March 4, 2019

Mr. Philippe Le Houérou,

Chief Executive Officer

International Finance Corporation

2121 Pennsylvania Avenue NW

Washington DC 20433

RE: Revisions to the EHS Guidelines for Thermal Power Plants

Dear Mr. Le Houérou:

We are writing to express our concern about the substance and delayed process of the proposed

revisions to the 2008 Environment, Health and Safety (EHS) Guidelines for Thermal Power

Plants.

We welcome IFC’s intent to harmonize these outdated guidelines with current best practices on

project design and selection, pollution control, climate mitigation, and other critical issues.

However, the most recent Draft Guidelines fall well short of best practices in a number of crucial

respects. Moreover, the process that IFC has employed to revise the Guidelines has dragged on

for over five years, and has been remarkably untransparent.

We therefore request that IFC (1) recommit to aligning the Guidelines with best practices; (2)

issue a new draft that identifies outstanding issues; (3) open the draft up to a final round of

public comment; and (4) specify a firm date for finalizing the new Guidelines.

Substantive Flaws in the 2017 Draft

The current Draft Guidelines are not fit for purpose, as they often fall well short of international

best practices and sound climate change policy in the energy sector. These shortcomings are

explored in more detail in our previous submissions, which are annexed to this letter.

In summary, these shortcomings fall into three broad categories.

First, the Draft Guidelines provide inadequate clarity on how they will inform World Bank

Group lending decisions, as they often do not set out clear performance benchmarks or describe

how IFC’s Performance Standards should be applied to thermal power projects. Most

importantly, the Guidelines should be clear that new fossil-fuel generation will be sponsored

only as a last resort, where there truly are no available alternatives.

Second, the Draft Guidelines do not adequately protect human health or the environment

because they adopt obsolete or incomplete standards for the emissions of carbon dioxide (CO2),

sulfur dioxide (SO2), nitrogen oxides (NOx) and particulate matter (PM) for coal-fired units, and

provide almost no useful information concerning the performance of natural gas-fired

combustion turbines (CTs) and combined cycle gas turbines (CCGTs).

Third, the Draft Guidelines do not set out the information needed by developers, host countries,

lenders and NGOs to evaluate thermal power plants proposals under applicable climate policies,

leading to potential confusion about the use of the Guidelines for future lending decisions.

To address these issues, the Draft Guidelines should be substantially revised to eliminate

confusion, provide more useful information, and better align IFC’s standards with emerging best

practices and the global imperative to dramatically reduce emissions in the electricity sector.

Transparency concerns

As this process has dragged on for years, it has become almost completely untransparent. IFC

has not promulgated any progress reports or explanations for the delay. It has not identified the

specific issues that have proven difficult to resolve, let alone solicited additional public comment

on those issues. Our repeated requests for updated information have been rebuffed or ignored.

We would welcome the opportunity to work with your staff as they finalize a new set of

Guidelines that reflect current best practices in the electricity sector and the urgency of the

climate crisis. Unfortunately, we have no reason to be confident that the revision process is on

track to deliver such Guidelines. To get this process back on track, IFC should (1) recommit to

aligning the Guidelines with best practices; (2) issue a new draft that identifies outstanding

issues; (3) open the draft up to a final round of public comment; and (4) specify a firm date for

finalizing the new Guidelines.

Sincerely,

Nezir Sinani Steven Herz Chris Littlecott

Director Senior Attorney Associate Director -

Bank Information Center-Europe Sierra Club Fossil Fuel Transition

E3G

cc: Ms. Kristalina Georgieva

Interim President of the World Bank Group

and Chief Executive Officer of the World Bank

COMMENTS ON THE IFC’S PROPOSED REVISION OF ITS EHS

GUIDELINES FOR THERMAL POWER PLANTS

Bruce Buckheit

Consultant, Sierra Club

Former Chief of Air Enforcement, U.S. EPA

b_buckheit@msn.com

Steven Herz

Senior Attorney, Sierra Club

steve.herz@sierraclub.org

Nezir Sinani

Europe and Central Asia Manager

Bank Information Center

nsinani@bankinformationcenter.org

Introduction

We welcome the IFC’s efforts to revise and update the 2008 Environment, Health and Safety

(EHS) Guidelines for Thermal Power Plants (2008 Guidelines).1 The evolution of global

standards since 2008, and more urgent attention to the risks of climate change and the central

role the thermal power sector plays in exacerbating those risks make this review both timely and

essential.

Because even high performing thermal power plants often present substantial environmental,

public health and climate risks, the decision whether to proceed with a thermal plant is as

important as the standards that will be applied. Thus, before applying the Guidelines for Thermal

Power Plants, the World Bank should follow alternative assessment requirements of the

Performance Standards, General EHS Guidelines and Criteria for Screening Coal Projects to

ensure a full consideration of low-carbon solutions, including renewables, storage and efficiency.

Based on our experience in Kosovo and other countries seeking new coal-fired generation,

consideration of end-use efficiency and transmission and distribution system improvements in

low income countries should be the highest priority for the foreseeable future. New fossil-fuel

generation should be sponsored only as a last resort, where the lack of available alternatives has

been demonstrated by comprehensive assessment.

1http://www.ifc.org/wps/wcm/connect/dfb6a60048855a21852cd76a6515bb18/FINAL_Thermal%2BPower.pdf?MO

D=AJPERES&id=1323162579734

The May/June 2017 Draft EHS Guidelines for Thermal Power Plants (Draft Guidelines)2 make

some limited improvements over the existing Guidelines. However, the Draft Guidelines often

fall well short of aligning IFC standards with international best practices and sound climate

change policy in the energy sector. These shortcomings fall into three categories. First, the Draft

Guidelines provide inadequate clarity on how they are to be applied, and create a potential

conflict with other World Bank policies and international best practice standards related to

funding proposals for new fossil fuel-fired power plants. Second, the Draft Guidelines do not

adequately protect human health or environmental values because they adopt obsolete or

incomplete standards for the emissions of carbon dioxide (CO2), sulfur dioxide (SO2), nitrogen

oxides (NOx) and particulate matter (PM) to be expected of well-performing coal-fired units, and

provide almost no useful information concerning the performance and application of natural gas

fired combustion turbines (CTs) and combined cycle gas turbines (CCGTs). Third, the Draft

Guidelines do not set out the information needed by developers, participating nations, lenders

and NGOs to evaluate proposals for new thermal power plants under applicable climate policies,

leading to potential confusion about the use of the Guidelines for future lending decisions.

To address these issues, the Draft Guidelines should be substantially revised to eliminate

confusion, provide more useful information, and better align IFC’s standards with emerging best

practices and the global imperative to dramatically reduce emissions in the electricity sector. In

this document the Sierra Club and Bank Information Center set out the major deficiencies in the

Draft Guidelines and recommend an approach that would better assist users in developing and

reviewing proposed thermal power plant projects potentially subject to World Bank policies.

Discussion

1. The Draft Guidelines should be much clearer about how they will inform World Bank

Group lending decisions.

The Draft Guidelines are supposed to establish clear performance benchmarks that thermal

power plants will be expected to achieve to be eligible for IFC support. Indeed, IFC’s

Performance Standards on Environmental and Social Sustainability makes clear that the EHS

Guidelines will be used for this purpose. Performance Standard 3 provides, “The EHS

Guidelines contain the performance levels and measures that are normally acceptable to IFC,

and that are generally considered to be achievable in new facilities at reasonable costs by

existing technology.”3 (emphasis provided).

