1

US Agency for International Development (USAID) / India

Initial Environment Examination (IEE)

India Regional Energy Program

Activity/Project Title: India Regional Energy Program Solicitation #: N.A.

Contract /Award Number (if known): N.AGeographic Location : South AsiaOriginating Bureau/Office: USAID/India, Clean Energy and Environment (CLEEO)Supplemental IEE: ☐ Yes ☒ NoAmendment: ☐ Yes ☒ No Programmatic IEE: ☐ Yes ☒ No

DCN and date of Original document: N.ADCN and ECD link (s) of Amendment (s): N.AAmendment No: N.A

Funding Amount: $5.5 million Life of Project Amount: $50-70 million

Implementation Start/End: FY 2020/ FY 2025Prepared By: Monali Zeya Hazra Date Prepared: August 16, 2019Expiration Date (if any): Reporting due dates (if any): N.AEnvironmental Media and /or Human Health Potentially Impacted (check all that apply)None ☒ Air ☐ Water ☐ Land ☐ Biodiversity ☐ Human Health ☐ Other ☐Recommended Threshold Determination:☒Negative Determination ☒With Conditions☒Categorical Exclusion☐Positive Determination

☐Deferral☐Exemption☐USG Domestic NEPA action

Climate Change□ GCC/Adaptation ☐ GCC/Mitigation Climate Change Vulnerability Analysis (included)

Adaptation/Mitigation Measures: Not Applicable

SUMMARY OF FINDINGS

Pursuant to 22 CFR 216.2(a), environmental analysis/evaluation is required for new projects, programs or activities authorized by USAID. This Initial Environmental Examination (IEE) evaluates the environmental and social impacts of India Regional Energy Program, the key regional effort under Asia EDGE (Enhancing Development and Growth through Energy) in South Asia, which will be implemented over a period of five years. The program aims to enhance energy security in South Asia1 by improving access to affordable, secure, reliable and sustainable energy through expanded, transparent and efficient energy markets.

RECOMMENDED ACTION:

(i) Categorical Exclusion:Pursuant to 22 CFR 216.2(c) (3), the originator of the activities (USAID/India Clean Energy and Environment Office (CLEEO)) has determined that “core” program activities, which include technical assistance, transactional advisory services, training and capacity building, feasibility studies and detailed project reports for infrastructure projects (Table I), consist of types of interventions entirely within the categories listed in 216.2(c) (2) and are therefore recommended to be categorically excluded by falling under the following classes of actions:

The action does not have an effect on the natural or physical environment {22 CFR 216.2(c)(1)(i)};

Education, technical assistance, or training programs except to the extent such programs include activities directly affecting the environment (such as construction of facilities, etc.) {22 CFR 216.2(c)(2)(i)};

Document and information transfers {22 CFR 216.2(c)(2)(v)} Studies, projects or programs intended to develop the capabilities of recipient countries to

engage in development planning, except to the extent designed to result in activities directly affecting the environment (such as construction of facilities, etc.) 22 CFR 216.2(c)(2)(xiv)

Activities which involve the application of design criteria or standards developed and approved by AID 22 CFR 216.2(c)(2) (xv.)

These activities represent approximately 70% ($35-50 million) of the total estimated cost of the activity.

(ii) Negative Determination with Conditions (NDC): This is recommended for activities under the project namely pilots and demonstrations either directly or through sub-grants to recipients for testing or developing technologies/equipment to support deployment of advanced technologies. This may include advanced technologies and solutions such as distributed energy resources, digitized transmission and distribution grid management technologies, energy access, air pollution and/or efficient equipment and buildings 1 The program will cover Bangladesh, Bhutan, India, Nepal and Sri Lanka. The missions in these countries have been participating in the coordination and consultations for the program design. In addition, USAID/Nepal and USAID/Bangladesh are also part of the design process.

Page | 2

(refer Section 2 of Table 1). This deployment could include grants or co-financing with host government(s) or the private sector for demonstration projects, procurement of software and hardware including testing equipment, communication systems, digital system, electric and electronic equipment, commodities and materials. Procurement of equiment and materials will be in accordance of ADS 312.

