Attachment_J_1_DCN_2018_MOL_010_MEERP_NDWC_CE.pdf

DCN: 2018-MOL-010

SOP-1, Template 1:

Initial Environmental Examinations (IEE)

US Agency for International Development (USAID) Moldova

Initial Environmental Examination (IEE) Program/Project/Activity Data

Activity/Project Name:

SoW Moldova’s Energy Efficiency and Renewables Project (MEERP)

Assistance Objective: Economic Growth

Program Area: Modern Energy Services

Country(ies) and/or Operating Unit: Moldova Originating Office: Date: 13 February, 2018 PAD Level IEE: Yes No X Supplemental IEE: Yes No X RCE/IEE Amendment: Yes No X

DCN of Original RCE/IEE: NA

DCN of Amendment(s):

If Yes, Purpose of Amendment (AMD):

DCN(s) of All Related EA/IEE/RCE/ER(s):

Implementation Start/End:

LOP: September 2018 – August

Funding Amount: LOP Amount: $ REDACTED

Contract/Award Number (if known):

Recommended Environmental Determination:

Categorical Exclusion: Positive Determination:

Negative Determination: Deferral:

Additional Elements:

Conditions: Local Procurement:

Government to Government: Donor Co-Funded:

Sustainability Analysis (included): Climate Change Vulnerability Analysis (included):

1. Background and Project Description

1.1. Purpose and Scope of IEE: This IEE covers all activities of Moldova’s Energy Efficiency and

Renewables Project (MEERP).. The Moldova’s energy profile is strongly impacted by very low reserves of fossil solid fuels, oil, natural gas and poor interconnections for supply from alternative energy sources.

Around 95% of Moldova’s primary energy needs are met from imports and only about 5% from renewables (mostly biomass). This makes the country extremely vulnerable in terms of energy security and economic stability. According to the Progress Report under Renewable Energy Directive 2009/28/EC as adapted by the Ministerial Council Decision 2012/04/MC-EnC 1 , Moldova had about 2.38 MW of installed PV power at the end of 2015. In the absence of traditional energy resources and huge dependence on imported energy, the energy efficiency (EE) and exploration of the local renewable energy sources (RES) is a strategic issue for Moldova. The latest International Renewable Energy Agency (IREA) experts’ report underlines the huge technical potential of Moldova on RES estimated at 25 GW. This unused capacity is 10 times higher than the current installed capacity of all existing power stations in the country. According to latest available statistics the total amount of energy consumed annually by Moldova was 3.62 mil. kWh in 2016 and 3.92 mil. kWh in 2017. 2

1 https://www.energy-community.org/dam/jcr:637ba0e7-bc06-4e93-976f-307e00ce7f44/MD_RE_progress_2017.pdf 2 http://www.statistica.md/category.php?l=ro&idc=128& mtelevantos Highlight

The energy efficiency in Moldova is very low and almost 3 times lower than in European countries. Very low quota of used RES and low energy efficiency, in its turn, results in substantial increases in energy costs, tariff’s affordability for the local customers and generate a big number of other problems as well.

Firstly, it affects integrally the energy system security and service sustainability. Secondly, the inefficient use of fossil energy is one of the main sources of environmental pollution, which significantly contribute to desertification and climate changes and strongly impacts the people health. The general positive effect of the project on Moldova’s economy, environment and society is expected to be much higher comparing with insignificant local impact possible from PV equipment installation at concrete sites.

1.2. Project Overview: The purpose of MEERP is to assist Moldova in fulfilling its commitments to the

Energy Community Treaty, comply with its renewable energy acquis, and to make progress towards integration of the energy sector with the EU countries. The project aims to enhance Moldova’s energy security by assisting with development of the legal and regulatory environment for public and private investment in small scale renewable energy installations and energy efficiency. The project will contribute to USAID/Moldova’s CDCS DO2 Intermediate Results, namely, IR 2.1: Improved Economic Foundation for Growth, and IR 2.2: Improved Private Sector Competitiveness in Selected Industries. Energy efficiency and renewable resources are key components for ensuring sustainable economic growth, decreasing reliance on fossil fuels, improvement of national security, environmental protection and public health. At a national level, scaling installations of solar PV will result in increased domestic power production and the reduction of electricity imports. The development of the solar industry will also create many new jobs in engineering, procurement and installation of the equipment, including U.S. business opportunities. At the end user level, rooftop solar energy provides opportunities for cost savings. Effective branding at the schools and other demonstration projects will contribute to promoting green technologies and help increase awareness of USAID support for Moldova’s development.

1.3. Project Description: Improving energy efficiency, utilization of renewable energy sources (RES), and energy security are among the main priorities of the National Development Strategy ‘Moldova 2020ʼ, National Energy Strategy of Moldova through 2030 (NES), and Moldova’s National Renewable Energy Action Plan (NREAP). According to NES and NREAP, 159.5 MW of additional renewable energy capacity is targeted by 2020. Despite the ambitious targets set at the national level, the implementation of renewable energy projects is slow and only 5.2 MW of capacity was installed by the end of 2015, out of which only

2.38 MW was solar energy. A number of obstacles have prevented wide-scale adoption of rooftop PV systems at the residential and commercial level. The lack of regulatory guidelines for distributed PV permitting results in large delays as distribution companies have no mandates to process applications.

