The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) Concept Environmental and Social Review Summary Concept Stage (ESRS Concept Stage) Public Disclosure Date Prepared/Updated: 10/25/2022 | Report No: ESRSC03067 Oct 25, 2022 Page 1 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) Argentina LATIN AMERICA AND P178553 CARIBBEAN Project Name Argentina: Clean Energy for Vulnerable Households and Communities Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date Energy & Extractives Investment Project 2/1/2023 4/25/2023 Financing Borrower(s) Implementing Agency(ies) Argentine Republic Secretariat of Energy Proposed Development Objective To improve enabling conditions for energy efficiency by supporting enhanced management of the electricity Public Disclosure distribution segment and improved energy use by lower income populations. Financing (in USD Million) Amount Total Project Cost 400.00 B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] Country Context. Argentina, with a Gross Domestic Product (GDP) of US $383 billion, was the third largest economy in Latin America in 2020. The Country has a historically large and strong middle class, with social indicators generally above the regional average; however, persistent social inequalities, economic volatility, and underinvestment have limited the country’s development. The COVID-19 outbreak hit Argentina when its economy faced significant macroeconomic imbalances and a highly uncertain outlook. Nevertheless, bolstered by favorable external conditions, Argentina’s economy recovered from the COVID-19 crisis at a fast pace, reaching pre-pandemic activity levels by end- 2021. In this context, The Argentine authorities have reached an agreement with the International Monetary Fund Oct 25, 2022 Page 2 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) (IMF), on an Extended Fund Facility (EFF) program for a period of 30 months and an amount of US $45bn, to address the economy’s macroeconomic imbalances and set the basis for sustainable growth. In addition. Climate change is posing additional threats to the recovery challenges, exacerbating existing vulnerabilities in Argentina. In this context, Argentina faces twin fiscal and sustainability challenges, and the energy sector represents both a challenge to Argentina’s sustainable development as well as an opportunity to achieve a green and resilient recovery. The re-freezing of tariffs in 2019 and increased operational costs faced as well as the lack of updates to the remuneration for distribution activities (Valor Agregado de Distribución, VAD) are having an impact on distribution entities capacity to pay for electricity purchases to CAMMESA and invest in the grid. Sectoral and Institutional Context. Argentina is one of the largest and most developed power markets in Latin America. Nevertheless, the wholesale power market as well as electricity concessions have witnessed radical adjustments and have become dependent on government transfers. Set up in 1992, the wholesale power market was expected to function as a competitive market, fully indexed to the United States dollar. However, macroeconomic and market conditions in the aftermath of the 2001 economic crisis made full indexation to the dollar unsustainable. Tariffs for residential consumers were practically frozen from 2002 to 2015 despite high inflation, exchange rate variation, and investment needs. In January 2016, the Government of Argentina (GoA) updated pass-through mechanisms, putting tariffs on the path to reflect actual costs. To offset the impacts of such measures on the poor, the GoA also created a new, reduced “social tariff” for the poorest citizens of Argentina, which is, since 2018, being administered and applied by provinces. The subsidized rate has relied on distribution entities databases to identify potential beneficiaries, many of which are either not appropriately updated or are missing relevant information on user characteristics, thus limiting the effectiveness of the tariff and its focalization. The re-freezing of tariffs in 2019 Public Disclosure and increased operational costs faced as well as the lack of updates to the remuneration for distribution activities (Valor Agregado de Distribución, VAD) are having an impact on distribution entities capacity to pay for electricity purchases to CAMMESA and invest in the grid. Argentina’s power sector is structured vertically into generation, transmission, and distribution businesses. Over 600 entities participate in electricity distribution activities across Argentina and the average electricity losses in the Country are roughly 16 percent of all power received by electricity distribution companies and cooperatives in the country while the global optimal standard for this kind of market is eight percent. Within the residential sector, food conservation (food refrigeration and freezing) represents over a quarter of electricity consumption in the poorest households in Argentina. As it is estimated there are more than 12.5 million refrigerators in use in Argentina (of which roughly 40 percent are over 15 years old and highly inefficient) just replacing a small share of these could result in great energy savings. Addressing and reducing losses at the distribution level would require a series of measures from both the supply and demand sides. These would include at least four main tasks: i) improving user databases and enhancing knowledge of users’ characteristics; ii) targeting