The World Bank Punjab Clean Air Program(P508222) @#&OPS~Doctype~OPS^blank@pidconpfrcoverpage#doctemplate Program Information Document (PID) Concept Stage | Date Prepared/Updated: 24-Dec-2024 | Report No: PIDPC00153 @#&OPS~Doctype~OPS^dynamics@pidpfrbasicinformation#doctemplate BASIC INFORMATION A. Basic Program Data Project Beneficiary(ies) Region Operation ID Operation Name Pakistan SOUTH ASIA P508222 Punjab Clean Air Program Financing Instrument Estimated Appraisal Date Estimated Approval Date Practice Area (Lead) Program-for-Results 03-Feb-2025 28-Mar-2025 Transport Financing (PforR) Borrower(s) Implementing Agency Punjab Energy Efficiency and Conservation Agency, Transport and Mass Transit Department, Government of Punjab, Planning and Islamic Republic of Pakistan Development Board, Government of Punjab, Agriculture Department, Government of Punjab, Industries Department, Government of Punjab Proposed Program Development Objective(s) To strengthen air quality management and reduce emissions from targeted sectors affecting Greater Lahore @#&OPS~Doctype~OPS^dynamics@pidpfrprojectfinancing#doctemplate COST & FINANCING (US$, Millions) Maximizing Finance for Development Is this an MFD-Enabling Project (MFD-EP)? Yes Is this project Private Capital Enabling (PCE)? Yes SUMMARY Government program Cost 500.00 Total Operation Cost 300.00 Total Program Cost 285.00 IPF Component 15.00 Page 1 Total Financing 300.00 Financing Gap 0.00 FINANCING Total World Bank Group Financing 300.00 World Bank Lending 300.00 @#&OPS~Doctype~OPS^dynamics@pidpfrconceptdecision#doctemplate Concept Review Decision The review did authorize the preparation to continue B. Introduction and Context Country Context 1. Poverty has increased slightly amid recent shocks, despite some economic stabilization. Pakistan made significant progress towards reducing poverty between 2001 and 2018 with the expansion of off-farm economic opportunities and increased external remittances. However, this has not fully translated into improved socio-economic conditions: over one-third of school-age children across Pakistan were found to be out of school; nearly two-thirds of those in school in FY24 were learning deprived; and alarmingly high rates of stunting - 40 percent in FY23 - persist. Critical constraints, including recurrent fiscal and current account deficits, protectionist trade policies, unproductive agriculture, a difficult business environment, a heavy state presence in the economy, and a financially unsustainable energy sector, have remained largely unaddressed, leading to slow and volatile growth. COVID-19, 2022 floods, and economic volatility have worsened poverty, with an estimated 40.5% (US$3.65/day 2017 PPP) lower-middle income poverty rate in FY24, with an additional 2.6 million Pakistanis falling below the poverty line from the year before. 2. Pakistan experienced heavy monsoon rains in 2022 leading to catastrophic and unprecedented flooding with enormous human and economic impacts. Roughly 33 million people were impacted, and many permanently displaced. More than 13,000 kilometers (km) of roads were destroyed, 2.2 million houses damaged, around 3.8 million hectares of crops were flooded, and an estimated 1.2 million livestock were killed. Limited access to input and output markets and temporary disruptions to supply chains subsequently drove up food prices and added to existing price pressures resulting from reduced agricultural yields and the global rise of food prices. The government’s Post-Disaster Needs Assessment1 estimated that the need for rehabilitation and reconstruction is at US$16.3 billion. 3. Pakistan has made recent progress towards macroeconomic stabilization, but risks remain high and faster sustained growth will require substantial reform. At the beginning of FY24, Pakistan's economy faced a potential economic crisis in the face of political uncertainty, global monetary policy tightening, and fiscal and external imbalances, that led to pressures on domestic prices and foreign reserves. To preserve reserves, measures to manage imports and capital outflows were introduced, which disrupted local supply chains, economic activity and exacerbated inflationary 1 Government of Pakistan. 