Document of The World Bank FOR OFFICIAL USEONLY ReportNo: 31548 - CN PROJECTAPPRAISAL DOCUMENT ONA PROPOSED GRANT FROMTHE GLOBAL ENVIRONMENT FACILITY TRUST FUND INTHEAMOUNT OFUSD18.34MILLION TO THE PEOPLE'SREPUBLICOF CHINA FORA DEMONSTRATION OF PCBMANAGEMENT AND DISPOSALPROJECT November 18,2005 Environment and Social DevelopmentUnit (EASES) East Asia and Pacific Region This document has a restricteddistributionandmaybe usedby recipientsonly inthe performance of their official duties. Its contentsmav not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective: February 7,2005) Currency Unit = Chinese Yuan (CNY) CNY8.1 = US$1 US$0.12345 = CNY 1 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Assistance BAT Best Available Techniques BEP Best Environmental Practices CAS Country Assistance Strategy CIO Convention Implementation Office CNAO China National Audit Office COP Conference o f Parties CQS Consultants' Qualification Selection EIA Environmental Impact Assessment EMP Environmental Management Plan EPB Environmental ProtectionBureau FECO Foreign Economic Cooperation Office FMM Financial Management Manual FMR FinancialMonitoringReport G A C General Administration o f Customs GEF Global Environment Facility GM Geometric GOC Government o f China GPN General Procurement Notice IC Individual Consultant ICB InternationalCompetitive Bidding IFB Invitation for Bids I O M C Inter-OrganizationProgram on the Sound Management o f Chemicals MOA MinistryofAgriculture MBD Model BiddingDocument MOCom MinistryofCommerce MOCon MinistryofConstruction MOF MinistryofFinance MOFA MinistryofForeignAffairs MOH MinistryofHealth MOST Ministryof Science andTechnology N C B National Competitive Bidding NDRC National Development & Reform Commission NIP National ImplementationPlan NLG National Leading Group for implementation o f the Stockholm Convention PCB Polychlorinatedbiphenyl PCB3 Trichlorobiphenyl PCB5 Pentachlorobiphenyl 2 PCN Project Concept Note P I U Project ImplementationUnit PMO Project Management Office PRC People's Republic of China QCBS Quality- and Cost Based Selection RAP Resettlement Action Plan SA Special Account SEPA State Environmental ProtectionAdministration SERC State Electricity Regulatory Commission SOE Statement o f Expenses SPN Specific Procurement Notice TEQ/Nm3 Toxic Equivalent/ Normal Cubic Meter U N D O UnitedNations IndustrialDevelopmentOrganization UNDP UnitedNations DevelopmentProgramme Vice President: Jemal-ud-din Kassum, EAPVP Country Director: David R. Dollar, EACCF Sector Director: Maria Teresa Serra, EASES Task Team Leader: Helen Chan. EASEN CHINA Demonstrationof PCBManagementand DisposalProject CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE .............................................................................. 8 1. Country and sector issues ................................................................................................................ 8 2. Rationale for Bank involvement...................................................................................................... 8 3. Higher level objectives to which the project contributes .............................................................. 10 B . PROJECT DESCRIPTION ............................................................................................................ 10 1. Lending instrument........................................................................................................................ 10 2. Program objective and Phases....................................................................................................... 10 3. Project development objective and key indicators ........................................................................ 11 4. Project components ....................................................................................................................... 13 5. Lessons learned and reflected inthe project design ...................................................................... 13 6. Alternatives considered and reasons for rejection......................................................................... 19 C. IMPLEMENTATION ..................................................................................................................... 21 1. Partnership arrangements (ifapplicable) ....................................................................................... 21 2 . Institutional and implementation arrangements ............................................................................ 22 3. Monitoring and evaluation of outcomes/results ............................................................................ 25 4 . Sustainability and Replicability ..................................................................................................... 26 5. Critical.risks and possible controversial aspects ........................................................................... 26 6. Loadcredit conditions and covenants ........................................................................................... 28 D. APPRAISAL SUMMARY .............................................................................................................. 29 1. Economic and financial analyses................................................................................................... 29 2. Technical ....................................................................................................................................... 29 3. Fiduciary........................................................................................................................................ 33 4 . Social............................................................................................................................................. 33 5. Environment.................................................................................................................................. 34 6. Safeguard policies ......................................................................................................................... 34 7. Policy Exceptions and Readiness .................................................................................................. 35 Annex 1: Country and Sector or ProgramBackground ....................................................................... 36 4 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ............................... 59 Annex 3: Results Framework and Monitoring ...................................................................................... 62 Annex 4: Detailed Project Description ........................................................................................... .......66 : Annex 5: Project Costs............................................................................................................................. 85 Annex 6: Implementation Arrangements ............................................................................................... 87 Annex 7: Financial Management and DisbursementArrangements ................................................... 95 Annex 8: Procurement Arrangements .................................................................................................. 100 Annex 9: Economic and FinancialAnalysis ......................................................................................... 106 Annex 10: Safeguard Policy Issues ....................................................................................................... 107 Annex 11: Project Preparation and Supervision ................................................................................. 114 Annex 12: Documents inthe Project File ............................................................................................. 115 Annex 13: Statement of Loans and Credits .......................................................................................... 116 Annex 14: Country at a Glance ............................................................................................................. 120 Annex 15: Incremental Cost Analysis ................................................................................................... 122 Annex 16: STAP Roster Review ............................................................................................................ 131 Map: IBRD33583 5 CHINA PCB MANAGEMENTAND DISPOSAL DEMONSTRATIONPROJECT PROJECT APPRAISAL DOCUMENT EAST ASIA AND PACIFIC EASEN Date: November 18,2005 Team Leader: Helen Chan Country Director: David R.Dollar Sectors: Other industry (100%) Sector Manager: Magda Lovei Themes: Pollution management and Project ID: PO82993 environmentalhealth (P) Focal Area: Persistent Organic Pollutants (POPS) Environmental screening category: Full Lending Instrument: Specific Investment Loan Assessment Safeguard screening category: Limited impact For Loans/Credits/Others: USSl8.34 Recipient: People's Republic o f China ResponsibleAgency: State Environmental Protection Administration 115 Xizhimennei Nanxiaojie Beijing 100035 China Yang.xiaolins@,seuafeco.orrr.cn Project implementation period: Start: Februaryl, 2006 End: December 31,2009 Expected effectiveness date: January 31, 2006 Expectedclosing date: June 30, 2010 Does the project depart from the CAS incontent or other significant respects? Re$ 1 Does the project require any exceptions from Bank policies? Re$ PAD D.7 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [XINO I s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? Re$ PAD C.5 [ ]Yes [XINO Does the project meet the Regional criteria for readiness for implementation? Re$ PAD 0 . 7 [XIYes [ ] N o Project development objective Re$ PAD B.2, Technical Annex 3 Identify and demonstrate environmentally-sound and cost-effective policies, procedures and techniques for safe management and disposal o f China's temporarily-stored polychlorinatedbiphenyls (PCBs), their associated PCB-contaminatedwastes and remaining in-use PCBs equipment. Global Environment objective Re$ PAD B.2, Technical Annex 3 Help China eliminate PCBs, one o f the 12 Persistent Organic Pollutants covered by the Stockholm Convention on POPS,which are harmful to human health and to the environment. Project description [one-sentence summary of each component] Re$ PAD B.3.a, TechnicalAnnex 4 The project has six components: (1) institutional strengthening; (2) development o f a policy framework for PCB management and disposal; (3) PCB management inthe Zhejiang Province; (4) disposal o fhighly contaminated PCB wastes inthe Liaoning Province; (5) project monitoring and evaluation; and (6) design o f a national replicationprogram. The project will be financed with a grant from the GEF (US$ 18.34m), counterpart contributions (US$ 14.73m), and other donors (US$2.02m). Which safeguardpolicies are triggered, ifany? Re$ PAD D.6, TechnicalAnnex 10 Among the ten World Bank Safeguards Policies, three have been identifiedto be directly applicable to this project: (a) Environmental Assessment (OP/BP/GP4.01), (b) InvoluntaryResettlement (OP/BP 4.12), and (c) Information Disclosure (BP17.50). Environmental impacts associated with the project may result from possible PCB discharges (e.g. spills) resulting in contamination at storagehurial sites and duringPCB waste excavation, clean-up, containerization, treatment bythermal desorption, temporary storage, transportation, and destruction by incineration. N o large-scale, significant and/or irreversible impacts are anticipated as mitigation measures will be taken to prevent, control and countermeasure environmental discharges o f PCBs/dioxins/furans. The project environmental impacts are assessedintwo fullEnvironmental Assessment Reports andtheir mitigation is outlinedinEnvironmental Management Plan. Possible social risks may be associated with public exposure to contaminated sites, buildings and water supplies duringthe site cleanup inZhejiang and transportation process from Zhejiang to Liaoning. A Resettlement Policy Frameworkhas been preparedto deal withthe possible landacquisition and resettlement issue and SEPA has submitted it to the Bank. Site-specific resettlement plans will be prepared duringproject implementation. Annex 10 discusses more specifically how the project will ensure compliance with the safeguard policies and the World Bank DisclosurePolicy. Significant, non-standard conditions, if any, for: none Boardpresentation: December 15,2005 Loadcredit effectiveness: expected to be January 31, 2006 Covenants applicable to project implementation: Details in Section C, paragraph 47 7 A. STRATEGIC CONTEXT AND RATIONALE 1. Countryandsectorissues 1, Background. Polychlorinated biphenyls (PCBs) are one of the twelve persistent organic pollutants (POPS), which, due to their damage to human health and the environment, were identified for elimination by the Stockholm Convention, which entered into force on M a y 17, 2004. China has been strongly committed to the development and implementation o f the Stockholm Convention. It participated in all preparatory meetings and signed the Convention as soon as it opened for signature on May 23, 2001. China officially ratified the Stockholm Convention on August 13, 2004, and i s a Party to the Convention. China has also advanced substantially inmeeting the Convention requirement that Parties to the Convention submit a National Implementation Plan (NIP)to the Conference of Parties within two years after the Convention enters into force for that country. China started preparing its NIP inmid-2004 and i s expected to complete it by the required date o f August 13, 2006. 2. Country Situation. Only three PCB producers (in Xi'an, Suzhou, and Shanghai), ever manufactured PCBs in China and only from 1965 to early 1974 (details in Annex 1). They produced approximately 10,000 tons, including 1,000 tons o f pentachlorobiphenyl (PCBS) and 9,000 tons o f trichlorobiphenyl (PCB3). Some wastes may remain at production facilities, which will be addressed under the national replication program to be developed in this project (component 6, para.25). PCBS oils were generally used in a wide variety o f open systems, such as in oil paints and exterior dopes. PCB3 was principally used inmanufacturing capacitors that were used inthe electricity supply industry. 3. Duringthe 1980s, following growing health and environmental concerns, China removed most PCB-containing capacitors from service and placed them in temporary storage facilities (underground "concrete coffins" or in caves) intended to hold them for 3-20 years. Recent surveys and investigations indicate that most PCB-containing equipment remains inthese temporary storage facilities, and that many of the facilities--caves and burial sites -- are leakingPCBs into the environment. 4. The Main Sector Issues to be Addressed by the Project. China is a country with a vast territory and a population o f over 1.3 billion. Because o f its size, the varying stages o f economic development and various degree o f effectiveness o f PCB management and disposal in different regions, China faces many challenges in PCB management and disposal. These include incomplete PCB baseline data, a weak institutional and policy framework for PCB management, lack o f PCB disposal technology and facilities, and insufficient public awareness. The project will address these sector issues in one province (Zhejiang) to determine and demonstrate the most cost-effective practices and technologies for managing and disposing o f PCBs in China. This demonstration will help China design and cost its nation-wide PCB program and help other countries design theirs. The main PCB management and disposal issues that the project will address inZhejiang Province are: a. Incomplete PCB baseline data. The project will complete the identification o f PCB wastes (including associated PCB-contaminated soils) in temporary PCB storage sites, over 95% o f the wastes are believed to be PCB capacitors and PCB containing oil. An ongoing Sino-Italian PCB project (Development of PCB Inventory Methodology and Dyaft PCB Disposal Strategy) i s collecting PCB baseline information in Zhejiang and Liaoning Provinces. This project will support follow-up activities, including identifying the exact locations o f the PCB sites, performing PCB concentration tests before their cleanup, and cleaning up o f the sites. The Sino- Italian project has also obtained some basic information on transformers in both provinces; however detailed information on PCB transformers and their levels o f contamination still need to be confirmed in both provinces. This demonstration project will focus on identifying in-use PCB contaminated transformers installed before 1980 and testing decontamination technology o f 8 PCB transformers as well as decontaminating some o f those large in-use PCB transformers installed before 1980. The project does not attempt to decontaminate all the PCB contaminated transformers inZhejiang. This would be a long-term task and would have to be integrated into the normal service and maintenance o f transformers. b. Weak PCB management and disposal capacity. This project will support environmentally sound management o f PCBs, including recovery, collection, packaging, transportation, safe temporary storage in Zhejiang, and final disposal in Liaoning. There are currently no suitable facilities in China that meet the requirements o f the Stockholm Convention for environmentally sound and safe disposal o f PCBs. China has started construction o f a new incinerator facility to dispose PCBs in 2002. However, design o f this new facility does not meet the requirements o f the Stockholm Convention on safe disposal o f PCBs. China will provide additional funding to complete this incinerator with equipments that are necessary for safe emission control and monitoring o f the incineration process. The project will also support capacity building activities for sound PCB management and disposal. c. Health and environmental risks from PCB contaminated soils and water. A toxicity study o f DDT and PCB on women and children supported by Canadian Trust Fund i s ongoing. Its key objective i s to investigate the exposure o f DDT and PCBs and their adverse effects with special emphasis on the health o f women and children. The initial study result indicates that the tested area in Zhejiang has a high-concentration PCB exposure. PCB geometric concentration levels in women and children in this area are moderately elevated. They are below those found in Arctic Canada (Nunavut) and above those found in southern Canada. Inthe Zhejiangprovince, several accidental releases ofPCBsare knownto have occurred (details inAnnex 1,Paragraphs 15-18). Data from the Mei Cheng and Xiaoshan sites inZhejiang show leakage at both sites and their contamination levels reached 150- 250 ppm, three to five times the national standard o f 50 ppm. The information from Zhejiang Province suggests that the PCB storage sites with confirmed or suspected leakage are located (i) in close proximity, sometimes within the footprint, o fresidential, office or retail buildings (e.g., in Shangyu Business Street), (ii) inpublic parks (e.g., Cixi Culture Park), (iii) upstream of drinkingwater reservoirs and rivers at (e.g., Qian Tang Jang River supplying the City o f Hangzhou), (iv) at sites o f planned or ongoing infrastructure development (e.g., Qiandao Lake Holiday Valley building and playground in Jianshan), (v) at active cemeteries (e.g., Mei Cheng Township), and (vi) at farms (e.g., in Wenzhou Yueqing). The project, therefore, will address the health and environmental risks by recovering and disposing o f the PCBs from all sites in Zhejiang Province to prevent future releases to the environment. The cleanup o f PCB sites would be based upon a clear understanding o f site-specific risks, feasibility o f the technological options and costs. d. Imperfect policies, regulations, standards and enforcement. Enforcement and execution o f current polices and regulations are severely constrained by the absence o f effective monitoring and evaluation measures. The project will therefore support development and update o f the legal and regulatory system for safe PCB management and disposal. Related policies and regulations at the national and local levels governing PCB management and disposal will be formulated and revised as necessary. Monitoring and evaluation measures will be developed to ensure effective enforcement. e. Insufficient public awareness and education. Public awareness i s important for smooth cleanup of identified PCB sites in Zhejiang, especially those PCB sites close to residential complexes. The project will support necessary public awareness activities, such as video making, newsletters issuance, TV programs, and other public outreach materials and activities. 