The pilots and demonstrations may result in generation of electronic wastes or other waste (e.g. battery storage, solar panels, etc.) and if it is in large quantities, it may need to be managed and disposed at the end of their useful life.

To ensure environmental compliance with the conditions of the IEE, the implementing partner shall prepare Environmental Review Checklist (ERC) with climate risk screening at each pilot level, including technology, site, etc. Based on this criteria, each pilot shall be assessed for their environmental and social impacts and for those activities (pilots) that are categorized as NDC, the implementer shall develop individual Environmental Mitigation and Monitoring Plans (EMMPs). The implementer (and sub-grantee) will ensure implementation of mitigation measures as identified in individual EMMPs including monitoring and reporting on the compliance. The Environmental Mitigation and Monitoring Plan (EMMP) for each pilot shall be reviewed and approved by the COR and Mission Environmental Officer (MEO)/Climate Integration Lead (CIL). The templates for ERC and EMMP can be found in https://usaidgems.org/compliance.htm.

Furthermore, the COR will carry out together with MEO/DMEO & CIL, as warranted, random site visits to pilots/demonstrations activities to ensure that the conditions in this IEE as well as specified in the specific EMMP are implemented. The implementing partner shall also undertake training and educational efforts to improve awareness of its partners and sub-contractors/sub-grantees on National environmental legislations and regulations. The implementing partner will also provide training to energy sector and other relevant stakeholders and civil society for identifying risks, undertaking climate resilience planning and responding to climate related events. USAID funds will not be utilized for construction ativities. In any event, the implementing partner shall undertake construction risk screening analysis in accordance with ADS 201 maw for each pilot or grant activity that may have potential for construction. The analysis including suitable mitigation measures should be approved by the AOR.

This component represents approximately 30% ($15-20 million) of the total estimated cost of the project.

(iii) Climate Risk Screening2:

The technical office undertook the detailed climate risk analysis and presents below a brief summary. The majority of interventions proposed under India Regional Energy Program are at a 2 https://openknowledge.worldbank.org/bitstream/handle/10986/28723/9781464811555.pdf?sequence=5&isAllowed=y;https://www.climatelinks.org/sites/default/files/asset/document/rdma_climate_vulnerability_profile_jan2013.pdf;https://www.climatelinks.org/sites/default/files/asset/document/2017_USAID%20ATLAS_Climate%20Risk%20Profile%20-%20India.pdf; https://www.climatelinks.org/sites/default/files/asset/document/India%20GHG%20Emissions%20Factsheet%20FNAL.pdf;

Page | 3

low risk from adverse effects related to the impacts of climate change. The interventions are predominantly technical assistance and are not subject to significant climate risk. However, the energy infrastructure (e.g. power projects, transmission and distribution lines), which will be facilitated under the project, will be vulnerable to the impacts of climate change. Actions will be incorporated as a part of the project to help reduce that vulnerability and increase the resilience of the energy infrastructure. As a part of the ERC, climate risk screening will also be done for each of the pilot.

The program will also include activities that will strengthen the capacity of stakeholders within the energy sector and civil society for identifying risks, undertaking climate resilience planning and responding to climate related events.

Climate change will have implications for all the countries participating in India Regional Energy Program in variety of ways including loss of land and livelihood due to rising sea level and more extreme weather events. Many of the activities under the project will have a beneficial impact on climate change. For instance, India Regional Energy Program will focus on promoting cross-border energy (electricity and gas) trade in South Asia, which will optimize utilization of energy resources and help achieve economies of scale. This will help reduce greenhouse gas (GHG) emissions due to increased usage of hydro-power and natural gas as well as increased deployment of RE. Further, the project will also improve the efficiency of utilities in South Asia thus reducing the transmission and distribution losses, which again will reduce climate change.

1. BACKGROUND AND ACTIVITY DESCRIPTION

1.1 Purpose and Scope of the IEE

The purpose of this document, in accordance with Title 22, Code of Federal Regulations, Part 216 (22 CFR 216), is to provide a preliminary review of the reasonably foreseeable effects on the environment of the USAID intervention described herein and recommend determinations and, as appropriate, conditions, for these activities. Upon approval, these determinations become affirmed, and specified conditions become mandatory obligations of implementation. This IEE also documents the results of the Climate Risk Management process in accordance with USAID policy (specifically, ADS 201mal).

