Attachment J.3 Initial Environmental Examination - Power Tunisia-signed.pdf

ME 21-55

INITIAL ENVIRONMENTAL EXAMINATION

ACTIVITY DATA

Activity Name: Power Tunisia Geographic Location(s) (Country or Region): Tunisia Amendment (Yes/No), if Yes indicate # (1, 2...): No Implementation Start/End Date (FY or M/D/Y): FY 2022- FY 2027 If Amended, specify New End Date: N/A Solicitation or Award Number(s): TBD Award Type: Cost Plus Fixed Fee Contract Implementing Partner(s): TBD Bureau Tracking ID: ME 21-55 Tracking ID of Related RCE/IEE (if any): N/A Tracking ID of Other, Related Analyses: ME 21-05

ORGANIZATIONAL/ADMINISTRATIVE DATA

Implementing Operating Unit: USAID/Tunisia Other Affected Operating Unit(s): N/A Lead BEO Bureau: USAID/Middle East Original Funding Amount: $60,000,000 If Amended, specify funding amount: N/A If Amended, specify new funding total: N/A Date Prepared: August 13, 2021

ENVIRONMENTAL COMPLIANCE REVIEW DATA

☒Environmental Examination

Analysis Type:

☐Deferral Environmental Determination(s):

☒Categorical Exclusion(s) ☒Negative (with conditions) ☐Positive ☐Deferred (per 22 CFR 216.3(a)(7)(iv)

IEE Expiration Date (if applicable): FY 2027 Additional Analyses/Reporting Required:

Climate Risks Identified (#): Low ___6___ Moderate ___10___ High ___#___ Climate Risks Addressed (#): Low ___6___ Moderate ___10___ High ___#___

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

1.0 ACTIVITY DESCRIPTION

1.1 PURPOSE 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 further supplemental analyses as the activity is developed.

Upon approval, these determinations become affirmed, and specified conditions become mandatory obligations of implementation.

This document provides an initial analysis for known activities and instructions for implementation. As applicable, requirements are specified for supplemental analyses and screening when context and activity specific information become available.

This IEE is a critical element of USAID’s mandatory environmental review and compliance process meant to achieve environmentally sound design and implementation.

It also documents the results of the Climate Risk Management process in accordance with USAID policy (specifically, ADS 201mal).

1.2 ACTIVITY OVERVIEW

The USAID Power Tunisia Activity seeks to advance self-reliance in Tunisia by strengthening the country’s institutional capacity to manage, operate, and maintain a modern, diversified and financially sound power system. The activity has the following core objectives: Strengthening sector performance, Diversifying and securing supply, and Promoting advanced technology pilots and partnerships. Through this activity, USAID seeks to contribute to the following high level results planned for Tunisia’s energy sector: Increase domestic electricity production from renewable sources to 30 percent by 2030; Reduce energy demand by 30 percent by 2030;

Lower the carbon intensity across all sectors by 41 percent by 2030 (which supports Tunisia in meeting its climate NDC); Reduce electricity losses; Increase private-sector-led investment and innovation; and Reduce energy deficit.

1.3 ACTIVITY DESCRIPTION

Table 2 below summarizes the illustrative activities and sub-activities envisioned under Power Tunisia. Comprehensive descriptions follow.

TABLE 2: DEFINED OR ILLUSTRATIVE ACTIVITIES AND SUB-ACTIVITIES

Activity 1 — Strengthening Sector Performance Sub-activity 1.1: Utility Modernization 1.1.1: Reduction of Commercial Losses and Increased Payment 1.1.2: Integrating Technological Improvements 1.1.3: Expanding Women’s Participation in the Workforce 1.1.4: Increased Organizational Capability Sub-activity 1.2: Catalyze Energy Efficiency Market Transformation 1.2.1: Effective Energy Transition Fund 1.2.2: Enhanced Energy Efficiency Standards 1.2.3: Improved Energy Efficiency Construction Sector Planning, Design and Code Enforcement

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

1.2.4: Industrial Sector Productivity Sub-activity 1.3: Regulatory Authority Support Activity 2 — Diversifying and Securing Supply Sub-activity 2.1: Renewable Energy Generation Increased 2.1.1: Renewable Energy Regime Implementation Improved 2.1.2: Renewable Energy Integration to the Electricity Grid

2.1.3 : Green Hydrogen Development Activity 3 — Promoting Advanced Technology Pilots and Partnerships Sub-activity 3.1: Pilot or scale private sector interventions Sub-activity 3.2: Test and deploy new decarbonization technologies and/or business models Sub-activity 3.3: Design and renovate existing building(s) to achieve a net-zero energy performance Sub-activity 3.4: Workforce education to achieve deep decarbonization

Power Tunisia has three core activities:

Activity 1: Strengthening Sector Performance Activity 2: Diversifying and Securing Supply Activity 3: Promoting Advanced Technology Pilots and Partnerships.

All of the Contractor’s activities must be approved by the COR prior to implementation.