2022. Pakistan Floods 2022 Post-Disaster Needs Assessment. Ministry of Planning Development & Special Initiatives. Page 2 pressures. Under the interim government, an IMF Stand-By Arrangement was approved in July 2023. Consequently, exchange rate flexibility was restored, import controls were relaxed, and steps were taken to contain the fiscal deficit. Political uncertainty also diminished with the successful conduct of the general elections. Coupled with favorable weather conditions and easing external conditions, the economy began recovering in FY24. Consequently, growth of real GDP at factor cost is estimated to have risen to 2.5 percent y-o-y in FY24, after contracting by 0.2 percent in FY23. Downside risks remain high, with the outlook predicated on the new IMF-EFF program remaining on track, continued fiscal restraint, and additional external financing. Heavy banking sector exposure to the sovereign, domestic policy uncertainty, and geopolitical instability pose significant risks to the outlook. Robust economic recovery over the medium term will require the steadfast implementation of much broader fiscal and economic reforms. 4. The 2022 Country Climate and Development Report (CCDR) highlights Pakistan’s severe climate vulnerability, ranking it among the top 10 most affected countries. Frequent droughts, floods, heat waves, and risks to coastal cities like Karachi from sea level rise and erosion increase development challenges and could reduce GDP by 18-20% annually by 2050. 5. Pakistan also faces an unfinished agenda on human development, which compounds its structural macro fragility and creates a drag on the economy. The country’s Human Capital Index, is 41, meaning that a child born in Pakistan today will be 41 percent as productive when she grows up as she could be if she enjoyed complete education and full health. The stunting rate of children under five remains among the highest in the world at 40 percent. Evidence suggests that the lack of safely managed water supply, sanitation, and hygiene (WASH) services is partly responsible for this staggering loss of human potential.2 Sectoral (or multi-sectoral) and Institutional Context of the Program 6. The Province of Punjab in northeast Pakistan, and South Asia more broadly, have most of their populations exposed to hazardous air pollution. Punjab is part of the Indo-Gangetic Plain and Himalayan Foothills (IGP-HF) region which includes parts of Bangladesh, Bhutan, India, Nepal, and Pakistan, and is now a global air pollution hotspot. IGP-HF has the most people exposed to hazardous air in the world. In Pakistan, Bangladesh, India, and Nepal, between 93 and 97 percent of the population are exposed to hazardous air pollution.3 7. Air pollution poses a chronic health threat in Punjab and has become a national and provincial priority. Fine particulate matter below 2.5 microns (PM2.5) can be inhaled through the lungs and is the most significant contributor to the public health burden associated with air pollution. Ambient PM2.5 concentrations in Punjab range widely, with 24-hour averages over 300-400 µg/m3 observed in Lahore during acute episodes. Annual average concentrations of 110-130 µg/m3 have been measured in central Lahore (capital of the province), and population-weighted annual averages of 52 µg/m3 are estimated across the entire Punjab, more than ten times the World Health Organization (WHO) guideline (of 5 µg/m3) and 3.5 times the Punjab ambient air quality standard (of 15 µg/m3). Based on current trends, exposure to PM2.5 will increase to 58 µg/m³ through 2030 without additional abatement measures. PM2.5 exposure (both ambient and household) in Pakistan caused 230,000 premature mortality and morbidity in 2019, with estimated health costs equivalent to 9 percent of GDP (measured by the societal value of premature deaths and years lost to disability).4 The poor and most vulnerable groups, such as women, elders, and children under five years old, suffer a disproportionate burden from such exposure. 8. Recent World Bank analytics identified five key anthropogenic sources of air pollution within the Punjab Province 2 Mansuri, Ghazala et al. 2018. When Water Becomes a Hazard: A Diagnostic Report on The State of Water Supply, Sanitation and Poverty in Pakistan and Its Impact on Child Stunting. WASH Poverty Diagnostic Washington, D.C.: World Bank Group. 3 World Bank 2023. Detox Development 4 World Bank 2021. The Global Health Cost of PM 2.5 Air Pollution: A Case for Action Beyond 2021, Washington DC Page 3 airshed accounting for 75 percent of air pollution.5 Besides natural sources (largely mineral dust and sea salt) which account for about one quarter of air pollution in the province, the largest contributors to population-weighted annual average PM2.5 concentrations are: (i) the residential sector (23 percent), mostly burning of solid fuels for cooking; (ii) transportation (16 percent), largely heavy-duty vehicles (trucks and buses), two- and three-wheelers; (iii) industrial sources (16 percent), largely heavy industry and brick kilns; (iv) agriculture and livestock (13 percent), including crop residue burning, and emissions from fertilizer and manure; and (v) municipal solid waste burning (7 percent). 