9 5. Baseline Information in Zhejiang. Zhejiang Province was selected as the demonstration province for this project. The ongoing Sino-Italian project has estimated that, on the basis o f Zhejiang's overall transformer capacity in 1980, the province has about 22,500 PCB capacitors, and a total o f about 247.5 tons o f PCB oil, The total amount o f the PCB capacitors and the highly-PCB contaminated soils (PCB >5OOppm) which need disposal i s estimated at about 1,980 - 2,475 tons (2,000 tons i s used as the project indicator), and the total amount o f low-PCB contaminated soils and water (PCB<=SOOppm) which need cleanup i s about 19,800 - 24,750 tons (20,000 tons i s used as the project indicator). 6. Based on the January 2005 survey on transformers conducted under the Sino-Italian project, the total number o f transformers in Zhejiang province has been identified to be around 230,000 transformers in 2003, o f which around 2,200 are large transformers at substations (details in Annex 1). There is presently no information on PCB used in transformers or potential contamination with PCB. It is estimated that 78 (still to be confirmed) o f large transformers installed before 1980 might still be in service in the Zhejiang province. A conservative estimate would be that they all might contain PCB. Decontamination o f some PCB transformers will be one o f the focuses inthe demonstration project. 2. Rationale for Bankinvolvement 7. The Bank - as a GEF Implementing Agency - has a responsibility to help its client countries achieve the global environmental objectives that are supported by the GEF. The GEF i s the interim financial mechanism o f the Stockholm Convention and this PCB Demonstration Project will contribute significantly to achieving the objectives o f the corresponding GEF Operational Program for Reducing and Eliminating Releases o f Persistent Organic Pollutants (OP14). The proposed project i s consistent with the Bank's Environment Strategy and its 2003-2005 Country Assistance Strategy (CAS) for China. The key pillars o f the strategy - improving people's quality o f life, quality o f economic growth, and quality o f regional and global commons - are all reflected in the project's objectives and approach. The Bank's technical knowledge on POPSmanagement and its experience in the design and implementation o f GEF investment projects give it a comparative advantage among the GEF Implementing Agencies inproviding this assistance. 3. Higherlevel objectivesto which the project contributes 8. The project will contribute to both national and global objectives. On the national level, it will support implementation o f the China's National Program for Construction o f Hazardous and Medical Waste Disposal Facilities issued by the State Council in December 2003, and will contribute to China's ongoing efforts to reduce the risks to human health and the environment from industrial pollution. On the global level, the project will help China meet its obligations under the Stockholm Convention and contribute to global efforts to control toxic chemicals in general and to eliminate PCBs in particular. It will also indirectly contribute to the objectives o f two other international environmental agreements -the Base1 Convention on the Control o f Trans-boundary Movements o f Hazardous Wastes and Their Disposal and the Rotterdam Convention on the Prior Informed Consent Procedures for Certain Hazardous Chemicals. B. PROJECTDESCRIPTION 1. Lendinginstrument 9. The lending instrument i s a GEF grant. The grant will be complemented by bilateral and counterpart funding from the Chinese Central and Zhejiang provincial government, the local private sector, and bilateral donors. 10 2. Program objective and Phases 10. While the project i s not a part o f a formal, multi-phase program, it i s an essential part o f a suite o f internationally supported interventions aimed at improving China's capacity for PCB management and disposal, and accelerating the achievement o f that objective. The project builds upon the work currently under implementation in (a) the preparation o f China's National Implementation Plan (NIP) for implementing the Stockholm Convention, (b) the Sino-ItalianPCB inventory methodology and draft PCB disposal strategy, and (c) the Sino-Canadian project on training for PCB management. The Sino-Italian and Sino-Canadian projects constitute bilateral co-financing contributions to the NIP preparation. These four projects (including the proposedproject) are beingimplemented simultaneously. Results o f the Sino- Italian project and the Sino-Canadian project will be fully integrated into the NIP and the proposed project; and project results from the four projects will lay the ground for developing a National Replication Program for PCB management and disposal in China. These activities are carefully coordinated to avoid any duplication o f efforts or inefficient use of resources. The timing and relationship among the proposed project and key complementary initiatives i s depicted in the following diagram. 3. Project development objective (PDO) and key indicators 11. The development objective o f the project i s to identify and demonstrate environmentally-sound and cost-effective policies, procedures and techniques for safely managing and disposing o f China's uniquetemporarily stored PCBs and associated PCB-contaminated wastes (e.g., PCB-contaminated soils and water). The project will also serve as a demonstration o f how this objective can most cost-effectively be achieved throughout China and in other countries that face the same challenge. The criteria for selecting Zhejiang as the demonstration province include its comparatively: (a) longer history o f PCB transport, storage, disposal, remediation at different levels o f government -- provincial, county, and district; (b) higher level o f PCB risks posed to both human health and the environment; (c) better and existing PCB management system at different levels o f government to built on; (d) deeper economic development at different levels; and (e) stronger local government support. 12. The Project will implement various cleanup measures inZhejiang Province to mitigate the impact o f PCB threats to human health and the environment, including the global environment. Inparallel, the project will strengthen Zhejiang Province's PCB institutional and regulatory system, management practices, and public awareness to prevent a recurrence o f PCB pollution in the future. PCB cleanup activities are not expected to adversely affect human health and the environment'in the province. The principal outcomes o f the project will be that Zhejiang Province has successfully and cost-effectively disposed o f its PCBs and PCB wastes, and that China has established a cost effective PCB cleanup framework, which can also be applied to the rest o f the world. 11 Y v1 a a 4 0 1 YU .- a z Q, a u a 5 Q) 13. To track the progress toward the PDO, the project will use five key indicators as summarized below, explained inmore detail inAnnex 3: a. Establishment o f an institutional and legal framework for PCB management and disposal in Zhejiang Province, b. Cleanup/removal ofPCBs from about 56 PCB storage sites inZhejiang, c. Disposal o f estimated 2,000 tons o f PCB oil, PCB equipment, and high-PCB contaminated soils and water (PCB>SOOpprn) in Zhejiang, d. Cleanup o f estimated 20,000 tons o f PCB-contaminated soils and water (PCB <=500ppm) collected from the 56 PCB storage sites inZhejiang, e. Decontamination o f 10 large in-use PCB transformers installed before 1980 in Zhejiang and identification o f PCB contamination level o f 3% o f 2,200 large transformers and 50 o f small transformers, and f. A draft national replication program for PCB management and disposal to be applied inthe rest o f China. 4. Projectcomponents(Annex 4 for a detailed description and Annex 5 for a detailed cost breakdown). 14. The project has six components: (a) institutional strengthening; (b) development o f a policy framework for PCB management and disposal; (c) PCB management in the Zhejiang Province; (d) disposal o f highly-contaminated PCB wastes in the Liaoning Province; (e) project monitoring and evaluation; and (0 design o f a national replication program. The project will be financed with a grant from the GEF (US$ 18.34m), counterpart contributions (US$ 14.73m), and other donors (US$ 2.02m). GEF funding is 57% of the total project cost. Project components and their cost estimates are listed in Table 1. Table 1: Summary ofProposedProjectCost andFinancing Counterpart Other Component contribution Yo of donors Yo of I (B) 1. Institutional Strengthening 1,945,000 I 7 0 299,000 2.0 363,000 ' 17.9 2. Development of a Policy Framework for PCB 1'283'000 II Managementand 8 10,000 72,000 668,000 4.5 70,000 3.5 Disposal 0 4 .............................................................. ............................ 3 PCB Managementin the .i Zhejiang Province 15,O 16,000 42 10,030,000 54 7 3,849,000 26.1 1,137,000 56.2 ~ I ......................................................................... ........................ 4 Disposalof PCB Wastes inLiaoningProvince 13,609,000 , I 3 8 8 6,23 8,000 34 0 6,9 17,000 46.9 454,000 22.4 5 Project Monitoringand + Evaluation 127,000 127,000 0 7 0 0 0 0 6 Design of aNational 1 Replication Program 3,290,000 I 9.4 290,000 1.6 3,000,000 20 4 0 0 ~ 7 Contingency 300,000 0.9 300,000 1.6 0 Total 35,097,000 100.1.0 18,340,000 100.0 14,733,000 99.9.0 2,024,000 100.0 13 Component 1:InstitutionalStrengthening (US$1,945,000) 15. This component aims to strengthen Chinese institutions for PCB management and disposal in a sustainable manner. It would support: (a) an inception workshop for the project; (b) capacity building at the national level by strengthening the PCB project team and establishment o f a national PCB expert group in CIO under SEPNFECO; (c) establishment o f a local project implementation unit (PIU) in the Zhejiang Province; (d) provision o f PCB management training to provincial authorities and technical personnel, as well as project management training for both PIU staff and the PCB project team inCIO; (e) a study tour abroad countries for PCBs disposal technologies, and (e) undertakmg public awareness activities. Component 2: Development of a Policy Framework for PCB Management and Disposal (US$ 810,000) 16. Current policies and regulations on hazardous waste management in China provide some specific requirements on PCB management, although they are insufficient to support the effective implementation o f this demonstration project. Therefore, China needs a new policy framework to meet obligations o f the Stockholm Convention. This can be achieved through (a) revising the existing national and provincial regulations and/or standards and (b) developing new technical guidelines and measures for implementing the Stockholm Convention. The detailed guidances for establishing the policy and legal framework as well as for technical measures on PCB management and disposal from UNEP, IOMC, Base1 Convention, and other resources will be considered duringproject implementation. 17. This component will develop and improve the legal and regulatory framework for safe management o f PCBs in the Zhejiang Province. In addition, relevant policies and regulations at the national and the local levels governing PCB management and disposal will also be reviewed, revised, and supplemented as necessary. This component would cover six key policies: At the provincial level: a. A PCB pollution prevention/control regulation for the Zhejiang Province. b. An emergency response plan for PCB accidents for Zhejiang. This will be an overall response plan for safety, health, environment, and other relevant authorities to effectively manage and cooperate incase o f accidents involvingPCB. c. A technical guideline for PCB management and disposal for Zhejiang. This i s to develop a technical guideline covering the entire spectrum o f activities that together constitute the environmentally sound management and disposal o f hazardous wastes containingPCBs. At nationallevel: d. A National regulation'on PCB management and disposal. The national regulation will (i) define the PCB management and disposal responsibilities o f the central government, local government, and PCB equipment owners; (ii) set up the timeline for PCB management and disposal in China; and (iii) require registration and public disclosure o f PCB waste storage. e. National pollution control and environmental quality standards for PCBs. This activity i s to develop seven pollution control and environmental quality standards for PCBs to facilitate implementation o f the project in the demonstration province and support the environmental regulatory framework in China. f. Developmentof a fundingmechanismfor co-financingPCB management and disposal inChina. This regulation will help China to effectively implement the strategy on PCB reduction and disposal now being developed under the Sino-Italian PCB project. 14 Component3: PCBManagement inthe Zhejiang Province(US$15,016,000) 18. There are a total o f estimated 61 PCB storage sites in Zhejiang, o f which five (5) had been cleaned up prior to 2003 and fifty-six (56) sites are to be cleaned up inthis project. Of the 56 sites, exact locations o f four (4) PCB storage sites have already been confirmed, thirty-four (34) sites have been identified with exact locations still to be confirmed, and eighteen (18) sites are expected to be identified inthe inventory investigationunder the Sino-Italianproject fromnow to the first-year implementationof the project. Exact locations o f where the PCBs are stored in the estimated 52 (34+18) PCB storage sites will be identified, sampled and tested, after which all 56 sites will be cleanedup (details inAnnex 4). 19. Highlycontaminated PCB wastes with PCB content o f over 500ppm will be storedtemporarily in Zhejiang until they are transported to Shenyang for final destruction. PCB contaminated soil and other PCB wastes at concentrations from 50 ppm to 500ppm will be treated by a thermal desorption unit in Zhejiang. The cleaned PCB sites will be further monitored and effectively managed untilthe remediation o f the sites brings them within PCB content below 50 ppm at the minimum,which i s a standard set by the Chinese Government (China GB13015-91 Standards on Pollution Control o f PCB Wastes). However, the cleanup action level for each site will be based on the actual risk at the site and the future use o f the cleaned PCB site. The applicable international standards will be used in case o f no relevant national standards. 20. The results and lessons learned from each key aspect o f PCB management will be fully documented and used to refine national and provincial PCB management regulations and guidelines. They will also be usedinthe design o f the national replication program on PCB elimination. 21. A process for PCB management and disposal described inParagraph 67 has beendraftedfor PCB management activities in Zhejiang and PCB disposal in Shenyang. The process will be further detailed with specific procedures and requirements through developing the technical guideline for PCB management and disposal under Component 2 o f this project. The technical guideline will be used, evaluated and improved through project activities inZhejiang and Shenyang. 22. This component for PCBmanagement inZhejiang Province would have seven activities: a. Feasibility studies on technical issues. Several feasibility studies will be conducted before PCB site cleanup, PCB waste storage in Zhejiang and transportation to Shenyang for disposal. These studies include: i)pre-treatment o f the buried PCBs equipment before sending them to Shenyang for final disposal; ii) fixed or mobile PCBs storage facilities in Zhejiang; iii) transportation vehicles for PCBs wastes from Zhejiang to Shenyang; and iv) fixed or mobile thermal desorption facility inZhejiang. b. Identificationof exact location of PCB sites. Georadar (ground penetrating radar) technology i s proposed for locating and obtaining a preliminary quantification o f buried PCBs wastes. This technology i s based on electromagnetic waves, which are sent to the surfaces to be monitored and received back with a different reflection due to the differing dielectric characteristics o f the elements they go through. This technology i s effective for locating and determining the depth o f claddings, caves, cracks, metallic elements and any other objects with a detectable dielectric contrast. Location o f 10 sites will be funded by the Sino-Italian project. The rest o f the sites will be financed by this project. c. Cleanup of PCB storage sites. All identified PCB sites will be cleanedup usingthe following procedures: i. Datagathering. ii.Pre-cleanupfieldtests--siteenvironmentcharacterization. 15 0 Mapping o f the exact position o f buried PCB wastes 0 Sampling and analysis 0 Mapping o f PCB contamination 0 Site environment characterization and risk assessment. Based on the location and conditions at the site, proximity to human settlements, water sources, agricultural lands, sensitive habitats, etc., the risks to humans and the environment will be determined using a simple comparative risk assessment approach. The risk assessment will allow ranking o f the sites and determining the order o f their inclusion inthe annual work program. iii.Site cleanup design. A cleanup planwillbe developed for eachsite basedonthe data collected from iand ii.The cleanup plan will include details o f (a) amount o f PCB wastes to be removed, (b) work schedule o f the cleanup, (c) standard safety procedures, and (d) measures for preventing further leakage or dispersion o f contaminants to the environment duringcleanup. iv. Site preparation prior to cleanup v. Safety training onpersonalprotection measures vi, Removal andpackagingof PCB contaminated waste and soil vii. Restoration o f the cleanup site viii. Evaluationo f cleanup activities ix. Site documentation will be collected and archived. The documentation will include the design o f the cleanup activities, cleanup work reports, analysis and sampling reports, the post-cleanup report, etc. x. After the PCB wastes are recovered from the PCB sites, the highly contaminated PCB wastes (>500 ppm) will be transported to the PCB storage facility inZhejiang for temporary storage. xi. After containerization, the highly contaminated PCB wastes will be transported by special trucks from the PCB storage facility in Zhejiang to Shenyang, Liaoning for destruction by incineration. A strict transportation protocol will be followed. d. PCB waste storage facility in Zhejiang. A feasibility study on a fixed storage facility versus a mobile one will be conducted (see Para. 22a). This storage facility will be built and operated according to China's Standard for Pollution Control on Hazardous Waste Regulation (GB18597- 2001). An EL4 will be prepared for local authorities and the Bank's clearance before its construction. This storage facility will belong to China to be used in the national replication program. e. Cleanup of low contaminated PCB wastes (between 50ppm to 500 ppm). PCB wastes with concentrations o f 50-500 ppm will be treated using a mobile thermal desorption system. Selection o f the thermal desorption technology i s based on the evaluation o f alternative PCB treatment/disposal technologies prepared during project preparation. The expected amount o f PCB contaminated wastes, mostly soils, (PCB<=SOOppm) i s about 20,000 tons, which i s planned to be safely cleaned after the highly contaminated PCB wastes are recovered and removed from the temporary PCB storage sites. Given the constraints o f traffic, energy supply, and the logistics o f re-positioning the facility, a mobile unit able to treat 50 tonnes per day i s believed to be the best choice. An E M for the thermal desorption unit to be used for soil decontamination in the Zhejiang province will be prepared for local authorities and the Bank's clearance before its purchase and application. f. Supervision of PCB site cleanup and soil decontamination. PCB site cleanup and soil decontamination will be supervised by independent consultants. This i s to make sure that PCB site cleanup and soil decontamination follows Chinese regulations and technical standards as well as requirements under this project. 