Activity 1: Strengthening Sector Performance

Sub-activity 1.1 - Utility Modernization

The Contractor must provide technical assistance and capacity building to strengthen sector performance and reliability of the utility system through modernizing efforts, including reducing technical and commercial losses, integrating technological improvements and efficiencies, and adopting efficiencies, best practices, and organizational changes. The Contractor must also advise the Tunisian Company of Electricity and Gas (STEG) on advanced utility business models to achieve expected results.

1.1.1 Reduction of Losses and Increased Payment. The Contractor must, at a minimum, perform the following during the Base Period:

● Identify the sources of technical losses, and procure and install selected equipment to reduce losses and improve the reliability of service over time.

● Building on the existing World Bank commercial loss reduction strategy, provide technical support to regularize the different segments of non-paying customers. ● In coordination with other donors (e.g. AFD), assist STEG to map customer meters and other distribution assets and identify improvements to smart metering programs that can be adopted to improve loss reduction and improve cost recovery.

● Train STEG on loss reduction strategies, including topics such as loss analytics, strengthening utility business processes and procedures, ICT systems, customer regularization, theft reduction, community engagement, utility business models and human resources practices.

1.1.2 Integrating Technological Improvements. In coordination with the World Bank, other donors, and STEG, the Contractor must perform the following interventions and/or complete the output/deliverables during the Base Period:

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

● Create a digital lab to pilot the interplay of new technologies in a safe environment before recommending installation on the grid.

● Develop a cybersecurity needs and resilience plan to assess system vulnerabilities and cybersecurity needs.

● Perform at least three (3) scenarios to model and test the adoption of modern technologies to reduce technical and commercial losses.

The following must, at a minimum, be completed during the Option Period:

● Procure and install a Metering Data Management System to perform long-term data storage and management for the vast quantities of data delivered by smart metering systems for STEG.

● Digitize STEG high-medium voltage to medium-low voltage in at least two substations, including the procurement and installation of vital equipment.

1.1.3 Expanding Women’s Participation in the Workforce. The following must be completed during the Base Period:

● Conduct a gender assessment of the energy sector, including an organizational review of all key energy sector organizations that will participate in USAID Power Tunisia, including STEG, and relevant government ministries and regulatory bodies, as well as a gender assessment of all other components. Using lessons learned from USAID’s Engendering Utility activity, in alignment with USAID’s ADS 205.3.2 methodologies, and in coordination with STEG and energy sector leadership, this assessment will identify key gender gaps, barriers to gender equality in the energy sector, and recommendations for priority areas of intervention. The project must consider the full employee life cycle from recruitment and talent outreach to separation and retirement including leadership training and professional development opportunities such as internships and fellowships that may help to further the development of female employees. Recommendations must be made across all other components of this activity and presented to the assessed organizations.

During the Option Period, the Contractor must at a minimum, conduct the following:

● Collaborate with the Engendering Utilities Activity and USAID gender experts to design and implement at least one Engendering Accelerated Course for Tunisian energy sector stakeholders in order to design, implement and monitor gender action plans for all major energy stakeholders and relevant private sector companies, including SMEs.

1.1.4 Increased Organizational Capability. During the Option Period, the Contractor must provide capacity building (via training or other) to implement recommended reforms to improve the financial viability of STEG. All human resource and organizational change interventions will focus on gender equitable approaches to ensure women are provided opportunities and that gender considerations are understood and addressed. This includes collaboration with EBRD to support STEG’s financial unbundling if applicable.

Sub-activity 1.2 - Catalyze Energy Efficiency Market Transformation

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

Under this sub-component, the Contractor must provide technical support to catalyze and transform energy efficiency in order to contribute to the NDC’s commitment to achieve a reduction in primary energy demand by 30 percent by 2030.

1.2.1 Effective Energy Transition Fund (ETF). The Contractor must, at a minimum, provide the following during the Base Period:

● Assist and advise the National Agency for Energy Conservation (ANME) staff to estimate energy savings opportunities to prioritize roll-out of policy, enforcement, resource allocation, and funding required for private and public sector in order to achieve 30% primary energy reduction.

● Assist ANME to develop a national energy consumption survey to estimate energy savings opportunities and to assess economic and social benefits of energy efficiency measures.

● Evaluate and advise the government on how the ETF can be leveraged to design innovative financial incentive programs to accelerate penetration of efficient and smart devices. Potential mechanisms to consider may include, but are not limited to: Revolving Fund; Utility Demand Side Management; Utility EE Standard Offer; Super Energy Service Companies, etc.

The following must be completed during the Option Period:

● Assist the anticipated new Regulatory Authority to integrate energy efficiency and demand response as energy resources in national energy planning.

● Assess the best regulatory mechanisms for implementing the energy efficiency and demand response resources identified.

1.2.2 Enhanced Energy Efficiency Standards. The Contractor must, at a minimum, perform the following during the Base Period:

● Provide technical assistance to ANME to revise current energy efficiency standards and labeling, including air conditioning.

● Increase ANME’s capacity to monitor, verify and enforce standards and labeling regulations to prevent inefficient equipment from entering the Tunisian market.

The following must be performed during the Option Period:

● Strengthen ANME’s capacity to monitor, verify and enforce regulations, including training for relevant stakeholders.