Project economics are hampered by the lack of an implemented net metering protocol that will allow customers to be compensated for electricity sold to the grid. Large-scale deployment is hindered by a lack of tested business models for developing projects and operating and maintaining installed systems. The sector may also require additional incentives, to properly incentive distributed energy systems among targeted customer groups. Moldova’s Law on Promoting the Use of Energy from Renewable Sources will come into force at the end of March 2018. The new rules, which transpose EU Directive 2009/28/EC on promotion of the use of renewable energies, will introduce changes intended to incentivize the deployment of distributed energy resources in the residential and commercial sectors. For instance, the law will include net-metering for renewable energy power stations with capacity up to 100 kW, enhancing the economic viability of these projects. The law also includes requirements for non-discriminatory access to the grid, priority dispatch of electricity generated from renewable energy, guaranteed purchase for eligible producers selected through competitive auctions, and minimization of curtailment.

Considering commitments to the Energy Community to utilize renewable resources at the level required by the EnCT acquis, Moldova must resolve key issues hindering the application of distributed renewable resources, including but not limited to: 1) establishment of a regulatory environment and enhanced project economics; 2) market development through demonstration projects and outreach; 3) institutional capacity building and educational programs for renewable energy deployment.

In supporting such reforms, the MEERP project development objectives are to: (i) reduce energy dependence of selected publically-owned municipal school buildings by implementing RES; (ii) demonstrate the commercial viability of the installed technology and provide models to help attract investment into energy efficiency and renewable energy projects; and (iii) enhance the policy and regulatory environment for energy efficiency and renewable energy development.

The Moldova’s Energy Efficiency and Renewables Project (MEERP) will partner with Moldova’s Energy sector Regulator (ANRE), Ministry of Economy and Infrastructure, electric utilities, municipal governments, local community organizations, municipal organizations, and the private sector to achieve the stated development objectives.

In order to realize the project objectives, three components will be carried out. These include: (i) Renewable Energy (RES) and Energy Efficiency (EE) policy and regulatory support, (ii) demonstration projects in schools and commercial buildings, and (iii) market development and outreach:

1.3.1. Component 1. Renewable Energy (RES) and Energy Efficiency (EE) Policy, Regulatory and

Utility support. Key Stakeholders: MoE, ANRE, Distribution Utilities, etc.

This task will take a comprehensive approach to addressing the policy, regulatory, and utility barriers to scaling up distributed renewable energy resources in Moldova. The passage of Moldova’s new law on Promoting Renewable Energy Resources is an important first step in this process, but additional support is required to realize the full potential of these cost effective resources.

Expected results of Component 1: Output will be measured by the completion of draft regulations submitted to the MoE and ANRE for consideration. It is expected that the draft documents will include regulations/guidelines concerning the use of net metering, licensing procedures and tariff setting methodologies, among others.

1.3.2. Component 2. Demonstration Projects. Key Stakeholders: Ministry of Education, project developers, DSOs, Energy Efficiency Fund, etc.

This component will focus on accelerating the commercial viability and development of RES through demonstration projects on schools and businesses. The pilot projects design process should consider collection of monitoring and maintenance data for project evaluation and to do outreach for Component 3.The demonstration projects will serve as test cases for effective implementation of task 1 outcomes such as the net metering schemes, new technology standards and grid codes, and streamlined permitting and application process. It is envisioned that a large component of the project site selection, feasibility, economic analysis, and system installation will be performed by private installers with appropriate oversight and support from USAID’s prime contractor. Design process should collect monitoring and maintenance data for project evaluation and to do outreach for component 3.

Project identification and selection will consider environmentally friendly approach and be based on a set of criteria developed during the inception of the project and approved by USAID. It is expected that 70% of the demonstration budget will be spent on schools and 30% on businesses. The capacities of most systems are expected to range from 20 to 100 kW. The project identification and selection process will commence with public announcement of the planned activity, request for applications (including preparation of all necessary application forms and data information), followed by survey of potential partner municipalities and a more detailed evaluation of proposed “first round” projects. The program will be open for beneficiaries from all over Moldova.

At a minimum, selection criteria are expected to include the following:

Level of support by the school administration, municipal government, business owner of the project. A local cost share of up to 20% of the total project costs will be sought for school projects. For business installations, the project will cover up to 20% of project costs.

Selection of the building with respect of its geographical location, sun exposure, size and overall projected project economics.

Positive results of roof (or related structure) integrity and required technical parameters necessary for installation of a PV solar system.

Environmental aspects/impact of the installation Likelihood of commercial installations to be replicated at other similar facilities without USAID support.

Structural assessments might also be required to confirm the rooftop area, rooftop strength, the capacity of the upper level transformer, and the capacity of the existing cable line.

Expected results of Component 2: Educational institutions facing budget shortfalls can slash operating costs by lowering their electric bills with solar power. With application of net metering rules, the project will generate and sell electricity to the grid especially during the summer, and create a substantial credit balance which can be utilized during the school year to contribute to a better education for students. Watching low-cost renewable energy in action can inspire kids, their families, and entire communities to adopt low cost energy solutions that bring real savings to schools and possible to other technology adopters.