5 Verificationand Monitoringof PCBs sites after cleanup. This part will include verification o f PCB site decontamination right after site cleanup and monitoring of sites after cleanup for one 16 year. Verification will be conducted by Zhejiang Environment Monitoring Station for each PCB site after cleanup to confirm its site decontamination. The verification results will be endorsed by the Zhejiang provincial EPB. Soil, ground water, surface water and plants around the storage sites will be tested during the verification. After commission o f each site by Zhejiang EPB, the project will also support monitoring o f selected sites for one year. h. Testing and Decontaminationof in-use PCB transformers. China has confirmed that itnever produced PCB containing transformers. However, large transformers containing PCBs were imported to China in 1970s and 1980s; it i s possible that some o f these PCB transformers are still inuse. In addition, transformers might have been contaminated with PCB during servicing and maintenance. The Sino-Italian project attempts to obtain the inventory o f all transformers in Zhejiang and Liaoning provinces. So far, this project has identified 230,000 in-use transformers in Zhejiang in 2003, o f which around 2,200 are large transformers (over IlOkv), yet their potential contamination with PCB i s still to be investigated. And it i s estimated that 78 (still to be confirmed) o f those older large PCB transformers (over 35kv and about 626 units) installed before 1980 are still in service. As there might be a higher risk that those transformers might be contaminated with PCB, this demonstration project will focus on investigating the potential PCB contamination o f them and testing o f decontamination technology o f PCB transformers and decontamination o f some those still in-use large PCB transformers installed before 1980. Due to the large number o f transformers and unknown status o f potential PCB contamination, the project does not attempt to decontaminate all the PCB contaminated transformers in Zhejiang. This would be a long-term task and would have to be integrated into the normal service and maintenance o f transformers. Detailed activities on PCB transformers include: Activities under the Sino-Italianpro1ect: i. Identificationoflocationofthe2,200largetransformers(alreadyidentifiedundertheSino- Italianproject), ii. Sampling and analysis of 108-144 on-line transformers in Zhejiang to establish the percentage o f PCB contaminated transformers and contamination level (will be conducted under the Sino-Italian project innext six months). Activities under the demonstration project: ... 111. Collection o f detailed information (such as owner information, age, size, country o f origin, PCB analysis records, maintenance records, condition o f transformers, etc. ) o f in-use 78 large transformers installed before 1980. The process and information collected will be based on the PCB inventory methodology developed under the Sino-Italianproject, iv. On site investigation and testing of potential PCB contamination level o f the 78 older transformers, v. Testing o f decontamination technology o f PCB transformers, 0 Seminars on decontamination technology o f PCB transformers, 0 Analysis o f the PCB content in transformer oil and selection o f the most appropriate technology for decontaminating PCB transformers inservice, 0 Rental o f decontamination equipment for testing on a limitednumber o f transformers, 0 Test o f the PCB oil in decontaminated PCB transformers in service to confirm the level o f contamination and the removal o f PCBs, 0 PCB oil recovered from PCB transformers will first be stored temporarily inZhejiang and later be transported to Shenyang for final disposal, and 0 Evaluation o f result. A seminar will be held. 17 vi. If the PCB-contaminated transformers installedbefore 1980 are identified, 10 in-use older transformers will be decontaminated based on information collected under iiiand iv and technology selected under v. (The number o f transformers to be decontaminated would be based on the findings and what mightbe financially possible within the available funding), vii. Additional sampling and analysis o f PCB contamination level for more transformers (estimated 3% o f 2,200 large transformers and 50 o f small transformers) if funding available to provide basis for the nationalreplicationprogram. A strategy for dealing with PCB transformers on both provincial and national levels will be developed as part o f the Sino-Italian project and be integrated into the national replication program, most likely as a separate component. Component 4: Disposal of Highly-Contaminated PCB Wastes in Liaoning Province (US$ 13,609,000) 23. This component will provide fundingfor the final destruction o f highly contaminated PCB wastes (with PCB concentration greater than 500 ppm) collected from the storage sites inthe Zhejiang Province. The PCBs will be disposed by incineration, utilizing an existing but not fully completed incinerator in Shenyang in the Liaoning Province. Construction o f the Shenyang facility was initiated by the Chinese Government in 2002 in an effort to build domestic capacity to comply with the Stockholm Convention. The work has largely been completed on the core equipment, namely the rotary kiln, afterburner, tail gas cleaning system, wastewater treatment system, and workshops, at a cost o f $5.8 million. The main activities under this component will be to (a) build a PCB waste storage facility; (b) support a waste characterization and analysis unit at an existing laboratory; (c) complete the rotary kiln incinerator in Shenyang to meet Stockholm Convention requirements, especially with respect to minimizing and monitoring dioxidfuran emissions; (d) dispose the highly contaminated PCB wastes transported from Zhejiang; and (e) provide training to technical personnel in the areas o f PCB safe storage, PCB disposal operations, and dioxidfuran monitoring. Component5: ProjectMonitoringandEvaluation(US$127,000) 24. This component includes monitoring and evaluating project implementation. Specific activities would include: (a) integration o f PCB information gathered from the project into the POPSmanagement information system (POPS-MIS); (b) a workshop on the monitoring system designed for PCB management inZhejiang Province; and (c) three annual workshops to review project progress. Component6: Designof a NationalReplicationProgram(US$3,290,000) 25. The objective o f this component i s to develop a program to disseminate the experiences gained in the Zhejiang Province through implementation o f this project to the rest o f China and worldwide. This will include (a) a national workshop for review of experience and lessons learned from the demonstration project; (b) development o f a national replication program; (c) a national workshop to discuss the draft replication program, after which the replication program will be finalized; and (d) an international workshop for information dissemination. 26. In order to develop a national replication program, China will carry out: (a) a detailed national PCB inventory and monitoring system for all on-line transformers, PCB storage sites, and equipments, and (b) identification o f some provinces (estimated to be six) to be included in the first phase o f the replication program, and sampling and analysis o f PCB sites and equipment inthese provinces. 18 Lessons learned and reflected in the project design 27. The project design draws upon the Bank's considerable experience in working with China on environmental issues, including those related to chemicals. The Bank has been working closely with China on implementation o f the Montreal Protocol on ozone depleting substances and has used the experience gained and lessons learned in that program in designing this PCB management project. In addition, both China and the Bank have drawn valuable lessons from preparing and implementing ongoing POPs projects and these lessons have been taken into account in the preparation o f this project. Finally, the Bank has drawn on the experience o f PCB experts from Italy, Canada, U S and UNEP in designing the project. Specifically: a. Comprehensiveness. The project will support development and implementation o f a comprehensive program for the identification and environmentally sound management and disposal o f PCBs inthe Zhejiang Province. This includes supporting the development at both the national and provincial levels o f the necessary institutional and legal framework to ensure sustainability after the conclusion o f the project. b. Country ownership and capability. Implementation o f the Montreal Protocol showed the importance o f establishing a Project Management Office (PMO) to provide an anchoring point . and a national advocate for each country's ozone layer protection program. Having a capable PMO has proven crucial for the successful implementation o f the Montreal Protocol. Consequently, the Bank continues to emphasize helping China improve the capacity o f SEPA's Convention Implementation Office (CIO), the office charged with implementing the POPs Convention in China. This has included providing (through the Bank's Beijing office) extensive and continuing training to the CIO staff on project management, procurement and disbursement procedures, and the Bank's safeguard policies. CIOiSEPA currently has 12 professional and support staff working for 8 ongoing POPS-related projects. c. Coordination with related projects. SEPA has demonstrated a strong commitment to combining all relevant activities under the four POPS-related projects that are currently being implemented. In addition, SPEA has built on its experience, both with ongoing POPs projects and with implementation o f the Montreal Protocol, to determine the priorities o f project components o f this project. Relevant preparatory and base studies on institutional arrangements, policy options, and available disposal and treatment technology choices, as well as training and workshops, will be combined as appropriate for implementation to ensure the effective use o f resources and to avoid overlap or duplication. d. Involvement of local stakeholders. China has chosen to conduct demonstration projects at the provincial level to gain practical experience on how the Stockholm Convention can be implemented in a province, and on securing the active participation and support o f the provincial stakeholders. China's past experiences with PCB management and disposal regulations have shown how difficult it can be to translate national policies and regulations into practice at the provincial level. The demonstration project will require development or revision o f provincial regulations, policies and enforcement modalities, thus requiring active support on such practical aspects as obtaining needed provincial approval to recover PCBs from specific local sites, Consequently, the project design incorporates substantial provincial involvement, including, but not limited to, provincial supervision o f the PCB storage sites, oversight o f the environmentally sound PCB disposal, and coordination o f local training. Furthermore, financial support by the participating provinces will be essential to the success o f this project. Finally, but importantly, a provincial coordination group consisting of the main stakeholders will be established for implementingthe project. 19 e. Timely implementation of safeguard policies. Some projects have encountered delays in environmental assessment and resettlement operations that affected compensation to affected individuals. To ensure that this does not happen here, the Bank operations team has included the Bank's safeguard policies in project discussions from the beginning o f project preparation. The Team has similarly encouraged SEPA and local stakeholders to appoint responsible staff to monitoring preparation o f the environment management plan (EMP) and the resettlement action plan (RAP). 5. Alternatives considered and reasons for rejection. 28. Seven alternatives were considered but rejected infavor o f the proposed project design: a No action. Consideration was given to leaving the PCBs in caves and buried containments undisturbed and to allowing any in-use PCB equipment to continue in service without replacement or decontamination. This was rejected because o f the threat to human health and the environment - both China's and globally - posed by the likelihood that many such sites are leaking PCBs already, and that the situation could only worsen if left unaddressed. In addition, China's obligations under the Stockholm Convention include identifying and ensuring the environmentally soundmanagement o f PCBs remaining inuse. b Find, but leave in place. Consideration was given to identifying the cave and burial sites but taking no further action. This was rejected because, as noted above, many sites are known to be leaking and it would be irresponsible to leave such confirmed and potential threats unaddressed. c Decontaminate high risk sites only. Consideration was given to assessing the human and environmentalrisks at all sites but limiting decontamination to only the sites with highrisk levels inthe Zhejiang Province. This alternative was rejected for the followingreasons: i. ThecurrentconditionandpotentialrisksforPCBleakageandcontaminationcanbe evaluated only by opening each storage site. Since the level o f effort and costs o fproperly evaluating risks at each site are a significant portion o f the overall decontamination effort, it i s more cost-effective to complete the site assessment and decontamination ina single operation than to do an assessment first and decontamination later, especially since the PCBs will ultimately have to be recovered from the temporary storage sites at a later stage anyway. Inaddition, it i s important to note that the storage sites were designed for 3-20 year life, but are now approaching 25 years; some sites were not builtto specifications (e.g., lacking liners) and are likely to leak innot so distant future, even ifthey are not leaking now. ii. Itmaynotbeacceptabletothelocalpopulationtoopenandinspectthesiteswithout removing the risks for human exposure to PCB. ... 111. Opening a storage site may compromise its integrity, malung more likely that the site will leak even ifit i s not currently doing so. Any subsequent leakage and consequent contamination o f the surrounding soil and water will then create a large problem with correspondingly greater risks and cleanup costs beyond the additional costs o f remobilization. d Recover and store. Consideration was given to identifying and recovering the PCBs in caves and burial sites, recovering them, and puttingthem into safe storage. This was rejected because the potential for environmental harm could be exacerbated by collecting the PCBs into one or a few storage locations and leaving them vulnerable to being released by natural disaster, accident, or human failure. 20 e Recover and send abroad for disposal, Consideration was given to identifying and recovering the PCBsand shipping them for disposal inexisting facilities overseas. This was rejected due to: (i)transporting considerable amounts o f PCB wastes and other highly chlorinated wastes entails unacceptable risks and expenses, and i s discouraged under the Base1 Convention; (ii) the cost of incineration inEuropeanNorth American countries ranges from USD 1,000 to USD1,500 per ton, excluding - at least - USD2,OOO for transportation; (iii) China's National Program on the the Construction o f Hazardous Waste and Medical Waste Disposal Facilities (issued December 2003) has clearly planned and begun the construction o f domestic hazardous waste disposal facilities for hazardous waste and PCB; and (iv) the selected alternative will give China invaluable experience in the environmentally sound management and disposal of PCB and other hazardous wastes, including other POPs. f Build a new disposal facility in Zhejiang. This was rejected because it will take time and substantial investment, thus will make the cost o f project extremely high and the new incinerator will not be ready in2 to 3 years. g Develop policy, management, and regulatory infrastructure, but no PCB recovery or disposal. Consideration was given to focusing only on policy and regulation rather than inclusion o f cleanup and disposal o f all or part o f PCB sites and wastes inthis project. This was rejected because PCB accidents in Zhejiang have already aroused great concerns from the provincial government and the public. Consequently, failure to address the significant risks posed the already known PCB sites would be unacceptable to many stakeholders. h Inclusionof PCBs only in the power sector. Consideration was given to including only PCBs inthe power sector because it is believedthat more than 90 percent of PCBs were inthat sector. This was rejected because during the early stage of the survey being conducted under the Sino- Italian project, some PCB-containing transformers have already been found outside the power sector in Zhejiang and Liaoning, and it i s estimated that there are many more such transformers yet to be identified. C. IMPLEMENTATION 1. Partnership arrangements 29. Financial partnerships: The Global Environment Facility (GEF), as the interim financial mechanism for the Stockholm Convention, will provide most o f the funding for the demonstration project. In addition, Bilateral Cooperation Parties (BCP), such as foreign governments, will be the financiers of the project, as will the Central Government o f China and the provincial governments o f Zhejiang and Liaoning Provinces. 30. Coordination among international IAs, EAs and donors. SEPA is the core agency to coordinate all POP activities in China. Relevant international I A s and EAs, as well as bilateral financiers will be invited to participate inperiodical POP coordination meetings and be informed about the project implementation status, invited to advise on its design, and briefed on its implementation progress and impacts through a coordination mechanism. These measures will ensure adequate and continuing information exchange among IAs, EAs, donors, and domestic stakeholders in China. 31. A technical coordination group will meet formally twice a year to review project progress. The Group will be chaired by FECOBEPA, and will also include the World Bank, UNIDO, UNDP, the Governments o f Italy, Canada, and other interested bilateral development partners. It will also include UNEP, WHO and FAO, which, although not directly involved, are recognized as having important experience on POPs activities. SEPA will provide regular progress reports on all ongoing POPs activities and on proposed new activities to all the agencies. SEPA has already initiated such a consultative process 21 inthe context of China's NationalImplementationPlan, which is currentlyunder development. The Bank will also keep the other agencies and bilateral partners informed of the ongoing work through regular updates. Figure 1 shows a general view of the partnership arrangement. Figure 1. Generalview of the partnershiparrangement 2. Institutionaland implementationarrangements 32. National implementation arrangements. SEPA has been designated as the national lead implementing agency for all POPs activities and for implementation of the POPs Convention. All major national and local government, scientific institutions, and private sectors that are concerned with the elimination of PCBs in China will be involved in project implementation, and many have already been involved in its initial preparation. The stakeholders and their roles are: a. National Leading Group (NLG) for implementationof the Stockholm Convention. China established the National NIP Development Leading Group in September 2003, with SEPA as the Lead Agency. The NLG provided overall guidance and coordination for the NIP development process at its Project Concept and Project Brief stages. This Group has become the National Leading Group for Implementationo f the POP Convention after China ratified the Conventionon August 13, 2004. It will provide (i) overall guidance to development of the NIP, (ii)review of significant policies related to POPs, and (iii)guidance to implementation of all POP activities. It consists of the following 11agencies: 1. State EnvironmentalProtection Administration (SEPA) 11. ... National Development and Reform Commission (SDRC) 111. MinistryofForeignAffairs (MOFA) iv. MinistryofFinance (MOF). MOF is the GEF Focal Point inChina. V. Ministry of Commerce (MOCom) vi. Ministryof ScienceandTechnology (MOST) vii. Ministry ofAgriculture (MOA) ... V l l lMinistryofPublic Health(MOH) ix. Ministry of Construction (MOCon) X. GeneralAdministration of Customs (GAC) xi. State Electricity Regulatory Commission (SERC) b. Ministry of Finance. As the counterpart of World Bank and focal point for GEF projects in China, MOF will be incharge of signing the grant agreement on behalf of China and establishing and managing the special account o f the project. 