Case Study: EMP for the Combined-Cycle Power Plant Project in Country X

1

Case Study: EMP for the Combined-Cycle Power Plant Project in Country X

Case presentation and discussion format

Participants are given a PowerPoint presentation in which the key elements of the case are laid out. Each participant receives a printed copy of the presentation and key tables from the Environmental Management Plan (EMP) for the hypothetical project in the case. Equipped with this material, the participants are given a few minutes to think about the general question included in the Role Play (see below).Then they are “visited” by the author of the case study impersonating the NGO critic of the project, who asks them the specific questions given below.Ideally, the participants should be able to retrieve the appropriate information from the EMP and the PowerPoint presentation to answer the questions. After the role play, a discussion follows, in which the answers given by the participants may be compared with the possible answers given below.

Learning objectives:

• Identify and analyze strengths and weaknesses of an EMP
• Learn about typical environmental issues covered in an EMP for a project involving construction of a thermal power plant
• Analyze EMP in a broader context of the project development cycle
• Appreciate the importance of public information and timely involvement of the local community.

Scenario for discussion

Country X has would like to improve its energy supply situation and decides to build a new thermal power plant with an electric capacity of about 100 MW. The country’s Ministry of Energy is the borrower. The country’s National Power Company (NPC) is put in charge of implementing the main physical component of the project, which consists of building a combined-cycle thermal power plant and connect it to the power grid. The choice of power plant site is made according to certain criteria (environment being one of them). The task team leader (TTL) discusses the project with the NPC management. TTL says, “It is obvious that the project is Category A. The World Bank takes Category A projects very seriously. Let’s make sure the EIA is comprehensive and state of the art.I would like the EMP to be especially well developed. At the end of the day, the EMP is the document that will be most useful to you in practice. Fortunately, we have secured enough grant money to hire top-quality experts to conduct the EIA and develop the EMP.”

EIA/EMP is prepared by a highly reputable team of environmental experts from consulting firm Top Quality Experts (TQE) hired by the Ministry of Energy. The EIA/EMP is the third phase in TQE’s contract. The two earlier phases consisted of (i) selecting the best site, technology, and fuel for the generation facility (power plant); and (ii) conducting a feasibility study to evaluate the technical requirements, as well as the environmental, economic, and financial viability of the generation facility at the selected site.

The TQE team chooses the sea coast of town Z to be the site for the power plant. It also chooses liquid fuel (distillate oil) as the primary fuel, and the once-through cooling (OTC) system utilizing the sea water for converting the plant’s exhaust steam back into water.

When the EIA report is completed, it includes an EMP as one of its chapters. The EMP consists of an Environmental Mitigation Plan and an Environmental Monitoring Plan (see Annex 1 for the key tables from the EMP).

When the bids are invited for the Engineering, Procurement, and Construction (EPC) contract, the EMP requirements are incorporated in the bidding/contract documents (binding for EPC contractor). Relevant EMP provisions are also included into the contracts for fuel supply during operating phase.

The borrower believes that the environmental aspects of this project’s preparation are exemplary.State of the art combined cycle power plant is designed by the EPC contractor and is ready to be supplied and installed.The office of the PIU director proudly displays the computer-generated image of the plant.

Source:

Still, the TTL is worried about possible criticisms from environmental groups (NGOs).

Role play

General Question.You are the PIU Director at the NPC, and you are asked to prepare for a meeting with Dr. Ruffle, a senior representative from an international environmental NGO and a likely critic of the project. You believe that the recently finalized EMP can help you answer his questions. What kind of issues do you think you need to be especially prepared to discuss?

Some correct answers:

• Siting (relates to avoidance versus mitigation of environmental impacts)
• Technology used (esp., once-through cooling), including mitigation technology
• Public consultation (note that public consultations in our case were held in an exemplary manner)
• The effectiveness/practical implementation of EMP

Possible scenario of the meeting between the PIU director and NGO activist

Specific Questions

• Siting:

Ruffle:In environmental management, like in many other fields, avoidance of damage is considered a better option than mitigation. The World Bank, among others, certainly subscribes to this view in its guidance on Environmental Management Plans[1].Some of the impacts this project will have on the environment might have been completely avoided had a different site been chosen for the project. This particular coastal area of Country X is particularly valuable/vulnerable and only 3 km away from a National Park. How did your experts choose the coastal area of town Z as the site for the project? What kind of criteria did you use to eliminate all the other possible locations?

