Initial Environmental Examination (Update) Project Number: 50088-002 August 2018 Mongolia: Upscaling Renewable Energy Sector Project Prepared by the Ministry of Energy for the Asian Development Bank CURRENCY EQUIVALENTS (as of 1 August 2018) Currency Unit – Mongolian Tughrik (MNT) MNT 1.00 = $0.0004057 $1.00 = MNT 2,464.50 ABBREVIATIONS ADB Asian Development Bank AP Affected Person ASL Above Sea Level AuES Altai-Uliastai Energy System CEMP Construction Environmental Management Plan CES Central Energy System CITES Convention on International Trade in Endangered Species CRVA Climate Risk Vulnerability Assessment DEIA Detailed Environmental Impact Assessment DN Diamètre Nominal/Nominal Diameter EA Executing Agency EARF Environmental Assessment and Review Framework EHS Environment, Health and Safety EIA Environmental Impact Assessment EMoP Environmental Monitoring Plan EMP Environmental Management Plan ESIA Environmental and Social Impact Assessment FSR Feasibility Study Report GDP Gross Domestic Product GEIA General Environmental Impact Assessment GFDRR Global Facility for Disaster Reduction and Recovery GHG Green House Gas GSHP Shallow-ground Heat Pump GIP Good International Practice GoM Government of Mongolia GRM Grievance Redress Mechanism HDI Human Development Index HH Household IA Implementing Agency IBAT Integrated Biodiversity Assessment Tool IEC Independent Environmental Consultant (national) IEE Initial Environmental Examination INDC Intended Nationally Determined Contributions, Paris climate accord. IUCN International Union for the Conservation of Nature LCoE Levelized Cost of Energy MNS Mongolian National Standard MoE Ministry of Energy MoET Ministry of Environment and Tourism NAMEM National Agency of Meteorology and Environmental Monitoring NM National Monument NP National Park NREC National Renewable Energy Center OM Operations Manual, ADB OCHA United Nations Office for the Coordination of Humanitarian Affairs PCR Physical Cultural Resources PMU Project Management Unit PPE Personnel Protective Equipment PPTA Project Preparatory Technical Assistance PSC Project Steering Committee PV Photovoltaic SOJSC State-Owned Joint Stock Company SPS Safeguard Policy Statement, ADB TA Technical Assistance TBD To Be Determined UNEP United Nations Environment Program WB World Bank WCS World Conservation Society WRES Western Energy System State Owned Joint Stock Company WHO World Health Organization WEIGHTS AND MEASURES µg/m3 Micrograms per Cubic Meter BOD5 Biochemical Oxygen Demand, five days CaCO3 Calcium Carbonate cm Centimeter CO Carbon Monoxide CO2 Carbon Dioxide COD Chemical Oxygen Demand dB(A) A-weighted sound pressure level in decibels DO Dissolved Oxygen GWh Gigawatt Hour ha Hectare 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 masl Meters Above Sea Level mg/l Milligrams per Liter mg/m3 Milligrams per Cubic Meter mm Millimeter MW Megawatt NO2 Nitrogen Dioxide NOx Nitrogen Oxides O3 Ozone oC Degrees Celsius 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 SOx Sulphur Oxides TDS Total Dissolved Solids TSP Total Suspended Particulates NOTES (i) The fiscal year (FY) of the Government of Mongolia and its agencies ends on 31 December. (ii) In this report, "$" refers to US dollars. This 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. Your attention is directed to the “terms of use” section of the ADB 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. 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. Mongolia Environmental Policy and Legal Framework ............................................... 5 B. Applicable Mongolian Environmental Standards ...................................................... 13 C. Applicable ADB Policies, Regulations and Requirements ........................................ 22 D. Other Relevant Guidelines....................................................................................... 23 III. PROJECT DESCRIPTION .......................................................................................... 24 A. The Project .............................................................................................................. 24 B. Country Context and Rationale ................................................................................ 24 C. Project Outputs and Phases .................................................................................... 26 D. Umnugovi 10 MW Wind Power ................................................................................ 26 E. Uliastai 5 MW Solar PV with Battery Storage........................................................... 31 F. Govi Altai 10 MW Solar PV ...................................................................................... 37 G. Altai Soum Hybrid Solar and Wind ........................................................................... 40 H. Khovd Shallow-ground Heat Pump .......................................................................... 47 I. Implementation Arrangements ................................................................................. 53 J. Implementation Period ............................................................................................. 53 K. Project Cost ............................................................................................................. 53 IV. DESCRIPTION OF THE ENVIRONMENT .................................................................. 54 A. Mongolia .................................................................................................................. 55 B. Umnugovi ................................................................................................................ 58 C. Uliastai .................................................................................................................... 73 D. Govi Altai ................................................................................................................. 83 E. Altai Soum ............................................................................................................... 96 F. Khovd .................................................................................................................... 102 V. ANTICIPATED IMPACTS AND MITIGATION MEASURES ...................................... 111 A. Assessment of Impacts ......................................................................................... 111 B. Anticipated Pre-construction Phase Impacts and Mitigation Measures .................. 111 C. Anticipated Construction Phase Impacts and Mitigation Measures ........................ 112 D. Anticipated Operation Phase Impacts and Mitigation Measures ............................ 118 E. Project Decommissioning ...................................................................................... 129 F. Project Benefits ..................................................................................................... 129 VI. ALTERNATIVE ANALYSIS ...................................................................................... 135 A. Umnugovi 10 MW Wind Power .............................................................................. 135 B. Uliastai 5 MW Solar PV with Battery Storage......................................................... 136 C. Govi Altai 10 MW Solar PV .................................................................................... 138 D. Altai Soum Hybrid Solar and Wind ......................................................................... 138 E. Khovd Shallow-ground Heat Pump ........................................................................ 139 F. No Project Alternative ............................................................................................ 142 G. Overall Alternative Analysis ................................................................................... 142 VII. INFORMATION DISCLOSURE AND PUBLIC CONSULTATION ............................. 143 A. Mongolian and ADB Requirements for Public Consultation ................................... 143 B. ADB Stakeholder Consultations ............................................................................ 143 C. Public Consultation During DEIA Preparation .......................................................