. (iii) During earthworks the area of soil exposed to potential erosion at any one time will be minimized through good project and construction management. (iv) Temporary spoil storage sites will be identified, designed, and operated to minimize impacts. Spoil sites will be restored at the conclusion of storage activities. (v) Excess spoil that cannot be used on-site will be transported to an approved spoil disposal site. (vi) Spoil and aggregate piles will be covered with landscape material and/or regularly watered. (vii) Spoil will be reused on-site to the maximum extent feasible as fill. (viii) Waste construction material such as residual concrete, bricks, etc. will be used for backfill at the sites or nearby construction sites to the maximum extent feasible. (ix) Construction and material handling activities will be limited or halted during periods of rains and high winds.

92 (x) Pipelines will be installed and backfilled in a sequenced section-by-section approach. Open excavation areas during trenching activities will be minimized, and appropriate construction compaction techniques utilized. (xi) Any planned paving or vegetating of areas will be done as soon as practical after the materials are removed to protect and stabilize the soil. (xii) Once construction is complete disturbed surfaces will be properly sloped and revegetated with native trees and grass (see greening plan).

2. Wastewater

188. There are no surface water bodies at or near the around the component construction sites. However, inappropriate disposal of domestic wastewater (from construction worker camps and/or workers) or construction wastewater (from drainage of excavation and drilling, washing aggregates, washing construction equipment and vehicles, pouring and curing concrete, and oil-containing wastewater from machinery repairs) may cause soil or groundwater resources contamination.

189. These impacts can be mitigated through typical good wastewater management practices:

(i) Site visits have confirmed that there are municipal wastewater treatment plants serving all component locations. Adequate temporary sanitary facilities and ablutions will be provided for construction workers. Toilets will be equipped with septic tanks in accordance with PRC standards. Domestic wastewater will be treated in the septic tanks to meet Wastewater Quality Standards for Discharge to Municipal Sewers (CJ 343-2010) and discharged to the municipal sewer network for final treatment at a municipal wastewater treatment plant. (ii) Wastewater from the canteen will be treated in an oil-water separator, and then discharged into the municipal sewer network for final treatment at a municipal wastewater treatment plant. (iii) Construction wastewater will be directed to temporary detention and settling ponds. Areas where construction equipment is being washed will be equipped with water collection basins and sediment traps. After settling, supernatant will be recycled and sediment will be periodically excavated, and either reused if possible as fill, disposed at official spoil disposal sites, or disposed at official or landfills. (iv) Maintenance of construction equipment and vehicles will not be allowed on site so as to reduce wastewater generation.

3. Air Pollution

190. Anticipated sources of air pollution from component construction activities include: (i) dust generated from demolition, earth excavation, filling, loading, hauling and unloading; (ii) dust generated from disturbed and uncovered construction areas, especially on windy days; (iii) dust generated from construction material storage areas, especially on windy days; (iv) dust generated by the movement of vehicles and heavy machinery on unpaved access and haul roads; (v) dust generated from aggregate preparation and concrete-mixing; and (vi) emissions from construction vehicles (gaseous CO and NO2) and heavy diesel machinery and equipment. Similarly, dust and air pollution will also be generated during the installation of the heat supply pipelines from (i) excavation and piling of materials; (ii) raw material transport and unloading; (iii) cement mortar preparation; (iv) pipeline backfilling; and, (v) emissions from construction vehicles and heavy diesel machinery and equipment.

93 191. The domestic EIA indicates that without appropriate mitigations construction phase activities at larger energy station sites (e.g. Components 1, 2 and 5) may generate significant localized total suspended particulate (TSP)12 levels, with worst case conditions occurring in clear weather without watering. Based on previous domestic project experience, assuming a reference point TSP level of 0.204 mg/m3 at the project boundary site and no mitigations applied:

- the maximum predicted TSP concentration will 1.302 mg/m3, 6.39 times higher than the reference point level; and,

- the predicted TSP concentration 200 m downwind will be 0.265 mg/m3, 1.3 times higher than the reference point level.

192. However, even the application of a simple mitigation measure such as site fencing can have a significant affect. After site fencing:

- the maximum predicted TSP concentration is 0.824 mg/m3, 4.04 times the reference point, and a reduction of 0.478 mg/m3;

- the predicted TSP concentration 100 m down wind direction will be 0.235 mg/m3, 1.15 times the reference point; and

- the pollution impact range is reduced to a 100 m radius.

193. Dust impacts from pipeline, boiler rooms and HES construction will be more limited in scope, and are expected to be limited to a radius of approximately a 20 m from both sides of the roads, boiler rooms or HES sites. Dust impacts from transportation are expected to be within an approximate 30 m radius of both sides of roads.

194. To reduce air quality impacts during the construction period the following air quality management measure will be implemented, in accordance with the Qingdao Urban Fugitive Dust Pollution Control Regulation (effective October 10, 2002) and the Shandong Fugitive Dust Pollution Control Regulation (effective March 1, 2012):

(i) Energy station sites, HES sites, boiler house sites and pipeline sections under construction will be fully enclosed by fence prior to the commencement of construction. Fence height will be increased near sensitive locations (residential areas, schools, clinics and hospitals). (ii) Water will be sprayed on active construction sites including where fugitive dust is being generated on a daily basis, and more frequently during windy days. (iii) All construction piles (spoil, aggregate other construction materials) with the potential to generate dust will be covered and/or regularly watered. (iv) Construction waste will be properly managed (see below). (v) Construction activities will be halted during high wind events (e.g. wind speed is more than Class 4 (5.5. m/s) of the PRC National Standard for Wind Power Classification (GB/T 28591-2012)). (vi) Once construction is complete disturbed surfaces will be properly sloped and revegetated with native trees and grass (see greening plan). (vii) Transport vehicles will be limited to low speeds in construction sites.

12 Airborne particles or aerosols that are less than 100 micrometers are collectively referred to as total suspended particulate matter (TSP).

94 (viii) Loads will be covered during truck transportation to avoid spillage or fugitive dust generation. Fine materials will be transported in fully contained trucks. (ix) Construction site roads will be well maintained, and watered and swept on an as-needed basis. Construction site road entry points will be equipped with truck drive through wash ponds. (x) Transport routes will avoid residential neighborhoods and other sensitive areas to the maximum extent practical. (xi) Vehicles and construction machineries will be maintained to a high standard (to be done off-site) to ensure efficient operating and fuel-burning and compliance with the PRC emission standards GB 11340-2005, GB 17691- 2005, GB 18285 -2005 and GB 18352-2005. (xii) The use of coal for cooking on site, heating and hot water will be prohibited.

4. Noise Impacts

a) Noise Intensity

195. A significant increase in localized noise is expected during construction. Construction activities will involve excavators, bulldozers, concrete-mixing plants, loaders, graders, rollers, and other heavy machinery, as well as noise from goods and material transportation. Noise during pipeline construction will be generated by trench excavators, rollers and compaction machinery.

196. The construction phase can be divided into 4 stages: earthworks, foundation construction, structure construction and final finishing:

- The main noise sources during the earthwork stage will be non-directive mobile sources including excavators, bulldozers, loaders and transport vehicles.

- The main noise sources during foundation construction stage will be stationary, including pile machines, land levelers, etc. Although the foundation construction phase period is short, predicted noise levels are high, ranging from 95-105 dB(A).

- The structure construction stage is the longest period in the construction phase. There are a variety of noise sources in this phase including concrete mixers, heavy equipment, cranes, etc.

- The final finishing stage is also lengthy. Main noise sources include electrical saws, drills, cutting machines etc. Noise levels from these noise sources range from 85-95 dB(A) and are short in duration.

- Materials and equipment transport can occur in all four phases.

197. The major anticipated noise sources at each construction stage are presented in Table 41. With the exception of No. 1 and No. 2 Commercial Complex Energy Systems in Jidong Subdistrict, these impacts will occur in mostly inhabited urban areas. Though noise levels may be high, the impacts will be temporary and localized, and can be further mitigated.

95 Table 41: Primary noise sources at each construction stage. Distance Construction Sound Level No Name from the Directivity Phase dB(A) source (m) 1.1 Excavator 80-85 5 No 1.2 Loader 85-90 5 No Earthwork 1.3 Bulldozer 85-90 3 No 1.4 Dump truck 85-90 3 No 2.1 Pile equipment 95-105 15 No Foundation 2.2 Land leveler 85-90 15 No Construction 2.3 Crane 70-75 15 No 2.4 Truck crane 70-75 15 No 3.1 Concrete pump truck 90-93 4 No Structure Concrete transport 3.2 90-93 4 No Construction vehicle 3.3 Vibrator 85-90 3 No 4.1 Electrical drill 85-95 5 No Final Finishing 4.2 Electrical hammer 90-95 5 No 4.3 Electrical saw 90-95 5 No 5.1 Trailer 70-75 5 No Transport 5.2 Flat car 70-75 5 No Vehicle 5.3 Truck 70-75 5 No Source: Domestic EIA Tabular Report.

198. In addition, high pressure cleaning of heating pipelines also has the potential to impact nearby residents.

b) Noise Prediction

199. Construction noise at a site is considered a point noise source, and a simple predictive model is as follows:

L2＝L1－20log(r2/r1) (r2＞r1)

Where, L1 and L2 are equipment noise sound levels at locations R1 and R2, respectively.

200. Peak construction noise levels at different distances from the source at each construction stage are presented in Table 42. This assumes a worst case scenario: high noise equipment is operating without noise barriers or mitigations, and sound absorption in air is not included.

201. The worst case peak construction noise prediction results show that during the day some high noise activities within 20 m of the site boundaries in the daytime, and 100 m at nighttime, could be close to being in non-compliance with GB 12523－2011 which specifies the noise limit at construction site boundaries for Class II areas as 75 dB (A) during the daytime and 55 dB (A) during the nighttime. These impacts will be localized and short-term during the construction process, and the highest noise impacts will be within the construction sites. However, mitigation measures to protect communities will nonetheless be implemented.

96 Table 42: Predicted noise levels of construction equipment by distance.

Construction Primary Noise Noise value dB(A) at distance (m) from source Stage Source 10 m 20 m 30 m 40 m 50 m 100 m 200 m 300 m Loader 70 64 60.5 58 56 50 44 38 Foundation Excavating 67 61 57.5 55 53 47 41 34 and Machinery Earthworks Piling 80 74 70 68 66 60 54 47 Machines Vibrator 75 69 65.5 63 58.7 55 49 43 Concrete pump 72.5 66.5 63 60.5 58.5 52.5 46.5 40.5 Structure Reinforcement 73 67 63.5 61 59 53 47 41 Construction cutting shears Chainsaw 69 63 59.5 57 55 49 43 37 Lift 74 68 64 62 60 54 48 42 Source: Domestic EIA Tabular Report.

c) Mitigation Measures for Noise Impacts

202. To ensure construction activities meet PRC noise standards (Noise Standards for Construction Site Boundary, GB 12523-2011) and to protect workers and adjacent residents, the following mitigation measures will be implemented:

(i) Construction activities, and particularly noisy ones, are to be limited to reasonable hours during the day and early evening. Construction activities will be strictly prohibited during the nighttime (22:00 h to 07:00 h). Exceptions will only be allowed in special cases, and only after getting approval of the surrounding residents, Qingdao EPB and other relevant departments. (ii) When undertaking construction planning, simultaneous high-noise activities will be avoided, and high noise activities will be scheduled during the day rather than evening hours. Similarly, construction sites will be planned to avoid multiple high noise activities or equipment from operating at the same location. (iii) Low-noise equipment will be selected as much as possible. (iv) Equipment and machinery will be equipped with mufflers and will be properly maintained to minimize noise. Noise levels from equipment and machinery must conform to the PRC standard GB 12523-2011. (v) Machines in intermittent use will be shut down in the intervening periods between work or throttled down to a minimum. (vi) Noise personnel protective equipment (PPE) will be provided to workers. (vii) Transportation routes and delivery schedules will be planned during detailed design to avoid densely populated and sensitive areas and high traffic times. (viii) Vehicles transporting construction materials or wastes will slow down and not use their horn when passing through or nearby sensitive locations, such as residential communities, schools and hospitals. (ix) Given their location within residential areas, special attention will be paid to protect sensitive sites near HESs and community boiler houses, and along the pipeline routes:

97  High noise construction activities will be positioned as far away from sensitive sites as possible.  Low noise equipment will be utilized to the extent possible.  Temporary or permanent noise barriers will be installed to protect sensitive sites. (x) To minimize noise impacts from high pressure cleaning of heating pipelines the following mitigation measures may be utilized as appropriate:  Low noise valves.  Mufflers after the valves (noise reduction of 20-30 dB).  Throttle orifices in the pipelines to share the pressure drop from valves and reduce noise.  Sound insulation on the external walls of pipelines.  Auxiliary regulating valves.

5. Solid Waste

a) Waste Sources

203. Solid waste generated in the construction phase will include construction and domestic waste. Construction wastes include fill, various building materials such as steel, timbers, rubble, and other types of waste. An estimated of 0.5 kg/day per worker of domestic waste will be generated from construction workers and 2.0 kg/m2 construction waste will be generated from construction activities. Inappropriate waste storage and disposal could affect soil, groundwater, and surface water resources, and hence, public health and sanitation. Considering the scales of construction at each project component, solid waste generation would be limited. At components 1, 2, 4, 5, and 6, construction workers would be less than 15 person over the period of 2-3 months of civil work construction period; and would be between 5-8 workers during the period of 1 -2 months of equipment installation period. Thus, domestic construction waste would be between 4 - 7.5kg per day for 6 months period and construction waste would be around As for other components 3, 7 and 8, construction workers would be less than 10 persons during the entire 2-4 months of construction period. The average domestic waste of construction workers would be less than 5 kg per day during 2-4 months. Considering the total land areas of construction, a total construction waste is estimated to be around 50 tons.

b) Mitigation Measures

204. The following solid waste management measure will be implemented:

(i) Wastes will be reused or recycled to the extent possible. Waste construction material such as residual concrete, bricks will used for backfill at the sites. (ii) Littering by workers will be prohibited. (iii) Domestic waste containers will be provided at all work sites. Domestic waste will be collected on a regular basis by the local sanitation departments and transported for recycling, reuse, or disposal at a licensed landfill, in accordance with relevant PRC regulations and requirements. (iv) Construction waste dumpsters will be provided at all work sites. Construction waste will be collected on a regular basis by a licensed waste collection

98 company and transported for recycling, reuse, or disposal at a licensed landfill, in accordance with relevant PRC regulations and requirements. (v) Excavated soil will be backfilled onsite to the extent possible. Excess spoil that cannot be used on-site will be transported to an approved spoil disposal site. (vi) There should be no final waste disposal on site. Waste incineration at or near the site is strictly prohibited. (vii) Contractors will be held responsible for proper removal and disposal of any significant residual materials, wastes, and contaminated soils that remain on the site after construction.

6. Hazardous and Polluting Materials

205. Inappropriate transportation, storage, use and spills of petroleum products and hazardous materials can cause soil, surface and groundwater contamination. To prevent this, the following mitigation measures will be implemented:

(i) A hazardous materials handling and disposal protocol that includes spill emergency response will be prepared and implemented by contractors.

(ii) Storage facilities for fuels, oil, chemicals and other hazardous materials will be within secured areas on impermeable surfaces provided with dikes, and at least 300 m from drainage structures and important water bodies. A standalone site within the storage facility will be designated for hazardous wastes. (iii) Suppliers of chemicals and hazardous materials must hold proper licenses. They will follow all relevant protocols in “Operation Procedures for Transportation, Loading and Unloading of Dangerous or Harmful Goods” (JT 3145-91). (iv) A licensed company will be hired to collect, transport, and dispose of hazardous materials in accordance with relevant PRC regulations and requirements. (v) Vehicles and equipment will be properly maintained and refueled in designated service areas on impermeable surfaces provided with oil traps, at least 300 m from drainage structures and important water bodies.

7. Impacts to Flora and Fauna

206. Typical construction impacts on flora and fauna include removal of vegetation and disruption of the ecosystem during construction. If present, rare or endangered flora or fauna may also be impacted. However, the project energy stations and boiler houses construction sites are located in urban or semi-rural environments within the city limits, which have little or no vegetation cover other than recently established grasses and shrubs. Similarly, pipeline routes and HES sites are within urban environments. Based on site visits, there are no known rare or endangered flora or fauna, parks, nature reserves or areas with special ecological significance which will be impacted by the project. This conclusion has been confirmed by the domestic EIA. Impacts on flora or fauna are thus expected to be minimal and short-term. Nonetheless, to address potential impacts:

(i) A greening plan will be implemented:

99 a. Site vegetation plans will be developed at new facility construction sites (energy stations, boiler houses, HESs) using appropriate native species. b. Any existing vegetated areas impacted by pipeline works or construction of boiler rooms, energy stations and HESs will be restored post-construction using appropriate native species.

8. Impacts on Socio-Economic Resources

a) Community Disturbance and Safety

207. Project construction has the potential to cause significant community disturbance such as traffic congestion or delays, and public safety risks from construction activities, heavy vehicles and machinery traffic. In addition, portions of the pipeline network and HESs are often located within sensitive residential or commercial areas. There is also the potential for interruptions in municipal services and utilities resulting from damage to pipelines for water supply, drainage, heating supply, and gas, as well as to underground power cables and communication cables. Mitigations will be implemented to address traffic and other community disturbance issues.

Traffic and Public Safety

(i) Traffic control plans, agreed to by the local traffic control authority, will be developed and implemented for each component in order to minimize community disturbance:  Local government, using information provided by the PMO, will inform residents, institutions, bossiness and other affected parties as to planned construction activities including schedule and duration of construction works, and expected traffic and other disruptions.  Transportation routes and delivery schedules will be planned during detailed design to avoid densely populated and sensitive areas and high traffic times.  Warning signs and cones will be installed along roads to protect workers and people in the neighborhood. Safety flags will be used if appropriate.  Vehicles transporting construction materials or wastes will slow down and not use their horn when passing through or nearby sensitive locations, such as residential communities, schools and hospitals.  During evening construction warning lights will also be used.  Roadside earthworks should be completed as quickly as possible, and all spoil either backfilled or removed.  Road crossing will use the pipe-jacking installation method where possible in order to minimize disruption. (ii) Public access to construction sites and other areas of danger will be restricted and temporary barriers installed.

100 Access to Public Services, Private Properties and Businesses

(i) Local authorities will be consulted to minimize disruption of public services such as telephone, water, gas and power supply. Contactors will use good construction practices to avoid disruption of other services. (ii) Contractors will take measures to minimize disruption of access to private properties and businesses where possible. (iii) Temporary access to affected private properties, businesses and public service buildings will be provided including temporary crossings over pipeline trenches, and subsequently good quality permanent access will be provided. (iv) Pipelines construction should be planned to take place simultaneously with other construction activities so as to minimize the length of disruption.

b) Worker Occupational Health and Safety

208. Construction may cause physical hazards to workers from noise and vibration, dust, handling heavy materials and equipment, falling objects, work on slippery surfaces, fire hazards, chemical hazards such as toxic fumes and vapors, and others.

209. Contractors will implement adequate precautions to protect the health and safety of their workers:

(i) Each contractor will implement the relevant construction phase EHS plan developed by the Loan Implementation EHS Consultant (LIEC) and consultants. (ii) An EHS officer will be appointed by each contractor to implement and supervise the EHS management plan. (iii) The EHS Plan will:  Identify and minimize the causes of potential hazards to workers.  Implement appropriate safety measures.  Ensure the provision of adequate type and number of fire extinguishers and first aid facilities onsite.  Provide training to workers on occupational health and safety and emergency response, especially with respect to using potentially dangerous equipment.  Ensure that all equipment is maintained in a safe operating condition.  Ensure that material stockpiles or stacks, such as, pipes are stable and well secured to avoid collapse and possible injury to workers.  Provide appropriate personal protective equipment (PPE) to workers to minimize risks, including ear protection, hard hats and safety boots, and post adequate signage in risk areas.  Provide procedures for limiting exposure to high noise or heat working environments in compliance with PRC noise standards for construction sites (GB 12523-2011).  Provide training to workers on the storage, handling and disposal of hazardous wastes.  Ensure regular safety meetings with staff.

101 9. Physical Culture Resources

210. Based on the domestic EIA and site visits there are no known cultural heritage or archaeological sites at or near the component sites. However, construction activities have the potential to disturb as yet unknown underground cultural relics. To address this issue:

(i) A construction phase chance find procedure will be established and activated if any chance finds of PCRs are encountered:  construction activities will be immediately suspended if any PCRs are encountered;  destroying, damaging, defacing, or concealing PCRs will be strictly prohibited in accordance with PRC regulations;  the local Cultural Heritage Bureau will be promptly informed and consulted; and,  construction activities will resume only after thorough investigation and with the permission of the local Cultural Heritage Bureau.

102 C. Anticipated Operation Phase Impacts and Mitigation Measures

211. The project may cause some adverse environmental impacts during operation including air pollution from natural gas combustion, noise from boilers, turbines, engines and HESs, use of water, production of wastewater and solid wastes, and fire and safety hazards.

1. Air Pollution

a) Air Pollution Emissions

212. The primary emissions to air from the combustion of fossil fuels are sulfur dioxide (SO2), nitrogen oxides (NOX), particulate matter (PM), carbon monoxide (CO), and greenhouse gases such as carbon dioxide (CO2). To minimize emissions and associated impacts, the project will provide coal-free energy efficient small-scale district energy utilizing a mix of cleaner and renewable heat sources such as:

- Low NOx natural gas-fired boilers, turbines and engines with design emission levels that are in compliance with the most stringent of PRC national and Shandong provincial standards (see Table 9). Natural gas generally produce negligible quantities of particulate matter and sulfur oxides, and levels of nitrogen oxides are about 60% of those from plants using coal (without emission reduction measures). Natural gas-fired plants also release lower quantities CO2.

- Waste heat recovery from industry and municipal wastewater plants.

- Extracted heat using heat pump technology from various sources such as air, wastewater, and geothermal.

- Parabolic trough solar heating.

- Heat storage for peak demand shaving.

213. The project will also demonstrate highly energy efficient low temperature district energy networks and demand-side response smart energy management.

214. When compared to the equivalent production of energy through traditional coal-fired sources, once operational the project will: (i) result in annual energy savings equivalent to 537,900 tons of standard coal, thereby providing a global public good by avoiding the annual 13 emission of 1,398,455 tons of carbon dioxide (CO2), a greenhouse gas; (ii) improve local air quality through the estimated annual reduction of emissions of sulfur dioxide (SO2) by 12,909 tons, nitrogen oxides (NOx) by 3,765 tons, and particulate matter (PM) by 5,379 tons (Table 43); and (iii) eliminate the negative impacts of coal transportation through urban areas by truck or train.

13 3 Annual project CO2 emissions are estimated 493,600 t, based on natural gas consumption of 253 million m , 3 and a factor of 1.951 kg CO2e for every m of natural gas consumed.

103 Table 43: Project coal and emissions savings vs coal-fired boilers.

Components Estimated Coal and Emissions Reductions Annual Annual CO2 Dust SO NOx Standard 2 No Name Savings Savings Savings Savings Coal Savings (t) (t) (t) (t) (t) Shibei District Binhai 1 178,700 464,494 1,787 4,288 1,251 Energy Systems Licang District Houhai 2 85,500 222,349 855 2,052 599 Energy Systems Licang and Shibei Districts Unit-Based 3 8,000 20,852 80 192 56 Heating and Cooling Systems Shibei District Heat 4 106,100 275,816 1,061 2,546 743 Exchange Stations Jidong Subdistrict 5 78,200 203,346 782 1,877 547 Energy Systems East Licang District 6 Neighborhood Heating 68,900 179,117 689 1,653 482 Systems Shinan District Unit- 7 Based Heating and 9,500 24,599 95 227 66 Cooling Systems Shibei District 8 Geothermal and Solar 3,000 7,882 30 73 21 Heating Systems TOTAL 537,900 1,398,455 5,379 12,909 3,765

Sources: Based on Qingdao Project Domestic FSR, (2015). Annex IV presents detailed calculations and assumptions.

b) Air Pollution Dispersion Modelling and Compliance with Air Quality Standards

i. Atmospheric Dispersion Model

215. Atmospheric dispersion modelling was undertaken by the Qingdao Environmental Protection Science and Technology Center (QEPSTC) utilizing AERMOD, a US EPA and PRC approved steady-state short range (up to 50 km) plume model that incorporates air dispersion based on planetary boundary layer turbulence structure and scaling concepts, including treatment of all point, surface and body sources.14 AERMOD can simulate the concentration distribution in both the short term (1-hour and daily average concentrations) and the long term (annual average concentrations). AERMOD is applicable for rural or urban districts and simple or complicated terrain. The impact of bottom flow of buildings (e.g. plume downwash) is also taken into account. AERMOD uses meteorological data for 1-hour continuous pre-treatment to simulate average concentration distribution in periods down to 1 hour. AERMOD includes two preprocessors: AERMET, which accepts surface meteorological data and upper air soundings, and then calculates atmospheric parameters needed by the dispersion model; and AERMAP, a terrain preprocessor which provide a

14 AERMOD is recommended model in Appendix A of Guidelines for Environmental Impact Assessment of Atmospheric Environment (HJ2.2-2008).

104 physical relationship between terrain features and the behavior of air pollution plumes. It generates location and height data for each receptor location. It also provides information that allows the dispersion model to simulate the effects of air flowing over hills or splitting to flow around hills.

ii. Atmospheric Dispersion Modelling Scenarios

216. The separation of the Qingdao urban area from Jidong Subdistrict by the Laoshan Mountains means that the two areas have different meteorological data, and it was not possible to cover both areas under a single modelling run. Atmospheric dispersion modeling was thus undertaken for the following scenarios:

Scenario 1 – All Components in Qingdao Urban Area (Components 1, 2, 3, 4, 6, 7, and 8)

i) Worst case SO2, PM10 and NO2 ground level concentrations (GLCs) over the entire 2013 modelling period (8640 h) with all components in Qingdao urban area running simultaneously, including:

a. Worst case predicted 1-hour averaging period SO2, PM10 and NO2 GLCs;

b. Worst case predicted 24-hour averaging period SO2, PM10 and NO2 GLCs;

c. Worst case predicted annual averaging period SO2, PM10 and NO2 GLCs.

ii) Worst case SO2, PM10 and NO2 ground level concentrations (GLCs) over the entire 2013 modelling period (8640 h) with all components in Qingdao urban area running simultaneously superimposed over worst case background ambient air quality (cumulative assessment taking into account other pollution sources in the airshed), including:

a. Worst case predicted 1-hour averaging period SO2, PM10 and NO2 GLCs + worst case ambient concentration at monitoring sites.

b. Worst case predicted 24-hour averaging period SO2, PM10 and NO2 GLCs + worst case ambient concentration at monitoring sites.

c. Worst case predicted annual averaging period SO2, PM10 and NO2 GLCs + worst case ambient concentration at monitoring sites.

Scenario 2 – Component 5 (Jidong Subdistrict Energy Systems)

i) Worst case SO2, PM10 and NO2 ground (GLCs) over the entire 2013 modelling period (8640 h) with all subcomponents running simultaneously, including:

a. Worst case predicted 1-hour averaging period SO2, PM10 and NO2 GLCs;

b. Worst case predicted 24-hour averaging period SO2, PM10 and NO2 GLCs;

c. Worst case predicted annual averaging period SO2, PM10 and NO2 GLCs.

ii) Worst case SO2, PM10 and NO2 with all subcomponents running simultaneously superimposed over worst case background ambient air quality (cumulative assessment taking into account other pollution sources

105 in the airshed), including:

a. Worst case predicted 1-hour averaging period SO2, PM10 and NO2 GLCs + worst case ambient concentration at monitoring sites.

b. Worst case predicted 24-hour averaging period SO2, PM10 and NO2 GLCs + worst case ambient concentration at monitoring sites. Note – worst case annual average cumulative assessment was not implemented for Component 5 as annual average concentration data is not available at that location).

iii. Atmospheric Dispersion Modelling Input Data - Scenario 1 – All Components in Qingdao Urban Area

Emission Parameters - All Components in Qingdao Urban Area 217. The emission parameters of all components in the Qingdao urban area are presented in Table 44. Receptor Grid System - All Components in Qingdao Urban Area

218. Predictions of concentration were made for a 20,000 × 20,000 m grid. The grid consists of 200 m x 200 m cells with a total of 10,000 receptors. The grid origin coordinates (0,0) is 120°24′20.5″E and 36°7’.48.8″N. Map projection is UTM and geodetic datum is WGS84. Terrain was assumed to be flat.

Meteorological Data and Sensitive Receptors - All Components in Qingdao Urban Area

219. Climate data from 1994-2013 and daily and hourly conventional meteorological data in 2013 was obtained from the Qingdao meteorological station to provide meteorological data for atmospheric dispersion modeling. The Qingdao meteorological station is located at 36°07′48.80″N and 120°24′20.50″E.

220. The modeling utilized one year of hourly and daily meteorological data for the year 2013, including hourly wind directions and wind speed for each day in 2013, dry-bulb temperature, ground data like cloud cover (total cloud cover and low cloud cover), etc. Daily high altitude data was extrapolated in AERMET from two times per day every 100 m from 0 - 3000 m. The AERMET estimate method was used for mixed layer height. The default of 200 calculated layers was utilized with a maximum altitude of 5000 m.

221. Ground characteristic parameters required by AERMOD (surface albedo at high noon, Bowen at daytime and ground roughness) were set according to recommended parameters in the reference model suitable for Blue Silicon Valley. Atmospheric diffusion parameters mainly use ground meteorological data and sounding meteorological data to generate the predicted meteorological input document.

222. Sensitive receptors are listed in Table 45.

106 Table 44: Exhaust Gas Emission Parameters of Subprojects in Qingdao Urban Area (Components 1, 2, 3, 4, 6, 7, and 8). Gas Exhaust Emission rate (g/s) Coordinate Stack Inner Comp. Capacity Stack consumption air of each Name Type height diameter No (t/h) No of each stack stack SO2 NOx PM X Y (m) (m) (m3/h) (m3/h) P1.1-1 28 1.2 792 3.30 0.04 0.396 0.031 -4465 2388 P1.1-2 28 1.2 792 3.30 0.04 0.396 0.031 -4485 2351 PC1-1 Industrial Waste Gas-fired hot 5*29MW P1.1-3 28 1.2 792 3.30 0.04 0.396 0.031 -4512 2316 Heat Recovery System water boiler P1.1-4 28 1.2 792 3.30 0.04 0.396 0.031 -4535 2277 PC1 P1.1-5 28 1.2 792 3.30 0.04 0.396 0.031 -4560 2244 Gas-fired steam PC1-2 Binhai Community- boiler+waste 1*7MW+1*1 P1.2 40 1.5 1500 6.25 0.08 0.75 0.058 -4436 2291 Based Energy System heat recovery 7.5MW boiler After burning P2.1-1 40 1.4 1000 4.17 0.06 0.5 0.039 -3210 4930 PC2-1 Houhai Community waste heat 2*25t/h Based Energy System P2.1-2 40 1.4 1000 4.17 0.06 0.5 0.039 -3180 4930 recovery boiler PC2 Gas engine P2.2-1 15 0.4 300 2.05 0.01 0.14 0.009 -3210 4900 2*1.416MW PC2-2 Qingdao North generator P2.2-2 15 0.4 300 2.05 0.01 0.14 0.009 -3180 4900 Railway Community Based Gas-fired hot P2.2-3 15 0.4 240 1.00 0.01 0.12 0.009 -3210 4870 Energy System 2*2.8MW water boiler P2.2-4 15 0.4 240 1.00 0.01 0.12 0.009 -3180 4870 2*2.326 PC3-1 Qingdao Subway Lithium bromide Control Center Unit-Based MW+1*1.16 P3.1 40 0.8 375 1.56 0.02 0.1875 0.015 0 0 direct fired unit Energy System 3MW PC 3-2 Jieneng Company Lithium bromide Headquarter Unit-Based 2*1.163MW P3.2 40 0.6 150 0.63 0.01 0.075 0.006 -6170 620 PC3 Energy System direct fired unit PC 3-3 Dongli Commercial Lithium bromide 2*2.908 Complex Unit-Based direct fired unit, MW+1*3.48 P3.3 40 0.8 735 3.06 0.04 0.3675 0.029 2770 3310 Heating and Cooling vacuum hot 9MW、 System water boiler 1*2.1MW PC4 Shibei District Heat Exchange Stations Heat supply project in Vacuum hot 3*2.623 P4.1 30 0.8 230.4 0.96 0.01 0.1152 0.009 -1460 1670 Wanke City (A4) water boiler PC4 Heating system Vacuum hot 3*0.7+1*2.6 renovation project in Heya P4.2 18 0.4 115.2 0.48 0.01 0.0576 0.004 -400 -220 water boiler 23 Village (commercial

107 Gas Exhaust Emission rate (g/s) Coordinate Stack Inner Comp. Capacity Stack consumption air of each Name Type height diameter No (t/h) No of each stack stack SO2 NOx PM X Y (m) (m) (m3/h) (m3/h) residential building) Heat supply project in Vacuum hot 1*1.4 P4.3 15 0.4 38.4 0.16 0.00 0.0192 0.001 -4100 -1670 Ruinazixuan water boiler Heat supply project in Vacuum hot 3*0.7+2*1.4 P4.4 18 0.6 96 0.40 0.01 0.048 0.004 -3880 -310 Honghaijiayuan water boiler Phase II heat supply Vacuum hot project for security 5*2.098 P4.5 30 1 288 1.20 0.02 0.144 0.011 -1390 1345 water boiler housing in Luoyang Road Heat supply project in Vacuum hot 1*1.4+1*2.6 P4.6 18 0.6 115.2 0.48 0.01 0.0576 0.004 -2320 -2450 Taiyang Island water boiler 23 Renovation project in Vacuum hot 1*2.098 P4.7 15 0.4 57.6 0.24 0.00 0.0288 0.002 -4320 -1640 Artwork plant water boiler Heating system P4.8-1 25 0.8 230.4 0.96 0.01 0.1152 0.009 2200 2300 renovation project in 5*0.7+11*1. P4.8-2 25 0.8 230.4 0.96 0.01 0.1152 0.009 2200 2600 Vacuum hot Zhonghaihenan and 4+2*2.098+ P4.8-3 25 0.8 211.2 0.88 0.01 0.1056 0.008 1880 2100 water boiler Nanzhuang(No 1,2,3,4,5 6*2.623 P4.8-4 25 0.8 211.2 0.88 0.01 0.1056 0.008 1700 2370 and 8 plots ) P4.8-5 25 0.8 211.2 0.88 0.01 0.1056 0.008 1740 2700 Baolixiangbinuoji (south Vacuum hot 1*0.7+5*2.0 P4.9-1 25 0.8 172.8 0.72 0.01 0.0864 0.007 -5450 1700 district and north district) water boiler 98 P4.9-2 25 0.8 134.4 0.56 0.01 0.0672 0.005 -5650 1440 D area of renovation Vacuum hot 1*0.7+2*2.6 P4.10 25 0.8 172.8 0.72 0.01 0.0864 0.007 -2720 -140 project in Shuiqinggou water boiler 23 Heat supply project in Vacuum hot 1*2.098 P4.11 18 0.6 115.2 0.48 0.01 0.0576 0.004 -4680 -110 Yingxiu Garden water boiler Heat supply project in Vacuum hot 1*0.7+2*2.6 Yousifang (No 99, South P4.12 25 0.8 172.8 0.72 0.01 0.0864 0.007 -2450 -1900 water boiler 23 Chongqing road) Vacuum hot P4.13-1 25 0.8 172.8 0.72 0.01 0.0864 0.007 -4900 2600 Heat supply project in water boiler 1*0.7+5*2.0 Lvdi Real estate Vacuum hot 98 P4.13-2 25 0.8 134.4 0.56 0.01 0.0672 0.005 -5150 2200 water boiler Vacuum hot 2*1.4+1*2.0 Heda central city P4.14 25 0.8 211.2 0.88 0.01 0.1056 0.008 -1840 -2350 water boiler 98+1*2.623 No 187, Ruichang road Vacuum hot 1*2.623 P4.15 18 0.6 76.8 0.32 0.00 0.0384 0.003 -5400 -850 (Huanyu) water boiler

108 Gas Exhaust Emission rate (g/s) Coordinate Stack Inner Comp. Capacity Stack consumption air of each Name Type height diameter No (t/h) No of each stack stack SO2 NOx PM X Y (m) (m) (m3/h) (m3/h) Renovation project in No Vacuum hot 3*0.7+1*2.6 P4.16 25 0.8 134.4 0.56 0.01 0.0672 0.005 -3600 500 4 Guomian plant water boiler 23 settlement building project Vacuum hot 1*1.4+1*2.6 P4.17 25 0.8 115.2 0.48 0.01 0.0576 0.004 -4580 -725 in Jinhua Road water boiler 23 Vacuum hot Zhongyeyingjun 1*2.098 P4.18 15 0.4 57.6 0.24 0.00 0.0288 0.002 -3000 200 water boiler Newly built settlement Vacuum hot building project in 1*2.098 P4.19 15 0.4 57.6 0.24 0.00 0.0288 0.002 200 170 water boiler Tianyijingyuan Residence in Vacuum hot 1*1.4+1*2.6 P4.20 25 0.8 115.2 0.48 0.01 0.0576 0.004 -2750 -2100 Gongzhiqingjiang Road water boiler 23 Project in Jinhua Road Vacuum hot 1*2.098+3* P4.21 30 1 288 1.20 0.02 0.144 0.011 -4300 -470 (Hanhe cable plant) water boiler 2.623 P4.22-1 30 1 211.2 0.88 0.01 0.1056 0.008 230 1580 Renovation project in 7*0.7+2*1.4 Vacuum hot P4.22-2 30 1 211.2 0.88 0.01 0.1056 0.008 -40 1500 Area ABC of +2*2.098+6 water boiler P4.22-3 30 1 211.2 0.88 0.01 0.1056 0.008 -80 1360 Haierhenanzhuang *2.623 P4.22-4 30 1 153.6 0.64 0.01 0.0768 0.006 -60 1150 Xinduxinyuan in No 249, Vacuum hot 2*1.4 P4.23 18 0.6 76.8 0.32 0.00 0.0384 0.003 -2222 -1350 South Chongqing Road water boiler Vacuum hot 2*1.4+1*2.0 Wanke Zitai P4.24 30 1 211.2 0.88 0.01 0.1056 0.008 -1350 -450 water boiler 98+1*2.623 Vacuum hot Wanke Zitai 1*1.4 P4.25 15 0.4 38.4 0.16 0.00 0.0192 0.001 -1000 -1300 water boiler Vacuum hot 1*2.098+3* Phase II Xingwang project P4.26 30 1 288 1.20 0.02 0.144 0.011 -3000 -220 water boiler 2.623 P4.27-1 30 1 211.2 0.88 0.01 0.1056 0.008 -1700 -160 5*0.7+3*1.4 Renovation project in Vacuum hot P4.27-2 30 1 211.2 0.88 0.01 0.1056 0.008 -1500 80 +3*2.098+6 Area B of Daqingshuigou water boiler P4.27-3 30 1 211.2 0.88 0.01 0.1056 0.008 -2000 20 *2.623 P4.27-4 30 1 211.2 0.88 0.01 0.1056 0.008 -1880 280 Renovation project in Vacuum hot 1*1.4+1*2.6 P4.28 25 0.8 115.2 0.48 0.01 0.0576 0.004 -5500 1680 Xiaoqingshuigou water boiler 23 PC6 East Licang District Neighborhood Heating Systems PC6 Gas-fired hot Shiyuanyaju project 2*2.1 MW P6.1 18 0.6 115.2 0.48 0.01 0.0576 0.004 7720 5840 water boiler