9. The Government of Punjab (GoPb) has started to lay the foundation for improved air quality management planning and governance, essential building blocks for reducing air pollution. Policies and plans such as the 2017 Smog Control Policy, the 2023 Clean Air Policy and Action Plan, and the new 2024 Smog Action Plan demonstrate GoPb's commitment to improving air quality. The plans focus on abating PM2.5 in the transport, agriculture, industry, energy, and municipal sectors, while promoting public awareness and engagement. Despite these efforts, enforcement of existing policies can be strengthened with augmented institutional capacity and budget. The Punjab Environmental Protection and Climate Change Department (EPCCD), responsible for overseeing air quality management, could be better resourced in terms of personnel, facilities, and systems. 10. Effective air quality management planning in Punjab requires several key technical elements. GoPb is expanding the regulatory grade air quality monitoring network in the province under the Punjab Green Development Program (PGDP; P165388). This expansion is crucial for meeting air quality standards and providing real-time information to protect sensitive populations. Further expansion and development of operation and maintenance protocols, data validation, and quality assurance plans are needed. In addition, strengthening the province’s analytical and modeling framework, including emissions inventory, scenario planning, and decision support systems, is essential for evidence-based decision-making and assessing the effectiveness of current and planned interventions. 11. Residential cooking is the highest sectoral contributor to ambient air pollution. Traditional cookstoves which cause both household and ambient air pollution need to be progressively replaced. Key considerations include affordability and technical efficiency in reducing emissions, but also cultural acceptability, safety, convenience, and maintenance of alternatives. While cleaner energy would eventually replace solid biofuels, in the interim, GoPb can prioritize efforts to support the adoption of improved cookstoves (ICS) and address barriers to the adoption of cleaner fuels. 12. Road transport is the second highest sectoral contributor to air pollutions, with emissions set to increase without concerted action. Heavy duty vehicles (trucks and buses), two- and three-wheelers, and cars are the chief PM2.5 contributors. Motorization trends indicate a rapid proliferation of private vehicles, which would add to emissions if not addressed promptly. In Lahore, private vehicles have doubled in the last decade and number around 7.4 million vehicles currently, with two-wheelers accounting for 82 percent of registered vehicles.6 This can be attributed to rising income levels, rising travel demand with urbanization, and shortage of public transport. Lahore has a very limited mass transit system for its size, with 27 km of metro, a bus rapid transit line and associated feeder buses. Around 800 buses currently operate in Lahore against a need of around 1,600 public buses,7 suggesting capacity constraints. Public buses are often overcrowded and seen as a last resort option. 13. Outdated emission norms and a nascent vehicle inspections system exacerbate road transport emissions. The prevailing emissions standard of EURO II is significantly more polluting than newer iterations. For instance, EURO II diesel buses emit 16 times more PM2.5 per km compared to the more recent EURO VI. Unclean diesel with high sulfur content of 0.5 percent is still in use. There is a need to expand fuel quality inspections to curb the supply of adulterated fuel. There is no vehicle retirement age in Pakistan, leading to the presence of aged and poorly maintained vehicles on roads. Anecdotally, there are buses and trucks operating in Punjab over 20 years of age. 5 World Bank 2024. Towards Clean Air for Punjab: An Advisory Report 6 Transport and Mass Transit Department, Government of Punjab. 