Attachment J.9_Initial_Environmental_Examination_Green_Economy.pdf

DCN: to be assigned by BEU

USAID Georgia / USAID Green Economy Program 1 E&E Bureau IEE Template (Version 1 Jun 2023)

US Agency for International Development (USAID) USAID/Georgia

Initial Environmental Examination (IEE)

Program/Project/Activity Data Activity/Project Name: USAID Green Economy Program

Assistance Objective: DO 3: Inclusive High-Value Employment Opportunities Provided through Increased Economic Growth

Program Area: EG.5 Private Sector Productivity EG.10 Environment

Country(ies) and/or Operating Unit: Georgia Originating Office: Office of Economic Growth Date: 12/26/2023

Original IEE/RCE Original IEE LOP Start Date: FY2024 IEE/RCE History DCN LOP End Date Original IEE/RCE Assigned by BEU FY2028 Purpose of Amendment: N/A Contract/Award Number (if known): N/A Sector Type(s) from the ECD Advanced Search Tab (https://ecd.usaid.gov) Major: Economic Growth Minor: None Recommended Environmental Determination(s):

Categorical Exclusion Positive Determination Negative Determination

With Conditions Deferral

Additional Elements:

Local Procurement Government to Government

Donor Co-Funded Public International Organization (PIO) environmental and social policies and procedures applicable

Climate Change Vulnerability Analysis (included) Climate Change Vulnerability Rating: Low

1. Background and Project Description

1.1 Purpose and Scope of IEE

This IEE covers the five-year Implementation of USAID Green Economy Program activity.

Recommended Environmental Determinations for this activity is Categorical Exclusions and Negative Determination with Conditions.

1.2 Project Description

The purpose of the USAID Green Economy Program activity is to 1) enhance the competitiveness and capacity of target economic sectors; 2) integrate with Western markets; 3) create remunerative employment opportunities; and 4) reduce those sectors’ environmental footprint.

USAID Georgia / USAID Green Economy Program 2 E&E Bureau IEE Template (Version 1 Jun 2023)

The Program will enhance the competitiveness and capacity of priority economic sectors and targeted enterprises to create remunerative employment opportunities; support their integration with Western markets; and reduce those sectors’ environmental footprint. These sectors include but are not limited to 1) tourism and hospitality; 2) light manufacturing; 3) digital industries, including Information and Communication Technologies (ICT), e-commerce, and innovation; and 4) solid waste management.

Component 1 – Improving the productivity and export capacity of individual enterprises.

Under Component 1, the Implementing Partner (IP) must improve productivity and economic competitiveness, while decreasing the environmental impact of individual firms within the targeted sectors. The ultimate aim would be to sustainably increase the capacity of firms in targeted sectors to provide high-value employment.

Sub-activity 1.1 Strengthen the competitiveness and capacity of individual firms.

Sub-activity 1.2 Facilitate the creation of high-value employment opportunities.

Sub-activity 1.3 Support export diversification, primarily with Western markets.

Sub-activity 1.4 Reduce the environmental footprint of beneficiary firms.

Component 2 – Facilitate an economic ecosystem to meet the needs of Georgian enterprises.

Under Component 2, the IP must focus on increasing the ability of Georgia’s economic ecosystem, including public and private sector stakeholders, to support the development of individual enterprises and economic sectors. The ultimate aim is to increase Georgia’s ability to capitalize on changing global market conditions, improve Georgia’s balance of trade, reduce Georgia’s market dependence on single source / malign markets, meet Georgia’s EU Association Agreement requirements, and reduce priority sectors’ environmental footprint.

Sub-activity 2.1 Identify and address critical systemic gaps in targeted sectors, by improving the regulatory environment.

Sub-activity 2.2 better tailoring government and private sector services.

Sub-activity 2.3 Strengthen intersectoral cooperation.

