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The project was screened B/1, requiring an Environmental Audit of the existing facilities and an Environmental Analysis of the proposed investment project. A baseline soil and groundwater investigation was also commissioned to assess potential soil or groundwater contamination. The environmental due diligence was conducted by Fiat's environmental consultants. International consultants were also retained by Fiat to act as independent assessors of the environmental investigations, in accordance with the Bank's terms of reference. Bank representatives accompanied the consultants on site visits and were involved in discussions with GAZ specialists responsible for environmental, health and safety issues. Meetings were held with local environment and health and safety authorities and regulators as part of the identification process of planning issues and regulatory compliance. All relevant permits and planning requirements are currently being sought from the authorities.
GAZ currently meets all of its obligations related to the Environmental Action Plans attached to the previous loan agreements with the Bank. These included the installation of new scrubbers for air pollution control equipment, a phase out of fuel oil and replacement with natural gas. Significant improvements have also been made to standards of waste-water discharge as a result of the construction of a general waste-water treatment plant (for run-off and other discharges).
The due diligence investigations confirm that the environmental issues associated with the operations are typical of large manufacturing complexes in the automotive sector and include atmospheric emissions, waste-water discharges, hazardous waste storage, oil and chemical storage, and worker health and safety issues. The most significant environmental impact is likely to be associated with the shared central services that the joint venture will draw on (waste-water treatment, power and energy, waste disposal etc.).
In the framework of the Fiat/GAZ project a comprehensive Environmental Action Plan has been developed to bring the facilities in compliance with both Russian and EU environmental health and safety legal requirements. The new passenger car production facilities will meet both national and EU environmental health and safety standards and regulations. The joint venture will also adopt the following cleaner technologies to limit adverse environmental impact:
- a new solid waste disposal facility will be installed in line with best international standards;
- air emission control equipment will be provided to reduce aerosol and particulate emissions;
- all painting facilities will be designed to best international standards, utilising water base processes and thereby eliminating solvent emissions;
- post-combustion treatment technology of emissions from paint drying ovens will be installed;
- segregated waste-collection systems will be established.
Exhaust emissions in automobiles
Within the European Community, the strict limits on vehicle emissions, imposed by the EU in the past years, have been further strengthened by Directive 94/12, which took effect on 1 January 1997. Furthermore, new proposals were made for still more stringent emission limits and gasoline standards to be achieved by the year 2000 and 2005.
The Fiat/GAZ engines will be fully compliant with the existing and proposed revised EU standards. However, in the context of the Russian automobile pool, the main drawback to achieving reduced pollutant emissions is access to unleaded gasoline, which currently is only available in the larger cities. In addition, the catalytic converter, responsible for the most significant abatement of pollutants and mandatory in most European countries for gasoline cars since the beginning of 1993, cannot be used on cars fuelled with leaded gasoline. A number of decrees and regulations have recently been introduced in Russia, which relate directly to a phase-out of lead in gasoline. Phasing lead out of Russia's gasoline pool will ultimately require investment in new refining capacity which can provide lead-free high octane fuel.
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