non-technical losses as illegal connections can represent up to 10 percent of total connections and as 90 percent of these are concentrated in thirteen distribution entities; iii) improving the electricity grid and its reliability; and iv) creating mechanisms to deal with tariffs’ structure, particularly in the context of the pandemic. The proposed Project would help increase efficiency in the electricity distribution segment and improve the use of energy by the lower-income population, thus contributing to reduce both the fiscal impact of the energy sector and CO2 emissions, while creating a tool for the National Government to intervene in the distribution segment, which it does not directly regulate. Oct 25, 2022 Page 3 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) Relationship to CPF. The proposed project would contribute to and is fully aligned with the World Bank Group's Fiscal Yea r (FY) FY19-FY22 Country Partnership Framework (CPF) for the Argentine Republic since it would contribute to and help strengthen Argentina’s capacity to cope with climate shocks and maintain its leading position as a clean energy leader, and would contribute to the following CPF Focus Areas: (i) Focus Area 3: Supporting Argentina to implement its NDC; (ii) Focus Area 1: Supporting Argentina’s access to long-term private financing; and (iii) Focus Area 2: Addressing key institutional Constraints for Better Governance and Service Delivery. Project Description. The proposed project will support the design, preparation and implementation of demand and supply side energy efficiency measures. It would consist of three components: (i) Component 1: Improving enhanced management in the electricity distribution segment; (ii) Component 2: Improved energy use by lower income populations; and (iii) Component 3: Improving enabling conditions and Project management. Component 1 would focus on a selected universe of electricity distribution utilities and their areas of operation to increase the impact of Project interventions and demonstrate the viability and usefulness of the measures. During preparation, the Project will set preliminary criteria to identify a small number of energy distribution utilities with high losses – based on a dialogue with ADEERA, CAMMESA, provinces and other relevant institutions – and willing to address them with the support of the SE. Financing the improvement of user databases and clients consumption conditions will be a fundamental part of these efforts which would create a positive feedback loop with the measures considered under Component 2 below. The Project will also work during preparation - and continue during implementation – to identify potential areas where metering could also be improved. Public Disclosure The energy efficiency measures to be considered would be determined based on detailed diagnoses to be carried out by the SE – with support from the World Bank – of the participating distribution companies to be selected and could include activities to be determined within the following general areas: i) Improvement and update of energy distribution utilities user databases to update and enhance their knowledge of existing and potential customers and improvement of clients consumption conditions; ii) Assessment of multi-household meters and analysis of the potential to introduce individual meters to improve accuracy of consumption data and better remunerate the electricity service; iii) Investing in existing infrastructure of the participating distribution utilities to reduce technical losses and/or address non-technical losses. Component 2 would improve energy efficiency in the residential sector with a focus on lower-income populations and women, as well as by targeting community or neighborhood entities or centers, such as neighborhood kitchens (and others that could be identified during Project preparation and implementation). The Project would focus on replacing inefficient appliances and lighting fixtures, including substituting over 20-year-old refrigerators with the latest, most efficient (“A” class) equipment as well as exchanging incandescent and fluorescent lamps with LEDs. Activities would be developed in the most densely populated jurisdictions of the country: City of Buenos Aires and provinces of Buenos Aires, Córdoba and Santa Fe and will be focused in urban and peri-urban areas. Only these four jurisdictions have appropriate procedures and scrapping centers that can both deal with the chlorofluorocarbons contained by old refrigerators and the mercury in some lighting fixtures (amongst other substances). Targeted beneficiaries would be informed about their eligibility and the direct support they would receive as well as the possibility to go to selected participating stores to request the replacement freely or by only paying a share of the cost (using any acceptable payment method, including financing programs offered by the store itself or current Oct 25, 2022 Page 4 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) government programs). The store would oversee the delivery and replacement of the refrigerator and the disposal of the replaced goods in scrapping centers, with the logistics being completely covered by the Project. Component 3 would focus on providing resources to SE for the preparation of Components 1 and 2 and to support – as needed – the development of capacities within all relevant entities involved in the execution of the Project. D. Environmental