Technical Assistance Report Project Number: 42056 Capacity Development Technical Assistance (CDTA) December 2008 People s Republic of China: Design of the National Sulfur Dioxide Emission Trading System The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.
CURRENCY EQUIVALENTS (as of 20 October 2008) Currency Unit yuan(cny) CNY1.00 = $0.146 $1.00 = CNY6.844 ADB ATS CAEP ETS GW MEP Mtce NDRC NO x PRC SO 2 US USEPA TA ABBREVIATIONS Asian Development Bank allowance tracking system Chinese Academy of Environmental Planning emission tracking system gigawatt Ministry of Environmental Protection million tons of coal equivalent National Development and Reform Commission nitrogen oxide People s Republic of China sulfur dioxide United States United States Environmental Protection Agency technical assistance TECHNICAL ASSISTANCE CLASSIFICATION Type Capacity development technical assistance (CDTA) Targeting Classification General intervention Sector Energy Subsector Energy sector development Themes Sustainable economic growth, environmental sustainability, capacity development Subthemes Promoting economic efficiency and enabling markets; cleaner production, control of industrial pollution; institutional development NOTE In this report, "$" refers to US dollars. Vice-President C. Lawrence Greenwood, Jr., Operation 2 Director General K. Gerhaeusser, East Asia Department (EARD) Director A. Terway, Energy Division, EARD Team leader Team member M. Pajarillo, Finance Specialist (Energy), EARD A. Maxwell, Energy Specialist, PARD
I. INTRODUCTION 1. During the 2007 Country Programming Mission, the Government of the People s Republic of China (PRC) requested technical assistance (TA) from Asian Development Bank (ADB) to assist with the design and implementation of a national sulfur dioxide (SO 2 ) trading system. The TA concept paper was approved on 2 April 2008, and a reconnaissance mission was fielded on 12 March 2008. 1 A Fact-Finding mission was held from 2630 May 2008, and it resulted in an agreement with the Government on the impact, outcome, outputs, implementation arrangements, and financing plan of the TA project. The TA project design and monitoring framework are in Appendix 1. II. ISSUES 2. Economic growth in the PRC has averaged more than 9.5% annually for the past two decades. Growth in the PRC now accounts for about 15% of global economic growth, up from 3% in 1980. By 2010, the economy is expected to double from its 2000 level, and is expected to quadruple by 2020. Energy demand has grown in parallel with the growing economy. Since 2000, annual electricity consumption growth has averaged about 13%. The current growth in power generation capacity is unprecedented; installed generation capacity has increased at an annual average of more than 8% over the past two decades. In both 2006 and 2007, 105 gigawatts (GW) of new capacity were installed in each year. These increases represented a record annual increase for any country (one year capacity addition alone is equivalent to the entire installed capacity of Africa). As the economy grows further, it is anticipated that electricity demand will continue to grow rapidly. Currently, energy demand in the PRC is the second highest in the world, and is projected to overtake the leader, the United States (US), by 2011. It is projected that the PRC will account for 20% of global energy demand by 2030. 2 Annual per capita electricity consumption has risen dramatically in recent decades, from 340 kilowatt-hours (kwh) in 1983 to 1,840 kwh in 2005. As per capita income continues to rise, consumption is also expected to increase. 3. The PRC energy sector is heavily dependent on coal; approximately 69% of the PRC's primary energy supply is from coal, and 82% of electricity is generated from coal. The PRC is well endowed with coal; it has the third largest proven coal reserves in the world. It is the world s largest coal producer as well as the largest consumer. Coal production accounted for 38% of global production in 2005; this figure is projected to increase to 49% by 2030. Coal demand increased from 446 million tons of coal equivalent (Mtce) in 1980 to 1,563 Mtce in 2005, and is projected to increase to 3,462 Mtce by 2030. It is expected that the PRC will remain heavily dependent on coal for power generation for the foreseeable future. Emissions from coal-fired power generation, particularly SO 2 and oxides of nitrogen (NO x ) are a significant contributor to air pollution and the primary cause of acid rain. Approximately 48% of cities fail to meet the national air quality standards. 3 Acid deposition causes deterioration in public health, reduced agricultural productivity, damage to infrastructure, and ecosystem degradation. Coal-fired power generation accounts for about 52% of the nation s SO 2 emissions (2005). Acid rain falls on onethird of the country and is estimated to annually cause $4 billion in crop damage and $0.9 billion in material damage (footnote 3). 1 The TA first appeared in the business opportunities section of ADB s website on 7 April 2008. 2 International Energy Agency. 2007. World Energy Outlook. Paris Cedex 15, France. 3 World Bank. 2007. Cost of Pollution in China: Economic Estimates of Physical Damage, Conference Edition. Washington, DC.