This IEE is a critical element of USAID’s mandatory environmental review and compliance process meant to achieve environmentally sound design and implementation. Potential environmental impacts should be addressed through formal environmental mitigation and monitoring plans (EMMPs) and/or Environmental Assessments (EAs), if needed.

1.2 Background

The United States Government is embarking on a concerted effort to support Asian countries to reach their development objectives in the energy sector and help them become more energy secure. In July 2018, the United States Government announced the Asia EDGE initiative as a key component of the current administration’s Indo-Pacific Strategy.  As a whole-of-government

Page | 4

initiative, Asia EDGE draws on the expertise of multiple USG agencies, private sector entities, and international financial institutions, and seeks ongoing collaboration with like-minded governments and intergovernmental organizations that are dedicated to sustaining equitable economic progress throughout the region.

South Asia is facing a confluence of challenges that requires constant economic and social support to maintain stability and to prevent it teetering over the edge.  Energy security is a critical component of regional stability, both for its ability to support economic development and for its capacity to provide national security. Besides South Asia’s self-reliance and security advanced through expanding energy markets there are major implications for the U.S.’s relationship with countries throughout South Asia. The role of USAID as a partner to assist the SA countries in their journey of self-reliance to attain higher degree of energy security would consist of building their capacity, strengthening infrastructure and creating enabling environments for businesses to invest in. Regional sharing and diversifying the use of available energy resources would address many of the growing energy security concerns, accelerate economic development of the region and advance USG’s geopolitical and trade interests through creation of exports and jobs for US companies.  

1.3 Description of Activities

USAID’s India Regional Energy Program aims to improve access to affordable, secure, reliable and sustainable energy for all through expanded, transparent and efficient energy markets. This is possible if South Asia is regionally integrated with enhanced energy markets, diversified energy sources and increased cross-border energy trade, increased deployment of advanced energy solutions and systems, improved technical and financial performance of energy utilities, and increased mobilization of the private sector investment and services for energy infrastructure. The purpose of India Regional Energy Program will be achieved by working on four major components

Component 1: Enhanced Regional Energy Markets and IntegrationIndia Regional Energy Program will focus on enhancing energy connectivity and integration in the region through increased cross-border power and gas trade and development of regional energy markets. 3 The component will build on and leverage other development partner and U.S. Government’s existing and future programs.4

3https://www.unescap.org/sites/default/files/Integrating%20South%20Asia%E2%80%99s%20Power%20Grid%20for%20a %20Sustainable%20and%20Low%20Carbon%20Future_WEB.pdf;http://www.saarcenergy.org/wp-content/uploads/2019/02/1.-ADB-Harmonizing-electricity-laws-in-South-Asia.pdf; https://asiafoundation.org/wp-content/uploads/2018/07/The-Price-of-Power-The-Political-Economy-of-Electricity-Trade-and-Hydropower-in-Eastern-South-Asia.pdf; 4 This program will build on the work of USAID’s SARI/EI program and complement activities of USAID’s bilateral missions as well as other USG’s such as MCC. The program will also leverage the investments of other multilateral agencies such as ADB and World Bank and will coordinate with other bilateral that are working in the space, especially DFAT and JICA. The program will also work with regional institutions such as SAARC to ensure complementarities.

Page | 5

i. Expanded Economical Gas Market: India Regional Energy Program will focus on expanding an economical regional gas market by working on an enabling environment i.e. policies and regulatory framework to increase gas trade in South Asia and establish a regional gas hub, a trading platform that sets market prices. It will also facilitate in the development of gas pipeline and other infrastructure such as for storage and re-gasification by undertaking feasibility studies, identifying investment opportunities, and supporting deal closure through transactional advisory services. A Regional Partnership will also be established to encourage exchange of best practices and learnings. Some illustrative activities are listed as follows:

o Technical assistance to national governments and regulators for policies and regulatory framework to support gas usage in power sector including non-discriminatory usage of transport infrastructure, dispute resolution mechanism, etc.;

o Technical assistance to Indian regulator to develop real time and ancillary services market to support viable business options for gas-based generation;

o Engage regional such as SAARC and national institutions to develop policies and frameworks to support expansion of existing gas markets into industry, transport and households

o Transaction advisory services, feasibility and pre-feasibility reports on potential pipelines, detailed project reports, TA to National Governments for deal closure, etc.