2. Baseline Environmental Information

2.1 Locations Affected and Environmental Context

Georgia is situated in the south-eastern part of Europe, south to the Great Caucasus Range. Georgia is bordered by Russia to the north, by Armenia to the south, by Azerbaijan to the southeast, by Türkiye to the southwest and by the Black Sea to the west. Georgia covers a territory of 76,284 square kilometers, including the Autonomous Republic of Abkhazia and Tskhinvali Region and the territorial waters, of which the land area takes about 91%, and the water takes about 9%. Two third of the country's territory is mountainous, with a complex relief. 54% of its territory is located at an altitude above 1000 m. The landscape of the country is quite varied with its mountains, plateaus, low-lands, glaciers, swamps, and arid areas (semi-deserts), lakes and rivers. With regard to land use, 15.8% represents the cropland, 70.6% is covered by forests, shrubs, and grasslands, and 13.6% is used for agriculture activities. Geographically Georgia is divided into two parts: East and West, naturally divided by the Likhi Range. By January 1, 2019, the population of Georgia was 3,723 thousand - 6,000 less than in 2018. 59% of the population is urban, and the rest 41% - rural. 1,171 thousand people live in Tbilisi, i.e., more than 30% of the total population. Population density is 65.1 persons per 1 km2. Economic growth has been solid – averaging 5% per annum between 2005 and 2019 – and poverty (national measure) declined rapidly to 19.5% in 2019, almost half its 2007 rate, spurred by sound macroeconomic policies and improved governance. The country’s economy is

USAID Georgia / USAID Green Economy Program 3 E&E Bureau IEE Template (Version 1 Jun 2023) supported by its services, tourism, financial (banks), and construction sectors, a transition from industry- and agriculture-based economy.

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

Climate Change National Adaptation Plan (NAP) for Georgia’s Agriculture Sector (2017)

Nationally Determined Contribution (NDC) to Paris Climate Agreement (2017)

National Disaster Risk Reduction Strategy 2017–2020 (2017)

National Communications to the UNFCCC (2021)

Technology Needs Assessment (TNA) (2012)

Climate Change National Adaptation Plan for Georgia’s Agriculture Sector (2017) In addition to Georgia laws, United States Government (USG) environmental policy compliance is required for all new activities.

2.3 Sustainability Analysis

The IP must design and implement interventions whose results will be sustainable beyond the life of the Program. Sustainability can be achieved in many ways and will be buoyed by building the capacity of the public sector, focusing on the needs of the private sector, engaging the private sector and GoG (including subnational governments, where appropriate) in the design and implementation of specific interventions, ensuring ownership by local actors, increasing linkages across the country, and requiring all grant and other support applicants to write a sound sustainability plan as part of their proposal. The IP must examine the incentives and motivations of key stakeholders in targeted sectors for sustaining interventions and incorporate these findings into intervention designs.

2.4 Climate Change Vulnerability Analysis

The U.S. Government has set substantial, ambitious targets for reductions in climate- impacting emissions, targeting a 50 percent reduction from 2005 levels in economy-wide net greenhouse gas pollution in 2030, and a net zero carbon economy by 2050. Investments made under this Program are expected to comply with the spirit of these commitments, and, where possible and appropriate, support the development of a cleaner, greener economy. The IP must integrate best practices and approaches from USAID’s Climate Change Strategy across all components. Where possible, interventions should be proposed and designed in a way that accelerates and scales targeted climate actions and catalyzes transformative shifts to net-zero and climate-resilient pathways, thereby contributing to both Strategic Objectives (SO) 1 and 2 of USAID’s Climate Strategy.

Specifically, the Program is designed to support SO 1 Targeted Direct Action first by reducing the emissions related to the targeted economic sectors, while also increasing access to finance for investments related to greening the sectors. It aims to reduce emissions and waste generated by the target sectors and encourage an environmentally-sound approach to further development. Further, interventions must be designed in a way that decreases the carbon footprint required in targeted sectors by increasing energy efficiency and promoting renewable energy opportunities. This required the IP to also coordinate with USAID Securing Georgia’s Energy Future Program. The Program must also engage with enterprises to modernize their operations methodologies for increased efficiency in line with international standards.

To advance SO 2 Systems Change, the Program must focus on transforming the overall approach to economic development, catalyzing a shift towards low-carbon, climate resilient pathways. Such transformation requires an emphasis on reducing resource usage and maximizing recycling opportunities for key industries. Further, by increasing the capacity of Georgia’s SWM sector, the

USAID Georgia / USAID Green Economy Program 4 E&E Bureau IEE Template (Version 1 Jun 2023)

Program will contribute to transforming the whole of Georgia’s economy, even beyond the target sectors, to be cleaner, greener, and more resilient.

In accordance with Executive Order (EO) 13677 and Mandatory Reference for ADS Chapter 201 on Climate Risk Management for USAID Projects and Activities, USAID must conduct climate risk management screening for all new strategies, projects, and activities.

Climate Risk Rating for this activity is defined as:

Low climate risk: Climate change is unlikely to significantly impact achievement of development outcomes relative to other stressors and development challenges.

