Environmental Impact Assessment and Due Diligence Report (DRAFT) Project Number: 47051-002 May 2015 PRC: Chemical Industry Energy Efficiency and Emissions Reduction Project Prepared by ChemChina and CHC for the Asian Development Bank. This is a version of the draft posted in May 2015 available on http://www.adb.org/Documents/RRPs/?id=47051-002-3. CURRENCY EQUIVALENTS (as of 11 May 2015) Currency unit – yuan (CNY) CNY1.00 = $ 0.1633 $1.00 = CNY 6.1254 ABBREVIATIONS ADB – Asian Development Bank AP – Affected Person API – American Petroleum Institute ASL – Above Sea Level CCPS – Center for Chemical Process Safety CEMS – Continuous Emissions Monitoring System ChemChina – China National Chemical Corporation CHC – China Haohua Company CHP – Combined Heat and Power CNY – Chinese Yuan CSEMP – Construction Site Environmental Management Plan DCS – Distributed Control System EA – Executing Agency EHS – Environment, Health and Safety EHSS – Environment, Health and Safety Specialist 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 FSR – Feasibility Study Report Flor – Calcium fluoride (CaF2) or “fluorite” GDP – Gross Domestic Product GHG – Greenhouse Gas GIP – Good International Practice GRM – Grievance Redress Mechanism HDP – High Density Polyethylene IA – Implementing Agency IEE – Initial Environmental Examination IT – Interim Target LIC – Loan Implementation Consultant MEP – Ministry of Environmental Protection MSDS – Material Safety Data Sheet NG – Natural Gas OM – Operations Manual, ADB PCR – Physical Cultural Resources PLC – Process Logic Controller PPCU – Project Public Complaint Unit PPE – Personnel Protective Equipment PPTA – Project Preparatory Technical Assistance PRC – People’s Republic of China PTFE – PolyTetrafluoroethylene (It is called, “Teflon”) PUR – Polyurethane SPS – Safeguard Policy Statement, ADB SPEPB – Sichuan Province Environment Protection Bureau TA – Technical Assistance UPS – Uninterrupted Power Supply WB – World Bank WHO – World Health Organization WEIGHTS AND MEASURES AHF – Anhydrous hydrogen fluoride BOD5 – Biochemical Oxygen Demand, 5 days CaCO3 – Calcium Carbonate CaSO 4 – Calcium sulfate CaF 2 – Calcium Fluoride C2F3Cl – trifluorochloroethylene C2F4 – tetrafluoroethylene CaSO 4 – Calcium sulfate C2F4 – tetrafluoroethylene C–C4F8 – Octafluorocyclobutane CHCl 3 – trichloromethane CHClF 2 – Difluorochloromethane CHF 3 – Trifluoromethane C2H2F2 – Vinylidene Fluoride C2H3ClF 2 – difluorochloroethane Cl 2 – chlorine cm – Centimeter CO 2 – Carbon Dioxide CO 2e – Carbon Dioxide equivalent COD – Chemical Oxygen Demand dB(A) – A-weighted sound pressure level in decibels DO – Dissolved Oxygen GJ – Gigajoules GWh – Gigawatt Hour HF – Hydrogen fluoride ha – Hectare H2SO 4 – Sulfuric acid H2SO 4 XSO 3 – Sulfuric acid fuming i–C4F8 – octafluoroisobutylene kg – Kilogram km – Kilometer kV – Kilovolt kWh – Kilowatt Hour Leq – Equivalent Continuous Noise Level m – Meter m/s – Meters per Second m³ – Cubic Meter mg/l – Milligrams per Liter mg/m3 – Milligrams per Cubic Meter MW – Megawatt Nm³ – Normal Cubic Meter NO2 – Nitrogen Dioxide NOx – Oxides of Nitrogen °C – Degrees Celsius pH – A measure of the acidity or alkalinity of a solution 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 environmental audit 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. Table of contents EXECUTIVE SUMMARY i I. INTRODUCTION 1 A. The Project 1 B. Purpose of the Report 3 C. Structure of the Report 3 II. POLICY, LEGAL, AND ADMINISTRATIVE FRAMEWORK 5 A. Legal Framework of the PRC 5 B. PRC Environmental Impact Assessment Framework 6 C. Project Domestic EIA Report Approval Status 7 D. Relevant International Agreements 9 E. Other International Relevant Guidelines 9 F. Relevant Guidelines and Standards 9 G. Applicable ADB Policies, Regulations and Requirements 19 I. INTRODUCTION 22 A. The Subproject 22 B. The subproject rationale 22 C. Report Structure of Part I 23 II. ENVIRONMENTAL STANDARDS, GUIDELINES, AND REQUIREMENTS 26 III. ENVIRONMENTAL AUDIT OF CURRENT OPERARTIONS AT ZHONGHAO CHENGUANG RESEARCH INSTITUTE OF CHEMICAL INDUSTRY COMPANY LTD. 30 A. Approaches and Procedure of Environmental Audit 30 B. CGY Company Overview 33 C. CGY’s Products 34 D. Plant Location and Plant Layout (Study Area) 37 E. Description of Historic/Current Production Processes 39 F. Compliance for Standards, Approvals, and Permits