22 c. Convention ImplementationOffice (CIO). The CIO is part of Foreign Economic Cooperation Office (FECO) o f SEPA. FECO i s in charge o f all bilateral and multilateral cooperation projects on environmental protection in SEPA. CIO i s responsible for day-to-day compliance with the Stockholm Convention and its responsibilities for this project include (i) providing technical support to international negotiations and policy studies on the Stockholm Convention, (ii) providing support to the development and implementation o f corresponding policy and regulations, as well as coordinatingwith key governmental stakeholders, (iii) screening, preparing and implementing Convention activities, (iv) raising co-financing (bilateral and domestic) for international collaborative programs, (v) preparing and submitting funding withdrawal applications to the Bank, and (vi) collecting data and information, preparing reports and organizing training, education, and information dissemination activities. As CIO i s not an independent entity, FECO will represent SEPA to sign MOUs (see legal covenants under Section 6) with Zhejiang DAD1and Shenyang Center respectively as well as other contracts for activities inthe project. d. PCB Project Team in CIO. The PCB project team will be in charge o f the management and implementation o f the proposed PCB project under the guidance o f the CIO. Its responsibilities include (i)preparing TORSfor activities under the project, (ii) reviewing project progress reports submitted by the local PIU (see below), (iii)managing project procurement and financial resources according to the Bank's procedures, (iv) organizing and convening project coordination meetings among stakeholders, and (v) reviewing project outputs. The PCB project team will seek technical support from various experts (a national expert group, including the chief technical advisor [CTA], national technical advisor [NTA] and other consultants) as necessary. e. National Expert Group. This group includes the Chief Technical Advisor (an international consultant), the National Technical Advisor, technical/policy experts and experts on transformers, as described inthe Annex 4. This National Expert Group will, in general, be responsible for: i. Introduction of successful experience gained from this demonstration project to other countries; ii. AssistingCIOinoveralltechnicalmanagementandcoordinationofallprojectactivities; ... 111. Technical support to institutional strengthening, policy framework, PCB management and disposal, project monitoring and evaluation, and replication program development; iv. Providing comments on project implementationprogress at different stages; v. Revision and improvement o f the training material developed by the Canadian project on Capacity Buildingon PCB Management; and vi. Providing consultationon transformer decontamination activities. f. LocalProjectImplementationUnitinZhejiang (localPIU). Zhejiang will establish aproject implementation unit (PIU) to conduct day-to-day project management and coordination at the local level. The PIU's location, size and specific functions will be clearly defined in a TOR prepared by CIO/SEPA. The P I U will consist o f staff from the Zhejiang EPB (two key centers: Zhejiang Environmental Monitoring Center and Zhejiang Solid Waste Management Center) and the Zhejiang Power Company. Its responsibilities will include (i)coordinatingiorganizing local training and seminars; (ii)overseeing operation o f PCB management inZhejiang; (iii) monitoring PCB sites after their cleanup and the PCB storage facility in Zhejiang for temporary storage o f highly contaminated PCB wastes; (vi) participatinginpublic awareness activities inZhejiang and engaging in policy dialogue with agencies in the province; and (v) collecting information and preparingprogress reports. g. Shenyang Hazardous Waste Disposal Technical Center. The Shenyang Institute of Environment Science has cleaned up three PCB sites in Zhejiang in the past few years. It owns the rotary kiln incinerator which will be completed in 2005-2006 to dispose PCB wastes under 23 the project. The rotary kiln incinerator i s the designated PCB incinerator in China and i s located ina waste management facility inXinmin,Liaoning. InJanuary 2005, the Shenyang Hazardous Waste Disposal Technical Center was established by Shenyang Institute based on the requirements o f the National Plan on Construction o f Technical Centers for Environmental Protection. All assets, including the rotary kilnPCB incinerator inthe waste management facility inXinmin, have been transferred to this Center by the Shenyang Institute. The ShenyangCenter i s an independent and state-owned company and it will obtain an official license from SEPA for PCB management and disposal. The official license will be issue according to the newly issued Regulation for the License of Hazardous Waste Management -- State Council Order #408 once the incinerator i s formally commissioned by SEPA. Commissioning will include confirmation that dixion and furan emission meets the Stockholm Convention emission standards. SEPA has confirmed that this Center will have the only PCB incinerator in China in the foreseeable future. For this reason, it will be the contractor for PCB disposal in the project. Whether China will build a second PCB incinerator in the future will solely depend on experiences gained in this demonstration project and the estimated total amount o f PCB wastes that need to be disposed in China. The Shenyang Center will receive the highly contaminated PCB wastes (>5OOppm) collected in Zhejiang and dispose o f them according to Stockholm Convention requirements. It will also house, maintain and operate the PCB storage facility and the waste characterizationunit. However, these two units will not belong to the Shenyang Center at project completion, but to the Central Government and these two units will be used in the follow up National Replication Program. h. HangzhouDadi EnvironmentalProtectionCo. Ltd (DADI). Hangzhou Dadi Environmental Protection Co. Ltd. i s the second waste management company in China which had experience in cleaning up PCB sites. The other one i s the Shenyang Institute. DADI is also the 2nd designated PCB waste management center in the National Program for Construction o f Hazardous and Medical Waste Disposal Facilities issued by the State Council in December 2003. Over the past ten years, Dadi has received continuous technical support from GTZ o f Germany. It has in-house German technical staff helpingit on all technical matters on waste management. SEPA has confirmed that Dadi will be the 2"dwaste management company in China which will be granted an official license in handling PCB wastes, excluding final disposal as it does not have a PCB incinerator. For this reason, Hangzhou Dadi will be the contractor in this project to (i) recover PCB wastes from burial sites, remove, package, transport, temporarily store PCBs (including PCBs recovered from PCB transformers still in use) and PCB-containing equipment, (ii)treat contaminated soils (between 50 ppm and 500ppm), and (iii)decontaminate PCB contaminated transformers under the project. The PCB storage facility will be built within the Dadi facility and Dadi will operate and maintain this facility. The thermal desorption unit to be procured will also be operated and maintainedby Dadi. However, these two units do not belong to Dadi at project completion, but belong to the Central Government as these two units will be used inthe follow-up National ReplicationProgram. 24 33. Figure 2 shows the framework o f the institutional arrangements for the proposed project. Figure2. Frameworkof the institutionalarrangementsfor the proposedproject. 34. Contractors for Consulting Services. Private companies or government institutes, when necessary, will be selected through a competitive process to (a) prepare environmental impact assessment needed for the project, (b) monitor PCB sites after cleanup, and (c) undertake consultant services under the project. 35. Involvementof Other Stakeholders. a. Enterprises that still have PCBs in service will be involved in implementingthe project activity o f decontamination o f PCB transformers from the beginning. b. The public at large will be involved in the project through education and public awareness activities. 1. PCB disposal in Shenyang. This project will complete the rotary kiln incinerator under construction in the Shenyang Center, which would not require any relocation or additional land acquisition. When the facility started construction in 2002, its information was shared with local communities. Public acceptance o f the site was assessed through a survey and a final agreement was signed. 11. PCB sites cleanup in Zhejiang Province. The PCB site treatment in Zhejiang would require temporary land and tree acquisition as well as relocation o f structures and tombs in some cases. The Zhejiang Province has developed a Resettlement Policy Framework to deal with the potential social risks (land acquisition and resettlement issue) to the public. The framework involves local governments, the affected villages, institutions and the affected households inthe inventory o f impacts and development of the compensatory packages. Site- specific resettlement plans will be prepared duringproject implementation. ... 111. Workshops and Training. Institutional capacity building is a major component o f the project 25 which includes series o f workshops and training. These training programs will be directed to key stakeholders in Zhejiang, including PCB management institutions (PIU, EPB, power companies), Hangzhou Dadi, environmental monitoring staff, and PCBs disposal operators in Shenyang. c. Relevant international organizations and possible bilateral donors will be informed about project progress and invited to advice on its implementation. 3. Monitoring and evaluation of outcomes/results 36. Monitoring o f project activities and evaluation o f their results in the project will serve a dual function. First, it will facilitate traclung progress toward project objectives. Second, it will facilitate learning and generation o f knowledge necessary for the preparation o f the national replication program. 37. The monitoring indicators, developed specifically for the project and described insection B2 and Annex 3, reflect the project's focus on the environmentally sound management and disposal o f PCBs, on reducing risks from PCBs wastes and PCB-contaminated sites, and on associated capacity building. The data for determining the value o f the indicators will come from two main sources. First, they will come from PCB management and disposal operations using standardized project-wide technical guidelines and methodologies for data collection and quality assurance. The detail PCB inventory completed inthe first year o fproject implementation will be a crucial source o fnew data. The responsibility for data collection at this level will rest with the local PIU, with guidance and assistance from the PCB project team in the CIOISEPA. Second, data will come from standardized monitoring and reporting designed by the PCB project team in the CIOiSEPA providing support services. The Zhejiang PIU will collect data from all contractors carrying out project activities (Annex 4) and report to the PCB project team in CIO/SEPA. Project managers, including PCB project team in CIOISEPA and the Zhejiang PlU, will regularly review consolidated indicators to assess effectiveness o f the project. 38. The World Bank i s responsible for supervisingthe implementation o f the project to ensure that financing i s usedonly for the purposes intended, with due regard to project objectives, expected outcome, efficiency and economy. Bank missions will visit China at least twice a year for this purpose. 39. An annual meeting will be held to review project implementation with representatives from all project stakeholders. Progress reports will be distributed beforehand for review at the meeting. 4. Sustainability and Replicability 40. As a Party to the Stockholm Convention, China is obligated to identify, manage, and dispose o f PCBs in an environmentally sound manner, and to eliminate its PCBs by 2028. The institutional and legal framework and technical capabilities put in place in Zhejiang through this demonstration will thus be needed throughout the country. The sustainability will be ensured by (a) involving all key stakeholders, including local participation from the beginning and throughout its implementation; (b) demonstrating the effectiveness o f environmentally sound PCB management and disposal technologies and facilities; (c) supporting provincial and national capacity building; and (d) putting in place and demonstrating the mechanisms for effective enforcement o f PCB management and disposal policies and regulations. 41. With ratification o f the Stockholm Convention on August 13, 2004, China has officially made its commitment to take on the obligations o f the Convention. Among those obligations i s Part I1o f Annex A, under which China must take measures to manage and dispose o f PCBs and PCB-containing materials according to the requirements o f the Convention, thus ensuring that the products o f this demonstration will be usednationally inthe remainingprovinces. 26 42. China i s committed to begin the demonstration o f environmentally sound PCB management and disposal in the selected province as soon as the necessary technical and financial support from the international community i s provided in accordance with Articles 12 and 13 o f the Convention. 43. This demonstration project will build upon other related and ongoing PCB projects. These include (a) development o f a National Implementation Plan for the Stockholm Convention, being conducted by SEPNCIO with the assistance o f UNDO and the GEF, (b) the ongoing Sino-Italianproject titled "PCB Inventory Methodology and Draft Strategy on PCB Reductionand Disposal inChina", and (c) a PCB management capacity buildingproject financed by a Canadian Trust Fund. These activities have already provided useful information which has been used inthe development o f the demonstration project for Zhejiang Province. 44. China i s committed to provide the counterpart funding for the GEF grant. As the national implementing agency o f the preparation project, CIO/SEPA has obtained (1) a firm commitment o f RMB 20 million counterpart funding from the local government o f Zhejiang Province, and RMB 13 million from the Zhejiang power company (of total RMB 33 million, RMB 31.8 million i s for the demonstration project, RMB 1.2 million i s for the Sino-Italian project) and (2) a firm commitment o f RMB 9.2 million counterpart funding from the Shenyang Center (not include in-kind contribution). The Central Government has also committed to provide RMB 8 million as counterpart funding for this project. Also Italy and Japan Government as well as U S A EPA have provided written commitment letters in co- financing the demonstration project. The total bilateral donor contribution i s USD 2.024m. 45. The National Leading Group for Implementation of the Stockholm Convention would play a crucial role in the sustainability and replicability o f the project by providing overall guidance and oversight. A strong and effective Convention Implementation Office would ensure success o f the project. Good cooperation between the central government and the local government and stakeholders will be at least as important. Institutional arrangements have been described above. 46. The project has been designed, and will be implemented, in the expectation that the experience gained in the Zhejiang Province will create a model for China's other provinces and that will be adopted at the national level. The approach makes this more likely by incorporating the active participation o f national government, provincial government, local government, the private sector, and other stakeholders throughout its development and implementation. 47. The project further seeks to ensure replicability by including a specific component (Component 6) on promoting and disseminating projects results and lessons to the rest o f China. As described earlier, Component 6 includes activities to encourage and facilitate technology transfer and information dissemination through programs of public participation, stakeholder involvement, and professional and community-based education and outreach. National, provincial and local governmental organizations, institutes and companies involved in this project will also help ensure the dissemination o f relevant information. Finally, the project's internet website will make its results widely available, as well as giving access to new information on PCB management and disposal issues. 5. Critical risks and possible controversial aspects I I I I Risk Rating RiskMitigationMeasure (a) Local governments may not continue to M (a) The SEPNCIO will continue to make major consider the problem o f PCB wastes to be an efforts to raise awareness inthe Zhejiang important environmental challenge and Province. Its active supervision and the full therefore give lower priority to resolving continuing involvement o f Zhejiang stakeholders oroblems during imdementation. will mitigate this risk. 27 Risk Rating RiskMitigation Measure (b) Poor coordination among all national and M b) China established CIO to harmonize interests and international stakeholders, such as Chinese standpoints o f different agencies. FECO has over government, academia, industry and the ten years of experience inthe management o f public, as well as donors, GEF and the World projects and national programs. It also has wide Bank. experience incollaborating effectively with numerous Intergovernmental Organizations, bilateral donors and enterprises. (c) Disposal technology not meeting performance M c) Selection o f proven technology and equipment requirements, resulting inunacceptably high from recognized suppliers, provision o f adequate emissions o f dioxidfuran and other toxic training, and active supervision o f the operation chemicals. o f disposal facilities will mitigate this risk. (d) Public opposition to the disposal project. M d) Public awareness raising and inclusiono f all stakeholders inbothproject preparation and implementation will minimize the likelihood of this occurring. (e) Failure to properly identify and find all PCB M e) Detailedinventories will be complemented by sites and equipment. awareness campaigns to encourage the stakeholders and the public to disclose locations o f PCB sites and equipment. ( f ) PCB waste may accidentally leak during H f ) PCB transport or other operations will follow a transport or during other stages, e.g., strict, internationally acceptable protocol containment, packaging, temporary storage, enforced as a part of regular project supervision. Key elements o f the protocol, such as emergency response procedures and operator training are outlined inthe environmental assessment and environmental management plan documentation and under description o f Component 3 (Annex 4 of the Project Brief). (8) The PCB site treatment inZhejiang would M g) A site-specific resettlementplan will be require temporary land and tree acquisition as developed duringproject implementation to well as relocation of structures and tombs in address potential social risks to the public. The some cases. There are potential social risks plan would involve local governments, affected raised from PCB site cleanup. villages, institutions and affected households in the inventory o f impacts and development o f the compensatory packages. 