109 Gas Exhaust Emission rate (g/s) Coordinate Stack Inner Comp. Capacity Stack consumption air of each Name Type height diameter No (t/h) No of each stack stack SO2 NOx PM X Y (m) (m) (m3/h) (m3/h) Baolimoligongguan Gas-fired hot P6.2-1 25 0.8 172.8 0.72 0.01 0.0864 0.007 2550 3200 6*2.1 MW project (2 energy stations) water boiler P6.2-2 25 0.8 172.8 0.72 0.01 0.0864 0.007 2650 3350 Donglixinyuan (phase II) Gas-fired hot 2*2.1 MW P6.3 18 0.6 115.2 0.48 0.01 0.0576 0.004 2700 2900 project water boiler Zhongnanshijiecheng A2- 1*2.1 Gas-fired hot 02-01 project (settlement MW+1*0.93 P6.4 15 0.4 79.2 0.33 0.00 0.0396 0.003 4300 4100 water boiler area of Sujia) MW Zhongnanshijiecheng A2- Gas-fired hot 09-01 and A2-06 project 2*2.1 MW P6.5 18 0.6 115.2 0.48 0.01 0.0576 0.004 4300 3880 water boiler (settlement area of Sujia) Xiaofangsushe project Gas-fired hot (east of C4 plot of 2*2.1 MW P6.6 18 0.6 115.2 0.48 0.01 0.0576 0.004 2440 3900 water boiler Wanda) Lvchengmeiguiyuan Gas-fired hot 2*2.1 MW P6.7 18 0.6 115.2 0.48 0.01 0.0576 0.004 3570 4700 project(A-1-4) water boiler Eastern part of 2*2.1 Gas-fired hot Lvchengchengyuan MW+2*0.93 P6.8 25 0.8 158.4 0.66 0.01 0.0792 0.006 3440 4080 water boiler project (A-1-9) MW Wandayuegongguan (10- Gas-fired hot 4*2.1 MW P6.9 30 1 230.4 0.96 0.01 0.1152 0.009 2650 3600 4-2-C4) water boiler 2*2.1 Shangzang Village area Gas-fired hot MW+2*0.93 P6.10 25 0.8 158.4 0.66 0.01 0.0792 0.006 5900 6100 project (E-1) water boiler MW 2*2.1 Shangzang Village t area Gas-fired hot MW+2*0.93 P6.11 25 0.8 158.4 0.66 0.01 0.0792 0.006 5800 5800 project (E-3) water boiler MW Lufang Village area Gas-fired hot 2*2.1 MW P6.12 18 0.6 115.2 0.48 0.01 0.0576 0.004 6100 5300 project (G) water boiler 2*2.1 Liujiaxiahe area project Gas-fired hot MW+2*0.93 P6.13 25 0.8 158.4 0.66 0.01 0.0792 0.006 5500 4100 (B1-08) water boiler MW 2*2.1 Zhuangzi area project Gas-fired hot MW+2*0.93 P6.14 25 0.8 158.4 0.66 0.01 0.0792 0.006 5250 3700 (A2-16-01) water boiler MW

110 Gas Exhaust Emission rate (g/s) Coordinate Stack Inner Comp. Capacity Stack consumption air of each Name Type height diameter No (t/h) No of each stack stack SO2 NOx PM X Y (m) (m) (m3/h) (m3/h) 2*2.1 Gas-fired hot Yujiaxiahe area project MW+1*0.93 P6.15 25 0.8 136.8 0.57 0.01 0.0684 0.005 6400 4200 water boiler MW 2*2.1 Gas-fired hot Wangjiaxiahe area project MW+1*0.93 P6.16 25 0.8 136.8 0.57 0.01 0.0684 0.005 6400 4500 water boiler MW S8 plot of Jiakaicheng Gas-fired hot P6.17-1 25 0.8 172.8 0.72 0.01 0.0864 0.007 1480 6500 6*2.1 MW project (2 energy stations) water boiler P6.17-2 25 0.8 172.8 0.72 0.01 0.0864 0.007 1200 6330 S20 plot of Jiakaicheng Gas-fired hot 2*2.1 MW P6.18 18 0.6 115.2 0.48 0.01 0.0576 0.004 1300 6000 project water boiler S6-3 plot of Jiakaicheng Gas-fired hot P6.19-1 25 0.8 172.8 0.72 0.01 0.0864 0.007 1870 8300 6*2.1 MW project (2 energy stations) water boiler P6.19-2 25 0.8 172.8 0.72 0.01 0.0864 0.007 1950 8300 Shangzanglufang commercial residential Gas-fired hot 4*2.1 MW P6-20 30 1 230.4 0.96 0.01 0.1152 0.009 6350 5800 building reformed from old water boiler village in B-1 plot project Shangzanglufang commercial residential Gas-fired hot 2*0.93MW P6-21 15 0.4 43.2 0.18 0.00 0.0216 0.002 6600 5800 building reformed from old water boiler village in B-2 plot project Shangzanglufang commercial residential Gas-fired hot 4*2.1 MW P6-22 30 1 230.4 0.96 0.01 0.1152 0.009 6660 6100 building reformed from old water boiler village in C-1 plot project Shangzanglufang commercial residential Gas-fired hot 4*2.1 MW P6-23 30 1 230.4 0.96 0.01 0.1152 0.009 6600 6380 building reformed from old water boiler village in C-2 plot project Zhuangzi, Sujia, Liujiaxiahe commercial Gas-fired hot residential building 2*2.1 MW P6-24 25 0.8 115.2 0.48 0.01 0.0576 0.004 5700 4400 water boiler reformed from old village in A2-14 plot project Zhuangzi, Sujia, Gas-fired hot 2*2.1 MW P6-25 25 0.8 115.2 0.48 0.01 0.0576 0.004 5500 4600

111 Gas Exhaust Emission rate (g/s) Coordinate Stack Inner Comp. Capacity Stack consumption air of each Name Type height diameter No (t/h) No of each stack stack SO2 NOx PM X Y (m) (m) (m3/h) (m3/h) Liujiaxiahe commercial water boiler residential building reformed from old village in A2-15 plot project Heat supply 2*5.180MW P7.1-1 30 1 1110 4.63 0.06 0.555 0.043 -2200 -5400 Vacuum gas- transformation project in 2*3.969 fired boiler P7.1-2 30 1 855 3.56 0.05 0.4275 0.033 -2180 -5400 Badahu district MW PC7 Municipal government 1*1.4 MW P7.2-1 15 0.4 120 0.50 0.01 0.06 0.005 -2680 -6820 heating supply system Vacuum gas- transformation in No1- fired boiler 1*1.4 MW P7.2-2 15 0.4 120 0.50 0.01 0.06 0.005 -2630 -6747 No4 buildings Notes: 1. Gas boilers and lithium bromide direct fired unit will generate 15 m3 exhaust gas per 1 m3 natural gas. Based on a 2007 survey of industrial natural gas boilers in PRC (updated in 2010), pollution emission factors are : PM: 140 mg per 1 m3 natural gas, SO2: 200 mg per 1 m3 natural gas, NOx : 1800 mg per 1 m3 natural gas and exhaust gas is 15 Nm3 per 1 m3 natural gas 2. Gas turbine and gas engine generator will use low NOx burning measures. Based on a 2007 survey of industrial natural gas boilers in PRC (updated in 2010), pollution emission factors are: PM:103.9 mg per 1 m3 natural gas, SO2 70.7 mg per 1 m3 natural gas, NOX 1220mg per 1 m3 natural gas and exhaust gas is 24.55 Nm3 per 1 m3 natural gas 3. Transformation factor of NO2 to NOx is 0.9. 4. Temperature at exhaust gas outlet of all equipment are all 333 k.

112 Table 45: Sensitive Receptors in Qingdao Urban Area. Nearest Nearest No Name Direction distance to X Y Component stack (m) 1 Lvdidichan Project NW 500 -4961 2557 PC1 - Shibei 2 Baolixiangbinuoji SW 750 -5582 1668 District Binhai Siliunan Road 3 Energy SE 1450 -3247 1449 Primary School Systems 4 Jiekang Hospital SE 1570 -2983 1520 Canghai Road 5 E 180 -2744 5745 Community PC2 - Licang Canghai Road 6 District Houhai E 150 -2959 5905 Primary School Energy 7 Haiyixincheng N 450 -3211 5381 Systems Haiyixincheng 8 NE 420 -2778 5507 (Jinhuayuan) Note: the dispersion modelling did not identify building based projects and distributed boiler rooms and HESs as sensitive locations. This is because once these facilities are put into operation regular monitoring can better reflect the impacts of these facilities.

iv. Atmospheric Dispersion Modelling Input Data - Scenario 2 – Component 5 (Jidong Subdistrict Energy Systems)

Emission Parameters - Component 5 (Jidong Subdistrict Energy Systems) 223. The emission parameters of all subcomponents in Component 5 (Jidong Subdistrict Energy Systems) are presented in Table 46. Receptor Grid System - Component 5 (Jidong Subdistrict Energy Systems)

224. Predictions of concentration were made for a 14,000×14,000 m grid. The grid consists of 200 m x 200 m cells with a total of 4,900 receptors. The grid origin coordinate (0,0) are 120°40′26.4″E and 36°23′9.6″N. Map projection is UTM, and geodetic datum is WGS84. Terrain was assumed to be flat.

Meteorological Data and Sensitive Receptors - Component 5 (Jidong Subdistrict Energy Systems)

225. Climate data from 1994-2013 and daily and hourly conventional meteorological data for 2013 was obtained from the Jimo meteorological station to provide meteorological data for the atmospheric dispersion modeling. The Jimo meteorological station is located at 36°13′48″N and 120°16′48″E.

226. The modeling utilized one year of hourly and daily meteorological data for 2013, including hourly wind directions and wind speed for each day, dry-bulb temperature, ground data like cloud cover (total cloud cover and low cloud cover), etc. Daily high altitude data was extrapolated in AERMET from two times per day every 100 m from 0-3000 m. The AERMET estimate method was used for mixed layer height. The default of 200 calculated layers was utilized with a maximum altitude of 5000 m.

227. Ground characteristic parameters required by AERMOD (surface albedo at high noon, Bowen at daytime and ground roughness) were set according to recommended parameters in the reference model suitable for the component area. Atmospheric diffusion parameters mainly use ground meteorological data and sounding meteorological data to generate the predicted meteorological input document.

113 Table 46: Exhaust gas emission parameters of subcomponents in Component 5 (Jidong Subdistrict Energy Systems). Gas Emission rate (g/s) Grid Coordinates Stack Inner Exhaust air of Comp. Stack consumption of Name Type Capacity (t/h) Height diameter each stack No. No each stack SO2 NOx PM X Y (m) (m) (m3/h) (m3/h) Gas engine 4*1.127 P5.1-1 18 0.6 160 1.09 0.003 0.07 160 -122 -3780 generator+ MW+1*0.329 P5.1-2 18 0.6 160 1.09 0.003 0.07 160 -122 -3788 PC5-1: No. 1 waste heat MW P5.1-3 18 0.6 160 1.09 0.003 0.07 160 -122 -3796 Commercial direct fired 4*1.121 P5.1-4 18 0.6 160 1.09 0.003 0.07 160 -122 -3804 Complex lithium bromide MW+1*0.269M Energy System unit W P5.1-5 18 0.6 45 0.31 0.001 0.02 45 -122 -3812 Gas-fired hot P5.1-6 18 1 600 2.50 0.033 0.30 600 -140 -3800 2*10.5MW water boiler P5.1-7 18 1 600 2.50 0.033 0.30 600 -140 -3810 Gas engine 4*1.127 P5.2-1 18 0.6 160 1.09 0.003 0.07 160 -1520 -4260 generator+ MW+1*0.329 P5.2-2 18 0.6 160 1.09 0.003 0.07 160 -1530 -4260 PC5-2: No. 2 waste heat MW P5.2-3 18 0.6 160 1.09 0.003 0.07 160 -1540 -4260 Commercial direct fired 4*1.121 P5.2-4 18 0.6 160 1.09 0.003 0.07 160 -1550 -4260 Complex lithium bromide MW+1*0.269 Energy System unit MW P5.2-5 18 0.6 45 0.31 0.001 0.02 45 -1560 -4260 Gas-fired hot P5.2-6 18 1 600 2.50 0.033 0.30 600 -1520 -4270 2*10.5MW PC5 water boiler P5.2-7 18 1 600 2.50 0.033 0.30 600 -1530 -4270 PC5-3: Neighborhood Boiler Heating Systems Xinmin Gas-fired hot 4*2.8MW P5.3 30 0.8 960 4.00 0.053 0.48 960 -2444 -4827 Community water boiler Anyuan Gas-fired hot 3*2.8MW P5.4 30 0.8 720 3.00 0.040 0.36 720 -1279 -3498 Community water boiler p5.5-1 30 0.8 540 2.25 0.030 0.27 540 -159 -1367 3*2.1MW+4*2. Beiping Gas-fired hot p5.5-2 30 0.8 720 3.00 0.040 0.36 720 345 -1103 1MW+4*2.1M Community water boiler p5.5-3 30 0.8 720 3.00 0.040 0.36 720 323 -1389 W+4*2.8MW p5.5-4 30 0.8 960 4.00 0.053 0.48 960 -313 -1367 Xingshi Gas-fired hot 4*2.8MW P5.6 30 0.8 960 4.00 0.053 0.48 960 0 0 Community water boiler Shuipo Gas-fired hot 4*4.2MW P5.7 30 1 1260 5.25 0.070 0.63 1260 334 2400 Community water boiler Jingtuan Gas-fired hot 4*2.1MW+3*2. P5.8-1 30 0.8 720 3.00 0.040 0.36 720 -629 5162 Community water boiler 1MW P5.8-2 30 0.8 540 2.25 0.030 0.27 540 -635 5170

114 Notes: 1. Gas boilers and lithium bromide direct fired unit will generate 15 m3 exhaust gas per 1 m3 natural gas. Based on a 2007 survey of industrial natural gas boilers in PRC (updated in 2010), pollution emission factors are : PM: 140 mg per 1 m3 natural gas, SO2: 200 mg per 1 m3 natural gas, NOx : 1800 mg per 1 m3 natural gas and exhaust gas is 15 Nm3 per 1 m3 natural gas 2. Gas turbine and gas engine generator will use low NOx burning measures. Based on a 2007 survey of industrial natural gas boilers in PRC (updated in 2010), pollution emission factors are: PM:103.9 mg per 1 m3 natural gas, SO2 70.7 mg per 1 m3 natural gas, NOX 1220mg per 1 m3 natural gas and exhaust gas is 24.55 Nm3 per 1 m3 natural gas 3. Conversion factor of NO2 to NOx is 0.9. 4. Temperature at exhaust gas outlet of all equipment is 333k.

228. Sensitive receptors in the Component 5 area are listed in Table 47.

Table 47: Sensitive Receptors, Component 5 (Jidong Subdistrict Energy Systems). Nearest distance No Name Direction X Y to stack (m) Aoshanwei Economically 1 Affordable Housing E 180 -2 -2442 Campus of Qingdao Branch 2 of Shandong University E 150 1069 -2560 3 Luxinhebi Garden Project N 450 -330 -3226 National Quality Inspection 4 Center NE 420 -792 -4718 Office of Administrative 5 Committee NW 500 -114 -4045 6 Weidong Project SW 750 -1779 -5107 Living area for Shandong 7 University staff SE 1450 210 -752 Note: the dispersion modelling did not identify building based projects and distributed boiler rooms as sensitive locations. This is because once these facilities’ are put into operation regular monitoring can better reflect the impacts of these facilities.

v. Dispersion Modelling Results, Scenario 1 – All Components in Qingdao Urban Area

229. The Scenario 1 – All Components in Qingdao Urban Area ten worst case 1-hour average SO2, PM10 and NO2 GLCs and corresponding date and position are presented in Table 48. Figure 56, Figure 57 and Figure 58 show SO2, PM10 and NO2 concentration contour lines diagrams at the time when the maximum 1-hour average concentration of SO2, PM10 and NO2 occurred. The modelling shows that, under the meteorological conditions of 2013, the worst case 1-hour average GLC of SO2, NO2 and PM10 from the project are 4.2 µg/m³, 45.01 µg/m3 and 4.44 µg/m³, equivalent to 0.84% and 22.51% respectively of the standard for SO2 and NO2 (there is no one hour average standard for PM10). However, as Table 49 shows, the worst case of 1-hour average NO2 GLC occurs only one hour out of a total 8760 hours of model run, which is only 0.01% of the year. For 94.63% of the time, the 1-hour average NO2 GLC ratio to standard is between 0 and 10% and for 4.81% of the time is between 11 and 15%.

230. Table 50 presents the cumulative modelling results (e.g. worst background concentration value from monitoring + worst case concentration predicted GLC from the project). The worst case 1-hour average SO2 cumulative concentrations at the monitoring 3 sites range from 293.79 to 294.99 µg/m , the worst case 1-hour average NO2 cumulative concentrations at the monitoring sites range from 199.07 to 210.02 µg/m³, and the worst case 1-hour average PM10 GLCs at the monitoring sites ranged from 1.36 to 2.68 µg/m³.

115 231. The ten worst case 24-hour average SO2, NO2 and PM10 GLCs and corresponding date and position are presented in Table 51. Figure 59, Figure 60 and

232. Figure 61 show SO2, NO2 and PM10 and concentration contour lines diagrams at the time when the maximum 24-hour average concentration of SO2, PM10 and NO2 occurred. The modelling shows that, under the meteorological conditions of 2013, the worst case 24- 3 hour average GLC of SO2, NO2 and PM10 and from the project are 2.59 µg/m³, 23.08 µg/m and 2.22 µg/m³, equivalent to 1.73%, 28.85% and 1.48% respectively of the standard. However, as Table 52 shows, the worst case of 24-hour average NO2 GLC occurs only one day out of 365 days, which is only 0.27% of the year. For 91.78% of the time, the 24-hour average NO2 GLC ratio to standard is between 0 and 5% and for 5.21% of the time is between 6 and 10%.

233. Table 53 presents the cumulative modelling results (e.g. worst background concentration value from monitoring + worst case concentration predicted GLC from the project). The worst case 24-hour average SO2 cumulative concentration at the monitoring 3 sites ranged from 121.21 to 121.93 µg/m , the worst case 24-hour average NO2 cumulative concentration at the monitoring sites ranged from 129.69 to 136.33 µg/m³ and the worst case 24-hour average PM10 cumulative concentration at the monitoring sites ranged from 415.15 to 415.69 µg/m³. The ten worst case annual average SO2, NO2 and PM10 GLCs and corresponding date and position are presented in Table 54. Figure 62, Figure 63 and Figure 64 show SO2, NO2 and PM10 and concentration contour lines diagrams at the time when the maximum 24-hour average concentration of SO2, NO2 and PM10 occurred. The modelling shows that, under the meteorological conditions of 2013, the worst case 24-hour 3 average GLC of SO2, NO2 and PM10 from the project are 0.2 µg/m³, 2.25 µg/m and 0.18 µg/m³, equivalent to 0.33% , 5.625% and 0.26% respectively of the standard.

234. Table 55 presents the cumulative modelling results (e.g. worst background concentration value from monitoring + worst case concentration predicted GLC from the project). The worst case annual average SO2 cumulative concentration at the monitoring 3 sites ranged from 44.03 to 44.12 µg/m , the worst case annual average NO2 cumulative concentration at the monitoring sites ranged from 50.19 to 51.10 µg/m³, and the worst case annual average PM10 cumulative concentration at the monitoring sites range from 141.01 to 141.09 µg/m³.

116 Table 48: Ten worst case 1-hour SO2, NO2 and PM10 GLCs and corresponding date and positions, Scenario 1 – All Components in Qingdao Urban Area. 10 Worst Case GLCs Grid Location Meteorological Ratio of conditions (wind Item Time Predicted GLC to direction in degrees, wind 3 X Y GLC (µg/m ) Standard speed and temperature) (%) 8 am, Feb 9 303, 5.7m/s, T=-4.3 oC 4.2 0.84 -2600 -200 9 am, Dec 8 284, 1.2m/s, T=5 oC 4.16 0.832 -400 1400 9 am, Nov 16 239, 1.2 m/s, T=13.4 oC 3.95 0.79 -4400 2400 9 am, Dec 8 284, 1.2m/s, T=5 oC 3.76 0.752 -200 1400 9 am, Dec 8 284, 1.2m/s, T=5 oC 3.67 0.734 -800 1600 SO o 2 9 am, Mar 14 120, 1.7 m/s, T=7.2 C 3.64 0.728 -4600 2400 8 am, Mar 29 282, 1 m/s, T=6.8 oC 3.63 0.726 -1000 1600 9 am, Mar 27 286, 1.2 m/s, T=9.5 oC 3.63 0.726 -600 1400 9 am, Dec 8 284, 1.2m/s, T=5 oC 3.59 0.718 0 1400 8 am, Nov 20 195, 2.8 m/s, T=6.1 oC 3.57 0.714 -4400 2600 9 am, Nov 16 239, 1.2 m/s, T=13.4 oC 45.01 22.51 -4400 2400 9 am, Mar 14 120, 1.7 m/s, T=7.2 oC 37.7 18.85 -4600 2400 8 am, Nov 20 195, 2.8 m/s, T=6.1 oC 37.54 18.77 -4400 2600 12 pm, Dec 20 68, 2 m/s, T=4.9 oC 37.51 18.76 -4800 2200 11 pm, Nov 17 190, 2.3 m/s, T=12.2 oC 37.48 18.74 -4400 2800 NO o 2 11 pm, Nov 16 255, 1.9 m/s, T=16.1 C 37 18.50 -4200 2400 9 am, Dec 8 284, 1.2 m/s, T=5 oC 36.02 18.01 -3000 2000 5 am, Mar 17 165, 2.2 m/s, T=3.4 oC 35.93 17.97 -4600 2800 6 am, Dec 2 341, 1 m/s, T=5.8 oC 35.47 17.74 -4200 1000 11 pm, Nov 16 255, 1.9 m/s, T=16.1 oC 35.42 17.71 -4000 2400 11 am, Nov 23 333, 1 m/s, T=11.6 oC 4.44 -- -4400 2200 8 am, Mar 29 282, 1 m/s, T=6.8 oC 4.34 -- -3800 2200 8 am, Mar 29 282, 1 m/s, T=6.8 oC 4.22 -- -4000 2200 10 am, Jan 10 289, 1.4 m/s, T=2.5 oC 4.19 -- -4200 2200 8 am, Feb 15 277, 0.9 m/s, T=1.6 oC 4.06 -- -3600 2200 PM o 10 9 am, Nov 16 239, 1.2 m/s, T=13.4 C 3.97 -- -4400 2400 9 am, Jan 5 288, 0.9 m/s, T=1.6 oC 3.92 -- -3600 2000 9 am, Dec 28 318, 0.8 m/s, T=1.4 oC 3.85 -- -3800 1400 6 am, Dec 2 341, 1 m/s, T=5.8 oC 3.81 -- -4200 1200 8 am, Feb 15 277, 0.9 m/s, T=1.6 oC 3.76 -- -3400 2200

Table 49. Frequency Analysis of 1-hour NO2 GLCs, Scenario 1 – All Components in Qingdao Urban Area. Ratio of Number of Number of Number of Percentage Percentage Percentage NO2 GLC to hours hours in hours in of hours of hours in of hours in standards heat NON-heat heat other supply supply supply season season season season 0-5% 1934 470 1465 22.08% 5.36% 16.72% 6-10% 6355 2590 3765 72.55% 29.57% 42.98% 11-15% 421 279 143 4.81% 3.18% 1.63% 16-20% 48 45 4 0.55% 0.51% 0.04% 21-25% 0 0 0 0.00% 0.00% 0.00% 26%-35% 1 1 0 0.01% 0.01% 0.00% > 35% 0 0 0 0.00% 0.00% 0.00% Total Hours of Model 8760 3384 5376 100.00% 38.63% 61.37% Run

117 Figure 56: SO2 contour map of worst case 1-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.5 mg/m3)

Figure 57: NO2 contour map of worst case 1-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.2 mg/m3).

118

Figure 58: PM10 contour map of worst case 1-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and there is no relevant standard).

Table 50: Worst case 1-hour SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Scenario 1 – All Components in Qingdao Urban Area.

Ratio of Ratio of Worst Worst Case GLC to Cumulative Item Monitoring site Case GLC Cumulative 3 Standard 3 GLC to (µg/m ) GLC (µg/m ) (%) Standard (%) Canghai Road Community 1.98 0.40 293.98 58.80 Canghai Road Primary School 2.79 0.56 294.79 58.96 Haiyixincheng 1.79 0.36 293.79 58.76 Haiyixincheng (Jinhuayuan) 2.62 0.52 294.62 58.92 SO 2 Lvdidichan Project 2.99 0.60 294.99 59.00 Baolixiangbinuoji 2.08 0.42 294.08 58.82 Siliunan Road Primary School 1.97 0.39 293.97 58.79 Jiekang Hospital 2.47 0.49 294.47 58.89 Canghai Road Community 17.26 8.63 200.26 100.13 Canghai Road Primary School 26.23 13.12 209.23 104.62 Haiyixincheng 18.00 9.00 201.00 100.50 Haiyixincheng (Jinhuayuan) 25.50 12.75 208.50 104.25 NO 2 Lvdidichan Project 27.02 13.51 210.02 105.01 Baolixiangbinuoji 16.07 8.04 199.07 99.54 Siliunan Road Primary School 17.27 8.64 200.27 100.14 Jiekang Hospital 21.85 10.93 204.85 102.43 PM10 Canghai Road Community 1.80 ------

119 Ratio of Ratio of Worst Worst Case GLC to Cumulative Item Monitoring site Case GLC Cumulative 3 Standard 3 GLC to (µg/m ) GLC (µg/m ) (%) Standard (%) Canghai Road Primary School 2.14 ------Haiyixincheng 1.72 ------Haiyixincheng (Jinhuayuan) 2.21 ------Lvdidichan Project 2.68 ------Baolixiangbinuoji 1.36 ------Siliunan Road Primary School 1.81 ------Jiekang Hospital 2.33 ------

Table 51: Ten worst case 24-hour SO2, NO2 and PM10 GLCs and corresponding date and positions, Scenario 1 – All Components in Qingdao Urban Area. 10 Worst Case GLCs Grid Location Item Date Predicted GLC Ratio of GLC to 3 X Y (µg/m ) Standard (%) Dec16 2.59 1.73 -4400 2600 Feb21 2.11 1.41 -3200 5000 Mar10 1.82 1.21 -4600 2600 Dec16 1.74 1.16 -4400 2800 Mar22 1.71 1.14 -4800 2400 SO 2 Mar10 1.69 1.13 -4600 2800 Dec7 1.46 0.97 -4200 2400 Feb21 1.17 0.78 -3200 5200 Jan23 1.17 0.78 -2600 -400 Mar12 1.16 0.77 -4600 2400 Dec16 23.08 28.85 -4400 2600 Mar10 20.70 25.88 -4600 2600 Feb21 18.74 23.43 -3200 5000 Dec16 15.47 19.34 -4400 2800 Mar10 15.23 19.04 -4600 2800 NO 2 Mar22 15.11 18.89 -4800 2400 Dec7 12.89 16.11 -4200 2400 Mar10 11.34 14.18 -4600 3000 Feb19 11.28 14.10 -4400 3000 Mar12 10.39 12.99 -4600 2400 Dec16 2.22 1.48 -4400 2600 Mar10 1.74 1.16 -4600 2600 Feb21 1.62 1.08 -3200 5000 Feb19 1.44 0.96 -4400 2800 Mar22 1.41 0.94 -4800 2400 PM 10 Mar10 1.4 0.93 -4600 2800 Dec7 1.27 0.85 -4200 2400 Mar21 1.00 0.67 -4600 2400 Nov20 0.96 0.64 -4000 2400 Feb19 0.95 0.63 -4400 3000

120 Table 52. Frequency Analysis of 24-hour NO2 GLCs, Scenario 1 – All Components in Qingdao Urban Area. Ratio of Number of Number of Number of Percentage Percentage Percentage NO2 GLC to hours hours in hours in of hours of hours in of hours in standards heat NON-heat heat other supply supply supply season season season season 0-5% 335 111 224 91.78% 30.41% 61.37% 6-10% 19 19 0 5.21% 5.21% 0.00% 11-15% 6 6 0 1.64% 1.64% 0.00% 16-20% 4 4 0 1.10% 1.10% 0.00% 21-25% 0 0 0 0.00% 0.00% 0.00% 26%-35% 1 1 0 0.27% 0.27% 0.00% > 35% 0 0 0 0.00% 0.00% 0.00% Total Hours of Model 365 141 224 100.00% 38.63% 61.37% Run

Figure 59: SO2 contour map of worst case 24-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.15 mg/m3).

Figure 60: NO2 contour map of worst case 24-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.08 mg/m3).

121

122 Figure 61: PM10 contour map of worst case 24-hour average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.15 mg/m3).

Table 53: Worst case 24-hour SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Scenario 1 – All Components in Qingdao Urban Area.

Ratio of Ratio of Worst Worst Case GLC to Cumulative Item Monitoring Site Case GLC Cumulative 3 Standard 3 GLC to (µg/m ) GLC (µg/m ) (%) Standard (%) Canghai Road Community 0.62 0.41 121.62 81.08 Canghai Road Primary School 0.76 0.51 121.76 81.17 Haiyixincheng 0.93 0.62 121.93 81.29 Haiyixincheng (Jinhuayuan) 0.51 0.34 121.51 81.01 SO 2 Lvdidichan Project 0.85 0.57 121.85 81.23 Baolixiangbinuoji 0.26 0.17 121.26 80.84 Siliunan Road Primary School 0.21 0.14 121.21 80.81 Jiekang Hospital 0.25 0.17 121.25 80.83 Canghai Road Community 5.41 6.76 133.41 166.76 Canghai Road Primary School 8.15 10.19 136.15 170.19 Haiyixincheng 8.33 10.41 136.33 170.41 Haiyixincheng (Jinhuayuan) 4.67 5.84 132.67 165.84 NO 2 Lvdidichan Project 7.71 9.64 135.71 169.64 Baolixiangbinuoji 2.06 2.58 130.06 162.58 Siliunan Road Primary School 1.69 2.11 129.69 162.11 Jiekang Hospital 2.13 2.66 130.13 162.66

123 Canghai Road Community 0.45 0.30 415.45 276.97 Canghai Road Primary School 0.65 0.43 415.65 277.10 Haiyixincheng 0.69 0.46 415.69 277.13 Haiyixincheng (Jinhuayuan) 0.39 0.26 415.39 276.93 PM 10 Lvdidichan Project 0.68 0.45 415.68 277.12 Baolixiangbinuoji 0.18 0.12 415.18 276.79 Siliunan Road Primary School 0.15 0.10 415.15 276.77 Jiekang Hospital 0.18 0.12 415.18 276.79

Table 54: Ten worst annual average SO2 and NO2 and PM10 GLCs and corresponding positions, Scenario 1 – All Components in Qingdao Urban Area.

Worst Case GLCs Grid Location Item Predicted GLC Ratio of GLC to 3 X Y (µg/m ) Standard (%) 0.20 0.33 -3200 5000 0.17 0.28 -3200 5200 0.17 0.28 -4400 2600 0.17 0.28 -4600 2600 0.14 0.23 -4400 2800 SO 2 0.13 0.22 -4600 2800 0.13 0.22 -4400 2000 0.12 0.20 -3200 5400 0.12 0.20 -4400 1800 0.11 0.18 -3400 5000 2.25 5.63 -3200 5000 1.60 4.00 -4600 2600 1.52 3.80 -4400 2600 1.46 3.65 -3200 5200 1.18 2.95 -4400 2800 NO2 1.10 2.75 -4400 2000 1.09 2.73 -4600 2800 1.05 2.63 -4400 1800 1.03 2.58 -3200 5400 1.02 2.55 -4600 2400 0.18 0.26 -3200 5000 0.15 0.21 -4400 2600 0.14 0.20 -4600 2600 0.13 0.19 -3200 5200 0.12 0.17 -4400 2000 PM 10 0.11 0.16 -4400 1800 0.11 0.16 -4400 2800 0.10 0.14 -4600 2800 0.09 0.13 -4600 2400 0.09 0.13 -3200 5400

124 Figure 62: SO2 contour map of worst case annual average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.06 mg/m3).

Figure 63: NO2 contour map of worst case annual average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.04 mg/m3).

125 Figure 64: PM10 contour map of worst case annual average concentration, Scenario 1 – All Components in Qingdao Urban Area. (unit: mg/m3 and relevant standard is 0.07 mg/m3).

Table 55: Worst case annual SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Scenario 1 – All Components in Qingdao Urban Area. Ratio of Ratio of Worst Worst Case GLC to Cumulative Item Monitoring Site Case GLC Cumulative 3 Standard 3 GLC to (µg/m ) GLC (µg/m ) (%) Standard (%) Canghai Road Community 0.04 0.07 44.04 73.40 Canghai Road Primary School 0.06 0.10 44.06 73.43 Haiyixincheng 0.12 0.20 44.12 73.53 Haiyixincheng (Jinhuayuan) 0.04 0.07 44.04 73.40 SO 2 Lvdidichan Project 0.06 0.10 44.06 73.43 Baolixiangbinuoji 0.03 0.05 44.03 73.38 Siliunan Road Primary School 0.03 0.05 44.03 73.38 Jiekang Hospital 0.03 0.05 44.03 73.38 Canghai Road Community 0.34 0.85 50.34 125.85 Canghai Road Primary School 0.61 1.53 50.61 126.53 Haiyixincheng 1.10 2.75 51.10 127.75 Haiyixincheng (Jinhuayuan) 0.34 0.85 50.34 125.85 NO 2 Lvdidichan Project 0.48 1.20 50.48 126.20 Baolixiangbinuoji 0.19 0.48 50.19 125.48 Siliunan Road Primary School 0.25 0.63 50.25 125.63 Jiekang Hospital 0.30 0.75 50.30 125.75 PM10 Canghai Road Community 0.03 0.04 141.03 201.47

126 Ratio of Ratio of Worst Worst Case GLC to Cumulative Item Monitoring Site Case GLC Cumulative 3 Standard 3 GLC to (µg/m ) GLC (µg/m ) (%) Standard (%) Canghai Road Primary School 0.05 0.07 141.05 201.50 Haiyixincheng 0.09 0.13 141.09 201.56 Haiyixincheng (Jinhuayuan) 0.03 0.04 141.03 201.47 Lvdidichan Project 0.04 0.06 141.04 201.49 Baolixiangbinuoji 0.01 0.01 141.01 201.44 Siliunan Road Primary School 0.02 0.03 141.02 201.46 Jiekang Hospital 0.02 0.03 141.02 201.46

vi. Dispersion Modelling Results, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems)

235. The Scenario 2 - Component 5 (Jidong Subdistrict Energy Systems) ten worst case 1-hour average SO2, NO2 and PM10 GLCs and corresponding date and position are presented in

236. Table 56.

127 237. Figure 65,

238. Figure 66 and Figure 67 show SO2, NO2 and PM10 concentration contour lines diagrams at the time when the maximum 1-hour average concentration of SO2, NO2 and PM10 occurred. The modelling shows that, under the meteorological conditions of 2013, the worst case 1-hour average GLC of SO2, NO2 and PM10 from the project are 5.93 µg/m³, 55.44 µg/m3 and 3.96 µg/m³, equivalent to 1.19% and 27.72% respectively of the standard for SO2 and NO2 (there is no one hour average standard for PM10). However, as Table 58 shows, the worst case of 1-hour average NO2 GLC occurs only 5 hours out of a total 8760 hours of model run, which is only 0.06% of the year. For 92.14% of the time, the 1-hour average NO2 GLC ratio to standard is between 0 and 10% and for 6.95% of the time is between 11 and 15%.

239.

240. Table 57 presents the cumulative modelling results (e.g. worst background concentration value from monitoring + worst case concentration predicted GLCs from the project). The worst case 1-hour average SO2 cumulative concentration at the monitoring 3 sites ranged from 40.58 to 43.79 µg/m , the worst case 1-hour average NO2 cumulative concentration at the monitoring sites ranged from 68.50 to 93.94 µg/m³, and the worst case 1-hour average PM10 GLCs at the monitoring sites ranged from 0.99 to 3.00 µg/m³.

241. The ten worst case 24-hour average SO2, NO2 and PM10 GLCs and corresponding date and position are presented in

242. Table 58. Frequency Analysis of 1-hour NO2 GLCs, Scenario 2 – Component 5 (Jidong Subdistrict Energy Systems).

Ratio of Number of Number of Number of Percentage Percentage Percentage NO2 GLC hours hours in hours in of hours of hours in of hours in to heat NON-heat heat other standards supply supply supply season season season season 0-5% 3552 636 2916 40.55% 7.26% 33.29% 6-10% 4520 2290 2230 51.60% 26.14% 25.45% 11-15% 577 349 228 6.59% 3.98% 2.61% 16-20% 94 92 2 1.07% 1.05% 0.02% 21-25% 12 12 0 0.14% 0.14% 0.00% 26%-35% 5 5 0 0.06% 0.06% 0.00% > 35% 0 0 0 0.00% 0.00% 0.00% Total Hours of Model 8760 3384 5376 100.00% 38.63% 61.37% Run

Table 59.