and Social Overview D.1. Detailed project location(s) and salient physical characteristics relevant to the E&S assessment [geographic, environmental, social] Component 1 of the Project will be implemented nationwide. During preparation, the project will set preliminary criteria to identify a small number of energy distribution entities with high losses and willing to address them with the support of the SE under Component 1. Support to the distribution entities on energy efficiency through: (i) the improvement of the entities user databases; (ii) assessment of multi household meters and analysis of the potential to introduce household-level individual meters; (iii) key investments in existing infrastructure to reduce technical losses or address non-technical losses. The implementation of measures to improve distribution networks and metering, would also help reduce the sector’s vulnerability, not only to losses and stealing, but also to climate change impacts such as extreme weather events. Enhancing consumption and users’ information can also result in improved planning capacity that can allow for more efficient decisions and reduce reliance on fossil fuels and other resources. The potential positive impacts of the Component will be further analyzed, but it is expected that over 20 years it could include 1 million tCO2 in emission Public Disclosure reductions. Component 2 will be implemented in the Metropolitan Areas of Buenos Aires, Córdoba and Santa Fe (urban and peri- urban areas in provinces with operational scrapping centers and procedures that can both deal with the chlorofluorocarbons contained by old refrigerators and the mercury in some lighting fixtures -amongst other substances-). The objective of this Component is to improve energy efficiency in the residential sector with a focus on lower-income population and women. The SE will work on identifying potential beneficiaries, which could include: (i) households targeted under the existing social tariff, including especially women; (ii) other lower-income households to be identified, including especially women; (iii) community centers and similar neighborhood and communal entities, such as neighborhood kitchens and clubs to be identified by the SE, including those registered with the Ministry for Social Development; and (iv) households in working-class neighborhoods per the relevant national registry (Registro Nacional de Barrios Populares, RENABAP) or other to be identified by the SE. D. 2. Borrower’s Institutional Capacity The agency responsible for coordination and implementation is the Secretariat of Energy (SE) within the Ministry of the Economy. SE has overseen a wide range of projects with external multilateral financing – as well as bilateral donors – for a long time. Since the 1990s, SE has been responsible for different Bank-financed operations and has received continuous support to expand and enhance its capacity including through the Project Coordination Unit. The Project Coordination Unit (PCU) has a core cadre of qualified staff to handle the diverse aspects of project implementation, including environmental and social management issues. This unit is currently in charge of the implementation of the Renewable Energy for Rural Areas project (P133288), which is being implemented under safeguards. Environmental and social compliance and performance has been rated moderately satisfactory in the last Oct 25, 2022 Page 5 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) ISRs, mainly in connection with delays in the preparation of safeguards instruments and of the required quality for specific subprojects. For the implementation of Component 1, the SE will establish cooperation agreements with the selected participating entities, such as electricity distribution entities. Most of these entities have the experience, processes, and capacity necessary to apply standard World Bank practices and policies. SE will further support these partner entities to ensure they perform all tasks and are trained in relevant environmental and social standards. For component 2 and overall activities, SE will prepare, lead, and coordinate tasks within the Environmental and Social Framework and ensure its compliance. SE will be responsible for supervision, monitoring, and reporting of all project activities, relying on local and partners’ capacities as needed. It is worth noting that the PCU is currently experiencing a change in environmental and social staffing. In addition, the proposed project will the first one for the SE to be implemented under the WB Environmental and Social Framework (ESF). Therefore, as part of the Bank’s due diligence, the capacity of the PCU for environmental and social management will be further assessed, considering: (i) the new areas of substantive coverage of the ESF as compared to the WB safeguards; (ii) the ability of the PCU to effectively manage the execution of the project in line with ESF requirements. It is foreseen that PCU´s capacity will need to be strengthened to have sufficient and trained staff. In addition, coordination challenges among the SE and other involved actors will be further addressed and analyzed during preparation, as more clarity on project activities and their implementation is available, to establish the appropriate articulation mechanisms for a proper environmental and social risk management. Strengthening measures on environmental and social management, including those related to organizational