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Inner Mongolia Autonomous Region Environmental Improvement Project

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Inner Mongolia Autonomous Region Environmental Improvement Project Environmental Assessment Report Summary Initial Environmental Examination Project Number: 39019 February 2006 People’s Republic of China: Inner Mongolia Autonomous Region Environmental Improvement Project Prepared by [Author(s)] [Firm] Prepared[City, Country] by the Government of Inner Mongolia Autonomous Region for the Asian Development Bank (ADB). Prepared for [Executing Agency] [Implementing Agency] The summary initial environmental examination 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. CURRENCY EQUIVALENTS (as of 15 December 2005) Currency Unit – yuan (CNY) CNY1.00 = $0.1233 $1.00 = CNY8.11 The exchange rate of the yuan is determined in relation to a weighted basket of currencies of the trading partners of the People’s Republic of China. In this report, a rate of $1.00 = CNY8.11 is used. ABBREVIATIONS ADB – Asian Development Bank CFB – circulating fluidized bed CNG – compressed natural gas CO2 – carbon dioxide EA – executing agency EMP – environmental management plan EMU – environmental management unit ESRI – Environmental Science Research Institute GDP – gross domestic product GIMAR – government of Inner Mongolia Autonomous Region IDC – interest during construction IMAR – Inner Mongolia Autonomous Region LARP – land acquisition and resettlement plan NOx – nitrogen oxides O&M – operation and maintenance PIA – project implementing agency PIO – project implementation office PIR – poverty impact ratio PMO – project management office PPMS – project performance management system PPTA – project preparatory technical assistance PRC – People’s Republic of China RP – resettlement plan SEPA – State Environmental Protection Agency SIEE – summary initial environmental examination SO2 – sulfur dioxide SOE – state-owned enterprise SPIA – social and poverty impact assessment TA – technical assistance TSP – total suspended particulates WACC – weighted average cost of capital WWTP – Wastewater treatment plant WEIGHTS, MEASURES, AND CONVERSIONS g – gram GJ – gigajoules (1 billion joules) kg – kilogram km – kilometer kV – kilovolt (1,000 volts) kW – kilowatt kWh – kilowatt-hour (power supply of 1,000 watts in 1 hour) m – meter m2 – square meter m3 – cubic meter MW – megawatt (1 million watts) ton – 1,000 kg 1 MW – 3.6 GJ/hour = 1.42 ton (of steam)/hour NOTE In this report, “$” refers to US dollars and “tons” refers to metric tons. Director General H. S. Rao, East and Central Asia Department (ECRD) Director A. Terway, Energy Division (ECRD) Team leader B. Lin, Principal Economist (Energy), ECRD Team members B. Konysbayev, Counsel, OGC A. Maxwell, Environment Specialist, ECRD T. Oi, Social Development Specialist, ECRD S. Sasaki, Energy Specialist, ECRD S. Wong, Senior Financial Specialist, ECRD CONTENTS Page MAPS I. INTRODUCTION 1 II. DESCRIPTION OF THE PROJECT 2 III. DESCRIPTION OF THE ENVIRONMENT 3 A. Geology and Climate 3 B. Flora and Fauna 3 C. Water Resources 3 D. Air Quality 4 E Social Conditions 4 IV. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 4 A. Environmental Benefits and Impacts 4 B. Environmental Impacts and Mitigation Measures – Construction Phase 6 C. Environmental Impacts and Mitigation Measures – Operation Phase 8 D. Resettlment and Land Acquistion 9 V. ECONOMIC ASSESSMENT 9 VI. INSTITUTIONAL REQUIREMENTS AND ENVIRONMENTAL MANAGEMENT PLAN 10 A. Institutional Requirements 10 B Environmental Management Plan 11 C. Environmental Monitoring 11 VII. PUBLIC CONSULTATION AND INFORMATION DISCLOSURE 12 A. Public Consultation 12 B. Information Disclosure 12 VIII. FINDINGS AND RECOMMENDATIONS 14 IX. CONCLUSIONS 14 APPENDIX Summary Environmental Management Plan 15 I. INTRODUCTION 1. This summary initial environmental examination (SIEE) has been prepared to assess environmental issues relating to the Inner Mongolia Autonomous Region Environmental Improvement Project. The Project has three components covering district heating supply, natural gas supply (NGS), and wastewater treatment plants (WWTPs) in the three administrative municipalities of Erdos, Wuhai, and Bayannur in Inner Mongolia Autonomous Region (IMAR) of the People’s Republic of China. The SIEE was prepared in accordance with the Asian Development Bank’s (ADB) Environmental Assessment Guidelines (2003) and Environment Policy (2002). The Project is classified as category B (sensitive), in accordance with ADB environmental categorization. The total project cost is estimated at $330.4 million. ADB intends to provide a loan of $110.0 million to finance the foreign exchange cost of the Project. This SIEE is based on six separate environmental impact assessment (EIA) reports, prepared in accordance