6. Loadcredit conditions and covenants 48. The following financial and environment covenants have been incorporated into the Grant Agreement: a. Financial covenants - i. NowithdrawalsshallbemadeuntiltheBankhavereceived: 0 An implementation agreement, satisfactory to the Bank, entered into between the Recipient, acting through SEPA, and Zhejiang for the provision of support by the Zhejiang provincial government, including coordination and cooperation o f all implementation activities in Zhejiang, and the operation and maintenance o f the Zhejiang PCB Storage Facility and the thermo desorption units to be acquired in Zhejiang component o f the Project; and An implementation agreement, satisfactory to the Bank, and entered into between the Recipient, acting through SEPA, and Liaoning for the supervision and monitoring o f the implementation activities carried by the Shenyang Center, and the operation and 28 maintenance o f the PCB storage facility to be constructed and the waste characterization unitto be acquired inthe Shenyang Center component ofthe Project. ii.NowithdrawalsshallbemadeonanyexpenditureonPCBcleanupactivitiesuntiltheBank receives an official license authorizingDAD1to handle PCB wastes. iii. NowithdrawalsshallbemadeonanyexpenditureonPCBdisposalactivitiesuntilthePCB incineration facility has been commissioned by SEPA and SEPA has issued an official license authorizing the Shenyang Center to use the PCB Incineration Facility for PCB disposal. b. Environment covenants - The emission of dixion and furan from the PCB incineration facility shall not exceed 0.1ngTEG/Nm3 from the PCB incinerator o f the Shenyang Center at all time. 49. The following are conditions for Grant effectiveness. a. A Project Implementation Manual, cleared with the Bank, has beenadopted by SEPA; and b. A financing management manual for the project, cleared with the Bank, has adoptedby SEPA. 50. Dated covenants and conditions applicable to project implementation are: a. By October 30, 2006, Dadi through SEPNCIO shall send a plan to the Bank on the operation and maintenance o f (a) the PCB storage facility in Zhejiang, and (b) the thermal desorption system to be used for the treatment o f low contaminated PCB soils. b. By October 30, 2006, Shenyang Center through SEPNCIO shall send a plan to the Bank for the operations and maintenance o f (a) the PCB storage facility, and (b) the waste characterization unit. C. By October 30, 2006, SEPNCIO will send to the Bank a plan, prepared in accordance with the agreed TOR, for the safe transportation o f PCB wastes: (i) the PCB storage sites to the PCB from storage facility in Zhejiang province, and (ii)from the PCB storage facility in Zhejiang to Shenyang Center inXinmin, Liaoning province. d. By February 15 and August 15 o f each year, starting on August 15, 2006, CIO will send a semi- annual progress report to the Bank with detail project implementation status based on agreed format with the Bank, and a financial management report on uses and sources o f funds for the project. D. APPRAISAL SUMMARY 1. Economicandfinancialanalysis 5 1. The demonstration project i s essentially contributing to local and global public good by reducing the risk o f contaminating the environment through releases o f PCBs, a persistent organic pollutant. Typical economic or financial analysis i s thus difficult and problematic at best. While it may be theoretically possible to apply cost-benefit analysis to the process, the lack o f reliable base data and the controversial aspects related to the valuation o f human life make such an analysis impractical. It i s nonetheless clear that the benefits from reducing damage to the environment and to human health from releases o f PCBs will substantially exceed the costs associated with implementing this project. In addition, the project will seek maximum cost-effectiveness in all o f its interventions, and it will use risk reduction as the criterion to prioritize among the PCB sites being addressed. 2. Technical 52. Estimates o f PCB wastes for the Zhejiang province are to cover all PCB capacitors and transformers buried in temporary PCB storage sites. The PCB inventory identified under the Sino- Italian project includes 43 confirmed PCB sites (Table 4, Annex l), with an additional 18 suspected. The total estimated sites in Zhejiang are 61 sites. The overall estimated amount o f 22,500 PCBs capacitors, 29 2,000 tonnes o f highlycontaminated wastes, 20,000 tonnes o f less contaminated wastes (mostly soil), and about 78 (still to be confirmed) o f older in-use large PCB transformers are likely underestimates o f actual totals. This estimation does not include transformers installed after 1980 and still in use that may be contaminated with PCBs; or those out o f service PCB transformers which are stored at backyards or warehouses o f their owners. 53. InChina, PCB wastes are mainly PCB contaminated soils. The amount of contaminated wastes requiring removal has been estimated using a concentration threshold o f 50 ppm (in soil) as a maximum level above which cleanup i s necessary. This threshold i s based on the Chinese GB13015-91 Standard on Pollution Control o f PCB Wastes. It also corresponds with the definition usedby the Basel Convention, which defines as "hazardous wastes" those "wastes, substances and articles" which contain PCBs "at concentration level o f 50 mg/kg. Similarly, the Stockholm Convention identifies three levels o f concentration at which PCBs are a concern, the lowest o f which i s 0.005 percent. Both o f these thresholds convert to 50 ppm. However, the cleanup action level for each site will be based on the actual risks at the site and the future use o f the cleaned PCB sites. The applicable international standards will be used in case o f no relevant national standards. 54. PCB destruction technologies. The analysis o fthe technologies to be utilized for the destruction o f PCBs for the project included: (a) considerations o f the availability o f a PCB incinerator under construction in Shenyang and China's domestic PCB disposal experience; (b) a review o f available PCB destruction technologies; (c) China's National Program for Construction o f Hazardous and Medical Waste Disposal Facilities; and (d) the PCB situation inChina and in the demonstration province. 55. The analysis o f international experience and technical literature shows that high temperature incineration continues to be the most widespread, accepted, and proven technology for the destruction o f highconcentration PCBswastes, capable of achieving a destruction andremoval efficiency (DRE) greater than 99.9999%, and limiting dioxin and furan concentrations in the flue gases to well below O.lng TEQ/Nm3. Achieving these standards requires continuous monitoring o f environmental and process parameters, careful management, and suitable supplementary methodology for the final disposal o f ashes that, in some cases, may contain organic or inorganic pollutants. This expertise in operating rotary kiln incinerators i s well established inChina. 56. Considering the large amount o f PCB wastes expected to be found in the Northern provinces, it makes economic sense to complete and use the new incinerator in Shenyang rather than establishing a new PCB disposal facility in Zhejiang, deploying an alternative technology in China or shipping to and using existing incinerators in European or North American countries. Based on cost information from other projects, it i s understoodthat the cost o f incineration in EuropeadNorth American countries ranges from U S D 1,000 to U S D 1,500 per ton, excluding transportation which costs up to U S D 2,00O/ton for PCB. Any trans-boundary shipments o f PCB would be in the context o f the Basel and Rotterdam Conventions. Shipping hazardous wastes across national borders and oceans would add additional risk to the project. Looking over the timeframe o f the entire PCB program in China, it cannot be guaranteed that such trans-boundary and transoceanic shipment would be allowed. 57. Construction by the Shenyang Hazardous Waste Disposal Technical Center o f a new state o f the art rotary kiln incinerator with a capacity o f 15 tonnes per day for PCB wastes i s nearing completion in Xinmin near Shenyang. The plant has been designed to meet all applicable Chinese regulations and standards. The project will use it to dispose PCB wastes transported from Zhejiang. The Stockholm Convention, however, requires capabilities not included in the plant's current design, particularly with respect o f minimizing emissions o f dioxins and furans. These features include (a) a pre-treatment system for PCBs wastes or flue gas cleaning system for fulfilling the PCDD/PCDF values for BAT, generally 30 lower than 0.1ngTEQ/Nm3, (b) a central control unit, (c) an online monitoring unit, and (d) a dioxin emission monitoring unit. 58. As noted above, an undetermined number o f PCB-contaminated transformers are likely to be identified through China's ongoing PCB inventory process. The potential cost and disruption involved in replacing such transformers argues for decontaminating them and continuing using them through their normal expected lifetimes. Consequently, the demonstration project includes testing a suitable technology for decontaminating PCB transformers and decontaminating some large PCB transformers installedbefore 1980 inZhejiang. 59. Onthe basis o fthe above, the proposed technologies for the project are: a. Shenyang rotary kiln incinerator, The incinerator will be completed to allow for the treatment o f highly contaminated PCB wastes (>500 ppm) to meet Stockholm Convention standards. Pretreatment for the incinerator will be designed to allow separation o f the high concentration PCB stream (principally PCB oil) and a low concentration PCB stream (principally shredded material contaminated by PCB). The other four key technical units (waste pretreatment and crusher unit, central control unit, online monitoring unit, and dioxin emission monitoring unit) will be added. Upon completion, the incinerator would attain a DRE for PCBs o f 99.9999%; and dioxin concentration inthe exhaust gas o f <O. 1TEQng/Nm3. b. Decontaminate PCB-contaminated transformers through dehalogenation, regeneration and recovery o f the contaminated oil. A small-scale mobile plant for evaluating the selected technology will be rented in order to gather data on its environmental performance and operating costs. The recovered PCB contaminated oil will first be shipped to the PCB storage facility in Zhejiang and later to the disposal facility in Shenyang. 60. The project refers to disposal standards for PCB and dioxidfuran emissions set by the Stockholm Convention.-However, it i s noted that these standards are not yet fully established, i.e. the outcome o f the BAT/BEPgroup as well as the Base1Convention Group on POPs Disposal will be discussedinMay 2005 at POPs/COPl. The outcome o f the discussion and guidance given by COP1 (e.g. on maximum levels and BAT/BEP) will be fully taken into account during project implementation, especially when developing the national replicationprogram for PCB management and disposal in China. 61. POPs disposal centers. Based on the National Plan on Hazardous Waste and Medical Waste Management issued in December 2003 by the State Council, China intends to have a hazardous waste disposal facility in each province. The Plan specifies, however, that POPs may go only to the hazardous waste disposal centers in either Shenyang or Hangzhou (Zhejiang), with the Shenyang Center covering the northern provinces, and the Hangzhou Center covering the southern provinces. Hangzhou does not currently have the capacity to dispose POPs, and can only handle PCB wastes from identification and recovery to shipment for final disposal. 62. After completion o f the PCB incinerator in Shenyang Hazardous Waste Disposal Technical Center, it i s expected to handle all PCBs from the northern provinces. Shenyang incinerator i s not only for disposal of PCB wastes from Zhejiang but also for those from other provinces in the country. In the longer term, it will be less cost effective to send abroad. If warranted by the results o f the national inventory and experience from this demonstration project, China may consider establishment o f a PCB disposal facility inHangzhou. 63. Mobile thermal desorption unit. With respect to contaminated soils, thermal extraction is believed to be the only on-site process allowing at least a limitedpreservation o f the original properties o f soils, thus allowing subsequent return o f the de-contaminated soils to its original location. The same 31 process can be used to treat also soils contaminated by hydrocarbons, by other chlorinated compounds and by pesticides. 64. Thermal desorption i s a mature technology commercially used in developed countries for decontaminating soil from hazardous wastes, including PCBs. The thermal desorption unitto be procured under this project for the treatment o f PCB contaminated soils in Zhejiang will include the appropriate design and operating conditions to ensure compliance with standards. The thermal desorption unit will be equipped with the treatment systems for the treatment o f the flue gas and wastewaters resulting from condensed gases. 65. A mobile thermal unit is intendedto decontaminate the soil around the sites inthe project. Inthe first year o f project implementation, a feasibility study will be conducted after site characterization to evaluate different decontamination technologies, including whether a fixed or mobile thermal desorption unit would be the most cost effective solution for the project, taking into account the nationalreplication program. If the feasibility study concluded that a fixed unit i s more cost effective and practical for the project, a fixed unit will be selected. After the selection i s made, and prior to procurement, an EA will be prepared for approval by Chinese authorities and clearance by the Bank. 66. The thermal desorption technology to be supported by GEF could also be for PCB disposal in other provinces inthe national replication program. While it i s possible that a few more mobile units (if that i s the conclusion o f the feasibility study) could be needed for the full replication program, such a determination can be made only after completion o f the PCB inventory and after China has gained sufficient experience from this demonstration project. 67. Process for PCB management and disposal. China has developed a process on PCB management and disposal to provide technical guidance on PCB management in Zhejiang and PCB disposal in Shenyang. Component 2 o f the Project will further develop specific procedures and requirements through developing the technical guideline for PCB management and disposal. The process for PCB management and disposal includes the following steps: a. Environment characterization and risk assessment of each PCB site. This entails investigating each site in detail to determine the extent o f site contamination, potential leakage, potential health and environmental impact based on surrounding areas, e.g., risk o f contamination o f farm land, housing areas, ground water, rivers, reservoirs, etc. This i s referred to in the project as site characterization and will be used in the risk assessment to determine priority for PCB recovery and site cleanup. b. Infrastructure construction for PCB management and disposal. This includes (i)establishment o f a storage facility in Zhejiang for temporary storage o f PCB wastes before transportation to the Shenyang disposal facility, (ii) establishment o f a storage facility in Shenyang for storage o f PCB contaminates to be shipped from Zhejiang, (iii) completion o f the PCB disposal incinerator to meet the minimum standard for PCB disposal under the Stockholm Convention, and (iv) training o f personnel for handling excavation, transportation and site and storage management. c. Implementation of PCB cleanup. i. Oncethedecisionhasbeenmadetoincludegiven sitesintheannualworkplan, datafrom those sites will form the basis for contracts for PCB recovery and site cleanup, ii. ContractorswillrecoverPCBsandPCB contaminants fromthesites, andbasedonlevelof PCB contamination, decide whether the contaminants can be cleaned up by the mobile unit ... or have to be sent to Shenyang for final disposal, and 111. Transportation of PCB contaminants within Zhejiang and from Zhejiang to Shenyang. 32 d. Evaluation of PCB cleanup results. After finalizing the PCB recovery at the sites, independent verification will be conducted verifying that the sites have met required environmental standards. The sites will be monitored for one year after PCB site cleanup to ensure that the sites do not constitute a future risk. e. Decontamination of PCB transformers. Recover o f PCB containing oil from remaining PCB transformers in the province and decontaminate these transformers. The recovered PCB contaminated oil will first be shipped to the PCB storage facility in Zhejiang and later to the disposal facility in Shenyang. f. Disposal of PCB wastes in Shenyang. Dispose all highly contaminated PCB wastes at the Shenyang disposal facility. g. Supportive capacity building and policy framework establishment. Conduct capacity building activities and establish effective policy framework. 3. Fiduciary 68. The assessment o f the China's fiduciary capacity consists o f the following: (a) country self- assessment o f the financial management and procurement practices following the Bank guidelines; (b) assessment by a Bank-accredited Financial Management Specialist and Procurement Specialist from the Bank; and (c) synthesis o f the two assessments at appraisal and agreement on any necessary financial management and procurement capacity strengthening. 69. A procurement capacity assessment o f the implementing agencies was carried out in October 2004 and updated in December 2004. The assessment has concluded that the overall risk o f the procurement process i s average. The agencies involved have allocated adequate resources including experienced staff to implement the project. Needs for strengthening the procurement capacity o f the agencies have been identified, and accordingly an action plan has been discussed and agreed during the assessment. This includes training workshops, and preparation and dissemination o f sample procurement documents, staffing plan for project implementation, etc. A procurement plan for the whole project period has been discussed and agreed with Bank team. 4. Social 70. The project i s expected to have significant social benefits by reducing public health risks associated with the release o f PCBs. This benefit will materialize in the Zhejiang Province with the planned cleaning o f PCB sites and disposal o f PCB as well as contaminated materials inthe project. The planned design o f a national replication program based on this demonstration experience in Zhejiang will further extendthisbenefit to the other provinces inChina. 71, Possible social risks may be associated with public exposure to contaminated sites, buildings and water supplies during the site cleanup in Zhejiang and transportation process, as well as the site location o f the disposal facility in Shenyang. The social impacts o f the Zhejiang and Shenyang components are assessed separately. The Shenyang PCB Waste Disposal Facility i s built at a developed site on a state forest farm. This site was selected and established in 2002. Its selection followed a consultative process with various stakeholders, including local governments, related institutions and local communities. The facility information was shared with local communities. Public acceptance o f the site was assessed through a survey and a final agreement was signed. The site required about three hectares o f forest land. The acquisition process and all payment were completed in early 2002. The PCB incineration would not require any relocation or additional land acquisition. The Shenyang Municipality has conducted a review of the land acquisition process and submitted to the Bank. 33 72. The PCB site treatment inZhejiang would require temporary land acquisition as well relocation o f structures and tombs. The general locations o f the PCB burial sites have been identified and the exact locations will only be known after further field work. Impacts related to the site treatment will only be known when the treatment design is completed. Therefore, the Zhejiang Province has developed a Resettlement Policy Framework to deal with the possible land acquisition and resettlement issue and has submitted it to the Bank. Site-specific resettlement planning will be prepared during project implementation. The planning would involve local governments, the affected villages, institutions and the affected households inthe inventory o f impacts and development o f the compensatory packages. 