structure and Public Disclosure coordination among involved actors, will be identified and accordingly reflected in the Environmental and Social Commitment Plan (ESCP). II. SCREENING OF POTENTIAL ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Moderate Environmental Risk Rating Moderate Based on the available information at this stage, Project environmental risk classification is considered to be Moderate. Environmental impacts are expected to be mainly positive. The Project is clearly aligned with Argentina’s green growth agenda as it aims to support the development of energy efficiency measures which would help decarbonize Argentina’s economy. In addition, investing in improved distribution infrastructure can help reduce the vulnerability of the sector to extreme weather events caused by climate change. Furthermore, enhancing consumption and users’ information can also result in improved planning capacity that can help make more efficient decisions and reduce reliance on fossil fuels and other resources. However, given the nature and scale of planned activities, low to moderate environmental, health and safety risks and potential impacts are expected under Components 1 and 2. Under Component 1 they are related to investments in infrastructure that could be implemented with participating distribution entities, which would be limited to make existing infrastructure, mainly located in public space, more efficient or up to date. Even though these minor interventions would be punctual and of limited scope, low to moderate environmental, health and safety risks and impacts could occur if the necessary (and readily available) management measures are not incorporated into the corresponding activities. These include, among others: punctual environmental pollution events in case of an inadequate waste management; increased risk Oct 25, 2022 Page 6 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) of occupational incidents and accidents; nuisance on the neighboring and minor community health and safety issues during works in public space. Under Component 2, risks and potential impacts are mainly related to the management of the replaced appliances, particularly the handling of certain substances such as chlorofluorocarbons contained by old refrigerators and mercury in some lighting fixtures. As per Component 2 design, these activities will be carried out in jurisdictions and existing scrapping centers with appropriate procedures in place. In this context, environmental risks and potential impacts are predictable and expected to be temporary and/or reversible, site-specific, not significant nor complex/large, not expected to cause serious adverse effects to human health and the environment and easily mitigated in a predictable manner by applying routine and accessible measures and safety precautions including, as applicable, the adoption of GIIP as defined in the WBG EHSGs. Social Risk Rating Moderate The Social Risk rating is Moderate. The projects social impacts are expected to be mainly positive and the ones negative are manageable through the mitigation measures identified below. Component 2 is expected to improve energy efficiency in the residential sector with focus on lower-income population and women, through replacing inefficient appliances and lighting fixtures, including substituting over 20-year old refrigerators with the latest, most efficient (“A” class) equipment as well as exchanging incandescent and fluorescent lamps with LEDs. This will be carried out in a voluntary basis and at reduced or no cost to the beneficiaries. Social risks under this Component are associated with not reaching the most vulnerable population. This risk is mitigated through the Project’s targeting strategy that will include: (i) households targeted under the existing social tariff, including especially women; (ii) other lower-income households to be identified, including especially women; (iii) community centers and similar neighborhood and communal entities, such as neighborhood kitchens and clubs to be identified by the SE, including those registered with the Ministry for Social Development; and (iv) households in working-class neighborhoods per Public Disclosure the relevant national registry (Registro Nacional de Barrios Populares, RENABAP) or other to be identified by the SE. In addition, the Project may finance minor interventions under Component 1, involving the replacement or improvement of existing networks and facilities, so involuntary acquisition of land or physical and/or economic displacement that implies an impact associated with ESS5 is not expected. In the case of activities under component 1, the implementation of measures to improve distribution networks and metering is expected to have both positive and negative impacts on beneficiaries. Positive impacts are related to higher control of beneficiaries over their own electricity consumption levels, taking into account that multi household meters imply paying more than what it was consumed. Negative impacts are related to potential increase of fees for those that used to have informal connections or those who received a subsidy for being part of a vulnerable community. This risk will be addressed using Social Tariff Scheme and/or other enhanced subsidy scheme focused on identified vulnerable households. Activities to be financed under Component 2 will also serve as a mitigation measure by helping beneficiaries to reduce their electricity