PIU Director: We have considered six other possible locations, and every one of them had some environmental issues of its own. But if you would like to know all the selection criteria we used, here they are: (i) environmental conditions on site; (ii) air quality concerns; (iii) cost of electricity generation; (iv) socio-economic concerns; (v) proximity to available transmission lines; (vi) transmission system considerations; (vii) fuel availability; (viii) water and sewer needs; (ix) transportation; and (x) property availability.

Ruffle:Thank you for this information, but I remain unconvinced. The environmental criteria you mention seem too general. An in-depth analysis of environmental conditions should have led you away from the green field areas of town Z and into areas that are already built-up by industry.

• Air Pollution Control:

Ruffle:How will you manage the air quality concerns at the site you have selected – especially the pollution resulting from fuel oil combustion?

PIU Director: As you know, Country X has adopted the standards of the European Union for air quality. To demonstrate compliance with these standards, our experts have utilized the latest US EPA air pollution simulation model (ISCST3).

Annual Averaging Period / 24-hour Averaging Period
Pollutant / Maximum Modeled Impacts (μg/m3) / Ambient Air Quality Standards (μg/m3) / Maximum Modeled Impacts (μg/m3) / Ambient Air Quality Standards (μg/m3)
World Bank / European Union / World Bank / European Union
NOx / 4.5 / 100 / 40 / 17.5 / 150
PM10 / 0.5 / 50 / 40 / 2.2 / 150 / 50
SO2 / 2.1 / 80 / 20 / 10.5 / 150 / 125

As you can see, these modeled concentrations are far below the strictest of the standards we could possibly apply, and these air quality levels will be ensured through the mitigation measures included in the EMP. Specifically, the combustion turbines will employ state of the art control technology for all pollutants. NOx will be controlled using low-NOx burners and water injection. SO2 will be controlled by firing only low-sulfur (less than 0.1% by weight) distillate fuel oil. Employing good combustion control will control CO, particulate matter, and volatile organic compounds. The plant will feature stack heights that conform to good engineering practiceto facilitate dispersion of emitted gases. The plant stack heightsin our case will be at least 45 m. At the plant commissioning, the EPC contractor will need to demonstrate compliance with the emission standards guaranteed by the manufacturer. Subsequently, there will be continuous monitoring of NOx and opacity emissions. Fuel sulfur content will be monitored to ensure that it is less than or equal to 0.1% by weight. Sampling and analysis will be performed on each delivery received.

• Fuel supplies:

Ruffle:Choosing offshore oil as primary fuel is a big environmental risk to take. How many tanker trips per year do you anticipate, and how will you manage the risk of oil spills?

PIU Director:

For some impacts of the project, the EMP we have developed is only a start. Oil spills is one of the risks requiring an individual risk management plan.The plan must be acceptable to the NPC and the World Bank. It is anticipated that about 30 deliveries will be made per year by a barge with minimum capacity of 3,000 m3from a distance of 20 km away. Monitoring and enforcement of sea conditions under which a vessel may make deliveries will be part of the plant procedures and implemented through the delivery contract. The necessary response equipment will be provided.

Ruffle:What other impacts of the project will require a specialized EMP?

PIU Director: To name just a few: waste management plan, site drainage and grading plan, health and safety plan, and noise and vibration plan (the complete list of such specialized EMPs, as well as additional studies required, is given after the tables in Annex 1).

• Power plant cooling technology

Ruffle: I am surprised that, after so much analysis of environmental impacts, your experts would choose the once-through cooling (OTC) technology to cool the power plant. The OTC technology uses the living and breathing sea water as the radiator fluid to run through the plant. Furthermore, the quantities of water involved in this process are enormous. Do you know how much water these systems use? There are estimates[2] that thewater demand for a once-through cooling system is 30 to 50 times that of a closed-cycle system. Not only are fish and other marine organisms destroyed by being sucked into the plant at the point of intake, but the thermal and chemical pollution of the sea by the return water coming from the outfall is also very harmful for the aquatic ecology. Would you like to have a few copies of this poster?

Once-through cooling technology
schematic emphasizing damage to aquatic environment

PIU Director: The OTC option was chosen based on its superior cost-benefit characteristics. The power plant is known to operate more efficiently when this technology is used. Regarding the environmental impact, please note first of all that there are no local restrictions in Country X on the use of OTC. Secondly, ourEIA has clearly demonstrated an acceptable level of environmental impact resulting from the use of OTC technology. In our EMP, we have included the necessary mitigation measures: traveling water screens at cooling water pump suctions will be employed. An inlet velocity less than 1 m/s will be used to minimize entrainment of fish and otheraquatic fauna. Thirdly, thermal discharge modeling demonstrates that the thermal impact from the discharge is well below 3ºC allowed by international guidelines. Finally, the chemical discharges are in compliance with the residual chlorine discharge limits recommended by the World Bank.