7 Feasibility study for Integrated Bus Operation, Punjab Mass Transit Authority, Government of Punjab, 2016. Page 4 14. Road transport pollution can be mitigated using Avoid-Shift-Improve (ASI) approaches. “Avoid� refers to reducing the need for motorized travel, “shift� refers to encouraging modal shifts to public transport and non -motorized transport, and “improve� refers to decreasing the emissions intensity of the vehicle stock, partly through the transition to low emission vehicles. World Bank analyses have identified “improve� approaches such as expanding heavy-duty vehicle inspection and maintenance, and the introduction of electric two and three wheelers as cost effective approaches to reduce emissions. Electric buses (e-buses) can mitigate emissions growth by combining “shift� and “improve� dimensions, especially when used to replace private vehicles. E-buses can reduce life cycle PM2.5 emissions by 88 percent relative to EURO VI diesel buses, and by over 98 percent relative to cars and two-wheelers of equivalent capacity, emphasizing the importance of modal shifts to maximize emissions reduction.8 15. There is good momentum on e-bus introduction in Punjab. In Pakistan, analyses show e-buses having a higher total cost of ownership than EURO II buses, but below hybrid and EURO VI diesel buses. While e-buses cost more upfront, they have lower operations and maintenance costs. GoPb recently procured 27 e-buses for a pilot in Lahore under the PGDP, setting the stage for future scale up. GoPb also plans to deploy around 500 e-buses under its Annual Development Program in FY25, which is a major step towards expanding public transport. To support the successful rollout of e-buses, mass transit agencies in Punjab need capacity building on e-bus operations and contract management. With improving macroeconomic conditions, public private partnership options for e-bus deployment are becoming increasingly attractive. 16. Electric two and three wheelers are ripe for electrification given favorable cost economics, but high upfront costs, limited charging infrastructure availability and the lack of affordable commercial financing are limiting uptake. E- 2Ws offer a total cost ownership advantage, more so for higher utilization commercial applications. Analyses show that the higher upfront cost can be recouped via lower operations and maintenance costs within two years for commercial electric two wheelers and within four years for commercial electric three wheelers. Expanding risk sharing facilities for electric two and three wheelers can catalyze affordable commercial financing flowing to these segments. Risk sharing mechanisms such as partial credit guarantees have been shown to be cost effective measures to catalyze EV adoption in other contexts, such as India, and are being trialed in Punjab under the Chief Minister’s Youth Initiative. Such mechanisms can give financial institutions sufficient comfort to start lending for EVs, thereby developing capacity to appraise and manage risks associated with EVs. Over time, risk sharing mechanisms can be scaled back, leading to a more self-sustainable EV financing ecosystem. 17. Besides electrification, there is a need to off-road polluting vehicles. Punjab’s vehicle inspection regime which was started in 2015 for Public Service Vehicles (PSVs) is emerging. Under the PGDP, the existing Vehicle Inspection and Certification System (VICS) was extended to private vehicles. Two-wheelers are currently excluded from vehicle inspections. For PSVs that fail emissions inspections typically have their route permits cancelled, but the government does not have the legal mandate to scrap or impound such vehicles. The Smog Action Plan contemplates a buyback scheme for polluting vehicles, given the environmental benefits. Such incentives have been effective in Peshawar9, Pakistan, and Latin America for instance. 18. The industrial sector ranks third and requires a transition to cleaner, more efficient technology. Enforcement approaches need to be tailored to each industry subsector, and strengthening the enabling environment for market- based access to green finance should be a priority. The Smog Action Plan prioritizes brick kilns, boilers including alternative fuels, emissions control systems across key sectors, and green investments and cleaner technologies in industry. Heavy industries would benefit from enhanced regulation that would, for example, set stricter emissions standards, require continuous emissions monitoring at stacks and require end-of-pipe emissions controls for stacks. 8 Team analyses using Life-Cycle Assessment of Passenger Transport: An Indian Case Study, International Transport Forum, 2023. 