o Peer-to-peer engagement with national and sub-national U.S. and European trading hub operators and regulators; capacity building workshops and trainings

ii. Integrated Regional Electricity Markets: India Regional Energy Program will build upon the work undertaken by USAID’s South Asia Regional Initiative for Energy (SARI/E) program over the years5. It will focus on advancing multilateral power trade and operationalizing a short-term power market in the region by strengthening regional institutions and current and new networks established under the project, creating an enabling environment (harmonized policies and regulatory frameworks, technical standards and operational system procedures), supporting generation and transmission infrastructure (transactional advisory services, risk guarantees, etc.), operationalizing the power exchange, building consensus around power trade (through civil society and analytical study), engaging private sector and capacity building of key stakeholders. Some illustrative activities are listed as follows:

o Institutionalizing and/or promoting number of regional entities and networks such as the South Asia Forum for Electricity Regulators (SAFER) and the South Asia Forum of Transmission Utilities (SAFTU) to support policy and regulatory

5 USAID’s SARI/E program started in 2000 and is currently in the fourth phase of the program. Some of the key learnings of the program include the need to involve local governments in the project implementation, trust and consensus building not only within energy stakeholder but also within civil society, need for political will, engagement of regional institutions, supporting bilateral trade which is currently poised for transition to multilateral trade, have been factored into the design of the India Regional Energy Program.

Page | 6

harmonization, common operating standards, and coordinated cross-border transmission planning.

o Develop market rules (including oversight); consensus building; establish power trading corporations and day ahead market in each country;

o Macro-economic analytical studies, impact studies, cost-benefit analysis and media outreach campaigns and educational programs, engagement of think tank, parliamentarians and diplomats.

o Transaction advisory services, feasibility and pre-feasibility reports, detailed project reports for regional generation and transmission projects, TA to national governments for PPAs and closing investments, etc.

Component 2: Deployment of Advanced Energy Solutions and SystemsThe focus of India Regional Energy Program would be on key innovative and new technologies which could transform the energy sector and provide a large market opportunity for the private sector investments i.e. renewable energy, distributed energy, digital systems (automation, sensors/ monitoring systems, controls), off-grid energy, sustainable buildings technologies; increased efficient end-use technologies, and air pollution control systems. Increased deployment of renewable energy and distributed energy resources: The

program will enable the deployment of these technologies by partnering with the national, state and the local governments in the partner countries to establish/improve the market friendly policies, regulations, deployment schemes and incentive programs. Depending on the level of market maturity in individual countries, it will identify and work with potential consumers to increase demand and use of renewable energy through improved awareness of the benefits, techno-economic assessments, demonstration programs and capacity building programs for both public and private sector. It will address the major hurdle of the lack of capacity of the relevant institutions (renewable energy agencies, regulators, financial instructions, project developers) and human resources trough technical workshops, technical papers, training programs. It will also work with relevant agencies to bring in international quality and safety standards for the RE deployment. Some illustrative activities include:

o Stipulation of renewable portfolio obligations energy targets (RPOs) and other long-

term strategies at the national, state and utility levels;o Renewable energy resource assessments and tools; to easy access and use of data for

taking informed decisionso Identification and design of suitable incentive structures (FIT’s, net metering, subsidies

etc.,),o Design renewable energy deployment programs such as solar parks, / wind farms,

renewable energy zones,o Develop and demonstrate business models for new technologies and solutions (RE

hybrids, floating solar, batteries, etc.).

