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Environmental classification and rationale
The project was screened B/1, requiring an Environmental Audit and Environmental Analysis in line with the Bank’s Environmental Policy and Public Information Policy. The modernisation of existing power units focussing mainly on improvising energy efficiency and operational control is associated with a number of environmental issues, which can be readily identified, assessed and mitigated as part of an Environmental Analysis.
An Environmental Audit and Analysis was undertaken by an independent consultant and Members of the Bank’s Environment Department visited the site in 2004.
Key environmental issues and mitigation
The key environmental issues are air emissions associated with the use of heavy fuel oil and/or gas. Due to the nature of fuel mix and site location, emissions from the plant are not judged as a having a significant adverse impact. The plant’s main emissions are associated with Sulphur Dioxide (SO2) and Nitrous Oxide (NOx) emissions. The plant already relies on low sulphur fuel, which is locally availability (0.2% sulphur). The planned modernization will also upgrade existing boilers inclusive of the existing primary NOX control systems and the installation of low NOx boilers at the plant. This will improve the performance of the plant. The plant has made an assessment of the impact on local air quality, and the modelling did not identify any exceedance of national or EU ambient air quality standards as a result of operating the power plant.
As part of the investment programme an environmental management system and continuous monitoring will be incorporated into day-to-day operations during the implementation of the modernization programme.
Water consumption and wastewater discharges are a significant issue as the plant has an open circuit cooling systems. The plant will review and upgrade the existing cooling systems, although it is likely to remain an open once-through system. Discharged water is used mainly for irrigation purposes, and there have been no reported environmental issues. As part of the Action plan this issue will be further reviewed.
The plant is not associated with significant waste disposal problems due to the nature of fuel used. However, some hazardous and non hazardous waste needs to be disposed in licensed landfills. At present his is not well organized, and much of the waste ends up in the municipal landfills. As part of developing an environmental action plan this will be addressed to reduce environmental and human risk.
Contaminated land was not judged as a significant issue at this plant.
Asbestos is used at the plant, and the modernization programme will include the development of an asbestos management plan to address this issue. Overall, health and safety culture at the plant is poor and needs to be upgraded as part of developing and environmental, health and safety management system.
Environmental opportunities
The proposed project is expected to bring significant environmental benefits as the upgraded plant will have a higher overall efficiency and substantial improvement will be made to the environmental management and operation of the plant. The increase in efficiency and fuel switching is likely to lead to significant emission reduction and possible carbon reduction opportunities. The ERBD is progressing this issue as a CDM project, and anticipates a significant amount of emission reductions to result from the project.
Summary of Environmental Action Plan
The company will be required to adhere to Azeri environmental, health and safety regulations and EU environmental standards. All relevant permits will need to be obtained during the modernization period.
An Environmental Action Plan (EAP) has been developed following the due diligence and is currently being discussed. Around EUR 3 million has been earmarked for environmental improvements. The EAP will address inter alia air emission control, need for continuous air monitoring systems, asbestos management, house keeping, and the overall management of the environment, health and safety issues at the power plant and associated auxiliary operations. An environmental management system will be developed at the plant within the next 2 years.
Disclosure of information and consultation
In the context of the EBRD’s participation in the project, the Company will release locally a summary of relevant environmental issues associated with the project and summarise mitigation measures, action plans and other initiatives agreed
Monitoring and reporting
The Company will monitor the environmental impact of its operations in accordance with national law and regulations. The Bank will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual environmental reports prepared for the project covering:
(i) ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programmes, and
(ii) the status of implementation of environmental mitigation and improvement measures. The Bank’s representatives will also conduct periodic site supervision visits when deemed appropriate.
If required, the Bank will carry out monitoring visits to the plant.
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