31717 - Aqualyng

Who We Are
Who We Are

IFC is the largest global development institution focused on the private sector in developing countries. By encouraging growth, IFC advances economic development, creates jobs and improves the lives of people.
More About Us
About IFC

Our Leadership

Development Partners
Accountability

Learn more about accountability
Annual Report

Download the Report
What We Do
What We Do

IFC advances economic development and improves the lives of people by encouraging the growth of the private sector in developing countries. We achieve this by investing in impactful projects, mobilizing other investors, and sharing expertise.
What We Do Overview
SOLUTIONS

Our products and services
OUR PRIORITIES

Climate Business

Fragile & Conflict Afflicted Situations

Gender

Mobilizing Private Capital

Sustainability
SECTORS & EXPERTISE

Agribusiness & Forestry

Creative Industries

Education

Financial Institutions

Funds

Health

Infrastructure

Manufacturing

Public-Private Partnerships

Tourism, Retail & Property

Trade & Supply Chain Finance

Venture Capital

Working Upstream
Where We Work
Where We Work

As the largest global development institution focused on the private sector, IFC operates in more than 100 countries around the globe. We apply lessons learned in one region to solve problems in another.
Overview
By Region

Africa

East Asia and Pacific

Europe

Latin America and the Caribbean

Middle East and Central Asia

South Asia
Our Impact
Our Impact

Our impact improves lives. IFC brings a clear set of advantages to the world’s most challenging markets. Including a history of innovation, a global mandate, and a determination to achieve measurable development impact.
Our Impact Overview
PRINCIPLES & MEASUREMENT

Impact Investing at IFC

Measuring and Monitoring (AIMM)

Evaluation

Sustainable Development Goals (SDGs)

Owned by 186 member countries and consistently rated AAA/Aaa. IFC aims to achieve our mission of promoting development by providing debt and equity to the private sector, through a range of benchmark and bespoke products.

For Partners

For Investors

Get in Touch

Environmental & Social Review Summary

Project Number

31717

Company Name

AQUALYNG CHINA LIMITED

Date ESRS Disclosed

Feb 13, 2012

Country

China

Region

East Asia and the Pacific

Last Updated Date

Dec 1, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jul 26, 2012
Signed : Sep 10, 2012
Invested : Oct 10, 2012

Sector

Water and Wastewater Utilities

Industry

Infrastructure

Department

Regional Industry - INF Asia & Pac

Project Description

Aqualyng Holding AS (the Company) is a Norwegian water company that designs, builds, finances, owns and operates seawater reverse osmosis (SWRO) desalination plants with its own proprietary energy recovery technologies and equipment. In 2008, the Company was awarded a 30 year Build Own Operate Transfer (BOOT) desalination project with a product capacity of 50,000 cubic meters per day in the Caofeidian Industrial Zone, one of China’s 13 pilot Eco-Cities with a planned area of 310 km2 in Tangshan City, Hebei Province. The plant will be one of the first commercial SWRO larger-scale plants in China to be in operation, and is planned to be expanded to 700,000 cubic meters per day. Water will be supplied to domestic and industrial customers within the industrial zone. The Company has also formed a joint venture with Beijing Enterprises Water Group Limited (BEWG), one of the top tier water companies in China in order to exclusively work on Chinese desalination projects. Aqualyng will also form a separate joint venture for its technology / equipment manufacturing with a leading desalination contractor in China. This partnership will serve to commercialize and market the Company’s energy recovery device for sea water SWRO and other technologies. The proposed IFC investment is to support the Company’s expansion into the Chinese market by funding investments into new desalination projects in China as well as in the establishment of a future manufacturing base for its technology and equipment sales in China.