● In collaboration with ANME, develop educational and awareness campaigns to further program results and disseminate such educational campaign messages online. These campaigns must include creative gender-informed community-based outreach strategies that focus on demand-side management to encourage energy savings.

1.2.3 Improved EE Construction Sector Planning, Design and Code Enforcement. The Contractor must, at a minimum, perform the following tasks during the Base Period:

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

● Partner with at least two cities to improve the compliance of building code implementation by providing training, developing tools and establishing verification and enforcement procedures within the Tunisia local government context.

● Propose updates to the existing building code and develop a roadmap of targets to further increase code stringency to reach net zero energy buildings and low carbon building construction in the medium term. Engage with local and national government agencies and industry stakeholders to define the targets and work toward adoption of the roadmap.

● Increase the Tunisia Green Building Council’s capacity to advocate, train and certify green buildings by enhancing their communication tools, sharing international and local best practices and providing training on rating tools that recognize achievements in energy efficiency and sustainable building performance.

The following must, at a minimum, be completed during the Option Period:

● Collaborate with ANME to develop training and tools to duplicate building code models throughout the country.

● Continue to engage with stakeholders for the adoption of the net zero energy and low carbon building code roadmap by more actors.

● Assist in assessing the energy performance of buildings in one sector (office, hotel, etc.).

● Develop a recognition award program for buildings meeting best in class by sector to be awarded annually in one national conference.

1.2.4. Industrial Sector Productivity. The Contractor must address the lack of investment in energy efficiency by large energy users and develop a strategy to accelerate implementation, including setting sectoral energy savings targets. To achieve this, the Contractor must, at a minimum, conduct the following during the Base Period:

● Develop cost-effective approaches to increase industrial energy productivity that complement the ANME Industry Action plans and that address energy efficiency investment barriers across the industrial sector.

● Identify at least 2 sectors with high energy efficiency potential (e.g. cement, textiles) and assist in demonstrating the cost benefits of investing in energy efficiency. ● Assist ANME to set energy performance targets, track plant’s energy productivity progress toward these targets, and provide guidance to ANME on how to formulate potential incentives for further uptake of energy efficiency investment in these industrial sectors.

● Conduct at least 3 different trainings to train at least 50 professionals, including women participants,on cost-benefit tools, energy management system and decarbonization strategies (electrification, circular economy, material efficiency, hydrogen, carbon capture and storage).

The following must be completed during the Option Period:

● Expand the assistance provided in the base period to cover one additional sector.

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

● Create a web-based platform to exchange lessons learned and best practices in industrial energy efficiency investment.

Sub-activity 1.3 - Regulatory Authority Support.

The Contractor must provide technical assistance to the Ministry of Industry, Energy and Mines in the formation of an independent Regulatory Authority for the electricity sector, including but not limited to the formulation of an institutional and legal framework for, and capacity building of, such Regulatory Authority.

As private developers of renewable energy emerge, creating a regulatory authority has become a priority to help foster an attractive and transparent climate for investors in Tunisia. ANME, with the assistance of the United Nations Development Programme, has carried out a series of studies which included an evaluation of the current institutional and regulatory framework, a benchmark report comparing Tunisia’s regulation and arbitration of the renewable electricity sector with relevant foreign experiences, and a proposal for an institutional and legal framework for the mechanism. These three studies led to the preparation of a draft law to set up an independent regulatory authority for the electricity sector in Tunisia and may eventually lead to the law’s adoption. New regulators are in need of significant assistance in order to form the organizational structure of the agency, recruit and hire staff, build up their capacity to issue tariff orders, regulate the sector particularly with regard to the new renewable energy IPPs, support on a cost of service study, and be exposed to global best practices from regulators around the world.

Specific services to be provided under this sub-component will be developed in collaboration with the Government of Tunisia and set forth in the work plan.

Base Period Expected Results:

● Institutional and legal framework for an independent regulatory authority for the electricity sector established.

● Knowledge of the new regulatory authority staff on tariff setting, cost of service analysis, and global tools to promote renewable energy and energy efficiency enhanced.

The following must be completed during the Option Period:

● Build consensus on cost allocation and tariff methodology.

● Analyze, review, and develop updated tariff methodologies that include incentives to promote and integrate renewable energy sources.

Activity 2: Diversifying and Securing Supply

Sub-activity 2.1: Renewable Energy Generation Increased

The Contractor must provide technical advisory services to the GoT and private sector to increase renewable energy generation. Such technical advisory services must include support to enhance the Government of Tunisia’s Renewable Energy (RE) Regimes, and improve RE integration into the grid system, as well as robustly consider and address social risks and negative consequences.

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

2.1.1 RE Regime Implementation Improved. To achieve improved RE regime implementation, the Contractor must, at a minimum, perform the following services:

● Conduct at least 5 feasibility studies for new renewable energy sites identified in coordination with the government to enable access to additional data and information for potential bidders in RE regime procurements. As part of the feasibility studies, conduct an assessment of social impact with recommendations for inclusive community engagement.