73. These risks are minor compared to the overall expected benefits. They have been carefully considered through compliance with high technical standards, effective communication with the local residents, and involvement o f all stakeholders in the potentially controversial aspects o f the project. The participatory mode used for project preparation, and full involvement o f local stakeholders, will continue duringproject implementation. 5. Environment 74. The project i s essentially an extensive cleanup o f PCB sites and equipment which will bring substantial environmental benefits, both locally and globally by eliminating currently uncontrolled PCB releases to the environment. The project does, however, carry some inherent environmental risks, specifically as related to possible PCB leakage resulting in contamination at storageburial sites, the recovery o f stored PCB capacitors from excavated sites, transporting highly contaminated PCB wastes from Zhejiang to Shenyang, and from the excavated sites to temporary storage in Zhejiang. These risks are mitigated by the improved PCB management system (from identification to final disposal) which the project i s designed to demonstrate. 75. Environmental Management Plan (EMP) have been developed as part o f the EA preparation which specified detailed mitigation measures (remediation o f PCBs sites, transportation, temporary storage and treatment/destruction o f PCBs waste, as well as emergency response measures), environmental monitoring plan during implementation o f PCBs management and disposal process, institutional coordination and capacity building, implementation schedule and cost estimates. A series o f PCB management workshops for government authorities and for waste management companies have been built into the project and will be conducted prior to PCB recovery to ensure that PCBs wastes are handledproperly. The project will strengthen the current environmental policy and regulatory framework on handling PCB wastes. All risks have been carefully reviewed duringproject preparation. 76. In addition to the two EAs that were prepared during project preparation (Zhejiang EA and Shenyang EA), three other EAs will need to be prepared duringproject implementation. These additional EAs are as follows: a. EA for the PCB storage facility to be constructed in Zhejiang. When the feasibility study has concluded the viability o f a fixed storage facility or a mobile one, an EA needs to be prepared for the Chinese authorities and the Bank's clearance before its construction. b. EAfor the PCB storage facility to be constructed in Shenyang. When the site for building the PCB storage facility i s selected, an EA needs to be prepared for the Chinese authorities and the Bank's clearance before its construction. c. EAfor the thermal desorption unit to be usedfor soil decontamination in Zhejiang. An EA will need to be prepared for the selected thermal desorption unit, after the PCB site characterization efforts in Zhejiang have been concluded. The relative weights o f fixed versus mobile thermal desorption unit should be analyzed in the EA to select the lower cost option. The EA will need the Chinese authorities and the Bank's clearance before its purchase and application. 34 6. Safeguard policies 77. The project triggers Operational Policy 4.01 on Environmental Assessment (EA) and Operation Policy 4.12 on Involuntary Resettlement. The key safeguard issues are associated with potential environmental and social impacts from dealing with highly toxic chemicals and remediation o f contaminated sites. The project's environmental impacts are assessed in an Environmental Assessment (one for Zhejiang and one for Shenyang) and their mitigation i s outlined in an Environmental Management Plan. The project's social impacts are assessed and their mitigation is outlined in a Social Management Framework. Annex 10 discusses more specifically how the project will ensure compliance with the safeguard policies and the World BankDisclosurePolicy. Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.01) [XI [X 1 [X 1 [I Natural Habitats (OP/BP 4.04) 11 Pest Management (OP 4.09) [I Cultural Property (OPN 11.03, being revised as OP 4.11) [XI 11 Involuntary Resettlement (OP/BP 4.12) [XI [X 1 [I IndigenousPeoples (OD 4.20, being revised as OP 4.10) [I Forests (OP/BP 4.36) [I [X1 Safety o f Dams (OP/BP 4.37) [I [X 1 Projects inDisputed Areas (OP/BP/GP 7.60)* [I EX 1 Projects on International Waterways (OP/BP/GP 7.50) 11 [X 1 7. Policy Exceptions and Readiness 78. The PCB Demonstration Project does not require any policy exceptions. The project i s ready for implementation. * By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties` claims on the disputed areas 35 Annex 1: Country and Sector or ProgramBackground CHINA: DemonstrationofPCBManagementand DisposalProject PCBs in China 1. PolychlorinatedBiphenyls (PCBs) are one o f the twelve persistent organic pollutants (POPS) to be eliminated under the 2001 Stockholm Convention. PCBs' harmful effects on human health and the environment are well documented, and include developmental and behavioral disorders in children and disruption in the endocrine and immune systems. Recently, PCBs were deemed to be carcinogen, and potential cancer growth accelerator. Research has also linked PCBs to reproductive failure and suppression o f the immune system in various wild animals, such as seals and mink. Finally, PCBs are toxic to fish, killing them at higher doses and causing spawning failures at lower doses. 2. PCB production. China began to produce PCBs in 1965 and stopped in early 1974, usingthem mainly in electrical equipment and as an additive inpaint. The total production amounted to about 10,000 tons, including 9,000 tons o f trichlorobiphenyl (PCB3) and 1,000 tons o f pentachlorobiphenyl (PCB5). Figure 1 below summarizes the general information on the production, use, import and export o f PCBs in China. Domestic Production ND 750,000 1,000t (PCBS) 9,000t (PCBJ) ND:no information or data available on the export o f PCBs Transformers InUse Storage & Disposal I Environment I Figure1:The Production,Use, Import, Exportand StorageofPCBs inChina 3. PCB producers. Historically, there were only three PCB producers in China. Detailed information on PCB production i s not available due to staff departure and missing records. A brief overview o f the three PCB producers i s given below: a. Xi'an Chemical Plant. This is a medium size chlor-alkali plant producing caustic soda, chlorine, HCl, Calcium carbide and V C W P V C etc. Inthe 1950s, the most important Chinese manufacturer o f electric power capacitors, designed by USSR engineers, was located in Xi'an. PCB oil was 36 supplied from USSR. However, in the 1960s, due to political reasons, import o f the PCB oil from USSR was not allowed. The Xi'an Chemical Plant started production o f PCBs from 1965 to meet demands o f capacitor producers in Xi'an. On March 9, 1974, the former Ministry of Machine o f China issued a Ban of Production o f PCB Containing Electric power Capacitors [(74) Yi-Ji- Dian N o 2261. Xi'an Chemical Plant then stopped production o f PCB oil. As o f today, this plant still exists and produces other chlor-alkali products. b. Jiangsu Suzhou Solvent Plant. Up to the 1990s, this enterprise was the only chemical plant producing diphenyl (biphenyl). Biphenyl is mainly used as a high-temperature heat transfer medium, which is commonly usedinproductionof many chemicals. It is also the raw materialfor the production o f PCB. This enterprise was in a good position to produce PCB to satisfy the demand in the eastern area o f China, including the demand from a manufacturer o f electric-power capacitors in Jiangsu Wuxi. The time o f the start and end o f the PCB productionmay be similar to Xi'an Chemical Plant. The enterprise produced many types o f solvents and plasticizer o f phthalate series. The enterprise has been merged to Jiangsu Chemical Pesticide Group Company. c. Shanghai Electro-chemical Plant. This enterprise was the first chlor-alkali plant in China. Originally, the enterprise was named Tianyuan Electro-chemical Plant. Now, it i s called Shanghai Chlor-alkali Co. Ltd. and belongs to Tianyuan Group Company. It produces CFC-12, C R and CTC. 4. PCB use. PCB5 oils were mostly used in a wide variety o f open systems, such as in oil paints and exterior dopes. While some wastes may remain at production or formulation facilities, it is reasonable to assume that most o f this material has been released into the environment. I 19.1 Percent of total PCBs inthis Figure2: Distributionof PCBs Used in China 37 5. PCB3 was principally used in manufacturing capacitors that were used in the electric power supply industry. An estimated 11kg o f PCB3 was used ineach capacitor and, based on a production o f 9,000 tones, it i s estimated that about 750,000 PCB-containing capacitors were produced in China. Production o f PCB containing capacitor in China stopped in 1975. Estimates based on the installed transmission capacity in China in 1975 indicate that 1.15 million capacitors would have been required, suggesting that as many as 400,000 PCB-containing capacitors were imported into China. Ifthis estimate were correct, then an estimated 4,000-4,500 tonnes o f PCB3 oils would have been imported with this equipment so that a total o f 13,000-13,500 tonnes o f PCB3 would have been introduced into China as a result o f the manufacture and import o f capacitors. Figure 2 shows the distribution o f PCBs used in China. 6. While China never produced transformers containing PCB oils, an unknown number were imported. Thirty PCB-containing transformers have so far been found and disposed of, but there i s no basis on which to estimate how many PCB-containing transformers may remain in China, either in service or in storage for disposal. 7. Since the lifetime o f capacitors made in China i s estimated to be 15 years, it follows that most o f the 1.15 million PCB-containing capacitors have now been retired from service. Some specialized transformers were imported into China in the 1970s and 1980s and their lifetime i s expected to be 25-40 years. Therefore approximately 1 million capacitors and an unknown number o f transformers are in storage and disposal sites throughout China. 8. Duringthe 1980s, pieces o f electrical equipment taken out o f service were collected at temporary storage sites prior to disposal in accordance with the requirements imposed by relevant Ministries. A maximum storage time o f 3-20 years was set, after which obsolete equipment was to be placedin caves or dedicated concrete-lined landfill facilities. 9. Surveys and investigations conducted in recent years indicate that discarded PCB-containing equipment remains in some temporary storage facilities. Few o f the sites were recorded on files and many o f those for which file details have been found are no longer marked on the ground. Identification o f these sites will, therefore, be a time-consuming and costly task. 10. In addition, many disposal sites have exceeded or are approaching their design lifetime of 20 years. Investigations at some o f these sites indicate that they are lealung PCBs into the surrounding environment. Thus, measures to address such problems must be taken as soon as possible. 11. China signed the Stockholm Convention on M a y 23,2001, and ratified it on August 13, 2004. As a Party to the Convention, China's obligations include eliminating the use o f PCBs in equipment by 2025 and pursuing "the environmentally sound waste management of' o f PCBs and o f equipment containing PCBs "as soon as possible, but no later than 2028." 12. The Chinese government has attached great importance to POPs issues and made substantial efforts toward their reduction and elimination. These efforts include: a. The Convention Implementation Office (CIO) in China was set up on April 15, 2003, in Foreign Economic Cooperation Office (FECO) o f State Environmental Protection Administration. The Office has integrated the POPS-related work o f several departments o f SEPA, namely the International Cooperation Department, Pollution Control Department, Science and Technology Department, Programming Department, and the Foreign Economic Cooperation Office, and i s responsible for organizing and coordinating all POPs measures and activities in the country, Under CIO, a Special Joint Working Group on PCBs, with members mainly from SEPA and SERC, was established to coordinate and organize all activities on PCBs; 38 b. InNovember 2003, China established the Leading Group for China NIP Development (LG) with SEPA as focal point and with membership from 11 administrations and ministries o f the State Council: SEPA, National Development and Reform Commission, Ministry o f Foreign Affairs, Ministry of Finance, Ministry of Commerce, Ministry of Science and Technology, Ministry of Agriculture, Ministry o f Health, Ministry o f Construction, General Administration o f Customs and State Electricity Regulatory Commission. The Convention Implementation Office in FECO/SEPA i s incharge o f the day-to-day management o f all POP activities inChina. c. CIO has set up the POPSExpert Panel, with noted experts from scientific research institutions, universities, and colleges, to provide advice on the formulation o f strategy and its follow-up implementation activities; d. With the support of Italian government, CIO has organized the expertise needed for development o f a PCB inventory methodology and a national strategy on PCB reduction and disposal; e. Canadian government has also supported: (i) a series o f 6 workshops inpublic awareness activity, (ii)a PCB managementworkshop and manual development, (iii)a toxicity study, and (iv) a termite study. PCBManagement inChina from 1974 into the future 13. Prior to the PCB pollution accident in Zhejiang in the late 1980s, China's PCB management efforts focused principally on PCB-containing electrical equipment remaining in service and on the sealing up o f retired PCB-containing equipment. The Administration o f Power o f China was the main administration agency. China's institutional reform included disbanding the Administration o f Power and PCB management was taken over by SEPA after 1990. 14. PCB management inChina has the following stages. a. Stage I(1974-1990): Production ended and PCB equipment stored. China stoppedproduction o f electrical equipment containing PCBs and prohibited the import o f such equipment in 1974. In 1980s, China decided to take some PCB equipments out o f service and stored them temporarily underground, incaves or at sites o f users. b. Stage I1(1990-1998): Initial Regulation of PCB electric equipment and wastes. These include -- i. SeverePCBscontaminationeventsinZhejianginthelate1980shelpedpromptChinato issue clear regulations on collection, storage, transportation, treatment, disposal, and import o f PCBs and PCB-containing electrical equipment, starting with "Circular on Strengthening Administration on Abandoned Polychlorinated Biphenyl Power Capacitors [Huanguan (1990) 0041,"and "Regulations on Prevention of EnvironmentalPollution of Electrical Equipment ContainingPolychlorinated Biphenyl and its Wastes [Huanguan (199 1) 0501." These regulations continue to be China's main laws and standards on PCBs. ii. Duringthisstage,ChinaalsocarriedoutapreliminaryinvestigationonPCBelectrical equipment throughout the country and built a pilot hazardous waste incineration facility with a capacity o f 1ton/day in Sujiatun, Shenyang, in 1995.Total investment was about 4,800,000 RMB.As o f April 2003, this pilot facility has disposed about 1000 tons o f PCB wastes collected fi-om Shenyang and other provinces. After November 2003, this facility was no longer inuse because o f its poor emission control o f environment pollutants raised from wastes incineration. China will dismantle it in 2005. C. Stage I11(1998-2004): Control of PCBs as hazardouswastes and different activities related to the Stockholm Convention. These include: 39 i PCBswasteswerelistedformallyashazardouswastesin1998.Themanagementand disposal o f PCB wastes i s governed by nationalpermit and transportation manifest control systems, and disposal must meet technical standards. ii ChinahasstartedaconstructionofanewPCBincinerationfacilitysince2002toaddressthe Stockholm Convention. It i s still under construction and will be completed in2005. iii TheSARSoutbreakinearly2003generatedgreatconcernfromthecentralgovernmentover hazardous waste and medical waste management, leading to the issuance inDecember 2003 o f China'sNationalProgramfor Constructionof HazardousWaste andMedical Waste DisposalFacilities. The program directs the construction inevery province of central disposal facilities for hazardous wastes, as well as the establishment o f a comprehensive management mechanism to ensure the facilities' viability and sustainability. The construction of the disposal facilities inthe various provinces will be phased, with the construction o f some given higher priority than others. The national plan further identified rotary kiln incineration as the preferred disposal technology, supplemented by plasma torch technology. iv With support from the Canadian Government, China held 5 workshops in2002 among stakeholders at national and provincial level to raise public awareness on the Stockholm Convention and PCB management and disposal inChina. v Under the Sino-Canadian project, a PCB management training will be conducted inlate 2004, and training modules developed by mid-2005, vi Under the Sino-Italianproject, PCB inventory methodology and PCB inventory investigationwill be tested in Zhejiang and Liaoningprovinces. This project will also develop the draft strategy of PCB disposal technology and destruction. This project will be completed in2006. vii With the support o f GEF, China is developinga national implementationplan (NIP) for the POPSStockholm Convention and will be completed in September 2006. d. StageIV (2005 2009): Demonstrationof PCBmanagement and disposal. This stage will - focus on developing and demonstrating inZhejiang Province a cost effective, environmentally sound and financially feasible programto safely manage and dispose PCBs.A national replication program will be developed in 2008/2009 based on the experience and lessons learned from the demonstration o f PCB management and disposal inZhejiang. e. Stage V (2010-2028): PCBmanagementandDisposalin China, China will replicate the comprehensive PCB management and disposal program demonstrated inZhejiang to all o f China's other provinces. PCBinZhejiangProvince 15. Accidental Releases of PCBs in Zhejiang Province. Several accidental releases o f PCBs are known to have occurred in the Zhejiang Province, including in Luqiao and Taizhou in 1989, in the Southern part o f Shaoxing City (year not reported), and in Yueqing and Wenzhou in 1990. The main causes for these accidents were illegal dismantling and subsequent sale o f PCB-containing capacitors or their improper disposal. 16. The 1989 release in Luqiao, caused by leakage from disassembled PCB capacitors, was treated in time by the Zhejiang Environmental Protection Bureau, under supervision o f SEPA and the China Academy o f Science (Toxic Chemical Office and Ecological Environmental Center). Highly contaminated soil and capacitors were incinerated. The incident resulted in the issuance by Zhejiang o f regulations prohibiting the dismantling or sale o f retired PCB-containing capacitors. 40 17. In the south of Shaoxing City, several PCB capacitors were landfilled improperly without any anti-leakage measures. PCB oils subsequently leaked because o f water infiltration and severe corrosion o f the capacitors. The capacitors were removed from the site, but the contaminated soil and leachate remain at the original location. 