Electricity prices have increased significantly over the last few years, pushing up operational expenses for businesses, making them less competitive. Meanwhile, the cost of solar photovoltaic (PV) systems has declined, making solar an increasingly affordable way for businesses to offset their electricity consumption and hedge against future price rises. It is generally considered that a small business consuming 50,000 Kwh per annum that installs a 15kw system can displace an average of 33% of its electricity usage.

Detailed and professional energy assessments for businesses will reveal consumption patterns compared to the expected generation from perspective solar systems that will optimize the return on investment and could incentivize business owners to invest in such systems and make their businesses more competitive Output will be measured by:

- databank of meteorological data to be used for system calculations

- general design and specifications of the solar PV system

- at least 100 identified projects, at least 50 selected for scheduled implementation

- the number of project completed and operated

- the number of PV project completion events organized with USG participation

- reducing demand for equivalent grid electricity

- number of net-metering contracts facilitated

1.3.3. Component 3: Market Development and Outreach.

Activities in this task will focus on enhancing awareness of the public and other stakeholders about the attractiveness of distributed solar investments as well as on enhancing the capacity for municipal officials, business owners and managers, local contractors/installers, and representatives of the government agencies responsible for RES promotion of private sector PV installers. Contractor will utilize available capacity building methods including “learning by doing”, classroom education, information dissemination, round tables form or conferences gathering.

Expected results of Component 3: If proven commercially successful, the project would provide valuable experience, and demonstrative and educational effects and benefits (technical feasibility, economic viability, safeguards, and project management) for developing similar projects in other public and commercial buildings.

‐ Training curriculum developed in collaboration with local institute or vocational/technical school.

‐ Three groups (at least 50 people) trained in design and installation of solar PV ‐ At least 3 round tables (annual event) executed for total at least 100 participants ‐ One conference organized ‐ An intense branding strategy will be promoted to emphasize USAID’s contribution toward development of the innovative demonstrative projects.

This IEE covers all MEERP activities, that are environmentally sound designed and integrally focused on ensuring sustainable implementation of the above listed components. In case if any additional works will be necessary or new activities will be designed, an IEE amendment and/or an ERC/EMMP will need to be done.

2. Baseline Environmental Information

2.1.Locations Affected and Environmental Context.

2.1.1. Environmental Context: Moldova has an area of 33,843 square km and a population of 3,559,500 people (2012 estimate). It is located at the intersection of three bio-geographic zones: the Central-European zone, the Euro-Asiatic zone, and the Mediterranean zone. Many species typical for each of these zones are at the limit of their natural range in Moldova. The variability of the natural conditions led to heterogeneous and complicated soil coverage formation. The zonal peculiarities of the soils are represented by three types of soil: brown and grey soils, and chernozem (rich black soils). Chernozem soil dominates as it covers about three quarters of land or about 2.5 million ha, which is the main reason for the agricultural orientation of the economy. Moldovan chernozems are among the most fertile soils in the world. The country has a rich biota relative to its size, considering that the highest elevation point is only 430 m above the sea level. The country is situated in the Black Sea and Danube River Basins, with biggest rivers being Nistru, Prut, Raut, Bic, Botna and Ialpug.

According to the Second Environmental Performance Review by the United Nations Economic Commission for Europe 20143, in 2012, agricultural land in the Republic of Moldova covered 73.8 percent of the total land area.

About 2 million ha of agricultural lands are situated on slopes with a variety of degrees of inclination, making them vulnerable to degradation. Soil erosion affects about 43 percent of agricultural land to some degree although soil erosion overall is not a major risk in mildly undulating landscape that is characteristic of Moldova.

Agriculture is a minor water user as it uses only 4.6 per cent of the total abstracted water in the country.

Agricultural activities contribute to water pollution but both Nistru and Prut have adequate water quality for irrigation. Irrigation from internal rivers of Moldova is not recommended due to high salinity.

Forests cover only about 13 percent of the total area. Over half (53 per cent) of Moldovan forests are planted and almost all the rest (46 per cent) are semi-natural. There are practically no undisturbed forests in the country. Today, natural ecosystems occupy approximately 10 percent of Moldova. A significant proportion of this area is highly degraded. Native steppe and steppe associated wet meadows have been systematically converted to cropland and pasture. The number of mammals, fish and birds in the critical and dangerous situation categories increased from 64 in 2005 to 98 in 2010.

2.2. Description of Applicable Environmental and Natural Resource Legal Requirements Policies, Laws, and Regulations.

The MEERP implementation is expected to have mostly beneficial impact on all environmental compounds and especially on air pollution, local climate and greenhouse gasses emissions because it will support Moldova to reduce import and consumption of fossil energy and increase the quota of renewables. However, implementation of project’s activities must comply with requirements of the Moldova Law on Environmental Control No 1515-XII ( as amended on June 17, 2016) and must be in line with the National Environmental Strategy for the years 2014- 2023. As a signatory of the Energy Community Treaty and in line with the Accession Agreement with the EC, Moldova committed to compliance with the EU directives, including the Directive 2011/92/EC, US 22 CFR PART 216, and all environmental requirements by the International Finance Institutions (The World bank, EBRD, EIB).