To serve this purpose, the Draft Guidelines should set out clear performance benchmarks and,

where necessary, the narrow and well-defined exceptions in which clients will be allowed to

derogate from those benchmarks. The Draft Guidelines often do not do this. In many places, they

read as a survey of current practice, and do not actually clarify which options will be required or

2 https://www.ifc.org/wps/wcm/connect/9a362534-bd1b-4f3a-9b42-

a870e9b208a8/Thermal+Power+Guideline+2017+clean.pdf?MOD=AJPERES. In this comment “Guidelines” refers

to the 2008 Guidelines and the Draft Guidelines. 3 http://www.ifc.org/wps/wcm/connect/115482804a0255db96fbffd1a5d13d27/PS_English_2012_Full-

Document.pdf?MOD=AJPERES at ii.

even preferred. Indeed, with respect to efficiency and CO2 emission intensity, the Draft

Guidelines expressly disavow the notion that they should be used as a benchmark or limit value:

[t]hermal power plant efficiency and CO2 emissions performance are dependent

on a number of factors including, but not limited to, fuel type, technology, unit

size, local climatic conditions, altitude and cooling technology. Values presented

in this table are indicative and, due to the degree of variation in power plant

characteristics, may not be directly comparable to actual new facilities. For this

reason, values should not be interpreted as a benchmark or limit value and are for

guidance only.4

Thus, as proposed, project developers, lenders, governments and host communities would be told

that the efficiency and CO2 emission rate values in Table 4 (1) are indicative; (2) may not be

directly comparable to actual new facilities; and (3) should not be interpreted as a benchmark or

limit value; but nonetheless, may be used for guidance. What, then, are these values to be used

for? If the values do not “indicate” the Good International Industrial Practice (GIIP) that IFC

expects its clients to achieve, why include them at all? What “guidance” is the values intended to

provide?

Moreover, the Draft Guidelines often do not provide any meaningful guidance for professionals

and decision makers engaged in projects. The Draft Guidelines state that they set out examples

of the application of GIIP, which is defined as “the exercise of professional skill, diligence,

prudence and foresight that would be reasonably expected from skilled and experienced

professionals engaged in the same type of undertaking under the same or similar circumstances

globally.” Yet the Draft Guidelines often do not specify the “type of undertaking” that is at issue.

Absent a specification of the design brief, one cannot determine whether a particular design

represents GIIP. For example, GIIP may be significantly different depending on the desired

efficiency of the proposed plant. A professional engineer tasked with producing a plant with an

efficiency of 30 percent will make different choices than if she were asked to design a plant with

an efficiency of 40 percent, even though each design could reflect a high degree of professional

skill and could be achievable in new facilities at reasonable costs.

2. The Draft Guidelines should clearly explain how clients will be expected to apply the

“mitigation hierarchy” to the technology choices and pollution challenges they will confront

in building and operating a thermal power plant.

One of the most valuable concepts in IFC’s Sustainability Framework is its “mitigation

hierarchy” for addressing the risks and adverse impacts of project operations. The “mitigation

hierarchy” requires project sponsors “to anticipate and avoid adverse impacts on workers,

communities, and the environment, or where avoidance is not possible, to minimize, and where

residual impacts remain, compensate/offset for the risks and impacts, as appropriate.”5 This

4 Draft Guidelines, supra, at Table 4.

5 IFC (2012), Policy on Environmental and Social Sustainability, para. 6; Performance Standard 1: Assessment and

Management of Environmental and Social Risks and Impacts, “Objectives”. Performance Standard 3, para. 4.

Available at http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-

ifc/policies-standards/sustainability+framework

approach is a true “hierarchy” in that its elements are listed in descending order of acceptability.

Clients must “favor the avoidance of impacts over minimization, and, where residual impacts

remain, compensation/offset, wherever technically and financially feasible.6

In a number of places, the Draft Guidelines pay homage to the mitigation hierarchy by

discussing options to “prevent, minimize or control” various environmental impacts and risks.7

But in most of these cases, the Draft Guidelines do not differentiate between those approaches or

technology choices that must be prioritized as “avoidance” strategies, and those that can only be

used to minimize impacts where avoidance “is not possible.” Accordingly, the Draft Guidelines

do not provide sufficient guidance as to how the mitigation hierarchy should be applied to select

among technology options or to address specific pollution challenges. Given that the mitigation

hierarchy is the cornerstone of IFC’s entire approach to addressing environmental impacts, this is

major shortcoming that should be addressed in the final draft.

GIIP is to apply the mitigation hierarchy through a “best achievable control technology (BACT)”

approach, as under the U.S. Clean Air Act, or the similar “best achievable technology” approach

employed in the European Union. In the U.S., BACT is determined on a case-by-case basis

employing what EPA styles a “Top Down” approach,8 where the most effective technology is

employed, unless it is demonstrated that the most effective technology is infeasible for either

technical or cost reasons. This is exactly the analysis anticipated in the mitigation hierarchy.

Accordingly, the Draft Guidelines should make clear that clients will apply the mitigation

hierarchy through such an approach for all categories of pollutants and impacts.

In the thermal power sector, end-use efficiency and transmission and distribution improvements

should be prioritized as first-order avoidance strategies under the mitigation hierarchy. Such

efficiency measures eliminate adverse impacts associated with activities across the entire

production chain. They avoid impacts upstream by reducing resource inputs, and downstream by

reducing wastes and pollutants. What’s more, as the Independent Evaluation Group and

numerous other observers have noted, efficiency is the single most important strategy for

expanding and improving energy service delivery for the poor while facilitating the transition to

sustainable, zero/ultra-low-carbon energy systems at least cost and risk.9 Clients therefore should

be expected to apply efficiency measures along with other avoidance measures wherever

possible, and undertake efforts to minimize, or offset impacts only where such avoidance is

demonstrated to not be possible.

6 Performance Standard 1, para. 14.

7 These include air pollutants (paras. 14, 19, 21, 23, 25); carbon dioxide (para 27); water pollution and impacts

(paras. 36, 43, 48); solid waste and hazardous materials (paras.55, 57); noise pollution (para. 60); and occupational

hazards (paras 64, 69, 70, 71). 8 https://www.epa.gov/nsr/nsr-workshop-manual-draft-october-1990

9 World Bank Independent Evaluation Group, (2008). Climate Change and the World Bank Group, Phase I:

An Evaluation of World Bank Win-Win Energy Policy Reforms; UN Secretary General’s Advisory Group on

Energy and Climate Change, 2010. Energy for a Sustainable Future. Amory Lovins, 2005. Energy End-Use

Efficiency. www.rmi.org.

3. Paragraph 29 falls well short of GIIP in its treatment of acceptable performance in plant

efficiency.

Paragraph 29 attempts to encourage the use of more efficient technologies in two ways. First, it

directs project sponsors to “consider alternative solutions including technical suitability and

trade-offs between capital and operating costs involved in the use of different technologies with

documented reasoning of why the selected option is the most feasible.” Second, it provides that

“new facilities should be aimed to be in the top quartile of energy efficiency for the

country/region average plant of the same fuel type and capacity.” Both of these provisions fall

well short of GIIP and are inadequate to the task.

The direction to “consider alternative solutions” is too narrow in three ways. First, as explained

above, a proper alternatives assessment should not be limited to different thermal plant

technologies. Nor should it be limited to options that exist within the business model, corporate

priorities or competitive advantages of the proponent. Rather, it should include the full panoply

of energy sector interventions, including renewable energy, upgrading the transmission and

distribution system, insulating buildings, modernizing lighting and otherwise reducing demand,

and policy innovations that can fundamentally alter the alternatives calculus (such as elimination

of fossil fuel subsidies).

Second, the curious provision allowing proponents to select the alternative that is “most feasible”

would seem to justify the rejection of the most efficient feasible alternative. This is inconsistent

with the mitigation hierarchy, and more specifically, Performance Standard 3, para 4, which

requires project operators to employ all feasible resource efficiency and pollution prevention

techniques. Under this provision, a project sponsor cannot reject a feasible efficiency/pollution

avoidance approach because it believes a less efficient/higher polluting approach is “more

feasible.”

Third, we believe that the “top quartile of existing units in the country/region” test of efficiency

is too weak and should be abandoned as proposed. This test fails to account for the global nature

of the market of thermal power plants. Because the relevant equipment is produced by a limited

number of companies worldwide, the same technologies are “available” globally. Thus, rather

than looking backwards at the stock of existing plants in a given country or region, which may be

decades old, the Guidelines should look sideways at the latest commercially available relevant

technologies and performance outcomes. To properly account for these market dynamics, the

Guidelines should require plants to use the “best commercially available technologies” for

efficiency. At a minimum, this should rule out support for subcritical pulverized coal (“PC”);

supercritical pulverized coal (“SC”) and subcritical circulating fluidized bed (“CFB”) designs not

delivering the efficiencies of more advanced technologies.10

4. The Draft Guidelines should clarify the technologies that will be required to satisfy other

IFC and World Bank Policy Requirements.