18. In 1990, at Yueqing and Wenzhou, inthe first of two incidents, the local government and the Police Bureau found 273 obsolete PCB capacitors and 900 kilograms o f PCB oil. Boththe capacitors and the PCB oils were recovered and sealed in a cave. Improper sealing, however, allowed subsequent PCB leakage from the cave. In the second Yueqing incident, an illegal capacitor dismantling site was discovered in 1991. Residents o f the village in which the site had been found were reported to have experienced symptoms o f having been exposed to toxics, and chickens and ducks were reported to have died. 19. BaselineInformationon PCBs inZhejiang. According to the preliminary investigation onPCBs conducted by SEPA and the Ministry of Energy in 1996, PCB problems in China mainly exist in the electric power system and some large-scale enterprises o f other industrial sectors. The PCB situation in Zhejiang basically reflects that o f China as a whole. The ongoing inventory investigation being conducted under the Sino-Italian "Development o f PCB Inventory Methodology and Draft Strategy for PCB Disposal Project" also cover other sectors which have, or may have, PCBs, including the military, railway, and hospital sectors. Data from those sectors are not yet available. 20. The theoretical calculation for the amount of the PCB electrical equipment (mostly capacitors) is based on the transformer capacity in MVA in 1980. Table 1 shows the transformer numbers and total capacity (MVA) inthe various transformer substations in 1980. Table 1: Number of transformers andtheir capacity inZhejiang transformer substationsin 1980 1. Transformers with capacity more than 35KV 2. No electric power records inthese districts; average value o f the capacity o f those districts is shown 21. Transformers in Zhejiang: China banned import o f PCB equipments in 1980. As Table 1 shows, the total number o f large transformers at substations in Zhejiang in 1980 i s about 626 units, and the transformer capacity i s 5,120 MVA. On average, considering the overall transformer capacity, the capacity o f each large transformer i s expected to be on the order o f few MVA (the size o f a large distribution transformer). No data are available on the number or sizes of the small transformers. 22. According to a 2005 January investigation conducted by the Zhejiang Solid Waste Management Center and the Zhejiang Electric Power Company on all on-line transformers in the electricity power 41 sector (production and distribution o f electricity) for the province, the total number o f online transformers i s 230,733, and overall capacity i s 127,794 MVA. Information i s provided in Table 2. More detailed information on transformer inZhejiang province i s summarized inTable 3. Table 2: On-line Transformersand OverallCapacity in 2003 I I I I Transf. Class(kV) Transf.Number Overall Capacity (MVA) 500kv 24 18,500 220kv 187 28,160 1lOkv 787 29,069 35(63)kv 1256 10,938 3510.4kv 387 1,930 3-1010.4kv 228092 39,197 Total 230733 127,794 23. Capacitors in Zhejiang: On the basis o f the overall transformer capacity, the total number of capacitors has been estimated to be about 20,500 units. Another 2,000 should be added to this estimate to account for capacitors estimated to have been brought into Zhejiang illegally, making the total for the province approximately 22,500 units. No information i s available on the amount o f PCB equipment and wastes after 1980, although more data will become available when the PCB inventory investigation i s completed inthe first year of the project implementation. The current PCB baseline data in Zhejiang are nevertheless likely to prove an underestimate. 24. The average quantity o f PCB oil in each capacitor is assumed to be 11kg'. Using the estimated total o f 22,500 PCB capacitors inZhejiang, there would thus be about 247.5 tons o f PCB oil. Usinga fill ratio o f 20 25% as weight basis, a weight o f 990 1240 t for only the PCBs capacitors can be estimated. - - Assuming a ratio of 2 times the weight o f the capacitor for highly contaminated soil and waste (including the weight o f the capacitor itself) and o f 20 times for less contaminated soil, Zhejiang would have about 1,980-2,475 tonnes and 19,800-24,750 tonnes, respectively, o f highly contaminated wastes (> 500 ppm) and less contaminated soil (between 50 to 500 ppm). 2,000 tons of highly-contaminated and 20, 000 tons o f lower contaminated wastes are used for calculation o f project cost and determination of indicators. These quantities can be confirmed, however, only after site sampling and analysis. 25. It should be noted that these estimates do not include information on small capacitors and transformers. The estimates are consequently likely to be an underestimation o f the total amount o f PCB- contaminated equipment inthe province. data comes fromBuilding the Capacity of the People's Republic of China to Implement the Stockholm Convention POPSand Develop a NationalImplementation Program, Primary Assessment Report on PCBs in China, Appendix 2, para. 1.2, UNIDO2003 42 N 1 d 7 I 4 I !!--I d o v i o , .. m d .. *T I l l- . % I, eC a4 M r m vi > 0 0 W d W Y e Eg, : 3 Y 0 N 0 u d d I- - dW I- I- N m m I- O m N m m I- - .. d 2 I- m Y ED : Y M 4E b .-* 0 d Yv) E v) I 26. IdentifiedPCBsites inZhejiangProvince(2003). The recent rapid development o f Zhejiang's economy has put great pressure on land uses, and an unknown number o f PCB sites were almost certainly used for the development. PCB leakage has been confirmed at some such sites. The Zhejiang Power Company, cooperated with the Zhejiang EPB, conducted some PCB preliminary investigations and monitoring some PCB sites since 1995. Together with the recent investigations under the Sino-Italian Project, 43 PCB sites inZhejiang have been identified (see Table 4). Findingsthus far include: a. Three storage sites (numbers 01, 03, and 11) inZhejiang Province were fully cleaned up and the PCBs wastes were incinerated. b. Two storage sites (numbers 23 and 38) were fully cleaned up, but PCB wastes have been stored temporarily awaiting disposal. c. Two storage sites (numbers 10 and 15) have undergone basic cleanup and some PCB wastes were incinerated. Further cleanup will be needed. d. Another two sites (numbers 2 and 12) have been located. In summary, total 9 sites have been exactly located. The sino-Italian project will fund exact location o f another 10 sites. The other 42 sites will be exactly locatedthrough fundingo f the demonstration project. e. Historical data from the M e i Cheng and Xiaoshan sites (number 26 and 21) in Zhejiang show leakage at both sites and their contamination levels reaching 150- 250 ppm, or three to five times the allowable levels. This is not surprising, giventhat the storage sites were designed for a 3-20 year life and many are now approaching 25 years. In addition, some sites were not built to the required specifications even at the start, so that some lack entirely the liners meant to prevent PCBs from leaking into the environment. f. Data on PCB concentration in the ground are limited. At several PCB sites, PCB wastes and contaminated soil were removed without confirmatory testing afterwards. Further testing o f the soil and water at these sites will be required to ascertain the existence and extent o f any remaining contamination. g. In most cases, records concerning the existence o f a PCB storage site were found showing only the site's general location, leaving the exact location o f the PCB wastes unknown. Further investigation will be required to identify the exact location o f these PCB sites. h. Several PCB sites are located in very close proximity to (sometimes within the footprint of) buildings, road, and other barriers (see examples below). Addressing such sites will be possible only with substantial stakeholder consultation and involvement. i. Number4:inShangyuBusinessStreet,closetoresidential,officeorretailbuildings ... ii. Number18:inCixiCulturePark 111. Number 28: at sites o f planned or ongoing infrastructure development (e.g., Qiandao Lake Holiday Valley building) iv. Number: 26: at upstream o f Qian Tang Jang River and close to active cemeteries, v. Number 10: inthe farms. i. Site-specific dataonPCBleakagearenotavailableformostsites.Suchdatacanonlybecollected duringsite investigation and pre-clean up field tests plannedunder the Component 3. 46 Tablc The district Site Name Disposal condition Remark city name code Shaoxing 01 Eastern part o f Shaoxing Cleaned up completely. The capacitors Fully city inthis site havebeensent to Shenyang cleaned up and incinerated. 02 Southern part o f The capacitors inthis site have been Located Shaoxing city disposed in Shenyang. But the site soils need to be cleaned up. 03 Former Electric Power Cleaned up completely. The capacitors Fully Bureau inthis site have beensent to Shenyang cleaned up and incinerated. 04 Shangyu, Shaoxing Still sealed 05 Dianrong, Shaoxing Still sealed Non-Electric Power 06 Shengzhou,Shaoxing Still sealed 07 Xinchang, Shaoxing I 1 Still sealed 08 Zhuji,Shaoxing Still sealed 40 Shaoxing Steel I1 Still sealed Non-Electric Corporation Group Power Wenzhou 09 Pingyang,Whenzhou The capacitors inthis site have been purchasedby some people and the local people don't know where these capacitors are. Local people said the capacitors leaked when they were removed. So the soil inthis site needbe further treated. 10 Yueqing,Wenzhou The capacitors and oil inthis site have Located been sent to Shenyang and incinerated. The contaminated soils still remain in the site. So the soil inthis site need be further treated. Jiaxing 11 Wangdian,Jiaxing Cleaned up completely. The capacitors Fully inthis site havebeensent to Shenyang cleanedup and incinerated. 12 Haining, Jiaxing 1 The capacitors have beenremoved and Located the soils need further treatment. 13 Tongxiang, Jiaxing 1 Still sealed Taizhou 15 Luqiao, Taizhou Capacitors inthis site have been Located dismantled. Soils need further 37 Sanmen, Taizhou Inthis site, there are lots of chemical Non-Electric residues containing PCBs depositing in Power the open air. Ningbo 14 Xiangshan, Ningbo - IIThe capacitors were stolen, the sealed up site-and soil need further treatment 16 Cixi, Ningbo The capacitors were stolen and the sealed up site and soil need further treatment 17 Yuyao, Ningbo Still sealed 18 Meishan, Cixi Still sealed rr The district Site Name Disposalcondition Remark code 19 Chemical fertilizer, Still sealed Non-Electric Ningbo 20 Tian' an,Nngbo Power Hangzhou 21 Xiaoshan,Hangzhou Still sealed 22 Yuhang,Hangzhou 24 Xin'an jiang transformer substation 27 Wenchang,Chunan Still sealed 28 Chunan transformer Still sealed Substation 38 HangzhouSteel The capacitors have beenremoved and Fully Corporation Steel the site cleanedup.The capacitors still cleaned up Group have been stored inthe warehouse now. 42 Exact location unknown The capacitors still are stored inthe warehouse. Jinhua 23 Yiwu,Jinhua The capacitors have been removed and Fully the site cleaned up. The capacitors still cleaned up have been stored inthe warehouse 25 Laoshusheicheng.Jinhua Still sealed 26 Meicheng,Jinhua Still sealed 29 Pujiang,Jinhua The capacitors have been removed and the local people don't know where these capacitors are. Local people said the capacitors leaked when they were removed. And the soil needed further treatment. 30 XiaoshqJinhua The capacitors have been removed and the local people don't know where these capacitors are. Local people said the capacitors leaked at that time. So the soil need be further treated. 31 Shaneshan.Jinhua Still sealed 33 Lanxi,Jinhua Still sealed Non-Electric Power 32 Shizikou,Quzhou Still sealed 34 Diangong,Shejiang Still sealed Non-Electric Power 41 Quhua,Quzhou Still sealed Non-Electric Power 35 Qingtian,Lishui Still sealed 36 Nanpu,Huzhou Still sealed 39 Changxing,Huzhou Still sealed Non-Electric Power 43 Exact location unknown Still sealed 48 27. PCB management in Zhejiang. Zhejiang currently has a provincial EPB, 11 city-level EPBs and 83 county-level EPBs in Zhejiang Province, who are responsible for PCB management. Inaddition, the province established the Zhejiang Solid Waste Management Center in 1999 to assist the provincial EPB with the management o f solid waste (including PCB waste). The cities o f Hangzhou, Ningbo, Wenzhou, and Jinhua have also established their own solid waste management centers. 28. The Zhejiang Power Company i s composed o f 11 city-level power subsidiary companies, and every city-level power subsidiary company composed o f several county-level power subsidiary companies. It and most o f its component and subsidiary companies at all levels (county, city and provincial) have security departments responsible for environmental protection compliance and these will take some role inthe demonstration project. 29. Although Zhejiang Province i s one o f the stronger provinces for PCBs management in China, Zhejiang has not yet established either a sufficient PCB management coordinating and cooperating mechanism or the management infrastructure and procedures necessary to ensure the environmentally sound management and disposal o f PCBs. The MainSector Issuesto beAddressedby the DemonstrationProject 30. China i s a country with a vast territory and a population o f over 1.3 billion. Because o f its size and varying stages o f economic development and different effectiveness o f PCB management and disposal in different regions, China faces many challenges for PCB management and disposal, such as incomplete PCB baseline data, weak institution and policy framework for PCB management, lack o f PCB disposal technology and facilities, and insufficient public awareness. The project will address these sector issues: a. Incomplete PCB baseline data. The project will complete the identification of PCB wastes (including associated PCB-contaminated soils) in temporary PCB storage sites, over 95% o f the wastes are believed to be PCB capacitors. An ongoing Sino-Italian PCB project (Development of PCB Inventory Methodology and Draft PCB Disposal Strategy) i s collecting PCB baseline information in Zhejiang and Liaoning Provinces. This project will support follow-up activities, includingidentifying the exact locations o fthe PCB sites and performingPCB concentration tests before their cleanup. The Sino-Italian project has also obtained some basic information on transformers in both provinces; however detailed information on PCB transformers and their levels o f contamination still needto be confirmed inboth provinces. This demonstration project will focus on identifying in-use large PCB contaminated transformers installed before 1980 and testing decontamination technology o f PCB transformers as well as decontaminating some o f those large in-use PCB transformers installed before 1980. b. Weak PCB management and disposal. This project will support environmentally sound management o f PCBs, including recovery, collection, packaging, transportation, safe temporary storage in Zhejiang, and final disposal in Liaoning. There are currently no suitable facilities in China that meet the requirements o f the Stockholm Convention for environmentally sound and safe disposal o f PCBs. A new incineration facility for PCB wastes has been under construction since 2002 in Xinmin in Liaoning Province. It has not completed yet. This project will use this facility to dispose collected PCB wastes. However, this facility designed in 2001 could not meet requirements on PCB disposal under the Stockholm Convention, particularly in waste pretreatment, central and online monitoring, and dioxin and furan emission control. The PCB incinerator will be completed by adding four key units (refer to annex 4, Para. 30/c) to ensure that it is capable of safe and effective destruction o f PCBs and meets relevant requirements o f the Stockholm Convention. Chinese government will provide its own funding and raise bilateral support for completing the PCB incinerator. The project will support capacity building activities 49 for PCB management and disposal. c. Health and environmental risks from PCB contaminated soils and water. The highrisks to human health and the environment from exposure to PCBs and soils and water contaminated with PCBs are well known. Several accidental releases o f PCBs are known to have occurred in the Zhejaing Province (see paragraph above on PCB identified sites for more details. The project will address the health and environmental risks by recovering and disposing o f the PCBs in Zhejiang Province to prevent future releases to the environment. The cleanup o f PCB sites would be based upon a clear understanding o f site-specific risks, feasibility o f the technological options and costs. d. Imperfectpolicy, regulations,standards andtheir enforcement.Enforcement and execution of current polices and regulations are severely constrained by the absence o f effective monitoring and evaluation measures. The project will support development and update o f the legal and regulatory system for safe PCB management and disposal. Related policies and regulations at the national and local levels governing PCB management and disposal will be formulated and revised as necessary. Monitoring and evaluation measures will be developed for their effective enforcement. e. Insufficient public awareness and education. Public awareness is important for smooth cleanup o f those identified PCB sties in Zhejiang, especially the PCB sites close to residential complexes. The project will support necessarily public awareness activities, such as videos, newsletters, TV programs, etc. OngoingActivities 31. Linkage of the Proposed Project to Ongoing Projects. The Stockholm Convention requires each party to prepare a National Implementation Plan (NIP)within two years from the Convention's entry into force for that country. The NIPprovides a framework for the country to develop and implement, in a systematic and participatory way, priority policy and regulatory reform, capacity building, and investment programs. The PDF-B grant phase o f the development of China's NIP as a first step to compliance with the Convention was implemented by the Foreign Economic Cooperation Office (FECO) o f the State Environmental Protection Administration (SEPA) under a letter o f agreement with UNDO. The GEF Council Meetingapproved this full sized project inMay 2003. 32. China has also been successful in winning co-financing support from its bilateral development partners for the development o f the NIP,including the following activities: a. Five Workshops (an AAA activity). The workshops' objective was to raise awareness o f the Convention among stakeholders at national and provincial level during the PDF-B phase o f NIP. The workshops were executedby the World Bank and fundedby a Canadian Trust Fundfor POPS activities established at the World Bank. The workshops have been completed; b. Capacity Building in PCB Management (an AAA activity). This small-scale activity is also funded by the Canadian Trust Fund. Its key objective i s to begin to develop China's capacity to assess industrial and commercial properties for PCBs (gather inventory information), establish and inspect safe storage sites for PCBs until a PCB destruction technology i s established in China, assess PCB destruction technologies, collect environmental samples, and work safely when in contact with equipment and sites that contain, or may contain, PCBs. This is being done by initiating an initial training program which will subsequently form the basis for developing more extensive training programs in China. The project was started in September 2003 and will be completedby mid-2005; c. Toxicity Study o f POPSon Women and Children. This small-scale activity i s also funded by the Canadian Trust Fund. Its key objective i s to investigate the exposure o f DDT and PCBs and their adverse effects with special emphasis on the health o f women and children. Biological and environmental samples colleted from an area in Zhejiang province, where there are several large- size disassembly workshops and many single household disassembly centers for imported old and 50 useless electric appliances and metal materials, were tested. Biological samples were collected from women-baby pairs and women-children pairs. Environmental samples were colleted from water, soil, fish, meat, eggs, milk, rice, shells, and vegetables. The initial study result indicates that the selected area i s an area with PCB high-concentration exposure. PCB GM concentration levels in women and children inthis area are moderately elevated. They are below those found in Arctic Canada (Nunavut) and above those found in southern Canada. d. Development of a PCB Inventory Methodology and an Initial Strategy on PCB Reduction and Disposal in China. This project i s being executed by the Bank and funded by the Government of Italy. Its key objective i s to develop an inventory methodology based on results o f pilot projects and a draft strategy on approaches and options for disposalheduction o f PCB. The draft strategy will provide an assessment o f current PCB disposal, reduction, management, policy and regulation and identification o f approaches and options (or course o f actions) that are suitable for China. Both the inventory methodology and the draft strategy will be integrated into the development o f a PCB Action Plan in the NIP. The project was started in October 2003 and will be completed by the end o f 2005; and, e. Collection o f national information on production, import and use o f PCBs and equipment containing PCBs under NIP development. This activity i s part o f NIP development and funded by GEF grant. 