3. Environmental Impacts and Recommended Mitigation Measures

Component 1 – Improving the productivity and export capacity of individual enterprises.

Sub-activities Potential Impacts Mitigation Measures Recommended

Threshold Determinations

1.1 Strengthen the

competitiveness and capacity of individual firms.

Potential impacts of grant supported activities on land, water, air and human health.

The IP shall submit a short description of the grant’s activity to the COR and MEO.

In case potential impacts on the environment and/or health of the beneficiaries are possible, a streamlined Environmental Review Checklist shall be completed prior to start of the activities.

No ERC will be required for grant activities that do not have potential environmental or occupational health impacts.

A new streamlined version of the ERC will be utilized, and the template will be shared with the IP.

Negative Determination with Conditions

1.2 Facilitate the creation of

high-value employment opportunities.

No adverse impacts are likely none Categorical

Exclusion

1.3 Support export

diversification, primarily with Western markets.

No adverse impacts are likely none Categorical

Exclusion

1.4 Reduce the environmental

footprint of beneficiary firms.

Potential impacts of grant supported activities on land, water, air and human health.

The IP shall submit a short description of the grant’s activity to the COR and MEO.

In case potential impacts on the environment and/or health of the beneficiaries are possible, a streamlined Environmental Review Checklist shall be completed prior to start of the activities.

No ERC will be required for grant activities that do not have potential environmental or occupational health impacts.

A new streamlined version of the ERC will be utilized, and the template will be shared with the IP.

Negative Determination with Conditions

USAID Georgia / USAID Green Economy Program 5 E&E Bureau IEE Template (Version 1 Jun 2023)

Component 2 – Facilitate an economic ecosystem to meet the needs of Georgian enterprises.

Sub-activities Potential Impacts Mitigation Measures Recommended

Threshold Determination

2.1 Identify and address

critical systemic gaps in targeted sectors, by improving the regulatory environment.

No adverse impacts are likely none Categorical Exclusion

2.2 better tailoring government and private sector services.

No adverse impacts are likely none Categorical Exclusion

2.3 Strengthen intersectoral

cooperation. No adverse impacts are likely none Categorical

Exclusion

4. Conclusions of the Environmental Review

4.1 Recommended Environmental Determinations:

Categorical Exclusions:

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

Sub-activities 1.2; 1.3; 2.1; 2.2; 2.3 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:

A negative determination is recommended for the following sub-activities under §216.3(a)(2)(iii).

Additional specific terms and conditions are presented below in Section 4.2.

Sub-activity 1.1 may require an ERC/EMMP.

Sub-activity 1.4 may require an ERC/EMMP.

4.2 Negative Determination Terms and Conditions:

4.2.1 Prior to initiating activities that have the potential to result in significant adverse environmental, health, and safety impact, the implementer shall submit a short description of the grant’s activity to the AOR/COR and MEO. No ERC will be required for grant activities that do not have potential environmental or occupational health impacts. In case potential impacts on the environment and/or health of the beneficiaries are possible, a streamlined environmental Review Checklist shall be completed prior to start of the activities. A new streamlined version of the ERC will be utilized, and the template will be shared with the implementer. The COR/AOR and MEO shall approve the environmental review document prior to implementation. The BEO reserves the right to rescind the approval of an environmental review document due to environmental risks. For each site-specific activity, the environmental review document shall include a Certification of No Adverse Significant Effects on the Environment signed by the IP, COR/AOR, and MEO;

assigned a Document Control Number (DCN) and posted to the Environmental Compliance Database (ECD).

4.2.2 Preparation of environmental review documents shall be captured in annual work plans, and therefore budgeted for and reviewed for adequacy at least annually.

4.2.3 Changes in activities and their associated environmental reviews shall necessitate amending the IEE.

USAID Georgia / USAID Green Economy Program 6 E&E Bureau IEE Template (Version 1 Jun 2023)

4.3 USAID Monitoring and Reporting

4.3.1 The AOR/COR, with the support of the MEO, is responsible for monitoring compliance of activities by means of desktop reviews and site visits.

4.3.2 The AOR/COR is responsible for confirming that the IP includes environmental compliance requirements and monitoring results as part of their routine project reporting to USAID.

4.3.3 The AOR/COR is responsible for monitoring, to the extent practicable, that the IP complies with applicable host country environmental requirements.

4.3.4 If at any time the project is found to be out of compliance with the IEE, the AOR/COR or

MEO shall immediately notify the BEO.