The climate-related design constraints that the designers and engineers of proposed thermal

power plants must meet to be eligible for World Bank Group funding are not limited to those set

10

These technologies can be employed when combusting lignite, with somewhat higher emission rates.

out in the EHS Guidelines, but are also found in other documents. Under IFC Performance

Standard 3, the project must include technically and financially feasible and cost effective

measures for improving efficiency and reducing project related GHG emissions. Coal projects

must also meet the World Bank’s Criteria for Screening Coal Projects under the Strategic

Framework for Development and Climate Change11

which sets an additional benchmark that:

[c]oal projects will be designed to use the best appropriate available technology to

allow for high efficiency and, therefore, lower GHG emissions intensity.12

The extremely broad range of efficiencies and technologies presented in the Draft Guidelines

offer no guidance as to whether a proposed project would meet the requirements of Performance

Standard 3 or the Criteria for Screening Coal Projects, because they provide no useful

information about efficiency levels that have been demonstrated to be technically and financially

feasible and cost effective in similar settings, or how to determine what the “best appropriate

available technology” may be in the project context.

Performance Standard 3 also directs project developers to refer to “the EHS Guidelines or other

internationally recognized sources, as appropriate, when evaluating and selecting resource

efficiency and pollution prevention and control techniques for the project.” The OECD Sector

Understanding on Export Credits for Coal-fired Electricity Generation Projects13

clearly is an

“internationally recognized source” that provides specific guidance on the efficiencies and GHG

emission intensity that have been shown to be technically and feasible and cost effective. Under

the OECD Sector Understanding proposed units greater than 500 MW must employ Ultra-

supercritical (USC) technology, which is defined as having an operating pressure of greater than

240 bar and an operating temperature of greater than 593°C, or an emission rate of less than

750gCO2/kWh. In IDA-eligible countries proposed projects with units between 300 MW and

500 MW generating capacity may only be funded if they meet the OECD’s definition of

supercritical (SC) - an operating pressure of greater than 221 bar and an operating temperature of

greater than 550°C, or an emission rate of less than 850g CO2/kWh. Such units must also meet

the World Bank Screening Criteria discussed above. Finally, subcritical units less than 300 MW

gross generating capacity in IDA-eligible countries may be funded, but such units are also

subject to the “best appropriate available technology to allow for high efficiency” screening

criteria. The Draft Guidelines should incorporate these standards to ensure that the World Bank

Group is not supporting projects that are too inefficient to garner support from other leading

international financiers.

11

Criteria for Screening Coal Projects Under the Strategic Framework for Development and Climate Change

http://siteresources.worldbank.org/EXTENERGY2/Resources/CGN_20100331.pdf at Page 2 12

Id. at p.2. 13

See, OECD Sector Understanding On Export Credits for Coal-fired Electricity Generation Projects,

TAD/PG(2015)9/FINAL 27-Nov-2015, Section 2, Table 1, supra, and OECD Council’s Recommendation of the

Council on Common Approaches for Officially Supported Export Credits and Environmental

and Social Due Diligence (referred to as "the Common Approaches") including the updated ANNEX VI related to the

coal-fired power plants valid as of 1st January 2017 TAD/PG(2017)1, accessed at

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?doclanguage=en&cote=tad/pg(2017)1

5. The Draft Guidelines do not provide useful examples of Good International Industry

Practice (GIIP) with respect to efficiency and GHG emission rates of coal fired power plants.

The Draft Guidelines set out the values in Table 1 as “guidelines” or “guidance” for net

efficiency on a lower heating value basis and for CO2 for coal-fired power plants.

Table 1: Net Efficiency (LHV) for Thermal Power Plants (from Table 4 EHS Guidelines):

Efficiency (net-LHV) CO2 (g-kWh)

Ultra-supercritical (USC) 39-48 676-934

Supercritical (SC) 40-46 748-938

Sub-critical (PC) 37-39 798-970

The efficiency and emission rates within each class of coal-fired power plant overlap

significantly. A 500 MW USC unit may have an efficiency as low as a subcritical PC unit and a

GHG emission rate higher than a sub-critical unit. Note also that the minimum “acceptable”

efficiency for a USC unit (39 percent, net LHV) is lower than the minimum “acceptable”

efficiency for a SC unit (40 percent, net LHV). Thus, a project developer could claim that a sub-

critical unit with an efficiency of 39 percent and an emission rate of 934 g/CO2/kWh has been

determined by the IFC to represent GIIP for a USC power plant.

Table 2: Gross Efficiency (LHV) for Thermal Power Plants (from Table 4, EHS Guidelines):

Efficiency (gross-LHV) CO2 (g-kWh)

Ultra-supercritical (USC) 47 728-777

Supercritical (SC) 44 781-834

Sub-critical 41-42 821-889

The gross efficiency values presented in the Draft Guidelines are from a single source

(ESMAP)14

and identified as “typical” design values that are not linked to any particular unit.

The associated emission rate estimates for the SC and USC categories are listed as having been

calculated from the ESMAP “typical design” efficiency values and nominal conversion factors

rather than unit specific values. Table 4 of the Draft Guidelines provides only generic citations

(e.g. USEPA 2006). For this reason, it is not possible to determine the quality of the data or

whether the unit in fact represents good practice and there is nothing in the record to demonstrate

that any evaluation was made as to whether a particular unit in fact met GIIP. It is indeed

difficult to accept the notion that a well-designed USC, even one combusting lignite, would emit

at a rate of 934 g/CO2/kWh.

The Draft Guidelines do not include the full suite of design criteria—such as minimum fuel

quality, number of reheat cycles, and conventional pollution controls—that it expects to be

14

http://www.esmap.org/sites/esmap.org/files/Technical%20and%20Economic%20Assessment%20of%20Off-

grid,%20Minigrid%20and%20Grid%20Electrification%20Technologies_Report%2012107.pdf?_sm_au_=i5VFMS

H14FTFWD4r.

employed at “good” subcritical, SC or USC units. Further, Table 4 does not distinguish between

lignite-fired units, which, will have lower net efficiency and higher specific GHG emission rates

due to the high moisture content of the fuel, and units combusting other forms of coal. This

enables developers of subcritical units burning sub-bituminous or bituminous coal to claim

efficiencies and emission rates associated with SC or USC units burning lignite.

6. The Guidelines should benchmark the best performing units in each class.

The Guidelines should identify and benchmark the best performing units in each class. IFC

should contact the operators of these units and acquire (and publish) the design and operating

conditions for these units and the data documenting performance, including the operating and

environmental parameters that impact the results. These data, along with information available in

standard engineering references and information concerning local conditions would then allow

project developers to demonstrate that, given local conditions, the proposed plant is at least as

efficient and clean as the benchmark plants.

This approach follows the recommendation of coal industry executives published by the Coal

Industry Advisory Board to the International Energy Agency (CIAB).15

In a 2010 Report, Power

Generation from Coal: Measuring and Reporting Efficiency Performance and CO2 Emissions,16

the CIAB detailed the differences in reporting methods in different countries, recommended the

creation of an international database and provided a reasonable summary of the factors that can

impact the efficiency of a coal-fired power plant.17

The CIAB Report recommended:

5.4 Performance benchmarking

In order to be useful in its underlying aim of encouraging best practice in coal use

and understanding the potential for further improvement, an agreed view of best-

practice performance would be needed. This should reflect efficiency and specific

CO2 emissions at a number of exemplary coal-fired power plants, covering

different plant designs and operating conditions. These best-practice performance

figures may then be used as benchmarks, providing a basis for participating

countries to consult with industry to determine appropriate future development

strategies that reflect regional constraints and objectives. It should be recognised

that the most efficient plant may not necessarily be the most economic plant to

build, own and operate, or provide the best long-term security of supply. A better

understanding of plant performance allows decision makers to better address the

compromises that must be made.

Tables 3 and 4, below, represent an initial compilation of publicly available performance data for

potential “benchmark” coal and lignite-fired units. The Draft Guidelines should expand on these

15

According the IEA “The IEA Coal Industry Advisory Board (CIAB) is a group of high level executives from coal-

related industrial enterprises, established by the IEA in July 1979 to provide advice to the IEA Executive Director on

a wide range of issues relating to coal. The CIAB currently has 44 members from 19 countries, contributing valuable

experience in the fields of coal production, trading and transportation, electricity generation and other aspects of

coal use. http://www.iea.org/ciab/papers/power_generation_from_coal.pdf 16

Id. 17

Id.

data by contacting the operators of these and similar well-performing units to obtain and publish

relevant design, operating and environmental parameters. Thereafter, project developers can

reference these units and adjust, as appropriate, based on site specific conditions, such as cooling

water temperature.