Increased deployment of advanced digital systems (automation, sensors/ monitoring systems, controls) in transmission and distribution networks: India Regional Energy Program will work with transmission and distribution companies, system operators, policy

Page | 7

makers, regulators and private sector to accelerate deployment of advanced technologies and solutions to support grid stability and reliability, enable two-way communications between customer and distribution grid and allow large-scale integration of variable renewable energy. This will be through interventions such as demonstration/pilots, business case development, regulatory assessments, cost-benefit analysis, market designs, consumer engagement, etc. Some illustrative activities are listed below:

o Support development of policy and regulatory frameworks through regulatory analysis, cost-benefit analysis, feasibility assessment, long-term and short-term planning, regional need assessment for advance distribution tools, etc.  

o Support deployment of tools (e.g. enhanced RE forecasting, SCUD and SCUC) and technologies (e.g. battery energy storage, advanced inverters, AGC on renewable generators, etc.) through pilots and demonstrations, business cases development, transactional advisory services, feasibility assessments, etc.  

o Enhance access to finance through loan guarantees, advisory services to prepare bid documents, etc.

o Outreach and knowledge sharing (e.g. workshops, exchanges, peer-to peer partnerships)

Increased development of sustainable, healthy and efficient buildings and increased adoption of efficient end-use technologies: India Regional Energy Program will advance deployment of highly energy efficient, sustainable and healthy buildings and efficient appliances through deep efficiency, renewables and indoor air quality integrated into codes and standards across the region, harmonized and interoperable standards and performance specifications for appliances, market assessments, demand aggregation for end use appliances, awareness and capacity building on net zero energy buildings, and demonstration of advanced building technologies, indoor air quality systems in both existing and new buildings. Some illustrative activities include:

o Review approach and methodology for building codes in South Asia and share best approaches and practices through workshops, conference, peer-to-peer executive exchanges

o Develop business case, pre-feasibility assessment for such technologies/products/services

o Design of 'Star labeling' programs for appliances; expand the efficiency definition to include demand response.

o Conduct on ground demonstration pilots in existing and new buildings owned by Government or private sector to establish the viability of such technologies,

o Develop innovation challenges/ competitions for more efficient technologieso Support and scale the ESCO market for retrofits;o Develop standard tendering processes, procurement procedures, project

management practices, measurement, evaluation, and learning systems,

Enhanced off-grid energy (electrical and thermal) access: India Regional Energy Program will enhance the delivery of off-grid, decentralized solutions to increase the pace of universal energy access to the unserved or underserved population. It will enable significant increase in public and private sector investments in off-grid solutions, which

Page | 8

will be monitored. It will adopt a market-based approach to promote off-grid solutions to achieve household electricity access and access to clean cooking solutions at scale, at speed, and at a low cost to the government. Program will primarily focus on solutions, which enable productive use to improve the incomes of the off-grid communities making these solutions more affordable. Illustrative activities include:

o Enabling policy and regulatory frameworks adopted at the national and sub-national level

o Innovative technologies (generation and demand side) and delivery models developed and adopted

o Capacity building and information awareness efforts

Deployment of technologies and solution to reduce air pollution and conserve water: India Regional Energy Program will achieve this by working on enabling policies and regulatory frameworks, adoption of sensors and controls, capacity building, market and cap trading system, etc.

Component 3: High Technical and Financial Performing Modern UtilitiesIndia Regional Energy Program will work with the utilities across the power chain (generation, transmission and distribution) to improve their financial performance, operational efficiency and adaptability to new technical advancements. It will also support creation of an enabling environment by development of policies and regulatory frameworks, improve access to finance and build the capacity of personnel through knowledge exchanges, peer-to-peer partnerships, etc.  

Improved efficiency and environmental performance of generating power plants (coal, gas and large hydro power plants): India Regional Energy Program will focus on strengthening the operational and fuel efficiency of generating facilities by establishing partnerships and networks that will facilitate research and deployment of efficient and cleaner technologies, improve operation and maintenance practices by adoption of better diagnostics & instrumentations, and improve heat rate through detailed assessments, benchmarking, etc. The project will also focus on improving the sustainability of conventional power plants through increased reuse and recycling (e.g. zero discharge, air-cooling, use of wastewater for industrial process, use of fly ash, etc.), rigorous due diligence process (siting of hydro-power plant, social and environmental impact assessments, etc.) and adoption of improved control equipment. The project will also support utilities to adapt to changing dynamics in power system by developing new business models for improving their viability. Some of the illustrative activities include:

o Mobilize a regional Network (Heat Rate alliance) and partnership to advance research and deployment of efficient and cleaner technologies (air cooling, waste heat recovery and practices);

o Improve the heat rate of coal-based power plants through development of best practices guidelines, HR improvement plans, benchmarking, etc.

o Improve sustainability of conventional power plant by undertaking environmental due diligence/audits, ESIAs, site assessments, adoption of advanced air pollution control equipment, etc. and development of market-based mechanisms such as cap and trade,

Page | 9

o Enhance flexible operation to enhance grid stability e.g. flexible operation of coal-based power plants; peaking gas plants, pumped hydro, etc.