Overview of IFC's Scope of Review

The scope of review of Aqualyng’s compliance with IFC’s Performance Standards included assessment of Aqualyng''s management capacity of its environmental, social, health and safety performance in relation to IFC Performance Standards, national (PRC) regulatory requirements and relevant Environmental Health and Safety guidelines. The review relied on documents and reports made available by Aqualyng, IFC technical expert’s report, and interviews conducted by IFC staff. Meetings and interviews with key staff (business development, operations, human resources, environmental, social, health and safety) were conducted, and numerous, relevant procedures demonstrating the Company’s management capacity to provide adequate oversight of its environmental, social, health and safety performance in conducting its business were discussed. The IFC team also visited the Company’s first water desalination concession in China (Caofeidian) which is anticipated to begin commercial operations in the second quarter of 2012.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management System;
- PS2: Labor and Working Conditions; and
- PS3: Pollution Prevention and Abatement

Issues associated with the following Performance Standards were not encountered during the assessment of the projects:
PS4: Community Health Safety and Security – the seawater desalination plant (at Caofeidian) is the Company’s, through Aqualyng Caofeidian Seawater Desalination Company (ACSD), the local JV company owning the plant, only operation in China and is located in an exclusive industrial zone (Caofeidian Industrial Zone) with no negative impact to neighboring facilities; PS5: Land Acquisition and Involuntary Resettlement – the facilities are located in industrial zones established on an artificial island (reclaimed land from sea) with no history of any public dispute or legal challenges to their establishment ; PS6: Biodiversity Conservation and Sustainable Natural Resource Management – The projects currently being developed by the Company has no impact to biodiversity or natural resources, due to the location of its intake structure within an existing utility water extraction / shipping access channel, no discharge of brine back to the Bohai Bay, and confirmation that there is adequate natural circulation that minimizes any impact to water quality and associated eco system; PS7: Indigenous People – no indigenous are known to have been affected from either project; PS8: Cultural Heritage – The projects currently being developed by the Company for IFC financing are not located in areas of known historical or cultural significance.

Because the proposed investment will be used to support future but, as yet, undefined projects in addition to existing projects, the principal Performance Standards to be applied to this investment are those listed above. A continued condition of IFC’s repeat investment going forward will be that the Company adopt IFC Performance Standards as part of the applicable legal and other requirements in all of its operating companies, and consider the issues identified in PS1 through PS8 when it is assessing any new business opportunities or service models.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because it will create a limited number of specific environmental and social impacts that can be minimized, avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. The project has a very limited footprint, and is collocated with other industries in an exclusive industrial zone located on a purpose built manmade island. The Company''s desalination project at Caofeidian complies with all regulatory requirements and is subject to strict environmental oversight by local regulatory agencies.

Environmental and Social Mitigation Measures

Key environmental and social issues associated with Aqualyng’s desalination business are summarized below. Environmental, social and health and safety issues will continue to be addressed by the Company consistent with requirements of IFC Performance Standards as agreed in IFC’s investment documents and associated agreements.

PS1: Social and Environmental Assessment and Management System

Aqualyng’s environmental management team has overall responsibility for ensuring consistency and compliance with local regulatory requirements. Potential impacts of proposed projects are identified during the planning stage (through government led impact assessment processes), and are used to prepare specific environmental control plans containing identified mitigation measures consistent with local regulatory requirements. In China, provincial governments select sites for locating water and wastewater treatment plants, and obtain documented approval from the impacted communities for location of the facility. Consistent with PRC regulatory requirements, environmental and social impact assessments are prepared by the government for all concession projects. The government ensures that potential impacts of the project are identified and addressed during the project planning stage, and are used to prepare specific environmental control plans containing identified mitigation measures. The water purchase contracts may be publicly bid or negotiated with the off-taker, and terms of the water purchase agreements vary by project. Aqualyng''s, through ACSD, contractual obligation in the water purchase contract is to comply with the requirements set forth in water purchase contract documents. Aqualyng’s environmental management team, through ACSD, has overall responsibility for obtaining appropriate permits and approvals from various government agencies, and ensuring all operations are consistent with the terms of the water purchase contract agreement for the Caofeidian project. Moving forward, Aqualyng for future projects, will ensure that compliance with IFC requirements is included throughout the project life cycle, from project selection through construction and operations. The Company will ensure compliance with IFC PS for its subcontractors as well, including EPC contractors for all construction-related PS3 and PS4 mitigation measures identified in environmental control plans/EIAs etc., through inclusion as mandatory requirements in contract documents, and programmatic monitoring of implementation.

