IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.
PS 1: Assessment and Management of Environmental and Social Risks and Impacts
MUB is the local government body in charge of the administration of Ulaanbaatar including provision of various urban services. Accordingly, MUB has multiple agencies responsible for, among other aspects, oversight of implementation of environmental, health, safety and labor laws of the country in its projects and operations. The SPV does not yet have in place an Environmental and Social Management System (ESMS). Monhorus, the construction contractor, has an ISO 14001 and ISO 45001 certified ESMS. Also EPC has prepared an environment management plan (EMP) to address construction stage impacts. The EPC has deployed one EHS staff and Monhorus has deployed one EHS staff during construction. According to tender requirements sub contractors are not allowed to have sub contractors, thus Monhorus has not engaged sub contractors and all construction activities are being undertaken by Monhorus. While Envision has an ISO 14001 and ISO 45001 certified ESMS, as mentioned at ESAP # 1, MUB/ UBDC will be required to: develop and implement in the SPV; or require Envision to develop and implement in the SPV an operation stage ESMS that meets IFC PSs. Further, MUB/UBDC will be required to retain this ESMS when it takes over O&M of the BESS plant and SPV. The ESMS will among other aspects include standard operating procedures: to manage and monitor operation stage risks and impacts identified in the IEE and any other risks identified subsequently; for responsibility allocation and resourcing; training and capacity building; contractor management; internal and third-party audits; and monitoring, reporting and management review.
The IEE covers risks and impacts for both construction and operations stage. An alternative analysis was undertaken including for different types of energy storage technologies and different types of battery energy storage systems. Climate risk review (including transition and physical risks) has determined low risks of: extreme precipitation and flooding; extreme heat; and extreme winter storms.
IEE has determined that the project land was not privately owned and there is no physical nor economic displacement on account of the project. The project and adjoining areas are open grasslands used by pastoralist/herders for livestock grazing. The project is located in the First Khoroo (administrative unit) in Banganuur district, which (at end of 2023) had about 38,500 heads of livestock and Banganuur district had about 170,000 heads of livestock. The area where the project is located is not designated as agricultural use land, so legally this is not pastureland. 9 ha from about 9300 ha of total land in First Khoroo is used for the project. There is about 37,800 ha of available grazing land in Banganurr district. No grazing land has been diverted for the project as the project site is not located in agriculture zone.
The SPV does not currently have in place an E&S organization. Accordingly, as mentioned at ESAP # 2, MUB/UBDC will require Envision to employ an appropriately qualified EHS staff in the SPV during operation phase and MUB/UBDC will retain such staff and position after taking over O&M of the project and SPV.
An emergency preparedness and response plan for operation stage covering among other aspects fire and electrocution, will be prepared as part of the ESMS mentioned at ESAP # 1.
MUB will, as mentioned at ESAP # 7, prior to decision on using the proceeds of subsequent IFC MUB Bond (s) for any project, ensure adequate staff/consultant resources and undertake an E&S due diligence (ESDD) to: (a) determine that the project is category B as per IFC’s Policy on Environmental and Social Sustainability and can meet the requirements of IFC PSs; (b) develop an ESAP to enable the project to meet the requirements of IFC PSs; and (c) where required as per IFC PSs, undertake an E&S impact assessment in accordance with IFC PSs.
PS 2: Labor and Working Conditions
During construction, about 100 workers from the construction company/Monhorus and 15 persons from Envision are deployed. Monhorus’s construction workers are from local area and UlaanBaatar and commute to the project site, 15 persons from Envision stay at a hotel in Baganuur city and commute to the project site. During operation stage, it is envisaged that Envision will deploy about 5 persons and employ up to 10 persons for plant operations in the SPV. The persons employed in the SPV will likely be retained when UBDC takes over SPV and plant O&M.
The labor laws of Mongolia, among other aspects, cover working conditions, working age, forced labor, working hours, wages, leaves and rest days, collective bargaining, discrimination, sexual harassment, disciplinary action and occupational health and safety. Since the SPV is a subsidiary of UBDC, human resource policies/regulations of UBDC will be applicable for the SPV. UBDC’s regulations require compliance with national law but there are areas like grievance redress and gender-based violence and harassment (GBVH) that are not adequately covered. Accordingly, MUB/UBDC will or require Envision to, as mentioned at ESAP # 3, develop and implement HR policies and procedures in the SPV that is aligned with the labor laws, UBDC’s human resource policies and IFC PS2 provisions including policies for freedom of association, procedures for employee grievance redress and prevention and redress of GBVH. MUB/UBDC/Envision will implement the HR manual and communicate it to employees through training including at new employee induction. UBDC will retain these policies when it takes over the O&M of the project and SPV.
Envision has deployed one EHS staff at site during construction and Monhorus has deployed one EHS staff during construction. There have been no lost time incidents at site during construction. Monhorus undertakes daily tool box and safety talks and training of workers on OHS aspects. The ESMS, mentioned at ESAP # 1, will include an OHS management system for the SPV that meets GIIP requirements for operation stage. Since the project is scheduled for commissioning in end December 2024, construction is coming to an end. No onsite accommodation has been made for construction stage and none is envisaged for operation stage.