9 Peshawar Bus Rapid Transit financed by Asian Development Bank. Page 5 19. In the agriculture sector which ranks fourth, the priority is to promote fertilizer use efficiency and manure management to reduce ammonia emissions, and harvest mechanization to reduce crop residue burning. To improve fertilizer-use efficiency, the GoPb could reform subsidy programs, prioritizing sustainable fertilizing techniques over bulk chemical fertilizers. To reduce crop residue burning, the GoPb could continue to introduce efficient harvesters for collection and valorization. Site-specific nutrient management and on-farm manure management practices also need to be strengthened. A comprehensive grasp of constraints on farmers and farms can inform interventions. Strengthened and customized agriculture extension services and comprehensive support programs can smoothen implementation. Relationship to CAS/CPF 20. The Program is consistent with the World Bank Group’s (WBG) Pakistan Country Partnership Strategy (CPS) FY15– FY19 discussed by the Board on May 1, 2014 (Report No. 84645-PK) and subsequently extended to FY21 under the corresponding May 2017 Performance and Learning Review (Report No. 113574). The preparation of the new Country Partnership Framework (CPF) was deferred in FY21 due to the COVID-19 crisis and paused in FY23 due to the 2022 floods. While the new CPF is expected to be presented to the Board in FY25, the focus areas and objectives of the current CPS remain relevant. The Program will support Cross-Cutting Area 3 (Climate change adaptation and mitigation in public and private sectors), by improving air quality in Lahore Division. The Program will also contribute to Result Area 2 (Private sector development) by creating the conditions for private sector investments across sectors. The Program will support Results Area 3 (Inclusion) by generating employment opportunities for women. Lastly, the Program will support Cross-Cutting Area 2 (Deepening engagement at the province level) by strengthening air quality governance and institutional capacity. The Program also fits in with World Bank’s AQM IGP -HF program and aligns with the World Bank South Asia Regional Integration, Cooperation, and Engagement Approach, in particular, the pillar on Reducing Vulnerabilities and Increasing Resilience. Rationale for Bank Engagement and Choice of Financing Instrument 21. A hybrid approach that combines the PforR and IPF instruments is proposed for this operation. The World Bank’s strategic, technical, and financing support will help GoPb tackle the challenges of a large and complex air quality program, while developing capacity for the long term. The bulk of AQM governance and sectoral interventions will be supported under a PforR instrument. PforR will provide financial incentives to a broad range of stakeholders to foster alignment towards improving air quality. The IPF component will cover technical assessments required to implement the transport sector abatement measures, as well as design the industry and clean cooking interventions envisaged to be include in a subsequent operation. C. Program Development Objective(s) (PDO) and PDO Level Results Indicators Program Development Objective(s) To strengthen air quality management and reduce emissions from targeted sectors affecting Greater Lahore. PDO Level Results Indicators 22. The Program will measure progress toward the PDO via the following proposed indicators: • PM2.5 emission reductions from priority sectors supported by the project (millions of tons) • Transboundary impact on PM2.5 emissions/concentration (millions of tons) • GHG emissions mitigated (mtCO2) • Expanded systems for evidence-based air quality management • People with improved access to sustainable transport infrastructure and services (disaggregated by gender) • Private capital financing mobilized (US millions) Page 6 D. Program Description PforR Program Boundary 23. The Punjab Clean Air Policy and Action Plan (2023) and the Punjab Smog Action Plan (2024) form the basis of the government program (‘p’, the program) for this PforR. The Punjab Clean Air Policy and Action Plan has a longer time horizon (through 2030) and covers air quality improvement objectives, policy interventions across the key sectors, implementation mechanisms, coordination and monitoring. The Smog Action Plan (2024) is the short-term implementation mechanism, with budgeted activities for one year (up to Q1 2025). It is expected that GoPb would update the Smog Action Plan annually with priority activities and budgets. Both these plans identify the need for action across multiple sectors and emphasize the need for awareness raising and behavior change to reduce air pollution. The Smog Action Plan includes air quality management measures by EPCCD/EPA, the Transport, Energy, Agriculture, Industries, Health, Education, Local Government and Community Development Departments, and the Parks and Horticulture Authority. 