Requirements 51 G. Environment, Health, and Safety Management 53 H. Emergency Management 67 I. Public consultation and grievance redress system at CGY 68 J. Areas of Concern 68 K. Conclusion of Environmental Audit of DSC 69 L. Proposed Corrective Actions 69 IV. ENVIRONMENTAL IMPACT ASSESSMENT OF CGY SUBPROJECT COMPONENTS72 A. EIA Scope and Approaches 72 B. Detailed Description of Project Components 72 C. The Location of Subproject Components and Description of the Environment 78 D. Environmental Baseline 81 E. Anticipated Impacts and Mitigation Measures 87 F. Alternative Analysis 104 G. Information disclosure and public consultation 106 H. Grievance Redress Steps at CGY 108 I. INTRODUCTION 111 A. The subproject 111 B. The rationale of the subproject 111 C. Report Structure of Part II 111 II. ENVIRONMENTAL STANDARDS, GUIDELINES, AND REQUIREMENTS 115 III. ENVIRONMENTAL AUDIT OF CURRENT OPERATIONS AT DEZHOU SHIHUA CHEMICAL CO., LTD 121 A. Approaches and procedure of environmental audit 121 B. Description of Dezhou Shihua Chemical Co., Ltd. (DSC) 123 C. Description of Current Production Processes 127 D. Compliance for Standards, Approvals, and Permits Requirements 131 E. Environment, Health, and Safety Management 131 F. Emergency Management 142 G. Areas of Concern 143 H. Conclusion of Environmental Audit of DSC 147 I. Proposed Corrective Actions 147 IV. ENVIRONMENTAL IMPACT ASSESSMENT OF DSC SUBPROJECT COMPONENTS153 A. EIA Scope and Approaches 153 B. Detailed Description of Project Components 153 C. The Location of Subproject Component and Description of the Environment 156 D. Environment Baseline 162 E. Anticipated Impacts and Mitigation Measures 180 F. Alternative Analysis 202 G. Information disclosure; public consultation; 203 H. Grievance Redress Steps at DSC 206 APPENDIX 1. THE DSC EMERGENCY RESPONSE PLAN 209 I. GRIEVANCE REDRESS MECHANISM OF THE FIL PROJECT 217 II. THE PROJECT ENVIRONMENTAL MANAGEMENT PLAN 219 A. Objectives 219 B. Implementation Arrangements 219 C. Institutional Strengthening and Capacity Building 222 D. Estimated Budget for the FIL Project Environmental Investment 222 E. CGY Subproject 226 F. DSC Subproject 242 G. Reporting Requirements 264 H. Performance Indicators 265 I. Mechanisms for Feedback and Adjustment 266 Table of Tables Table 1.Applicable PRC Environmental Laws ............................................................................ 5 Table 2. Applicable PRC Environmental Management and Assessment Guidelines .................. 5 Table 3. Relevant International Environmental Agreements ....................................................... 9 Table 4. Applicable PRC environmental standards ...................................................................10 Table 5. PRC Ambient air quality standards (GB3095-2012) and WHO/World Bank’s EHS guidelines on ambient air quality ...............................................................................................11 Table 6. The PRC’s Integrated Emission Standard of Air Pollutants (GB 16297-1996) on maximum concentration of source emissions ............................................................................12 Table 7. PRC emissions standards at site boundary .................................................................13 Table 8. Environmental Quality Standards for Surface Water in the PRC..................................14 Table 9. Quality Standards for Ground Water in the PRC .........................................................15 Table 10. Wastewater discharge standards in the PRC in comparison with the General EHS guidelines ..................................................................................................................................16 Table 11. Environmental Quality Standards for Noise (GB3096-2008) and relevant international guidelines ..................................................................................................................................17 Table 12. Air Emissions Standards Relevant to Plasmas Incineration .......................................27 Table 13.Chemical Industry Air Emissions Standards relevant to CGY .....................................28 Table 14. Relevant PRC Emission Standards of Air Pollutants for Coal-burning, Oil-burning, Gas-fired Boilers (GB 13217-2001) and relevant international guidelines..................................28