China - Yantai Integrated Gasification Combined Cycle (IGCC) (GEF) Project : China - Yantai Inegrated Gasification Combined Cycle (IGCC) (GEF) Project

INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE 26506 Date ISDS Prepared/Updated: July 31, 2003 1. BASIC INFORMATION A. Basic Project Data Country: China Project ID: P071439 Project Name: Yantai IGCC Task Team Leader: N. Berrah Estimated Appraisal Date: October 2004 Loan/Credit amount ($m.): Estimated Board Date: December 2004 GEF amount ($m.): 15 to 18 Managing Unit:EASEG PCF amount ($m.): Lending Instrument: Other financing amounts ($m.) by source: Sector: Equity; 80 Theme: Domestic Loans: 322 Safeguard Policies Specialists in the task team: Bernie Baratz (Environment) and Yuxuan Zhu (Resettlement) B. Project Objective The objectives of the project are to: (a) reduce China's greenhouse gas emissions and local air pollutions from coal-fired power generation by accelerating the adoption of the integrated gasification and combined cycle (IGCC) technology; and (b) help the Chinese government to develop and to gradually implement a "zero CO2 emissions from coal strategy" and plan for a pilot hydrogen production and CO2 sequestration project, as a first, practical step to implementing such a project. The project would (a) provide Chinese government and utility industries with full access to cutting-edge knowledge of IGCC technology and international best practice in plant design and operation, which would both accelerate construction and improve plant performance, thus enhancing the technology's replication potential and prospects; (b) strengthen the design and implementation of China's IGCC replication strategy and action plan, and thus speed and deepen the dissemination of experience gained from constructing and operating the Yantai plant and; (c) by modifying the plant design to facilitate CO2 sequestration, help China to immediately develop and subsequently begin implementing a long term strategy to gradually move towards a "power generation zero emissions" objective. C. Project Description  The proposed project consists of the construction, commissioning, operation, demonstration and replication of a green-field 300-400 MW IGCC plant at Yantai, Shandong Province, and the development of a long-term strategy to gradually achieve zero CO2 emissions from coal-fired power generation in China. The overall IGCC plant train system would include an air separation plant for producing oxygen, an entrained coal gasifier, a gas clean-up system to remove sulfur gases, ammonia and ash, and a combined cycle power generation system. Other important auxiliary systems comprising the plant would include coal grinding equipment, a pressurized coal feed system, and associated heat exchangers to heat and cool gas streams. The State Power Grid Company, Shandong Electric Power Group, Shandong International Investment and Trust Co., and Yantai Power Development Company will form a Special Purpose Company to build, operate and manage the Yantai IGCC plant. The plant would be designed to use indigenous high sulfur, high calorific value and low ash coal. The total project cost is estimated to be about US$420 million, of which 20% will be financed by equity, 75% by a domestic loan and (China has requested) the balance by a US$15-18 million GEF grant. The Chinese Government has decided bear the bulk of the US$120 million cost difference between constructing a comparable PC plant (the least cost option) and the IGCC plant. It has requested GEF co-financing of just: (a) the incremental cost ($9-1 0 million) of making the design changes and increasing the capacity of the oxygen plant, gas clean up system and other auxiliary system in order to (i) test various types of Chinese coal and thereby facilitate future replication of IGCC technology; and (ii) equip the plant for future hydrogen production and CO2 sequestration; (b) capacity building ($2-3 million) to provide state-of-the-art technical assistance and training during the construction of the plant and to build-up the operational capacity of the implementing agency to ensure successful and high efficiency operation of the plant; (c) technology improvement to lower costs ($3 million) which will focus on experience and knowledge dissemination and on actions that would lead to lower costs by tapping China's low cost domestic manufacturing potential; and (d) development of a zero emission C02 coal-fired power generation emission strategy ($1-2 million). D. Project location The project will be located in an existing power plant in the middle of an industrial zone in the suburbs of Yantai City, Shandong province in China. The city is in the northern coastal area of the Shandong Peninsula about 200 km north east of Qingdao, and about 400 km east of Jinan, the capital city of Shandong province. E. Borrower's Institutional Capacity The implementing agency led by the State Power Grid Company is very experienced in all aspects of power system construction and management, including environmental and social assessment and the design and implementation of appropriate environmental and social impact mitigation plans.  The implementing agency and concerned government agencies have already collected a considerable volume of information and data on the construction, operation and maintenance of IGCC plants in the US and Europe. Required consultancy services and capacity building activities are envisaged to assist the grant recipient in completing the design of and implementing the project. II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policy If Applicable, How Might It Apply? Environmental Assessment (OP/BP 4.01) Preparation of EIA. Natural Habitats (OP/BP 4.04) No Pest Management (OP 4.09) No Involuntary Resettlement (OP 4.12) No (to be confirmed during project preparation) Indigenous Peoples (OD 4.20) No Forests (OP 4.36) No Safety of Dams (OP/BP 4.37) No Cultural Property (draft OP 4.11 - OPN 11.03) No (to be confirmed during ___ ___ ___ _ _ preparation) Projects in Disputed Areas (OP/BP 7.60) No Projects on International Waterways (OP/BP 7.50) NO Environmental Assessment Category: A LA LB O C O Fl O TBD (to be determined) If TBD, explain follow-up and calendar/steps for the determination of the category: Safeguard Policies Classification: S2 l SI O S2 FL S3 Cl SF Cl TBD (to be determined) If TBD, explain follow-up and calendar/steps for the determination of the classification: III. ACTIONS DURING PROJECT PREPARATION A. What actions might be needed during project preparation to assess safeguard issues and prepare to mitigate them? Review prepared EIA. Revision of EIA if needed to meet Bank safeguard policies. By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas  B. How might consultation and disclosure requirements be addressed? Consultation and disclosure will be addressed based on the experience gained in past power and energy projects in China. IV. AGREEMENTS REACHED ON SAFEGUARDS AT PCN REVIEW Summarize the key agreements reached on follow-up actions to be taken regarding safeguards during project preparation Agreed target date for Quality Enhancement Review: V. APPROVALS Signed and submitted by: Task Team Leader: Name Date Approved by: Regional Safeguards Coordinator Name Date Comments Sector Manager Name Date Comments