Improved performance of distribution utilities: India Regional Energy Program will improve the performance of distribution utilities across SA region by working on a diverse yet interconnected areas like optimized planning and procurement; increased use of markets for reducing costs; reducing AT&C losses through restructuring, management practices, tariff design, technology adoption; supporting distribution utilities in the deployment of smart technologies, increased proliferation of digital services that enable better visibility and control over the operations and improves billing and collection efficiency; and institution strengthening and capacity building of utilities. Some of the illustrative interventions may include but not limited to:

o Development of analytical tools like cost-benefit tools for new technologies (e.g. smart grids, EVs) for the region and disseminating/socializing the tools/frameworks in utilities across the region

o Provide transaction support for its implementation in select utilitieso Adopt HR practices and tools that incentivize AT&C loss reduction and enhance utility

performance;o Adopt technologies that improve reliability, reduce AT&C losses and enable two-way

communication like smart meters;o Adopt technologies that enable new load growth such as EV charging infrastructure.o Institutionalize an alliance or network of distribution utilities across SA region, o Catalyze twinning arrangements with US and SA institutes for training, peer learning

regional conferences, executive exchanges.

Improved transmission utilities and operations: India Regional Energy Program will focus on interventions that will lead to enhanced capacity of the transmission and system operator to manage and operate faster, efficient and reliable grid. This will include equipping the system operator with tools and technologies that will help in maintaining the grid including models/analytics (security constrained unit commitment (SCUC), security constrained unit dispatch (SCUD), etc.), visibility of the generating facilities and better communication systems to improve communication with generators. The project will also build the capacity of system operators to use these tools and technologies. It will also enhance the capacity of transmission operators and system operators to undertake long-term, mid-term and short-term planning at utility level, regional and national level. The project will also provide transactional advisory support to the transmission utilities to develop PPAs, TSAs, cost benefit analysis, identification of potential transmission networks, improve access to finance, etc. The project will also engage National Governments to establish independent power trading corporations, independent system operators and market operators including policy and regulatory frameworks to support this. Some of the illustrative interventions may include but not limited to:o Enabling tools and technologies to support system operation such as security

constrained unit commitment (SCUC), security constrained unit dispatch (SCUD), automatic generation control (AGC), RE forecasting tool, better visibility of generation, communication platform to coordinate with generators, etc.

Page | 10

o Build capacity to undertake rigorous and scientific planning at national and state level for long-term requirements for transmission expansion, system operation,  

o Support design and development of market products through TA to policy makers and regulators, support gencos and DISCOMS in redesigning contracts, handling of stranded assets, etc.

Component 4: Private Sector Investment and ServicesIndia Regional Energy Program is designed to address private-sector constraints or risks and build market-based approaches to energy security challenges.

Effective and transparent procurement systems and governance: India Regional Energy Program will work with technical and procurement divisions of the key public agencies (especially at the sub-national levels, namely states and municipalities) to help them improve procurement processes and governance, reduced the chances of corruption, adopt best value procurement practices for new technologies and increase competition, through targeted technical assistance, capacity building, development and adoption of new tools and policies. Illustrative activities include: o Assessment and technical assistance to simplify procurement process to avoid

unnecessary permit requirements, defining clear requirements, adopt more objective and unbiased evaluation criteria, etc.

o Implement tools (e-tendering, online auctions, etc,) and practices to improve procurement governance such as transparency in providing information, reduce the need for human interaction and multiple steps (reduce the possibility of corruption), etc.

o Develop procurement policies and guidelines, that allow best-value procurement vis-à-vis least-cost as has been traditional procurement practice.

o Adopt innovative procurement options such as technology-neutral energy procurements, auctions, bulk procurements, performance-based awards etc for the technologies new to the market or which are maturing fast (solar PV, WTE, energy storage, etc.)