consumption levels. Finally, there are some risks associated to this Project regarding indigenous peoples. These are exclusively related to social communication to make sure that Indigenous peoples are informed in a culturally appropriate manner about: (i) any potential change in their electricity metering and/or tariff scheme; (ii) the benefits under Component 2 to enhance energy efficiency at the household level, and timely information related to activities to be carried out in the households (e.g., change of appliances in the case they decide to participate). B. Environment and Social Standards (ESSs) that Apply to the Activities Being Considered B.1. General Assessment ESS1 Assessment and Management of Environmental and Social Risks and Impacts Oct 25, 2022 Page 7 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) Overview of the relevance of the Standard for the Project: This standard is relevant to the Project. Based on the available information at this stage, environmental and social impacts of the project are expected to be mainly positive. However, given the nature and scale of planned activities , low to moderate environmental, health and safety risks and potential impacts are expected under Components 1 and 2. Component 1 would include activities to be determined within: i) improvement and update of energy distribution entities user databases; ii) multi-household meters analysis to introduce individual meters to better compensate the electricity service and improve accuracy of consumption data; and iii) key investments in existing infrastructure of the participating distribution entities to reduce technical losses, or address non-technical losses, comprising minor interventions that could include the installation/improvement of: capacitor banks in transmission substations; anti- theft networks; elevated BT network with protected cable; shielded metering cabinets or panels; encapsulated measurement systems; intelligent systems (BI) for location of shoplifters. Under Component 2, main activities involve the management (including logistics) of the replaced appliances, particularly the handling of certain hazardous substances. Environmental risks and potential impacts of these activities are expected to be limited to the site locations, temporary, reversible and can be controlled or mitigated by the adoption of standard and accessible measures, including, when applicable, the adoption of GIIP as defined in the WBG EHSGs. Social risks are associated with not reaching the most vulnerable population with the benefits of the project under Component 2 and with potential increase of fees for those used to have informal connections or those who received a subsidy for being part of a vulnerable community. Given that the location and scope of the Project´s interventions would be defined during implementation, the SE will prepare an Environmental and Social Management Framework (ESMF), proportionate to the risk, to identify: (i) any Public Disclosure risks and potential impacts that need to be addressed for the proper environmental and occupational and community health & safety management of works under Component 1, (ii) the conditions of handling and disposal of replaced appliances, with focus on handling and disposal of hazardous substances. The ESMF will then include adequate measures, procedures and, as applicable, action plans to address and mitigate the identified risks, which will need to be taken into account and applied, as appropriate, by the selected distribution companies, stores and scrapping centers for carrying out the foreseen activities. These will be punctual activities / interventions and of limited scope. As such, no specific Environmental and Social Management Plans are expected to be prepared and activities would be managed, as mentioned, by the adoption of standard and accessible measures, including, when applicable, GIIPs as defined in the WBG EHSGs. The drafting of the ESMF will incorporate inputs from relevant stakeholders on risks and mitigation measures received from the preparation-stage discussions on the Stakeholder Engagement Plan (SEP), as it will include, for that specific purpose, a chapter with the preliminarily identified risks, potential impacts and corresponding mitigation measures (see details under ESS10). Additionally, the ESMF will include an E&S assessment identifying vulnerable groups and the engagement processes will support the opportunity to identify any additional barriers that might have not been previously identified. The draft ESMF, including the preliminary inputs, will be disclosed no later than 60 days after the Effective Date. It will then be held subject to a broader consultation as it would be defined in the SEP, and finalized no later than 120 days after the Effective date and before the initiation of any activity. The final version of the ESMF will consider all feedback received from relevant stakeholders on risks and mitigation measures. The Project will also prepare a SEP that will incorporate measures to mitigate the risks associated with potential exclusion from project benefits mentioned above, including ways to promote stakeholders access to information about the project, including opportunities for them, and will also provide information about the Project’s grievance Oct 25, 2022 Page 8 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) mechanism for all beneficiaries. The SEP will identify vulnerable groups and any barrier they may