33. The linkages of the proposed project to the above ongoing projects under NIP development include: a. The completed Sino-Canadian POPS Convention workshops have contributed greatly to the identification o f the demonstration project interms o f public awareness, stakeholder participation and identification o f experienced and qualified PCB experts. b. The capacity building project will improve PCB management training at the national level by conducting a pilot training program and developing a national training program proposal, as well as a training manual, by mid-2005. c. The Sino-Italian project will provide an inventory o f PCBs and equipment containing PCBs in two provinces - Zhejiang and Liaoning, develop and demonstrate a PCB detailed inventory methodology, and draft a draft strategy on PCB reduction and disposal by mid-2005. d. National information on PCB import and use, as well as on equipment containing PCBs, will be collected as part o f developing the NIP, and will provide basic data for both the draft strategy beingdeveloped by the Sino-Italian project and the replication program under this demonstration project. e. The Sino-Italian and Sino-Canadian projects constitute bilateral co-financing contributions to the NIPpreparation. Results of the Sino-Italian project and the Sino-Canadian project will be fully integrated into the NIP and the proposed project; and project results from the (1) Sino-Italian project, (2) Sino-Canadian project, and (3) NIP will lay the ground for developing a National ReplicationProgram for PCB management and disposal in China under the proposed project. The following diagram shows the linkage o f these projects. 51 RelationshipAmong the PCB ProjectsinChina and Their Key Outputs C a m d i m PCB Pmject (WE) KeyOutputs (I) PCBMmagerncntTrnmg -Workshops,($0TrauungMan~al,and(119 Trmmg Program I ItalianP CB Proieet (we) I Implementation (19 DreRStrategyon o f C h i n a PCB Reductionand National Disposal,and Replication Program I for National ImDlcmcntationP k nIUNIDO) I PCBManagement KeyPCB Cornponenu (1)Prehmmaty and NabonelInventory,(u) PCB Inventory Disposal Methodology dDraRStratcgyonPCB I I CEF PCB Demo Pmiect [WBI Keyoutputs (I) NationalRcplicationProgam,and(u) PCB CIebn-up inZhejiang Provrncc I- 4 b 7/2003 912003 9/2004 112006 212006 7/2006 912006 1212009 2010 2028 Note Ttmelme not t o scale 34. These ongoing activities will be closely coordinated with, and will feed into the design of, the proposed demonstration project. Disposal Technology Selection for the Proposed Project 35. Summary Conclusions. As a rotary kilnincinerator i s currently under construction in Shenyang, China proposes to use it for incineration o f PCB wastes under this project. This option would meet all technical requirements for PCB disposal, as well as beingcompatible with China's 2003 National Plan for hazardous and medical waste management. , The Shenyang incinerator will have a capacity of 15 tonnedday, and has been designed to dispose o f highly chlorinated wastes (such as chorine-containing organic solvents), including PCBs. 36. Principles to Select PCB Waste Disposal Technology for China. According to the requirements o f the Stockholm Convection and current PCBs pollution situation in China, the following principles are used for selecting PCBswaste disposal technology demonstrated inChina: a. Meeting the requirement o f Stockholm Convention; b. Hightreatment effectiveness, safety andreliability; c. No secondary pollution; d. With good acceptability, suit to the characteristic of different types o fPCBs pollutantsinChina; e. L o w treatment cost with good economic result; f. Technologyisripeandreliable; 52 g. Meeting the schedule o f China's PCBs disposal plan. 3 7. Currently available PCB disposal technologies. A number o f international agencies concerned with POPs or PCBs have reviewed PCB decontamination technologies in the last ten years. The following documents were examined in order to gather information concerning the available technologies for PCB disposal, as well as for the general strategies followed by the different countries inaddressing the problem o f PCBs: a. USEPA produced several relevant reviews, such as "Guidance on Remedial Actions for Superfund Sites with PCB Contamination," and "Technology Alternatives for the Remediation o f PCB-Contaminated Soil and Sediment" (1993). b. More recent reviews include those by of PCB decontamination technologies have been published by UNDO (M.S.M. Mujeebur Rahuman et al., 2000) on PCB decontamination technologies, and by UNEP on non-incineration technology to be used for pure PCBs stockpiles ("Survey o f Non- IncinerationPCB Destruction Technologies," August 2000). C. A training manual for hazardous waste project managers concerning the PCB destruction and decontamination and guidelines concerning PCB decontamination have been written under the Base1 Convention by the Auckland University, (2001). d. The Italian National Committee for Best Available Technologies also prepared recently the Italian "Guidelines for the Selection and Use o f the Best Available Technologies for PCB disposal and For the Disposal o f PCB-Contaminated Devices" (Italian Ministry o f the Environment and Territory, D.LGS 372199, inItalian). e. The Scientific and Technical Advisory Panel o f the GEF (STAP) recently completed (June 2004) the "Review Of Emerging, Innovative Technologies For The Destruction And Decontamination OfPOPs AndThe IdentificationOfPromisingTechnologies For Use InDeveloping Countries." 38. Several factors have driven the process o f developing technologies for PCB destruction in the last ten years: a. The (though slowly) increasing number o f new patented technologies i s partially attributable to the limitations or problems posed by existing technologies, along with a competitive business climate. b. The strong competitive advantage o f incineration versus other technologies, due mainly to the large amount o f low cost hightemperature incineration capacity inEurope, made it more difficult for non-incineration technologies to enter the market; c. Increasing awareness o f the environmental limits o f incineration has nevertheless spurred research and application of new solutions for the treatment o f flue gases and for the detoxification o f ashes, thus making incineration safer, due to the added costs o f the post-treatment processes, but also more costly; d. The need for decontamination o f valuable electrical equipment without destroying it, with the minimumpossible interruption to its connectionto the electrical grid, and ina way which allows recovery o f the expensive dielectric oil, has opened the market to "online" decontamination technologies. Among the most widespread o f these are the sodium based and APEG based technologies. 39. PCBs disposal experiences in China. The State Environment Protection Administration (SEPA) o f China, in the National EighthFive-Year Plan in 1992, designated a state research topic on the establishment o f a set o f industrial PCB incineration facilities in China. In response, the Shenyang Institute o f Environmental Science developed a pilot-scale incineration facility, whose main performance parameters met applicable national standards. This facility, built for PCB capacitors, included a primary and secondary combustion chamber furnace, in which the first chamber burned solid, liquid, or mixed wastes, while the secondary chamber was dedicated to the post-combustion o f the gases. The unit also 53 had high temperature tail gas rapid-cooling equipment and waste water treatment equipment. However, this plant had only limited automated control systems, and lacked online monitoring systems for the off- gas. These two defects are the key problems o f PCBs incineration treatment in China. This facility operated for eight years until2003, i s no longer inuse and will be dismantled in2005. 40. The successor demonstration incinerator for hazardous waste i s currently under construction inthe Xinmin County o f the Liaoning Province, and is a national demonstration engineering project designed and constructed by the Shenyang Institute o f Environmental Science. The incinerator will be transferred to the Shenyang Hazardous Waste Disposal Technical Center. The new facility has a nominal capacity o f 15 tordday, and i s comprised o f a rotary kiln pyrolysis furnace, a two-section high temperature tail gas disposal furnace, Venturi scrubber, with NaOH and active carbon absorption as o f f gas treatment technologies. The plant i s also equipped with a water treatment/reuse facility. Roads for accessing the plant have been improved as part o f the project. 41. The facility's technology parameters are: a. Main components: rotary kilnfurnace; secondary combustion chamber; Venturi dust gas quench; NaOH spray-pour tower, active carbon absorption tower; baghouse, and water treatment plant. b. PCBs destruction ratio: 99.9999% c. Combustion efficiency: 99.9%; d. HCL destruction ratio: 99.9% e. Dioxin concentration inthe exhaust gas: <O.5TEQng/Nm3 42. The facility does not include detoxification o f the ashes, nor does it have automated process control for technical and environmental parameters. As currently being constructed, the facility would not meet Stockholm Convention "best available techniqueshest environmental practice (BATIBEP)" standards for PCDD/PCDF emissions, which would require beingbelow 0.lngTEQ/Nm3. 43. PCB disposal facilities outside China. UNEP released the first issue o f the "Inventory o f Worldwide PCB Destruction Capacity" in December 1998. Incineration with rotary kiln plants was the most widely practiced technology to destroy PCBs waste. Cement kilnincineration was also reported to be quite widespread at the time o f the inventory. Although UNEP i s currently preparing an updated facility inventory, incineration will continue to be the first choice treatment technology for the destruction o f PCB. Other available technologies are: solvent or thermal treatment in autoclave for transformers; chemical dehalogenation transformers; and the plasma arc process. Alternative Schemes for Disposal of Highly-contaminated PCB Wastes 44. There are three alternative schemes o f high concentration PCBs disposal: (1) modifying and renovating an existing disposal facility in Zhejiang, and disposing PCBs wastes in Zhejiang; (2) Sending PCBs wastes to Western European countries for disposal; and (3) renovating existing facilities in Shenyang, and disposing Zhejiang PCBs wastes in Shenyang. Comparisons o f disposal cost by the three alternatives are showed in Table 5. Table 5: Comparisons of disposal cost by the three alternatives 1 Alternative Scheme 1 1.Disposal in j2.Overseas I 3.Disposalin I IITotal new investment U S D 7,700,000 * - 1,650,000 Disposal expense USD 1I 15,000,000 II5,080,000 Transportation cost U S D I -5,800,000 I2,000,000 I 1,512,000 I 54 Subtotal, Disposal & Freight U S D 13,500,000 7,000,000 6,592,000 Total incremental costs 13,500,000 7,000,000 8,242,000 Inland Transport Risks No No Yes Overseas transport risks No Yes No Disposal demo features Yes No Yes Domestic transport demo features No No Yes Inland transport expense and risk High High Low duringproject spreading Overseas transport expense and risk No Yes No during project spreading Policy adaptability Worse Bad Good Comprehensive demo effect Fine Worse Good 45. As shown inthe Table, the disposal and the transportation costs for Alternative (1) are the highest one, almost 40-50% higher than the rest two options. Therefore, Alternative (1) i s not a good option for the implementationofthis demonstration project.For the remainingtwo alternatives, the total incremental costs for Alternative (3) are about 15% more expensive than Alternative (2). However, the disposal and transportation cost for Alternative (3) will be lowered down greatly when the facility receives PCBs wastes from other parts o f China. As noted earlier, it will be a time consuming and dreary process for China `to get permission to transport and dispose o f PCBs wastes in other countries. Moreover, there will be a risk o f PCBs exposure to the marine environmentinthe course o f transportation. 46. Inaddition to dispose of the 2,000 MT PCBs from Zhejiang Province, Alternative (3) will serve the demonstration purpose o f PCBs waste transportation and disposal in China and will accept national PCBs wastes after the completion o f this demonstration project. Therefore, Alternative (3), disposal o f highconcentration PCBs wastes inShenyang, is the best option. 47. The additional investment in the Shenyang incinerator would ensure that it will comply with the national strategy and with applicable standards to meet the Stockholm Convention requirements. The National Plan for Hazardous Wastes and Medical Wastes specifies the buildingo f a 15 tonnedday rotary kiln incinerator in. The applicable standards include GB13015-91 (Standards on Pollution Control of PCB Wastes), which applies to wastes exceeding 50 mg/kg o f PCBs. Those standards provide that PCB wastes exceeding 500mgikg should be disposed o f by hightemperature incineration; those contaminated at levels between 50 and 500 mg/kg must be safely landfilled or put through high temperature incineration. PCB waste (with PCBs <50mgikg) must be collected and temporarily stored under the approval o f the EPB ifit cannot be incineratedor landfilled. 48. 50 mg/kg (50 ppm) i s also the most usual threshold for cleanup among developed countries. The Base1Convention, for example, defines as "hazardous wastes" for those "wastes, substances, and articles" having PCBs "at a concentration level o f 50 mgikg or more." Similarly, the Stockholm Convention identifies three levels o f concentration at which PCBs are a concern, the lowest o f which i s 0.005 percent. Both o f these thresholds convert to 50 ppm. 49. The additional investment in the Shenyang incinerator will enable it to reduce its dioxidfuran emission levels to less than 0.lngTEQ/Nm3, thereby address the requirement o f the Stockholm Convention on the use o f best available techniques and best environmental practices: ``F'Izen considering proposals to construct new facilities or to significantly mod@ existingfacilities using processes that release chemicals listed in this Annex, priority consideration should be given to alternative processes, techniques or practices that have similar usefulness but which avoid theformation and release of such 55 chemicals. I n cases where such facilities will be constructed or signijkantly modi3ed, in addition to the prevention measures outlined in section A of Part V the following reduction measures could also be considered in determining best available techniques: a. Use of improved methods for jlue-gas cleaning such as thermal or catalytic oxidation, dust precipitation, or adsorption; b. Treatment of residuals, wastewatel; wastes and sewage sludge by,for example, thermal treatment or rendering them inert or chemical processes that detoxijj them ; c. Process changes that lead to the reduction or elimination of releases, such as moving to closed systems; (the project includes improving the storage o f PCBs and PCB wastes to prevent any releases) d. Modijkation of process designs to improve combustion and prevent formation of the chemicals listed in this Annex, through the control of parameters such as incineration temperature or residence time. " (The project includes implementing computerized control o f all the relevant operational process inorder to guarantee technical and environmentalparameters). 50. The technology o frotary kilnincinerator is aproven technology with which China has established expertise. The Stockholm Convention, however, requires a further improvement in the environmental and technical performance o f this technology. The demonstration project will then bringimportant follow up for the country. 51. Rotary kilnincinerators are very flexible plants, capable of destroying with highDRE coefficient a wide range o f hazardous wastes having differing concentrations o f POPSand differing physical- chemical properties. This flexibility allows the project to maximize the benefiticost ratio o f the investment. Selection of Soil Decontamination Technology 52. Seven technologies for decontaminating PCB contaminated soil (50 ppm-5OOppm) were evaluated during project preparation. The seven technologies include (1) incineration, (2) plasma transform technology, (3) In Situ. Verification (ISV), (4) thermal desorption, (5) solvent extraction, (6) solvated electron, and (7) base catalyzed dechlorination. Thermal disorption technology was concluded as the best option with the following advantages for treating PCB low-contaminated soil under the proposed project. a. Size: The throughput size for the proposed thermal desorption unit i s on the order o f 30 tonnedday. This size has been estimated on the basis o f an estimated amount o f 20,000t - 26,000t o f contaminated soil in Zhejiang. b. Mobility: Mobile units for the decontamination o f PCB-contaminated soil and wastes may be repositioned and reused on different sites once decontamination activities have been completed, thus minimizing investmentcosts; c. Soil Reuse: Thermal extractionwill allow at least a limited preservation o f the original properties o f soil, making it possible to returnthe de-contaminated soil to its original location. d. Flexibility:Thermal desorption i s also a quite flexible process, capable to treat different kind of contaminated soils: soils contaminated by hydrocarbons, by PCBs, by pesticides. e. Scale: Thermal desorption i s especially suitable where for on site/ex-situ situations where large amounts o f contaminated soils have to be treated. f. Costs: The economics for the treatment withthermal desorption are quite favorable. g. Residue: The high concentration residues generated by the thermal desorption can be successfully treated by incineration, in which case they would be transported to the Shenyang facility in compliance with applicable standards and requirements. 56 Conclusionof PCBManagement and DisposalTechnologiesfor the ProposedProject 53. Based upon (1) careful analysis o f available technologies, (2) the PCB incineration facility in Shenyang, (3) China's strategy on hazardous wastes, and (4) information currently available on PCB situation in China, the following technologies are proposed as demonstration technologies for the proposed project: a. A new rotary kiln incinerator now nearing completion in Shenyang for the treatment o f highly contaminated solid wastes. China will complete construction o f this incinerator to ensure that all Stockholm Convention requirements on PCB disposal are met, b. Placement of a mobile thermal desorption unit in Hangzhou for the treatment of PCB- contaminated soil at concentrations between 50ppm and 500ppm, and c. Rental and testing of foreign mobile dehalogenation equipment for the treatment o f PCB- contaminated transformers remaining inuse. 54. Technical data for the PCB incineratorin Shenyang. The technology parameters for the PCB incinerator in Shenyang are: a. Throughput capacity: 15 tiday b. Main equipments: rotary kiln furnace; secondary combustion chamber; Venturi dust gas quench; NaOH spray-pour tower, active carbon absorption tower; baghouse; and water treatment plant. c. PCBs destruction ratio: 99.9999% d. Residence time inthe post-combustion chamber at 1200
Groupe de la Banque mondiale · Project Appraisal Document
China - Demonstration of Polychlorinated Biphenyl (PCB) Management and Disposal (GEF) Project
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