24. World Bank’s support for GoPb’s program will be offered through sequential operations to support air quality management, the first of which will have a stronger focus on managing road transport and agriculture emissions. This operation entitled the Punjab Clean Air Program (P-CAP) will support the government’s plans to curb emissions across priority sectors, viz. transport, agriculture, industry and residential cooking. The Program will lay the foundation for subsequent operations which will extend initial results across sectors. 25. The proposed P-CAP PforR Program (‘P’, the Program) will support selected activities of GoPb’s program where World Bank would add the most value. A comprehensive, multi-year, and multi-sectoral approach is required to tackle air pollution in Punjab. The Program will achieve the PrDO through three results areas and one IPF component. Government program PforR Program Reasons for non-alignment Objective To keep the air clean through emission To strengthen air quality PforR objective is aligned on the reductions and sustainable green management and reduce long-term goal, while focusing on development for increasing access to emissions from targeted Program interventions which are living-friendly environment (Punjab sectors. limited to selected sectors. Clean Air Policy) Duration Punjab Clean Air Policy (to 2030), Smog 2025 to 2030 N.A. Action Plan (to Feb 2025, updated annually) Geographic Punjab province Punjab province (with a Lahore Division has highest coverage priority for activities that population-weighted PM2.5 reduce PM2.5 exposure for exposure; and amplified Lahore Division) transboundary impact given proximity to border. Results areas Plans tackle awareness; abatement in • AQM governance & Remaining sectors will be supported transport, municipal, industrial, awareness raising by GoPb. agriculture & livestock, energy, • Sectoral abatement infrastructure/housing, public health, across transport and environmental protection, school agriculture, with education, parks & horticulture assessments for the industries and residential sectors. Overall Financing US$500 million (estimated by Team) US$300 million Gap will be financed by GoPb. Page 7 26. Results Area 1: AQM governance and awareness raising (US$20 million). This result area will focus on incentivizing EPCCD to enhance Punjab’s regulatory, institutional, and technical capacity foundation for AQM, as well as robust communications and awareness raising to corral diverse actors towards the goal of improving air quality. a. Strengthen AQM governance. This includes: (i) further expansion of the air quality monitoring network to fulfill monitoring capacity needs; (ii) establishment and implementation of standard operating procedures for new air quality monitors and to ensure that staff are able to validate and analyze the data, including through the use of innovative/artificial intelligence technologies; (iii) development and implementation of a continuous emissions monitoring program for priority polluting heavy industries and establishment of brick kiln district monitoring stations to strengthen industrial sector monitoring and enforcement capacity; (iv) development of an integrated air pollutant/GHG emissions inventory system, a routine source apportionment program for primary and secondary PM2.5 and chemical composition studies to inform policymaking; (v) evaluation and update of the Punjab Clean Air Policy and Plan, Smog Action Plan (annual) and existing regulatory framework and development of new regulatory and legal instruments to enhance air quality (including, for example, fuel quality standards, performance standards for diesel generators, and update of emissions standards for priority industries); and (vi) participation of EPCCD and representatives of other key departments in knowledge exchanges. b. Strengthening public communications and raising awareness. This activity will incentivize the development and implementation of a public communications plan/campaign on air quality that aims to inform the public focusing on women and youth and other stakeholders on the key sources of air pollution and their health impacts, potential abatement measures, actions undertaken by government to support abatement measures, and appropriate response measures to be taken by the public, especially vulnerable populations, during poor air quality events (building on healthy advisory system supported by PGDP). 