Su pplementary Initial Environmental Examination (Draft) Summary Initial Environmental Examination Loan Number: 2260-PRC May 2010 People’s Republic of China: Inner Mongolia Autonomous Region Environmental Improvement Project (Expanded works of Linhe District Heating Subproject) Prepared by the Government of Inner Mongolia Autonomous Region for the Asian Development Bank (ADB). 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 February 2010) Currency Unit = yuan (CNY) = $ 0.147 Y1.00C $1.00 = 6.82 CNY ABBREVIATIONS ADB – Asian Development Bank EIA – environmental impact assessment EMP – environmental management plan EMU – environment management unit EPB – environmental protection bureau IEE – Initial Environmental Examination PRC – People’s Republic of China SEIA – summary environmental impact assessment WEIGHTS AND MEASURES C – Celsius ha – hectare kg – kilogram km – kilometer kV – kilovolt kWh – kilowatt-hour m – meter m3 – cubic meter mm – millimeter MW – megawatt t – ton NOTE In this report, "$" refers to US dollars. CONTENTS Page I. INTRODUCTION 1 II. DESCRIPTION OF THE PROJECT 1 III. DESCRIPTION OF THE ENVIRONMENT 1 A. Geology and Climate 1 B. Flora and Fauna 1 C. Water Resources 2 D. Air Quality 2 E. Social Conditions 2 IV. ALTERNATIVES 2 V. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 3 A. Environmental Benefits and Impacts 3 B. Environmental Impacts and Mitigation Measures–Construction Phase 3 B. Environmental Impacts and Mitigation Measures - Operation Phase 8 V. ECONOMIC ASSESSMENT 9 VI. ENVIRONMENTAL MANAGEMENT PLAN 10 A. Institutional Requirements 10 B. Environmental Management Plan 10 C. Environmental Monitoring 11 VII. PUBLIC CONSULTATION AND INFORMATION DISCLOSURE 11 A. Public Consultation 11 VIII. CONCLUSIONS 12 SUPPLEMENTARY INITIAL ENVIRONMENTAL EXAMINATION I. INTRODUCTION 1. This supplementary initial environmental examination (IEE) has been prepared to assess environmental issues relating to the expanded works of Linhe Yangguang District Heating Project (project) under the ADB financed China’s Inner Mongolia Autonomous Region (IMAR) Environmental Improvement Project (Loan Number: 2260-PRC). The SIEE was based on the Chinese environmental impact assessment (EIA) report, prepared by two local EIA institutes1 in accordance with the People’s Republic of China’s (PRC) infrastructure development environmental approval process, as well as the Asian Development Bank’s (ADB) Safeguard Policy Statement (June. 2009). 2. The proposed project area experiences severe air pollution due to its heavy reliance on coal as the primary fuel and the large number of small inefficient coal-fired heating boilers and family heating stoves. The continued strong economic growth and urbanization in the district, combined with a significant increase in urban housing construction, has resulted in a heating supply shortage during the six month winter season in the area (the district heating rate in Linhe District was less than 20% in 2008). 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. II. DESCRIPTION OF THE PROJECT 3. The expanded Linhe District Heating System (DHS) will construct (i) a heat source with 70MW x4 chain grate boilers and auxiliary structures and facilities, (ii) 76.0 km of primary pipeline, (iii) 100 heat exchange stations, and (iv) rehabilitation of 67.4 km of secondary pipelines. Due to this expansion, 46 small low efficiency polluting coal fired boilers and approximately 40,000 family heating stoves will be demolished. III. DESCRIPTION OF THE ENVIRONMENT A. Geology and Climate 4. The project area is located in Linhe District of Bayannur City in the western region of IMAR. The project area covers 35.5 km2 with the total population of 529 thousand. The project area has a temperate continental climate which is characterized by distinct seasonal variations and sharp temperature changes. The annual average temperature is 8.8–10.1ºC, the average annual precipitation is 131.6 mm, with most occurring between June and September, and the annual evaporation capacity is 2400 mm. The project area is on the Yellow River Alluvial Plain with the vegetation coverage of 70%, which are mainly farmland and urban landscaping spaces as well as artificial orchards, grasslands and forests, etc. B. Flora and Fauna 5. The major agriculture vegetations are wheat, corn, sunflower and vegetables. The EIA Report has indicated that there is no endangered species in the immediate vicinity of the Project. 1 Dongfang Science & Technology Institute of China Metallurgical Industry Co. and Bayannur Municipal Environmental Science Research Institute. 