● Provide the government auction/competitive procurement design support under the authorization and concession regimes such as: creating auction rules, guidelines, and schedules, and providing legal or financial advisory support for drafting or revising key contractual documents..

● Provide financing and transaction advisory expertise to private companies interested in the authorization and concession regimes to transition from initial interest to an operational status.

● Develop a compensation regime for distributed solar, such as net metering or net billing under the self-production regime.

The following must be completed during the Option Period:

● Conduct at least 3 additional feasibility studies for new renewable energy sites identified by the government for potential bidders to enable them to have more information on site conditions.

2.1.2 RE Integration to the Electricity Grid. The Contractor must, at a minimum, perform the following during the Base Period:

● Conduct a grid integration study to inform other grid integration activities. The study must include one or more of the following three core studies: capacity and transmission expansion study, power flow study, or production cost modeling.

● Provide technical support to power sector stakeholders for the development of distributed PV through distribution grid impact studies.

● Develop a regulatory framework in partnership with key stakeholders for deploying EVs, taking into account various considerations such as vehicle technology, charging infrastructure, interconnection, market and policy.

The following must be completed during the Option Period:

● Create services and products that educate banks and financial institutions about the viability of renewable energy and foster RE deployment such as RE lines of credit and credit enhancement products. There are multilateral organizations involved in this space such as AFDB, and the Contractor is encouraged to partner with applicable entities to leverage resources.

● Provide assistance with developing technical codes, standards and interconnection processes to ensure safety, power quality, reliability, and transparency for all stakeholders with regard to distributed PV.

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

● Provide modeling support to evaluate power flow, backfeed power, voltage regulation on distributed PV and other distributed energy resources, such as electric vehicles (EVs).

2.1.3 Green Hydrogen development: The Contractor must, at a minimum, complete the following during the Base Period:

● Identify potential opportunities for partnering Tunisian institutions with relevant U.S.

institutions and utilities to build the capacity and growth of the Tunisian green hydrogen market.

● Conduct training and other capacity building activities for key power sector stakeholders on green hydrogen knowledge and tools including hydrogen storage, fuel cell technologies, safety, codes and standards, and the potential role of hydrogen in achieving decarbonization goals and NDC goals.

The following must be completed during the Option Period:

● Building off the above referenced GIZ study, conduct an in-depth study of topics such as the technical potential of hydrogen, geographic distribution in relation to demand, techno-economic analyses to inform economic potential in various sectors. ● Provide technical support to develop safety codes and standards for hydrogen systems.

Activity 3: Promoting Advanced Technology Pilots and Partnerships

The Contractor must facilitate partnerships with the private sector to scale renewable energy, energy efficiency technology, net-zero energy construction, and pilots. This work builds off of and accompanies the technical assistance provided as part of Components 1 and 2.

The Contractor must work through these partnerships to pilot, operationalize, showcase and promote advanced technologies, approaches and other opportunities in the development and implementation of innovative solutions that contribute to the energy sector (Pilot Projects). For example, the Contractor may partner with the private sector on the development or construction of renewable energy technology to demonstrate cutting-edge technologies and their applicability for the Tunisian electricity system. Pilots within the building sector must promote the transition toward net-zero energy buildings. The Contractor must collaborate with local partners in the design, construction, operation and verification processes to implement such Pilot Projects.

In order to promote innovative technologies and advanced design practices, and to drive public policies and programs in the design and construction of energy efficient buildings, the Contractor must develop case studies or similar tools and guides to be shared among industry market players based on these Piloted Projects. The Contractor must promote these tools to such entities as: national and local governments, utilities, and building professionals and establish networking groups or similar forums to regularly share such information.

The Contactor is highly encouraged to partner with local, new and/or underutilized partners and must mobilize private capital and expertise from local and international stakeholders to implement interventions or approaches that contribute the activity’s desired outcomes, and follow the principles below:

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

1. Clear and transparent criteria and procedures. The Contractor must establish clear and transparent criteria and procedures in selecting partners, making funding decisions, and assessing impact.

2. Catalytic Impact. Proposed projects must showcase outcomes that can accelerate private sector growth in the energy sector in the absence of U.S. Government assistance.

3. Leverage. The Contractor must seek to leverage USAID resources with private sector capital and expertise at a minimum ratio of 1:1.

4. Crowd-in the private sector. Proposed projects must incentivize broad private sector participation and avoid market distortions that substitute or displace the private sector.

Expected Results:

● At least $10,000,000 in private sector investment mobilized for the energy sector. ● Partner with at least 10 local new and/or underutilized partners to pilot or scale private sector interventions.

● At least two new decarbonization technologies and/or business models tested and deployed.

● In partnership with the private sector, at least one new building will have been designed and executed or an existing building retrofitted to achieve a net-zero energy performance standard (ie. Zero Energy Certification by International Living Future Institute or similar certification.) The building will report at least one year of operational energy use data to the certifying body.

● Pilot Projects foster workforce education, support creation of high road jobs, and demonstrate credibility to related policy efforts to achieve deep decarbonization. Pilots share examples of: design methods; cost and financing models; and contract processes which can be replicated and scaled across Tunisia.