Table 3. Partial Performance Data for Coal-fired USC Units

Coal Plants Capacity

(MW)

Pressure

(Mbar)

Temperature

(Celsius)

Reheat

cycles

CO2 Emission

Rate (gross/net)

Eff LHV

(gross/net)

Eff HHV

(gross/net)

RDK8 919 28.5 603 1 47.5

(net)18

Nordylland 400 29 582/580/58

0

2 7(n)/699(g) 47 (net)19

Isogo 1 600 25 600/610 1 802(n)/710(g) 45 20

(gross)

Isogo 2 600 600/620 1 802(n)/710(g) 45 21

(gross)

Lunen 750 28 600 4622

Table 4. Partial Performance Data for Lignite-fired USC Units

Lignite

Plants

Capacity

(MW)

Pressure

(Mbar)

Temperature

(Celsius)

Reheat

Cycles

CO2 Emission

Rate

(gross/net)

Efficiency LHV

(gross/net)

Eff HHV

(gross/net)

Neurath 1100 27.2 600 >43(net)23

Niederaussem 1000 >43 (net)24

Boxberg 907 26.6 545 1 48.5(g)/42.7(n)25

Under the World Bank’s Criteria for Screening Coal Projects even projects less than 600 MW

must be designed to use the best, appropriate available technology to allow for high efficiency

18

http://www.gereports.com/supercritical-thinking-this-coal-power-plant-applies-bullet-like-pressures-to-steam-to-

achieve-worlds-best-performance/; http://www.powerengineeringint.com/articles/print/volume-18/issue-

5/Special_Project_Report/rdk-8s-three-little-words-efficient-reliable-and-flexible.html 19

http://cornerstonemag.net/setting-the-benchmark-the-worlds-most-efficient-coal-fired-power-plants/ 20

http://www.nedo.go.jp/content/100580308.pdf; http://www.iea.org/media/workshops/2011/cea/Topper.pdf 21

http://www.nedo.go.jp/content/100580308.pdf; http://www.iea.org/media/workshops/2011/cea/Topper.pdf 22

http://www.powermag.com/europes-most-efficient-coal-plant-comes-online/; http://cornerstonemag.net/setting-

the-benchmark-the-worlds-most-efficient-coal-fired-power-plants/ 23

http://www.rwe.com/web/cms/en/1754836/rwe-generation-se/about-us/lignite/: 24

http://www.rwe.com/web/cms/en/1754836/rwe-generation-se/about-

us/lignite/;https://online.platts.com/PPS/P=m&s=1029337384756.1478827&e=1096495472414.2240023308785804

128/?artnum=x2F004ShER07261656F2X4_1 25

http://www.modernpowersystems.com/features/featureboxberg-achieves-world-record-for-efficiency/;

http://www.power-eng.com/articles/print/volume-106/issue-8/features/new-benchmarks-for-steam-turbine-

efficiency.html

and therefore lower GHG emission intensity,26

and so, application of GIIP to World Bank

lending policies should include a demonstration that SC and USC technologies are not available

and that the subcritical design, including specified fuel, is the most efficient design available for

the project.27

7. The Guidelines should require reporting in a specified form that best addresses World Bank

funding policies.

Table 4 in the 2008 Guidelines provides efficiency data for “typical” (not best performing) units

in terms of “net” and “gross” generation and in terms of “lower heating value” (LHV) and

“higher heating value” (HHV).28

The Draft Guidelines propose to eliminate all data based on the

HHV of the fuel. This approach is incorrect and should not be adopted—the Guidelines should

use net generation to the grid and the HHV of the fuel that is used. Gross generation refers to the

amount of electricity produced by the generator at the plant. However, not all of this electricity

leaves the facility. This is because the unit requires a substantial amount of electricity to

operate—large fans to bring in and exhaust gases, mills to grind the coal to a fine powder, pumps

to cycle water and pollution and operational controls. The amount of electricity “produced” by a

plant and sent offsite for use by the public is ordinarily referred to as “net” generation.29

Efficiency ratings based on gross generation fail to incorporate potential efficiency

improvements associated with reducing auxiliary loads and distort the efficiencies of integrated

gasification combined cycle (ICGG) and carbon capture and sequestration (CCS) technologies

with very high auxiliary loads.

The difference between the HHV and LHV of fuels is related to the assumption made about the

availability of the energy present in the fuel, but unable to do work, because of the moisture

content of the fuel. The HHV measurement includes all the heat released from fuel combustion

and is the true energy content of the fuel. In determining the LHV of the fuel, it is assumed that

the latent heat used to volatilize the moisture in the fuel is not recovered. In the U.S., use of the

“higher heating value” (HHV) is common, while elsewhere, the “lower heating value” (LHV) is

used. The difference is in the treatment of the hydrogen and water content of the fuel, which is

present, but not useful for generating steam.30

A fuel that contains more moisture will generally

have a lower useful heat value and a larger difference between its HHV and LHV than a fuel

with less moisture. In practical applications, increasing moisture content will tend to increase

plant losses and fuel use. If one is merely concerned about the performance of the boiler, use of

the LHV may provide useful information.31

However, World Bank policies include encouraging

26

http://siteresources.worldbank.org/EXTENERGY2/Resources/CGN_20100331.pdf at page 2 27

Supercritical technology initially was developed using small (75 MW) units; the Nordylland unit is only 400 MW

in capacity. 28

HHV is also referred to as the gross calorific value (GCV) while LHV is referenced as the lower calorific value

(LCV) of the fuel. 29

Gross generation is sometimes referred to as “gross output”, while net generation is also referred to as “sent-out”

power or “gross-net” generation. 30

See, https://www.iea.org/ciab/papers/power_generation_from_coal.pdf, for a general discussion of efficiency

measuring and reporting issues. 31

The CIAB report asserts that “[u]sing the NCV basis is questionable: a modern condensing boiler could

potentially achieve a heating efficiency in excess of 100%, in violation of the first law of thermodynamics.” CIAB

Report, supra, at p. 18.

the use of cleaner burning fuels.32

Use of the LHV masks differences in actual plant performance

based on the use of coals with higher useful heat content and, in particular, the adverse impact of

using high moisture lignite fuels. Use of HHV encourages use of more efficient fuels and the use

of waste heat or renewable energy for lignite drying.33

The potential for confusion under the 2008 Guidance is demonstrated by the misuse of net and

gross generation in the December, 2016, Environmental and Social Due Diligence Report for the

Long Phu 1 Thermal Power Plant, purportedly in compliance with IFC policies. In that matter,

the contractor for the lender reviewing the project acknowledged that as designed the proposed

plant would achieve a gross efficiency of (on a HHV basis) of approximately 42.14 percent, but

nonetheless estimated a GHG emission rate that corresponded to a net efficiency of

approximately 44 percent. However, a plant cannot have a higher net efficiency than gross

efficiency34

The Draft Guidelines should be revised to explain these differences and to state that

net generation to the grid and the higher heating value of the fuel should be used for purposes of

evaluating efficiency of proposed thermal projects. We note that the CIAB Report cited herein

recommends this approach as well.35

8. The Guidelines should benchmark best performing units for conventional pollution controls

and apply a “Top Down” test.