Table 60. Frequency Analysis of 24-hour NO2 GLCs, Scenario 2 – Component 5 (Jidong Subdistrict Energy Systems). Ratio of Number of Number of Number of Percentage Percentage Percentage NO2 GLC to hours hours in hours in of hours of hours in of hours in standards heat NON-heat heat other supply supply supply season season season season 0-5% 340 116 224 93.15% 31.78% 61.37% 6-10% 12 12 0 3.29% 3.29% 0.00% 11-15% 7 7 0 1.92% 1.92% 0.00% 16-20% 2 2 0 0.55% 0.55% 0.00%

128 21-25% 1 1 0 0.27% 0.27% 0.00% 26%-35% 3 3 0 0.82% 0.82% 0.00% > 35% 0 0 0 0.00% 0.00% 0.00% Total Hours of Model 365 141 224 100.00% 38.63% 61.37% Run

243. Figure 68, Figure 69 and Figure 70 show SO2, NO2 and PM10 concentration contour lines diagrams at the time when the maximum 24-hour average concentration of SO2, NO2 and PM10 occurred. The modelling shows that, under the meteorological conditions of 2013, the worst case 24-hour average GLCs SO2, NO2 and PM10 from the project are 2.51 µg/m³, 22.66 µg/m3 and 1.82 µg/m³ and, equivalent to 1.67%, 28.33% and 1.21% respectively of the standard. However, as Table 60 Table 60shows, the worst case of 24-hour average NO2 GLC occurs only 3 days out of 365 days, which is only 0.82% of the year. For 93.15% of the time, the 24-hour average NO2 GLC ratio to standard is between 0 and 5%.

244. Table 61 presents the 24-hour average cumulative modelling results (e.g. worst background concentration value from monitoring + worst case concentration predicted GLC from the project). The worst case 24-hour average SO2 cumulative concentrations at the 3 monitoring sites range from 32.21 to 32.83 µg/m , the worst case 24-hour average NO2 cumulative concentrations at the monitoring sites range from 38.4 to 44.08 µg/m³, and the worst case 24-hour average PM10 cumulative concentrations at the monitoring sites range from 128.33 to 128.66 µg/m³.

245. The ten worst case annual average SO2, NO2 and PM10 GLCs and corresponding date and position are presented in Table 62. Figure 71, Figure 72 and Figure 73 show SO2, NO2 and PM10 concentration contour lines diagrams at the time when the maximum annual average concentration of SO2, NO2 and PM10 occurred. The modelling shows that, under the meteorological conditions of 2013, the worst case annual average GLC of SO2, NO2 and 3 PM10 from the project are 0.24 µg/m³, 1.91 µg/m and 0.15 µg/m³, equivalent to 0.40%, 4.78% and 0.21% respectively of the standard.

246. Table 63 presents the cumulative modelling results (e.g. worst background concentration value from monitoring + worst case concentration predicted GLC from the project). The worst case annual average SO2 GLCs at the monitoring sites ranged from 0.02 3 to 0.12 µg/m , the worst case annual average NO2 GLCs at the monitoring sites ranged from 0.19 to 1.01 µg/m³ and the worst case annual average PM10 GLCs at the monitoring sites ranged from 0.01 to 0.08 µg/m³.

129

Table 56: Ten worst case 1-hour SO2, NO2 and PM10 GLCs and corresponding date and positions, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). Meteorological 10 Worst Case GLCs Grid Location Conditions (wind Ratio of Item Time direction in degrees, Predicted GLC to 3 X Y wind speed and GLC (µg/m ) Standard temperature) (%) 8 pm, Nov 28 267, 3.8 m/s, T=7.2 oC 5.93 1.19 0 -3800 7 am, Dec 10 160, 2.7 m/s, T=7.8 oC 5.04 1.01 -200 -3600 9 am, Nov 17 19, 4.2 m/s, T=13.6 oC 4.74 0.95 -200 -4000 9 am, Mar 4 328, 2.6 m/s, T=3.5 oC 4.69 0.94 0 -4000 6 pm, Mar 31 236, 1.9 m/s, T=11.1 oC 4.53 0.91 -1400 -4200 SO o 2 9 pm, Nov 17 242, 2.2 m/s, T=10.1 C 4.53 0.91 200 -3600 5 pm, Nov 22 212, 2.6 m/s, T=11.3 oC 4.48 0.90 0 -3600 6 am, Mar 22 97, 2.2 m/s, T=7.9 oC 4.47 0.89 -400 -3800 11 pm, Mar 22 131, 4.1 m/s, T=7.6 oC 4.43 0.89 -1600 -4200 6 am, Dec 8 266, 1.9 m/s, T=4.2 oC 4.22 0.84 200 -3800 9 am, Feb 15 284, 0.9 m/s, T=-1 oC 55.44 27.72 0 -1400 9 am, Jan 4 342, 1.2 m/s, T=-0.5 oC 53.56 26.78 -200 -1600 6 pm, Mar 31 236, 1.9 m/s, T=11.1 oC 50.13 25.07 -1400 -4200 8 am, Nov 16 14, 0.9 m/s, T=10.5 oC 48.78 24.39 -400 -1800 8 pm, Nov 28 267, 3.8 m/s, T=7.2 oC 46.28 23.14 0 -3800 NO o 2 9 am, Dec 2 349, 1.2 m/s, T=8.7 C 46.14 23.07 -200 -1800 11 pm, Mar 22 131, 4.1 m/s, T=7.6 oC 46.02 23.01 -1600 -4200 8 am, Mar 27 277, 0.9 m/s, T=7.1 oC 44.43 22.22 -200 -1400 8 am, Nov 16 14, 0.9 m/s, T=10.5 oC 41.61 20.81 -400 -1600 7 am, Dec 10 160, 2.7 m/s, T=7.8 oC 40.03 20.02 -200 -3600 6 pm, Mar 31 236, 1.9 m/s, T=11.1 oC 3.96 -- -1400 -4200 11 pm, Mar 22 131, 4.1 m/s, T=7.6 oC 3.69 -- -1600 -4200 8 pm, Nov 28 267, 3.8 m/s, T=7.2 oC 3.69 -- 0 -3800 7 am, Dec 10 160, 2.7 m/s, T=7.8 oC 3.18 -- -200 -3600 9 am, Nov 17 19, 4.2 m/s, T=13.6 oC 3.03 -- -200 -4000 PM o 10 9 pm, Nov 17 242, 2.2 m/s, T=10.1 C 2.98 -- 200 -3600 9 am, Mar 4 328, 2.6 m/s, T=3.5 oC 2.87 -- 0 -4000 5 pm, Nov 22 212, 2.6 m/s, T=11.3 oC 2.81 -- 0 -3600 5 pm, Nov 16 104, 2 m/s, T=12.9 oC 2.79 -- -1800 -4200 1 am, Nov 15 243, 1.8 m/s, T=11.9 oC 2.79 -- 1000 -3200

130 Figure 65: SO2 contour map of worst case 1-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.5 mg/m3)

Figure 66: NO2 contour map of worst case 1-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.2 mg/m3).

131

Figure 67: PM10 contour map of worst case 1-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and there is no relevant standard)

Table 57: Worst case 1-hour SO2, NO2 and PM10 and cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). Ratio of Ratio of GLC Worst Case Worst Case Cumulative Item Monitoring site 3 to Standard Cumulative GLC (µg/m ) 3 GLC to (%) GLC (µg/m ) standard (%) Aoshanwei Economically 2.52 0.50 41.52 8.30 Affordable Housing Campus of Qingdao Branch of 2.39 0.48 41.39 8.28 Shandong University Luxinhebi Garden Project 2.93 0.59 41.93 8.39 National Quality Inspection SO 1.84 0.37 40.84 8.17 2 Center Office of Administrative 4.79 0.96 43.79 8.76 Committee Weidong Project 3 0.60 42.00 8.40 Living area for Shandong 1.58 0.32 40.58 8.12 University staff Aoshanwei Economically 24.99 12.50 80.99 40.50 Affordable Housing NO Campus of Qingdao Branch of 2 18.99 9.50 74.99 37.50 Shandong University Luxinhebi Garden Project 23.33 11.67 79.33 39.67

132 National Quality Inspection 19.49 9.75 75.49 37.75 Center Office of Administrative 37.94 18.97 93.94 46.97 Committee Weidong Project 31.92 15.96 87.92 43.96 Living area for Shandong 12.5 6.25 68.50 34.25 University staff Aoshanwei Economically 1.55 ------Affordable Housing Campus of Qingdao Branch of 1.49 ------Shandong University Luxinhebi Garden Project 1.85 ------National Quality Inspection PM 1.55 ------10 Center Office of Administrative 3 ------Committee Weidong Project 2.46 ------Living area for Shandong 0.99 ------University staff

Table 58. Frequency Analysis of 1-hour NO2 GLCs, Scenario 2 – Component 5 (Jidong Subdistrict Energy Systems). Ratio of Number of Number of Number of Percentage Percentage Percentage NO2 GLC to hours hours in hours in of hours of hours in of hours in standards heat NON-heat heat other supply supply supply season season season season 0-5% 3552 636 2916 40.55% 7.26% 33.29% 6-10% 4520 2290 2230 51.60% 26.14% 25.45% 11-15% 577 349 228 6.59% 3.98% 2.61% 16-20% 94 92 2 1.07% 1.05% 0.02% 21-25% 12 12 0 0.14% 0.14% 0.00% 26%-35% 5 5 0 0.06% 0.06% 0.00% > 35% 0 0 0 0.00% 0.00% 0.00% Total Hours of Model 8760 3384 5376 100.00% 38.63% 61.37% Run

133

Table 59: Ten worst case 24-hour SO2, NO2 and PM10 GLCs and corresponding date and positions, Component 5 (Jidong Subdistrict Energy Systems).

Worst Case GLCs Grid Location Item Date Predicted GLC Ratio of GLC to 3 X Y (µg/m ) Standard (%) Mar 10 2.51 1.67 -200 -3600 Mar 21 2.18 1.45 -1600 -4200 Nov 20 2.15 1.43 0 -3800 Dec 7 2.03 1.35 -1400 -4200 Dec 16 1.47 0.98 0 -3600 SO 2 Mar 10 1.4 0.93 -1600 -4000 Feb 19 1.24 0.83 0 -3400 Dec 16 1.18 0.79 -1400 -4000 Mar 22 1.18 0.79 -400 -3800 Nov 20 1.11 0.74 200 -3800 Mar 21 22.66 28.33 -1600 -4200 Dec 7 21.72 27.15 -1400 -4200 Mar 10 20.04 25.05 -200 -3600 Nov 20 16.60 20.75 0 -3800 Mar 10 15.20 19.00 -1600 -4000 NO2 Dec 16 12.47 15.59 -1400 -4000 Dec 16 11.49 14.36 0 -3600 Mar 22 10.61 13.26 -1800 -4200 Feb 19 9.92 12.40 0 -3400 Mar 22 9.26 11.58 -400 -3800 Mar 21 1.82 1.21 -1600 -4200 Dec 7 1.73 1.15 -1400 -4200 Mar 10 1.60 1.07 -200 -3600 Nov 20 1.32 0.88 0 -3800 Mar 10 1.21 0.81 -1600 -4000 PM 10 Dec 16 1.00 0.67 -1400 -4000 Dec 16 0.90 0.60 0 -3600 Mar 22 0.84 0.56 -1800 -4200 Feb 19 0.79 0.53 0 -3400 Mar 22 0.74 0.49 -400 -3800

134 Figure 68: SO2 contour map of worst case 24-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.15 mg/m3)

Figure 69: NO2 contour map of worst case 24-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.08 mg/m3).

135 Figure 70: PM10 contour map of worst case 24-hour average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.15 mg/m3)

136 Table 61: Worst case 24-hour SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Component 5 (Jidong Subdistrict Energy Systems). Ratio of Ratio of Worst case Worst Case Cumulative GLC to Cumulative Item Monitoring Site GLC GLC to 3 standard GLC (µg/m ) 3 standard (%) (µg/m ) (%) Aoshanwei Economically 0.41 0.27 32.41 21.61 Affordable Housing Campus of Qingdao Branch of 0.18 0.12 32.18 21.45 Shandong University Luxinhebi Garden Project 0.53 0.35 32.53 21.69 SO 2 National Quality Inspection Center 0.34 0.23 32.34 21.56 Office of Administrative Committee 0.78 0.52 32.78 21.85 Weidong Project 0.38 0.25 32.38 21.59 Living area for Shandong 0.49 0.33 32.49 21.66 University staff Aoshanwei Economically 3.31 4.14 39.31 49.14 Affordable Housing Campus of Qingdao Branch of 1.51 1.89 37.51 46.89 Shandong University Luxinhebi Garden Project 4.22 5.28 40.22 50.28 NO 2 National Quality Inspection Center 3.69 4.61 39.69 49.61 Office of Administrative Committee 6.34 7.93 42.34 52.93 Weidong Project 3.94 4.93 39.94 49.93 Living area for Shandong 3.96 4.95 39.96 49.95 University staff Aoshanwei Economically 0.17 128.26 85.51 0.17 Affordable Housing Campus of Qingdao Branch of 0.08 128.12 85.41 0.08 Shandong University Luxinhebi Garden Project 0.23 128.34 85.56 0.23 PM 10 National Quality Inspection Center 0.19 128.29 85.53 0.19 Office of Administrative Committee 0.33 128.50 85.67 0.33 Weidong Project 0.21 128.31 85.54 0.21 Living area for Shandong 0.23 128.34 85.56 0.23 University staff

137 Table 62: Ten worst annual average SO2 and NO2 and PM10 GLCs and corresponding positions, Component 5 (Jidong Subdistrict Energy Systems).

Worst Case GLCs Grid Location Item Predicted GLC Ratio of GLC to 3 X Y (µg/m ) Standard (%) 0.24 0.40 -200 -3600 0.14 0.23 0 -4200 0.13 0.22 0 -3600 0.12 0.20 -200 -3400 0.11 0.18 -1600 -4200 SO 2 0.11 0.18 -1600 -4000 0.11 0.18 0 -4000 0.11 0.18 0 -3800 0.11 0.18 0 -3400 0.10 0.17 0 -4400 1.91 4.78 -200 -3600 1.46 3.65 -1600 -4200 1.44 3.60 -1600 -4000 1.10 2.75 0 -4200 1.09 2.73 0 -3600 NO 2 1.05 2.63 -1400 -4600 1.00 2.50 -200 -3400 0.99 2.48 -1400 -4000 0.92 2.30 0 -3400 0.88 2.20 0 -4000 0.15 0.21 -200 -3600 0.11 0.16 -1600 -4200 0.11 0.16 -1600 -4000 0.09 0.13 0 -4200 0.08 0.11 -1400 -4600 PM 10 0.08 0.11 -1400 -4000 0.08 0.11 0 -3600 0.08 0.11 -200 -3400 0.07 0.10 -1400 -4800 0.07 0.10 0 -4400

138 Figure 71: SO2 contour map of worst case annual average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.06 mg/m3)

Figure 72: NO2 contour map of worst case annual average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.04 mg/m3).

139 Figure 73: PM10 contour map of worst case annual average concentration, Scenario 2: Component 5 (Jidong Subdistrict Energy Systems). (unit: mg/m3 and relevant standard is 0.07 mg/m3)

Table 63: Worst case annual SO2, NO2 and PM10 cumulative (worst case predicted + worst case background) GLCs at monitoring sites, Component 5 (Jidong Subdistrict Energy Systems). Ratio of Worst Case Ratio of Worst GLC to Cumulative Cumulative Item Monitoring site Case GLC 3 Standard GLC GLC to (µg/m ) 3 (%) (µg/m ) Standard (%) Aoshanwei Economically 0.05 0.08 -- -- Affordable Housing Campus of Qingdao Branch of 0.03 0.05 -- -- Shandong University Luxinhebi Garden Project 0.07 0.12 -- -- SO2 National Quality Inspection Center 0.02 0.03 -- -- Office of Administrative 0.12 0.20 -- -- Committee Weidong Project 0.02 0.03 -- -- Living area for Shandong 0.06 0.10 -- -- University staff Aoshanwei Economically 0.47 1.18 -- -- Affordable Housing Campus of Qingdao Branch of NO 0.22 0.55 -- -- 2 Shandong University Luxinhebi Garden Project 0.55 1.38 -- -- National Quality Inspection Center 0.23 0.58 -- --

140 Office of Administrative 1.01 2.53 -- -- Committee Weidong Project 0.19 0.48 -- -- Living area for Shandong 0.54 1.35 -- -- University staff Aoshanwei Economically 0.03 0.04 -- -- Affordable Housing Campus of Qingdao Branch of 0.02 0.03 -- -- Shandong University Luxinhebi Garden Project 0.04 0.06 -- -- PM10 National Quality Inspection Center 0.02 0.03 -- -- Office of Administrative 0.08 0.11 -- -- Committee Weidong Project 0.01 0.01 -- -- Living area for Shandong 0.04 0.06 -- -- University staff

vii. Discussion of Dispersion Modelling Results

247. The dispersion modelling shows that for both scenarios (Scenario 1 – All Components in Qingdao Urban Area and Scenario 2 - Component 5 (Jidong Subdistrict Energy Systems)) the worst case 1-hour, 24-hour and annual averaging period predicted SO2, NO2 and PM10 GLCs resulting from project emissions are fully in compliance with PRC standards.

248. In addition, cumulative modelling results (e.g. worst background concentration value from monitoring + worst case concentration predicted GLC from the project) indicate that for all averaging periods in both scenarios cumulative SO2 GLCs at all monitoring sites are in compliance with relevant PRC ambient standards. However there were predicted exceedances of worst case cumulative NO2 and PM10 ambient standards at Scenario 1 – All Components in Qingdao Urban Area monitoring sites, and also at some under Scenario 2 - Component 5 (Jidong Subdistrict Energy Systems monitoring sites. It should be noted that these worst case cumulative GLC exceedances are a result of high worst case ambient levels of NO2 and PM10, and not as a result of Project emissions exceeding PRC standards; in fact Project emissions are typically a small percentage of ambient levels. Nonetheless, during the operation phase gas emissions will be sampled on a regular basis to confirm compliance with relevant PRC emission standards, and ambient monitoring will be undertaken through the Qingdao EPB Continuous Ambient Air Quality Monitoring Stations. If either emissions monitoring or ambient monitoring indicates exceedances of relevant standards, additional denitrification and/or particulate control emissions devices will be added in consultation with the Qingdao EPB and the ADB.

2. Water Consumption

249. The project will require both production and domestic water, and will source it from the Qingdao municipal water supply system. An estimated 2.4 million m3/year production water will be required for make-up water for heating and cooling systems and for fire protection systems. Annual domestic water use is estimated at 2,565 m3/year, 15 and therefore total project water use is estimated at 2,402,565 m³/year.

15 Based on i) staffing of the project is around 300 for the heating season and 100 for the cooling season; ii) daily domestic water consumption is estimated at 50 l/person/day; iii) the heat supply season is 141 days and the cooling supply season is 90 days. Therefore, the annual domestic water consumption is estimated at 2,565 m3.

141 250. Qingdao’s combined surface and groundwater municipal water supply capacity is 1,020,000 m³/d. The total project water consumption is 2,4002,565 m³/year is equivalent to 0.65% of Qingdao’s annual water supply capacity. This is not expected to result in any significant negative impact on Qingdao’s water supply, and no associated mitigations are required.

3. Wastewater Generation

251. The project will generate both domestic and production wastewater.

252. Domestic wastewater will be produced from canteens and toilet facilities. Domestic wastewater generation is typically 85% of domestic water consumption, and is estimated at 2,180.25 m3/year. COD in domestic wastewater is estimated at 450 mg/L, BOD 250 mg/L, SS 200 mg/L and ammonia nitrogen 30 mg/L.

253. Production wastewater will include:

- Wastewater from the production water treatment plants. Make-up water for the boilers, turbines and associated equipment will be conditioned in water treatment plants. The water will be filtered, pre-treated, softened and the oxygen content will be reduced. Ion exchange will be utilized to remove Ca2+ and Mg2+. Wastewater will be generated during backwashing and regeneration processes estimated at 0.48 million m3/year. The main pollutants in this wastewater are COD estimated at 10 mg/L, ammonia nitrogen estimated at 1.5 mg/L, Ca2+ and Mg2+ estimated at 20 m g/L, and SS estimated at 30 mg/L.

- Wastewater from the heating and cooling supply system, and boiler blowdown (water intentionally wasted from a boiler to avoid the concentration of impurities during continuing evaporation of steam), estimated at 0.192 million m3/year. Based on data from similar projects COD in this waste water is estimated at 120 mg/L, SS is estimated at 20 mg/L, and ammonia is estimated at 10 mg/L

254. Table 64 summarizes the annual wastewater discharges for the project.

142 Table 64: Predicted annual wastewater concentrations and emissions. Wastewater from the Wastewater from water Concentration heat and cool supply Domestic wastewater Total treatment plants in mixed Parameter systems quantity wastewater Concentration Quantity Concentration Quantity Concentration Quantity (t/a) (mg/L) (mg/L) (t/a) (mg/L) (t/a) (mg/L) (t/a) CODCr 120 23.04 450 0.98 10 4.8 35.63 24.02 BOD5 0 0 250 0.55 0 0 0.81 0.55 SS 20 3.84 200 0.44 30 14.4 6.34 4.28 NH3-N 10 1.92 30 0.07 1.5 0.72 2.94 1.99 Sources: EIA Tabular Report.

255. To address production and domestic wastewater:

- Wastewater from the production water treatment plants will be treated in neutralization tanks then discharged to the municipal wastewater network for final treatment in the relevant local municipal wastewater treatment plant.

- Wastewater from the heat and cool supply system depending on heating or cooling season, and boilers will be discharged to the municipal wastewater network for final treatment in the relevant local municipal wastewater treatment plant.

- Domestic will be treated in digestion tanks, and then in combination with the neutralized production wastewater, will be discharged to the municipal wastewater network for final treatment in the relevant local municipal wastewater treatment plant.

256. All emission concentration of SS, COD, BOD5 and ammonia nitrogen will be in compliance with Wastewater Quality Standards for Discharge to Municipal Sewers (CJ 343- 2010), which sets the emission standards for wastewater discharged to a municipal sewerage system.

4. Domestic Solid Waste

257. The project will generate an estimated 150 kg of domestic waste per day during the heating season and 50 kg per day in the cooling season, for an annual domestic waste generation of 25.65 tons. 16 If not properly managed this waste can cause visual and environmental impacts. To mitigate this risk, the following measures will be implemented:

(i) Waste bins will be provided at all facilities. (ii) Wastes will be routinely collected by the local sanitation department for recycling, if possible, or final disposal at an approved waste disposal site. (iii) No permanent on-site solid waste disposal will be permitted at component sites. (iv) No burning of wastes will be permitted at component sites.

16 Based on a waste production factor of 0.5 kg/worker/day, 300 workers in the 141 day heat supply season, and 100 workers in the 90 day cooling supply season.

143 5. Chemicals and Hazardous Materials

258. Toxic, hazardous, and harmful materials present in the operation of the project include petroleum products, solvents, scale and corrosion inhibitors, waste lubrication oil and waste oil-contained fabric, and waste ion exchange resin and chemicals used for water analysis and purification. Toxic chemicals and hazardous wastes can have negative impacts on human health and the environment if not appropriately managed. Special care will be taken to mitigate these risks, including:

(i) A register of all activities that involve the handling of potentially hazardous substances will be developed, including protocols for the storage, handling and spill response. This will include all fuels, oils, grease, lubricants, and other chemicals. (ii) All chemicals, toxic, hazardous, and harmful materials will be transported in spill proof tanks with filling hoses and nozzles in working order, (iii) All chemicals, toxic, hazardous, and harmful materials will be stored in secure areas with impermeable surfaces and protective dikes such that spillage or leakage will be contained from affecting soil, surface water or groundwater systems. Their usage will be strictly monitored and recorded. Some chemicals will be stored off-site, such as water quality analysis chemicals which will be stored at an independent laboratory. (iv) Material safety data sheets (MSDSs) will be posted for all hazardous materials. (v) Oil absorbents will be readily accessible in marked containers. (vi) Good housekeeping procedures will be established to avoid the risk of spills. (vii) Spills will be dealt with immediately, and personnel will be trained and tasked with this responsibility. (viii) Workers will be properly trained before handling hazardous wastes and have the requisite PPE. (ix) Hazardous waste will be temporarily stored in closed containers away from direct sunlight, wind, water and rain in secure designated areas with impermeable surfaces and protective dikes such that spillage or leakage will be contained. (x) Hazardous wastes will be collected and disposed by licensed contractors (e.g. Qingdao Xintiandi Integrated Solid Waste Disposal Co. Ltd.) on an as needed basis.

6. Noise

259. Noise sources during operation will mainly be from energy stations, boiler rooms and HESs, and will include transformers, pumps, and cooling equipment. The predicted noise levels of the equipment range from 55 to 90 dB(A).

260. To mitigate noise impacts the project design will use low-noise equipment as far as possible, and will also utilize noise elimination, shock absorption, insulated enclosures and sound dampening materials on exterior walls. These measures can typically reduce noise intensity by approximately 20 dB(A) (Table 65). All plant and equipment, including vehicles will be properly maintained in order to minimize noise. Also, appropriate personal noise protective equipment (PPE) will be provided to the workers who are likely to be exposed to high noise level environments.

144 Table 65: Main project noise sources and mitigation measures (unit: Leq dB(A)) Estimated Mitigated Estimated Noise Noise Source Mitigation Measures Noise Emission Emission dB(A) dB(A) Sound absorber, vibration Gas turbine 85-90 attenuation, acoustic shield, 70-75 exhaust-gas muffler Sound absorber, vibration Gas boilers 80-85 attenuation, acoustic shield, 65-70 exhaust-gas muffler Sound absorber, vibration Gas engines 80-85 attenuation, acoustic shield, 65-70 exhaust-gas muffler Lithium bromide direct Sound absorber, vibration 80-85 70-75 fired chiller/heater unit attenuation, acoustic shield Sound absorber, vibration Waste heat recovery 70-75 attenuation, acoustic shield, exhaust 60-65 boiler gas muffler Vibration attenuation, sound Boiler induced-draft fan 80-85 65-70 insulation Vibration attenuation, sound Chiller 70-75 60-65 insulation Vibration attenuation, sound Circulating water pump 70-75 60-65 insulation Vibration attenuation, sound Heat pump 70-75 55-60 insulation Vibration attenuation, sound Make-up pump 65-70 55-60 insulation Vibration attenuation, sound Air compressor 80-85 70-75 insulation Vibration attenuation, sound Transformer 70-75 60-65 insulation and reasonable layout Vibration attenuation, exhaust air Cooling tower 70-75 60-65 muffler Roof absorber and reasonable Regulation station 70-75 55-60 layout

261. Estimated site boundary noise levels are presented in Table 66. The results indicate that with appropriate mitigations:

- Predicted total noise levels at the boundaries of Taineng TPP (Component 1 Shibei District Binhai Energy Systems) will meet the relevant Class III standard in Noise Standards for Industrial Enterprises at Site Boundary (GB12348-2008) during the daytime (65 dB(A) and the nighttime (55 dB(A).

- Predicted noise levels at the south and west boundaries of Houhai TPP (Component 2 Licang District Houhai Energy Systems) meet the relevant Class II standard in Noise Standards for Industrial Enterprises at Site Boundary (GB12348-2008) during the daytime (60 dB(A) and the nighttime (50 dB(A). In addition, estimated noise levels at adjacent sensitive points will meet the relevant Class II standard. However, predicted noise levels at the north and east boundaries of Houhai TPP don’t meet the relevant Class II standard. The main reasons for this is existing construction noise from adjacent buildings, as well as noise from the Houhai TPP. In the future however,

145 the, Houhai TPP will be relocated to another place and or closed (see Due Diligence report in Appendix III) and construction will be finished, and thus the ambient noise level will be reduced. In addition, noise monitoring will be undertaken, and if required additional noise control measures like noise reduction barriers will be implemented.

262. With respect to the other project components, the results indicate that:

- Predicted noise levels at site boundaries of boiler rooms and HESs will meet the Class II standard in Noise Standards for Industrial Enterprises at Site Boundary (GB12348-2008) during the daytime (60 dB(A) and the nighttime (50 dB(A).

- Noise levels at site boundaries of No. 1 and 2 Commercial Complex Energy Systems (Component 5, Jidong Subdistrict Energy Systems) will meet Class III standard in Noise Standards for Industrial Enterprises at Site Boundary (GB12348-2008) during the daytime (65 dB(A) and the nighttime (55 dB(A).

263. With appropriate mitigations, project operation is not expected to have any significant noise impacts on surrounding areas.

146 Table 66: Predicted noise levels at site boundaries of existing and newly built facilities. (unit: Leq dB(A)). Shading denotes exceedances. Worst Case Estimated Project Total Superimposed Worst Applicable Ambient Noise Noise Emissions Case Noise Emission Comp. Ambient Noise Monitoring Site Standards (day/night) Day Time Night Time Day Time Night Time Day Time Night Time (dBA) (dBA) (dBA) (dBA) (dBA) (dBA) Existing Facilities Taineng TPP (site boundaries) Class III North 65/55 45.1 40.3 52.1 52.1 52.9 52.4 PC1 South 65/55 48.8 42.2 50.3 50.3 52.6 50.9 East 65/55 49.7 45.6 52.7 52.7 53.3 52.9 West 65/55 44.1 38.9 51.9 51.9 53.9 52.8 Houhai TPP (site boundaries) Class II and III North 60/50 67.4 56.0 47.1 47.1 67.4 56.5 PC2 South 65/55 47.9 42.5 48.3 48.3 51.1 49.3 East(sensate receptor is located) 60/50 53.0 48.3 47.7 47.7 53.3 50.2 West 65/55 51.9 46.7 45.1 45.1 53.8 50.0 New Facilities Neighborhood Boiler Houses (25 locations) Class II Heat supply project in Wanke City (A4) 60/50 43.0 - 50.2 38.2 34.9 - 38.4 34.9 - 38.4 44.3 - 50.4 40.9 - 41.3 Heating system renovation project in Heya Village 60/50 48.7 -52.7 45.8-49.8 34.6 - 38.0 34.6 - 38.0 49.0 - 52.9 46.3 - 50.1 Heat supply project in Ruinazixuan 60/50 35.2 - 57.3 27.9 - 30.1 33.5 - 37.4 33.5 - 37.4 38.1 - 57.3 35.9 - 38.8 Heat supply project in Honghaijiayuan 60/50 43.3 - 51.2 38.4 - 41.1 34.9 - 38.4 34.9 - 38.4 44.4 - 51.3 41.0 - 42.2 Phase II heat supply project for security housing in Luoyang Road 60/50 48.1 - 53.3 44.5 - 46.9 34.9 - 38.4 34.9 - 38.4 48.4 - 53.4 45.3 - 47.3 Heat supply project in Taiyang Island 60/50 50.4 - 53.6 43.0 - 46.5 34.9 - 38.0 34.9 - 38.0 50.6 - 53.7 44.1 - 47.1 Renovation project in Artwork plant 60/50 31.9 - 47.9 29.0 34.9 - 38.4 34.9 - 38.4 38.1 - 48.1 35.9 - 37.5 Heating system renovation project in Zhonghaihenan and Nanzhuang 60/50 37.6 - 54 31.0 - 46.6 34.6 - 38.0 34.6 - 38.0 40.3 - 54.1 38.4 - 47.1 Baolixiangbinguoji (south district and north district) 60/50 43.0 - 53.1 46.1 - 48.9 34.9 - 38.0 34.9 - 38.0 44.3 - 53.2 43.9 - 49.3 PC4 D area of renovation project in Shuiqinggou 60/50 44.9 - 51.7 38.4 - 46.8 34.9 - 38.4 34.9 - 38.4 45.3 - 51.8 40.7 - 47.4 Heat supply project in Yingxiu Garden 60/50 35.9 - 36.4 28.9 - 31.8 34.6 - 38.0 34.6 - 38.0 38.7 - 39.0 35.9 - 38.0 Heat supply project in Yousifang (No 99, South Chongqing road) 60/50 35.2 - 44.1 31.5 - 38.1 34.9 - 38.4 34.9 - 38.4 39.6 - 45.1 38.5 - 39.8 Heat supply project in Lvdi Real estate 60/50 50.1 - 56.3 44.5 - 49.8 34.9 - 38.4 34.9 - 38.4 50.3 - 56.3 45.3 - 49.9 Heda central city 60/50 51.2 - 56.9 41.1 - 48.2 34.6 - 38.0 34.6 - 38.0 51.4 - 57.0 42.7 - 48.5 No 187, Ruichang road (Huanyu) 60/50 41.6 - 44.2 25.8 - 43.7 34.9 - 38.4 34.9 - 38.4 43.0 - 45.2 37.3 - 44.8 Renovation project in No4 plant of Guomian 60/50 43.6 - 45.1 33.9 - 44 34.6 - 38.0 34.6 - 38.0 44.7 - 45.5 39.1 - 44.5 Housing for survivors project in Jinhua Road 60/50 49.8 - 51.8 38.7 - 44.6 34.9 - 38.0 34.9 - 38.0 49.9 - 52.0 42.0 - 45.4 Zhongyeyingjun 60/50 40.8 - 48.7 37.6 - 46.1 34.9 - 38.4 34.9 - 38.4 42.2 - 49.1 34.9 - 46.8 Newly built housing for survivors project in Tianyijingyuan 60/50 43.6 - 47.5 35.6 - 43 34.6 - 38.0 34.6 - 38.0 44.5 - 47.7 39.5 - 44.3

147 Worst Case Estimated Project Total Superimposed Worst Ambient Noise Applicable Noise Emissions Case Noise Emission Comp. Ambient Noise Monitoring Site Standards Day Time Night Time Day Time Night Time Day Time Night Time (day/night) (dBA) (dBA) (dBA) (dBA) (dBA) (dBA) Residence in Gongzhiqingjiang Road 60/50 54.9 - 56.4 44.5 - 47.1 34.6 - 38.0 34.6 - 38.0 55.0 - 56.5 45.3 - 47.5 Project in Jinhua Road (Hanhe cable plant) 60/50 45.0 - 48.9 39.1 - 43.6 34.9 - 38.4 34.9 - 38.4 45.7 - 49.2 40.5 - 44.6 Renovation project in Area ABC of Haierhenanzhuang 60/50 47.5 - 58.7 36.2 - 46.5 34.6 - 38.0 34.6 - 38.0 47.9 - 58.7 39.1 - 47.0 Xinduxinyuan in No 249, South Chongqing Road 60/50 42.8 - 48.7 36.5 - 39.8 34.9 - 38.4 34.9 - 38.4 43.8 - 48.9 40.1 - 41.2 Wanke Zitai 60/50 51.3 - 55.9 49.5 - 52.3 34.9 - 38.0 34.9 - 38.0 51.7 - 55.7 49.7 - 52.5 Phase II Xingwang project 60/50 51.0 - 56.3 37.8 - 44.4 34.9 - 38.4 34.9 - 38.4 51.2 - 56.4 40.7 -45.1 Renovation project in Area B of Daqingshuigou 60/50 45.9 - 48.1 42.8 - 45.4 34.9 - 38.4 34.9 - 38.4 46.5 - 48.9 43.5 - 46.0 Renovation project in Xiaoqingshuigou 60/50 54.3 - 57.2 36.2 - 45.1 34.9 - 38.0 34.9 - 38.0 54.4 - 57.2 39.5 - 45.9 Wenshajun 60/50 49.8 - 55.9 45.3 - 47.2 34.9 - 38.0 34.9 - 38.0 50.0 - 55.9 46.1 - 49.7 No 1 Commercial Complex Energy Station (site boundaries) Class II North 60/50 42.4 37.9 45.6 45.6 49.5 46.1 South 60/50 46.1 35.4 46.2 46.2 49.2 46.5 East 60/50 47.2 36.4 47 47 49.2 47.3 West 60/50 45.3 35.9 44.5 44.5 46.6 45.4 No 2 Commercial Complex Energy Station (site boundaries) Class II North 60/50 48.9 33.9 45.6 45.6 51.6 46.1 South 60/50 49.6 36.2 46.2 46.2 51.2 46.6 PC5 East 60/50 50.3 36.7 47 47 51.4 47.2 West 60/50 49.4 33.4 44.5 44.5 50.2 44.9 Neighborhood Boiler Houses Class II Xinmin community 60/50 47.2 - 48.8 32.0 - 35.3 40.1 - 42.0 40.1 - 42.0 48.1-49.5 41.2-43.3 Anyuan community 60/50 45.2 - 47.1 36.0 - 41.1 41.1 - 42.3 41.1 - 42.3 47.1 - 48.2 42.6 - 44.9 Beiping community 60/50 46.5 - 48.6 40.0 - 43.3 41.6 - 42.5 41.6 - 42.5 48.0 - 49.4 43.7 - 46.0 Xingshi community 60/50 47.3 - 49.2 39.6 - 40.8 40.8 - 42.6 40.8 - 42.6 48.2 - 50.1 43.5 - 44.8 Shuipo community 60/50 40.9 - 45.3 39.7 - 43.2 39.5 - 41.4 39.5 - 41.4 43.8 - 47.2 43.6 - 45.4 Jingtuan community 60/50 44.1 - 47.7 38.2 - 42.4 42.1 - 44.2 42.1 - 44.2 45.9 - 48.5 42.6 - 45.0 Heat Exchange Stations Class II Shiyuan Yaju (original UK garden) 60/50 38.3 - 40.8 32.3 - 39.1 40.7 - 42.6 40.7 - 42.6 43.1 - 44.3 42.5 - 43.8 Poly Moly Mansion 60/50 48.1 - 50.4 36.9 - 37.9 41.7 - 42.9 41.7 - 42.9 47.1 - 50.9 42.2 - 43.8 PC6 Dongli Xinyuan (II) high building 60/50 46.5 - 52.3 36.9 - 37.5 40.7 - 42.6 40.7 - 42.6 47.6 - 52.7 42.4 - 43.6 Zhongnan century city A2-02-01 60/50 48.1 - 48.8 38.1 - 39.4 40.1 - 42.3 40.1 - 42.3 48.8 - 49.5 42.6 - 44.1 Zhongnan century A2-09-01、A2-06 60/50 44.1 - 47.8 40.9 - 42.9 40.7 - 42.6 40.7 - 42.6 46.0 - 48.9 44.6 - 45.3 Fire protection dorm (East wing of Wanda C ） 60/50 47.5 - 50.3 37 - 38.5 40.7 - 42.6 40.7 - 42.6 48.4 - 50.8 42.7 - 43.9

148 Worst Case Estimated Project Total Superimposed Worst Ambient Noise Applicable Noise Emissions Case Noise Emission Comp. Ambient Noise Monitoring Site Standards Day Time Night Time Day Time Night Time Day Time Night Time (day/night) (dBA) (dBA) (dBA) (dBA) (dBA) (dBA) Green city -Rose (A-1-4) 60/50 41.9 - 54 29.4 - 33.8 40.7 - 42.6 40.7 - 42.6 44.6 - 54.2 41.0 - 42.9 Green city –Cheng East (A-1-9) 60/50 44.2 - 49.7 36.8 - 38.8 41.1 - 42.9 41.1 - 42.9 46.5 - 50.3 42.6 - 44.0 Wanda. Yuegong（10-4-2-C4） 60/50 43.4 - 51.1 38.8 - 39.4 42.7 - 43.6 42.7 - 43.6 45.6 - 51.5 43.1 - 44.1 Shangzang village (E-1) 60/50 50.1 - 51.2 30.6 - 36.7 40.7 - 42.6 40.7 - 42.6 50.7 - 51.8 41.3 - 42.9 Shangzang village (E-3) 60/50 48.8 - 51.9 33.3 - 35.8 40.7 - 42.6 40.7 - 42.6 49.4 - 52.4 41.9 - 43.4 Lufang village (G) 60/50 44.5 - 49.6 32.4 - 38.7 40.7 - 42.6 40.7 - 42.6 46.7 - 50.1 41.3 - 43.3 Liujia xiahe (B1-08) 60/50 47.4 - 48.3 40.8 - 42.7 40.7 - 42.6 40.7 - 42.6 48.3 - 49.1 44.1 - 45.0 Zhuangzi（A2-16-01） 60/50 47.1 - 47.8 39.7 - 41.7 40.7 - 42.6 40.7 - 42.6 48.4 - 48.7 43.6 - 44.9 Yujia xiahe 60/50 43.2 - 47.5 32.8 - 39.1 40.7 - 42.6 40.7 - 42.6 45.1 - 48.5 42.0 - 48.7 Wangjia xiahe 60/50 42.9 - 49.3 31.9 - 35.2 40.1 - 42.3 40.1 - 42.3 45.8 - 49.9 41.5 - 43.0 Jiakai city S8 plot(high rise building) 60/50 45.0 - 53.5 36.6 - 39.2 40.7 - 42.6 40.7 - 42.6 46.5 - 53.7 42.2 - 44.2 Jiakai city S20 (multi-floor residential) 60/50 43.1 - 46.4 41.1 - 42.6 40.1 - 42.3 40.1 - 42.3 45.3 - 47.7 43.9 - 45.1 Jiakai city S6-3(High rise residential) 60/50 42.1 - 51.5 36.2 - 47.8 40.7 - 42.6 40.7 - 42.6 44.8 - 51.9 42.7 - 48.7 Shangzanglu transformation B-1 60/50 44.9 - 46 29.1 - 30.6 40.1 - 42.3 40.1 - 42.3 46.9 - 47.3 41.1 - 42.8 Shangzanglu transformation B-2 60/50 42.9 - 50.7 28.1 - 34 40.1 - 42.1 40.1 - 42.1 44.9 - 51.3 40.9 - 43.2 Shangzanglu transformation C-1 60/50 49.6 - 50.4 37.2 - 41.2 42.7 - 43.6 42.7 - 43.6 50.1 - 50.9 42.7 - 45.0 Shangzanglu transformation C-2 60/50 44.6 - 46.9 34.7 - 37.8 42.7 - 43.6 42.7 - 43.6 46.3 - 48.0 42.3 - 43.7 Zhuanzi, Sujia, Liujia xiahe transformation A2-14 60/50 47.6 - 58.3 31.6 - 35.4 40.7 - 42.6 40.7 - 42.6 48.8 - 58.4 41.8 - 42.9 Zhuanzi, Sujia, Liujia xiahe transformation A2-15 60/50 46.9 - 50.7 32.3 - 33.6 40.7 - 42.6 40.7 - 42.6 48.0 - 51.1 41.5 - 43.0 Badahu HES 60/50 47.2 - 48.9 37.0-40.4 34.8 - 38.4 34.8 - 38.4 47.7 - 49.2 40.3 - 42.0 PC7 Municipal Government Complex 60/50 56.1 - 56.8 - 34.8 - 38.4 34.8 - 38.4 56.2 - 56.9 -

149 7. Occupational Health and Safety

264. Plant operation poses risks to workers. Accidental release of chemicals, and hazardous materials may present health and safety risks to workers. Natural gas also presents fire, burn and explosive hazards.

