e&s risks in renewable energy projects in east africa
TRANSCRIPT
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E&S Risks in Renewable Energy Projects in East Africa
26th -27th October, Nairobi, Kenya
James Archer , PE, CHMM, CPSA
Partner, ERM, Nairobi
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• Background & introduction
• E&S risks on Renewable Energy in East Africa… are they real?
• Why is it important to consider E&S risks?
• Mechanisms for managing E&S risks
• Integrating E&S risks into the project lifecycle
• Conclusion
2ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
Agenda
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• Environmental & Social Risk forms the core of non-technical risk
• Impact to the environment & communities
• Sophisticated and informed communities
• Multiple stakeholders
• Growing demands
• Empowered Communities
• Social licence to operate
• Power of social media
• Compulsory land acquisition
• Minimise risks and maximise project value
• Make a difference
• Minimum vs maximum
3ERM Presentation - ESG in Renewable Energy Projects in East Africa17/10/2016
E&S Risks-Are They Real ?
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6%
3%
6%
35%
3%
6%
6%
23%
35%
42%
No details available
Technical challenges
Revenue sharing
Commercial issues
Adverse weather
Health & Safety
Land Access
Permitting issues
Environmental concerns
Lack of social acceptance
Causes of delay*
Social opposition
E&S Risks-Are They Real ?
Global Project Progress (2008 – 2012)
*Does not sum to 100% due to multiple causes of delays
Non technical causes
30%
24%
46%
0% 50%
Delivered onschedule
No delay reported,project in progress
Delayed
Other causes
Source: ERM AnalysisSample size = 67 projects across five multinationals
4ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
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Why Is It Important
To Consider E&S Risks?
5ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
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Water scarcity
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Biodiversity & Sensitive Environments
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Livelihoods
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Community and culture
9ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
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Land Acquisition, Compensation &
Resettlement
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Stakeholder Engagement
& Social Licence to Operate
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Health, safety, security,
labour conditions
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Gaps between local regulations and international good practice
13ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
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Global and local NGOs &
Stakeholder Pressure Groups
14ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
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Opportunity to do goodthrough community investment
15ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
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Livelihood and job creation
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Mechanisms for Managing
E&S RisksAfrican Countries:
• Framework Environmental Legislation
• EIA Regulations
• Other environmental and social laws/regulations
• Sustainable Finance Initiative (KBA SFI)
International:
• Equator Principles
• IFC Performance Standards
• International Banks Safeguard Policies (e.g. World Bank, AfDB, EIB, DBSA)
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Biodiversity Cons. & SustainableMgt. of Living Natural Resources
Indigenous People
Cultural Heritage
Land Acquisition and Involuntary Resettlement
Community Health, Safety & Security
Resource Efficiency & Pollution Prevention
Labour and Working Conditions
PS
1:
Ass
ess
men
t an
d M
anag
emen
t o
f E
and
S R
isks
an
d Im
pac
ts
PS2
PS3
PS5
PS6
PS7
PS8
PS4
Equator PrinciplesIFC Performance Standards
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Country-specific EIA Regulations
19
• Most African countries have Framework Environmental Legislation
• Framework Legislations allows for the development of EIA Regulations
• Each country has its own EIA Regulations with different administrative and decision-making processes
• Guideline documents also exist to assist with the interpretation of the EIA Regulations
• A detailed understating of the EIA Regulations and having good relationships with the regulatory authorities is important to understanding the permitting processes, timeframes and other risks associated with obtaining an environmental permit(s)
ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
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Integrating E&S Risks Early on in the Lifecycle
• Addressing these risks early on in the project lifecycle (concept phase) is critical
• Screening for biodiversity and social risks during the concept phase can be desktop and include:
• Biodiversity risks
Mapping of wetlands or sensitive ecosystems/habitats
Understanding of sensitive species and migratory paths
• Social risks
Mapping of no. of households, footpaths, location of social infrastructure, extent of community agriculture, community structures and key stakeholders
Understanding Corporate Social Investment expectations
20ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
While there are well-established mechanisms to address E&S Risks some key aspects to note include:
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Conclusion
• East Africa is full of opportunities in Renewable Energy
• There are many E&S risks… however, if the risks are addressed at the appropriate time in decision making they can all be managed
• There are well established mechanisms to address E&S Risks – Equator Principles, IFC Performance Standards, ESIA Regulations, Local Requirements
• Addressing these E&S risks early on in the project lifecycle is critical for a successful investment
21ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016
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E&S Risks in Renewable Energy Projects in East Africa-Annex
26th -27th October, Nairobi, Kenya
James Archer , PE, CHMM, CPSA
Partner, ERM, Nairobi
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• Don’t do it unless you can show you are competent
• Start on E&S screening very early in project planning phase
• Establish E&S networks and partnerships long before the project starts
• Involve key stakeholders – early and continuously
• Incorporate feedback from stakeholders early
• Create positive awareness early
• Communicate the real story
• Establish credibility and trust
• Educate and build confidence
• Communicate often
• Technical support - you get what you pay for
• Consider E & S extended implications
• Make it relevant and transfer responsibility and ownership
• Opportunity to demonstrate leadership
• Make it last - create a legacy
23ERM Presentation - ESG in Renewable Energy Projects in East Africa17/10/2016
Best Practices