An EIA was prepared by the local institute for the Caofeidian project which included some mitigation measures to minimize impact during construction and operational phases of the project. The measures were defined in an Environmental Management Plan that Aqualyng, through ACSD, used to develop the project. For the operational phase of the project, the primary concerns were related to extraction of raw water related to the location of the intake structure, and disposal of reject brine. To take into account these concerns, it was agreed to locate the intake structure for the facility within an existing channel currently used by the Huarun Power plant. Reject brine from desalination operations will be consumed by a salt manufacturer and caustic soda manufacturer located close to the desalination plant.

Human resources are managed effectively at Aqualyng. Staff in China is hired directly by Aqualyng through its registered China entities. Staff in Caofeidian is hired directly by the project companies. Both staff for Aqualyng China entities and project companies have HR policies are consistent with those of Aqualyng and China regulations. Training of staff is done on regular basis in compliance with local workplace regulations. Manpower providers are strictly selected based on having adequately trained labor force and in full compliance with Aqualyng''s EH&S standards, and ACSD’s EHS standards for Caofeidian manpower. Internal audits are conducted periodically and overseen by senior management. Routine monitoring and supervision activities are undertaken by operational staff according to established procedures, including periodic reporting on key environmental and safety control factors, such as effluent quality and employee-related incidents. The company’s EH&S management team periodically inspects facilities to verify performance of compliance with applicable requirements.

Aqualyng and its subsidiary project companies will adopt IFC’s environmental and social Performance Standards as part of the applicable legal and other requirements in its management system. In addition, the company will incorporate formal procedures for environmental and social screening of business opportunities and new projects into its marketing strategy, commercial planning, and project bidding processes. The management system will be extended to incorporate community engagement, including clear procedure on disclosure and consultation with potentially affected communities.

PS2: Labor and Working Conditions

Aqualyng employs about 8 people directly for its project developments operations in China as part of its joint venture with BEWG. For Caofeidian project, ACSD currently employs about 20 people directly for the administration, construction management, and operation of the plant, the number of ACSD staff will gradually increase to about 43 people during normal operation. The number of sub-contracted employees can vary greatly depending on construction activities. Aqualyng, and ACSD, has a Human Resources policy that complies with local regulatory requirements, and is applied consistently to all direct employees. The policy is consistent with PS2, including non-discrimination, freedom of association, and protection of the workforce. As required by law, the policy is included in employment contracts, and addresses working conditions, terms of employment, and wages and benefits. This information is provided in the form of an employee handbook at the time of induction. As is common practice in China, although not explicitly stated, employment relationships recognize the principals of non-discrimination and equal opportunity. Although there is no union at Aqualyng, under PRC law, employees have the right to freedom of association and have the opportunity to collectively represent to the management any issues or grievances that they may have.

The minimum employment age at Aqualyng is 18 years. Aqualyng, and ACSD, ensures that child labor or forced labor is not employed directly or by subcontractors through verification of relevant documents. Working hours on site vary by the nature of activity and phase of project, with most labor intensive phases being at the construction phase during which there are continuous operations. Construction activity is largely subcontracted, for which unskilled labor is often procured from nearby towns and villages. Managing the influx of labor into local communities and providing worker accommodation is the responsibility of the subcontractor. Regulatory requirements in PRC do not require the Company to provide direct oversight of wages, working or living conditions of subcontracted labor. Wages are paid monthly and calculated on the basis of the hours worked, inclusive of overtime. Terms of employment for sub-contractors are as per host country laws and the Company, and ACSD, relies on regulatory agencies for ensuring that sub contractors comply with applicable labor laws. Moving forward, Aqualyng will review its human resources policy to ensure consistency with IFC Performance Standard 2 on labor, working and living conditions for any labor employed by Aqualyng, either directly or through sub-contractors.

Occupational health and safety of employees at Aqualyng is managed by the Administration and Human Resources department. There is a plan for accident prevention and worker safety consistent with local regulatory requirements. All employees in the company have to undergo a training program at induction and subsequently regarding worker health and safety relevant to their job activity. Facilities are audited yearly by regulatory agencies to monitor compliance with labor regulations. The Company has been in compliance with regulatory requirements and has recorded no significant lost time incidents or fatalities in its operational history.