265. To minimize risks associated with leaks of natural gas:

(i) All natural gas works will be in compliance with relevant PRC building code requirements, including the Code for Design of City Gas Engineering (GB 50028-2006) and Regulation on Electric Apparatus Design for Explosion and Fire Risk Environment (GB50058-92). (ii) Independent gas regulation stations will be constructed at least 14 meters away from other buildings and 30 m from the site boundary, to minimize the risk of explosion damaging other project facilities or the public.17 (iii) The gas regulation stations will be specially designed to withstand and contain explosions. (iv) Gas regulation stations and the connection to the boilers will be equipped with flammable gas detection, alarm and fire suppression systems. Electrical devices within the explosion risk area will be safety equipped. (v) Gas pipelines will be grounded and equipped with anti-lightning devices where applicable. (vi) All other at risk areas will have flammable gas detection and alarm systems able generate audible and visual alarms, and automatic fire suppression systems. (vii) All gas related devices will be brightly colored and equipped with warning signs.

266. To mitigate potential health and safety risks to workers, the following measures will be taken:

(i) Operation phase EHS plans for natural gas systems including fire prevention and control will be developed and implemented, and workers will be trained regularly on their implementation. (ii) Natural gas systems will be designed in strict compliance with relevant PRC fire, health and safety standards. Fire compartments will be established based on the fire risk, and fire-resistant buildings/structures will include fire- proof doors and windows. (iii) Fire-alarm and suppression systems will be installed and tested regularly to ensure it functions properly. (iv) The process control system will include an out-of-limit alarm to ensure all hazardous materials are safety under control at all time. (v) PPE, including goggles, gloves, safety shoes, will be provided to workers.

17 Gas regulation stations are defined as Class II explosion risks. Space within 4.5 meter away from a regulation station is included in the explosion risk region, as regulated in Regulation on Electric Apparatus Design for Explosion and Fire Risk Environment (GB50058-92). In the Code for Design of City Gas Engineering (GB 50028-2006) the recommended distance from a gas regulation station with no more than 1.6 MPa inlet pressure to other buildings is 9 m.

150 (vi) Naked fire sources, hot surfaces, electric sparks, electrostatic sparks and ignition sources will be strictly controlled, especially near natural gas. (vii) Control measures will be strictly undertaken to ensure the discharge, exhaust and safety relief of flammable fuels in enclosed systems. (viii) No unauthorized personnel should be allowed into gas-fired facilities. 267. Authorized personnel must have appropriate PPE at all times

8. Emergency Response Plan

268. An emergency risk and response plan applicable to all gas-fired facilities will be established in accordance with the “National Environmental Emergency Plan” (24 January 2006) and other relevant PRC laws, regulations and standards and will include measures in the World Bank EHS guidelines with respect to occupational and community health and safety. Major elements of the emergency response plan are presented in Table A-3 of Appendix I.

9. Climate Change Risk Assessment

269. A rapid climate risk assessment was performed and concluded that the risk is medium. It found that the most significant risk to project investments is sea level rise. No specific design modifications appear to be required or justified at design stage, since critical structures are roughly two to four meters above current sea level. Project design lifetime is estimated at 25 years, so that indicative rates of sea level rise of even 1 cm per year suggest that no more than 25 cm of SLR would be anticipated over the project lifespan. These slow- onset risks can be addressed adequately through adaptive incremental interventions. Appendix II provides a rapid climate risk assessment and its results, which was done by a climate adaptation expert.

D. Anticipated Positive Operation Phase Impacts

270. The project will deliver significant positive social impacts to beneficiaries through the delivery of 1,003 MWth of heating, 176 MWth of cooling and 79 MWe of electricity. This will provide an estimated population of 420,400 in eight locations in Qingdao City with access to clean and highly efficient district energy including 19.3 million m2 of heating area, 1.7 million m2 of cooling area, and 107.9 MWh of electricity.

271. Instead of coal the project will use a mix of cleaner and renewable heat sources such as natural gas; waste heat recovery from industry and municipal wastewater plants; extracted heat using heat pump technology from various sources such as air, wastewater, and geothermal; solar thermal; and heat storage for peak demand shaving. When compared to the equivalent production of energy through traditional coal-fired sources, once operational the project will: (i) result in annual energy savings equivalent to 537,900 tons of standard coal, thereby providing a global public good by avoiding the annual emission of 1,398,455 tons of carbon dioxide (CO2), a greenhouse gas; (ii) improve local air quality through the estimated annual reduction of emissions of sulfur dioxide (SO2) by 12,909 tons, nitrogen oxides (NOx) by 3,765 tons, and particulate matter (PM) by 5,379 tons; and (iii) eliminate the negative impacts of coal transportation through urban areas by truck or train (see Appendix IV for additional information).

272. The demonstration of solar heating and wastewater and ground heat pumps will promote utilizing renewable natural resources, save non-renewable fossil energy, reduce pollution and protect the environment, and support the sustainable development of energy, economy and society.

151 VI. ALTERNATIVE ANALYSIS

273. An analysis of project alternatives was undertaken during the feasibility stage to determine the most financially and technically feasible way of achieving the project objectives while minimizing environmental and social impacts.

A. No Project Alternative

274. The district heating area in Qingdao has increased rapidly from 16.18 million m2 in 2 18 2004 to 69.02 million m in 2014, an annual growth rate of 15.8%. According to the Qingdao Clean Energy Heating Plan, by 2020 the total urban heating area will increase to 310 million m2 due to rapid urban expansion. Thus, there is an urgent need to construct new heating infrastructure. However, current coal-based large scale district heating systems are no longer an option in Qingdao due to worsening air quality. As clearly stated in the “Qingdao Integrated Prevention and Control of Atmospheric Pollution”, construction of new coal based heating systems is not allowed. If the project is not implemented, areas without district heating systems will be dependent on current heating methods such as small polluting coal-fired house stoves, inefficient and polluting coal-based neighborhood boilers, or expensive electric household boilers.

275. Qingdao also faces increased cooling demands to sustain livelihoods in hot summer periods. Currently many households reply on individual air conditioners which causes peak electricity shortages during the hot season. Without the project, this high power demand for cooling will continue to increase and put pressure on the Qingdao power supply system.

276. The project’s implementation will: (i) fulfil rapidly increasing heat and cooling demand; (ii) significantly reduce coal consumption; (iii) improve air quality; and (iv) reduce GHG emissions. It will also provide valuable hands on experience and help to explore various uses of different energy sources like solar, waste heat, and air and ground temperature, which will support the development of niche energy system solutions for rapid urban development. For these reasons the “no project” alternative is considered unacceptable.

B. Smaller Scale District Energy Systems

277. Large scale district heating systems have traditionally been applied in the Qingdao downtown area. To fulfill heat demand, there are several heat sources options for district heating, including combined heat and power (CHP) plants; large coal, natural gas or biomass-fired heat source plants (HSPs); solar energy; industrial or residential waste heat; geothermal energy, and heat pumps. Large scale district heating systems using CHPs as the heat source are often considered the most proven, economically viable, and energy efficient heat source options.

278. Based on technical, administrative, environmental, social, and economic assessments of the location of existing systems and increased energy demand, more distributed smaller scale district energy systems (heating supply area is several million m² floor area) are considered to be more reasonable when the following conditions exist:

(i) Existing CHPs including attached networks have limited capacity and cannot accommodate rapidly increased heat demand.

(ii) A part of the district heating network is approaching the end of its service life

18 Data provided by Qingdao Heating Office via the IA, heat demand/consumption ramp up from 2004 to 2014.

152 and the investment costs, including administrative costs, of overall replacement of main networks and network expansion are very high.

(iii) Some planned coal-fired CHPs will now not be constructed, and connections to existing CHPs are limited due to the plant capacity or long distance from the energy source to consumers.

(iv) For new development zones located in suburban areas, combined heating and cooling demands are high, which makes distributed energy systems more rationale from technic-economic point of view.

(v) Small scale district energy system requires less administrative efforts for finding suitable sites, construction permissions, etc. In addition, small scale district energy system can lessen social costs associated with extensive disturbance of main roads for pipeline construction.

(vi) Using a building based heating and cooling system is considered to be more efficient than individual energy supply facilities such as electrical household boilers and air conditioners.

C. Energy Sources

279. Natural gas is the recommended fuel source in the World Bank Goup’s Environmental Health and Safety (EHS) Guidelines. Natural gas generally produces negligible quantities of particulate matter and sulfur oxides, and levels of nitrogen oxides are about 60% of those from plants using coal (without emission reduction measures). Natural gas-fired plants also release lower quantities of carbon dioxide, a greenhouse gas. Natural gas is the only fossil fuel applied in the project and will contribute to emissions reduction in Qingdao. In addition, gas-fired facilities do not require large coal storage sheds or ash storage silos, and do not need water and electricity for coal, fly and bottom ash and slag treatment. Thus, the use of natural gas-fired instead of coal-fired boilers will require less land and will consume less water and electricity. Furthermore, the transmission of natural gas by pipeline will eliminate the negative impacts of coal transportation through urban areas by truck or train.

280. Other types of energy sources including heat geothermal sources, waste water, solar energy, residual steam and flue gas will be utilized in the project.

D. Energy Efficient and Environmentally Friendly Energy Systems

281. Tri-generation or combined cycle systems are more energy efficient than coal-fired HSPs. Annual overall energy efficiency can be higher than 70% compared to single power generation systems in which energy efficiency is normally less than 40%.

282. A combined heating (called a heat pump when it is used for heating purposes) and cooling (called a chiller when it is used for cooling purpose) unit is a typical energy transfer facility with phase changing of refrigerant. Driven by limited amount of energy input, several times of energy output can be generated. The supplement energy for this combined heating and cooling unit could come from low-grade energy that is usually not feasible for direct use, for instance low-temperature heat from air and underground soil. As the project utilizes a range of different clean energy, waste heat energy, and low-grade energy in well-proven technologies, it contributes to high energy efficient systems while significantly lowering emissions impacts.

283. Thermal energy storage (TES) will be applied in the project where cheaper energy is

153 available during low load situations. It allows excess thermal energy to be collected for later use, hours, days or months later. Typically in this project thermal energy storage is used to balance energy demand between day time and night time. For example, summer heat from ground soil can be stored inter-seasonally for use in winter. Water is used as the thermal storage media to store heat from CHP plants, and heat or cold produced with heat pumps from off-peak, lower cost electric power. Thermal energy storage is used for peak shaving. The overall system energy efficiency will be increased by TES and project operational costs will be reduced.

284. Low NOx boilers will be used which produce less than 100 mg/m3 NOx emissions, comparing to regular natural gas boilers that have around 137 mg/m3 NOx emissions.

E. Pipeline Network

285. The project will utilize direct-buried pre-insulated bonded pipeline, which is by far the most commonly used technology for both new district heating and cooling systems and for rehabilitation of existing systems. Steel pipes and insulation materials made of polyurethane foam (PUR) and high density polyethylene (HDPE) are bonded into one piece in a sandwich- like structure. Compared to onsite insulated pipe buried in a tunnel, direct-buried pre- insulation bonded pipe has many advantages including lower capital costs, reduced heat losses and improved energy efficiency, better anti-corrosive and insulation performance, longer service life, and shorter installation cycles. Although pre-insulated bonded pipe is designed for direct-bury installation, some sections of pipeline may need to run overhead and/or use trench laying modes, depending on local site conditions.

286. The project will also develop low temperature heat supply secondary networks utilizing plastic pipes. Pre-insulated plastic pipes will be directly buried, and twin-pipe can be utilized where both supply and return pipe can be inserted into one insulation jacket. Construction of secondary networks is easier when bendable plastic pipes are used.

F. Overall Alternative Analysis

287. Based on the analysis of alternatives, the project has selected a wide range of appropriate small-scale district energy systems, sustainable energy sources, high energy efficient systems, thermal storage, low NOx burners, pipeline type and installation methods, and HES type.

154 VII. INFORMATION DISCLOSURE AND PUBLIC CONSULTATION

A. PRC and ADB Requirements for Public Consultation

1. PRC Requirements

288. Relevant provisions in the PRC Environmental Impact Assessment Law (2003) and the Regulations on the Administration of Construction Project Environmental Protection (No. 253 Order of the State Council, 1998) require that an EIA study for a construction project shall solicit opinions from affected residents, as well as other organizations and concerned stakeholders. However, the requirements for public consultation are different for various sectors and projects. For an environmental Category A project (such as a coal-fired power plant), full EIA reports are required including two rounds of public consultations, while for a Category B project (such as the district heating projects), only a simplified tabular EIA is required without a requirement for any public consultation.

2. ADB Requirements

289. ADB’s SPS has specific requirements for information disclosure and meaningful public consultation. The SPS also requires that the borrower carry out consultation with affected people and other concerned stakeholders, including civil society, and facilitate their informed participation.

290. Information disclosure involves delivering information about a proposed project to the general public and to affected communities and other stakeholders, beginning early in the project cycle and continuing throughout the life of the project. Information disclosure is intended to facilitate constructive engagement with affected communities and stakeholders over the life of the project.ADB Public Communications Policy: Disclosure and Exchange of Information (2011) requires that the borrower shall provide safeguard information to affected people in a timely manner, in an accessible place, and in a form and language(s) understandable to them.

B. Information Disclosure

291. Project public information was disclosed on the IAs website in June 2015 (http://www.qingdaonengyuan.com/news_detail/newsId=97.html). The information included:

a) project name and summary of the Qingdao district heating situation; b) name and contact information of the proponent; c) project description including heating, cooling and power supply capacity; and d) environmental benefits of the project.

292. The Qingdao EPB posted the domestic EIA report on its website in June 2015 (http://www.qepb.gov.cn/m2/zwgk/jsxm/view.aspx?n=24a0357a-86cd-4b98-844e- 70fe089631a5). The information included:

a) project name and project information summary; b) name and contact information of the proponent; c) name and contact information of the institute responsible for preparing the EIA; d) potential project environmental impacts and mitigation measures; e) key conclusions of the EIA report;

155 f) a link to download an abridged version of the EIA report; and, g) contact information and a request for questions, suggestions and feedback from the public.

293. No public feedback was received in response to any of the project information notices.

294. The ADB will also post this IEE on its website (www.adb.org).

C. Public Consultation Meetings

295. The IA undertook meaningful public consultation in accordance with the Interim Guidelines on Public Consultation for EIA (2006) and the ADB SPS. A meeting information notice was posted in the Qingdao Daily newspaper for one week prior to the meetings. The notice provided basic project information and invited residents in the project areas to attend the meetings (Figure 74).

296. Given the scale of the project, two meaningful public consultation meetings were held, the first for project components in the Qingdao urban area and the second for Component 5 in Jidong Subdistrict. Both meetings took place on July 23, 2015. The meeting covering project components in the Qingdao urban area was held at the QEG’s meeting room and was attended by 64 participants. The second meeting was held at No. 777 Laiqing Road, which is centrally located amongst the Component 5 activities, and was attended by 17 participants (Figure 75). Sign-in lists for the two meetings are presented in Appendix V.1 and V.2.

297. During the meetings information was presented about the project status, potential environmental impacts and proposed mitigation measures (see PowerPoint presentation in Appendix V.3). Questions and subsequent discussions focused on focused issues on environmental benefits of gas-fired energy systems, price of gas-fired heat supply methods, and benefits of the smart heat supply management system.

298. Meeting participants were also asked to complete a questionnaire, and in addition two rounds of questionnaire based surveys were undertaken in the Qingdao urban area and Jidong Subdistrict areas (Table 67). A total of 154 questionnaires were distributed and 154 were retrieved, a recovery rate of 100%. A sample completed questionnaire is presented in Appendix V.4, while Table 68 presents summary data on the questionnaire respondents, while Table 69 presents a summary of the questionnaire results.

299. Most of the respondents work and live within a 5 km radius of a project component; 70.1% of respondents knew about project either from the internet, newspapers or information signs, and 62.9% of respondents indicated that they were already familiar with the project benefits. The top three environment issues respondents identified in their neighborhoods are air quality (40.7%), noise (25.9%) and surface water quality (19.9%). Air quality, noise and dust were identified as the top three issues during both the construction phase and the operation phase. However, most participants also indicated that potential air, waste water, solid waste and noise impacts can be appropriately mitigated.

300. Overall support for the project is very strong; 94.2% of the respondents indicated that the project will improve local economic development, 81.2% indicated that the project will improve quality of life, and 93.5% of respondents indicated that they support the proposed project.

156 Figure 74: Public meeting notice in Qingdao Daily newspaper, July 2015.

Unofficial Translation:

Public consultation meeting notice for smart low carbon district energy system project in Qingdao, QEG QEG is applying for a loan from ADB for purpose of addressing the needs of heat supply in Qingdao urban area and Blue Silicon Valley, achieving sustainable development of Qingdao, enhancing energy saving, and reducing pollution and protecting the ambient environment. The loan will be used for smart low carbon district energy system project in Qingdao. The project is located at Shinan District, Shibei District, Licang District and East Jimo area (Wenquan and Aoshan town are included). More detailed project information can be found on QEG’s website.

QEG and ADB will hold a public consultation meeting for the purpose of making the project more transparent and giving the public more rights to know and participate. Residents in the project site, relevant government departments and social persons who concern about the project are cordially invited to the meeting. Problems on project construction, environmental protection, social impact and benefits etc. will be communicated and discussed in the meeting. Suggestions and advice on the project are welcomed.

Meeting time and meeting place: 9:30 am of June 23th, 2015 (tentative), meeting room at 8th floor, No 123 Ningxia Road, Qingdao 2:30 pm of June 23th, 2015 (tentative), meeting room at East of first floor, No 777 Laiqing Road, Qingdao Contact No: 0532- 86688335

Source: QEG, 2015.

157 Figure 75: Public consultation photographs (2015).

QEG senior staff and environmental Public consultation participants(meeting 1) consultants present information about the proposed project (meeting 1)

Public consultation discussion. (meeting 1) Questionnaires being completed by public consultation participants (meeting 1)

QEG senior staff and environmental Public consultation participants(meeting 2) consultants present information about the proposed project (meeting 2)

Public consultation discussion. (meeting 2) Questionnaires being completed by public consultation participants (meeting 2) Source: QEG, 2015.

158 Table 67: Project public consultation questionnaire (2015). Name Sex Age Nationality Education level Occupation Company Title Contact number 1. What is the main environment pollution near your living areas in your opinion (multiple choice)? A. Surface water B. Ambient air C. Noise D. Ground water E. Solid waste F. Others 2. Do you know this project? A. Yes B. No 3. If you know this project, project information is obtained by which way? A. Internet B. Newspaper C. Information signs D. Other person E. Other 4. Distance between your working place and project site A. <1 km B. 1-3 km C. 3-5 km D. > 5km 5. Distance between your house and project site A. <1 km B. 1-3 km C. 3-5 km D. > 5km 6. Do you understand this project like project information, project component, project benefit etc,? A. Yes B. No C. Not clear 7. Do you understand environment impacts of this project? A. Yes B. No C. Not clear 8. What is environmental issues of highest concern during construction period? A. Surface water B. Ambient air C. Noise D. Dust/PM E. Ground water F. Solid waste G. Traffic problems H. Ecological environment I. Others 9. What is environmental issues of highest concern during operation period? A. Surface water B. Ambient air C. Noise D. Dust/PM E. Ground water F. Solid waste G. Ecological environment H. Others 10 Based on construction phase mitigation measures proposed in EIA, do you accept the impacts to environment? 10.1 Ambient air (PM, dust included) A. Accept B. Barely accept C. Do not accept D. Have no idea 10.2 Noise A. Accept B. Barely accept C. Do not accept D. Have no idea 10.3 Wastewater A. Accept B. Barely accept C. Do not accept D. Have no idea 10.4 Solid waste A. Accept B. Barely accept C. Do not accept D. Have no idea 10.5 Ecological environment A. Accept B. Barely accept C. Do not accept D. Have no idea 10.6 Other (traffic problem and inconvenient by project construction) A. Accept B. Barely accept C. Do not accept D. Have no idea 11 Based on operation phase mitigation measures proposed in EIA, do you accept the impacts to environment? 11.1 Ambient air (PM, dust included) A. Accept B. Barely accept C. Do not accept D. Have no idea 11.2 Noise A. Accept B. Barely accept C. Do not accept D. Have no idea 11.3 Wastewater A. Accept B. Barely accept C. Do not accept D. Have no idea 11.4 Solid waste A. Accept B. Barely accept C. Do not accept D. Have no idea 11.5 Ecological environment A. Accept B. Barely accept C. Do not accept D. Have no idea 12. Do you think construction of this project can improve local economic development or not? A. Yes B. No C. Not clear 13. Do you think whether construction of this project can improve your living quality (like better heat and cool supply service)? A. Yes B. No C. Not clear 14. After comprehensive analysis of project advantages and disadvantages, do you agree with the construction of this project? A. Yes B. No C. Not clear Suggestions or requirements of the project: Suggestions or requirements for environment protection of the project: Project information (a project summary was provided here), anticipated pollution control measures and environment benefits. Source: QEG, 2015.

159 Table 68: Summary data on questionnaire respondents.

Parameter Indicator No. % Male 121 78.6 Sex Female 33 21.4 Below 30 61 39.6 31-40 56 36.4 Age 41-50 28 18.2 Above 50 9 5.8 Han people 150 97.4 Nationality Other 4 2.6 Primary School or Below 0 0.0 Junior school 0 0.0 Education High school, including technical 9 5.8 Level secondary school Bachelor degree or above, including 145 94.2 junior college Farmer 12 7.8 Employer 110 71.4 Occupation Self-employed entrepreneurs 12 7.8 Civil servant 7 4.6 Other 13 8.4 Source: QEG, 2015.

Table 69: Public consultation questionnaire results. % (shading Question Item No denotes highest ranked) Surface water 43 19.91 Ambient air 88 40.74 1. What is the main environment pollution near your Noise 56 25.93 living areas in your opinion (multiple choice) Ground water 13 6.02 Solid waste 9 4.17 Other 7 3.24 Yes 108 70.13 2. Do you know this project? No 46 29.87 Internet 39 36.11 3. If you know this project, project information is Newspaper 23 21.30 obtained by which way? Information signs 32 29.63 Other person 6 5.56 Other 8 7.41 <1 km 23 14.94 1-3 km 56 36.36 4. Distance between your working place and project site 3-5 km 46 29.87 > 5km 29 18.83 <1 km 36 23.38 1-3 km 67 43.51 5. Distance between your house and project site 3-5 km 35 22.73 > 5km 16 10.39 Yes 97 62.99 6. Do you understand project information, project No 36 23.38 component, project benefit etc,? Not clear 21 13.64

160 % (shading Question Item No denotes highest ranked) Yes 114 74.03 7. Do you understand environment impacts of this No 24 15.58 project? Not clear 16 10.39 Surface water 13 8.44 Ambient air 36 23.38 Noise 33 21.43 Dust/PM 25 16.23 8. What is environmental issues of highest concern Ground water 8 5.19 during construction period? Solid waste 5 3.25 Traffic problems 19 12.34 Ecological environment 11 7.14 Other 4 2.60 Surface water 12 7.79 Ambient air 44 28.57 Noise 36 23.38 9. What is environmental issues of highest concern Dust/PM 11 7.14 during operation period? Ground water 9 5.84 Solid waste 14 9.09 Ecological environment 16 10.39 Other 12 7.79 10 Based on construction phase mitigation measures proposed in EIA, do you accept the impacts to environment? Accept 95 61.69 Barely accept 22 14.29 10.1 Ambient air (PM and dust is included) Do not accept 26 16.88 Have no idea 11 7.14 Accept 95 61.69 Barely accept 22 14.29 10.2 Noise Do not accept 26 16.88 Have no idea 11 7.14 Accept 109 70.78 Barely accept 25 16.23 10.3 Wastewater Do not accept 11 7.14 Have no idea 9 5.84 Accept 125 81.17 Barely accept 18 11.69 10.4 Solid waste Do not accept 5 3.25 Have no idea 6 3.90 Accept 97 62.99 Barely accept 38 24.68 10.5 Ecological environment Do not accept 11 7.14 Have no idea 8 5.19 Accept 110 71.43 10.6 Other (traffic problem and inconvenient by project Barely accept 23 14.94 construction) Do not accept 15 9.74 Have no idea 6 3.90 11 Based on operation phase mitigation measures proposed in EIA, do you accept the impacts to environment? Accept 104 67.53 Barely accept 27 17.53 11.1 Ambient air (PM and dust is included) Do not accept 16 10.39 Have no idea 7 4.55 Accept 75 48.70 Barely accept 34 22.08 11.2 Noise Do not accept 25 16.23 Have no idea 20 12.99

161 % (shading Question Item No denotes highest ranked) Accept 112 72.73 Barely accept 20 12.99 11.3 Wastewater Do not accept 13 8.44 Have no idea 9 5.84 Accept 106 68.83 Barely accept 22 14.29 11.4 Solid waste Do not accept 10 6.49 Have no idea 16 10.39 Accept 122 79.22 Barely accept 12 7.79 11.5 Ecological environment Do not accept 18 11.69 Have no idea 2 1.30 Yes 145 94.16 12. Do you think whether construction of this project can No 0 0 improve local economic development or not? Not clear 9 5.84 13. Do you think whether construction of this project can Yes 125 81.17 improve your living quality (like better heat and cool No 7 4.55 supply service) or not? Not clear 22 14.29 14. After comprehensive analysis about advantages and Yes 144 93.51 disadvantages of this project, do you agree with the No 0 0 construction of this project? Not clear 12 7.79 Source: QEG, 2015.

D. Future Consultation Activities

301. QEG will continue to conduct regular community liaison activities during the construction and operations phases, including the implementation of the grievance redress mechanism (GRM, see Chapter VIII).

162 VIII. GRIEVANCE REDRESS MECHANISM

A. Introduction

302. A project grievance can be defined as an actual or perceived project related problem that gives ground for complaint by an affected person (AP). As a general policy, QEG will work proactively toward preventing grievances through the implementation of impact mitigation measures and community liaison activities that anticipate and address potential issues before they become grievances. In addition, as the project has strong public support and will not involve any involuntary land or property acquisition or resettlement, significant grievance are unlikely. Nonetheless, during construction and operation it is possible that unanticipated impacts may occur if the mitigation measures are not properly implemented, or unforeseen issues arise. In order to address complaints if or when they arise, a project grievance redress mechanism (GRM) has been developed in accordance with ADB requirements and Government practices. A GRM is a systematic process for receiving, recording, evaluating and addressing AP’s project-related grievances transparently and in a reasonable period of time.

B. ADB’s GRM Requirements

303. The ADB’s SPS requires a project to establish a GRM to receive and facilitate resolution of affected person’s concerns and complaints about the project’s environmental performance during construction as well as operation phase of the project. The GRM should be scaled to the risks and adverse impacts of the project; should address affected people’s concerns and complaints promptly, using an understandable and transparent process; should be readily accessible to all sections of the community at no cost and without retribution; and, should not impede access to the PRC’s judicial or administrative remedies.

C. Current GRM Practices in the PRC

304. At the national level a framework to address grievance has been established. State Council Decree No. 431 “Regulations on Letters and Visits” (January 2005) codifies a complaint mechanism at all levels of government, and safeguards the complainants from any retaliation. The Ministry of Environmental Protection (MEP) “Decree No. 34 Environmental Letters and Visits System” provides specific guidelines to establish a system and address environmental complaints. When APs are negatively affected by project activities, they may complain to the contractors and the project company by themselves or through their community organizations, or complain directly to local EPBs. If the issue is not resolved they may take legal action, though that is typically considered as a last option.

D. Project GRM

305. All complaints will be recorded in a systematic fashion by the designated GRM staff at all branch offices, which are in charge of various project components. While detailed steps of GRM are provided at a branch office level, the designated person at QEG will be the main focal person of the project’s GRM, who will ensure effective GRM implementation through close cooperation and communications with all branch offices.

306. If any grievance was not effectively solved at branch office level, QEG will further

163 facilitate the development of reasonable, effective, and satisfactory resolution. The following describes the four main steps of the project level GRM.

(i) Step 1: If a concern arises, the AP should try to resolve the issue of concern directly with the contractor (during construction) and/or the operator (during construction and operation). If the concern is resolved successfully, no further follow-up is required. Nonetheless, the contractor (during construction) and/or the operator (during construction and operation) shall record any complaint and actions taken to resolve the issues and report the results to the GRM designated staff at relevant branch office. If no solution is found within 7 working days or if the complainant is not satisfied with the suggested solution under Step 1, proceed to Step 2.

(ii) Step 2: The AP will submit the grievance to the GRM designated staff at a branch office, either directly or via other entry points such as District EPBs or community leaders. The GRM designated staff at the branch office must assess the eligibility of the complaint, identify a solution, and give a clear reply within 7 working days to the complainant with the suggested solution. The GRM designated staff at the branch office also reports to the GRM designated staff at QEG. The branch office shall implement the redress solution within 7 working days. And the branch office shall convey the outcome to the GRM designated staff at QEG

(iii) Step 3: If no solution is identified or if the complainant is not satisfied with the suggested solution under Step 2, the GRM designated staff at the branch office will organize a multi-stakeholder meeting within 15 days, where all relevant stakeholders, including the complainant, the GRM designated staff at the branch office and other representative(s), and local District EPB can discuss the issue. The meeting will aim to find in a solution acceptable to all, and identify responsibilities and an action plan. The branch office will implement the agreed-upon redress solution within 7 working days and convey the outcome to the GRM designated staff at QEG

(iv) Step 4: If the multi-stakeholder hearing process under Step 3 is not successful, the GRM designated staff at the branch office will inform QEG, the relevant EPBs, other relevant local government authorities and the ADB accordingly. The GRM designated staff and other representative(s) at The branch office and QEG with the consultation from the relevant EPBs and ADB, will review the situation and attempt to develop an alternative approach to resolve the complaint within 15 working days. Based on the agreement, an action plan shall be developed and implemented by the branch office within the agreed timeframe.

307. The designated GRM staff at all branch offices and QEG shall accept the complaints/grievances lodged by the AP free of charge. Any cost incurred should be covered by a relevant branch office. The grievance procedures will remain valid throughout the duration of the project construction and until project closure.

164 Figure 76: Four Steps of the Project GRM

165 IX. CONCLUSIONS

308. The proposed Smart Low-Carbon District Energy Project will demonstrate coal-free energy-efficient small-scale district energy (heating, cooling, and power) systems in eight different locations in Qingdao City. Instead of coal the project will use a mix of cleaner and renewable heat sources such as natural gas; waste heat recovery from industry and municipal wastewater plants; extracted heat using heat pump technology from various sources such as air, wastewater, and geothermal; solar thermal; and heat storage for peak demand shaving. It will also demonstrate highly energy efficient low temperature district energy networks and demand-side response smart energy management. The project will generate 1,003 MWth of heating, 176 MWth of cooling and 79 MWe of electricity, in combination providing an estimated population of 420,400 with access to clean and highly efficient district energy including 18.3 million m2 of heating area, 1.7 million m2 of cooling area, and 107.9 MWh of electricity.

309. The project will bring significant positive environmental benefits. The cleaner sources of heat combined with highly energy efficient district energy systems will reduce the emission of greenhouse gases and other air pollutants in Qingdao City. The project will utilize clean burning natural gas, and dispersion modelling shows that even worst case 1-hour, 24-hour and annual averaging period predicted SO2, NO2 and PM10 ground level concentrations (GLCs) resulting from project emissions are fully in compliance with PRC standards. When compared to the equivalent production of energy through traditional coal-fired sources, once operational the project will: (i) result in annual energy savings equivalent to 537,900 tons of standard coal, thereby providing a global public good by avoiding the annual emission of 1,398,455 tons of carbon dioxide (CO2), a greenhouse gas; (ii) improve local air quality through the estimated annual reduction of emissions of sulfur dioxide (SO2) by 12,909 tons, nitrogen oxides (NOx) by 3,765 tons, and particulate matter (PM) by 5,379 tons.

310. Through the environmental assessment process the project has: (i) selected appropriate technologies to reduce the emission of pollutants; (ii) identified potential negative environment impacts and appropriately established mitigation measures; (iii) received public support from the project beneficiaries and affected people; (iv) established effective project GRM procedures; and (v) prepared a comprehensive EMP including environmental management and supervision structure, environmental mitigation and monitoring plans, and capacity building and training.

311. Based on the analysis conducted it is concluded that overall the project will result in significant positive socioeconomic and environmental benefits, and will not result in significant adverse environmental impacts that are irreversible, diverse, or unprecedented. Overall, any minimal adverse environmental impacts associated with the project can be prevented, reduced, or minimized through the appropriate application of mitigation measures. It is therefore recommended that:

i) the project’s categorization as ADB environment category B is confirmed; ii) this IEE is considered sufficient to meet ADB’s environmental safeguard requirements for the project, and no additional studies are required; and iii) the project be supported by ADB, subject to the implementation of the commitments contained in the EMP and allocation of appropriate technical, financial and human resources by the EA and IA to ensure these commitments are effectively and expediently implemented.

166 APPENDIX I: ENVIRONMENTAL MANAGEMENT PLAN

A. Objectives

1. This is the Environmental Management Plan (EMP) for the proposed Qingdao Smart Low-Carbon District Energy Project in the People’s Republic of China (PRC). The proposed project will demonstrate the first coal-free energy efficient small-scale energy (heating, cooling, and power) systems in eight different locations in Qingdao City, located on the eastern coast of Shandong Province.

2. The objectives of the EMP are to ensure (i) implementation of identified mitigation and management measures to avoid, reduce, and mitigate anticipated adverse environment impacts; (ii) implementation of monitoring and reporting; and (iii) the project compliance with the PRC’s relevant environmental laws, standards and regulations and ADB’s Safeguard Policy Statement (SPS). Organizational responsibilities and budgets are clearly identified for execution, monitoring and reporting.

B. Implementation Arrangements

3. The Qingdao Municipal Government (QMG) will be the executing agency (EA) responsible for overall guidance during project preparation and implementation. The QMG consists of the Qingdao Municipal Finance Bureau and the Qingdao Municipal Development and Reform Commission. The Qingdao Energy Group (QEG) will be the project implementing agency (IA). QEG will sign on-lending agreements with QMG and will be responsible for all day-to-day management work during project preparation and implementation.

4. The IA will establish a Project Management Office (PMO) with a Project Manager. The PMO will include an appropriately staffed Environment, Health and Safety Unit (EHSU), and will be supported by a Loan Implementation EHS Consultant (LIEC). The PMO EHSU will include a designated staff member responsible for the GRM. IA branch offices will be responsible for implementation of each project component. A conceptualized project management chart is presented in Figure A-1.

5. The PMO will be responsible for day-to-day project implementation management including procurement and contract management, and payment to contractors.

6. The EHSU within the PMO will consist of an EHSU manager and an appropriate number of staff, including a designated GRM staff. At each branch office, an appropriate number of EHS staff will be appointed, including a designated GRM contact. To ensure the EMP requirements are incorporated into construction contracts, the PMO EHSU will prepare and provide the following specification clauses to incorporate in the bidding procedures: (i) a list of environmental management requirements to be budgeted by the bidders in their tendering documents; (ii) environmental clauses for contractual terms and conditions; and (iii) environmental monitoring requirements in the domestic EIA, the project IEE and this EMP. The PMO EHSU will oversee EMP implementation and provide specific mitigation implementation guidance to the EHS staff at IA branch offices, who will ensure day-to-day EMP implementation by contractors during construction and operator during operation. The PMO EHSU will prepare consolidated environmental (EMP) monitoring reports semi- annually during construction and annually during operation, and submit them to QEG, ADB, and Qingdao EPB.

