Argentina: Tierra del Fuego Energy Transition Support Program

OBJECTIVE

To increase the renewable wind power generation capacity in Tierra del Fuego Province.

DESCRIPTION

The Province of Tierra del Fuego (“the Province”) is an insular territory located in the south of the country. The provincial network is isolated from the national electricity grid SADI ("Sistema Argentino de Interconexión”) and made up of city grids (Rio Grande and Ushuaia), which results in a fragile network requiring specific consideration for green transition. The current energy mix of the Province is made up of 100 percent fossil fuel, specifically natural gas, which is scarce and costly. The current stock of electricity generators in the province is generally obsolete and inefficient and has urgent needs for maintenance and rehabilitation.

The Province of Tierra del Fuego has rich wind resources and therefore great potential for wind generation. However, to date, no wind energy project has materialized. Given the disconnected status of local grids, wind farms need to be built together with modernized and more flexible thermal plants, so that both thermal and renewable generations can be duly integrated. By implementing such a plan, the Province can diversify its energy supply mix, improve energy efficiency, reduce gas consumption and achieve its goal of clean energy transition.

Partnering with CAF who will support the modernization of the two thermal power plants, AIIB will support the construction of a wind farm located in Río Grande. The AIIB loan is expected to finance: (1) the procurement, transportation and installation of eight wind power turbines, with an individual capacity of 4.2 MW for each turbine and a total installed capacity of 33.6MW; (2) the interconnection line to the 33Kv local electric power distribution system (including fiber-optic cable network); (3) project feasibility studies.

ENVIRONMENTAL AND SOCIAL INFORMATION

Environment and Social Policy and Categorization. AIIB's Environmental and Social Policy (ESP), including the Environment and Social Standards (ESSs) and the Environmental and Social Exclusion List, apply to the Projects. ESS 1 (Environmental and Social Assessment and Management) is triggered for the Project. ESS 2 (Involuntary Resettlement) and ESS 3 (Indigenous Peoples) is under consideration pending further field assessment. Based on the likely environmental impacts, the Project is currently assigned Category B, and the categorization will be confirmed following field review.

Instruments. An Environmental and Social Impact Assessment (ESIA) is under preparation in line with Argentinian regulations. In addition, AIIB will develop an Environmental and Social Due Diligence Report (ESDD) to address identified gaps with AIIB's ESP. The EIA include an Environmental and Social Management Plan (ESMP) to manage environmental and social risks and impacts. In addition, a Stakeholder Engagement Plan (SEP) will be prepared.

Environmental Aspects. The Project is expected to generate direct and indirect adverse impacts on biodiversity during construction, operation, maintenance, and decommissioning, manifested through dust emissions, habitat fragmentation, light spill, noise, solid waste, wastewater, etc. The major impacts include bird and bat collision-related fatalities, noise, and shadow flickering during the operational phase. In addition, the location of operational turbines may represent a barrier to the migratory species. Adverse impacts can also result from associated facilities, particularly overhead transmission lines and access roads. This Project is part of the wind energy development that involves other wind power plants in the same region, and it can cause cumulative impacts. These impacts are assessed in the respective ESIAs, and appropriate mitigation measures will be included in the respective ESMPs. The spatial context around the project site was assessed to analyze the potential impacts on avifauna, including one Key Biodiversity Areas (KBA), Reserva Costa Atlántica de Tierra del Fuego y zonas Adyacentes, within 10 km of the Rio Grande wind farm site and the Transmission Line, and a Critical Habitat Assessment ("CHA") will be prepared as part of the EIA.

Climate Change Risks and Opportunities. The GHG emission avoidance from renewable energy generation will be estimated in the climate risk assessment as part of the ESIA. The Project contributes to Argentina's NDC to reduce GHG emissions and increase the uptake of renewable energy. Based on the activity type (wind power generation), AIIB's entire financing for the Project can be counted as climate mitigation finance. A climate vulnerability assessment will integrate adaptive measures into the project design to mitigate climate risks (floods, storms, etc.).

Social Aspects. The land where the Project will be developed is located in an unpopulated area currently owned by the Salesian congregation and that will be transferred to the Province on a willing seller willing buyer basis. Therefore, the construction of the Project will not lead to physical displacement. Economic displacement is also not expected. The construction of the OHTL may lead to limited economic displacement.

Stakeholder Engagement, Consultation, Information Disclosure and Monitoring. During the ESDD and SEP preparation, meaningful consultations and stakeholder engagement will be conducted with local communities. The English version of the environmental and social (E&S) instruments and the summaries of those both in Spanish and English will be disclosed online and made available in the project area. In addition, the documents will be posted on the Bank's website. Appropriate monitoring arrangements will be discussed with the Client during project appraisal. The Bank will carry out field-based E&S monitoring missions.

Community and Occupational Health and Safety, Labor and Employment Conditions. As part of the ESMP, the mitigation of community health and safety risks will be defined in the Occupational Health and Safety Management Plan (OHSMP) to be prepared at the start of the construction and operational phases, including a Worker Influx Management Plan. In addition, the EPC Contractor and O&M provider will prepare a Sexual Exploitation and Abuse and Sexual Harassment (SEA/SH) Prevention and Response Action Plan, Human Resources Policy (and related procedures), Retrenchment Plan, and Human Rights Policy.

Project Grievance Redress Mechanism. The Project Company will establish and operate a project-level Grievance Redress Mechanism (GRM) for the local communities and a project-level GRM for Project workers. The public consultation and disclosure process should disseminate information about the project level GRM and the Project-affected People's Mechanism ("PPM") of AIIB.