The Government of Moldova has passed over 50 laws and regulations related to environmental protection and energy sector, provided below. Implementing Partners will be responsible to ensure their activities are in compliance with applicable host country policies, laws, and regulations. The Republic of Moldova seeks to align its national environmental policy with regional and international best practices and the Law on Environmental Protection confirms that international conventions and agreements take precedence over national legislation if the provisions in the international agreements are more stringent. A National Commission was established by a presidential decree (November, 1996) to oversee the implementation of the provisions of different international agreements. More information on Moldova’s international commitments can be found in UNECE Environmental Performance Reviews (http://www.unece.org/fileadmin/DAM/env/epr/epr_studies/Synopsis/ECECEP171_Synopsis.pdf, 2014). Moldova ratified most of the major international biodiversity related agreements as provided below in Table 1.

International Environmental Agreements to which Moldova is a Party Date Ratified Convention on the Conservation of European Wildlife and Natural Habitats (Bern, 1979)

23 June 1993

Convention on EIA in a Transboundary Context (Espoo, 1991) 23 June 1993 Convention on the Protection and Use of Transboundary Watercourses and International Lakes (Helsinki, 1992)

23 June 1993

UN Convention on Biological Diversity (Rio de Janeiro, 1992) 16 March 1995 UN Framework Convention on Climate Change (Rio de Janeiro, 1992) 12 June 1995

3 United Nations Economic Commission for Europe (2014). Republic of Moldova, Environmental Performance Review - Third Review. http://www.themisnetwork.eu/uploads/documents/Studies/3rd%20EPR_Moldova_ECE_CEP_171_En.pdf

UN Convention on Combating Desertification (Paris, 1994) 24 December 1998 Convention on Cooperation for the Protection and Sustainable Use of the Danube River (Sofia, 1994)

17 March 1999

Convention on the Access to Information, Public Participation in Decision Making and Access to Justice in Environmental Matters (Aarhus, 1998)

7 April 1999

Convention on Wetlands of International Importance especially as Waterfowl Habitat (Ramsar, 1971)

14 July 1999

Convention on Conservation of Migratory Species of Wild Fauna (Bonn, 1979), Agreement on Conservation of bats in Europe and Agreement on Conservation of African–Euro-Asian Migratory Water Birds

28 September 2000

Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) (Washington, 1973)

28 September 2000

Convention on European Landscape (Florence, 2000) 12 October 2000

Convention on POPs (Stockholm, 2001) 19 February 2004 Additionally, Moldova signed a number of agreements with other countries in the region to ensure mutual cooperation in the management of natural resources.

The Moldova’s Government (GoM) vision on the energy sector is reflected in the Energy Strategy of the Republic of Moldova until 2030, approved by Government Decision (GD) no. 102/2013. There are identified the strategic opportunities of the country in a rapidly changing energy context in the geopolitical space that includes the region of Central, Eastern and South Europe, Russia and the Caucasus region. The Energy Strategy of Moldova refers to 2020 as the year of full integration in the EU internal energy market. In compliance with this objective, the national legislation has to be aligned to the Energy Community’s acquis and will be convergent with the EU acquis, which must ensure the legal and regulatory compatibility with these markets. The key objectives of the Strategy are to: (i) Secure the energy supply; (ii) Create competitive markets and ensure their regional and European integration; (iii) Provide environmental sustainability and fight against climate changes. To ensure a better coordination of the implementation process for the Energy Strategy the GoM developed a dedicated road-map, including the RES and EE sub sector Action Plan and Program:

- The National Action Plan on Energy Efficiency for 2013-2015, (approved by GD no. 833 of 10.11.2011) was intended to ensure the implementation of the Law on Energy Efficiency approved in July 2010.

- The National Energy Efficiency Program 2011-2020 sets out the overall framework with long-term objectives and has to be supported/updated every three years. This Program comprises priority actions and measures aimed at reaching the intermediate objective of 9% of energy savings by 2016 and the national objective of 20% of energy savings by 2020.

In 2007, Moldova adopted the first Energy Strategy which included the Renewable Energy Sources (RES) as a reliable alternative to traditional energy supply, compensating for critical lack of traditional energy resources. The RES promotion framework was completed with the Renewable Energy Law No. 160-XVI dated 12 July 2007 that asked the ANRE to ensure the existence of a regulated tariff system for each type of renewable energy and biofuel.

Among the seven development priorities identified in “Moldova 2020” National Development Strategy, one directly refers to the energy sector and renewable energy sources: “Reducing the energy consumption via increasing energy efficiency and the use of renewables”.

The most important for the energy efficiency area is the adoption of the Law on Energy Efficiency (Law no. 142 of February 07, 2010), harmonized with EU standards. According with this Law in December 2010 was created the Energy Efficiency Agency (by Government Decision no. 1173 of 12/21/2010) – the authority responsible for energy efficiency and renewable energy sources In May 2010 Moldova joined the Energy Community Treaty (ECT) and got commitments for restructuring the local energy system and complete transposition of the energy acquis which should result in creating a favorable economic and legal framework of energy market functioning and attracting investments in this area in safe, competitive and environmentally friendly conditions.