PS3: Pollution Prevention and Abatement

The seawater desalination plant at Caofeidian will supply water for drinking and industrial use, and water quality will comply with Chinese Drinking Water Standard GB 5749-2006 (with the exception of Boron at 1mg/L). The desalination plant will produce a significant reject stream (brine) which will be removed and recycled by an offtaker under contractual agreement with the Offtaker. Due to environmental restrictions, desalination plants located on Bohai Bay are not permitted to discharge concentrate (brine) back to the bay. As a result, for the Caofeidian SWRO, the offtaker entered into an agreement with a chemical and salt company to deliver brine to their coastal salt and chemical factories. Desalination brine has excellent properties for salt production (fewer impurities) and as such, Aqualyng has developed a strong potential new line of business for new desalination plants with the dual-purpose of producing water and generating brine for salt production, and has had agreements reached with China Salt Group. Solid wastes generated from desalination operations primarily include process residuals. Dewatered residuals are disposed in government approved landfills. Other solid and hazardous waste generated at the facility are disposed by government approved vendors in compliance with local regulatory requirements.

Principal energy usage includes electricity procured from the grid (estimated to be about 59,250 MWh per year). Net green house gas (GHG) emissions attributable to ACSD’s annual consumption of electricity for the Caofeidian project are estimated to be about 36,500 metric tons of carbon dioxide equivalents per year. Although, GHG emissions from the projects being currently considered for IFC financing will not exceed 100,000 tons of carbon dioxide equivalents per year, Aqualyng will explore opportunities for energy efficiency in its operations to reduce operational cost and their carbon footprint. Further, consistent with IFC PS3 requirements on GHG emissions, Aqualyng will monitor and quantify GHG emissions as well as those avoided, in accordance with internationally recognized methodologies. Should the level of GHG’s exceed 100,000 tons of carbon dioxide equivalents per year, Aqualyng is required to evaluate technically and financially feasible and cost-effective options to reduce or offset project-related GHG emissions during the design and operation of the project.

Stakeholder Engagement

No local communities have been significantly affected by ACSD’s ongoing operations which are in an industrial area and away from any residential communities. ACSD has not been the subject of any public complaints or litigation related to its environmental or social performance. In China, dialogue and communication with affected communities including public consultation and disclosure of environmental and social impact assessment usually occurs by local government authorities through procedures established by local regulations. As a result, no formal information dissemination activities have been undertaken by ACSD on its own accord so far. Notwithstanding, as part of its environmental and social management program, ACSD will establish methods for communicating environmental and social aspects to external interested parties and maintain procedures for receiving, documenting and responding to concerns from any external interested parties relating to the projects. Specific procedures will be developed to incorporate community engagement, including clear procedure on disclosure and consultation with potentially affected stakeholders.

For more information see the company’s website at http://www.aqualyng.com/ or contact:
Mr. Brynjulf Lomsdalen
Chief Executive Officer
Aqualyng Holding AS
Lyng Industrial Park
N-7125 Vanvikan, Norway
Phone: +47 74 85 55 00
Fax: +47 74 85 55 09

A local-language copy of the Environmental and Social Review Summary (ESRS) will be posted on the Company’s web site (http://www.aqualyng.com/) and made available at the main entrance of the facilities listed below. An announcement informing the public of its availability for review and comment will also be placed in a local newspaper.

C309, 50 Liangmaqiao Road,
Chaoyang District, Beijing 100125, China
Phone: 010 6462 3762
Fax: 010 6462 3257

North of Huarun Power Plant, East of Tangcao Highway Extension
Caofeidian Industrial Zone 11+
Tangshan City, Hebei Province
Phone: +86 315 8820328
Fax: +86 315 8820328

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Projects

Environmental & Social Review Summary

Project Description

Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Identified Applicable Performance Standards

Environmental and Social Categorization and Rationale

Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

Stakeholder Engagement

Stakeholder Engagement

Local Access of Project Documentation

Press-Release

Related SII

Similar Projects

Information on E&S Complaints and Grievance Mechanisms

Disclaimer