with the People’s Republic of China’s (PRC) infrastructure development environmental approval process. All components of the Project were assessed in the six EIA reports (Table 1). Table 1: Summary of Project Environmental Impact Assessments No. EIA Name Author Date Approval Status 1 District heating IMAR November Approval anticipated by Subcomponent in Environment 2005 March 2006 Wuhai Municipality Science Research Institute (ESRI) 2 District heating Bayannur September Approval anticipated by Subcomponents in Municipal ESRI 2005 March 2006 Bayannur Municipality 3 Changqing Natural IMAR ESRI November Approval anticipated by Gas Field Wuhai–Linhe 2005 March 2006 Main Pipeline 4 Urban NGS Wuhai Municipal November Approval anticipated by Distribution Network in ESRI 2005 March 2006 Wuhai City 5 Urban NGS Bayannur November Approval received Jan 2006 Distribution Network in Municipal ESRI 2005 (Ref: IMAR E-2006-9) Bayannur Municipality 6 Two WWTPs in Bayannur November Approval anticipated by Bayannur Municipality Municipal ESRI 2005 March 2006 IMAR = Inner Mongolia Autonomous Region., NGS = Natural Gas Supply, WWTPs = wastewater treatment plants. Source: PPTA Consultants. 2. The IMAR experiences severe air pollution because of its reliance on coal as its primary fuel and the large number of small inefficient coal-fired domestic heating boilers. The population of IMAR is approximately 24 million, 26% of whom live in urban areas. The PRC’s continued strong economic growth, combined with a significant increase in urban housing construction, has resulted in a heating supply shortage during the 5-month winter season in cities and towns of the IMAR. The shortage of district heating supply has an adverse affect on the quality of life and health of urban residents, especially the elderly, young children, and the poor. Currently, coal provides a significant amount of the indoor cooking fuel in urban areas of IMAR. This contributes significantly to indoor and outdoor pollution and has a negative effect on public health. The proposed project area is located in the semiarid western region of the IMAR. Continued urbanization and industrialization, coupled with a severe shortage of municipal wastewater treatment facilities, have resulted in severe water pollution in the Yellow River and Wuliangsuhai Lake, affecting the health of local residents. 2 II. DESCRIPTION OF THE PROJECT 3. The district heating supply component of the Project will have eight subcomponents: (i) the Wulateqian subcomponent will construct (a) three units of hot water boilers with 29 MW capacity and auxiliaries, (b) nine heat exchange stations, and (c) 9.8 kilometers (km) of heat supply pipeline, and will close (d) 64 small coal- fired boilers; (ii) the Wulatezhong subcomponent will construct (a) two units of hot water boilers with 29 MW capacity and auxiliaries, (b) eight heat exchange stations, and (c) 3.0 km of heat supply pipeline, and will close (d) 20 small coal-fired boilers; (iii) the Wulatehou subcomponent will construct (a) two units of hot water boilers with 29 MW capacity and auxiliaries, (b) 14 heat exchange stations, and (c) 11.4 km of heat supply pipeline, and close (d) 35 small coal-fired boilers; (iv) the Linhe subcomponent will construct (a) 36.2 km of heat supply pipeline and (b) 31 heat exchange stations, and will close (c) 58 small coal-fired boilers; (v) the Wuyuan subcomponent will construct (a) four units of circulating fluidized bed (CFB)-type hot water boilers with 29 MW capacity and auxiliaries, (b) 12 heat exchange stations, and (c) 9.8 km of heat supply pipeline, and will close (d) 57 small coal-fired boilers; (vi) the Dengkou subcomponent will construct (a) three units of CFB-type hot water boilers with 29 MW capacity and auxiliaries, (b) 11 heat exchange stations, and (c) 3.0 km of heat supply pipeline, and will close (d) 39 small coal-fired boilers; (vii) the Hangjinhou subcomponent will construct (a) three units of hot water boilers with 58 MW capacity and auxiliaries, (b) 36 heat exchange stations, and (c) 10.6 km of heat supply pipeline, and will close (d) 11 small coal-fired boilers; and (viii) the Wuhai subcomponent will construct (a) four units of hot water boilers with 186 MW capacity and auxiliaries, (b) 69 heat exchange stations, and (c) 42.2 km of heat supply pipeline, and will close (d) 112 small coal-fired boilers. 4. The natural gas transmission and distribution improvement component will have two subcomponents: (i) the Changqing–Wuhai–Linhe natural gas transmission pipeline subcomponent will construct 406 km of pipeline across the region of Erdos, Wuhai and Bayannur; and (ii) the natural gas distribution networks in eight cities and one master CNG station, including the natural gas city networks in the cities of Wuhai, Dengkou, Linhe, Wulateqian,
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