A Memorandum of Understanding between Romania and Moldova was signed in May 2015, to define and prioritize the upcoming interconnections of power and gas systems of the two countries and ensure the access of

Moldova to the EU internal energy market. According to the Moldova –EU Association Agreement (AA), Moldova is committed to transposing 43 EU Directives and Regulations relevant to the energy sector. Out of these, 12 EU Directives and Regulations were transposed before Moldova started provisional application of the AA in September 2014, based on its commitments in the ECT. As the deadlines for the transposition of the remaining EU Directives and Regulations expired in 2017, to date most of the legal and regulatory documents are in place. Moldova needs further technical support for improving many by-laws, technical norms and methodologies in the sector.

The most important for the RES area is the adoption of the Law No. 10/2016 on Promotion of Renewable Energy Sources (the “Law on RES”), which will become effective in March 2018. The new law transposes the Directive 2009/28/CE of the European Parliament and the Council of 23.04.2009 on the Promotion of RES, confirming the alignment, long-term orientation towards a green sustainable economy and implementation of the relevant Community acquis. Hence, it stipulates the involvement of the Energy Efficiency Agency (EEA) in order to facilitate licensing procedures, the competences of other authorities and relevant institutions, authorization and certification activities in the field of energy by the ANRE, with a particular attention paid to support schemes, eligible producers, guarantees of origin, administrative procedures as well as producers’ access to the network. \

National Environmental Policies -

● The Waste Management Strategy in 2013-2027 (2013)

● The Soil Fertility Conservation and Improvement Program for 2011-2020 (2011)

● The National Ecological Network Building Program for 2011-2018 (2011)

● The National Strategy on Water Resources Development, 2011

● The Ecological Security National Program for 2007-2015 (as amended in 2009)

● The Biosafety Action Plan for 2009-2015, 2009

● The Water Supply and Sanitation Strategy for 2008-2025, 2007, 2015

Environmental Legislation -

● The Law on Strategic Environmental Assessment, 2016

● The Law on Environmental Impact Assessment #86, 2014

● The Law on Waste, 2014

● The Natural Resources Law, 1997 (as amended in 2013)

● The Environmental Protection Law, 1993 (as amended in 2012)

● The Riparian Zones Protection Law, 1995 (as amended in 2012)

● The Protected Areas Law, 1998 (as amended in 2013)

● The Environmental Impact Assessment Law, 1996 (as amended in 2011)

● The Fauna (Animal Kingdom) Law, 1995 (as amended in 2011)

● The Water Law, 2011

● The State Surveillance of Public Health Law, 2009

● The Ecological Network Law 2007 (as amended in 2010)

● The Local Green Areas Law, 1999 (as amended in 2010)

● The Plant Protection Law, 1999 (as amended in 2009)

● The Potable Water Law, 1999 (as amended in 2009)

● The Environmental Pollution Taxes Law, 1998 (as amended in 2008)

● The Biological Security Law, 2001 (as amended in 2007)

● The Air Protection Law, 1997 (as amended in 2007)

● The Flora (Vegetation Kingdom) Law, 2007

● The Red Book Law, 2005 (as amended in 2007)

● The Degraded Land Forestation Law, 2006

● The Law on Fisheries and Conservation of the Aquatic Biological Resources, 2006

● The Hydro-meteorological Activities Law, 1998 (as amended in 2005)

● The Law on Amelioration (through Afforestation) of Degraded Lands, 2000 (as amended in 2004)

● The Forest Code, 1996

Related Legislation -

● The Civil Code, 1996 (as amended in 2013)

● The Access to Information Law, 2000 (as amended in 2012)

● The Law on Industrial Safety of Industrial Dangerous Objects, 2012

● The Earth Bowels Code, 2009 (as amended in 2011)

● The Energy Efficiency Law, 2010

● The Renewable Energy Law, 2007 (as amended in 2010)

● The Radioactive Waste Management Law, 2009

● The Hazardous Substances and Product Management Law, 1997 (as amended in 2007)

● The Monument Protection Law 1993 (as amended in 2007)

● The Settlements Sanitation Concept, 2007

● Energy Strategy through 2020, 2007

● The General Product Safety Law, 2006

● The Law on Leasing, 2005

● The Law on Urban and Territorial Development Principles, 1997

● The Cadastre Law, (1998 and as amended)

Executive Branch Regulations -

● Regulations on Water Pollution Prevention caused by Agricultural Activities, 2013

● The Sanitary Protection Zones of Water Intakes Regulations, 2013

● The Collection, Treatment and Discharge of Used Waters in Sanitation System and/or in Water

Bodies Regulations, 2013

● The Solid Biofuels Regulations, 2013

● The Underground Waters Quality Regulations, 2013

● The Regulations on Monitoring of Surface and Underground waters’ State, 2013

● The State Water Cadastre Regulations, 2013

● Identification, Delimitation, and Classification of the Water Bodies Methodology, 2013

● The Regulations on Environmental Requirements for Surface Waters, 2013

● Unique window for environmental authorization for special water use Regulation, 2013

● The Regulations on requirements to the discharged used waters in the water basins, 2013

● The Evidence and Reporting of the Used Waters Regulations, 2013

● The Governmental Decision (GD) on Limits of Hydrographic Basins and Sub basins, 2013

● The Drought Management Planning Regulations, 2013

● The Waters Use for Community, Irrigation and Pisciculture Needs Regulations, 2013