face to have access to the benefits of the Project and look for ways to ensure that these groups are afforded opportunities to participate in planning and/or implementation of activities that affect them, with particular focus on Indigenous Peoples, to ensure that they are engaged in a culturally appropriate manner. A draft SEP will be disclosed prior to appraisal. It will then be consulted and finalized no later than 60 days after the Effective date. Finally, the requirements of relevant ESSs will be considered for all technical assistance to be provided under the Project, particularly under Component 3. The terms of reference for all such technical assistance will be reviewed and approved by the Bank to ensure that all pertinent provisions, including stakeholder engagement aspects in line with ESS 1-10, are fully incorporated in such TORs, in a manner acceptable to the Bank. Areas where “Use of Borrower Framework” is being considered: N/A ESS10 Stakeholder Engagement and Information Disclosure This standard is relevant to the Project. Throughout its three components, the Project would develop a pro-active communication and stakeholder engagement strategy that incorporates the principles of using the feedback from relevant institutional stakeholders during Project design including other government institutions (e.g. those that work with focus on the identified vulnerable groups); and directly from beneficiaries (especially women and indigenous peoples representatives -in the latest case, in accordance with ESS7, see below-) collected in community consultations at early stages of project implementation and communicating those decisions and changes back to the Public Disclosure beneficiaries. The strategy would mainly focus on: (i) sensitizing the population on behavioral changes that could save energy in households; and (ii) developing engagement mechanisms with the targeted populations and institutions, including local governments and other involved entities, to inform them about the benefits and implications of the planned interventions and to “close the loop” by including their feedback and preferences into the Project . The communication and stakeholder engagement strategies will take into consideration, and accordingly will be tailored to as needed, the existing set up of the location where the activities would be implemented (specific jurisdictions, different characteristics of the urban/peri-urban settings, conditions of the most vulnerable populations, etc.). The Project will prepare and disclose a draft Stakeholder Engagement Plan (SEP) before appraisal. The draft SEP will include project information to allow stakeholders, including IP representatives, to understand the risks and impacts of the project, and potential opportunities. It would include the following contents: (a) The purpose, nature and scale of the project; (b) The duration of proposed project activities; (c) A section identifying: i) potential risks of the Projects and the proposals to mitigating these; and, ii) vulnerable groups and any barrier they may face to have access to the benefits of the Project and look for ways to ensure that these groups are afforded opportunities to participate in planning and/or implementation of activities that affect them either positively (access to new home appliances) or negatively (e.g. formalization or increase of energy tariffs). A particular focus will be put on Indigenous Peoples to make sure that all communication process associated with the Project that is targeted to indigenous communities is culturally appropriate; (d) The proposed stakeholder engagement process highlighting the ways in which stakeholders can participate; (e) The time and venue/way of any proposed public consultation meetings (face to face and/or virtual ones). Relevant stakeholders will be adequately involved during all project stages, providing the required measures and mechanisms according to the evolving sanitary situation and corresponding measures associated with the COVID-19 pandemic; (f) the process by which meetings will be notified, summarized, and Oct 25, 2022 Page 9 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) reported; and (g) The process and means by which grievances can be raised and will be addressed. The SEP will describe the Project’s grievance mechanism for all beneficiaries. B.2. Specific Risks and Impacts A brief description of the potential environmental and social risks and impacts relevant to the Project. ESS2 Labor and Working Conditions This standard is relevant. The Project will be mainly implemented by staff from SE (Government Civil Servants). Although civil servants will remain subject to the terms and conditions of their existing public sector employment agreement, they will be also subject to the ESS2 provisions on Protecting the Work Force and Occupational Health and Safety. Other type(s) of Project´s workers may be identified based on definitions and clarifications on Project´s activities; based on available information at this stage, Project workers may include both direct workers (workers hired specifically for the implementation of the project or legally transferred to the project, such us specialized personnel to reinforce the PCU and individual consultants in charge of TA activities) and contracted workers (basically workers of consultancy firms in charge of TA activities). All types of Project´s workers will be described in Labor- Management Procedures (LMP). The LMP