2 4. SO 2 emissions in the PRC gradually decreased throughout the 1990 s, primarily attributed to (i) Government policies mandating the use of low-sulfur coal in power generation, (ii) programs resulting in the closure of small boilers, and (iii) slower electricity demand growth as a result of the 1997 financial crisis. However, unprecedented growth in the energy sector since 2002 has led to steadily increasing SO 2 emissions. The 10th Five Year Plan (20002005) targeted an SO 2 emission reduction of 10%; instead, emissions increased by 27%, primarily because of a 64% expansion in coal-fired generation capacity. In 2005, total SO 2 emissions in the PRC were 25.9 million tons, the highest in the world. 5. In response, the Government has introduced a number of measures to reduce SO 2 emissions, including (i) mandating installation of flue gas desulfurization units in power plants; (ii) closing small, inefficient boilers; (iii) strengthening regulations regarding coal washing; (iv) requiring increased use of low-sulfur coal; and (v) introducing total emission control policies. As of 2000, only 2% (5 GW) of thermal generation capacity had flue gas desulfurization units installed. By the end of 2007, this percentage had increased to 48.7% (270 GW), and it is projected to increase to 60% by 2010. Power generation in the PRC has historically been dominated by small, inefficient generating units, which tend to lack sophisticated emissioncontrol equipment. In 2005, 29.4% of installed capacity was from units less than 100 MW, however, this share is expected to decrease due to (i) mandated policies on closing small boilers (25 GW were decommissioned in 2006 and 2007), and (ii) dominance of larger units for new installations. The 11th Five-Year Plan (20062010) has established a mandatory SO 2 emission reduction target of 10%. Reaching this target will be a major challenge, as generation capacity is projected to increase by 45% during the same period. In 2006 emissions increased 1.7%, to 25.94 million tons; however, in 2007 emissions decreased by 6.6%, to 24.23 million tons. 4 To encourage sustainable reductions in SO 2 emissions, the Government is proposing that a market-based SO 2 trading system be utilized to complement command-and-control instruments. 6. The introduction of an SO 2 trading system provides a market-based mechanism to manage SO 2 emissions at the least economic cost. The Government sets a national emissions cap, then establishes an emission trading platform based on emission allowances allocated to SO 2 emitters. Emission sources with excess reductions can then trade their allowances. The trading system operates to identify least-cost emission reductions. This cap-and-trade system complements existing policy initiatives to reduce SO 2 emissions. 7. The PRC is a suitable country for establishing a national SO 2 trading system because (i) emissions from readily monitorable point sources (i.e., power plant stacks) constitute a relatively high percentage of total emissions, (ii) there is a wide range of marginal control costs between emission sources, (iii) the Government has shown a strong commitment to controlling SO 2 emissions, and (iv) important lessons have been learned through a number of pilot SO 2 trading projects. SO 2 trading has been successfully introduced internationally, notably in the US, where it was introduced by the US Environmental Protection Agency (USEPA) under the Acid Rain Program. The US experience confirms that SO 2 trading can be an effective market-based mechanism that efficiently allocates resources to lower the overall cost of system compliance. The USEPA estimates that SO 2 trading has reduced the cost of compliance with the SO 2 emissions cap from $7 billion$9 billion to $1 billion$1.5 billion per year. 4 Ministry of Environmental Protection. 2008. China Environmental Statistics. Beijing.