TABLE 2: DEFINED OR ILLUSTRATIVE ACTIVITIES AND SUB-ACTIVITIES

Activity 1 — Strengthening Sector Performance Sub-activity 1.1: Utility Modernization 1.1.1: Reduction of Commercial Losses and Increased Payment 1.1.2: Integrating Technological Improvements 1.1.3: Expanding Women’s Participation in the Workforce 1.1.4: Increased Organizational Capability Sub-activity 1.2: Catalyze Energy Efficiency Market Transformation 1.2.1: Effective Energy Transition Fund 1.2.2: Enhanced Energy Efficiency Standards 1.2.3: Improved Energy Efficiency Construction Sector Planning, Design and Code Enforcement 1.2.4: Industrial Sector Productivity Sub-activity 1.3: Regulatory Authority Support Activity 2 — Diversifying and Securing Supply Sub-activity 2.1: Renewable Energy Generation Increased 2.1.1: Renewable Energy Regime Implementation Improved 2.1.2: Renewable Energy Integration to the Electricity Grid

2.1.3 : Green Hydrogen Development Activity 3 — Promoting Advanced Technology Pilots and Partnerships Sub-activity 3.1: Pilot or scale private sector interventions

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

Sub-activity 3.1: Test and deploy new decarbonization technologies and/or business models Sub-activity 3.1: Design and renovate existing building(s) to achieve a net-zero energy performance Sub-activity 3.1: Workforce education to achieve deep decarbonization

Will this Activity involve construction1 as defined by ADS 201 and 303? Yes ☒ No

☐ Construction under Power Tunisia includes, but is not limited to, the following:

a) Assessment of new buildings: The Contractor will assess and identify a list of near term, new build plan to integrate best in class energy efficiency improvements. b) Retrofits for Existing Buildings: The Contractor will carry out a portfolio-wide analysis of existing municipal building stock and also identify the best opportunities for net-zero energy and/or deep energy retrofits for existing buildings.

c) Solar PV for Buildings: The Contractor will identify opportunities to design and carry out the installation of PV solutions. In concert with installing solar PV solutions, the Contractor could work one-on-one with recipient entities to familiarize them with the technical, legal, and financial aspects of solar PV or to provide youth education around renewable technologies in the case of underserved communities.

d) Electricity Equipment Installation: The Contractor will identify opportunities to procure and install equipment to reduce losses, manage peak demand, and promote the adoption of clean and low-cost technologies.

2.0 BASELINE ENVIRONMENTAL and SOCIAL INFORMATION

2.1 LOCATIONS AFFECTED AND SOCIAL-ENVIRONMENTAL AND SOCIAL CONTEXT

(ENVIRONMENT, PHYSICAL, CLIMATE, SOCIAL, THREATENED AND ENDANGERED SPECIES)

Geography. Tunisia's total land area of approximately 164,000 km2, consists primarily of cultivated land (32%), forests (13%), wetlands (5%), urban land (0.5%), and unexploited land (50%). The desert comprises between 33% and 40% of the latter. The northern topography is mountainous, and the central area is dry plain. The southern area of the country is dry, barren desert.

Ecoregions of Tunisia include:

● Temperate coniferous forests;

● Mediterranean forests, woodlands, and scrub;

● Desert and Xeric shrublands;

● Grasslands and savannas (including flooded areas);

● Marine and freshwater biomes.

(Sources: World Bank Climate Profile https://climateknowledgeportal.worldbank.org/country/tunisia]; World Atlas -https://www.worldatlas.com/articles/ecological-regions-of-tunisia.html)

1 Construction, as defined by ADS 201 and 303, includes: construction, alteration, or repair (including dredging and excavation) of buildings, structures, or other real property and includes, without limitation, improvements, renovation, alteration and refurbishment. The term includes, without limitation, roads, power plants, buildings, bridges, water treatment facilities, and vertical structures. In the box below, describe any construction planned for this Activity. Refer to ADS 201maw for required Construction Risk Management procedures.

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

Climate. Tunisia's northern mountainous region has a Mediterranean climate with mild, rainy winters and hot, dry summers. The south has a hot, dry, and semiarid climate as it enters the Sahara Desert, while the eastern coastal border has an arid steppe climate. following climatic zones: humid to sub-humid in the extreme north; sub-humid to semi-arid in the northwest and the Cap Bon region; semi-arid to arid in central Tunisia; and desert in the south (Sources: World Bank Climate Change Knowledge Portal, climatelinks.org)

Rainfall in Tunisia varies by region, with average annual rainfall at 158 millimeters (mm) per year for the whole country, but less than 100 mm annually in the south and over 700 mm annually in the north. Average temperatures also vary seasonally and regionally; in the northern coastal region temperature ranges from a low of 10°C in the winter months (December to February) to a high of 27°C in the summer months (June-August), while in the central western and southern regions temperature ranges from a winter low of 11°C to a summer high of 32°C.