will be prepared no later than 60 days after the Effective Date, or prior to the recruitment of any project worker, whichever comes first. The LMP will describe the type of workers involved, identify the main labor requirements and risks associated with the Project, and determine the necessary resources to address Project related labor issues, including sexual exploitation and abuse and sexual harassment (SEA/SH), and health and safety issues. The LMP shall also include Public Disclosure measures to ensure that civil servants working on the project direct workers and contracted workers have a general understanding of occupational health and safety requirements and the protection of employees. The LMP will describe the working conditions and management of worker relationships, the terms and conditions of employment, provisions for non-discrimination and equal opportunity, worker’s organizations and freedom of association, occupational health and safety for workers, provisions to protect the workforce (including via minimum wage protections), and the prevention of child and forced labor. The LMP will further ensure that the health and safety of workers are adequately addressed using WBG Environmental, Health, and Safety (EHS) Guidelines, WHO guidelines on COVID-19 and national regulations. The LMP will also incorporate a separate grievance mechanism specifically for project workers, including the SE staff involved in the project. During project implementation, the LMP may be revisited and updated as required, as additional labor-related risks or issues unfold. Relevant aspects of ESS2 will apply to the electricity distribution entities that will be benefited under Component 1, as well as to the participating stores and scrapping centers that will be involved in activities under Component 2. The risks associated with the range of project workers as well as those from distribution entities, private stores and scrap centers will be identified and analyzed during preparation, as more information on project activities and their implementation is available; corresponding relevant details will be reflected in the A-ESRS. ESS3 Resource Efficiency and Pollution Prevention and Management Oct 25, 2022 Page 10 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) The Standard is relevant. As stated above, the Project will support several energy efficiency measures and help reduce the vulnerability of the energy sector to extreme weather events caused by climate change. Furthermore, enhancing consumption and users’ information can also result in improved planning capacity that can help make more efficient decisions and reduce reliance on fossil fuels and other resources. Nevertheless, as stated above the Project is expected to have some low to moderate environmental risks and potential impacts under Components 1 and 2. The works under Component 1 may involve consumption of raw materials (e.g. metals, wood, concrete, water, etc.) and generate potential air pollution (particulate material), noise, and risks related to punctual environmental pollution events in case of an inadequate waste management. Risks and potential impacts related to activities under Component 2 are mainly related to the management of the replaced appliances, particularly the handling of certain substances such as chlorofluorocarbons contained by old refrigerators and mercury in some lighting fixtures. As mentioned above, activities under Component 2 would be developed in the City of Buenos Aires and provinces of Buenos Aires, Cordoba and Santa Fe; preliminary research indicated that only these four jurisdictions have appropriate procedures and scrapping centers that can both deal with those hazardous substances. The ESMF will include legal requirements (at federal, provincial and local level as applicable) and management measures to address identified risks and will inform the preparation of action plans, as applicable. The appraisal stage ESRS will provide more information on risks and potential impacts under ESS3, as more detailed information becomes available during preparation, which would then be fully assessed in the ESMF. ESS4 Community Health and Safety This standard is relevant. Some activities under Component 1 are related to investments in infrastructure, which Public Disclosure would be limited to make existing infrastructure, mainly located in public space, more efficient or up to date. These activities may involve minor community health and safety issues during works execution, such as risk of elements falling from heights, poor signage or fencing on works sites with excavations, etc. The ESMF further identify and assess these risks and potential impacts that need to be addressed for the proper community health & safety management. For all identified risks and potential impacts, the ESMF will also include the corresponding mitigation measures and action plans. In addition, the LMP will incorporate measures to prevent risks associated to sexual exploitation and abuse and sexual harassment (SEA/SH) for works developed in public space. ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement This standard is not currently relevant. The outcome of E&S screening did not identify any potential risks and/or impacts relevant to ESS5. Activities to be financed will be built mainly in public land or in private facilities neither require land acquisition, nor restrictions on land or involuntary resettlement as defined under this Standard. ESS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources This standard is not currently relevant. Foreseen interventions would take place in urban or peri-urban areas. The outcome of E&S screening did not identify any potential risks and/or impacts relevant to ESS6. ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities Oct 25, 2022 Page 11 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) This standard is relevant to the Project. Argentina is a multicultural country with a notable presence of indigenous populations, and the majority of these populations (more than 80 percent) live in urban areas, with the largest concentration living in the Buenos Aires Metropolitan Area. Challenges associated to this Project regarding indigenous peoples are exclusively related to social communication to make sure that Indigenous peoples are informed in a culturally apropriate manner about: (i) any change in their electricity metering and/or tariff scheme; (ii) the benefits under Component 2 to enhance energy efficiency at the household level, and timely information related to activities to be carried out in the households, (e.g change of appliances, in the case they decide to participate). The ESMF will include a proportional and relevant assessment of IP vulnerabilities vis-à-vis these challenges and relevant components of an IPP will be included in the proposed instruments. The ESMF and the SEP will be prepared in a manner consistent with the ESS7 and will include a strategy to engage with these groups and their representatives, and relevant feedback and recommendations they may provide through their engagement in consultation activities will be taken into consideration for the final design of the Project and during implementation, to promote their full sharing in the benefits of the Project , as part of the stakeholder engagement strategy described under ESS10. The GRM will be also culturally appropriate and accessible for IPs. ESS8 Cultural Heritage The Standard is not currently relevant. The outcome of E&S screening did not identify any potential risks and/or Public Disclosure impacts relevant to ESS8. ESS9 Financial Intermediaries This standard is not currently relevant. The Project will not involve the use of Financial Intermediaries. C. Legal Operational Policies that Apply OP 7.50 Projects on International Waterways No OP 7.60 Projects in Disputed Areas No III. WORLD BANK ENVIRONMENTAL AND SOCIAL DUE DILIGENCE A. Is a common approach being considered? No Financing Partners There will not be financing partners related to this project. B. Proposed Measures, Actions and Timing (Borrower’s commitments) Oct 25, 2022 Page 12 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) Actions to be completed prior to Bank Board Approval: The borrower will prepare and disclose a draft SEP prior to appraisal, to assess the risks associated to the proposed activities, incorporate mitigation measures, and propose actions to improve the design or implementation of the activities and will include a plan for consultations with key stakeholders, which will be conducted during project preparation and throughout implementation. Possible issues to be addressed in the Borrower Environmental and Social Commitment Plan (ESCP): The draft SEP will be updated following the final definition and timing of the activities under the Project and based on the feedback from consultations. This will take place no later than 60 days after the Effective Date. In addition, the Project will prepare an Environmental and Social Management Framework (ESMF) to assess key risks and impacts as well as to establish general and specific mitigation measures consistent with World Bank Environmental and Social Standards. The draft ESMF will be disclosed no later 60 days after the Effective Date; following consultations in accordance with the SEP, it will be finalized no later than 120 days after the Effective Date. The SE will also identify all types of Project workers and develop the corresponding Labor Management Procedures; these procedures will need to be finalized in a satisfactory manner to the Bank no later than 60 days after the Effective Date or before the hiring of any Project worker, whichever comes first. The ESCP is also expected to include, inter alia, specific actions related to (i) ensuring an organizational structure adequate to manage the environment and social risks associated with the Project, (ii) ensuring adequate monitoring and reporting procedures, including specific guidance to report Incidents; (iii) the operationalization of the Project’s Public Disclosure GM. C. Timing Tentative target date for preparing the Appraisal Stage ESRS 15-Nov-2022 IV. CONTACT POINTS World Bank Contact: Lucia Spinelli Title: Senior Energy Specialist Telephone No: 5260+3753 / 54-11-4316-9753 Email: lspinelli@worldbank.org Borrower/Client/Recipient Borrower: Argentine Republic Implementing Agency(ies) Implementing Agency: Secretariat of Energy V. FOR MORE INFORMATION CONTACT Oct 25, 2022 Page 13 of 14 The World Bank Argentina: Clean Energy for Vulnerable Households and Communities (P178553) The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects VI. APPROVAL Task Team Leader(s): Lucia Spinelli Practice Manager Maria Gonzalez de Asis Recommended on 24-Oct-2022 at 15:32:54 GMT-04:00 (ENR/Social) Marco Antonio Zambrano Chavez (SAESSA) Cleared on 25-Oct-2022 at 17:36:52 GMT- Safeguards Advisor ESSA 04:00 Public Disclosure Oct 25, 2022 Page 14 of 14