Ruffle: In that case, why do you think the US EPA is considering a prohibition on the construction of new power plants using OTC in the United States? They are even studying the options for upgrading the existing power plants to the closed-cycle cooling system. I have just returned from a trip to California. The environmental community is clearly winning the argument there.

PIU Director: The closed-cycle cooling system requires the construction of cooling towers and is generally more expensive. However, we did consider this option in our analysis of alternatives in the EIA. Our experts estimated that a cooling tower would add as much as US$10 million (or almost 9%) to the cost of the project. Corrosion-resistant materials would have to be used if the system uses saltwater from the sea, while using fresh water is practically out of the question due its intermittent availability. The plant efficiency would also be somewhat lower with the closed-cycle cooling system, which would translate into higher consumption of fuel.

• Wastewater disposal

Ruffle:How will you manage thewastewater coming from the pant?

PIU Director: A sewage treatment facility will be provided at the plant and discharge of treated effluent will be combined with the cooling water discharge. The sewage treatment plant will provide secondary treatment.

• Practical implementation (enforcement) of EMP

Ruffle: I have seenyour EMP and I appreciate the fact that it was on the table when the consultation meetings were held with the local public. I have to admit that it is probably one of the best documents of this sort that I have seen for similar projects. But I have some concerns about its practical implementation. How exactly can you make sure that the mitigation and monitoring measures included in the EMP will be actually enforced?

PIU Director: I would like to answer as follows:

• First of all, there is a provision in the project agreement about the need to implement the EMP. The National Power Company, as the project implementing entity, is legally obligated to follow the provisions of the agreement. And why wouldn’t it? You may have noticed that practically every item of the EMP has a cost estimate. Essentially, this is the budget allocated to these items, and they are included in the procurement plan.
• Secondly, every time we have a tender, we include the relevant provisions of the EMP into the bidding documents. You can see from Annex 2 how detailed these environmental requirements are. To win the tender, the candidate contractor will have to fully accept these requirements as an integral part of their contract.In our case, the successful EPC contractor has gone beyond the scope of the mandatory EMP provisions and developed its own version of the EMP, which is more detailed than the original version.
• Also, we’ll make sure that NPC includes the relevant environmental requirements into the contracts with the fuel suppliers.
• Last but not least, implementation of the environmental mitigation measures will be closely supervised. The PIU has recruited a full-time environmental specialist. It is in her job description to periodically check compliance of the project with the environmental monitoring plan and obtain regular reports from the NPC on compliance.

Analysis/Discussion

The EMP strengths and weaknesses

Strengths:

The EMP (and the Environmental Management Planning process more broadly) incorporates the following elements of best practice:

• The air pollution control measures are designed to comply with the stricter of the potentially applicable standards (EU, WB)
• Cost estimates are available for most items in the EMP and included in the Procurement Plan
• EMP requirements are incorporated in the bidding/contract documents (binding for EPC contractor) and into the contracts of suppliers of fuel during operating phase
• The EMP has been adequately disclosed, and the local community was actively involved

Weaknessesand what might have been done differently/better:

• The mitigation options in the EMP are limited by the earlier commitments to pursue particular technological solutions (e.g., the once-through cooling system)
• Furthermore, both the technology and the project site have been chosen mostly on the basis of narrowly defined (financial) cost minimization and plant efficiency, giving a lower priority to environmental considerations

• No siting or technology choices should be eliminated until completion of the detailed EIA: while the EMP reduces the impacts, some of them might have been completely avoided with a different site and/or technology

Lesson learned:

• EMP is not an isolated tool but should be part of the overall good environmental management and decision making
• Environmental mitigation is an integral part of decision making and must be considered simultaneously with the analysis of alternative technological and siting choices
• The project team may prepare a state of the art EMP, but may still be in a vulnerable position if the upstream decision making isperceived to be flawed
• In making choices about the technology, it is more prudent to err on the conservative side and require the technology consistent with the higher degree of environmental protection: the absence of local environmental restrictions on certain technologyin Country X is a weak excuse if the environmental credentials of the technology are known to be questioned
• Economic (including environmental) rather than just financial costs/benefits need to be part of the analysis of alternatives.

Annex 1. Environmental Management Plan