27. Result Area 2: Transport sector abatement measures (US$245 million) will focus on measures to curb road transport emissions, by expanding mass transit and off-roading aged, polluting vehicles. a. Expanding and encouraging modal shifts to mass transit. This is to incentivize the deployment of around 400 e- buses in Lahore, and supporting infrastructure, viz. depots, charging facilities, bus stops and street improvements. PPP options will be explored under transaction advisory to be supported under the IPF component. Measures to encourage modal shifts to mass transit such as multi-modal integration, road safety, and ensuring women’s safety on buses will be incentivized. Lastly, female labor force participation will be supported. b. Catalyzing the transition to electric two and three wheelers. This will incentivize the creation of a financing facility to catalyze the flow of affordable commercial financing to electric two and three wheelers, which is expected to accelerate the transition to EVs. Retrofitting of existing two wheelers into cleaner vehicles and scaling up charging solutions will also be incentivized. c. Off-roading polluting vehicles. This will incentivize additional measures to curb road transport transmission such as expanding vehicle inspections and maintenance with a focus on two-wheelers and heavy-duty vehicles. The activity will also support a buyback scheme for aged and polluting vehicles, with financial incentives to encourage vehicle owners to swap for cleaner alternatives. d. Tackling road dust while facilitating non-motorized transport. This will incentivize measures to reduce road dust, such as paving of road shoulders, and improving footpaths along mass transit corridors. This will have the added benefit of boosting access and utilization of public transport options, which would improve the efficacy of investments in expanding public transport. 28. Result Area 3: Agriculture Sector Abatement Measures (US$20 million). This results area will incentivize abatement measures in the agriculture sector. Activities in this RA will provide a demonstration effect that could be scaled up through subsequent programs. The focus will be on addressing crop-residue burning and promoting efficient fertilizer use. The approach will encompass: (i) demonstrating technological options for rice harvesting mechanization like Super Seeder Planters; (ii) improving rice straw management via R&D for on-farm solutions with rice producers and off-farm solutions with private entrepreneurs; and (iii) strengthening the overall efficiency and climate resilience of Page 8 the rice/wheat cropping system by supporting research on agronomic solutions to eliminate crop burning, reduce emissions (low carbon rice) and strengthen climate adaptation. 29. An IPF component of around US$15 million will support the technical assistance and assessments required to facilitate Program implementation, and design interventions in clean cooking and industries, to be implemented under a subsequent operation under the series of operations to support air quality improvements. The component includes: a. Technical assistance capacity building on transport including: (i) designing a buyback scheme for polluting vehicles, with detailed stakeholder consultations; (ii) battery waste management rules and ecosystem development; (iii) measures to improve the financial sustainability of public bus operations; (iv) electric two- and three-wheeler adoption, as well as disposal/retrofitting of conventional two- and three-wheelers; and (v) end-to- end process for monetizing GHG emissions reductions from the shift to cleaner vehicles in the form of carbon credits. Lastly, the component will support institutional strengthening for transport sector agencies with a focus on curbing road transport emissions, bus procurement and contract management, and road safety. b. Cleaner cooking assessments. Market research on consumer behavior and preferences for clean stove technologies and fuels. Standards and design specifications including laboratory upgrades, training, and resource mobilization. c. Industrial emissions abatement assessments. Detailed assessment on retrofitting/replacement of boilers and furnaces, combustion fuel alternatives and options for cleaner technologies. E. Initial Environmental and Social Screening 30. The Program would have significant positive environmental impacts. The expansion of the air quality monitoring network and standard operating procedures for new monitors will enhance air quality data collection and analysis. The introduction of e-buses, e-2/3Ws and retirement of aged polluting vehicles would reduce GHG and air pollutant emissions from the transport sector. Other sectoral measures would promote cleaner energy and technology alternatives. 