2 C. Water Resources 6. The Project area is located on the upper reaches of the Yellow River with an extensive irrigation canal network. The basin length of the Yellow River in the district is 52km with the annual average flow rate of 847m3/s. The groundwater depth is 1.6-2.2m, and the annual average groundwater yield is 244million m3. D. Air Quality 7. In general, air quality in the project area meets the category II ambient air quality standards (GB3095-1996). The pollutants are mainly SO2 and total suspended particulates (TSP) caused mainly by numerous small, inefficient, domestic, and industrial coal-fired boilers, as well as by the dry climate. E. Social Conditions 8. There have been no cultural, historical or archaeological sites identified within the project area. The key social indicators of the District are summarized below: Table 1: Key Social Indicators of the Project Area Item Indicator Population Total population: 529 thousand; Non-agricultural population: 242.9 thousand; Agricultural population: 289.8 thousand. Land Total area: 2,354 km2 (urban area: 52 km2) Urbanization 10 sub-districts and 7 towns Economy GDP: 7.13 billion RMB in 2005 (IMAR: 507.36 billion RMB); Major industrial products: food processing, wool textile; Major crops: wheat, corn, beans, beetroots, sunflower, potato, fruits and Chinese cabbage. Education and medical One college, 25 middle schools, 12 vocational schools, 101 primary schools service and 61 kindergartens; 10 hospitals with total beds of 2,469. Source: Chinese EIA report. IV. ALTERNATIVES 9. Three types of coal-fired boiler technologies were evaluated during the feasibility study. They are circulating fluidized bed (CFB) boiler, pulverized coal boiler and chain grate stoker boiler. One of main advantages of CFB technologies is that it reduces SO2 emissions through adding limestone to the boiler. However, the local coal has low sulfur content (1.08% sulfur). For pulverized coal boiler, more particulate matters are generated using this technology. Thus it requires expensive dust control devices to reduce emissions. This type boiler also requires high level maintenance. Stoker boiler technology is reliable, long service life, low cost for operation, easy to operate and maintain, and widely used in PRC. It requires the lowest capital investment among all options. Emissions from new stoker boilers can meet the national air emission standards. 10. Based on above analyses, it is concluded that chain grate stoker boiler technologies is the most economical and suitable option for the district heating subcomponent. 3 V. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES A. Environmental Benefits and Impacts 11. The Project will significantly improve the local air quality by using environmentally friendly high-efficiency boilers with advanced emission control equipment that consume less coal, and by decommissioning 46 small, inefficient coal-fired boilers and replacing thousands of single-family heating stoves. The reduction of the single-family stoves, a point source for indoor air pollution, will have a significant positive impact on residents’ health and well-being, especially the poor. Water and soil pollution will indirectly improve as a result of the reduction of particulate matter emissions, sulfide, and other harmful compounds that contribute to acid rain and decreased crop production and water pollution. The Project, along with the closure of the small coal-fired boilers and family heating stoves will (i) increase the urban coverage of district heating services by 11 million m3 and reduce coal consumption, air pollutant emissions and green house gas namely CO2 emissions associated with district heating; (ii) reduce the traffic hazards caused by coal transport vehicles in the urban areas; and (iii) improve public health and the living environment in areas now affected by emissions, noise, and flue dust from small boilers and family stoves. The projected reductions in coal consumption and emissions are summarized in Table 2. Table 2: Estimated Reduction of Coal Consumption and Emissions Item Emission Reduction (ton/annum) Coal saving 171,000 SO2 2465 TSP 2411 NOx 446 CO2 284,451 Slag 82,000 Source: EIA report. B. Environmental Impacts and Mitigation Measures–Construction Phase 1. Soil 12. Potential environmental impacts on soil by the Project include (i) soil erosion, (ii) soil contamination, (iii) temporary and permanent acquisition of land, and (iv) impact from construction machinery operation and traffic. Soil erosion may be caused by (i) the constructions of the boiler house and the HESs, (ii) excavation of pipe trenches