167

Figure A-1: Conceptualized Project Management Structure.

7. The PMO through the EHSU will be responsible for contracting the third party environmental monitoring stations/companies to undertake construction and operation

168 environmental phase monitoring

8. The Loan Implementation EHS Consultant (LIEC) will be a part-time national EHS specialist and will support the PMO EHSU in mitigation implementation, environmental monitoring, reporting, and addressing any environment related issues that arise including grievances. The LIEC will also support contractors in developing Construction Site EMPs (CSEMPs), and EHS plans during construction and operation.

9. The Contractors will be responsible for implementing relevant mitigation measures during construction. Following the award of the construction contract, the Contractors will prepare CSEMPs which detail the means by which the Contractors will comply with the EMP. The Contractors will identify a lead focal point for environmental issues (e.g. Chief Site Engineer), will implement the CSEMPs, and will take all reasonable measures to minimize the impact of construction activities on the environment. The Contractors will also submit monthly environmental records to the EHS staff at the relevant branch offices on EMP implementation, including the EMoP. They are also required to report any spills, accidents, and grievances received, and take appropriate action. The EHS staff at the relevant branch offices will review the records and submit them to the PMO EHSU.

10. The PMO EHSU with the support of the LIEC will be responsible for regular internal inspections of mitigation measures at the construction site, in accordance with the Environmental Monitoring Plan (EMoP). A third party environmental monitoring station/company will be engaged by the PMO and will undertake construction and operation phase ambient environmental monitoring as per the EMoP. It is anticipated that the Qingdao EPB will also undertake random environmental compliance inspections during construction and operation. The Qingdao EPB will also conduct environmental acceptance inspections for each project component after a three month trial operation period.

11. ADB will conduct due diligence of environment issues during the project review missions. ADB will review the semi-annual and annual environmental monitoring reports submitted by the PMO and will disclose the reports on its website. If the PMO fails to meet safeguards requirements described in the EMP, ADB will seek corrective measures and advise the IA on items in need of follow-up actions.

12. Key project institutions and their EMP implementation responsibilities are summarized in Table A-1.

C. Institutional Strengthening and Capacity Building

13. The institutional strengthening and capacity building focusses on the safeguards requirements of relevant PRC laws and regulations and the ADB SPS. The training will focus on the ADB SPS; PRC safeguard requirements; development and implementation of EHS plans during construction and operation; implementation of the EMP, the EMoP, and the GRM; and typical good construction EHS plans and practices. The capacity building program will emphasize workers’ and community health and safety issues and measures.

14. In the construction phase, significant works should not be undertaken until the CSEMP and the construction EHS plan are developed, and proper training has been provided on their implementation. Similarly, operation of each project component should not commence until the operation phase EHS plan for each project component is developed, and training provided on their implementation.

15. Development of the EHS plans, training topics, contents, estimated budgets and number of participants are presented in Table A-2.

169

Table A-1: Summary of Institutions and Responsibilities for EMP Implementation

Institution Responsibilities Qingdao Municipal Ultimate responsibility for the implementation of environmental Government – management plan (EMP). Executing Agency (EA) Qingdao Energy Establish appropriately staffed Project Management Unit (PMO); provide Group (QEG) - overall project management guidance to PMO. Implementing Agency (IA) Project Management Establish appropriately staffed Environment, Health and Safety Unit within Office (PMO) PMO (PMO EHSU); provide overall management and direction to EHSU. PMO Environment, Ensure incorporation of EMP requirements into bidding documents and Health and Safety contracts; oversee EMP implementation; provide mitigation implementation Unit (EHSU) guidance to branch office EHS staff and/or contractors; undertake regular compliance inspections of mitigation measures at the construction sites, in accordance with the EMoP; identify a staff member within the EHSU to be responsible for implementation of the grievance redress mechanism (GRM); recruit and supervise the third party environmental monitoring station/company, which will undertake construction and operation phase environmental monitoring; prepare and submit consolidated environmental (EMP) monitoring reports to QEG, QMG, and ADB semi-annually during construction and annually during operation; coordinate the role of the LIEC. Loan Implementation Provide technical assistance to the PMO EHSU and the EHS/GRM staff at EHS Consultant branch offices in all aspects of EMP, EMoP, and GRM implementation; develop (LIEC) construction and operation phase EHS plans and provide training to the staff of the IA, IA branch offices, and contractors on EMP, Construction Site EMPs (CSEMPs), EMoP, GRM, and EHS, utilizing additional consultants as required; assist and coordinate environmental monitoring, including undertaking compliance inspections and assisting with ambient monitoring; assist PMO EHSU and the EHS/GRM staff at branch offices in addressing any environmental safeguard issues that may arise, including grievances; and assist the PMO EHSU in preparing semi-annual and annual environmental (EMP) monitoring reports. QEG Branch Offices Designated an appropriate number of qualified EHS and GRM staff; undertake in charge of project day-to-day EMP, EMoP, and GRM implementation; provide guidance and components supervision to contractors in their EMP, CSEMP, EMoP and GRM implementation; coordinate with the PMO EHSU and LIEC in environmental safeguard issues; review and maintain the monthly environmental records from contractors; prepare project component specific environmental (EMP) monitoring reports and submit to the PMO EHSU semi-annually during construction and annually during operation. Contractors Develop and implement CSEMPs in accordance with the EMP and other contract conditions; implement all required mitigations during construction; prepare and submit monthly environmental records to the EHS/GRM staff at branch office, which shall contain the status of implementation and compliance of the CSEMP, including information on all spills, accidents, grievance received, and appropriate actions taken. Environmental Conduct ambient monitoring according to the EMP monitoring plan (EMoP). Monitoring Station/Company

170 Institution Responsibilities Qingdao EPB Inspect the facilities during construction and operation to ensure compliance; enforce applicable PRC’s environmental laws and regulations; review EMP monitoring reports; and conducting an environmental acceptance inspection after a three months trial operation period. ADB Conduct due diligence of environment issues during the project review missions; monitor and supervise the overall environmental performance of the project; review and quality control the environmental monitoring reports and disclose the project monitoring reports on its website.

171 Table A-2: Institutional Strengthening and Training Program

Source Training Period # Trainers Attendees Contents Times Budget (USD) of Topic (days) Persons Funds ADB and PRC EHS laws, regulations and policies  ADB’s safeguard policy statement  Project applicable PRC EHS laws, policies, standards and regulations EHS Plan International environmental, health and Development safety management practice in civil (fees and per diem): construction 8 plans x 5  International environmental, health days/plan x 400/day and safety management practice in = $16,000 civil construction EHS Plan Training GRM Course IA, PMO,  GRM structure, responsibilities, and Development Construction Counter EHSU, QEG timeframe (fees and per diem): Phase EHS part Branch  Types of grievances and eligibility 5 days x $400/day = Plan LIEC 1 3 40 funding Offices, assessment $2000 Development for the Qingdao EPB, and Training project Contractors Implementation of EMP, CSEMP and EMoP Course Delivery  Impacts and mitigation measures during (fees and per diem): construction and operation at EMP and 5 days x 400/day = CSEMP $2000  Monitoring and auditing mechanism  Reporting requirements (fixed costs):  Issue of non-compliance and corrective $2000 per course actions for EMP, CSEMP, EMoP and GRM. delivery x 1 = $2000

Implementation of EHS Plans TOTAL = $22,000  Plan descriptions  Roles and responsibilities  Community EHS concerns and actions

172 Source Training Period # Trainers Attendees Contents Times Budget (USD) of Topic (days) Persons Funds EHS Plan Development (fees and per diem): 8 plans x 5 days/plan x 400/day = $16,000

International good practices in natural gas- EHS Plan Training fired boiler operation Course IA, PMO,  Environmental, health and safety issues Development Counter EHSU, QEG associated with natural gas-fired boilers. (fees and per diem): Operation part Branch 5 days x $400/day = Phase EHS LIEC 1 3 40 funding Offices, Implementation of Operation Phase EHS $2000 Plan Training for the Qingdao EPB, Plans project Contractors  Plan descriptions Course Delivery  Roles and responsibilities (fees and per diem):  Community EHS concerns and actions 5 days x 400/day = $2000

(fixed costs): $2000 per course delivery x 1 = $2000

TOTAL = $22,000 Total 2 6 80 $44,000

173 D. Potential Impacts and Mitigation Measures

16. The potential impacts of the project during construction and operation have been identified and appropriate mitigation measures developed (see Chapter V of the IEE). Detailed impacts and mitigation measures are presented in Table A-3.

E. Environment Monitoring Plan

17. An environment monitoring plan (EMoP) to monitor the environmental impacts of the project and assess the effectiveness of mitigation measures is presented in Table A-4. The EMoP includes both compliance inspection undertaken by the PMO EHSU supported by the LIEC, and ambient air, noise, wastewater and flue gas monitoring undertaken during both construction and operation phases. Ambient and discharge monitoring will be conducted in compliance with relevant PRC regulations, methods and technical specifications.

18. The data and results of environmental compliance inspection and monitoring activities will be used to assess: (i) the extent and severity of actual environmental impacts against the predicted impacts and baseline data collected before the project implementation; (ii) performance or effectiveness of environmental mitigation measures or compliance with pertinent environmental rules and regulations; (iii) trends in impacts; (iv) overall effectiveness of EMP implementation; and (v) the need for additional mitigation measures and corrective actions if non-compliance is observed.

174 Table A-3: Environment Impacts and Mitigation Measures

Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds

A. Pre-construction Phase

Include mitigation  Environmental mitigation measures identified in the IEE, the EHSU supported PMO, ADB Detailed measures and EMP and the domestic EIA will be incorporated into the by LIEC Design monitoring program detailed design. Budget in detailed design Include mitigation  Environmental mitigation measures identified in the IEE, EMP EHSU supported PMO, ADB Detailed Incorporate measures and and the domestic EIA will be incorporated in the bidding by LIEC Design Mitigation monitoring program documents for the project, and will be included in contract Budget Measures and in bidding documents for civil constructions and equipment installations. Monitoring in documents All contractors shall be required to strictly comply with the Detailed Design EMP. and Bidding and Environmental  EHSU supported PMO, ADB Detailed Contracting The environmental monitoring program (EMoP, see Table A-4 monitoring in Appendix I) will be incorporated into the design to ensure by LIEC Design incorporated into that environmental impacts are closely monitored and Budget design. activities of the project construction and operating are closely supervised against the PRC environmental laws, regulations and standards, ADB SPS, and the project EMP and approved domestic EIA.

Grievance Impacts on project  In accordance with the Grievance Redress Mechanism EHSU supported PMO, ADB PMO Redress Affected Persons (GRM) presented in Chapter VIII of the IEE, a staff member by LIEC Operating Mechanism (GRM) within the PMO EHSU will be assigned overall responsibility Budget for the GRM; GRM training will be provided for PMO members and GRM access points; and the GRM access point phone numbers, fax numbers, addresses and emails will be disclosed to the public.

Closure of Coal- Air quality  The closure of coal-fired neighborhood boilers and household Qingdao Qingdao EPB PMO fired stoves will be done by local government as part of air quality municipal Operating neighborhood improvement policy in Qingdao. The project IA informed that government Budget and

175 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds boilers (if any) and by July 2015, all the coal-fired neighborhood boilers were LIEC budget stoves closed down in the project areas. The LIEC will check, confirm existence of all the coal-based heating sources in the project areas and record it the environmental monitoring reports.

Emission  Taineng and Houhai TPPs are currently upgrading equipment Taineng TPP and Qingdao EPB PMO reduction efforts to comply with newly introduced stringent air emissions Houhai TPP Operating at Taineng TPP standards. Even though these efforts are not part of the Budget and and Houhai TPP project scope, their status of ongoing emission reduction LIEC budget efforts will be checked and recorded in order to assess system-wide air quality improvement in project areas.

176 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds

B. Construction Phase

Erosion and Spoil Soil erosion, spoil Good practice construction erosion controls and site maintenance: Contractors EHSU Contractor disposal  At each construction site the potential for storm water runoff supported by construction will be assessed and appropriate storm water drainage LIEC budget systems to minimize soil erosion will be implemented, including perimeter bunds and establishment of temporary detention and settling ponds to control topsoil runoff.  Land excavation and filling will be balanced so as minimize the requirement for fill transportation.  During earthworks the area of soil exposed to potential erosion at any one time will be minimized through good project and construction management.  Temporary spoil storage sites will be identified, designed, and operated to minimize impacts. Spoil sites will be restored at the conclusion of storage activities.  Excess spoil that cannot be used on-site will be transported to an approved spoil disposal site.  Spoil and aggregate piles will be covered with landscape material and/or regularly watered.  Spoil will be reused on-site to the maximum extent feasible as fill.  Waste construction material such as residual concrete, bricks, etc. will be used for backfill at the sites or nearby construction sites to the maximum extent feasible.  Construction and material handling activities will be limited or halted during periods of rains and high winds.  Pipelines will be installed and backfilled in a sequenced section-by-section approach. Open excavation areas during trenching activities will be minimized, and appropriate construction compaction techniques utilized.  Any planned paving or vegetating of areas will be done as soon as practical after the materials are removed to protect

177 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds and stabilize the soil.  Once construction is complete disturbed surfaces will be properly sloped and revegetated with native trees and grass (see greening plan, below). Wastewater Surface and Good wastewater management practices: Contractors EHSU Contractor groundwater  Site visits have confirmed that there are municipal wastewater supported by construction contamination from treatment plants serving all component locations. Adequate LIEC budget construction temporary sanitary facilities and ablutions will be provided for wastewater, and construction workers. Toilets will be equipped with septic domestic water tanks in accordance with PRC standards. Domestic wastewater will be treated in the septic tanks to meet Wastewater Quality Standards for Discharge to Municipal Sewers (CJ 343-2010) and discharged to the municipal sewer network for final treatment at a municipal wastewater treatment plant.  Wastewater from the canteen will be treated in an oil-water separator, and then discharged into the municipal sewer network for final treatment at a municipal wastewater treatment plant.  Construction wastewater will be directed to temporary detention and settling ponds. Areas where construction equipment is being washed will be equipped with water collection basins and sediment traps. After settling, supernatant will be recycled and sediment will be periodically excavated, and either reused if possible as fill, disposed at official spoil disposal sites, or disposed at official or landfills.  Maintenance of construction equipment and vehicles will not be allowed on site so as to reduce wastewater generation. Air Pollution Dust, vehicle  Energy station sites, HES sites, boiler house sites and Contractors EHSU Contractor emissions pipeline sections under construction will be fully enclosed by supported by construction fence prior to the commencement of construction. Fence LIEC budget height will be increased near sensitive locations (residential areas, schools, clinics and hospitals).

178 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds  Water will be sprayed on active construction sites including where fugitive dust is being generated on a daily basis, and more frequently during windy days.  All construction piles (spoil, aggregate other construction materials) with the potential to generate dust will be covered and/or regularly watered.  Construction waste will be properly managed (see below).  Construction activities will be halted during high wind events (e.g. wind speed is more than Class 4 (5.5. m/s) of the PRC National Standard for Wind Power Classification (GB/T 28591-2012)).  Once construction is complete disturbed surfaces will be properly sloped and revegetated with native trees and grass (see greening plan, below).  Transport vehicles will be limited to low speeds in construction sites.  Loads will be covered during truck transportation to avoid spillage or fugitive dust generation. Fine materials will be transported in fully contained trucks.  Construction site roads will be well maintained, and watered and swept on an as-needed basis. Construction site road entry points will be equipped with truck drive through wash ponds.  Transport routes will avoid residential neighborhoods and other sensitive areas to the maximum extent practical.  Vehicles and construction machineries will be maintained to a high standard (to be done off-site) to ensure efficient operating and fuel-burning and compliance with the PRC emission standards GB 11340-2005, GB 17691-2005, GB 18285 -2005 and GB 18352-2005.  The use of coal for cooking on site, heating and hot water will be prohibited.  Non-ozone depleting blowing agents will be utilized for the polyurethane foam (PUR) during the construction of pre-

179 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds insulated bonded heating pipes. Noise Impacts from To ensure construction activities meet PRC noise standards Contractors EHSU Contractor construction noise (Noise Standards for Construction Site Boundary, GB 12523- supported by construction on sensitive 2011) and to protect workers and adjacent residents, the following LIEC budget resources mitigation measures will be implemented:  Construction activities, and particularly noisy ones, are to be limited to reasonable hours during the day and early evening. Construction activities will be strictly prohibited during the nighttime (22:00 h to 07:00 h). Exceptions will only be allowed in special cases, and only after getting approval of the surrounding residents, Qingdao EPB and other relevant departments.  When undertaking construction planning, simultaneous high- noise activities will be avoided, and high noise activities will be scheduled during the day rather than evening hours. Similarly, construction sites will be planned to avoid multiple high noise activities or equipment from operating at the same location.  Low-noise equipment will be selected as much as possible.  Equipment and machinery will be equipped with mufflers and will be properly maintained to minimize noise. Noise levels from equipment and machinery must conform to the PRC standard GB 12523-2011.  Machines in intermittent use will be shut down in the intervening periods between work or throttled down to a minimum.  Noise personnel protective equipment (PPE) will be provided to workers.  Transportation routes and delivery schedules will be planned during detailed design to avoid densely populated and sensitive areas and high traffic times.  Vehicles transporting construction materials or wastes will slow down and not use their horn when passing through or nearby sensitive locations, such as residential communities,

180 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds schools and hospitals.  Given their location within residential areas, special attention will be paid to protect sensitive sites near HESs and community boiler houses, and along the pipeline routes:  High noise construction activities will be positioned as far away from sensitive sites as possible.  Low noise equipment will be utilized to the extent possible.  Temporary or permanent noise barriers will be installed to protect sensitive sites.  To minimize noise impacts from high pressure cleaning of heating pipelines the following mitigation measures may be utilized as appropriate:  Low noise valves.  Mufflers after the valves (noise reduction of 20-30 dB).  Throttle orifices in the pipelines to share the pressure drop from valves and reduce noise.  Sound insulation on the external walls of pipelines.  Auxiliary regulating valves. Solid Waste Inappropriate Waste  Wastes will be reused or recycled to the extent possible. Contractors, local EHSU Contractor Disposal Waste construction material such as residual concrete, bricks sanitation supported by construction will used for backfill at the sites. departments LIEC budget  Littering by workers will be prohibited. (domestic waste),  Domestic waste containers will be provided at all work sites. licensed waste Domestic waste will be collected on a regular basis by the collection local sanitation departments and transported for recycling, companies reuse, or disposal at a licensed landfill, in accordance with (construction relevant PRC regulations and requirements. waste)  Construction waste dumpsters will be provided at all work sites. Construction waste will be collected on a regular basis by a licensed waste collection company and transported for recycling, reuse, or disposal at a licensed landfill, in accordance with relevant PRC regulations and requirements.

181 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds  Excavated soil will be backfilled onsite to the extent possible. Excess spoil that cannot be used on-site will be transported to an approved spoil disposal site.  There should be no final waste disposal on site. Waste incineration at or near the site is strictly prohibited.  Contractors will be held responsible for proper removal and disposal of any significant residual materials, wastes, and contaminated soils that remain on the site after construction. Hazardous and Inappropriate  A hazardous materials handling and disposal protocol that Contractors, EHSU Contractor Polluting Materials transportation, includes spill emergency response will be prepared and waste supported by construction storage, use and implemented by contractors. management LIEC budget spills  Storage facilities for fuels, oil, chemicals and other hazardous companies materials will be within secured areas on impermeable surfaces provided with dikes, and at least 300 m from drainage structures and important water bodies. A standalone site within the storage facility will be designated for hazardous wastes.  Suppliers of chemicals and hazardous materials must hold proper licenses. They will follow all relevant protocols in “Operation Procedures for Transportation, Loading and Unloading of Dangerous or Harmful Goods” (JT 3145-91).  A licensed company will be hired to collect, transport, and dispose of hazardous materials in accordance with relevant PRC regulations and requirements.  Vehicles and equipment will be properly maintained and refueled in designated service areas on impermeable surfaces provided with oil traps, at least 300 m from drainage structures and important water bodies. Flora and Fauna Removal of A greening plan will be implemented: DI (plan design), EHSU Contractor vegetation  Site vegetation plans will be developed at new facility Contractors (plan supported by construction construction sites (energy stations, boiler houses, HESs) implementation) LIEC budget using appropriate native species.  Any existing vegetated areas impacted by pipeline works or

182 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds construction of boiler rooms, energy stations and HESs will be restored post-construction using appropriate native species.

Socioeconomic Community Traffic and Public Safety DI (plan design), EHSU Contractor Resources Disturbance and Traffic control plans, agreed to by the local traffic control authority, Contractors (plan supported by construction Safety will be developed and implemented for each component in order implementation) LIEC budget to minimize community disturbance:  Local government, using information provided by the PMO, will inform residents, institutions, bossiness and other affected parties as to planned construction activities including schedule and duration of construction works, and expected traffic and other disruptions.  Transportation routes and delivery schedules will be planned during detailed design to avoid densely populated and sensitive areas and high traffic times.  Warning signs and cones will be installed along roads to protect workers and people in the neighborhood. Safety flags will be used if appropriate.  Vehicles transporting construction materials or wastes will slow down and not use their horn when passing through or nearby sensitive locations, such as residential communities, schools and hospitals.  During evening construction warning lights will also be used.  Roadside earthworks should be completed as quickly as possible, and all spoil either backfilled or removed.  Road crossing will use the pipe-jacking installation method where possible in order to minimize disruption. Public access to construction sites and other areas of danger will be restricted and temporary barriers installed. Access to Public Services, Private Properties and Businesses Contractors EHSU Contractor  Local authorities will be consulted to minimize disruption of supported by construction public services such as telephone, water, gas and power LIEC budget supply. Contactors will use good construction practices to

183 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds avoid disruption of other services.  Contractors will take measures to minimize disruption of access to private properties and businesses where possible.  Temporary access to affected private properties, businesses and public service buildings will be provided including temporary crossings over pipeline trenches, and subsequently good quality permanent access will be provided.  Pipelines construction should be planned to take place simultaneously with other construction activities so as to minimize the length of disruption. Worker Contractors will implement adequate precautions to protect the EHS Plan EHSU LIEC Budget Occupational Health health and safety of their workers: Developed by and Safety  Each contractor will implement the relevant construction LIEC and phase EHS plan developed by the LIEC and EHS consultants consultants.  An EHS officer will be appointed by each contractor to EHS Plan EHSU Contractor implement and supervise the EHS management plan. implemented by supported by construction  The EHS Plan will: contractors LIEC budget  Identify and minimize the causes of potential hazards to workers.  Implement appropriate safety measures.  Ensure the provision of adequate type and number of fire extinguishers and first aid facilities onsite.  Provide training to workers on occupational health and safety and emergency response, especially with respect to using potentially dangerous equipment.  Ensure that all equipment is maintained in a safe operating condition.  Ensure that material stockpiles or stacks, such as, pipes are stable and well secured to avoid collapse and possible injury to workers.  Provide appropriate personal protective equipment (PPE) to workers to minimize risks, including ear protection, hard hats and safety boots, and post

184 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds adequate signage in risk areas.  Provide procedures for limiting exposure to high noise or heat working environments in compliance with PRC noise standards for construction sites (GB 12523-2011).  Provide training to workers on the storage, handling and disposal of hazardous wastes.  Ensure regular safety meetings with staff. Physical Cultural As yet unknown  A construction phase chance find procedure will be Contractors EHSU In the event Resources PCRs may be established and activated if any chance finds of PCRs are supported by that a PCR is damaged if proper encountered: LIEC and local discovered, precautions are not  construction activities will be immediately suspended Cultural the direct cost taken. if any PCRs are encountered; Heritage for comp-  destroying, damaging, defacing, or concealing PCRs Bureau ensation to will be strictly prohibited in accordance with PRC contractor will regulations; be covered by  the local Cultural Heritage Bureau will be promptly a special fund informed and consulted; and, to be devel-  construction activities will resume only after thorough oped for investigation and with the permission of the local cultural relic Cultural Heritage Bureau. protection.

C. Operation Phase

Air Pollution Combustion  Low NOx natural gas-fired boilers, turbines and engines with DI EHSU Design and Emissions design emission levels that are in compliance with the most (plan design) construction stringent of PRC national and Shandong provincial standards. budget  Waste heat recovery from industry and municipal wastewater Contractors EHSU plants. (construction)  Extracted heat using heat pump technology from various sources such as air, wastewater, and geothermal. IA (operation) EHSU and IA operation  Parabolic trough solar heating. Qingdao EPB budget

185 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds  Heat storage for peak demand shaving.  Gas emissions will be sampled on a regular basis to confirm compliance with relevant PRC emission standards, and ambient monitoring will be undertaken through the Qingdao EPB Continuous Ambient Air Quality Monitoring Stations. If either emissions monitoring or ambient monitoring indicates exceedances of relevant standards, additional denitrification and/or particulate control emissions devices will be added in consultation with the Qingdao EPB and the ADB. Wastewater Discharge of  Wastewater from the production water treatment plants will be IA Qingdao EPB IA operation Production and treated in neutralization tanks then discharged to the budget Domestic municipal wastewater network for final treatment in the Wastewater relevant local municipal wastewater treatment plant.  Wastewater from the heat supply and cool supply system and boilers will be discharged to the municipal wastewater network for final treatment in the relevant local municipal wastewater treatment plant.  Domestic will be treated in digestion tanks, and then in combination with the neutralized production wastewater, will be discharged to the municipal wastewater network for final treatment in the relevant local municipal wastewater treatment plant.  All emission concentration of SS, COD, BOD5 and ammonia nitrogen will be in compliance with Wastewater Quality Standards for Discharge to Municipal Sewers (CJ 343-2010), which sets the emission standards for wastewater discharged to a municipal sewerage system. Solid Waste Collection and  Waste bins will be provided at all facilities. District Sanitation Qingdao EPB IA operation Disposal  Wastes will be routinely collected by the local sanitation Departments budget department for recycling, if possible, or final disposal at an approved waste disposal site.  No permanent on-site solid waste disposal will be permitted at component sites.

186 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds  No burning of wastes will be permitted at component sites.  All structures and/or components replaced during maintenance activities will be reused or recycled to the extent possible. Non-recyclable parts will be disposed at an approved waste disposal site. Chemical and Inappropriate  A register of all activities that involve the handling of IA, Licensed Qingdao EPB IA operation Hazardous Management potentially hazardous substances will be developed, including Contactors budget Materials protocols for the storage, handling and spill response. This will include all fuels, oils, grease, lubricants, and other chemicals.  All chemicals, toxic, hazardous, and harmful materials will be transported in spill proof tanks with filling hoses and nozzles in working order,  All chemicals, toxic, hazardous, and harmful materials will be stored in secure areas with impermeable surfaces and protective dikes such that spillage or leakage will be contained from affecting soil, surface water or groundwater systems. Their usage will be strictly monitored and recorded. Some chemicals will be stored off-site, such as water quality analysis chemicals which will be stored at an independent laboratory.  Material safety data sheets (MSDSs) will be posted for all hazardous materials.  Oil absorbents will be readily accessible in marked containers.  Good housekeeping procedures will be established to avoid the risk of spills.  Spills will be dealt with immediately, and personnel will be trained and tasked with this responsibility.  Workers will be properly trained before handling hazardous wastes and have the requisite PPE.  Hazardous waste will be temporarily stored in closed containers away from direct sunlight, wind, water and rain in secure designated areas with impermeable surfaces and

187 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds protective dikes such that spillage or leakage will be contained. - Hazardous wastes will be collected and disposed by licensed contractors (e.g. Qingdao Xintiandi Integrated Solid Waste Disposal Co. Ltd.) on an as needed basis. Noise Impact on Sensitive  The project design will use low-noise equipment as far as Contractors EHSU Contractor Receptors possible, and will also utilize noise elimination, shock (construction) construction absorption, insulated enclosures and sound dampening budget materials on exterior walls.  All plant and equipment, including vehicles will be properly IA (operation) Qingdao EPB IA operation maintained in order to minimize noise. budget  Appropriate personal noise protective equipment (PPE) will be provided to the workers who are likely to be exposed to high noise level environments.  Noise monitoring will be undertaken, and if required additional noise control measures like noise reduction barriers will be implemented. Occupational Risks to Workers To minimize risks associated with leaks of natural gas: Contractors EHSU Contractor Health and Safety  All natural gas works will be in compliance with relevant PRC (construction) construction building code requirements, including the Code for Design of budget City Gas Engineering (GB 50028-2006) and Regulation on Electric Apparatus Design for Explosion and Fire Risk IA (operation) Qingdao EPB IA operation Environment (GB50058-92). budget  Independent gas regulation stations will be constructed at least 14 meters away from other buildings and 30 m from the site boundary, to minimize the risk of explosion damaging other project facilities or the public.19  The gas regulation stations will be specially designed to withstand and contain explosions.  Gas regulation stations and the connection to the boilers will

19 Gas regulation stations are defined as Class II explosion risks. Space within 4.5 meter away from a regulation station is included in the explosion risk region, as regulated in Regulation on Electric Apparatus Design for Explosion and Fire Risk Environment (GB50058-92). In the Code for Design of City Gas Engineering (GB 50028-2006) the recommended distance from a gas regulation station with no more than 1.6 MPa inlet pressure to other buildings is 9 m.

188 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds be equipped with flammable gas detection, alarm and fire suppression systems. Electrical devices within the explosion risk area will be safety equipped.  Gas pipelines will be grounded and equipped with anti- lightning devices where applicable.  All other at risk areas will have flammable gas detection and alarm systems able generate audible and visual alarms, and automatic fire suppression systems.  All gas related devices will be brightly colored and equipped with warning signs.

To mitigate potential health and safety risks to workers, the following measures will be taken: Plans developed PMO, LIEC Budget  Operation phase EHS plans for natural gas systems including by LIEC and EHS Qingdao EPB fire prevention and control will be developed and Experts implemented, and workers will be trained regularly on their implementation. Plans Qingdao EPB IA Budget  Natural gas systems will be designed in strict compliance with implemented by relevant PRC fire, health and safety standards. Fire IA compartments will be established based on the fire risk, and fire-resistant buildings/structures will include fire-proof doors and windows.  Fire-alarm and suppression systems will be installed and tested regularly to ensure it functions properly.  The process control system will include an out-of-limit alarm to ensure all hazardous materials are safety under control at all time.  PPE, including goggles, gloves, safety shoes, will be provided to workers.  Naked fire sources, hot surfaces, electric sparks, electrostatic sparks and ignition sources will be strictly controlled, especially near natural gas.  Control measures will be strictly undertaken to ensure the discharge, exhaust and safety relief of flammable fuels in

189 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds enclosed systems.  No unauthorized personnel should be allowed into gas-fired facilities.  Authorized personnel must have appropriate PPE at all times. Emergency An emergency risk and response applicable to all gas-fired Plans developed Qingdao EPB, LIEC budget Response facilities will be established in accordance with the “National by EHSU with local Environmental Emergency Plan” (24 January 2006) and other support from emergency relevant PRC laws, regulations and standards, and will include LIEC authorities measures in the World Bank EHS guidelines with respect to occupational and community health and safety. The plan must be Plans Qingdao EPB, IA budget established and in place before the plant is operational. implemented by local IA emergency Indicative plan requirements are as follows: authorities  Procedures for responding to different types of emergency situations will be identified in the response plan.  Emergency exercises will be conducted and they should include different emergency scenarios.

Training Requirements  Appropriate operating and maintenance employees will be trained to ensure that they are knowledgeable of the requirements of emergency response plan. Training will be provided as follows:  Initial training to all employees before the gas-fired facilities are put in operation.  When new equipment, materials, or processes are introduced.  When emergency response procedures have been updated or revised.

Annual Emergency Simulation  Simulated emergency exercises will be conducted at least annually.

190 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds Receiving Notification of a Possible Emergency  When a supervisor receives a report of a possible emergency situation, he/she should obtain at minimum the following information from the reporting person:  Name of person reporting emergency;  Nature of emergency - leak, fire, interruption of service if leak, odor present, etc.  Details of emergency: location, amount, how long has the odor been noticed, what actions have been taken, etc.  Leaks or other emergencies require prompt investigation.

Immediate On-site Action  The first responder will assess the nature of the report. This assessment should include the status of the emergency, an estimation of how the incident might progress, and an evaluation of the manpower, equipment, and materials needed to adequately cope with the situation.  If there is a strong odor or any measurable reading of gas detected inside a structure:  Clear the building of all occupants.  Eliminate potential ignition sources.  Localize or isolate the problem and shut off gas as needed.  Determine the extent of the hazardous area and establish a restricted area.  The responding supervisor shall determine the extent of the emergency and inform the dispatcher of the condition at the site.  If emergency procedures are put into effect, the responding supervisor should select a location and establish an emergency command post.  The responding supervisor will assign one person to remain

191 Potential Impacts Responsibility Source of Category Mitigation Measures and/or Safeguards and Issues Implemented by Supervised by Funds at the command post to maintain communications until the emergency is over.  When necessary, the command post will be coordinated with the local emergency responders. When local emergency responders are involved, they will be in charge of the incident.  The responding supervisor will make himself known to fire and/or police department officials, or other authority having jurisdiction, and will remain with them during the emergency.  All employees reporting to the scene of the emergency will report to the command post for identification and instructions.  Key personnel will be alerted, and it will be their responsibility to keep the emergency personnel under their supervision informed and available for emergency call out.  When a system failure cannot be made safely by normal procedures, emergency shutdown procedures should be implemented.  Reduce system pressure or segment a section before repair procedures are implemented.  Well trained and qualified personnel will be dispatched to monitor system pressure and repair work.

Communication with Public Officials  When an emergency resulting in a hazard to the public safety occurs, the local fire department, police, the city medical emergency center and other relevant public officials should be notified. An emergency call list will be prepared and make it available at the plant control room.

DI = design institute, EHSU = environment, health and safety unit, EMP = environment monitoring plan, EMS = environment monitoring station, EPB = environment protection bureau, GRM = grievance redress mechanism, IA = implementing agency, IEE = initial environmental examination, LIEC = loan implementation environmental consultant. Source: Domestic Project EIA Report (2015) and TA consultants.

192 Table A-4: Environmental Monitoring Plan (EMoP)

Implemented Supervised Subject Parameter Location Frequency Source of Funds by by

A. Construction Phase Erosion and Compliance inspection Construction sites, Monthly; and once after EHS staff at PMO EHSU PMO EHSU: PRC PMO Spoil of erosion protection spoil disposal sites completion of spoil branch offices Budget measures and spoil disposal supported by LIEC: ADB LIEC Budget management LIEC Wastewater Compliance inspection Construction sites Monthly EHS staff at PMO EHSU PMO EHSU: PRC PMO generated from of wastewater mitigation branch offices Budget construction measures (detention supported by LIEC: ADB LIEC Budget ponds, septic systems) LIEC Air Pollution Ambient dust monitoring Construction sites Quarterly 3rd party PMO EHSU 3rd party lump sum (TSP, PM10) (or representative environmental PMO EHSU construction phase number of sites for monitoring environmental monitoring project components station/ contract with multiple sites) company; EHS staff at branch Compliance inspection All construction Weekly when there are offices of dust mitigation sites construction activities PMO EHSU: PRC PMO measures (water EHS staff at Budget spraying, cover branch offices LIEC: ADB LIEC Budget transport vehicles, etc.); supported by and maintenance and LIEC condition of vehicles and construction equipment.

193 Subject Parameter Location Frequency Implemented Supervised Source of Funds

rd by by rd Noise Leq dB(A) Construction sites Quarterly: a day each 3 party PMO EHSU 3 party lump sum (or representative time and two samples; environmental construction phase number of sites for once during daytime, monitoring environmental monitoring project components once during nighttime. station/ contract with multiple sites) company; EHS staff at branch offices

Solid Waste Compliance inspection Waste collection Monthly EHS staff at PMO PMO EHSU: PRC PMO of domestic and and disposal sites. branch offices EHSU Budget construction waste supported by LIEC: ADB LIEC Budget collection and disposal LIEC Hazardous and Compliance inspections Storage facilities for Monthly EHS staff at PMO EHSU PMO EHSU: PRC PMO Polluting of hazardous fuels, oil, chemicals branch offices Budget Materials management, protocols, and other supported by LIEC: ADB LIEC Budget and licenses of hazardous LIEC suppliers and waste materials. removers Vehicle and equipment maintenance areas. Greening Plan Compliance inspection Energy stations, After construction is EHS staff at PMO EHSU PMO EHSU: PRC PMO of implementation of HES sites, pipeline complete. branch offices Budget greening plans routes. supported by LIEC: ADB LIEC Budget LIEC Compliance inspection Pipeline and Monthly EHS staff at PMO EHSU PMO EHSU: PRC PMO to determine if traffic Energy Station branch offices Budget and public safety construction sites supported by LIEC: ADB LIEC Budget measures are in place at or near roads. LIEC Transportation Socioeconomic routes. Impacts Compliance inspection Pipeline routes Monthly EHS staff at PMO EHSU PMO EHSU: PRC PMO to determine if branch offices Budget temporary access being supported by LIEC: ADB LIEC Budget provided to public and LIEC private properties

194 Subject Parameter Location Frequency Implemented Supervised Source of Funds

by by Compliance inspection All construction Monthly EHS staff at PMO EHSU PMO EHSU: PRC PMO to determine if EHS sites branch offices Budget Plans developed and supported by LIEC: ADB LIEC Budget implemented, and LIEC workers have appropriate PPE

195 Supervised Subject Parameter Location Frequency Implemented by Source of Funds by

B. Operation Phase rd rd SO2, NO2, TSP (PM) Exhaust stacks of Four times per year 3 party PMO EHSU 3 party lump sum natural gas boilers, (two times in heating environmental operation phase Gas Exhaust generators, season, two times in monitoring environmental Emissions turbines and cooling season). company; EHS monitoring contract engines staff at branch offices

Ambient Air SO2, NO2, PM10, PM2.5 Qingdao EPB Continuous Qingdao EPB Qingdao Qingdao EPB (Non Quality Monitoring Stations Monitoring EPB project funds) Stations

Greenhouse CO2 Project level Annual PMO EHSU LIEC IA operation budget gases emissions rd rd Domestic and SS, COD, BOD5 Energy Station Four times per year 3 party PMO EHSU 3 party lump sum Production Discharge (two times in heating environmental operation phase Wastewater Locations season, two times in monitoring environmental Discharged to cooling season). company; EHS monitoring contract Municipal staff at branch Sewer offices Compliance Four times per year 3rd party PMO EHSU 3rd party lump sum monitoring: at 1 m (two times in heating environmental operation phase outside of the site season, two times in monitoring environmental Noise Leq dB(A) boundary (Energy cooling season). company; EHS monitoring contract Stations, HESs) staff at branch offices Compliance inspection Energy Stations, Ongoing, random EHS staff at PMO EHSU Included in IAs’ to determine if EHS HESs, pipelines branch offices operation budgets Health and plans developed and supported by Safety implemented, and LIEC workers have appropriate PPE dB = decibel, CEMS = continuous emissions monitoring system, EHSU = environment, health and safety unit, EMS = environment monitoring station, EPB = environment protection bureau, IA = implementing agency, Leq = equivalent continuous noise level, LIEC = loan implementation environmental consultant, NO2 =

196 nitrogen dioxide, PM= particulate matter, pH = potential hydrogen, TSP = total suspended particulate matter, PMO = project management office, SO2 = sulfur dioxide. Source: Domestic EIA Report (2015) and ADB PPTA consultants estimate.