The issues discussed above also arise concerning the Draft Guidelines’ treatment of SO2, NOx

and PM emission performance. The Draft Guidelines contain a generic description of the

different pollution controls that are available (see Tables 2 and 3), but include no information

concerning the best performing units or even which technologies must be employed at large coal-

fired units to meet the more broadly worded World Bank Group and IFC policies. For example,

the Draft Guidelines discuss low NOx burners as an applicable NOx controls technology, with no

estimate of the efficacy of this technology and both selective catalytic reduction (SCR), with a

listed control efficiency of 80-95 percent and selective non-catalytic reduction (SNCR), with a

control efficiency ranging between 30-50 percent.36

The Draft Guidelines specify only that

(1) the emission limitations required by the laws of the host country should be met;

(2) that the values of Table 6 should also be met, unless the EA justifies more or less

stringent limits due to ambient environment, environmental, community health, technical

and economic considerations; and

32

See, General EHS Guidelines, at page 5. 33

Lignite drying is not mentioned in the Guidelines. This technology is currently available and should be part of

any analysis of a proposed lignite plant. See, http://rotarydryerchina.com/en/products/hmhgj.html; http://www.iea-

coal.org/site/2010/publications-section/newsletter-information/current-newsletter-3/drying-lignite?;

http://www.rwe.com/web/cms/mediablob/en/606202/data/0/3/Development-status-of-WTA-fluidized-bed-drying-

for-lignite-at-RWE-Power-AG-Article-taken-from-Kraftwerkstechnik-Sichere-und-nachhaltige-Energieversorgung-

Volume-2-.pdf: https://www.usea.org/sites/default/files/082014_Techno-economics%20of%20modern%20pre-

drying%20technologies%20for%20lignite-fired%20power%20plants_ccc241.pdf 34

See, ERM, Environmental and Social Due Diligence – Long Phu 1 Thermal Power Plant, December 9, 2016

(ESDD) at Annex F. 35

Guidelines, supra, at p. 18 and p. 57, fn 21. 36

Guidelines, supra, at Table 2.

(3) that the EA should demonstrate that ambient impacts from emissions are in compliance

with applicable ambient air quality standards the requirements of Section 1.1 of the

General EHS Guidelines.37

The Draft Guidelines propose to reduce the approvable limits in Table 6 modestly. For example,

SO2 emissions from large (>600MW) coal and lignite power plants would decline from a range

of 200-850 mg/nM3to a range of 200-650 mg/nM

3. While directionally correct, even 200

mg/nM3

does not reflect the performance of a well-designed SO2 control system38

and 650

mg/nM3is unconscionably high, especially given the extremely poor air quality in many of the

areas where the World Bank Group operates. These limits are far in excess of what has been

demonstrated to be economically achievable throughout the world. New coal and lignite plants in

the EU are required to meet 75 mg/nM3, in the United States the relevant limit is 60 mg/nM

3 and

in China, most new plants are required to meet a limit of 30 mg/nM3.39

The lower values of the

range of “approvable” emission rates set out in Table 6 are also problematic as they would

suggest that projects that are far cleaner than these ranges – such as those that would meet the

EU, U.S. or Chinese rates set out above - are not approvable. Such an outcome is clearly not

contemplated in the broader World Bank Group and IFC policies. The Draft Guidelines should

set out values for the best performing “benchmark” units in each class of thermal power

producers and require that sponsors of new projects meet those values or provide a clear

technical justification for any short fall.

The third constraint in the Draft Guidelines— compliance with ambient air quality standards— is

insufficiently specific to ensure that public health will not be adversely impacted. As can be seen

in Table 5, below, the World Health Organization (WHO) publishes Ambient Air Quality

Guidelines and “interim targets” that are substantially less protective than the AAQ Guidelines.

The Draft Guidelines are not specific as to whether, for example, the relevant short term SO2

AAQ constraint is 20 or 125µg/m.3 The Guidelines should specify that any airshed which does

not meet the actual WHO guideline should be considered “degraded”.

37

http://www.ifc.org/wps/wcm/connect/554e8d80488658e4b76af76a6515bb18/Final%2B-

%2BGeneral%2BEHS%2BGuidelines.pdf?MOD=AJPERES 38

The Isogo Power station claims that SO2 emissions are less than 6 mg/nM3, NOx emissions less than 20 mg/nM

3

and PM emissions less than 1 mg/nM3. http://www.nedo.go.jp/content/100580308.pdf;

http://www.iea.org/media/workshops/2011/cea/Topper.pdf 39

Large Combustion Plants Directive http://eur-lex.europa.eu/legal-

content/EN/TXT/?qid=1402653842533&uri=CELEX:32001L0080; http://www.gpo.gov/fdsys/pkg/FR-2012-02-

16/pdf/2012-806.pdf, http://www.gpo.gov/fdsys/pkg/FR-2013-04-24/pdf/2013-07859.pdf, http://www.ecfr.gov/cgi-

bin/text-idx?tpl=/ecfrbrowse/Title40/40cfr60_main_02.tpl; 火电厂大气污染物排放标准 (GB 13223-2011). Partial

English translation

http://switchboard.nrdc.org/blogs/bfinamore/NRDC%20Unofficial%20English%20Summary.docx

Table 5. Relevant WHO Ambient Air Quality Guidelines

Table 1.1.1: WHO Ambient Air Quality Guidelines7,8

Averaging

Period

Guideline value in

3

Sulfur dioxide (SO2) 24-hour

10 minute

125 (Interim target-1)

50 (Interim target-2)

20 (guideline)

500 (guideline)

Nitrogen dioxide

(NO2)

1-

year

1-

hour

40 (guideline)

200 (guideline)

Particulate Matter 1-year 70 (Interim target-1)

PM10 50 (Interim target-2)

30 (Interim target-3)

20 (guideline)

24-hour 150 (Interim target-1)

100 (Interim target-2)

75 (Interim target-3)

50 (guideline)

Particulate Matter 1-year 35 (Interim target-1)

PM2.5 25 (Interim target-2)

15 (Interim target-3)

10 (guideline)

24-hour 75 (Interim target-1)

50 (Interim target-2)

37.5 (Interim target-3)

25 (guideline)

Ozone 8-hour daily

maximum

160 (Interim target-1)

100 (guideline)

Since 1970, the U.S. Clean Air Act has required that new major sources in degraded airsheds

meet the lowest achievable emission rate (LAER) and that any emissions from the new source be

offset by reductions at existing sources in the airshed. LAER is the lowest rate that has been

achieved in practice without any consideration of cost. Section 1 of the General EHS Guidelines

follows this approach and requires that any pollution increases from projects in degraded

airsheds “be as small as feasible.”40

40

General Guidelines, supra, at page 5.

Table 6 of the Draft Guidelines would allow a substantial further degradation of already

unhealthy air by interpreting the General EHS Guidelines to allow emission levels that are far

higher than what has been shown to be feasible elsewhere around the world. Thus, for example,

Table 6 allows SO2 emissions of 400 mg/nM3 for coal plants <600 MW and 200 mg/nM

3 for coal

plants >600 MW, even though levels less than 30 mg/nM3

have been shown to be feasible. Table

6 should be revised to identify the best performing units with respect to conventional pollutants.

This is particularly important since host countries may lack the authority to enforce offset

obligations that may last for more than 50 years and (contrary to the mandatory emission offsets

required under U.S. law) the General EHS Guidelines merely note that suitable mitigation

measures may include offset and emission buy down activities within the same airshed. And so,

any emissions allowed above the best practice levels may well cause significant and unnecessary

health and environmental impacts for decades.

Under the U.S. Clean Air Act, new major sources in non-degraded airsheds must meet the “best

achievable control technology” (BACT) which is similar to the European Union’s Best

Achievable Technology. BACT is determined on a case-by-case basis employing what EPA

styles a “Top Down” approach,41

where the most effective technology is employed, unless it is

demonstrated that the most effective technology is infeasible for either technical or cost reasons.

The technologies for controlling conventional pollutant emissions from thermal power plants are

quite mature, having evolved over several decades. Further, thermal power plants generally are

among the very largest emitters and therefore present the most cost-effective opportunity for

controlling pollution. For this reason, as a practical matter, there is no significant difference

between BACT and LAER levels of control in the United States.42

The Draft Guidelines present

no information that demonstrates that the current state of the art of commercially available PM,

NOx and SO2 controls cannot be employed in non-degraded airsheds.

.

