e&s risks in renewable energy projects in east africa

E&S Risks in Renewable Energy Projects in East Africa

26th -27th October, Nairobi, Kenya

James Archer , PE, CHMM, CPSA

Partner, ERM, Nairobi

• 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 ?

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


Why Is It Important

To Consider E&S Risks?


Water scarcity

ERM Presentation – E&S Risks in Renewable Energy Projects in East Africa27/10/2016 6

Biodiversity & Sensitive Environments


Livelihoods


Community and culture


Land Acquisition, Compensation &

Resettlement


Stakeholder Engagement

& Social Licence to Operate


Health, safety, security,

labour conditions


Gaps between local regulations and international good practice


http://www.equator-principles.com/resources/EPIII_PACKAGE.pdf


Global and local NGOs &

Stakeholder Pressure Groups


Opportunity to do goodthrough community investment


Livelihood and job creation


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)




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

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PS3

PS5

PS6

PS7

PS8

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Equator PrinciplesIFC Performance Standards




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

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


While there are well-established mechanisms to address E&S Risks some key aspects to note include:

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


E&S Risks in Renewable Energy Projects in East Africa-Annex

26th -27th October, Nairobi, Kenya

James Archer , PE, CHMM, CPSA

Partner, ERM, Nairobi

• 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

e&s risks in renewable energy projects in east africa

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