197 F. Reporting Requirements

19. The Contractors will submit monthly reports to the EHS staff at the relevant branch office on the implementation and compliance with the CSEMP, including information on all spills, accidents, grievance received, and appropriate actions taken.

20. Based on the Contractors’ monthly reports and the compliance inspection and ambient monitoring results, the EHS staff at branch offices, with support from the LIEC, will prepare project component specific environmental (EMP) monitoring reports semi-annually during construction and annually during operation and submit them to the PMO EHSU. The PMO EHSU will prepare consolidated environmental (EMP) monitoring reports, with support from the LIEC. These reports will be submitted to the PMO, who will review them and then submit them to the ADB, QMG, and the Qingdao EPB.

21. No later than two months after completion of each project component construction work, the EHS staff at the branch offices will submit a subproject construction completion environmental acceptance report to the Qingdao EPB and send a copy to the PMO EHSU. Within three months after project component completion, an environmental acceptance inspection will be undertaken by the Qingdao EPB. ADB can request the PMO for copies of the construction completion environmental acceptance reports and the environmental acceptance approvals by the Qingdao EPB.

22. The environmental reporting requirements during the implementation of the project are summarized in the Table A-5.

Table A-5: Reporting Requirements

Report Prepared by Submitted to Frequency A. Construction Phase CSEMP compliance, spills and EHS staff at Contractors Monthly accidents branch offices Project component specific EHS staff at branch environmental monitoring PMO EHSU Semi-annually offices supported by LIEC report PMO reviews (Consolidated) Environmental PMO EHSU supported by and submits to Semi-annually monitoring reports LIEC ADB B. Operation Phase Project component specific environmental monitoring EHS staff at branch PMO EHSU Annually report, including annual CO2 offices supported by LIEC emissions (Consolidated) Environmental PMO reviews PMO EHSU prepares and monitoring report, including and submits to Annually submits to PMO annual CO2 emissions ADB

198 G. Performance Indicators

23. Performance indicators (Table A-6) have been developed to assess the implementation of the EMP. These indicators will be used to evaluate the effectiveness of environmental management.

H. Estimated Budget for Mitigation and Monitoring

24. The estimated budgets for environmental mitigation and monitoring are summarized in Table A-7. Construction phase costs are estimated at 154,000 USD; operation phase mitigation and monitoring costs are estimated at 64,000 USD. The budget does not include major capital costs for mitigations (e.g. low NOx burners, etc).

Table A-6: Performance Indicators

No. Description Indicators (i) PMO EHSU established with appropriately qualified staff. (ii) IA Branch Offices designated with appropriately qualified staff. 1 Staffing (iii) Appropriately qualified LIEC recruited. (iv) 3rd party environmental monitoring station/company engaged. (i) Environment mitigation cost during construction and operation is sufficiently and timely allocated. 2 Budgeting (ii) Environment monitoring cost is sufficiently and timely allocated. (iii) Budget for capacity building is sufficiently and timely allocated. (i) Compliance monitoring is conducted by EHS staff at branch offices, PMO EHSU and LIEC as per EMoP. (ii) Construction phase ambient and effluent monitoring is conducted 3 Monitoring by 3rd party environmental monitoring station/company. (iii) Operation phase gas exhaust, wastewater and ambient air quality monitoring is undertaken by 3rd party environmental monitoring station/company and Qingdao EPB monitoring stations. (i) ADB mission to review EMP implementation at least once a year during the construction phase. 4 Supervision (ii) Qingdao EPB to supervise monitoring and reporting. (iii) Qingdao EPB to conduct an environmental acceptance inspection after a three months trial operation period. (i) Monthly environment monitoring reports prepared by the Contactors are submitted to EHS staff at IA branch offices. (ii) Semi-annual (during construction period) and annual (during operation) Project component specific environmental (EMP) monitoring reports, prepared by the EHS staff at branch offices are submitted to the PMO EHSU. (iii) Semi-annual (during construction period) and annual (during operation) (Consolidated) Environmental (EMP) monitoring reports 5 Reporting prepared by the PMO EHSU supported by the LIEC, are submitted to ADB and Qingdao EPB through the PMO. (iv) Construction completion environmental acceptance reports prepared by the EHS staff at branch offices are submitted to the PMO EHSU and Qingdao EPB. (v) IA branch offices obtain environment acceptance approvals by the Qingdao EPB and submit the copies to the PMO EHSU, and, upon request, the ADB after a three months trial operation period.

199 No. Description Indicators (i) Construction Site Environmental Management Plans (CSEMPs) and construction phase EHS plans are developed and in place before substantive construction activities begin. (ii) Training on EHS plan implementation, ADB safeguard policy, EMP Capacity implementation, and GRM is provided to at the beginning of 6 Building project implementation. (iii) Operation phase EHS plan developed and in place before substantive project operation activities begin. (iv) Training on EHS plan implementation and best international practices is provided prior to project operation. (i) GRM contact persons are designated at all branch offices and the Grievance PMO EHSU, and GRM contact information disclosed to the public 7 Redress before construction. Mechanism (ii) All complains are recorded and processed within the set time framework in the GRM of this IEE. Compliance (i) Project complies with the PRC’s environmental laws and 8 with PRC regulations and meets all required standards. standards

200 Table A-7: EMP Budget

Construction Phase Source of 1. Ambient Monitoring Unit Unit Cost # Times Cost USD Cost RMB Funds Air - TSP Quarterly $ 3,000 12 $ 36,000 ¥223,200 Counterpart Noise Quarterly $ 3,000 12 $ 36,000 ¥223,200 Financing Subtotal $ 72,000 ¥446,400 2. Capacity Building Unit Course Cost # Times Cost USD Cost RMB Construction Phase HSE Plan Development and HSE Plan Development $ 2,000 8 $ 16,000 ¥99,200 Counterpart Training HSE Course Development $ 2,000 1 $ 2,000 ¥12,400 Financing HSE Course Delivery $ 4,000 1 $ 4,000 ¥24,800 Subtotal $ 22,000 ¥134,200 3. Loan Implementation Consultant (LIC) Unit Monthly Cost # Months Cost USD Cost RMB ADB Loan LIC HSE Specialist Person Months $ 6,000 10 $ 60,000 ¥366,000 Cost USD Cost RMB TOTAL Construction Phase $ 154,000 ¥939,400

Operation Phase (first 2 years) Unit Unit Cost # Times Cost USD Cost RMB Counterpart 1. Exhaust Emissions Monitoring Seasonal Sampling $ 5,000.00 4 $ 20,000 ¥120,001 Financing 2. Ambient Monitoring Unit Unit Cost # Times Cost USD Cost RMB Noise Seasonal Sampling $ 3,000 4 $ 12,000 ¥400,000 Counterpart Wastewater Seasonal Sampling $ 2,500 4 $ 10,000 ¥61,000 Financing Subtotal $ 22,000 ¥461,000 3. Capacity Building Unit Course Cost # Times Cost USD Cost RMB Construction Phase HSE Plan Development and HSE Plan Development $ 2,000 8 $ 16,000 ¥99,200 Counterpart Training HSE Course Development $ 2,000 1 $ 2,000 ¥12,400 Financing HSE Course Delivery $ 4,000 1 $ 4,000 ¥24,800 Subtotal $ 22,000 ¥134,200 Cost USD Cost RMB TOTAL Operation Phase $ 64,000 ¥390,400 Cost USD Cost RMB GRAND TOTAL Construction + Operation $ 218,000 ¥1,329,800

201 EMP Budget Notes:

Construction Phase  Construction phase ambient monitoring based on contract with 3rd party environmental monitoring company, with quarterly monitoring at a total of ten sites: four Energy Stations and the remainder being a sampling of other construction sites.  Construction phase EHS plan development based on 5 consultant days at $400/day (fees and per diem) per plan, and 8 component plans. Construction phase EHS course development based on 5 consultant days at $400/day (fees and per diem). Course Delivery based on 5 consultant days per delivery at $400/day (fees and per diem) and fixed costs of $2000 per delivery.

Operation Phase  Operation phase exhaust monitoring based on contract with 3rd party environmental monitoring company, with quarterly monitoring at a total of ten sites: four Energy Stations and the remainder being a sampling of other gas-fired heat sources.  Operation noise and wastewater monitoring based on contract with 3rd party environmental monitoring company, with quarterly monitoring at a total of ten sites: four Energy Stations and the remainder being a sampling of other construction sites.  Budget does not include costs for continuous ambient air quality monitoring at Qingdao EPB Monitoring Stations as that is funded by Qingdao EPB,  Operation phase EHS plan development based on 5 consultant days at $400/day (fees and per diem) per plan, and 8 component plans. Operation phase EHS course development based on 5 consultant days at $400/day (fees and per diem). Course Delivery based on 5 consultant days per delivery at $400/day (fees and per diem) and fixed costs of $2000 per delivery.  Budget does not include major capital costs for mitigations (e.g. low NOx burners, etc).

I. Mechanisms for Feedback and Adjustment

25. The effectiveness of mitigation measures and monitoring plans will be evaluated through a feedback reporting system. If, during compliance inspections and monitoring, substantial deviation from the EMP is observed, then the EHS staff at branch offices will consult with the PMO EHSU, the Qingdao EPB, and ADB and propose appropriate changes to the EMP monitoring and mitigation plan.

26. Any major EMP adjustments will be subject to ADB review and approval and ADB may pursue additional environmental assessment and, if necessary, further public consultation. The revised EMP with ADB confirmation is subject to reposting on the ADB’s website as the ADB public communications policy requires. The revised EMP will be passed to the PMO EHSU, the EHS staff at branch offices, and the contractor(s) for implementation.

J. EPB Environmental Acceptance

27. After a three months trial operation period the Qingdao EPB will conduct an environmental acceptance inspection for each project component and issue environmental acceptance approvals. If the project component is in compliance with all conditions for approval of the domestic EIA (see IEE Appendix 2), the project component can be put into formal operation.

202 APPENDIX II: RAPID CLIMATE RISK ASSESSMENT Prepared by Charles Rodgers, Senior Advisor Climate Adaptation Consultant at Sustainable Development and Climate Change Department at ADB on July19, 2015

Project Overview: The proposed project will demonstrate coal-free energy efficient small-scale district energy (heating, cooling, and power) systems in eight different locations in Qingdao City. Instead of coal the project will use a mix of cleaner and renewable heat sources such as natural gas; waste heat recovery from industry and municipal sewage plants; extracted heat from air, wastewater, and geothermal sources using heat pump technology; solar thermal; and heat storage for peak demand shaving. The project will also demonstrate highly energy efficient low temperature district energy networks and demand-side response smart energy management. The cleaner sources of heat combined with highly energy efficient district energy systems will reduce the emission of greenhouse gases and other air pollutants in Qingdao City.20

Results of Preliminary Climate Risk Screening: Preliminary checklist climate risk screening finds the project at MEDIUM risk based on potential impacts of sea level rise and potential impacts of temperature change on project performance (noting these impacts are likely to be positive, as warmer winter temperatures reduce the need for heating).

Results of AWARE screening: overall MEDIUM risk; based on high risk of flooding and high risk of changes in water availability.

Comments on risk screening: screening presents risks to project in principle from climate change impacts based primarily on project type (sector) and location. The Qingdao City Smart Low Carbon District Energy Project (“Qingdao Energy”) is a complex project with respect to both location (investments are widely distributed geographically) and nature of activities and investments (project involves a wide range of technologies). The preliminary risk screening thus serves as a starting point for a more targeted climate risk assessment.

Climate-related Risks to the Project: For a project such as Qingdao Energy, climate change-related risks are primarily of two types: (1) risks posed by manifestations of climate change, such as changes in flood frequency and severity or sea level rise, on exposed and vulnerable built infrastructure and specific components of infrastructure resulting in damage and/or reduction in usable service lifetime; and (2) impact on the performance of the system caused by changes in climatic variables, in particular temperature. Performance impacts may be positive or negative, as discussed subsequently. Other categories of risk exist, including risks transmitted from other systems and sectors that are connected to or which provide critical inputs to the project. An example is delivery of electric power and/or natural gas to project facilities, either one of which might be affected by climate change impacts, but an assessment of these transmitted risks is beyond the scope of the present assessment.

Climate Risks to Project Infrastructure and Sub-Components: The project investments are distributed over many locations within and surrounding Qingdao City, as described earlier (Figure 1). Although there are eight specific physical project

20 Initial Environmental Examination (Draft July 2015), Peoples’ Republic of China, Qingdao Smart Low-Carbon District Energy Project, Executive Summary.

203 components (Table 1), specific investments within a component, such as heat exchange stations (e.g., Project Component 4) or neighborhood heating systems (e.g., Project Component 6) may be distributed over multiple locations within and around the city. As climate change risks to specific infrastructure components are in many cases highly location- specific, a full accounting of these risks would require risk assessments for each location, which would require time and resources far beyond what is available. This assessment will focus on those sub-projects for which visual inspection of sub-project location suggests the likelihood of climate-related risks. Inspections are made using Google Earth. Imagery for Qingdao City in general is recent (December 13-14 2014) and at relatively high resolution so that specific features of most project sites and their settings are visible.

Figure 1: Project component detailed locations in Qingdao urban core21

One potential risk to at least some of the project installations is sea level rise (SLR). Unlike e.g., changes in precipitation, SLR is projected with high confidence, although both the rate of change and the total extent of SLR in a given locaion over the next few centuries are uncertain.22 In addition, many factors determine the local rate of relative SLR, including local land subsidance or rebound, prevailing ocean currents and shifts in earth’s gravitational field due to changes in Antarctic ice mass. Table 1 describes the eight Project locations and provides a brief description of each. Table 2 indicates the approximate elevations of primary sites derived on the basis of Google Earth. Google Earth’s digital elevation model (DEM) is based on the NASA Shuttle Radar Topography Mission (SRTM) DEM and should thus have a comparable accuracy, as some studies have confirmed.23 The relative accuracy of SRTM (and by extension Google Earth) DEM data are known to vary with location, relief, land cover

21 Figure 13, p. 31 in Draft IEE. 22 IPCC AR5 WG1 Chapter xxx. 23 For example, Rusli et al. (2014), Google Earth’s Derived Digital Elevation Model: A Comparative Assessment with Aster and SRTM Data. IOP Conf. Series: Earth and Environmental Science 18 (2014) 012065 doi:10.1088/1755-1315/18/1/012065

204 and other factors, although the relative error should not be large at points of low relief at or near sea level, which serves as a contirol and can be observed directly in the imagery. Table 1: Qingdao Energy Project Components and Descriptions No. Component Energy Source / Technology 1 Shibei District Binhai Energy Systems Waste heat recovery from industry, natural gas, and wastewater 2 Licang District Houhai Energy Systems Natural gas 3 Licang and Shibei Districts Unit-Based Natural gas Heating and Cooling Systems 4 Shibei District Heat Exchange Stations Natural gas 5 Jidong Subdistrict Energy Systems Natural gas 6 East Licang District Neighborhood Heating Natural gas Systems 7 Shinan District Unit-Based Heating and Natural gas and absorption heat pump Cooling Systems 8 Shibei District Geothermal and Solar Geothermal heat pump and solar Heating Systems heating 9 Smart Energy Management System Heating networks and energy control management

Many areas within Qingdao City and zones surrounding Jiaozhou Bay are built on reclaimed land (landfill) and are thus typically at very low absolute elevations. The anticipated exposure of specific locations to SLR can be viewed as a function both of absolute elevation, proximity (distance) from the site to the ocean or other water bodies subject to sea level control (e.g., river outlets); and to the presence or absence of protective structures such as seawalls, dykes, and roadway embankments.

On the basis of Google Earth elevation and proximity checks, sites at potential risk from SLR include Project Component 1, situated at around 4 masl and 250 meters from the Licun River near its outlet into Jiaozhou Bay, at sea level (Figure 2); and Component 2: Licang District Houhai Energy Systems, below 5 masl and between 250 and 350 m from Jiaozhou Bay. Also potentially exposed are 3 heat exchange stations of Project Component 4 located roughly 500 m from Jiaozhou Bay (Figure 1) which appear to be at less than 2 masl.

Table 2: Approximate Elevations in Meters above Sea Level (MASL) of Project Components: No. Component Rough elevation MASL (Google Earth) 1 Shibei District Binhai Energy Systems 4 – 7 2 Licang District Houhai Energy Systems 0 – 5 3 Licang and Shibei Districts Unit-Based 6 – 10 (3a); 3 – 4 (3b) 15-20 (3c) Heating and Cooling Systems 4 Shibei District Heat Exchange Stations Widely distributed – 3 sites below 2 masl 5 Jidong Subdistrict Energy Systems Many community sites between 5 and 20 masl; energy station No. 1 2 – 4 masl (1.3 km from river mouth) 6 East Licang District Neighborhood Widely distributed – no sites at low Heating Systems elevation 7 Shinan District Unit-Based Heating and 25 – 50 (7.1); 10-20 (7.2) Cooling Systems 8 Shibei District Geothermal and Solar 15 – 25 Heating Systems 9 Smart Energy Management System (distributed)

205 Component 1: Shibei District Binhai Energy Systems,“… will be located within the premises of the existing Qingdao Energy Taineng Thermal Power Plant (Taineng TPP) and will source waste heat from the Huadian Qingdao Combined Heat and Power Plant (Huadian CHP) and the Licun River Wastewater Treatment Plant (Licun River WWTP).”24 The area of greatest interest is the triangular region where the ADB Project Component 1 activities will be located, south-of the roadway separating the proposed facility from the Licun River at a point roughly 1 km upstream of the river mouth at Jiaozhou Bay. On the basis of Google Earth examination, it appears that Licun River is being progressively reclaimed, and structures appear to inhibit the free flow of the river to or from Jiaozhou Bay. The present extent of tidal influence cannot be determined on the basis of this imagery, although the presence of a series of river-side parks and small structures at water level suggests that tidal inundation is not presently a major factor.

Figure 2: Detail: Location of ADB Component 1: Shibei District Binhai Energy Systems near Licun River

Source: Google Earth (July 18, 2015)

In evaluating risks from SLR, the following factors enter consideration: (i) likelihood of exposure, (ii) sensitivity of system components to exposure and (iii) presence of adaptations to minimize exposure and/or harm. Equipment at Component 1 site includes an industrial waste heat recovery system, community-based energy system and wastewater heat recovery system, inclusive of boilers, heat pumps and related technology described in the IEE (2015). Without attempting to evaluate specific impacts of climate change on each technology, it is assumed that these and related technologies are subject to harm if immersed in sea water for extended periods; which would also result in service interruption. The primary focus in this assessment is thus on how likely an occurrence exposure to sea level rise might be at this site.

24 Draft IEE, July 2015.

206 The most recent estimate of SLR produced by the Inter-governmental Panel on Climate Change (IPCC) in their Fifth Assessment Report (2013)25 presents a range of estimates of projected SLR over the 212st Century. The 2100 end points depend strongly on assumptions concerning global carbon emissions over the 21st Century, with optimistic projections as captured in Representative Concentration Pathway (RCP) 2.6 ranging between 38 and 60 cm; and more pessimistic projections (RCP 8.5) ranging from around 55 cm to 1.0 m. It should be emphasized that current global emissions are most consistent with RCP 8.5.26 Since SLR is not projected to proceed in linear fashion, but rather to accelerate at a rate that depends on emissions, projections through mid-century do not reflect this strong end-of-century dependence on emissions scenario.

Figure 3 depicts the projected annual rate of SLR for RCP 8.5 in mm per year. This is global mean SLR and cannot be assumed applicable to any specific location. It is observed that annual GMSLR over the 25-year project design life (assumed 2016-2040) ranges from around 3 mm/year (2015, low estimate) to around 7 mm/year (high estimate, 2040), with a project period average of around 5 mm/year or around 12.5 cm over the project design lifetime..

Figure 3: Projected Rate of Global Mean Sea Level Rise, RCP 8.527

For purposes of assessing risks to the project, we assume a higher rate of 10 mm/year or 25 cm over the project economic lifetime. One the basis of estimated site elevations it appears that sufficient safety margin exists (and without including the impact of specific structures such as sea walls and levees that cannot be evaluated on the basis of Google imagery alone) to preclude static inundation by sea water due to SLR. In any event, as SLR itself is a slow-

25 Church and co-authors (2013), Chapter 13 Sea Level Change. In: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change 26 Note that some studies project rates of SLR that exceed the IPCC scenarios. See for example Jevrejeva and co-authors (2014) Upper Limit for Sea level Projections by 2100. Environmental Research Letters 9, doi.10.88/1748-9326/910/104008. 27 From Figure 13.11(b), p. 1181 in IPCC (2013) WG I Chapter 13: Sea Level Change.

207 onset climate change phenomenon, adequate time would likely be available to secure the site on the basis of extrapolation from on recurrent observations.

One additional point must be considered. It is seldom static SLR that represents the greatest threat to coastal infrastructure but rather SLR in combination with storm surge and/or landward flooding leading to inundation of low elevation coastal margins. The lack of major, visible coastal defenses on the Jiaozhou Bay side of Qingdao City suggests that storm surge is not a common occurrence. This is likely due in part to the protective nature of the bay itself, and may also reflect the relative infrequency of typhoons and other severe storms typically responsible for storm surge. Figure 4, extracted from a larger map of historical typhoon tracks in the West Pacific28, indicates that the Shandong Peninsula, where Qingdao City is located, is at the northern fringe of the typhoon belt. Typhoons do make landfall at Qingdao, as illustrated by Typhoon Muifa in 2011, but do not appear to present a major category of hazard, at least under contemporary climate.29

Figure 4: Excerpt for Shandong Peninsula, Tracks of all tropical cyclones in the Northern-Western Pacific Ocean between 1980 and 2005

Component 2: Licang District Houhai Energy Systems: Component 2 will consist of two community-based energy system subcomponents: (i) Houhai Community-Based Energy System and (ii) Qingdao North Railway Community-Based Energy System. The community- based energy systems will be built within the premises of the existing Houhai TPP (Figure 5). The Houhai Community–Based Energy System will have gas and steam combined cycle power and steam generation. Using natural gas as the energy source, a gas turbine will generate electricity; and The Qingdao North Railway Community-Based Energy System will have (i) power generation unit; (ii) lithium bromide heating and cooling supply unit; (iii) peaking boiler; and (iv) peaking chiller.. The ADB Component 2 infrastructure will be located in the South-western section of the existing complex, where elevations are indicated by Google Earth to be near sea level ( 0 – 1.0 MSL).

The close proximity (both vertical and horizontal) of Project Component 2 to sea level suggests that potential risks from SLR are present. Consideration must be given here to the fact that Component 2 will be located within the perimeter of an existing power generating facility, which represents a more substantial investment than Project Component 2 itself. More accurate elevation measurements should be obtained from engineering reports on the existing Houhai Thermal Power Plant to evaluate the existing safety margin against the hypothetical 25 cm rise in sea level. It is also assumed, but should be verified, that the site is protected from inundation on the basis of historical occurrence.

28 Extracted from Wikipedia (2015): Tracks of all tropical cyclones in the Northern-Western Pacific Ocean between 1980 and 2005. 29 Some studies suggest that typhoon tracks will move northward as a consequence of climate change.

208

Figure 5: Project Component 2 - Licang District Houhai Energy Systems

Source: Google Earth (2015)

As in the case of Project Component 1, and assuming that the existing Houhai Thermal Power Plant is adequately protected against inland flooding, storm surge and other risks associated with present climate, it is likely that given the slow-onset nature of SLR, adequate additional risk management interventions can be performed to ensure that risks to the ADB investment from SLR are held to acceptable levels through careful monitoring, evaluation and adaptive intervention.

Project Component 4: Shibei District Heat Exchange Stations: Component 4 is designed to enhance the existing district heating systems in Shibei District by installing additional heat exchange stations (HESs). Each HES will be equipped with (i) heat exchange unit; (ii) peaking boiler unit; and (iii) air pump unit. The heat exchange units will use automatic plate heat exchangers. Peaking boilers will be gas-fired modular cast iron boilers with a range of heating capacities. Four sets of electrical air heat pumps with 65 kW heating capacity will be installed at each HES. Component 4 consists of 28 installations distributed throughout Qingdao (Figure 1). Of these, three are potentially at risk from SLR due to their location at relatively low elevation (2 masl or less) and close proximity (roughly 500 m) to Jiaozhou Bay at sea level (Figure 6).

209 Figure 6: Three Project Component 4 (Shibei District Heat Exchange Stations) near Jiaozhou Bay

(sites are all on coastal strip to the west of highway, within housing clusters)

The heat exchange stations are typically designed to be located in basements or sub- basements of existing structures. As with Project Component 2, it is assumed that such structures have been designed to minimize risks from current climate-related hazards, including inland flooding and/or storm surge. Adaptation to SLR can also proceed incrementally, and should emphasize designs and retrofitting to minimize the flooding of basements and sub-basements to prevent damage to equipment and interruption of services. This might involve inter alia use of waterproof doors and window seals, elevation of critical electrical and mechanical equipment to avoid even short-duration inundation, and installation of high-capacity pumps to control floodwater levels; in the event that such measures have not already been incorporated into building design.

Climate Risks to Project Performance: The second broad category of potential climate-associated risk to the project is potential impacts of changes in specific climatic parameters to the project performance. For this project we will interpret performance in terms of the delivery of efficient and climate-friendly heating (in cool seasons) and air conditioning (in warm seasons). Warming of the atmosphere is the primary consequence of accumulated greenhouse gas emissions (“global warming”) and model-based projections of climate change globally show fairly consistency in the direction and relative magnitudes of warming at regional and seasonal scale.

Warming manifests not only as increases in mea annual temperatures, but in addition as higher minimum and maximum daily and seasonal temperatures, and increases in sequences of warm (hot) days (“heat spells”). To the extent that warming climate reduces the need for heating, particularly during the winter, climate change has a benign or possibly beneficial impact on project performance. To the extent that warming during the summer increases demand for air conditioning, it may affect project performance negatively.

The draft IEE (2015) states that “Qingdao … is situated in the northeastern part of the country. The winter temperature drops to as low as –17 degree Celsius (°C), and sub-zero temperatures typically last for 5 months a year; under this climate heating service is an essential requirement for sustaining people’s livelihoods.” This suggests that positive impacts of warming via reduced heating demand may outweigh the negative impacts via increased cooling demand.

210 The IPCC, in the Fifth Assessment report (2013) summarizes the results of General Circulation Model (GCM) simulations of future climate at regional scale. Table 3 summarizes the results of these studies for emissions scenario RCP 4.5. In interpreting this table It is important to keep in mind that the RCP 4.5 represents, when viewed from the perspective of current emissions, a very optimistic view of the future, and so 75th percentile values for temperature might be more appropriate benchmarks than median (50th percentile), although not necessarily for precipitation.

Table 3: CMIP5 (IPCC AR5) GCM Projections Assuming RCP 4.5 (moderate emissions), Qingdao City, PRC Region.30 Percentages refer to model ensemble quartiles, e.g., “Temp 25%” is interpreted as the 25th percentile of model results sorted from least to greatest warming. Season/Period Variable 2016-2035 2046-2065 2081-2100 December-Feb Temp oC 25% 0.5 to 1.0 1.5 to 2.0 1.5 to 2.0 December-Feb Temp oC 50% 0.5 to 1.0 1.5 to 2.0 2.0 to 3.0 December-Feb Temp oC 75% 1.0 to 1.5 2.0 to 3.0 3.0 to 4.0 June - August Temp oC 25% 0.5 to 1.0 1.0 to 1.5 1.5 to 2.0 June - August Temp oC 50% 0.5 to 1.0 1.5 to 2.0 2.0 to 3.0 June - August Temp oC 75% 1.0 to 1.5 2.0 to 3.0 2.0 to 3.0 October – March 0% to -10% 0% to +10% 0% to +10% October – March 0% to +10% 0% to +10% +10% to +20% October - March 0% to +10% +10% to +20% +20% to +30% April – September 0% to -10% 0% to +10% 0% to +10% April – September 0% to +10% 0% to +10% +10% to +20% April - September 0% to +10% +10% to +20% +10% to +20%

If the period 2046-2065 is taken as representative of the conditions under which the project will perform, at least late in its design lifetime, then we can take cold season (December- February) warming of around 1.5 oC to 2.0 oC, and warm season (June – August) warming of 1.5 oC to 2.0 oC as indicative of future conditions. Since relative warming in each period is roughly equivalent, we cannot make strong statement about the net impact of climate change on project performance, although due to the prolonged cold period in Qingdao, it is likely that reduced heating requirements dominate.

In addition, Table 12 of the draft IEE indicates that across all 9 Project Components, total area heated is equal to18.2 million m2 in comparison with 1.8 million m2 to be cooled. Thus, without performing a full analysis of changes in heating and cooling energy demand, respectively, as a consequence of climate change, it is likely that climate change in the form of seasonal warming will not have a negative impact on project performance, particularly over the 25-year design lifetime of the project.

Summary: A rapid climate risk assessment has been conducted for the Qingdao Smart Low-Carbon District Energy Project. This assessment was conducted as a desk study, i.e., based on easily accessible information and without the benefit of site visits, impact modeling or similar, more rigorous risk evaluation methodology. Much of the assessment rests on basic considerations of risk by virtue of location, with Google Earth providing the primary assessment tool. It is a tool that was not designed for these purposes due to limited

30 Source: IPCC (2013) Fifth Assessment Report, Working Group 1 (Science), Annex 1

211 accuracy particularly with respect to vertical resolution, and so the conclusions of this assessment must be viewed as provisional. Certain observations made in this assessment should be verified on the basis of site visits and/or engineering plans, in particular the vulnerability of Project Component 2 to risks associated with sea level rise. This rapid risk assessment is not proposed as a substitute for more rigorous climate risk and vulnerability, which is recommended as time and resources permit.

This assessment concludes that in principle the most significant risk to project investments is likely to be sea level rise. No specific design modifications appear to be required or justified at design stage, however, since critical structures appear to be designed to minimize risks consistent with current sea level and associated hazards such as tropical storms and inland flooding. Project design lifetime is estimated at 25 years, so that indicative rates of sea level rise of even 1 cm per year suggest that no more than 25 cm of SLR would be anticipated over the project design lifespan 31 . These risks can be addressed through adaptive (incremental) interventions, supported in turn by diligent monitoring and evaluation of changing environmental conditions.

31 Roughly consistent with RCP 8.5.

212 APPENDIX III: EXISTING AND ASSOCIATED FACILITY DUE DILIGENCE

ENVIRONMENTAL AUDITS AND REVIEWS

A. Component 1 Linked Facility Due Diligence Environmental Review – Huadian Combined Heat and Power Plant

B. Component 1 Linked Facility Due Diligence Environmental Review – Licun River Wastewater Treatment Plant

C. Component 1 Existing Related Facility Due Diligence Environmental Review and Assessment – Taineng Thermal Power Plant

D. Component 2 Existing Related Facility Due Diligence Environmental Review and Assessment – Houhai Thermal Power Plant

213 Appendix III-A: Component 1 Linked Facility Due Diligence Environmental Review – Huadian Combined Heat and Power Plant

A. Introduction

1. This is a due diligence rapid environmental review of the Huadian Qingdao Combined Heat and Power Plant (hereafter referred to as the Huadian CHP), being conducted as part of the preparatory assistance for the development of the proposed Asian Development Bank (ADB) Qingdao Smart Low-Carbon District Energy Project (hereafter referred to as the Qingdao Clean Energy Project).

2. Component 1 of the Qingdao Clean Energy Project, the Shibei District Binhai Energy Systems (hereafter referred to as Qingdao Clean Energy Component 1), will utilize waste heat from the Huadian CHP. The Huadian CHP is therefore an associated facility for Qingdao Clean Energy Component 1, and as per the ADB Safeguard Policy Statement (SPS), an environmental review of the existing facility is required.

B. Environmental Review Approach

3. This report is based on a site visit, consultations with Huadian CHP managers and technical staff, and a review of plant environmental and technical documentation. The site visit was undertaken May 6th 2015, and included the following participants:

Environmental Reviewers: Ashley Bansgrove, International Environmental Safeguards Specialist, TA-862532 Dai Lei, National Environmental Safeguards Specialist, TA-8625

Huadian CHP: Mr Ji, Deputy Manager, Huadian Qingdao Power Generation Co. Ltd. Mr X, Huadian Qingdao Power Generation Co. Ltd. Mr X, Huadian Qingdao Power Generation Co. Ltd.

4. Documentation reviewed during and after the facility visit included: - PRC Project Environmental Impact Assessment (EIA) report (2004); - EIA approval (Qingdao EPB, 2004); - Project Environmental Acceptance Approval (Qingdao EPB, 23 October 2007); - Certificate of Compliance with Standards (Qingdao EPB, covering the period January 1 2013 to November 25, 2014).

C. Project Description

1. Type

5. The Huadian CHP is an existing coal-fired facility used for district heating and electricity production in Shibei District of Qingdao City, Shandong Province, in the People’s Republic of China (PRC). It is owned by China Huadian Group and operated by the Huadian Qingdao Power Generation Co. Ltd.

2. Location

6. The Huadian CHP is located on a 45 ha site at No. 6 Xinlongyi Road, Shibei District, Qingdao City, on the eastern shores of Jiaozhou Bay (Figure 1). The area is mixed

32 TA-8625 PRC: Qingdao Smart Low-Carbon District Energy Project – Part II, Consultants (Project 48003-001).

214 commercial/industrial, though there are residential areas to the east. The CHP is bordered to the north by Yichang Road, to the west by Huanwan Boulevard and Jiaozhou Bay, to the south by the Haibo River, and to the east by a railway and some residential areas.

Figure1 : Huadian CHP location, Shibei District, Qingdao

Source: Google Maps, 2015.

Figure 2: Huadian CHP and surrounding area

Huadian CHP

Source: Google Maps, 2015 and TA Consultants.

215 Figure 3: Huadian CHP looking from the south

Source: TA Consultants.

7. Figure 4 shows an aerial view of the CHP including the boiler house building and stacks.

Figure 4: Huadian CHP layout

Coal Storage

Boiler Building Stacks

Source: Google Maps 2015 and Huadian Qingdao Power Generation Co. Ltd., 2015

3. Purpose and Capacity

8. The plant was originally built in 1935 for power generation. In 1995 there was an extension project and the current No. 1 and No. 2 power generation units were built. The

216 CHP started heat supply in 1998. No. 3 and No. 4 power generation units were built in 2005.

9. The current configuration of the CHP is:

- 1 x 300 t/h pulverized coal (PC) Low NOx steam boiler; - 2 x 400 t/h PC Low NOx steam boilers; - 1 x 108 t/h PC Low NOx steam boiler with capacity to use 550 t/h waste heat; - 4 x 300 MW turbine and generator units.

10. All boilers are equipped with selective catalytic reduction (SCR) denitrification and seawater flue-gas desulfurization (FGD), and electrostatic precipitators (ESPs) and bag houses for dust control. Flue gases are exhausted through two stacks, each 245 m high.

11. The heat capacity during the heating season (from November to April) ranges from 1500 to 600 t/h, and heat is provided to a total of 27 million m2 of building area. In the non- heating season steam is provided to local industries at a capacity of about 150 t/h.

12. Based on communication with Huadian TPP staff, the waste heat supply capacity of the TPP is sufficient to meet the needs of Qingdao Clean Energy Component 1. The Huadian TPP has 4 CHP units and after planned upgrading each CHP unit will be able to provide heat to an additional 4 million m2 building area. Currently only 1 unit has been upgraded, leaving an additional available heat supply capacity of 12 million m2. Component 1 will provide heat to 4.8 million m2 of building area, which is well within the available heat capacity of the TPP. A waste heat supply agreement between the IA and Huadian TPP will be signed soon to guarantee the supply of the required waste heat.

4. Fuel

13. Low sulpher (<0.7%) coal is primarily sourced from Shanxi province and transported by train, truck and sea. Total coal consumption for the CHP is approximately 3.5 million t/y. Coal is stored onsite.

5. Water Supply and Wastewater

14. The CHP sources production and domestic water from the municipal water system. Production water is treated by reverse osmosis. Cooling water is drawn from Jiaozhou Bay.

15. All domestic and production wastewater is treated on site and recycled, and cooling water is returned to Jiaozhou Bay:

- Domestic wastewater treatment is treated through hydrolytic acidification, biological aeration, filtration and disinfection.

- Industrial wastewater is treated through coagulation, sedimentation, clarification and filtration.

- Coal contaminated wastewater is treated through coagulation and high efficiency separation to remove suspended solids, and is then used to spray coal piles.

- The FGDs uses cooling sea water. FGD wastewater is treated through oxidation and aeration in order to raise the DO and pH and reduce COD. Then all cooling sea water is discharged into the Haibo River. The cooling water must meet the Class 4 requirements of Sea Water Quality Standard (GB 3097-1997).

16. The difference in temperature between sea water at the intake and discharge water

217 is reported to be 10oC in the summer and 20oC in the winter. In 2008 a study on impacts of the discharge of cooling water from the Huadian TPP was published in the journal China Water & Wastewater. 33 The study, undertaken by the Qingdao Research Academy of Environmental Sciences, the Qingdao Environment Monitoring Station and the Huadian TPP, monitored sea water temperature at and near the discharge point. The study showed that i) the FGD did not increase cooling water temperature; ii) the temperature rise of seawater decreased rapidly with distance away from the Haibo River mouth; iii) at 250 m from the Haibo River mouth the sea water temperature rise does not affect the requirement of fish for DO; and iv) at 500 m from the Haibo River mouth the sea water temperature rise had little effect on plankton and microorganisms.

6. Solid Wastes

17. The CHP produces approximately 1,000,000 t/year of fly and bottom ash per year. All coal combustion waste products are recycled and sold to construction companies.

18. Hazardous wastes are sent to the Qingdao Xintiandi Company for treatment and final disposal.

D. Environmental Management

1. Environmental Impact Assessment

19. The Huadian CHP is reported to be in compliance with all relevant PRC EIA requirements. An EIA was approved in 1995 for No 1 and 2 boilers, and in 2004 for No. 3 and 4 boilers. The environmental review team was provided a copy of the 2004 EIA approval.

2. Relevant Environmental Standards

20. Table 1 presents a summary of relevant emission standards for the Huadian CHP. Table 2 presents the relevant ambient air quality standards for the Huadian CHP surrounding urban area, while Table 3 presents ambient noise standards.