Envision is sourcing battery and power conversion kit from its own factories. The other components are being sourced from OEM suppliers. Envision requires suppliers to sign up to its code of conduct, which is aligned with IFC’s PS2 requirements and their suppliers have traceability procedures in place. As mentioned at ESAP # 4, MUB/UBDC will or require Envision to put in place a supply chain management system, which will include: (a) a supplier selection procedure aimed at screening any instances of child labour, forced labour and significant safety issues; b) a supplier mapping procedure in place to identify direct suppliers and sub suppliers; (c) Procurement policy and supplier code of conduct that explicitly prohibit child labor and forced labor and includes significant safety issues requirements for workers in the supply chain; (d) provision for contractual clauses in written agreements with suppliers requiring compliance with the procurement policy and the code of conduct; and (e) a process for supplier engagement, remedy or disengagement in case of non-compliance with the code of conduct. Additionally, the company will retain records of supplier screening and ongoing monitoring activities in line with the code of conduct.
PS 3: Resource Efficiency and Pollution Prevention
The project is expected to enable the integration of renewable energy generation to the grid leading to an average annual GHG emissions reduction of 11,158 tCO2e. The project will use Ethylene glycol aqueous solution as a coolant.
The total water consumption for the construction phase is estimated at approximately 3 m3/day of purchased potable water and 2 m3/day for construction purposes. Water consumption during operation phase is expected to be about 1.2 m3/day. Both construction stage and operation stage water will be sourced from Baganuur water LLC" a local licensed water company
The environmental impacts from construction activities for the project are those typical of most construction sites and include: dust generation; noise; waste management; potential spills of hazardous and other material; construction debris disposal; domestic solid waste and wastewater; increased water usage; and construction vehicle traffic. EPC has put in place a construction stage EMP to address these impacts.
Domestic wastewater is the primary wastewater stream during construction and operation phases. Ecotoilets will be provided during construction stage and sewage will be pumped into tankers and disposed to treatment facilities. Sewage during operation phase will be treated in a septic tank. Wastes (hazardous and non-hazardous) generated in the operation phase will be disposed to authorized entities. The SPV will, as part of the ESMS (ESAP # 1) implement procedures to segregate, label and store hazardous wastes within contained areas and dispose them through authorized entities for treatment, reuse/recycling or disposal. Further, the SPV will also as part of the ESMS (ESAP # 1), implement duty of care procedures to confirm that the hazardous material / waste operators are transporting, handling, storing, treating and disposing of the materials / wastes appropriately in line with GIIP.
The supply contract requires EPC to have in place a contract with an agency to dispose of the spent and defective batteries. Envision has entered into a contract with an agency that will transport the spent/defective batteries to Japan for disposal. Accordingly, as part of the ESMS mentioned at ESAP # 1, MUB/UBDC/EPC will put in place procedures to demonstrate compliance with Basel Convention on Control of Transboundary Movement of Hazardous Waste and their Disposal.
PS 4: Community Health, Safety and Security
While the project construction activities may cause nuisance to communities from: traffic ; noise; dust; and potential for impact on groundwater or surface water, these will be limited as the nearest residential community is at about 2 km from the project site and the construction impacts will be for a period of 3-4 months. Given the distance of the community from project site, dust and noise impacts on community not expected, precipitation of less than 85 mm per annum at site limits erosion and sedimentation impacts. Community will be exposed to traffic impacts for 3-4 months. Further, EPC has developed a construction stage EMP that addresses these aspects.
Significant influx of workers is not there as at peak, about 100 workers are deployed during construction for a period of 3-4 months and about 15 persons will be at the project site during O&M stage. The workers are expected to be from local area and broadly from Ulaanbaatar.
The project site will have its own unarmed security personnel. Accordingly, the ESMS mentioned at ESAP#1, will include a security management plan, that meets IFC PS 4 requirements.
PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources.
The project is in the Mongolian-Manchurian grassland ecoregion. It is located outside of protected areas and internationally recognized areas and its location is classified as modified grassland habitat. Review of the baseline information indicates presence of Mongolian Marmot (IUCN EN) to the south and north of the Project area, with the closest records being about 5km to the south. The estimated population in the area of analysis would be between 3500 to 11,900 marmots, assuming that the habitat is of good condition and is suitable for marmots. This equates to be about 0.0005% of the global population, indicating that the population would not trigger critical habitat for Critical Habitat Assessment (CHA) criteria 1, critically endangered and endangered species. The population of Mongolian Marmot however will be subject to management, including The ESMS (ESAP # 1) will also incorporate biodiversity management measures for Mongolian Marmot including training and awareness programs for Envision and SPV employees to manage risk of hunting and disease.. The landscape is also host to migratory waterbirds and raptors (Steppe Eagle, IUCN EN). Accordingly, as mentioned at ESAP # 5, MUB/UBDC will require that bird diverters be provided in the 400 m overhead transmission line.