● The Management of Flood Risks Regulations, 2013

● Normative acts for implementation of Plants Protection and phyto-sanitary quarantine, 2012

● Flood Protection Embankments Regulations, 2012

● Rules for notification of intercepting a cargo or a pest from abroad that represents imminent phytosanitary risk, 2012

● The Regulations on Recreational Areas near Water Basins, 2002 (as amended in 2010)

● The Polychlorinated Biphenyls Regulation, 2009 (as amended in 2010)

● Technical regulations on soil protection measures within the agriculture practices framework, 2008

● Regulations on Procedures for Establishing a Natural Protected Area, 2002 (as amended in 2006)

● The Regulation on Ecological Audit of the Enterprises, 1998 (as amended in 2006)

● The Instruction on Calculation of Environmental Pollution Payment, 2000 (as amended in 2006)

● The State Ecological Expertise Instructions, 2002 (as amended in 2006)

● Authorization of activities related to use of natural resources and environmental pollution prevention, 2005

● The GD on transportation of dangerous loads and crash consequences liquidation, 1994 (as amended in 2004)

● The Guidance on Assessing the Damage Caused to Soil Resources, 2004

● The Guidance on Assessing the Damage Caused to Atmospheric Air when Managing Production and Household Wastes, 2004

● The Scheme of Localities for Floods Protection, GD#1030, 2000 (as amended in 2003)

● The Methodology for Assessing the Environmental Damage Caused as a Result of Water Law

Breach, 2003

● The Wastes Delivery Regulations (2001)

● The Natural and Constructed Protected Areas Regulations, 2000

● The Framework Regulations on National Parks, Natural Monuments, Resource and Biosphere

Protected Areas (2000)

● The methodology to estimate the damage caused to environment as a result of underground waters pollution, 1999

● The Integrated Ecological Monitoring System Regulations, 1998

● The Pollution Prevention of Water Bodies Regulations, 1997

● The Ministry of Health Requirements for Potable Waters for Decentralized Supply, Protection of

Water Sources, and Arrangement and Maintenance of Wells (#06.6.3.18-96, 1996)

● The GD on Restoration of Degraded Lands (#404, 1994)

● Labor Safety Regulations -

● The Sanitary Regulation to Avoid Risks of Chemicals Presence at Workplace, 2013

● The GD on health safety signs at the work place, 2013

● The GD on Temporary or Mobile Building Sites, 2012

● The GD on Workers Protection from Asbestos Exposure, 2013

● The Technical Regulations on Fire Protection in the Republic of Moldova (RT DSE 1.01-2005)

● The Norms for Labor Protection Measures, 2001

2.3. Country/Ministry/Municipality Environmental Capacity Analysis:

Historically, governmental organizations have played the leading role in mitigating climate change, promoting use of renewable energy sources and ensuring biodiversity conservation in Moldova. The supreme representative body of the people and the sole legislative authority of the State in the Republic of Moldova is the Parliament. The Parliament (www.parlament.md) has the role to approve the decisions regarding ratification of or accession to international and regional treaties, approves strategies, concepts and action plans for the most important areas, including biodiversity conservation. The Parliament Commission on Environment and Climate Change is the working body of the Parliament of the Republic of Moldova - most directly related to biodiversity conservation, climate change mitigation, promotion of green economy principles and renewable energy sources.

The executive branch of the Government of Moldova (GOM) is responsible for the implementation of national and international environmental protection policies. GOM is responsible for implementing programs, strategies, concepts, and action plans adopted by the Parliament. Within the executive branch, there are several central government institutions that directly or indirectly are responsible for protecting and conserving biodiversity. In accordance with the law, the most important ecological issues will be considered by the Supreme Security Council subordinated to the President of the Republic of Moldova. All other important issues will be considered by the State Chancellery, an institution that coordinates the work of other national authorities implementing applicable laws/regulations and monitoring the implementation. The State Chancellery has the Agriculture and Environment Division.

The primary central government institutions responsible for biodiversity conservation in Moldova is the newly created Ministry of Agriculture, Regional Development and Environment (MARDE) and the Agency MoldSilva (Moldova Forest Service). The MARDE (www.mediu.gov.md & www.marde.gov.md) is the national environmental authority that develops and defines governmental policies related to the environmental protection, rational use of natural resources (including the renewable energy resources), waste management, biodiversity conservation, climate change, and state control of ecological activities. The MARDE assesses and monitors biodiversity, manages some protected areas, coordinates research, ensures cross-sectoral cooperation, monitors compliance, and develops reports on the state of the environment in Moldova. At the same time, the MARDE (together with its subordinated divisions and institutions) is the main governmental body responsible for ecological expertise and environmental impact assessment.

Institutional framework of the Energy Sector The Moldova’s energy sector including RES/EE is managed in the Ministry of Economy & Infrastructure by:

General Energy Security and Efficiency Directorate Energy Efficiency Agency

Energy Efficiency Fund State Energy Inspectorate, currently under ANRE’s jurisdiction.