Enhanced private sector participation and investments: India Regional Energy Program will focus on key success factors of private sector participation and public-private partnerships (PPPs) i.e. establishing a sound sector strategy and policy mix to serve as a basis for the collaboration; establishing an effective regulator and regulations to safeguard both the interests of the private investor and the general public; addressing the issues affecting the bankability of energy project; and deploy innovative financing mechanism to increase the availability of financing for the public and private sector. Illustrative activities include:o Develop innovative PPP models with appropriate incentives and risk sharing among

public and private agencies;o Private sector engagement/feedback; built security provisions (for new technologies

and services); strengthen/built new institutions; implementation support; built monitoring mechanisms. PPP Enabling Environment Index, clarifying regulations for PPPs

Page | 11

o Design and implement risk mitigation instruments (guarantees, contract enforcement, forex hedging, liquidity reserve facilities etc. credit enhancement, payment security mechanism);

o Establish a project development facility to provide technical assistance to project developers on project structuring, section of technology, legal provisions, etc;

o Develop standard tender documents and agreements (power purchase), standardization of project documents and agreements; aggregation/bundling of smaller projects; identify and address unfavorable and uncertain regulations and policies.

o Develop and publish project pipelines, sector market assessments, investment and tender opportunities; awareness campaigns that raise awareness among companies, financiers and public to increase demand

Geography and Beneficiaries: The project activities will be implemented in South Asia Beneficiaries of the activity include the Governments of South Asia, stakeholders from energy sector, think tank, civil society, etc.

2. RECOMMENDED THRESHOLD DECISIONS AND MITIGATION ACTIONS

Categorical Exclusion and Negative Determination with Conditions (Please refer to the Summary Section).

The justification for recommending a determination of Categorical Exclusion for activities under the project is due to their nature, such as technical cooperation, training programs, capacity building, knowledge management and communication, and other similar types of environmentally neutral actions. For certain activities, a determination of NDC has been made.

S. No

Components and illustrative activities

Effect on Natural or Physical environment

Threshold decisions and Reg.216 actions required

1 Enhanced regional energy markets and integration

No effect Categorical Exclusion: no action required

2 Increased deployment of advanced energy solutions and systems

Insignificant effect Negative Determination with conditions:

1. The implementer shall develop an Environmental Review Checklist (ERC) which will detail out the screening criteria to assess the environmental and climate risks for each pilot or sub-grant implementing a pilot.

2. Each pilot shall be assessed for their environmental impacts and for those activities (pilots) that are categorized as NDC, the

Page | 12

implementer shall develop individual Environmental Mitigation and Monitoring Plans (EMMPs).

3. The implementer (and sub-grantee) shall ensure implementation of mitigation measures as identified in individual EMMPs including monitoring and reporting on the compliance.

4. The COR shall carry out together with MEO/DMEO & CIL, as warranted, random site visits to ensure that the conditions in this IEE as well as specified in the specific EMMP are implemented.

5. The implementing agency shall also undertake training and educational efforts to improve awareness of its partners and sub-contractors/sub-grantees, of the local beneficiaries and third-party entrepreneurs.

6. The implementing agency shall also undertake training and educational efforts to improve awareness of its partners and sub-contractors/sub-grantees on National environmental legislations and regulations.

7. The implementing partner shall also provide training to energy sector stakeholders and civil society for identifying risks, undertaking climate resilience planning and responding to climate related events.

Page | 13

8. USAID funds shall not be utilized for construction ativities. In any event, the implementing partner shall undertake construction risk screening analysis in accordance with ADS 201 maw for each pilot or grant activity that may have potential for construction. The analysis including suitable mitigation measures should be approved by the AOR.

3 High performing modern utilities

Insignificant effect

The activities under this component will also focus on improving the environmental and social performance of the utilities through efficient practices, control equipment, environmental due diligence, ESIAs, etc.

Negative Determination with conditions

1. If there are any pilot or demonstration under this component, it will be assessed for their environmental and social impacts. For those that are categorized as NDC, the implementer shall develop individual Environmental Mitigation and Monitoring Plans (EMMPs).