In the southern semi-arid to arid areas, drought can be frequent, while the coastal region experiences floods. Although information on the rate of sea level rise varies, coastal areas are already experiencing salinization from sea level rise (USAID, Tunisia Climate Risk Profile)

Tunisia is one of the countries most exposed to climate change in the Mediterranean. The main risks the country is likely to confront are temperature increases, reduced precipitation, rising sea levels and escalating extreme weather phenomena (floods and droughts). These risks are likely to result in major environmental and socio-economic vulnerability that will particularly affect water resources, agriculture, natural and artificial ecosystems, the coastline, health and tourism (World Bank Climate Change Knowledge Portal). Tunisia’s agriculture sector - which is largely in coastal areas - is threatened by sea level rise and variability in temperatures and precipitation, which may lead to decreased crop yields, increased water scarcity, reduced water quality, and changes in growing season.

Biodiversity. Protected areas cover around 6% of the total land area in Tunisia. There are currently 44 designated sites, including 17 national parks and 27 nature reserves.Tunisia contains over 7,200 terrestrial and marine animal and plant species, including 165 endemic species/varieties of flora, 24 species that are quite rare, and 239 that are rare. More than 200 animal and plant species are listed in the IUCN Red List of rare and endangered species for Tunisia. Tunisian flora comprises 2,162 species, of which 2103 species are distributed among 115 families and 742 genera. Mammalian diversity comprises 11 large mammals, including the wild boar, Barbary deer, Barbary sheep, 4 distributed species of gazelles, addax antelope and oryx, and water buffalo. Carnivores are represented by 15 species (civet, mongoose, weasel, zorille, otter, striped hyena, golden jackal, red fox, Rüppell's fox, fennec fox, serval, lynx, caracal). The number of bird species reported in Tunisia is in the order of 398. (Convention on Biological Diversity, https://www.cbd.int/countries/profile/?country=tn#:~:text=The%20national%20study%20on%20b iological,and%20239%20that%20are%20rare).

Demographic & Economic Information: Tunisia hosts a modest population of approximately

11.7 million inhabitants. The vast majority of the country lives in the more hospitable northern half of the country, and although the current demographic composition shows a high percentage of young people, Tunisia is trending toward a more traditional demographic breakdown representative of a lower fertility and mortality rates, a rising median age, longer life expectancy;

a positive marker that is uncommon among Tunisia's regional neighbors.

Significant unemployment--particularly for the large youth population--persists as a challenge;

this served as a root factor in the Arab Spring uprising in 2011. However, over the longer term

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

the demographic shift can help ameliorate some of the employment pressure the country faces, though even prior to any impacts felt from the COVID-19 global pandemic, there economic growth hurdles that needed to be cleared; Tunisia's economy grew by only 1.1% over the first half of 2019, a reduction from the greater than 2% growth experience in each of 2017 and 2018.

Tunisia's economy comprises agriculture (10% of Gross Domestic Product [GDP]), industry (26% of GDP, 15% of which is from the tourism and phosphate industries), and other services sectors (63% of GDP) comprising the rest.

2.2 APPLICABLE AND APPROPRIATE PARTNER COUNTRY AND OTHER INTERNATIONAL

STANDARDS (E.G. WHO), ENVIRONMENTAL AND SOCIAL LAWS, POLICIES, AND

REGULATIONS

Applicable National Strategic Plans Include:

National Strategy for the Green Economy [Arabic] (2016-2036): Unified national strategy to stimulate green economic growth.

● The four core principles of the strategy include:

o Development of strong, inclusive, innovative green economy;

o Reduction of unsustainable use of natural resources and overuse of systems that have a negative impact on climate change;

o Adoption of integrated, decentralized, participatory governance of green growth;

o Promotion of resilience and improved quality of life for citizens.

● The strategy is also oriented around nine “strategic axes”:

o Improved efficiency in natural resource use, reduction of pollution, promotion of sustainable production;

o Ensured supply of potable water and sanitation for all citizens;

o Elimination of waste through improved recycling programs to reduce greenhouse gas emissions;

o Safeguard forests and pastoral resources to counter the effects of climate change;

o Reduce economy’s dependence on fossil fuels;

o Advance industrial sector through investment in clean energy and technology;

o Improved quality and performance of public transport;

o Promotion of energy efficiency; and o Promotion of sustainable tourism.

Tunisia Renewable Energy Action Plan 2030 (2016-2030)

● Formulated to support the implementation of Law No. 2015-12 dated 11 May 2015 relating to the electricity generation from renewable energies. The Action Plan presents short and medium term action items for overcoming barriers to the development of renewable energy projects, and is organized into six thematic categories: o Concession regime o Authorization system o Self-production regime o Financing of the Tunisian Solar Plan o Land o Governance of the Tunisian Solar Plan

Tunisia Integrated Regional Development Program (PDRI French acronym) ● Launched in 1984 by the Regional Development General Commission (CDGR French acronym) as a replacement for the Regional Development Program.