4.3.5 A summary report of Mission’s compliance relative to this IEE shall be sent to the BEO on an annual basis, normally in connection with preparation of the Mission’s annual environmental compliance report required under ADS 203.3.8.5 and 204.3.3.

4.3.6 The BEO or his/her designated representative may conduct site visits or request additional information for compliance monitoring purposes to ensure compliance with this IEE, as necessary.

4.4 Implementing Partner (IP) Environmental Compliance Monitoring and Reporting

4.4.1 The IP is required to comply with applicable host country environmental requirements.

4.4.2 If an individual activity is found to pose significant adverse environmental effects that have not been identified and addressed in the approved environmental review documents, new environmental review documents shall be developed to include environmental safeguards for such effects.

4.4.3 IPs shall report on environmental compliance requirements and monitoring results as part of their routine project reporting to USAID.

4.4.4 After the IP has finalized its activities at a specific site, the IP shall sign a Record of Compliance (ROC) certifying that the organization met all applicable conditions and submit it to the COR/AOR. The COR/AOR shall keep the original for the project files and provide a copy to the MEO and BEO. The ROC shall be assigned a DCN and posted to the ECD.

[The Record of Compliance certifies that all the mitigation measures that the IP confirmed would occur during project implementation did indeed occur. The ROC is completed at the end of work at each individual site. If there are multiple sites, multiple ROCs are required.]

5. Mandatory Inclusion of Requirements in Solicitations, Awards, Budgets and Workplans

5.1 Appropriate environmental compliance language, including limitations defined in Section 6, shall be incorporated into solicitations and awards for this activity and projects budgets shall provide for adequate funding and human resources to comply with requirements of this IEE.

5.2 Solicitations shall include Statements of Work with tasks for meeting environmental compliance requirements and appropriate evaluation criteria.

5.3 Environmental mitigation and monitoring requirements, when available, shall also be included in solicitations and awards.

5.4 The IP shall incorporate conditions set forth in this IEE into their annual work plans.

5.5 The IP shall ensure annual work plans do not prescribe activities that are defined as limitations, as defined in Section 6.

5.6 The USAID Mission will include an indicator for environmental compliance as part of the project’s performance monitoring plan. (For example, if an IEE has a threshold determination of negative determination, then a possible indicator is if the IP complied with the ERC/EMMP.)

6. Limitations of the IEE: This IEE does not cover activities (and therefore should changes in scope implicate any of the issues/activities listed below, a BEO-approved amendment shall be required), that:

6.1 Normally have a significant effect on the environment under §216.2(d)(1), including:

Programs of river basin development.

Irrigation or water management projects, including dams and impoundments.

USAID Georgia / USAID Green Economy Program 7 E&E Bureau IEE Template (Version 1 Jun 2023)

Agricultural land leveling.

Drainage projects.

Large scale agricultural mechanization.

New lands development.

Resettlement projects.

Penetration road building or road improvement projects.

Powerplants.

Industrial plants.

Potable water and sewerage projects other than those that are small scale.

6.2 Support project preparation, project feasibility studies, engineering design for activities listed in §216.2(d)(1).

6.3 Affect endangered and threatened species or their critical habitats per §216.5, FAA 118, FAA 119.

6.4 Provide support to extractive industries (e.g., mining and quarrying).

6.5 Promote timber harvesting per FAA 117 and 118.

6.6 Support agro-processing or industrial enterprises.

6.7 Provide support for regulatory permitting.

6.8 Lead to privatization of industrial facilities or infrastructure with heavily polluted property.

6.9 Research, testing, or use of genetically engineered organisms except in accordance with ADS

211; or

6.10 Assist the procurement (including payment in kind, donations, guarantees of credit) or use

(including handling, transport, fuel for transport, storage, mixing, loading, application, clean-up of spray equipment, and disposal) of pesticides or activities involving procurement, transport, use, storage, or disposal of toxic materials per §216.2(e) and §216.3(b). Pesticides (cover all insecticides, fungicides, rodenticides, etc. covered under the Federal Insecticide, Fungicide, and Rodenticide Act).

7. Revisions

7.1 Under §216.3(a)(9), if new information becomes available that indicates that activities covered by the IEE might be considered major and their effect significant, or if additional activities are proposed that might be considered major and their adverse effect significant, this environmental threshold decision will be reviewed and, if necessary, revised by the Mission with concurrence by the BEO.

It is the responsibility of the USAID COR/AOR to keep the MEO and BEO informed of any new information or changes in the activity that might require revision of this IEE.

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