31. The E&S risks and impacts of the PforR RAs are rated as Substantial. The project's overall environmental and social (ES) risk rating is Substantial. This is a hybrid operation that uses both the PforR and IPF instruments. The IPF component is focused only on technical assistance activities including feasibility studies, capacity building and research, which may have downstream ES impacts. Detailed assessments for the downstream impacts delineated above, will be presented as part of the PforR and outlined in the Environmental and Social Systems Assessment that will be duly consulted on and disclosed prior to appraisal in line with the requirements for information disclosure. The ESSA will assess the client’s capacity and existing systems (legal/regulatory, institutional and procedural) to achieve E&S objectives in accordance with Bank’s six Core Principles of PforR policy. The ESSA will elaborate a “negative� list which excludes activities with High E&S impacts. Key stakeholders will be engaged for the preparation of the ESSA Report and throughout the life of the Program. 32. Key sources of environmental risks are the generation of e-waste from monitoring equipment and used e-bus batteries, and the current energy generation mix. Improper recycling of such e-waste could lead to environmental and health impacts due to the release of pollutants during dismantling, burning, chemical processing, and disposal activities. Recycling facilities in Punjab are mostly informal with potential to strengthen environmental soundness of practices and enforcement. The Program therefore includes an assessment to strengthen battery waste management under the IPF component. The Program would therefore support solarization of depots to shift towards clean energy for charging. 33. The social risks are attributed to potential land acquisition, involuntary resettlement, loss of livelihoods, limited engagement with vulnerable groups, and challenges ensuring equitable access to project benefits. The Program will Page 9 include a code of conduct to prohibit SEA/SH, integrate clauses in contracts, establish an SEA/SH-sensitive grievance mechanism, and provide staff training. SEA/SH risks are rated Low, but the Program will address them. @#&OPS~Doctype~OPS^dynamics@legalpolicyandscreeningrisk#doctemplate Legal Operational Policies Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts of the IPF Component 34. The ES Risk Classification (ESRC) of the IPF component is rated as Substantial wherein both the Environmental and Social Risk Ratings are Substantial. For the IPF component, the Program will comply with the World Bank’s Environmental and Social Framework (ESF) Policy, which will include the assessment of E&S risks against the ten Environmental and Social Standards (ESSs). The Borrower will prepare a Stakeholder Engagement Plan (SEP) and an Environmental and Social Commitment Plan (ESCP) to guide ES risks management in line with the WB ESSs. The preparation of detailed instruments such as ESIA, ESMP, RAP, LMP and any other related assessments will be finalized and determined at the Appraisal stage. These instruments along with ESSA will be publicly consulted upon, reviewed and approved by the World Bank and disclosed on the Government and World Banks Documents and Reports website. @#&OPS~Doctype~OPS^dynamics@contactpoint#doctemplate CONTACT POINT World Bank Shyam Srinivasan Transport Specialist Shafick Hoossein Senior Environmental Specialist Borrower/Client/Recipient Islamic Republic of Pakistan Kazim Niaz Secretary, Economic Affairs Division secretary@ead.gov.pk Implementing Agencies Page 10 Punjab Energy Efficiency and Conservation Agency Waqas Hussain Manager Compliance, PEECA Peeca.mc1@energy.punjab.gov.pk Transport and Mass Transit Department, Government of Punjab Waseem Akram Director, Transport Planning Unit waseemakram555@hotmail.com Planning and Development Board, Government of Punjab Saba Ashgar Ali Chief Environment Srchiefca@pndpunjab.gov.pk Agriculture Department, Government of Punjab Sajid Mehmood Director General, Agriculture, Field Wing fieldwing@gmail.com Industries Department, Government of Punjab Asif Ali Farrukh Director General, Industries asif.farrukh.ansari@gmail.com FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects Page 11