The General EHS Guidelines also apply, “as a general rule”, the U.S. EPA’s Prevention of

Significant Deterioration Increments Limits for non-degraded airsheds43

that limit consumption

of the “increment” (the difference between current ambient air quality levels and the relevant

ambient air quality standard) to 25 percent. The Draft Guidelines would eliminate the specific

references to these requirements in the 2008 Guidelines, including the specific statement that the

“EA should demonstrate that emissions do not contribute a significant portion to the attainment

of relevant ambient air quality guidelines or standards, and more stringent limits may be

required.”44

Thus, the Draft Guideline would suggest only that SO2 emission rates as high as

1000 mg/nM3 for units <600 MW and 600 mg/nM

3 for units >600 MW are now approvable. No

explanation for why these references should be deleted is provided. However, a specific and

subsequent reference is often interpreted to override an earlier, general statement, and so there is

a risk that these changes will be viewed as suggesting that the numerical values in Table 6 are

41

https://www.epa.gov/nsr/nsr-workshop-manual-draft-october-1990 42

The major difference is in the offset obligation. 43

United States Environmental Protection Agency, Prevention of Significant Deterioration of Air Quality, 40 CFR

Ch. 1 Part 52.21. The General EHS Guide lines also cite as “other” references for establishing significant emissions

include the European Commission. 2000. “Guidance Document for EPER implementation.”

http://ec.europa.eu/environment/ippc/eper/index.htm ; and Australian Government. 2004. “National Pollutant

Inventory Guide.” http://www.npi.gov.au/handbooks/pubs/npiguide.pdf 44

See, Table 6 of the “Track Changes” version of the Draft Guidelines.

ordinarily controlling. In many countries, limiting increment consumption will require far more

stringent limits than those proposed in Table 6.

Many of the areas where the World Bank Group operates involve communities that rely heavily

on subsistence fishing and are within 150 km of proposed large new plants. In these

circumstances, the risk of mercury (Hg) deposition and uptake into the food chain is particularly

significant. The Draft Guidelines should include a reference to technical and health related

information concerning Hg emissions and should include benchmark performance data for Hg

emissions reduction technologies. Where modern, high-performing SO2, NOx and PM controls

are in place as recommended herein, those controls alone, perhaps augmented by activated

carbon injection (depending on the nature of the fuel) can provide excellent Hg reduction at low

added cost.

The Draft Guidelines should set out “benchmark” units that represent the state of the art for

control of conventional pollutants in each class of units. EU and EPA data are available for this

purpose. 45

Thereafter, as with the climate-related approach suggested above, project developers

should follow U.S. EPA’s Top Down Approach.

9. The Guidelines should be updated to incorporate advances in thermal power generation.

The Guidelines should be updated to incorporate advances in technology that have become

commercially available since the 2008 Guidelines were published. These include the use of

concentrated solar power (CSP) to augment the performance of CCGTs (also known as

Integrated Solar Combined Cycle (ISCC)46

, lignite drying47

and SC and USC circulating

fluidized bed boilers (CFB).48

10. The Guidelines should ensure that fossil fuel-fired thermal generation is only used where

necessary and that the most appropriate form of thermal generation is employed.

The efficiency and CO2 emission rate of a proposed thermal project is also substantially affected

by the anticipated use of the unit. Unit efficiencies and emission rates are often based on full-

45

See, e.g., U.S. EPA’s RACT, BACT, LAER Clearinghouse,

https://www3.epa.gov/ttncatc1/rblc/htm/welcome.html 46

http://www.powermag.com/leveraging-generation-synergies-with-hybrid-plants/;

https://www.energy.siemens.com/us/en/fossil-power-generation/power-plants/csp-power-block/;

http://helioscsp.com/iran-yazd-integrated-solar-combined-cycle-power-station/;

http://projects.worldbank.org/P041396/integrated-solar-combined-cycle-power-project?lang=en;

www.eskom.co.za/AboutElectricity/.../G3CSP_FossilHybridMillerFINAL.pptx 47

http://rotarydryerchina.com/en/products/hmhgj.html; http://www.iea-coal.org/site/2010/publications-

section/newsletter-information/current-newsletter-3/drying-lignite?;

http://www.rwe.com/web/cms/mediablob/en/606202/data/0/3/Development-status-of-WTA-fluidized-bed-drying-

for-lignite-at-RWE-Power-AG-Article-taken-from-Kraftwerkstechnik-Sichere-und-nachhaltige-Energieversorgung-

Volume-2-.pdf: https://www.usea.org/sites/default/files/082014_Techno-economics%20of%20modern%20pre-

drying%20technologies%20for%20lignite-fired%20power%20plants_ccc241.pdf 48

https://www.worldcoal.org/%C5%82agisza-power-plant-world%E2%80%99s-first-supercritical-cfb;

https://www.gepower.com/steam/products/boilers/circulating-fluidised-bed.html;

http://www.iea.org/media/workshops/2011/cea/Topper.pdf

load operation and an annual capacity factor of 80 percent or higher. However, in many

developing countries, off-peak demand for electricity may not be sufficient to require full load

operation of coal-fired units designed for baseload applications. Part load operation, nightly “turn

down” to minimal temperatures and/or frequent unit shut downs will have a significant, adverse

impact on unit efficiency, emission rates and longevity. Since this factor also affects the

economic viability of a proposed project, any evaluation of a thermal power project should

include consideration of the likely load pattern that will be experienced.

This issue is of particular importance where gas turbine generation is under evaluation. As

shown by the “new and clean” efficiency and emissions data published in Gas Turbine World,

large “baseload” CCGTs have a substantially greater efficiency than smaller units designed for

cycling applications. Simple cycle combustion turbines (CTs) have far lower efficiencies and

higher CO2 emission rates and should only be used in “peaking” applications where the capacity

factor is less than 10 percent. The use of “duct burners” for auxiliary power is highly inefficient

and should not be approved without a specific, detailed justification.

Conclusion

The Sierra Club and Bank Information Center urge the World Bank to ensure a full consideration

of low carbon solutions, including renewables, storage and efficiency before approving funding

for new coal or lignite-fired units. Improvements in the transmission and distribution system and

demand-side reductions in low-income countries can often obviate the need for additional

carbon-intensive generation at a lower long term cost and should be the highest priority for

World Bank investments for the foreseeable future. New fossil-fuel generation should be

sponsored only as a last resort, where there truly are no available alternatives.

The Draft Guidelines can and should be revised so that they provide useful information to

engineers and designers of proposed projects and to World Bank staff, other lenders, government

agencies and civil society and fairly implement the broader World Bank policies that require the

best feasible pollution controls and efficiencies for new thermal projects. In these comments we

suggest that the Guidelines either set out or provide reference to “benchmark” units that

represent the best performers in commercial service. Thereafter, project proponents would be

expected to demonstrate that the project is comparable to those benchmark units on an

engineering basis or that meeting those marks is infeasible. We recognize that it may take several

months to acquire the relevant data and resolve issues with stake holders, but suggest that the

effort is critical to ensuring compliance with World Bank policies and will expedite review of

well-designed projects.

We also believe that the process of developing an updated Guidelines would benefit from the

creation of a multi-stakeholder work group and greater transparency in explaining the reasons for

changes from the 2008 Guidelines.

CONSULTATION RESPONSE JUNE 2017

WORLD BANK GROUP DRAFT REVISED THERMAL POWER PLANTS EHS GUIDELINE E3G COMMENTS AND RECOMMENDATIONS CHRIS LITTLECOTT & HELENA WRIGHT

The International Finance Corporation (IFC) of the World Bank group has opened a

‘second consultation period’ on its draft revised EHSi guideline document for thermal

power plants.ii This consultation response focuses on the treatment of coal-fired power

generation and the implications for pollution control and mitigation of climate change.

Key Concerns and Recommendations

IFC Performance Standards and Technical EHS Guidelines are widely used by International Financial Institutions, Export Credit Agencies, and the private sector. It is therefore essential that IFC guidance

provides a clear reference point and high standards of performance for proposed investments.

Prior to being adopted, the draft guideline should be revised to provide an explicit introductory

explanation of how fossil fuel power generation should only be taken forward following prioritisation of cleaner alternatives such as energy efficiency, renewables and electricity

distribution and transmission.

This ‘second consultation period’ has been undertaken almost 4 years since the first consultation period

in October-November 2013.iii The revised draft guideline document significantly fails to incorporate

updated standards set in the interim period by key countries (e.g. China and India), regions (e.g. European Union), and international forums (e.g. OECD) in respect to pollution control performance and power plant efficiencies. The draft guideline proposes weak pollution standards that are typically 10 to 20 times worse than existing best practice. Such levels of pollution would result in significant harm to human health and the environment.

Prior to being adopted, the draft guideline should be revised to incorporate these relevant peer

standards. IFC standards should be identified and should at least match international best practice across all key pollutants, and should include specific requirements for mercury.