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

● Geared towards alleviation of poverty and regional asset imbalances (through initiatives like increasing sustainability and improving agricultural outputs for farmers) ● SDGR studies available here (French)

● Mid-term evaluation of projects in first tranche of the program available here (French) o

Completion Report of Phase One (English) o Announcement of Phase Three (2018, English)

Applicable Tunisian National Policies, Laws, and Regulations include: Tunisia’s Constitution of 2014 provides additional support to environmental management, health, and sustainable development. The preamble addresses the importance of reserving a healthy environment and ensuring the sustainability of natural resources for future generations. Articles 44 and 45 provide further specifics, including the guaranteed right to water, the duty of the state and society to conserve and rationally use water, the duty of the state to guarantee “the right to a healthy and balanced environment and the right to participate in the protection of the climate,” and the duty of the state to “provide the necessary means to eradicate pollution of the environment.” Article 40 also calls for all citizens to “have the right to decent working conditions.”

Law No. 88-91 of 2 August 1988: This law created the National Environmental Protection Agency and establishes the responsibilities of the Agency. Conditions for the application of requirements of this law are to be delineated in associated decrees. Requirements of the law include:

● Article 5: The Agency reviews and approves environmental impact studies for any industrial, agricultural, or commercial activities that pose environmental risks. ● Article 6: As a part of the Agency’s interventions to protect the environment, the Agency has the authority to enter into agreements with organizations or companies in order to establish programs for the elimination of pollutant discharges. Allows for tax benefits and financial assistance for organizations or companies entering into such agreements, the conditions/details of which would be fixed through a decree.

● Article 8: Natural or legal persons (including industrial, agricultural, and commercial establishments) that endanger the environment or create environmental pollution through solid, liquid, gaseous, or other releases are required to eliminate, reduce, or recover their discharges, as well as repair the resulting damage.

Law 75-16 of 31 March 1975 (Water Code): Foundational legislation for water quality and standardization

● Decree 85-56 of 2 January 1985: Sets industrial effluent standards.

● Decree No. 2005-1991 relating to the environmental impact study and fixing categories of units subjected to the environmental impact study and categories of units subjected to the specification (2005): Sets standards for environmental impact studies

Law No. 88-20 revising the Forest Code (1988): The Tunisian Forest Code was overhauled in April 1988 through Law No. 88-20. Since 1987, there have also been efforts to develop a national reforestation and soil protection strategy, implementation of which began in 1990 with a significant increase in the national budget for forestry.

Law No. 91-39 relating to the fight against calamities, their prevention and the organization of relief (1991): Establishes protocol for disaster planning, including delegating responsibilities

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

between regional and national governments, and establishing the right to requisition people and resources.

Law No. 95-70 on the conservation of water and soil (1995): Establishes the rights and responsibilities of Tunisians as it relates to water. Specifically geared towards limiting negative impacts of erosion and silting of waterways.

Law No. 96-41 of June 10, 1996 on waste and the control of its management and disposal (1996): Addresses: packaging waste; the deposit of waste in landfills; waste management and disposal; hazardous waste; export, import and transit of waste. Establishes responsibilities of creators of waste and penalties for noncompliance with the law. Article 51 states that funds raised via such penalties are paid into the Pollution Cleanup Fund (FODEP in French), which was created in 1992. (side note: Tunisia launched an Environmental Police force in 2017. See:

https://bit.ly/3iEYote)

Law No. 96-25 establishing the International Center for Environmental Technologies in Tunis (1996): “The mission of the Center [for Environmental Technologies] (CITET French acronym) is to acquire, adapt and develop new techniques, to promote eco-technologies and their production, to strengthen national capacities and to develop the scientific knowledge necessary for the development and implementation of environmental techniques appropriate to specific national and regional needs, with a view to sustainable development.” As of 2020, the CITET website lists two ongoing projects (CLIMA--focused on managing organic waste; and AQUACYCLE--focused on capturing, treating, and reusing wastewater). The CITET website also lists proposed programs focused on environmental transition, technological innovation, strategic partnership, technical support, and promotion of green trades--however none of these appear to be active as of July 6, 2020. The One Planet Network also lists one additional project (institutional support for the implementation of the national action plan for sustainable public procurement in Tunisia) as ongoing, with the kickoff workshop having been held on the 12-14 of March, 2019.

Law No. 97-37 on the transport of dangerous goods by road (1997): Establishes regulations for transport of hazardous waste to minimize negative impacts on populations and ecosystems.

Law No. 2007-24 On Air Quality (2007): Establishes regulations for preventing, limiting, and reducing air pollution and its negative impacts on the health of populations and environments.

Article 13 of the law sets forth penalties for noncompliance, which include fines from 1,000- 50,000 dinars for violators of paragraph 1 of article 9 (article 9 deals with the general obligations for waste recovery from producers, distributors, or transporters of goods), paragraph 1of article 10 (article 10 deals with packaging), and paragraph one of article 11 (article 11 deals with specific categories of products which are subject to additional regulation). Article 13 also allows for fines ranging from 100-10,000 dinars for violators of the second paragraphs in article 9, 10, and 11. In the case of repeat offenses, penalties are doubled. Article 14 of the law allows a judge to suspend the activity that has caused the pollution until necessary mitigation measures are implemented, or close the installation should there be no viable mitigation measures identified.

Law No. 2015-12 dated 11 May 2015 relating to the electricity generation from renewable energies: Governs installation, equipment, necessary goods and materials for renewable energy projects, technologies, and producers.