Additionally, the National Agency for Energy Regulation (ANRE) is the single authority for energy sector regulation (electricity, gas, heat and renewable energy) as required by the 3rd Energy Package implemented by Moldova. The independence as well as professional, technical and regulatory skills of ANRE’s staff remains critical. The EU and other international partners have consistently insisted on ANRE’s independence. However, so far this has only led to limited commitment and engagement from the Min. of Economy & Infrastructure in solving the sector’s fundamental issues, leaving ANRE vulnerable to pressures from the public opinion as well as to political and vested interests. As a result, ANRE has not managed to properly fulfil its mandate and set appropriate tariffs in due time along the approved methodologies. As a consequence, energy operators are faced with financial difficulties which slow down the process of reform of the sector, including RES exploration. Moreover, ANRE has sometimes been tempted to modify approved tariff methodologies during their validity period (and even before their enforcement) creating legal uncertainty.

2.4. Sustainability Analysis:

It is anticipated that many project activities will not have any negative effect on the environment and human health in Moldova. While some project activities may have some effect, in most cases, this environmental/health effect is deemed being positive – as increased energy efficiency and use of renewable energy will lead to reduced energy consumption and GHG emissions for a given size of Moldova’s economy – and sustainable. In some cases, when increases in energy efficiency and/or use of RES will be impossible to achieve without physical interventions supported by USAID, USAID support will be conditional, i. e. no support will be provided without initial assessment of environmental sustainability of any significant physical intervention. The Moldova’s Energy Efficiency and Renewables Project (MEERP) will partner with Moldova’s Energy sector Regulator (ANRE), Ministry of Economy and Infrastructure, Moldova Energy Efficiency Fund, electric utilities, municipal governments, local community organizations, municipal organizations, and the private sector to achieve the stated development objectives. In order to facilitate production and speed up use of renewable energy Moldova must resolve key issues hindering the application of distributed renewable resources, including but not limited to: 1) establishment of a regulatory environment and enhanced project economics; 2) market development through demonstration projects and outreach; 3) institutional capacity building and educational programs for renewable energy deployment. The main purpose of MEERP is to assist Moldova to comply with its commitments to the Energy Community to utilize renewable resources at the level required by the EnCT acquis (up to 20%). The planned project activities significantly contribute to improving general sustainability (including key sustainability aspects: economic, financial, social, environmental, security, etc,) of the energy sector and also to building a more favorable and sustainable base for economic growth of the country and environmental protection in the region. All MEERP activities are environmentally friendly and sustainable designed, that is why its implementation will have very beneficial impact on the local climate, biodiversity conservation and people health. The pilot projects will be focused on increasing local production of renewable energy and it will have a double beneficial impact on the environment: a) from reducing quantity of fossil energy consumed and correspondingly the greenhouse gases impact on climate; and b) serve as real models for environmental education and promotion of clean production and green technologies in Moldova.

2.5. Climate Change Vulnerability Analysis.

Moldova is a small land locked country with very variable climate conditions. It has a temperate climate with short, mild winters and long, warm summers. The country has highly variable rainfall levels, and drought-like conditions are common. According to the Third National Communication of the Republic of Moldova under the United Nations Framework Convention on Climate Change :Moldova is highly sensitive to climate changes4. Impacts are expected to intensify as changes in temperature and precipitation affect economic activity. The analysis of the air annual average temperature during 2007–2010, as compared to the multiannual average, shows that this period is characterized by significant thermal anomalies, especially in 2007, which is considered to be the hottest year in the last 120 years. Socioeconomic costs of climate-related natural disasters such as droughts, floods and hailstorms are significant, and both the intensity and frequency of such events are expected to further increase as a result of

4 https://unfccc.int/resource/docs/natc/mdanc3.pdf climate change. The impacts of climate change on agriculture are of particular concern because agriculture is a major source of income and employment. The severe droughts of 2007 and 2012 impacted on more than 80 percent of the rural population depending on agriculture. Floods in 2008 and 2010 caused damage, primarily affecting rural and agricultural regions of the country, which was estimated at approximately US$42 million. The agricultural sector also contributes to greenhouse gas (GHG) emissions accounting for 17.9 percent of Moldova's GHG emissions. At regional level the recent climate changes are manifesting mostly by increasing climate variability, reflected by both: a) increase in amplitude of temperature and precipitations variations at seasonal and yearly levels and also b) by general increase of the frequency and the number of diverse weather anomalies, like: severe droughts, high temperature waves during the summer, heavy rainfalls, frosts, strong wind and hurricanes, etc.

Promoting use of renewable energy, MEERP will have a very beneficial impact on regional and local climate change because it will contribute to reducing the consumption of traditional energy from fossil sources and accordingly will reduce the air pollution and emissions of greenhouse gasses. Analysis of climate change impact will be deeply considered also in selecting pilot projects of solar energy that may be used as success stories for applying green technologies in the energy sector of Moldova.

Analysis of Potential Environmental Impact

. See Annex A: Climate Risk Management Summary Table for more information.

2.6. Component 1: Renewable Energy (RES) and Energy Efficiency (EE) Policy, Regulatory and

Utility support

Defined/Illustrative Activities

Potential Impacts

Potential Climate Risk Climate Risk Rating

Opportunities for Climate Resiliency

1.1 Renewable Energy

(RES) and Energy Efficiency (EE) Policy, Regulatory and Utility support

Potential impact to air, water, human health

Increased temperatures will reduce the energy efficiency of the power grid which may lead to increased need for cooling and a decrease in water supply and increase the potential for flooding. Disruption of infrastructure - falling power lines. Lack of water could impact hydropower supply.

