IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors. The Summary of Project Information (SPI) also provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to World Bank InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. IFC will effectively be investing at the corporate level in a power development company, with the investment linked to specific projects. IFC’s appraisal assessed the compliance of projects with Government of China environmental requirements, and the feasibility of projects to comply with applicable World Bank guidelines and policies as well as international best practice for MSW plants. Issues identified regarding China Green's existing investments will be addressed through development of an Action Plan for each project. IFC's appraisal also assessed China Green's capacity for environmental and social matters, such as staff qualifications and environmental management systems.

The sponsor has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. - Environmental Benefits China Green focuses on energy conversion projects for which there are financial regulatory incentives associated with the fuel used. These incentives are for the use of waste coal, low grade coal, and municipal solid waste (MSW). Waste coal is a residue from coal processing, and is often disposed of in an uncontrolled manner at the mine or processing site. Low grade coal is normally uneconomic to mine and is often mined and consumed locally in highly polluting home heating and small industry boilers. Disposal of MSW is a major problem in China, and the un-engineered landfills that are often used contaminate soil and water, are unsightly, and are a public health problem. Performance of landfills is a particular problem in the coastal regions in which China Green operates, which have a high ground water table and where land values are high. IFC’s involvement will ensure that China Green's existing plants are environmentally upgraded to the practical extent, and that new facilities will be constructed to meet World Bank Group guidelines. Converting waste coal products and MSW into useable energy provides an environmentally sound solution to the disposal concerns with such wastes. This also enables the shutdown of many of the small, inefficient, coal-fired heating boilers prevalent in China. Environmental issues associated with MSW fuel include toxic air emissions, ash and slag disposal, and waste water disposal. Social concerns include traffic, odor and noise from plant operations, and labor issues related to presorting of the fuel. Offsetting these concerns are the environmental benefits of incineration deriving from the 90% reduction in waste volume as a result of incineration, thus saving valuable landfill capacity. Partially offsetting the above benefits are the emissions of greenhouse gases (GHGs) from the combustion of fossil fuels. Annual emissions of carbon dioxide, a GHG which is implicated in climate change, from China Green's plants will be on the order of 2.3 million tons. Both the direct and indirect effects of China Green's projects must be considered, and on balance, the company's plants are providing a significant net positive benefit to the regions in which it operates. - Environmental and Social Management IFC's appraisal assessed China Green's capacity for environmental and social matters, such as staff qualifications and environmental management systems. The company has an environmental policy in place, and evolving environmental and social programs and procedures. Appraisal found that under its current structure the company's management has reached capacity to manage environmental and social issues. Environmental and social affairs need to be managed at the corporate level, preferably in accordance with a corporate ISO 14001 EMS system. During appraisal, management acknowledged the need for a corporate-level program. They are in the early stages of seeking ISO accreditation for their operations, and thus are planning to hire/assign appropriate staff for environmental and social affairs and to develop and implement an environmental management system. To this end, the company has hired the consulting arm of the Zhejiang Province Environmental Protection Bureau (EPB) to develop the management systems and procedures necessary for ISO certification (ISO 9001 for quality, ISO 14001 for environmental, and OHSAS 18001 for health and safety). - Environmental Compliance IFC’s appraisal also assessed the compliance of projects with Government of China environmental requirements, and the feasibility of projects to comply with applicable World Bank guidelines and policies as well as international best practice for MSW plants. HZJJ currently is only subject to GOC requirements for environmental and social compliance. An investment by IFC will require the Company to meet World Bank Group policies and guidelines. Preliminary review of the company's environmental compliance data provided during appraisal indicates that they meet GOC requirements and can substantially meet WBG guidelines with affordable modifications to equipment and procedural changes. China Green has agreed to conduct the necessary analyses to confirm to IFC that it can be in compliance with WBG policies and guidelines. As part of ISO 14001 program development, China Green will address the "legal and other requirements" that it will adopt for its operations. Legal is GOC regulatory requirements and World Bank Group policies and guidelines, and other requirements include international-level protocols that it adopts for its operations. An important element of the internal requirements that the company adopts will be the air emissions targets for its municipal waste incinerators, especially for dioxin. Information provided to IFC during appraisal indicates that GOC requirements compare to IFC's for emissions of dioxin and for furnace operating conditions, and also that the existing plants meet those requirements. - Coal Procurement Procurement of coal is centrally managed by a subsidiary of HZJJ, which has coal supply contracts with several large state owned coal mines. Huainan Mining Group is the primary supplier. Although the environmental and safety problems in China's coal industry are well known, HZJJ has mitigated the risk by dealing directly with larger suppliers. A procurement exception is the Jiande Plant, for which coal is supplied from a dedicated mine about 1 km away. The mine is operated by Jiande Anren Bone Coal Mining Company, a subsidiary of the HZJJ Group and employs about 40 people to supply 700-800 ton of coal per day. Surface works of the mine were visited during appraisal. This plant demonstrates not only the synergies that HZJJ has developed in its operations, but also the environmental benefits and tradeoffs that result. HZJJ has constructed an ash and slag grinding plant adjacent to the power plant that is fed by a conveyor system. The ground ash and slag are then mixed onsite with locally-produced cement. Prior to development of the Jiande plant and mine, extraction of the bone coal resource was by small-scale operations that supplied the coal for home heating and small companies. Ash from these small, polluting boilers was sold to cement manufacturers. While HZJJ has presumably displaced some local economic activity, its operations allow a more environmentally-friendly use of the resource and also provide 100-150 steady jobs to local people. - Way Forward As noted above, preliminary review indicated that the company's existing plants can substantially comply with WBG guidelines with operational changes and equipment upgrades, some of which the company is already planning. For example, dust emissions can be reduced at reasonable cost through adding fields to electrostatic precipitators, if internal space is available. China Green and IFC will develop and agree on Action Plans for the existing projects. The targets for these improvements will be established once the company completes its development of an environmental management system and adopts legal and other requirements for its operations. IFC will also negotiate a timetable for the various actions by China Green.

This ERS contains the full environmental and social documentation prepared for the project.

Based on the site appraisal, review of available information regarding potential environmental and social impacts, and the company's agreement to put management systems in place to mitigate and manage those impacts, China Green's operations and expansion program are expected to meet Government of China requirements, and World Bank Group policies and guidelines.

IFC will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual monitoring reports (AMRs) prepared for the project covering the status of implementation of corporate and plant-specific Action Plans and ongoing performance of China Green's projects. Periodic site supervision visits will also be conducted.