Table 1: Summary of Environmental Pollution Standards Applicable to the Huadian CHP.

Pollutant Limit Standards Source Stack Emissions 3 SO2 35 mg/m Table 1 in Emission Standards of Air Pollutants from NOx 50 mg/m3 Thermal Power Plant in Shandong Province (DB PM 5 mg/m3 37/664-2013). Other 1.0 mg/m3 at site Table 2 of Integrated Emission Standard of Air Fugitive PM boundary Pollutants (GB 16297-1996) Daytime Noise 65 dB(A) at site (06:00-22:00 h) boundary Class III of Emission Standard for Industrial Nighttime noise 55 dB(A) (at site Enterprises at Site Boundary (GB 12348-2008) (22:00-06:00 h) boundary)

33 “Impact of Warm Effluent from Seawater Flue Gas Desulphurization System on Sea Area Environment”. In China Water & Wastewater (Vol 24 No 14, July 2008).

218 Table 2: Applicable ambient air quality standards – Class II, Ambient Air Quality Standards (GB 3095—2012) Pollutants Annual mean (class 2) 24-hr mean (class 2) 1-hr mean (class 2) TSP 0.200 0.300 --

PM10 0.070 0.150 --

PM2.5 0.035 0.075 --

SO2 0.060 0.150 0.500

NO2 0.040 0.080 0.200

Table 3: Applicable ambient environment noise standard – Class II, Environmental Quality Standards for Noise (GB3096-2008) Item Class II Class III Daytime Noise (06:00-22:00 h) 60 dB(A) 65 dB(A) Nighttime noise (22:00-06:00 h) 50 dB(A) 55 dB(A)

3. Environmental Monitoring

21. The Huadian CHP is equipped with a continuous emissions monitoring systems (CEMS) that monitors in real time SO2, NOx, PM and air flow. Data is sent electronically to the Qingdao EPB Data Center.

22. Manual stack emissions monitoring is also undertaken on a quarterly basis by the Qingdao EPB for calibration. The company also does internal monitoring of stack emission operational parameters which are used to manage boiler operation.

23. Noise monitoring is undertaken at the site boundary on a quarterly basis.

4. Emission Controls and Compliance

24. All boilers are low NOx PC type, and are equipped with SCR denitrification, sea water and limestone FGD, and ESPs and bag houses for dust control. The facility is reported as being in full compliance with the current Emission Standard of Air Pollutants for Thermal Power Plants in Shandong Province (DB 37/ 664—2013). A Qingdao EPB Certificate of Compliance with emission standards covering the period January 1 2013 to November 25 2014 was provided to the team as evidence of compliance.

25. Staff report that quarterly noise monitoring shows that the CHP is in compliance with the relevant standard, Class III, Emission Standard for Industrial Enterprises at Site Boundary (GB 12348-2008). In addition, the above noted Qingdao EPB Certificate of Compliance also indicates CHP is in compliance with noise standards.

5. ISO Certification, Staffing and Environmental Management

26. The Huadian CHP has been third-party certified for ISO 9001 (Quality Management Systems), ISO 14001 (Environmental Management Systems) and ISO 18001 (Occupational Health and Safety).

27. The facility has a total of approximately 1,300 staff. Responsibility for environmental management rests with the Production Technology Department, and 2 of its staff work full time on environmental management. Health and safety belong to the Safety Supervision Department, and a total of 9 staff have full time health and safety responsibilities.

219 E. Conclusion

28. Based on this rapid environmental review, the Huadian CHP has undergone an appropriate EIA process and has received the necessary Environmental Acceptance by the Qingdao EPB. The facility is ISO 9001, 14001 and 18001 third-party certified.

29. The CHP has sufficient waste heat supply capacity to meet the needs of Qingdao Clean Energy Component 1, and a waste heat supply agreement between the IA and Huadian TPP will be signed soon to guarantee the supply of the required waste heat.

30. Combustion products are recycled into construction materials, and wastewater is recycled on site. Hazardous waste is treated at a certified facility.

31. The low NOx CHP boilers are equipped with SCR denitrification, limestone and seawater FGD, and ESP and bag house filters for dust control. Management reports that the CHP is in full compliance with relevant emission standards, and this has been confirmed by a Qingdao EPB certification covering 2013 and 2014.

220 Annexes

Annex 1: Former State Environmental Protection Administration Approval of EIA Report for Huadian CHP Extensions (2 x 300 MW), 2004.

Annex 2: Qingdao EPB Environmental Acceptance for Huadian CHP Extensions (2 x 300 MW), 2007.

Annex 3: Qingdao EPB Huadian CHP Emission Compliance Certification (January 1 2013 to November 25, 2014).

Annex 4: Huadian CHP 3rd party ISO certifications: ISO 9001 (Quality Management Systems), ISO 14001 (Environmental Management Systems) and ISO 18001 (Occupational Health and Safety).

Please Note:

To reduce document length and file size, Annexes have been archived. All Annexes are available on request.

221 Appendix III-B: Component 1 Linked Facility Due Diligence Environmental Review – Licun River Wastewater Treatment Plant

A. Introduction

1. This is a due diligence rapid environmental review of the Licun River Wastewater Treatment Plant (hereafter referred to as the Licun River WWTP), being conducted as part of the preparatory assistance for the development of the proposed Asian Development Bank (ADB) Qingdao Smart Low-Carbon District Energy Project (hereafter referred to as the Qingdao Clean Energy Project).

2. Component 1 of the Qingdao Clean Energy Project, the Shibei District Binhai Energy Systems (hereafter referred to as Qingdao Clean Energy Component 1), will utilize waste heat from the Licun River WWTP. The Licun River WWTP is therefore an associated facility for Qingdao Clean Energy Component 1, and as per the ADB Safeguard Policy Statement (SPS), an environmental review of the associated facility is required.

B. Environmental Review Approach

3. This report is based on a site visit, consultations with Licun River WWTP managers and technical staff, and a review of plant environmental and technical documentation. The site visit was undertaken May 6th 2015, and included the following participants:

Environmental Reviewers: Ashley Bansgrove, International Environmental Safeguards Specialist, TA-86251 Dai Lei, National Environmental Safeguards Specialist, TA-8625

Licun River WWTP: Mr. Wu, Deputy Manager, Qingdao Shouchuang Ruihai Water Co. Ltd. Ms. Gu, Qingdao Shouchuang Ruihai Water Co. Ltd.

4. Documentation reviewed during and after the facility visit included:

- Project Acceptance Memos and Approvals; - EIA Approvals; - EPB Certificates of Compliance with Emission Standards.

C. Project Description

1. Type

5. The facility is a municipal WWTP in Shibei District of Qingdao City, Shandong Province, in the People’s Republic of China (PRC). It is owned by the Qingdao Shouchuang Ruihai Water Company, which is a joint venture company between the Qingdao Water Company (60%) and the Beijing Shouchuang Group (40%).

1 TA-8625 PRC: Qingdao Smart Low-Carbon District Energy Project – Part II, Consultants (Project 48003-001).

222 2. Location

6. The Licun River WWTP is located on a 15.5 ha site at No 2 North Ruihai Road, Shibei District, Qingdao City, on the eastern shores of Jiaozhou Bay (Figure 1). The area is mixed commercial/industrial, though there are residential areas to the west. The WWTP is bordered to the north by No 1 Zhenping Road and the Licun River; to the east by the Taineng Thermal Power Plant; to the west by Huanwan Road and a residential area; and to the south by Zhenping Road and the Zongbudadao area (Figure 2).

Figure 1: Licun River WWTP location, Shibei District, Qingdao

Source: Google Maps, 2015.

Figure 2: Licun River WWTP and surrounding area

Licun River WWTP

Source: Google Maps, 2015 and TA Consultants.

223 7. Figure 3 shows an aerial view of the WWTP.

Figure 3: Licun River WWTP layout

Phase I

Phase II

Phase III (under construction)

Source: Google Maps 2015

3. Purpose and Capacity

8. The Licun River WWTP currently provides treatment of industrial and domestic wastewater to a 124 km2 urban area with a population of 800,000 (Figure 4). Its current treatment capacity is 186,000 m3/day.

Figure 4: Licun River WWTP service area

WWTP

Service Area

Source: Qingdao Shouchuang Ruihai Water Company, 2015.

224

9. Phase I was built approximately 20 years ago with the support of an ADB loan1. It became operational in 1998 and had a capacity of 80,000 m3/day. Phase II became operational in 2008 with a capacity of 90,000 m3/day, for a current design capacity of 170,000 m3/day though actual capacity in 2014 was 186,300 m3/day. Phase III and Phase II extension are currently under construction and will increase Phase II capacity by 35,000 m3/day and provide Phase III capacity of 45,000 m3/day. Once the Phase II extension and Phase III are operational in 2016 the total plant capacity will be over 250,000 m3/day.

10. All phases of the WWTP provide primary sedimentation treatment, secondary anaerobic/anoxic/oxic (A/A/O) treatment, and tertiary treatment with mechanical flocculation, sedimentation and cloth filters. Final disinfection is provided through chlorination. Treated effluent is discharged to Jiaozhou Bay.2

Figure 5: Primary settling tanks, Licun River WWTP

Source: TA Consultants.

Figure 6: Biological treatment, Licun River WWTP

Source: TA Consultants.

1 ADB (1992), Loan 1205-PRC: Qingdao Environment Improvement. Manila. 2 Qingdao’s water supply is primarily sourced from six surface water reservoirs.

225 4. Sludge

11. Dewatered sludge generation ranges from 250 to 300 m3/d. All dewatered sludge is collected and trucked by Qingdao EPB certificated companies for treatment at certified sites between 60 to 90 km from the plant. The treated sludge is used as fertilizer for municipal greening and agriculture.

D. Environmental Management

1. Environmental Impact Assessment

12. The Licun River WWTP is reported to be in compliance with all relevant PRC EIA requirements. An EIA was approved for Phase I in 1999, for Phase II in 2008, and for upgrading of treatment to meet more stringent standards in 2011.

2. Relevant Environmental Standards

13. The WWTP is required to meet the Class 1A standard from Discharge Standard Of Pollutants for Municipal Wastewater Treatment Plants (GB 18918-2002) (Table 1).

Table 1: Class 1A, Discharge Standard of Pollutants for Municipal Wastewater Treatment Plants (GB 18918-2002) No Item Unit Limit 1 COD mg/l 50 2 BOD mg/l 10 3 SS mg/l 10 4 animal and vegetable oil mg/l 1 5 Petroleum mg/l 1 6 Anionic surfactant mg/l 0.5 7 Total nitrogen mg/l 15 8 Ammonia nitrogen mg/l 5 9 Total phosphorus mg/l 0.5 10 Chromaticity 30

11 pH 6-9

12 Fecal coliforms no./l 1000

3. Environmental Monitoring and Compliance

14. The WWTP is equipped with an Qingdao EPB managed continuous emissions monitoring systems (CEMS) that monitors discharged wastewater in real time for chemical oxygen demand (COD) and ammonia nitrogen (NH3-N). Data is sent electronically to the Qingdao EPB Data Center (Figure 7).

15. In addition the Qingdao Urban Management Department has onsite automatic sampling equipment that takes a wastewater discharge sample every 2 hours (Figure 8). The samples are mixed together and then sent for analysis for COD, BOD5, SS, NH3-N, and total phosphorus.

226

Figure 7: Qingdao EPB wastewater CEMS building, Licun River WWTP

Source: TA Consultants.

Figure 8: Qingdao Urban Management Department automatic wastewater sampling building, Licun River WWTP

Source: TA Consultants.

16. The Qingdao Urban Management Department requires 96% compliance with the wastewater standard over a year. Staff reported that in 2014 the Licun River WWTP only exceeded the standard one day for one parameter (fecal coliforms) and was therefore in compliance 99.7% of the time.

17. Staff reported that according to the EPB CEMS, the WWTP was 100% in compliance in 2014. Staff also provided EPB Certificates of Compliance that demonstrated the WWTP’s

227 compliance with standards for the periods January 2010 to May 2013, and January 2014 to April 2015.

E. Conclusion

18. Based on this rapid environmental review, the Licun River WWTP has undergone an appropriate EIA process and has received the necessary Environmental Acceptance by the Qingdao EPB. Staff reports that the WWTP is in full compliance with relevant wastewater emission standards, and this has been confirmed by Qingdao EPB certifications.

228 Annexes

Project Acceptance Meeting Memo, Phase I, 1999

Project Environmental Acceptance Approval, Phase II (Qingdao EPB, December 2008)

Treatment Technology Transformation (Upgrading) Project (Phase I and II) EIA approval (Qingdao EPB, November 2011)

Certificate of Compliance with Standards (Qingdao EPB, covering the period Jan 2010 to May 2013)

Certificate of Compliance with Standards (Qingdao EPB, covering the period Jan 2014 to April 2015)

Please Note:

To reduce document length and file size, Annexes have been archived. All Annexes are available on request.

229 Appendix III-C: Component 1 Existing Related Facility Due Diligence Environmental Review and Assessment – Taineng Thermal Power Plant

A. Introduction

1. This is a due diligence environmental audit of the Qingdao Energy Taineng Thermal Power Plant (hereafter referred to as the Taineng TPP), being conducted as part of the preparatory assistance for the development of the proposed Asian Development Bank (ADB) Qingdao Smart Low-Carbon District Energy Project (hereafter referred to as the Qingdao Clean Energy Project).

2. Component 1 of the Qingdao Clean Energy Project, the Shibei District Binhai Energy Systems (hereafter referred to as Qingdao Clean Energy Component 1), will be located within the premises of the Taineng TPP. The Taineng TPP is therefore an existing facility for Qingdao Clean Energy Component 1, and as per the ADB Safeguard Policy Statement (SPS), an environmental audit of the existing facility is required.

B. Environmental Audit Approach

3. This report is based on a site visit, consultations with Taineng TPP managers and technical staff, and a review of plant environmental and technical documentation. The site visit was undertaken May 6th 2015, and included the following participants:

Environmental Auditors: Ashley Bansgrove, International Environmental Safeguards Specialist, TA-86251 Dai Lei, National Environmental Safeguards Specialist, TA-8625

Taineng Thermal Power Plant: Yang Jining, Qingdao Energy Taineng Thermal Power Co. Ltd. Guan Jingfeng, Qingdao Energy Taineng Thermal Power Co. Ltd. Li Wenda, Qingdao Energy Taineng Thermal Power Co. Ltd. Zhang Yongji, Qingdao Energy Taineng Thermal Power Co. Ltd. An Guolin, Qingdao Energy Taineng Thermal Power Co. Ltd. Li Wanlei, Qingdao Energy Taineng Thermal Power Co. Ltd. Xu Shiping, Qingdao Energy Taineng Thermal Power Co. Ltd. Chen Ming, Qingdao Energy Taineng Thermal Power Co. Ltd. Zhang Qingxin, Qingdao Energy Taineng Thermal Power Co. Ltd.

4. Documentation reviewed during and after the facility visit included:

- PRC Project Environmental Impact Assessment (EIA) reports; - EIA approvals (Former State Environmental Protection Administration and Qingdao Environmental Protection Bureau (EPB)); - Project Environmental Acceptance Approvals (Qingdao EPB); - Continuous emissions monitoring system (CEMS) outputs; - 3rd party stack emission monitoring reports; - 3rd party noise monitoring reports; - 3rd party fugitive dust monitoring reports; - 3rd party ISO Certifications; - Health and Safety regulations; and, - Environment and Quality and Management System (EQMS) manuals.

1 TA-8625 PRC: Qingdao Smart Low-Carbon District Energy Project – Part II, Consultants (Project 48003-001).

230 C. Project Description

1. Type

5. The Taineng TPP is an existing coal-fired TPP used for district heating and electricity production in Shibei District of Qingdao City, Shandong Province, in the People’s Republic of China (PRC).2 It is owned and operated by the Qingdao Energy Taineng Thermal Power Co. Ltd., which is part of the Qingdao Taineng Gas Group Co. Ltd., one of three companies that collectively form the Qingdao Energy Group.

2. Location

6. The Taineng TPP is located on a 27 ha site at No 1 Zheping Road, Shibei District, Qingdao City, on the eastern shores of Jiaozhou Bay (Figure 1). The area is predominantly commercial/industrial, though there are some residential areas to the west and southeast. The TPP is bordered to the north by No 1 Zhenping Road and the mouth of the Licun River; to the west by the Licun River Wastewater Treatment Plant (WWTP) and Huanwan Road, with a residential area to the west of Huanwan Road; to the south by Zhenping Road, the Jiao-Ji Railway and the Zongbudadao area; and to the east by a commercial area and then Zhenping Road and the Jiao-Ji Railway (Figure 2 and Figure 3). There is small airport 2.5 km to the northeast, and Qingdao Liuting International Airport is 10.5 km to the north.

Figure1: Taineng TPP Location, Shibei District, Qingdao

Source: Google Maps, 2015.

2 It is thus technically a combined heat and power (CHP) plant. However, it is commonly referred to as a TPP, as its gas turbine capacity is quite small, and its primary purpose is district heating.

231 Figure 2: Taineng TPP and Surrounding Area

Licun River

Licun River WWTP

Taineng TPP

Road and Railway

Source: Google Maps, 2015 and TA Consultants.

Figure 3: Taineng TPP looking from the north

Source: TA Consultants.

7. Figure 4shows an aerial view of the TPP including the boiler house building and stacks. Component 1 of the Qingdao Clean Energy Project will be located in a triangular shaped area on the northwestern corner of the TPP site in an area previously used for temporary coal and ash storage (Figure 5).

232 Figure 4: Taineng TPP Layout Showing ADB Component Site

ADB Component Location

Boiler Building

Stacks

Source: Google Maps 2015 and Qingdao Energy Taineng Thermal Power Co. Ltd., 2015

Figure 5: ADB Component 1 site at Taineng TPP

Source: TA Consultants.

3. Purpose and Capacity

8. The Taineng TPP was originally constructed in 1986 as coal gasification plant. In 1996 with the support of an ADB loan it was converted to a coal-fired TPP, though it didn’t started to provide heat until 2000.

9. Before 2011, in the non-heating season the Taineng TPP provide steam and power to

233 clients. After 2011, in the non-heating season all boilers were closed and steam clients used gas instead. Its primary purpose now is provision of district heating during the winter heating season.

10. The TPP provides heat to 8 million m2 of commercial and residential building space in a heating district to the south of the plant (Figure 6), which is expected to increase to 22 million m2 by 2020. The heating network currently has 100 Heat Exchange Stations (HESs), 105 km of primary heating pipeline and 339 km of secondary pipeline.

Figure 6: Heating area of Taineng TPP

Taineng TPP

Heating Area Boundary

Source: Qingdao Energy Taineng Thermal Power Co. Ltd., 2015

4. Boiler Type, Emission Controls and Stacks

11. The TPP currently is equipped with:

- 2 x 130 t/h circulating fluidized bed (CFB) steam boilers; - 1 x 130 t/h Low NOx pulverized coal (PC) steam boiler; - 2 x 70 MW natural circulation corner-tube hot water boilers; and - 24 MW of turbine capacity connected to the 2x130 t/h CFB boilers and 1x130 t/h PC boiler.

12. Design parameters for the boilers and turbines are presented in Table 1.

13. The two 130 t/h CFB steam/hot water boilers are equipped with SNCR denitrification, and will be upgraded to Low NOx burners by November 2015. Both boilers are also equipped with wet magnesium oxide (MgO) flue gas desulfurization (FGD) scrubbers for SO2 removal, and electrostatic precipitators (ESPs) to control fly ash.

234 Table 1: Design Parameters, Taineng TPP Main Equipment Item Value

2 x 130 t/h CFB boilers

Type CG130-5.30/450 Rated evaporation 130 t/h Rated steam pressure 5.30 MPa Rated steam temperature 450℃ Feedwater temperature 150℃ Exhaust air temperature 142℃ Design thermal efficiency: 88.50％ Desulfurization efficiency 80％ Coal consumption 19.77 t/h Limestone consumption 1.45 t/h

2 x 70 MW stand-by corner tube hot water boilers

Type DHL70-1.6/130/70-AII, coal corner tube Pollution control ESP, MgO FGD scrubbers

1 x 130 t/h PC boiler

Type CG130/5.30 MX Rated evaporation 130 t/h Maximum continuous load 150 t/h Steam temperature at outlet of superheater 450℃ Water temperature at inlet of coal economizer 130℃ Exhaust air temperature (maximum continuous load) ≤145 Thermal efficiency 90% Coal consumption 18.4 t/h Exhaust air flow 155682 Nm3/h NO2 emission concentration 600 mg/Nm3

Turbines

1 x 3 MW Extraction back-pressure turbine 1 x 3 MW Back-pressure turbine 1 x 12 MW Extraction condensing turbine 1 x 6 MW Back-pressure turbine Source: Qingdao Energy Taineng Thermal Power Co. Ltd., 2015

Figure 7: Taineng TPP Electrostatic Precipitator

Source: TA Consultants.

235 14. The third 130 t/h boiler was converted in 2013 from a PC burner to a PC Low NOx burner, and is in the process of being equipped with a selective catalytic reduction (SCR) system which is expected to be operational by November 2015. It is also equipped with wet MgO FGD scrubbers for SO2 removal, and ESP to control fly ash.

15. The two 70 MW small corner-tube hot water boilers were added in 2011, replacing three existing small 35 t/h CFB steam boilers. The corner-tube hot water boilers are also equipped with wet MgO FGD scrubbers for SO2 removal, and ESPs to control fly ash, and will be equipped with SCR denitrification before the next heating season. These are stand-by boilers, and in the 2015 heating season were only used for two days for operating permit purposes.

16. There are two stacks on the facility, an 84 m stack being used to exhaust flue gases from the two 70 MW corner-tube hot water boilers, and a 90 m stack used for the two 130 t/h CFB boilers and the 130 t/h PC boiler. Both stacks have a diameter of 4.76 m. Given the proximity of the airports, the Qingdao EPB limited stack height to a maximum of 90 m.

Figure 8: Taineng TPP Wet FGD

Source: TA Consultants.

Figure 9: Taineng TPP 84 m stack

Source: TA Consultants.

236 5. Fuel

17. Coal is primarily sourced from Shanxi province and transported to Qinhuangdao in Hebei province by train, and then shipped to Qingdao. Coal is also sourced from Weifang in Shandong province, though on a more limited basis. Coal characteristics are presented in Table 2. Total annual coal consumption for the plant was 160,000 tons in 2014.

Table 2: Coal Characteristics 2 x 130 t/h CFB 1 x 130 t/h PC Indicator Boilers / 2 x 70 MW Steam Boilers Corner Tube Boilers Heat Value (K cal/kg) 5300-6000 5000-5500 Moisture (%) ≤10 ≤10 Sulphur content (%) ≤0.8 ≤0.8 Vdaf (%) 18-23 ≥28 Ash Fusion Temperature (℃) ＞1300 ＞1300 Grindability Index ＞1.5 -- Source: Qingdao Energy Taineng Thermal Power Co. Ltd., 2015

18. Coal is stored onsite both in a storage building and outside. Coal stored outside is chemically treated to prevent fugitive dust emissions using non-hazardous biodegradable alkyl alcohol and starch based wetting agents.

Figure 10: Taineng TPP Coal Storage Shed

Source: TA Consultants.

237 6. Water Supply and Wastewater

19. The TPP sources production and domestic water from the municipal water system. Production water is treated by reverse osmosis and mixed bed ion exchange. Total annual water consumption is 400,000 to 450,000 m3.

20. Domestic wastewater is discharged to the municipal sewer and treated at the adjacent Licun River WWTP. Part of the production wastewater from boilers and the cooling system is recycled as make-up water for the heat supply system and the remainder is discharged to municipal sewer and treated at the Licun River WWTP. The discharged wastewater must comply with Wastewater Quality Standards for Discharge to Municipal Sewers (CJ 343-2010) (see Table 11).

7. Solid Wastes

21. The TPP produces approximately 34,400 t/year of fly and bottom ash, 8,600 t/year of coal slag, and 2000 t/year of FGD slag. All coal combustion waste products are recycled and are sold to an onsite construction company belonging to the Qingdao Energy Taineng Thermal Power Company and used in the production of bricks and other construction materials. When construction begins on the ADB Component the onsite construction company will be closed and all coal combustion waste products will sold to offsite construction companies for recycling.

22. Hazardous wastes, such as waste thermal insulation, are sent to the Qingdao Xintiandi Company for treatment and final disposal. It is understood that this is the only Qingdao EPB certified hazardous waste treatment facility in the area.

D. Environmental Management

1. Environmental Impact Assessment

23. The Taineng TPP is in compliance with all relevant PRC EIA requirements. The environmental assessment process has been an ongoing one as the plant has been expanded and upgraded, as summarized in Table 3. The audit team were shown copies of the EIA Approval and Environmental Acceptance documents (see Annexes 1 to 4).

2. Relevant Environmental Standards

24. Table 4 and Table 5 present a summary of relevant emission standards for the Taineng TPP.

238 Table 3: Summary of Taineng EIA Approval Process EIA Date Approved By Whom Approval conditions EIA approval of Phase I Taineng July 16, 1992 Former State 1. Control wastewater Thermal Power Project (covered Environmental quantity discharged Phase II Coal Gasification Protection 2. Heat supply pipe should Project) Administration be constructed simultaneously with heat supply project EIA Report of Phase II Taineng December 9, Qingdao EPB 1. install CEMS and ESP for Thermal Power Project (covered 2001 new boiler 3 x 35 t/h existing CFB boilers 2. total quantity control and 2 x 130 t/h newly built CFB requirements should be boilers) meet EIA of Subsequent Project of June 26, 2008 Qingdao EPB 1. Control dust of coal Phase II Taineng Thermal Power storage and coal slag rooms. Project (covered 3 x 35 t/h 2. Install CEMS for SO2 and existing CFB boilers, 2 x 130 t/h PM monitoring existing CFB boilers, and 1 x 130 t/h newly built PC boiler) EIA of Extension Project of May 3, 2011 Qingdao EPB 1. Denitrification project Taineng Thermal Power Plant should be put into agenda to (covers demolition of 3 x 35 t/h meet the standard in the existing CFB, 2 x 130 t/h existing future. CFB boilers, 1 x 130 t/h existing PC boiler, and 2 x 70 MW new hot water boilers) Source: TA Consultants based on EIA Approvals

Table 4: Summary of Environmental Pollution Standards Applicable to the Taineng TPP Pollutant Limit Standards Source Stack Emissions Table 2 in Emission Standards of Air Pollutants from 3 SO2 100 mg/m Thermal Power Plant in Shandong Province (DB 37/664- 2013). Table 1 in Emission Standards of Air Pollutants from 3 NOx 100 mg/m Thermal Power Plant in Shandong Province (DB 37/664- 2013). Note: the standard for NOx is 200 mg/m3 for CFB boilers, and 100 mg/m3 for all other boilers. When more 3 PM 20 mg/m than one type of boiler exhausts to a stack, the lower emission standard applies. 1.0 mg/m3 at site Table 2 of Integrated Emission Standard of Air Pollutants Fugitive PM boundary (GB 16297-1996) Noise Daytime Noise 65 dB(A) at site (06:00-22:00 h) boundary Class III Emission Standard for Industrial Enterprises at Nighttime noise 55 dB(A) (at site Site Boundary (GB 12348-2008) (22:00-06:00 h) boundary) Wastewater At discharge point Class A of Wastewater Quality Standards for Discharge to to municipal waste Municipal Sewers (CJ 343—2010), see Table 11, below. water system. Note: the provincial standard (Emission Standards of Air Pollutants from Thermal Power Plant in Shandong Province (DB 37/664-2013)) is more stringent than the relevant national standard (Emission Standards of Air Pollutants from Coal-Burning, Oil-Burning and Gas-Fired Boilers (GB 13271-2014)), and is therefore the applicable standard.

239 Table 5: PRC Wastewater Quality Standards for Discharge to Municipal Sewers (Class A, CJ 343-2010) Maximum acceptable concentration No Pollutant mg/L (except pH) 1 pH 6.5-9.5 2 SS 400 3 COD 500 4 Ammonia nitrogen 45 5 BOD 300 6 Total nitrogen 70 7 Total phosphorus 8

25. Table 6 presents the relevant ambient air quality standards for the Taineng TPP surrounding urban area, while Table 7 presents ambient noise standards. There is no applicable surface water quality standard as all wastewater from the TPP is discharged to the municipal sewer.

Table 6: Applicable ambient air quality standards – Class II, Ambient Air Quality Standards (GB 3095—2012) Annual mean (class 2) 24-hr mean (class 2) 1-hr mean (class 2) Pollutants mg/m3 mg/m3 mg/m3 TSP 0.200 0.300 --

PM10 0.070 0.150 --

PM2.5 0.035 0.075 --

SO2 0.060 0.150 0.500

NO2 0.040 0.080 0.200

Table 7: Applicable ambient environment noise standard – Class III, Environmental Quality Standards for Noise (GB3096-2008) Item Class II Class III Daytime Noise (06:00-22:00 h) 60 dB(A) 65 dB(A) Nighttime noise (22:00-06:00 h) 50 dB(A) 55 dB(A) Note: according to Regional Division of Qingdao Urban Area Environmental Noise Quality (implemented from September 1, 2012 by Qingdao EPB), Taineng TPP areas is classified as Class II.

3. Environmental Monitoring

26. The Taineng TPP is equipped with a continuous emissions monitoring systems (CEMS) that monitors in real time SO2, NOx, PM and air flow. Data is sent electronically to the Qingdao EPB Data Center. The Qingdao EPB monitors daily average concentrations, and staff indicate that the EPB can be on site within as little as 1 hour if the CEMS indicates serious noncompliance. Prior to 2014 the data was sent to the National Ministry of Environmental Protection Data Center. Third party stack monitoring is also undertaken. Noise and fugitive dust is also monitored on a quarterly basis, as is wastewater quality.

27. Annex 5 presents monitoring reports, including FGD and ESP monitoring, 3rd party

240 stack emissions monitoring, and hourly CEMS data for the January in the 2015 heating season.

4. Emission Controls

28. The TPP is currently being upgraded in so as to meet the recent more stringent provincial emission standards.

 The two 130 t/h CFB boilers had previously been equipped with SNCR denitrification systems, but as they cannot meet the current NOx standard of 100 mg/m3, they will be upgraded to Low NOx burners by November 2015. Although the standard for CFB boilers is 200 mg/m3, as they exhaust out of the 90 m stack also used by the PC boiler, stack emissions must meet the lower standard of 100 mg/m3. The tender for the upgrading has already been released, and compliance with the NOx standard is a requirement. Staff are confident that as a result of the upgrade NOx emission levels will be less than 100 mg/m3 and in compliance with the provincial standard. Both boilers are also equipped with magnesium oxide (MgO) based wet flue-gas desulfurization (FGD) scrubbers for SO2 removal, and electrostatic precipitators (ESPs) to control fly ash.

 The two small corner-tube hot water boilers are equipped with wet MgO FGD scrubbers for SO2 removal, and ESPs to control fly ash. It is understood that they will also be upgraded to include denitrification for the 2015/16 heating season, which should put them in compliance with the NOx provincial standard.

 The third 130 t/h PC boiler currently does not have a denitrification system and it is understood that despite being considered a Low NOx burner, its emissions also do not meet the relevant standard for NOx of 100 mg/m3. However it is currently being equipped with a SCR system which will be operational by November 2015. The tender for the upgrading has already been released, and compliance with the NOx standard is a requirement. Staff are confident that as a result of the upgrade NOx emission levels will be less than 100 mg/m3 and in compliance with the standard. The boiler is also equipped with MgO based wet FGD scrubbers for SO2 removal, and ESPs to control fly ash.

5. Compliance

29. It is understood from Taineng TPP staff that when it became operational the TPP was in compliance with relevant emission standards (e.g. the SO2 emission standard in the 1990s is reported as being 1200 mg/m3). The current Emission Standard of Air Pollutants for Thermal Power Plants in Shandong Province (DB 37/ 664-2013) is much stricter.

30. Third party monitoring reports given to the auditors indicate FGD and ESP were showing 95% reduction of SO2 and PM, respectively for the 70 MW hot water boilers, and that while the TPP was in compliance with SO2 and dust in the 2013/14 heating season, the NOx standard was being exceeded.

31. Annex 5 presents recent CEMS data from January 2015. Table 8 presents a summary of average daily one hour CEMS concentrations for SO2, NOx and PM for January 2015, while Figure 11 and Figure 13 graphically presents the results. The CEMS is reported to be old and will be replaced for the upcoming heating season.

241 Table 8: Daily averages of one hour CEMS Data, 90 m Stack for the 2 x 130 t/h CFB boilers and 1 x 130 t/h PC boiler, Taineng TPP, 01-31 Jan 2015 SO2 SO2 NOx NOx PM PM Air Flow Date and Time concentration emission concentration emission concentration emission O2 (%) 3 3 3 3 (m /h) g/Nm (kg/h) mg/Nm (kg/h) (mg/ Nm ) (kg) Standard 3 3 3 100 mg/Nm 100 mg/Nm 20 mg/Nm DB 37/ 664-2013 01/01/2015 95.5 22.5 394.9 93.0 18.6 4.4 9.0 294,786.29 02/01/2015 107.7 25.3 385.3 90.2 19.0 4.5 8.9 289,893.20 03/01/2015 77.6 16.9 376.1 81.4 17.9 3.9 9.0 269,635.56 04/01/2015 78.3 16.5 365.7 76.9 17.3 3.6 8.6 251,199.86 05/01/2015 72.9 14.7 357.6 72.4 19.0 3.8 9.2 256,654.36 06/01/2015 57.4 13.3 253.9 58.5 15.9 3.7 6.9 222,813.53 07/01/2015 66.3 15.5 343.1 79.6 19.1 4.4 9.0 289,517.48 08/01/2015 67.3 16.0 346.9 82.1 19.2 4.5 9.0 294,527.54 09/01/2015 68.7 15.5 342.2 77.4 19.3 4.4 9.3 288,196.31 10/01/2015 77.0 17.1 375.8 83.5 19.8 4.4 9.2 280,816.26 11/01/2015 48.9 11.0 402.4 90.7 18.0 4.1 9.5 293,400.24 12/01/2015 66.3 15.5 343.1 79.6 19.1 4.4 9.0 289,517.48 13/01/2015 61.0 14.4 407.0 96.1 18.8 4.5 9.0 294,389.66 14/01/2015 68.6 15.4 383.4 85.9 19.3 4.3 9.4 289,062.41 15/01/2015 50.4 11.3 386.1 86.3 18.2 4.0 9.3 284,770.45 16/01/2015 52.0 11.7 382.7 85.9 18.3 4.1 9.2 283,083.22 17/01/2015 62.0 14.7 390.5 93.1 18.9 4.5 9.1 299,633.86 18/01/2015 49.8 10.7 263.5 57.0 18.1 3.9 9.3 272,319.68 19/01/2015 45.4 8.7 233.0 45.0 17.8 3.4 11.0 283,871.52 20/01/2015 49.0 10.7 263.5 57.0 18.1 3.9 9.3 272,319.68 21/01/2015 95.0 19.7 289.1 58.4 19.3 3.8 10.2 272,916.25 22/01/2015 112.8 23.0 290.5 58.6 19.2 3.8 10.4 280,147.74 23/01/2015 130.8 24.4 242.6 45.4 19.9 3.6 10.9 270,765.76 24/01/2015 136.8 27.3 301.4 60.4 20.1 4.0 10.2 275,555.38 25/01/2015 87.1 17.2 293.6 58.6 18.3 3.6 10.2 270,923.49 26/01/2015 105.0 21.3 250.0 50.9 18.9 3.7 10.6 281,008.66 27/01/2015 140.7 33.6 427.9 102.6 20.3 4.8 9.0 298,854.28 28/01/2015 80.7 19.6 422.1 102.0 18.0 4.3 8.9 299,145.88 29/01/2015 62.3 14.4 285.9 66.3 13.0 3.0 6.4 205,909.06 30/01/2015 106.8 26.1 399.1 97.6 19.0 4.6 8.7 297,602.28 31/01/2015 114.3 28.7 406.7 102.1 19.3 4.8 8.9 310,123.87 AVERAGE 80.46 17.83 342.11 76.60 18.55 4.1 9.24 279,463.27 Source: 2015 CEMS Data, Qingdao EPB.

Figure 11: Daily average of one-hour SO2 stack concentrations, Taineng TPP 160.0

140.0

120.0

100.0

80.0 SO2 mg/Nm3 Standard 60.0

40.0

20.0

- 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31

Source: 2015 CEMS Data, Qingdao EPB.

242 Figure 12: Daily average of one-hour NOx stack concentrations, Taineng TPP 450.0

400.0

350.0

300.0

250.0 NOx 200.0 Standard 150.0

100.0

50.0

- 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31

Source: 2015 CEMS Data, Qingdao EPB.

Figure 13: Daily average of one-hour PM stack concentrations, Taineng TPP 25.0

20.0

15.0 PM

10.0 Standard

5.0

- 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31

Source: 2015 CEMS Data, Qingdao EPB.

32. An analysis of the CEMS data indicates the following:

 Over the month average one-hour SO2 emission concentrations were 80.46 mg/Nm3 which is in compliance with the standard. However there were a number of hourly exceedances, and there were also a number of days when daily average of one-hour concentrations exceeded the standard. The Taineng TPP management reports that the Qingdao EPB will visit the site in case of serious non-compliance. They also report that given the existing FGD systems, the most likely reason for the exceedances is that the SO2 meter is old, and its detection range, which is 0-4000 mg/Nm3, is suitable for much higher pollution levels. A new SO2 meter will be in place for the next heating

243 season.

 With respect to NOx, average hourly emissions were 350% higher than the standard. It is understood that Qingdao EPB has required the plant to upgrade to provide denitrification, and as described above this process is ongoing.

 With respect to PM, CEMS data indicates that the Taineng TPP is almost fully compliance, though there were several days when there was very slight exceedances. This can likely be addressed through improved ESP operation.

33. Noise monitoring is undertaken on a quarterly basis. Staff report that the TPP is in compliance with the relevant standards (Emission Standard for Industrial Enterprises at Site Boundary (GB 12348-2008) Class 3: 65 dB(A) from 06-22 h, and 55 dB(A) from 22-06 h), and that no noise complaints have been received.

34. Wastewater is monitored on a quarterly basis (to be confirmed). Discharged wastewater must comply with Wastewater Quality Standards for Discharge to Municipal Sewers (CJ 343-2010).

35. Fugitive dust is monitored on a (to be confirmed). Fugitive dust must comply with Integrated Emission Standard of Air Pollutants (GB 16297-1996).

6. ISO Certification, Staffing and Environmental Management

36. The Taineng TPP has been third-party certified for ISO 9001 (Quality Management Systems), ISO 14001 (Environmental Management Systems) and ISO 18001 (Occupational Health and Safety).

37. The facility has a total of 240 staff. Environmental, health and safety (EHS) responsibilities are assigned to the Environment and Safety Department, which has a staff of 4 and includes an environment engineer and a safety engineer (Figure 14).