2. If any potentially significant adverse environmental and social impacts are identified, the IP shall contact A/COR and MEO/CIL to seek guidance whether an activity falls under Positive Determination and whether an EA process shall be triggered.

3. The implementer (and sub-grantee) shall ensure implementation of mitigation measures as identified in individual EMMPs including monitoring and reporting on the compliance.

4. The COR shall carry out Page | 14

together with MEO/DMEO & CIL, as warranted, random site visits to ensure that the conditions in this IEE as well as specified in the specific EMMP are implemented.

5. The implementing agency shall also undertake training and educational efforts to improve awareness of its partners and sub-contractors/sub-grantees, of the local beneficiaries and third-party entrepreneurs.

6. The implementing agency shall also undertake training and educational efforts to improve awareness of its partners and sub-contractors/sub-grantees on National environmental legislations and regulations.

7. The implementing partner shall also provide training to energy sector stakeholders and civil society for identifying risks, undertaking climate resilience planning and responding to climate related events.

8. USAID funds shall not be utilized for construction activities. In any event, the implementing partner shall undertake construction risk screening analysis in accordance with ADS 201 maw for each pilot or grant activity that may have potential for construction. The analysis including

Page | 15

suitable mitigation measures should be approved by the AOR.:

4 Private sector investment and services mobilized (including transparent procurement).

No effect Categorical Exclusion: no action required

3. MITIGATION, MONITORING & EVALUATION

3.1 Specific ResponsibilitiesAll approved conditions shall be fully transposed into procurement instruments.

The implementing shall have sufficient technical and financial capabilities to implement all approved conditions.

The COR/AOR and the MEO/CIL shall review and approve environmental compliance documentation, conduct spot checks to ensure that conditions in the IEE are met, mitigating measures identified are implemented, and adequate measurement protocols are in place to ensure their implementation, and provide guidance when required to the Implementing Partner. The A/COR and MEO/CIL shall explain at the post award conference all conditions approved in the IEE to the implementing partner

3.2 Reporting Requirements

The Implementing Partner shall regularly report to USAID on and have a section on environmental compliance in its Annual Work Plans. The Final Report will also have a section that will summarize activities related to environmental compliance and will describe results. 4. LIMITATIONS OF THE IEE

This IEE does not cover activities involving: Assistance for the procurement, use or recommendation for use of pesticides or activities

involving procurement, transport, use, storage, or disposal of toxic materials. Activities involving support to wood processing, agro-processing, industrial enterprises,

and regulatory permitting. GDA and DCA Assistance, procurement, or use of genetically engineered organisms (GEOs).

Procurement or use of Asbestos, Lead, and or Mercury Containing Materials (ALMCM), PCB containing transformers, or other hazardous/toxic materials for construction projects.

Page | 16

All the above activities will require preparation of statutory analysis, which shall be approved by BEO/Asia and Pillar BEO as warranted, and this IEE shall be amended accordingly to incorporate approved conditions therein.

5. REVISIONS

Pursuant to 22 CFR 216.3(a) (9), if new information becomes available which indicates that activities to be funded by the project might be “major” and their effects “significant,” this determination will be reviewed and revised by USAID/India and submitted to the Bureau Environmental Officer (BEO) for approval, and, if appropriate, an environmental assessment will be prepared in accordance with the procedures stipulated in 22 CFR 216. It is the responsibilities of the AOR to timely inform the Mission Environment Officer and BEO of any changes in the scope and nature of the approved activities, which may require the revision of the approved Threshold Decision.

APPROVAL OF ENVIRONMENT ACTION RECOMMENDED

Clearances:

Activity Manager: Date:

Deputy Mission Environmental Officer & Climate Integration Lead

Monali Zeya Hazra

Date:

Chandan Samal

Regional Environmental Advisor for Central and South Asia and OAPA

Andrei Barannik Date:

Page | 17

Regional Legal Advisor:

Deputy Mission Director:

Diana Weed Date:

Date:

Approval:

Mission Director:

Ramona El Hamzaoui

Date:Keith Simmons

Concurrence: Bureau Environmental Officer Asia:

Date:

William Gibson

CCed: Project File, MEO Tracking, RLO, OAA; participating Missions’ MEOs/CILs

Page | 18