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

2.3 COUNTRY/MINISTRY/MUNICIPALITY REGULATORY CAPACITY ANALYSIS

Per the strategic, legal, and policy framework captured in Section 2.2. Tunisia is working towards enhancing its environmental and sustainable management planning, requirements, and capacity. Among the key governmental infrastructure in place focused upon integrating sustainability and environmental stewardship as keystones within its economic growth priorities and plans, include the Tunisia Ministry of Local Affairs and the Environmental (http://www.un spider.org/institutions-guides/tunisian-ministry-local-affairs-and-environment).

In practice, however, the country faces challenges in key areas, such as chemical and waste management, for which the UN Environment Program (UNEP) has initiated a program targeting chemical and waste management and is currently focusing on improving Tunisia's regulatory and institutional framework for chemical and associated waste management. Similarly, an extremely water scarce country, Tunisia currently reuses less than 75% of its treated wastewater (source: Fanack Water, Tunisia); this represents a management inefficiency driven in part by existing gaps in country capacity.

3.0 ANALYSIS OF POTENTIAL ENVIRONMENTAL AND SOCIAL RISK

The following analyses and identification of environmental and social impacts are based on the illustrative activities defined in the above Activity Description. Changes to these activities following award will require screening for additional potential environmental and social impacts.

ACTIVITY 1: STRENGTHENING SECTOR PERFORMANCE

TABLE 3A. POTENTIAL IMPACTS – ACTIVITY 1

Project/Activity Potential environmental and social impacts Sub-activity 1.1: Utility Modernization 1.1.1: Reduction of Commercial and Technical Losses and Increased Payment

1.1.2: Integrating Technological Improvements

1.1.3: Expanding Women’s Participation in the Workforce 1.1.4: Increased Organizational Capacity Although reduction of losses (Technical and Commercial losses) will have many environmental benefits, however, depending on the source of the losses and the approach and equipment needed to be installed (if needed), the installation of new assets and equipment on the grid/distribution system may cause both direct and indirect potential adverse social and environmental impacts including, but not limited to, damage to sensitive or valuable ecosystems, contamination of soil and water sources, noise, dust, health and safety risks, adverse social impacts, solid waste (and especially handling and disposal of old equipment), etc.

Installation of the Data Management System and other vital equipment could require construction.

Potential impacts might include, but not limited to, damage to sensitive or valuable ecosystems, contamination of soil and water sources, noise, dust, health and safety risks, adverse social impacts, solid waste handling and disposal, etc.

Not expected to generate environmental impacts, interventions under this sub-activity include only provision of technical assistance/capacity building, conduct analysis, studies, meetings and workshops only. Not expected to generate environmental impacts, interventions under this sub-activity include only provision of technical assistance/capacity building, conduct analysis, studies, meetings and workshops only.

Sub-activity 1.2 Catalyze Energy Efficiency Market Transformation 1.2.1: Effective Energy Transition Not expected to generate environmental impacts, interventions under this sub-activity include only provision of technical assistance/capacity building, conduct analysis, studies, meetings and workshops only.

ME/TUNISIA/POWER TUNISIA

ME IEE TEMPLATE VERSION 3.3(5.21)

ME 21-55

1.2.2: Enhance Energy Efficiency Standards

1.2.3: Improved EE Construction Sector Planning, Design and Code Enforcement 1.2.4: Industrial Sector Production

Sub-activity 1.3:

Regulatory Authority Support Not expected to generate environmental impacts, interventions under this sub-activity include only provision of technical assistance/capacity building, conduct analysis, studies, meetings and workshops only. Creating and developing building codes could lead to future investment in construction.

Developing strategies could lead to future investment in construction. The strategy should take into consideration social and environmental factors and impacts.

Not expected to generate environmental impacts, interventions under this sub-activity include only provision of technical assistance/capacity building, conduct analysis, studies, meetings and workshops only.

ACTIVITY 2: DIVERSIFYING AND SECURING SUPPLY

TABLE 3B. POTENTIAL IMPACTS – ACTIVITY 2

Activity Potential environmental and social impacts Sub-activity 2.1:

Renewable Energy Generation Increased 2.1.1: Renewable Energy Regime Implementation Improved

2.1.2: Renewable Energy Integration to Electricity Grid 2.1.3: Green Hydrogen Development Development of new renewable energy sites may cause both direct and indirect potential adverse social and environmental impacts including, but not limited to, damage to sensitive or valuable ecosystems, contamination of soil and water sources, noise, dust, health and safety risks, adverse social impacts, solid waste, etc. Social, environmental as well as climate change risks must be considered during site selection and during preparation of feasibility studies.

The grid integration study, the development of standards, codes, etc. could lead to decisions including decisions related to investment in future construction.

Although Hydrogen Energy has minimal environmental impacts compared to fossil fuels, the training provided should include topics on the disadvantages of using Hydrogen energy. In addition, any standards, codes provided could affect future decisions including future construction.

ACTIVITY 3: PROMOTING ADVANCED TECHNOLOGY PILOTS AND PARTNERSHIPS

TABLE 3C. POTENTIAL…