3 8. However, there are a number of barriers to the successful implementation of an SO 2 trading system, including (i) a lack of established trading platforms (i.e., emissions trading system and allowance tracking systems); (ii) a relatively low level of installation of continuous emission monitoring equipment on power plant emission stacks, resulting in relatively poorquality compliance data; (iii) inconsistent reporting formats from power plants, (iv) difficulties with emission verification and compliance; and (v) large variations in implementation capacities at the provincial government and power plant levels. 9. The promotion of SO 2 trading aligns closely with the Government s 11th Five-Year Plan target of reducing SO 2 emissions. Support for establishing an SO 2 trading system is also consistent with ADB's (i) long-term strategic framework 20082020 (Strategy 2020) priority of environmentally sustainable growth, 5 and (ii) PRC country partnership strategy (20082010) strategic pillar of resource efficiency and environmental sustainability. 6 ADB has been actively supporting SO 2 emission reduction in the PRC. In 2004, ADB supported one of the first pilot projects of an SO 2 trading scheme in Taiyuan City. 7 ADB also extended a loan for Anhui Province 8 that targeted industrial retrofits to reduce SO 2 emissions. ADB currently has six ongoing loans in the PRC energy sector, resulting in an annual reduction of 66,000 tons SO 2 when the projects become fully operational. 10. Pilot SO 2 trading projects at the city and provincial levels in the PRC have provided valuable lessons for developing a national trading scheme. The pilot project in Taiyuan demonstrated the need for establishing a robust regulatory framework prior to implementation of the trading scheme, and for allowing sufficient time to test the emission trading and tracking software. The pilot projects have also clearly demonstrated the necessity for transparent emission reporting guidelines to allow emitters to gauge potential impacts to business, and the necessity for a high degree of support from provincial and local governments. The PRC has a Total Emissions Control program that specifies a national SO 2 emission target and allocates targets to provincial and municipal levels. Once the trading platform is available, regulations will be issued by the Government to require emitters to meet the target through the cap-and-trade system. III. THE TECHNICAL ASSISTANCE A. Impact and Outcome 11. The impact of the TA will be improved environmental conditions through reduced SO 2 emissions, and the outcome will be the establishment of a national SO 2 trading system. 5 ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank 2008-2020. Manila. 6 ADB. 2008. Country Partnership Strategy (2008-2010): People s Republic of China. Manila. 7 ADB. 2006. Project Completion Report on the Shanxi Environment Improvement Project in the People s Republic of China (Loan 1715-PRC). Manila. 8 ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People s Republic of China for Acid Rain Control and Environmental Improvement Project. Manila. (Loan 1890- PRC, approved on 19 December, for $147 million).
4 B. Methodology and Key Activities 12. The TA will include the following components: 1. Component 1: Emission Tracking System and Allowance Tracking System 13. Component 1 will assist the Ministry of Environmental Protection (MEP) to develop the SO 2 trading system by establishing an emission tracking system (ETS) and an allowance tracking system (ATS). The ETS is an electronic reporting system that collects, reviews, and manages emission data from emission sources. The ATS is a separate electronic reporting system that collects, validates, and manages emission allowance transactions undertaken by emission sources. Data from both the ETS (tracking source emissions) and the ATS (tracking trade of allowances) are required for operation and compliance monitoring of the emission trading system. It will include (i) development of operational manuals; (ii) development of relevant ETS and ATS software suitable for use in the PRC, based on existing software used for the US SO 2 trading system; (iii) training of relevant officials in the operation of ETS and ATS software; and (iv) pilot testing of ETS and ATS software on selected power plants. The manuals and software developed will complement the existing regulatory framework. 2. Component 2: Emission Monitoring, Verification, and Reporting Standards 14. An emissions trading system requires clear and practical compliance guidelines to ensure consistency in implementation and equitable distribution of emission allowances. To support implementation of the emissions trading system, component 2 will support the drafting of power plant emission monitoring, verification, and reporting standards for the SO 2 trading system, including but not limited to (i) monitoring-equipment requirements; (ii) requirements for installation and maintenance of monitoring equipment; (iii) procedures for stack-emission monitoring; and (iv) procedures for recording, storing, and reporting emissions data. 3. Component 3: Capacity Development and Information Dissemination 15. Component 3 will consist of a series of workshops held in three regional centers to build capacity and increase awareness of the newly developed proposed SO 2 trading system. The workshops will target staff from the local environment protection bureaus (EPBs) and power generating companies. The workshops will enhance the understanding of the objectives and benefits of the proposed system, and will discuss the details of the system's operations, stakeholder responsibilities, trading procedures and principles, and proposed implementation schedule. The workshops will also provide a venue for the local EPBs to learn about the experiences of the SO 2 trading system in the pilot trading centers. 16. The main deliverables from the TA will be (i) an SO 2 trading system consisting of ETS and ATS software; (ii) operational manuals for the SO 2 trading system; (iii) SO 2 emission monitoring, verification, and reporting standards; and (iv) three information dissemination workshops. C. Cost and Financing 17. The total cost of the TA is estimated at $700,000, of which $500,000 will be financed by ADB s TA funding program. Counterpart financing will consist of in-kind contributions equivalent
5 to $200,000 in the form of office space, facilities, and salaries of counterpart staff. Details of the cost estimates and financing plan are provided in Appendix 2. D. Implementation Arrangements 18. The TA will be implemented over a 1-year period from January 2009 to January 2010. The MEP will be the Executing Agency for the Project. International and national consultants will be recruited in accordance with ADB s Guidelines on the Use of Consultants (2007, as amended from time to time). The consultants services will be provided through a consulting firm selected after the submission of simplified technical proposals and the use of quality- and costbased selection methods (qualitycost ratio of 80:20). Software design companies for development of the ETS and ATS software will be provided through consultants qualifications selection; the selection criteria will include the ability to extend continuing service for debugging and updating the software during the initial years of the implementation of the national SO 2 trading system. 19. Equipment will be financed under the TA and will be procured by international consultants in accordance with ADB s Procurement Guidelines (2007, as amended from time to time). This equipment will be handed over to the Executing Agency upon completion of the TA project. Coordination among the consultants will be managed by the Executing Agency through the Foreign Economic Cooperation Office (FECO), which will act as the project management office. The estimated allocation of consulting services will be 2 international consultants (combined 4 person-months), and 4 national consultants (combined 24 person-months). The international consultants will consist of (i) an SO 2 trading specialist, and (ii) an emissions monitoring specialist. The national consultants will consist of (i) a senior SO 2 trading specialist, (ii) an SO 2 trading specialist, and (iii) two emission monitoring specialists. The USEPA will provide implementation support for component 1 and component 2. IV. THE PRESIDENT'S DECISION 20. The President, acting under the authority delegated by the Board, has approved the provision of technical assistance not exceeding the equivalent of $500,000 on a grant basis to the Government of the People s Republic of China for the Design of the National Sulfur Dioxide Emission Trading System, and hereby reports this action to the Board.