Figure 14: Corporate Structure, Qingdao Energy Taineng Thermal Power Co. Ltd.

Corporate Management Team

Equipment Environ- Pipe Customer Thermal Production and ment and Network Manage- Power Plant Office Technology Material Safety Manage- ment Sub- Operations Dept. Dept. Dept. ment Sub- company Dept. company

Source: Qingdao Energy Taineng Thermal Power Co. Ltd., 2015. Note: The Qingdao Energy Taineng Thermal Power Co. Ltd., is part of the Qingdao Taineng Gas Group Co. Ltd., one of three companies that collectively form the Qingdao Energy Group.

38. The Taineng TPP has an Environment and Quality Management System (EQMS). A copy of the latest EQMS manual (2015) was shown to the audit team. The EQMS system includes:

244 Environment Targets:  Reduce consumption of water, power and coal;  Comply with relevant pollutant emission standards;  Comply with relevant boundary noise standard;  Eliminate dust pollution to surrounding urban area and no dust related public complaints;  Collect and dispose solid waste; and  Implement environment indicators for all departments.

Responsibility  The Qingdao Energy Taineng Thermal Power Co. Ltd. has primary responsibility for TPP environmental management, capacity building, operation and control, emergency preparation and response, monitoring, compliance assessment, prevention and corrective measures, and communication and outreach.

Procedural Documentation The EQMS manual refers to a series of procedural control documents for environmental management that the TPP must comply with, including:  Identification and assessment of environmental factors;  Acquisition and update of laws, regulations and other requirements;  Environment policies, targets, indicators and environment management programs;  Human resources;  Information communication;  Documentation;  Operation;  Wastewater emission management;  Energy and resources;  Environmental monitoring and monitoring equipment;  Compliance assessment;  Emergency preparation and response;  Occupational health and safety; and  Prevention and corrective measures.

Updating  The EQMS is annually reviewed by a qualified third party and updated as required.

7. Health and Safety

Safety Management Regulation

39. Safety is implemented and controlled through a Taineng TPP safety management regulation (Taineng TPP SMR), prepared according to relevant national, provincial and local laws and regulations. During the site visit the current Taineng TPP SMR (2015) was provided to the audit team for review.

40. The Taineng TPP SMR establishes a safety and fire protection committee, structures safety and fire protection system and safety supervision system, and assigns targets and responsibilities. The main contents of the SMR are listed below:

 Safety management system;  Safety and fire protection responsibility;

245  Safety management content;  Check and rectification of potential dangers;  Safety education for staff;  Special operation training management;  Report and treatment procedures for accidents ;  Personal protection equipment management; and  Safety production expenses management.

41. The SMR appendices include the organizational structure of the safety and fire protection system and the safety supervision system, special operation permit, fire protection equipment safety check record table, rectification notice for potential dangers, safety check list, safety check record table, fire drills (minimum of 1 per year), safety and fire protection training, and distribution standard for personal protection equipment.

42. According to Taineng TPP management, the SMR is reviewed and updated periodically. Management also report that there have been no safety related accidents in the past three years.

Occupational Health Management Regulation

43. Occupational health is implemented and controlled through a Taineng TPP occupational health management regulation (Taineng TPP OHMR), prepared according to relevant national, provincial and local laws and regulations. During the site visit the current Taineng TPP OHMR (2012) was provided to the audit team for review.

44. The OHMR focuses on occupational health and safety and occupational disease prevention and control. The main contents of the OHMR are listed below:

 Responsibilities of relevant departments;  Management of occupational hazardous factors;  Operation and management of occupational hazard factors protection facilities;  Personal protection equipment management;  Occupational hazardous factors monitoring;  Management of occupational hazardous factors monitoring points;  Environment assessment of work place;  Notice of occupational hazardous factors;  Occupational hazardous factors control and prevention;  Emergency plan for occupational hazard accident;  Propaganda and education;  Noise standard and noise control;  High-temperature control.

45. During the site visit other documents such as personal protection equipment management records, occupational hazardous workplace records (including working procedures, worker numbers, hazardous substances, responsible persons, and work environment inspection records), training and education records, etc., were also shown to the audit team.

46. According to management the Taineng TPP OHMR is reviewed and updated periodically. Management also report that there have been no occupational health related accidents in the past three years.

246 E. Conclusion

47. The Taineng TPP has undergone an appropriate environmental impact assessment process and has received the necessary Environmental Acceptance by the Qingdao EPB. The facility is ISO 9001, 14001 and 18001 third-party certified, and there are environmental, health and safety polices and systems in place.

48. Combustion products are recycled into construction materials, and wastewater is either recycled or treated at the local municipal WWTP. Hazardous waste is treated at a certified facility.

49. The TPP boilers and SO2 and dust emission control systems have been regularly upgraded to keep pace with more stringent emission standards. CEMS data indicates that while January 2015 average one-hour SO2 emission concentrations were in compliance with the standard, there were a number of hourly exceedances, and there were also a number of days when daily average of one-hour concentrations exceeded the standard. Given the existing FGD systems, a reasonable explanation for exceedances is that the SO2 meter is old, and its detection range, which is 0-4000 mg/Nm3, is suitable for much higher pollution levels. A new SO2 meter will be in place for the next heating season.

50. With respect to NOx, average hourly emissions were 350% higher than the standard, and this is the most significant issue identified in the audit. Boilers are in the process of being converted to Low NOx and/or being equipped with denitrification for the 2015/16 heating season, and in principle this should ensure the TPP’s compliance with the current NOx emissions standards. Thus, it appears that although non-compliance with NOx standards has been a serious issue, appropriate action has been taken to address the problem.

51. With respect to PM, CEMS data indicates that the Taineng TPP is almost fully compliant, though there were several days when there were very slight exceedances. This can likely be addressed through improved ESP operation. The Taineng TPP is taking appropriate action to address the above noted issues and also allocated budget of 17 million CNY (2.74 million USD). To understand that these measures are effective, the progress and results shall be included in the environmental monitoring reports.

247 Annexes

Annex 1a: Former State Environmental Protection Administration Approval, EIA Report of Phase I Thermal Power Project (Phase II Coal Gasification Project), 1992

Annex 1b: Former State Environmental Protection Administration Environmental Acceptance of Phase I Thermal Power Project (Phase II Coal Gasification Project), 1992

Annex 2a: Excerpt (including executive summary) EIA Report of Phase II Thermal Power Project

Annex 2b: Qingdao EPB Approval of EIA Report of Phase II Thermal Power Project

Annex 2c: Excerpt of Qingdao EPB Environmental Acceptance of Phase II Thermal Power Project

Annex 3: Qingdao EPB Approval of EIA of Subsequent Project of Phase II Thermal Power Project

Annex 4: Qingdao EPB Approval of EIA of Extension Project of Taineng Thermal Power Plant

Annex 5 – Environmental Monitoring Reports

Annex 5a – 70 MW hot Water Boiler FGD Monitoring Report (2012), showing 95% SO2 reduction

Annex 5b – 70 MW hot Water Boiler ESP Monitoring Report (2013), showing 95% PM reduction

Annex 5c – 3rd party stack emissions monitoring showing compliance with standards at that time (March 2012)

Annex 5d – 3rd party stack emissions monitoring showing compliance with standards at that time (March 2012)

Annex 5e: Hourly CEMS Data, 90 m Stack for the 2 x 130 t/h CFB boilers and 1 x 130 t/h PC boiler, Taineng TPP, 01 Jan 2015 - 08 Feb 2015

Annex 6: Taineng TPP Environment and Quality Management System (Taineng TPP EQMS) Manual (cover)

Please Note:

To reduce document length and file size, Annexes have been archived. All Annexes are available on request.

248 Appendix III-D: Component 2 Existing Related Facility Due Diligence Environmental Reiew and Assessment – Houhai Thermal Power Plant

A. Introduction

1. This is a due diligence environmental audit of the Qingdao Houhai Thermal Power Plant (hereafter referred to as the Houhai TPP), being conducted as part of the preparatory assistance for the development of the proposed Asian Development Bank (ADB) Qingdao Smart Low-Carbon District Energy Project (hereafter referred to as the Qingdao Clean Energy Project).

2. Component 2 of the Qingdao Clean Energy Project, the Licang District Houhai Energy Systems Component (hereafter referred to as Qingdao Clean Energy Component 2) will be located within the premises of the Houhai TPP. The Houhai TPP is therefore an existing facility for Qingdao Clean Energy Component 2, and as per the ADB Safeguard Policy Statement (SPS), an environmental audit of the existing facility is required.

B. Environmental Audit Approach

3. This report is based on a facility visit, consultations with Houhai TPP managers and technical staff, and a review of plant environmental and technical documentation. The site visit was undertaken May 7th 2015, and included the following participants:

Environmental Auditors: Ashley Bansgrove, International Environmental Safeguards Specialist, TA-86251 Dai Lei, National Environmental Safeguards Specialist, TA-8625

Houhai Thermal Power Plant:

Qingdao Energy Kaiyuan Group: Wang Shuli, Director of New Energy Office Song Tao, Deputy Director of New Energy Office Wan Weina, Engineer of New Energy Office

Qingdao Houhai Thermal Power Co. Ltd. Wang Zhong, Deputy Manager Zhang Lei, Environment Protection Engineer

4. Documentation reviewed during and after the facility visit included:

- PRC Project Environmental Impact Assessment (EIA) reports; - EIA approvals (Qingdao and Licang Districts Environmental Protection Bureaus (EPBs)); - Project Environmental Acceptance Approvals (Qingdao and Licang Districts EPBs); - Continuous emissions monitoring system (CEMS) outputs; - 3rd party stack emission monitoring reports; - 3rd party noise monitoring reports; - 3rd party fugitive dust monitoring reports; - 3rd party ISO Certifications; - Environment and Quality and Management System (EQMS) manuals; and - Health and safety assessment reports.

1 TA-8625 PRC: Qingdao Smart Low-Carbon District Energy Project – Part II, Consultants (Project 48003-001).

249 C. Project Description

1. Type

5. The Houhai TPP is an existing coal fired TPP used for district heating and electricity production in Licang District of Qingdao City, Shandong Province, in the People’s Republic of China (PRC). It is owned by the Qingdao Energy Kaiyuan Group and operated by the Qingdao Houhai Thermal Power Co. Ltd. The Qingdao Houhai Thermal Power Co. Ltd. is a subsidiary of the Qingdao Energy Kaiyuan Group, one of three companies that collectively form the Qingdao Energy Group.

2. Location

6. The Houhai TPP is located on a 12 ha site at No 8 Cangxing Road, Licang District, Qingdao, on the eastern shores of Jiaozhou Bay (Figure 1). The site is bordered by North Datong Road to the east and Canghai Road to the south. To the west of the plant there is Huanwan Road, a railway and the shores of Jiaozhou Bay. The Qingdao North Railway station is about 400 m to the south. There is a small airport about 2 km to the southeast of the plant (Figures 2 and 3), and Qingdao Liuting International Airport is 7.5 km to the north.

7. The TPP is located in a mixed industrial and residential area, and there are residential buildings to the east and north, the closest being less than 50 m from facility boundary.

Figure 1: Houhai TPP Location, Licang District, Qingdao

Source: Google Maps, 2015.

250 Figure 2: Houhai TPP and surrounding area

Jiazohou Bay Adjacent Residential Areas

Houhai TPP

Railway Station

Airport

Source: Google Maps, 2015 and TA Consultants.

Figure 3: Huahai TPP from within, looking to the northwest. From left to right note coal storage building, cooling tower, coal conveyer system, turbine and boiler building, stack, and office building

Source: Qingdao Houhai Thermal Power Co. Ltd., 2015.

8. Figure 4 shows and aerial view of the TPP including the boiler house building and stacks. Component 2 of the Qingdao Clean Energy Project will be located in a trapezoidal shaped area on the southeastern corner of the TPP site in an area currently used for coal

251 storage (Figure 5).

Figure 4: Houhai TPP layout showing ADB Component site

Stack

Boiler Building

Cooling Tower

ADB Component Location (Currently used for coal storage)

Source: Google Maps 2015 and Qingdao Houhai Thermal Power Co. Ltd., 2015

Figure 5: ADB Component 2 site at Houhai TPP. The building, currently used for coal storage, will be refitted and retained.

Source: TA Consultants.

3. Purpose and Capacity

9. The Houhai TPP was designed for both electricity production and district heating (and as such is also at times referred to as a Combined Heat and Power (CHP) plant). It was built in 2004 with two 130 t/h coal water slurry fuel (CWSF) boilers, one 25 MW abstraction-

252 condensing turbine and one 12 MW back-pressure turbine. Once put into operation a total of 42 small neighborhood coal-fired heat supply boilers with a capacity of 413 t/h were closed, resulting in a coal savings of 67,000 t/year. A 150 t/h circulating fluidized bed (CFB) boiler was added in 2006, and a 220 t/h pulverized coal (PC) boiler was added in 2010.

10. The TPP provides heat to 7 million m2 of residential building space within a 30 km2 heating district. In addition an average of 30 to 60 t/h of steam is provided to non-residential users within the heating district including schools, hospitals and commercial and industrial enterprises. Although designed for both heat and power, it has primarily been used for district heating. In 2014 heat supply was 3.0486 million GJ (77.4 % of total energy production) while the power supply was 0.248 billion kWh (equivalent to 892,800 GJ or 22.6 % of total energy production).

11. Urban growth in the last decade has meant that the Houhai TPP is now located within an urban area, and the closet apartment buildings are less than 50 m to the east of the facility boundary. There will be no further extensions to its heat and power supply capacity, and Houhai TPP management reports that it will be closed and relocated in the future. This has been confirmed by the Licung District Government, which in response to complaints from local residents reports that a relocation plan has been developed and preliminary relocation work has begun, though detailed information is not yet available.2 Due to its low emissions, the Qingdao Clean Energy Component 2 will not need to be relocated.

Figure 6: Houhai TPP showing location of residences to the east of the plant. The closest apartment buildings are less than 50 m from the facility boundary.

Source: Google Maps 2015

2 Source: http://liuyan.people.com.cn/thread.php?tid=2832677.

253

4. Boiler Type, Emission Controls and Stacks

12. The Houhai TPP turbine and boiler house is currently equipped with:

- 2 x 130 t/h coal water slurry fuel (CWSF) boilers (No. 1 and No. 2 boilers); - 1 x 130 t/h circulating fluidized bed (CFB) (No. 3 boiler); - 1 x 220 t/h pulverized coal (PC) boiler (No. 4 boiler); and - 1 x 25 MW abstraction-condensing turbine and 1 x 12 MW back-pressure turbine (Figure 7).

13. Design parameters for the boilers and turbines are presented in Table 1.

14. It is understood that only the No. 3 boiler, which was recently equipped with a selective non-catalytic reduction (SNCR) system to control nitrogen oxides, is operational and in compliance with the current Emission Standard of Air Pollutants for Thermal Power Plants in Shandong Province (DB 37/664-2013) for NOx of 200 mg/m3 for CFB boilers. Boilers No. 1, 2 and 4 are currently non-operational and are in the process of being equipped with selective catalytic reduction (SCR) systems, and it is reported that they will be operational and in compliance for the 2015/16 heating season. The relevant Shandong Provincial emission standard for NOx for No. 1, 2 and 4 boilers is 100 mg/m3, and as the TPP only has one stack, once boilers No. 1,2 and 4 are operating the TPP stack will have to meet the lower emission standard for NOx of 100 mg/m3 (including emissions from the No. 3 boiler).

15. With respect to SO2 control, all boilers are equipped with magnesium oxide (MgO) based wet flue-gas desulfurization (FGD); No. 1, 2 FGDs were completed in 2014, and No. 3 and 4 FGDs were completed in November, 2013. It is reported that the SO2 emissions of all boilers is lower than 50 mg/m3 (the relevant standard is 200 mg/m3).

Figure 7: 25 and 12 MW turbines

Source: TA Consultants.

254

Figure 8: Houhai TPP heating area

Source: Google Maps 2015 and Qingdao Houhai Thermal Power Co. Ltd., 2015

255 Table 1: Design Parameters, Houhai TPP Main Equipment

Item Value

2 x 130 t/h CWF boilers (No 1 and No 2)

Type WGZ130/5.3-1 Rated evaporation 130 t/h Rated steam pressure 5.30 MPa Rated steam temperature 450℃ Feedwater temperature 150℃ Exhaust air temperature 147.6℃ Thermal efficiency: 90.8％

1 x 130 t/h CFB boilers (No 3)

Type UG-150-5.3-M Rated evaporation 130 t/h Rated steam pressure 5.30 MPa Rated steam temperature 450℃ Feedwater temperature 150℃ Exhaust air temperature 140℃ Thermal efficiency: 89％ Desulfurization efficiency ≥90% Circulation rate 25-30

1x 170 t/h PC boiler (No 4)

Type CG-170/5.30-M Rated evaporation 170 t/h Maximum continuous load 220 t/h Superheated steam pressure 5.30 MPa Superheated steam temperature 450℃ Feedwater temperature 150℃ Exhaust air temperature 140℃ Thermal efficiency: 90.3% Coal consumption 32.112 t/h

1x 25 MW turbine

Type C25-4.90/0.981 Rated steam pressure at inlet 4.9 Mpa Rated steam temperature at inlet 435℃ Power 25 MW Extraction pressure 0.981 MPa

1x12 MW turbine

Type B12-4.90/0.98 Rated steam pressure at inlet 4.9 Mpa Rated steam temperature at inlet 435℃ Power 12 MW Extraction pressure 0.98 MPa Source: Qingdao Houhai Thermal Power Co. Ltd., 2015.

16. All boilers are equipped with electrostatic precipitators (ESPs) to control fly ash within the standard of 20 mg/m3. Flue gases are exhausted by one 80 m stack with a diameter of 4.3 m. The proximity of the airports limits stack height.

17. The facility includes a truck wash system to help reduce dust emissions (Figure 9).

256 Figure 9: Huahai TPP truck washing station

Source: TA Consultants.

5. Fuel

18. Coal is sourced from a number of locations, including Datong in Shanxi province and Feicheng and Yanzhou in Shandong province. Currently the plant is using coal from Shemu in Shanxi province. Coal is primarily transported by truck, and annual consumption varies between 20,000 to 30,000 tons. It is understood that coal ash content is required to be less than 10%.

19. Coal is stored onsite both in a storage building and outside. Coal stored outside is covered to prevent fugitive dust emissions.

Figure 10: External covered coal storage, Houhai TPP

Source: TA Consultants.

257 6. Water Supply and Wastewater

20. The TPP sources production and domestic water from the municipal water system. Production water is treated by ultrafiltration and reverse osmosis. Cooling is provided by a single cooling tower which is used in the non-heating season and which also draws water from the municipal water system. In the heating season water from the heating supply pipeline system is used for cooling. Total annual water consumption is approximately 2,000,000 m3/y.

21. Domestic and production wastewater from boilers and the cooling system wastewater is discharged to the municipal sewer and treated at the Licung River WWTP, 2.5 km to the southwest. Some production wastewater and wastewater from the boiler water treatment plant is treated by reverse osmosis (RO) and ultrafiltration and is then used for cooling, boiler washing and mixing with coal in the CWSF boilers.

Figure 11: Huahai TPP cooling tower

Source: TA Consultants.

7. Solid Wastes

22. The TPP produces approximately 10,000 t/year of fly and bottom ash, and 10,000 t/year of coal slag. All coal combustion waste products are recycled and sold for use in the construction industry for the production of bricks and other materials.

23. Hazardous wastes such as waste thermal insulation are sent to the Qingdao Xintiandi Company for treatment and final disposal. It is understood that this is the only Qingdao EPB certified hazardous waste treatment facility in the area.

D. Environmental Management

1. Staffing and Management Structure

24. The facility has a total of approximately 400 staff structured into 9 departments.

258 Environmental issues are addressed by the Production Technology Department, which includes one staff who is focused full time on environmental management. The Safety Department, which has a staff of 5, is responsible for occupational health and safety issues.

Figure 12: Huahai TPP management structure

Source: Qingdao Houhai Thermal Power Co. Ltd., 2015.

2. Environmental Impact Assessment

25. The Houhai TPP is reported to be in compliance with all relevant PRC EIA requirements. The environmental assessment process has been an ongoing one as the plant has been expanded and upgraded, as summarized in Table 2.

Table 2: Summary of Houhai EIA Approval Process Date EIA Approved By Whom Approval Conditions Approved EIA Report, Houhai May 9, 2002 Qingdao EPB 1. control coal ash content and Thermal Power Plant sulphur content 2. control equipment noise 3. control fugitive emissions Tabular EIA, Houhai Boiler January 21, Licang District 1. control coal ash content and Desulphurization Project 2008 EPB sulphur content 2. control total quantity of SO2 emission EIA Report, Houhai Project January 20, Qingdao EPB 1. control coal ash content and for Conversion to PC 2009 sulphur content Boilers 2. install CEMS EIA Registration Form, November 28, Licang District 1. meet relevant standard Houhai Conversion to Low 2013 EPB 2. control noise NOx Boilers Tabular EIA, Houhai Boiler November 12, Licang District 1. meet relevant standard Desulphurization System 2014 EPB 2. control noise Transformation Tabular EIA, Houhai Boiler November 12, Licang District 1. meet relevant standard Denitirification System 2014 EPB 2. control noise Transformation Source: TA Consultants based on EIA Approvals

259 3. Relevant Environmental Standards

26. Table 3 to present a summary of relevant emission standards for the Houhai TPP.

Table 3: Summary of Environmental Pollution Standards Applicable to Houhai TPP Pollutant Limit Standards Source Stack Emissions Table 1 in Emission Standards of Air Pollutants from 3 SO2 200 mg/m Thermal Power Plant in Shandong Province (DB 37/664-2013). Note: the standard for NOx is 200 mg/m3 for CFB 3 3 boilers, and 100 mg/m for all other boilers. However, NOx 100 mg/m as the Houhai TPP only has one stack, the lower emission standard applies. Table 3 in Emission Standards of Air Pollutants from PM 20 mg/m3 Thermal Power Plant in Shandong Province (DB 37/664-2013) NH (used during Table 2 in Emission Standards for Odor Pollutants (GB 3 75 kg/h denitrification) 14554-93) Other 1.0 mg/m3 at site Table 2 of Integrated Emission Standard of Air Fugitive PM boundary Pollutants (GB 16297-1996) Daytime Noise 60 dB(A) at site (06:00-22:00 h) boundary Class II of Emission Standard for Industrial Enterprises Nighttime noise 50 dB(A) (at site at Site Boundary (GB 12348-2008) (22:00-06:00 h) boundary) Wastewater: At discharge point Class A of Wastewater Quality Standards for Discharge to municipal waste to Municipal Sewers (CJ 343—2010), see Table 11, water system. below. Note: the provincial standard (Emission Standards of Air Pollutants from Thermal Power Plant in Shandong Province (DB 37/664-2013)) is more stringent than the relevant national standard (Emission Standards of Air Pollutants from Coal-Burning, Oil-Burning and Gas-Fired Boilers (GB 13271-2014)), and is therefore the applicable standard.

Table 4: PRC Wastewater Quality Standards for Discharge to Municipal Sewers (Class A, CJ 343-2010) Maximum acceptable concentration No Pollutant mg/L (except pH) 1 pH 6.5-9.5 2 SS 400 3 COD 500 4 Ammonia nitrogen 45 5 BOD 300 6 Total nitrogen 70 7 Total phosphorus 8

27. Table 5 presents the relevant ambient air quality standards for the Houhai TPP surrounding urban area, while Table 6 presents ambient noise standards. There is no applicable surface water quality standard as all wastewater from the TPP is discharged to the municipal sewer.

260 Table 5: Applicable ambient air quality standards – Class II, Ambient Air Quality Standards (GB 3095—2012) Annual mean (class 2) 24-hr mean (class 2) 1-hr mean (class 2) Polluants mg/m3 mg/m3 mg/m3 TSP 0.200 0.300 --

PM10 0.070 0.150 --

PM2.5 0.035 0.075 --

SO2 0.060 0.150 0.500

NO2 0.040 0.080 0.200

Table 6: Applicable ambient environment noise standard – Class II, Environmental Quality Standards for Noise (GB3096-2008) Item Class II Class III Daytime Noise (06:00-22:00 h) 60 dB(A) 65 dB(A) Nighttime noise (22:00-06:00 h) 50 dB(A) 55 dB(A) Note: according to Regional Division of Qingdao Urban Area Environmental Noise Quality (implemented from September 1, 2012 by Qingdao EPB), Houhai TPP areas is classified as Class II.

4. Environmental Monitoring and Compliance

28. The Houhai TPP is equipped with a continuous emissions monitoring systems (CEMS) that monitors in real time SO2, NOx, PM and air flow. The Qingdao EPB requires that the CEMS is maintained by a qualified 3rd party certified by the EPB. Data is sent electronically to the Qingdao EPB Data Center (Figure 13). The Qingdao EPB monitors the CEMS data, and staff indicate that the EPB can be on site within as little as 1 hour if the CEMS indicates serious noncompliance. There is also “internal” real time monitoring of stack emission operational parameters which are used to manage boiler operation. Annexes 3 to 6 present sample 3rd party monitoring reports and CEMS data.

Figure 13: Huohai TPP control room and Qingdao EPB website showing real-time Houhai TPP CEMS data

Source: TA Consultants.

261 29. Third party monitoring reports undertaken by Qingdao ECH Testing Co. Ltd. given to the auditors indicate that while boilers were in compliance with SO2 and dust in the 2013/14 heating season, the NOx standard was being exceeded by as much as 500 mg/m3 (Annex 3). It is understood that Qingdao EPB has required the plant to upgrade to provide denitrification. Only the No. 3 boiler has received this upgrading and has been equipped with a selective non-catalytic reduction (SNCR) system to control nitrogen oxides. It is understood that it is operational and in compliance with the current Shandong Provincial standard, though 3rd monitoring reports were not available to demonstrate this. Boilers No. 1, 2 and 4 are currently out of operation and are in the process of being equipped with selective catalytic reduction (SCR) systems to control nitrogen oxides.

30. With respect to SO2 control, all boilers are equipped with magnesium oxide (MgO) based wet flue-gas desulfurization (FGD) and are reported as being in compliance with the standards (emission are reported as being lower 50 mg/m3, and the relevant current 3 standard for SO2 is 200 mg/m ).

31. All boilers are equipped with electrostatic precipitators (ESPs) to control fly ash within the provincial standard of 20 mg/m3.

32. In summary with respect to stack emissions it is understood that the TPP has made significant efforts to meet compliance and has shut down and is upgrading non-compliant boilers. It is reported that for the 2015/16 heating season all boilers will be equipped with SNCR or SCR, wet FGD and ESPs, and are expected to be in compliance with relevant emission standards.

33. The Qingdao EPB requires that 3rd party noise monitoring be undertaken on a quarterly basis and reports indicate that the TPP is in compliance with the relevant standard (Emission Standard for Industrial Enterprises at Site Boundary (GB 12348-2008) Class II: 60 dB(A) from 06-22 h, and 50 dB(A) from 22-06 h) (Annex 4). Quarterly 3rd party fugitive dust monitoring are also undertaken and indicate that the plant is in compliance (Annex 5). It is understood that the EPB makes this data publically available.

5. ISO Certification and Environmental Management

34. The Houhai TPP has been third-party certified for ISO 14001 (Environmental Management Systems). The plant is not ISO 18001 (Occupational Health and Safety) certified, through the audit team were shown safety and occupational hazard assessment reports.

35. The Houhai TPP has an Environment and Quality Management System (EQMS). A copy of the latest EQMS manual (2014) was shown to the audit team. The EQMS system includes:

Environment Targets:  Reduce consumption of water, power and coal;  Comply with relevant pollutant emission standards;  Comply with relevant boundary noise standard;  Eliminate dust pollution to surrounding urban area and no dust related public complaints;  Collect and dispose solid waste; and  Implement environment indicators for all departments.

Responsibility  The Qingdao Houhai Thermal Power Co. Ltd. has primary responsibility for TPP environmental management, capacity building, operation and control,

262 emergency preparation and response, monitoring, compliance assessment, prevention and corrective measures, and communication and outreach.

Updating  The EQMS is annually reviewed by a qualified third party and updated as required.

6. Health and Safety

Safety Management Regulations

28. Safety at the Houhai TPP is implemented and controlled through a series of safety management regulations (SMRs), prepared according to relevant national, provincial and local laws and regulations, and assembled into a Houhai TPP SMR manual. During the site visit the current SMR manual (2015) was provided to the audit team for review. The main contents of the Houhai TPP SMR manual are listed in Table 7.

29. According to Houhai TPP management, the Houhai TPP SMR manual is reviewed and updated periodically. Management also report that there have been no safety related accidents in the past three years.

Occupational Health Management Regulation

30. Occupational health at the Houhai TPP is implemented and controlled through 12 occupational health management regulations (OHMRs), prepared according to relevant national, provincial and local laws and regulations, and assembled into a OHMR manual. During the site visit the current OHMR manual (2015) was provided to the audit team for review. The OHMR manual focuses on occupational health and safety and occupational disease prevention and control. The main contents of the OHMR manual are listed in Table 8. According to Houhai TPP management, the OHMR is reviewed and updated periodically. Management also report that there have been no occupational health related accidents in the past three years.

263 Table 7: Houhai TPP Safety SMR Manual Contents No Name 1 Management assessment standard 2 Safety production responsibility system 3 Safety production management system 4 Work permit management system 5 Operation permit management system 6 Equipment periodical test and rotation system 7 Operation shift change system 8 Operation patrol inspection system 9 Management system for potential safety hazard check and rectification 10 Fire safety management system 11 Flame operation management system and implementation rules Management system for safety technology measures, labor protection measures 12 and anti-accident measures 13 Management system for accident, barrier and anomaly division 14 Management system for special operators safety training assessment 15 Hazardous chemical safety management system 16 Hoisting machinery and equipment safety management system 17 Scaffold installation, demolition and utilization safety management system 18 Safety production education and training management system 19 Safety production meeting system 20 Maintenance safety management system 21 Project outsourcing management system 22 Electrical safety equipment management system 23 Hydrochloric acid management system 24 Safety management system for heat supply network maintenance and operation 25 Personal protection equipment management system Source: Qingdao Houhai Thermal Power Co. Ltd., 2015.

Table 8: Houhai TPP OHMR Manual Contents No Name 1 Responsibility system for prevention and control of occupational hazards 2 Caution and notification system for occupational hazards 3 Application system for occupational hazards project Promotion, education and training system for prevention and control of occupational 4 hazards Maintenance and overhaul system for occupational hazards prevention and control 5 facilities 6 Management system for occupational hazards prevention and control equipment 7 Occupational hazards monitoring and assessment management system 8 Occupational health supervision and record management system for workers 9 Report and treatment system for occupational hazardous accidents 10 Emergency response and management system for occupational hazardous accidents 11 Occupational health operation regulation 12 Management system for prevention and control of occupational hazards Source: Qingdao Houhai Thermal Power Co. Ltd., 2015.

E. Conclusion

36. The Houhai TPP has undergone an appropriate EIA process and has received the necessary Environmental Acceptance by the Qingdao EPB. The facility is ISO 14001 third

264 party certified, and there are environmental, health and safety polices and systems in place.

37. Combustion products are recycled into construction materials, and wastewater is either recycled or treated at the local municipal WWTP. Hazardous waste is treated at a certified facility.

31. The TPP boilers and SO2 and dust emission control systems have been regularly upgraded to keep pace with more stringent emission standards, and are reportedly in compliance with relevant standards. However until recently the TPP was out of compliance with respect to NOx emissions, and this is the most significant issue identified in the audit. Boiler No 3 has had a SNCR installed and is operational, and boilers No. 1, 2 and 4 are currently shut down while they are upgraded to SNCR. It appears that although non- compliance with NOx standards has been a serious issue, appropriate action has been taken to address the problem and 30 million CNY (4.84 million USD) was allocated.To understand that these measures are effective, the progress of these ongoing actions and results shall be included in the environmental monitoring report of the project.

265 Annexes

1. EIA Approvals from Qingdao EPB and Licung District EPB

2. Environmental Acceptance Reports from Qingdao EPB and Licung District EPB

3. Sample 3rd Party (Qingdao ECH Testing Co. Ltd.) Stack Emissions Monitoring Reports

4. Sample 3rd Party (Qingdao ECH Testing Co. Ltd.) Site Boundary Noise Monitoring Reports

5. Sample 3rd Party (Qingdao ECH Testing Co. Ltd.) Site Boundary Fugitive Dust Monitoring Reports

6. Sample CEMS data sent to Qingdao EPB Data Center

7. 14001 3rd Party ISO Certification

8. Environment and Quality Management System (EQMS) Manual

Please Note:

To reduce document length and file size, Annexes have been archived. All Annexes are available on request.

266 APPENDIX IV: POWER, HEAT AND COOLING GENERATION, UTILITIES

CONSUMPTION AND COAL AND EMISSIONS REDUCTIONS

267 Subprojects Power Generation Heating Cooling Utilities Consumption The Project 2014 Baseline Coal and Emissions Reductions

Annual Annual Annual Annual Cooling Annual Annual Annual Annual Power Gas Annual CO2 Annual CO2 Power Heat Heat Heat Supply Cooling Cooling Supply Water Standard Annual Dust SO2 NOx Power Power Consum- Consum- emission of emissions of No Name Components Capacity Load Supply Area (10,000 Load Supply Area Consum- Coal CO2 Savings Savings Savings Supply Export ption ption the Project BAU (MW) (MW) (10,000 m2) (MW) (10,000 (10,000 ption Savings Savings (t) (t) (t) (t) (10,000 kwh) (10,000 kwh) (10,000 (10,000 (t) scenario (t) GJ) GJ) m2) (10,000 t) (10,000 t) kwh) Nm3) 1.1 Industrial Waste - 240.00 219.28 480.00 - 504.01 1,901.03 20.95 37,083 315,053 10.69 277,970 1,069 2,566 748 Heat Utilization 1.2 Zongbu Road Binghai Energy 25.80 8,338.77 6,969.00 42.00 38.37 75.20 34.90 9.95 35.00 - 3,272.30 17.80 63,832 185,378 4.67 121,546 467 1,122 327 1 Energy Station Island 1.3 Licun River - 49.00 44.77 110.00 45.52 12.98 45.00 4,111.92 - 31.42 - 64,978 2.50 64,978 250 600 175 Wastewater Heat Pump Subtotal 25.80 8,338.77 6,969.00 331.00 302.43 665.20 80.42 22.93 80.00 4,615.94 5,173.33 70.17 100,915 565,409 17.87 464,494 1,787 4,288 1,251 2.1 Houhai Energy 41.00 13,251.53 12,484.00 78.40 71.63 50.00 14.00 3.99 14.00 - 5,419.20 8.38 105,711 304,872 7.66 199,161 766 1,838 536 Station Houhai Energy 2 2.2 Qingdao North Island 2.83 915.33 619.00 10.97 10.03 19.60 17.53 5.00 16.00 - 461.32 6.28 8,999 32,187 0.89 23,188 89 214 62 Station Subtotal 43.83 14,166.85 13,103.00 89.37 81.66 69.60 31.53 8.99 30.00 - 5,880.52 14.66 114,710 337,059 8.55 222,349 855 2,052 599 3.3 Subway Control - 3.84 3.50 8.50 5.82 1.66 5.30 81.90 243.33 4.19 4,747 10,239 0.21 5,493 21 51 15 Center Natural Gas 3.2 Jieneng HQ Office 3 District Heating - 1.79 1.64 2.00 2.33 0.66 2.00 24.15 62.10 1.05 1,211 3,710 0.10 2,498 10 23 7 Project and Cooling 3.3 Dongli Community - 9.28 8.48 14.20 11.71 3.34 10.60 178.51 349.79 6.28 6,823 19,684 0.49 12,861 49 119 35 Subtotal - - - 14.91 13.62 24.70 19.85 5.66 17.90 284.56 655.22 11.52 12,781 33,633 0.80 20,852 80 192 56 HES and Peaking 4 Boilers at 28 NA - 238.14 217.58 504.48 - 791.72 2,534.70 50.27 49,444 325,260 10.61 275,816 1,061 2,546 743 Subdistricts 5.1 No 1 Energy Station 4.84 1,563.36 655.00 25.75 23.53 31.30 16.11 4.59 17.54 - 898.55 9.43 17,528 62,751 1.74 45,223 174 417 122

Jidong District 5.2 No 2 Energy Station 4.84 1,563.36 437.00 25.75 23.53 30.15 21.74 6.20 22.11 - 879.54 11.52 17,157 63,397 1.78 46,240 178 427 124 5 Energy Station 5.3 District Gas Boilers - - 96.60 88.26 140.50 - - 303.46 2,998.56 23.25 58,492 170,375 4.30 111,883 430 1,033 301 Rooms Subtotal 9.67 3,126.71 1,092.00 148.11 135.32 201.95 37.84 10.79 39.66 303.46 4,776.65 44.20 93,177 296,523 7.82 203,346 782 1,877 547 East Licung 6 NA - 154.65 141.30 305.20 - 241.51 5,498.66 42.63 107,261 286,378 6.89 179,117 689 1,653 482 District Energy 7.1 Badahu - 15.24 13.92 32.60 - 1,166.69 672.96 4.40 13,127 30,778 0.68 17,651 68 163 48 Badahu and Transformation Municipal 7.2 Municipal 7 Government Government - - 5.62 5.14 12.50 2.40 0.68 2.20 94.50 107.95 1.05 2,106 9,053 0.27 6,947 27 64 19 Transformation Transformation Subtotal - - - 20.86 19.06 45.10 2.40 0.68 2.20 1,261.19 780.91 5.45 15,233 39,832 0.95 24,599 95 227 66 8.1 Underground Heat Underground Heat - - 5.25 4.80 10.00 4.20 1.20 3.82 290.86 - 1.10 - 6,840 0.26 6,840 26 63 18 Pump 8 Pump and Solar 8.2 Solar Heating - 0.90 0.82 2.00 - - - - - 1,042 0.04 1,042 4 10 3 Heating Subtotal - - - 6.15 5.62 12.00 4.20 1.20 3.82 290.86 - 1.10 - 7,882 0.30 7,882 30 73 21

Total 79.31 25,632.33 21,164.00 1,003.19 916.59 1,828.23 176.25 50.25 173.57 7,789.23 25,300.00 240.00 493,520 1,891,976 53.79 1,398,456 5,379 12,909 3,765

Emission Reduction Factors Per Standard Ton of Coal Reduced: CO2 26000.000 Dust 0.010

SO2 0.024 NOx 0.007

268 APPENDIX V: PUBLIC CONSULTATION

1. Meeting 1 (Qingdao Urban Area) Sign-in List

269

2. Meeting 2 (Jidong Subdistrict) Sign-in List

270 3. Public Consultation Power Point Presentation

271

272

273 4. Sample Completed Questionnaire

274