The revised draft guideline document fails to provide adequate guidance on the performance levels and measures that would normally be acceptable to IFC, contrary to the stated intent of the EHS guidance framework. In respect to power plant efficiencies and CO2 emissions performance, the

draft guideline presents overlapping categories of plant performance that will confuse rather than clarify any subsequent consideration of investment proposals.

Prior to being adopted, the draft guideline should be revised to provide distinctive categories of

power plant in respect to operating efficiency and CO2 emission rates, together with clear guidance on target levels of performance for any proposed projects.

The revised draft guideline document incorporates text in respect to the potential application of carbon

capture and storage (CCS) technologies and the implications for ‘capture readiness’ at the

permitting stage. This inclusion is welcome but insufficient given repeated international analyses that identify the need to cease investments in unabated coal power generation and accelerate the retrofit of CCS.

Prior to being adopted, the current draft guideline should be revised to require additional actions by project promoters and host country governments in respect to the identification, permitting and practical deployment of CCS. In particular this should require assessment of access to CO2 storage prior to project approvals being granted and finance provided.

Context As part of the World Bank group, in 2006 the IFC introduced a Sustainability Frameworkiv and an accompanying set of Performance Standardsv to shape its approach to Social and Environmental

Sustainability. These Performance Standards have since been widely applied internationally, influencing an aggregate $4.5 trillion of financing over the period 2006-2016.vi

In presenting the Performance Standards, the IFC notes that:

The Performance Standards are directed towards clients, providing guidance on how to identify risks and impacts, and are designed to help avoid, mitigate, and manage risks and impacts as a

way of doing business in a sustainable way, including stakeholder engagement and disclosure

obligations of the client in relation to project-level activities. In the case of its direct investments

(including project and corporate finance provided through financial intermediaries), IFC requires its clients to apply the Performance Standards to manage environmental and social risks and

impacts so that development opportunities are enhanced. [emphasis added] Performance Standard 3 on Resource Efficiency and Pollution Preventionvii recognises that “Industrial

activity and urbanization can increase levels of pollution that may threaten people’s health and the environment.” As a consequence, it sets out three objectives:viii

To avoid or minimize adverse impacts on human health and the environment by avoiding or minimizing

pollution from project activities.

To promote more sustainable use of resources, including energy and water.

To reduce project-related GHG emissions.

Performance Standard 3 further sets out that:

…the client will consider alternatives and implement technically and financially feasible and cost-effective options to reduce project-related GHG emissions during the design and operation of the project. These options may include, but are not limited to, alternative project locations, adoption of renewable or low carbon energy sources… [Paragraph 7, emphasis added]

The client will avoid the release of pollutants or, when avoidance is not feasible, minimize and/or control the intensity and mass flow of their release. This applies to the release of pollutants to air, water, and land due to routine, non-routine, and accidental circumstances with

the potential for local, regional, and transboundary impacts. [Paragraph 10, emphasis added] The EHS Guidelines sit underneath the Performance Standards and serve as essential reference documents to guide implementation:

The EHS Guidelines are technical reference documents with general and industry-specific examples of Good International Industry Practice (GIIP). They contain the performance levels and measures that are normally acceptable to the World Bank Group, and that are generally considered to be achievable in new facilities at reasonable costs by existing

technology.ix[emphasis added]

EHS Guidelines are provided for general cross-cutting issues and specific industry sectors.x Following the 2012 update of the Performance Standards, the IFC has had a rolling programme to update the EHS

Guidelines.xi A two-stage consultation process is undertaken for each thematic area. In some cases, this has been completed within an 18 month period (e.g. offshore oil and gas development in 2013-14), while others have had a considerable time lag between consultation rounds.

This is the case with the current revised draft guideline on thermal power generation, which was first

consulted on in October-November 2013.xii The current second round of consultation seeks to collate further comments before the guideline is finalised, translated and disseminated. This can be a relatively rapid process - the recently published guideline document on Liquified Natural Gas was released three

months following the conclusion of the second consultation round.

Given the importance of the EHS Guidelines for the implementation of the Performance Standards, it is therefore imperative that each guideline document provides accurate information and appropriate

guidance relevant subsequent project assessment and financing decisions. Having reviewed the revised draft guideline for thermal power plants, E3G highlights in this response that significant omissions and

inaccuracies should be rectified before the document is finalised for publication.

E3G comments on the revised draft guideline We focus here on issues of specific relevance to coal-fired power generation, but note that the same principles and need for up-to-date performance comparisons applies across technologies and fuels. To aid comparison we present comments here following the structure of the revised draft guideline on thermal power generation.

Consideration of alternatives Paragraph 6 notes that “Decisions to invest in this sector by one or more members of the World Bank Group are made within the context of the World Bank Group strategy on climate change” and cross references “WBG Climate Change Action Plan 2016-2020”, “Toward a Sustainable Energy Future for All:

Directions for the World Bank Group’s Energy Sector”, and “Criteria for Screening Coal Projects under the Strategic Framework for Development and Climate Change”.

E3G welcomes these references but notes the lack of an explicit opening statement that links the draft

guideline to the IFC Performance Standards. As noted above, Performance Standard 3 sets out clear objectives aimed at minimising negative impacts on human health and the environment and expressly identifies the need for consideration of alternatives prior to project initiation. However, the only

reference to such consideration in this revised draft guideline is in Table B-1 of Annex B: Environmental Assessment Guidance for Thermal Power Projects. All other references to ‘alternatives’ refer to design, technology, or fuel choices subsequent to the initiation of a fossil fuel thermal generation project. A much clearer requirement for prior consideration of alternatives should be provided at the start of the

document, which should explicitly refer to the need for prioritisation of cleaner investment alternatives such as energy efficiency, renewable energy, and electricity distribution and transmission.

Air emissions Paragraph 14 includes a reference to carbon capture and storage. This should be deleted from this location as it relates to greenhouse gas control rather than air pollution. The accompanying reference to Large Scale Integrated CCS Projects as tracked by the Global CCS Institute is undated but obviously out of date. An updated version of this reference should be reincorporated later in the document.

Paragraph 25 refers to mercury in the context of ‘other pollutants’ and potential technological

applications for its removal are discussed. A maximum concentration level for mercury is included in Table 5 regarding effluent. However, there is no limit value included for mercury in Table 6 regarding air emissions, despite Footnote 23 noting that both the USA and EU have now introduced requirements for

mercury controls. (The reference to IED should be removed in light of the agreement on the BREF standards). This should be addressed with Table 6 updated to include mercury emissions levels in line

with existing international practice. If any coal power plants were to follow the draft guideline in not addressing mercury, they would be at risk of contradicting the obligations of host countries under the

Minamata convention, which requires them to put in place best available technology requirements for new sources. It should also be noted that Footnote 23 refers to the Draft EU BREF standards from 2016. These have now been adopted in April 2017,xiii and will shortly be published in their official (translated)

format. We would highlight that the draft guideline needs to be updated throughout to reflect the entry into law of the new BREF standards.

Table 6 (C) presents Emission Guidelines for boiler plant. The proposed emissions levels are unacceptably high when compared with international best practice across a range of countries and

regions. Furthermore, the Table fails to even reference the current standards for the EU, China and India despite claiming to provide details of emissions limits in place as of January 2017. These are both unacceptable weaknesses in the current draft that must be address prior to finalisation and publication.

Table 6 (C) proposes the following emissions levels:

These can be compared with current equivalent standards in EU,xiv China,xv and India:xvi

Pollutant unit IFC revised draft guideline EU China India

SO2 mg/Nm3 200-600 10-75 35 100

NOx mg/Nm3 500 50-85 50 100

PM mg/Nm3 25-40 2-5 10 30

Mercury ug/Nm3 no limit <1-2 30 30

The proposed IFC emissions are therefore significantly higher compared to best practice:

For SO2 = 20 times higher emissions For NOx = 10 times higher emissions For PM = 23 times higher emissions

For Mercury no limit is provided Such weak standards would impose unacceptable pollution burdens on human health and the

environment. These must be addressed as matter of priority before the guideline in finalised and published.