Beneficial impact: Improving regulatory base for RES is a real mitigation measure for reducing the climate risk in the country because it create favorable base for reducing both: air pollution and impact to climate from the use of fossil energy.

Low MEERP will develop energy options that lower GHG emissions, increase energy efficiencies, and reduce water usage.

Upgrading the power system will advance energy security for Moldova and the region and allow opportunities for economic growth.

2.7. Component 2: Demonstration Projects

Defined/Illustrative Activities

Potential Impacts

Potential Climate Risk Climate Risk Rating

Opportunities for Climate Resiliency

2.1 Demonstration

Projects – including:

Selection of Projects Sites, Design, Installation, Commissioning, Monitoring and Maintenance

Potential impacts on land, water, air, biodiversity and human health

Increased temperatures will reduce the energy efficiency of the power grid which may lead to increased need for cooling and a decrease in water supply and increase the potential for flooding.

Disruption of infrastructure - falling power lines. Lack of water could impact hydropower supply.

Low MEERP will develop energy options that lower GHG emissions, increase energy efficiencies, and reduce water usage. Upgrading the power system will advance energy security for Moldova and the region and allow opportunities for economic growth. The pilot projects design process should consider collection of monitoring and maintenance data for project evaluation and to do outreach for Component

3. The site selection will develop criteria to avoid sensitive environmental areas (like: natural reservations, waterways, wetlands, bird’s migration corridors) and also areas impacted by severe weather anomalies, like strong wind and hurricanes.

2.8. Component 3.: Title Market Development and Outreach

Activities

Potential Impacts

Potential Climate Risk Climate Risk Rating

Opportunities for Climate Resiliency

3.1. Market

Development and Outreach

No adverse impacts are likely

N/A N/A N/A

3. Recommended Environmental Actions

3.1 Recommended Mitigation Measures

Component 1 – Title Renewable Energy (RES) and Energy Efficiency (EE) Policy, Regulatory and Utility support

Defined/Illustrative Activities

Potential Impacts Mitigation Measures Recommended Threshold Determination

1.1 Renewable

Energy(RES) and Energy Efficiency (EE) Policy, Regulatory and Utility support

If improperly developed or implemented the new regulatory framework for the energy efficiency and RES may have some potential impact to air, water, soil, biodiversity, human health

As required by the ECT and Moldova –EU Association Agreement the new regulatory framework has to be aligned with the EU Directives in the sector.

Environmental Impact Assessment protocols will be followed per Local Moldova law and in Compliance with the EU directive 2011/92/EC on assessment of the effects of certain public and private projects on the environment, and with the EU Directive 2010/75/EU on industrial emissions, integrated pollution prevention and control

Negative Determination with Conditions

Component 2 – Demonstration Projects

Activities

Potential Impacts Mitigation Measures Recommended Threshold

2.1 Demonstration

Projects – including:

Selection of Projects Sites, Design, Installation, and Commissioning, and Monitoring and Maintenance

If improperly selected the projects sites may have potential impacts on land, water, air, biodiversity and human health

Selection of the pilot project sites as well as the selection of the equipment to be installed will be done with close consideration of environmental protection criteria.

The equipment will be procured only from certified vendors and installed by authorized specialists.

Prior to initiating activities that have the potential to result in significant adverse environmental, health, and safety impact, the IP shall prepare an ERC/EMMP(s) in the format provided in the Annex 1 of this IEE. The COR/AOR, MEO, and BEO shall approve the ERC/EMMP(s) prior to implementation. For each site-specific activity, the ERC/EMMP shall be attached to the signed Certification of No Adverse or Significant Effects on the Environment (See ERC/EMMP Annex 1). This should be signed by the IP, COR/AOR, MEO, and

BEO.

Negative with Conditions

3.2. Recommended Environmental Determination:

Categorical Exclusions:

A categorical exclusion is recommended for the following identified activities under 22 CFR 216.2(c)(2): Activity

3.1 Market Development and Outreach under §216.2(c)(2)(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.);

Negative Determination with Conditions:

Under §216.3(a)(2)(iii), a negative determination with conditions is recommended for activities 1.1, 2.1, 2.2 and

2.3. Specific terms and conditions are presented below in Section 3.3.

3.3. Terms and Conditions:

3.3.1. For the activity 1.1 Renewable Energy (RES) and Energy Efficiency (EE) Policy, Regulatory and Utility support: Environmental Impact Assessment protocols will be followed per Local Moldova law and in Compliance with the EU directive 2011/92/EC on assessment of the effects of certain public and private projects on the environment and with the EU Directive 2010/75/EU on industrial emissions, integrated pollution prevention and control. This information will be shared with the MEO and BEO for adequacy at least annually.

3.3.2. For activity2.1 Demonstration Projects – including: Selection of Projects Sites, Design, Installation, and Commissioning, and Monitoring and Maintenance Selection of the pilot project sites as well as the selection and procurement of the equipment to be installed will be done with close consideration of environmental protection criteria. The design works for the pilot projects and also the equipment installation must be done only by certified specialists.