Energy Efficiency and GHG emissions Paragraph 27 introduces this section. We would recommend that it should highlight the importance of considering aggregate lifetime CO2 emissions from power generation projects, not just a consideration of relative plant efficiency. In addition, we recommend that it should include an explicit introductory

reference to the application of carbon capture and storage (which can refer to it being integrated from the outset of a power generation project or as an anticipated retrofit activity). This would be in place of

the current inappropriate reference to CCS in Paragraph 14. This inclusion of CCS should also be

accompanied by up to date reference to operational projects, including the two retrofit post-

combustion projects in operation on coal-fired power plants at Boundary Dam and Petra Nova projects in Canada and the USA respectively.

Paragraph 31 discusses carbon capture and storage readiness (CCR). The inclusion of this framework

reflects this already being a requirement of many lenders. While we welcome the fact that the text states that new coal power plants over 300MW should undertake CCR assessments we would highlight that further guidance should be provided here to require actions by both the project developer and the host country.

Given the present limited availability of accessible CO2 storage and absence of targeted incentives and / or regulatory frameworks for CCS at the national level, the current text could be rapidly dismissed as a

box ticking exercise. Project developers and host countries should therefore be required to consider the timelines for the development of accessible CO2 storage at appropriate scale and the future economic conditions under which CCS retrofit may be undertaken. We can provide further details on this upon request.

If the current text were to remain unrevised, project development and financing would be likely to proceed without having undertaken adequate consideration of the future application of CCS, significantly increasing the likelihood that it would face early closure and / or limited operating hours.

Conversely, scenarios considering the reduction of CO2 emissions in line with efforts to limit climate change to below 2 degrees point to a need for substantial deployment of CCS. In such a scenario, any projects and host countries that were to undertake proactive assessment of CCS application and / or

retrofit would be better positioned to secure longer operating lifetimes at higher load factors. These matters are considered further in the 2017 IEA Energy Technology Perspectives and associated documentation. We note that the second half of Footnote 30 discusses the GCCSI assessment of CO2 Storage Readiness –

this is related to but not the same as capture readiness which is discussed previously in the footnote. Paragraph 28 includes the promotion of biomass as a means of reducing CO2 emissions, stating that it “is considered carbon-neutral if produced in a sustained yield without consideration of energy used for

harvesting, processing and transportation”. We disagree with this approach. Biomass should not be considered carbon-neutral, particularly because there is considerable energy for the harvesting and

transportation for biomass fuel as well as the impact of indirect land use change (ILUC).

Instead, we would suggest that this paragraph should acknowledge that the whole life cycle emissions of the biomass feedstock should be considered to ensure the life cycle emissions are lower than using the original fossil fuel. For example, in the EU: “To be considered sustainable, biofuels must achieve

greenhouse gas savings of at least 35% in comparison to fossil fuels. This savings requirement rises to 50% in 2017.”xvii

Paragraph 29 discusses coal power plant efficiency criteria, including with reference to rehabilitation of existing facilities. As noted above, the key consideration from a climate perspective is in respect to the

overall level of CO2 emissions over the operating lifetime of a power plant, rather than its relative

efficiency alone. We would therefore recommend that all projects (both new and rehabilitation) should be required to quantify their likely lifetime emissions under different operational scenarios, with action taken to minimise lock in to significant CO2 emissions. It should be noted that this is a prudent approach

in response to the growing risk of stranded assets for high carbon investments. This approach should also be mirrored in Annex B: Environmental Assessment Guidance for Thermal Power Projects.

Paragraph 30 states that the “The values in Table 4 are indicative and are not intended to be used as

benchmarks, as regional performance varies (for example due to ambient temperature differences).” This puts the revised draft guideline at odds with the statement highlighted above that EHS guidelines do provide the detailed performance levels and measures expected to meet the EHS Performance Standards. This alone is a significant failing that must be addressed before finalisation and publication.

Furthermore, the plant efficiency and GHG emission level values presented in Table 4 span huge ranges (to the extent that they should not be considered to be in line with Good International Industry Practice)

and overlap substantially. This makes meaningful differentiation impossible between the different categories of plants. Table 4 and Table A-1 both fail to reference the Sector Understanding on Export Credits for Coal-Fired Electricity Generation Projects, agreed in 2015 and in force since 1 January 2017.xviii This sets out clear criteria for differentiating between different categories of power plant based on efficiency and emissions levels (page 123), and therefore which categories of plant are eligible for support via export credits in particular host country income categories.

The present IFC consultation specifically asks for feedback on whether “New facilities should be aimed to be in the top quartile of energy efficiency for the country/region average plant of the same fuel type and capacity” as proposed in Paragraph 29. This could result in some very weak standards in countries

or regions with inefficient plant in operation. We would instead propose that the approach taken by the OECD should be adopted to provide clear restrictions on funding for coal plants in line with the restrictions already in place under the World Bank screening process. We would further recommend that assessments of CCS application and / or retrofit should be incorporated alongside such an approach, as discussed above.

Water Consumption and Aquatic Habitat Alteration The inclusion of new paragraph 34 discussing the impacts of climate change on thermal generation is welcome. However, the current text is a missed opportunity to highlight the opportunities available to

consider alternative electricity generating technologies such as wind and solar that are far better suited to operation in water-stressed environments. The large-scale deployment of renewables in place of existing thermal generation would provide a substantial water dividend for use by local populations and in agriculture. Such an approach would be preferable to the continued promotion of thermal generation

technologies that continue to require water, or which manage to reduce water consumption (eg via air cooling) but continue to contribute to worsening climate impacts through their lifetime CO2 emissions.

Similarly, we welcome the inclusion of new paragraphs 39, 40 and 46 regarding the impact of power plant water discharges on the aquatic environment and the implications for power plant operation in

light of elevated temperatures resulting from climate change. We would highlight that this should be thoroughly considered at the level of strategic environmental assessments at a country or river basin

level, not just in project EAs.

About E3G E3G is an independent climate change think tank operating to accelerate the global transition to a low carbon economy. E3G builds cross-sectoral coalitions to achieve carefully defined outcomes, chosen for their capacity to leverage change. E3G works closely with like-minded partners in government, politics,

business, civil society, science, the media, public interest foundations and elsewhere. In 2016, E3G was ranked the number one environmental think tank in the UK.

More information is available at www.e3g.org

Copyright

This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.0 License.

© E3G 2017

Endnotes i environmental, health and safety ii http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-

standards/ehs-guidelines/thermalpower_phase2_secondconsultation

iii

http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-standards/ehs-guidelines/ehs_guidelines_technical_revision iv

http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-standards/sustainability+framework v http://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/Sustainability-At-IFC/Policies-

Standards/Performance-Standards/ vi

http://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/impact-stories/how-ifc-has-changed-finance vii

http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-standards/performance-standards/ps3 viii

http://www.ifc.org/wps/wcm/connect/25356f8049a78eeeb804faa8c6a8312a/PS3_English_2012.pdf?MOD=AJPERES ix

http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-standards/ehs-guidelines/ehs_guidelines_technical_revision x http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-

standards/ehs-guidelines#IndustryEHS xi http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-

standards/ehs-guidelines/ehs_guidelines_technical_revision xii

http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-standards/ehs-guidelines/thermalpower_phase2_secondconsultation xiii

http://ec.europa.eu/transparency/regcomitology/index.cfm?do=search.documentdetail&Dos_ID=14177&DS_ID=50159&Version=1 xiv

COMMISSION IMPLEMENTING DECISION establishing best available techniques (BAT) conclusions, under Directive 2010/75/EU of the European Parliament and of the Council, for large combustion plants. 28 Apr 2017. http://ec.europa.eu/transparency/regcomitology/index.cfm?do=search.documentdetail&Dos_ID=14177&DS_ID=50159&Version=1 xv

Ministry of Environmental Protection, National Development and Reform Council, and National Energy Administration. 全面

实施燃煤电厂超低排放和节能改造工作方案. [Main Goals of Fully Implementing Ultra-Low Emission and High-Efficiency

Retrofits for Coal-Fired Power Plants]. MEP document no 164, 2015. http://kjs.mep.gov.cn/hjbhbz/bzwb/dqhjbh/dqgdwrywrwpfbz/201109/W020130125407916122018.pdf xvi

Central Pollution Control Board. Environmental Standards - Thermal Power Plants. 2015. http://www.cpcb.nic.in/divisionsofheadoffice/pci2/ThermalpowerPlants.pdf xvii

https://ec.europa.eu/energy/en/topics/renewable-energy/biofuels/sustainability-criteria xviii

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?doclanguage=en&cote=tad/pg(2017)1