6 Appendix 1 Design Summary Impact DESIGN AND MONITORING FRAMEWORK Performance Data Targets/Indicators Sources/Reporting Mechanisms Assumption Assumptions and Risks Improved environment through reduced SO 2 emissions Reduced occurrence of acid rain after launch of the SO 2 trading system by 2013 PRC Statistical Yearbook PRC government maintains strong commitment to establishing the SO 2 trading system. Outcomes Assumptions Establishment of a national SO 2 trading system SO 2 trading system becomes operational by 2013 Reduced national annual SO 2 emissions from the power generating sector to 10 million tons by December 2013 MEP website Correspondence with MEP Government will establish necessary policy framework for SO 2 trading system Power generating companies will actively support the SO 2 trading system Risk Delays occur in implementation of SO 2 trading system Outputs Assumption 1. Establishment of a draft emissions tracking system (ETS) and draft allowance tracking system (ATS), including operational manuals, software, and training activities 2. Draft emission monitoring, verification, and reporting standards 3. Capacity development and information dissemination workshops ETS and ATS software prepared and piloting completed by March 2010 Draft standards completed by March 2010 Minimum of 150 staff (total) from provincial government officials, local EPB, and power plant staff informed about the SO 2 trading policy, aware of lessons learned from the operations of pilot trading systems, and trained on the proposed SO 2 trading system and operating procedures Midterm review report Consultants report Workshop reports Stakeholders participate fully in consultations and workshops Risks Difficulties may be encountered in locating suitably experienced consultants Required decisions on SO 2 trading system may not be available on time, resulting in draft ETS and ATS requiring significant modifications Activities with Milestones Activity 1: Emission Tracking System and Allowance Tracking System 1.1 Submit an inception report 2 months after commencement of component 1 1.2 Deliver preliminary ETS and ATS software suitable for operating an SO2 trading system in PRC 6 months after commencement of component 1 1.3 Complete ETS and ATS software testing 3 months after receiving preliminary software 1.4 Deliver final ETS and ATS software 2 months after completion of software testing Inputs ADB: $500,000 Technical Assistance Special Fund Government Contribution: $200,000 in-kind contribution
Appendix 1 7 1.5 Submit the draft operational manuals within 2 months of delivery of the preliminary ETS and ATS software 1.6 Conduct training activities for PRC officials in the operation of the US SO 2 trading systems 4 months after commencement of the TA project Activity 2: Emission Monitoring, Verification and Reporting Standards 2.1 Submit draft emission monitoring, verification, and reporting standards 8 months after commencement of TA 2.2 Submit final emission monitoring, verification, and reporting standards 1 month after receiving comments on draft documents Activity 3: Capacity Development and Information Dissemination 3.1 Submit dissemination workshop plan within 10 months of commencement of the TA project 3.2 Complete dissemination workshops within 12 months of commencement of the TA project ADB = Asian Development Bank; ATS = allowance tracking system; ETS = emissions tracking system; MEP = Ministry of Environmental Protection, PRC = People s Republic of China; SO 2 = sulfur dioxide; TA = technical assistance.
8 Appendix 2 a b COST ESTIMATES AND FINANCING PLAN ($ 000) Total Item Cost A. Asian Development Bank Financing a 1. Consultants a. Remuneration and Per Diem i. International Consultants 92.0 ii. National Consultants 110.0 b. International and Local Travel 38.0 c. Reporting and Translation 10.0 2. Equipment b 20.0 3. Software Design 150.0 4. Training, Seminars, and Conferences 45.0 5. Contingencies 35.0 Subtotal (A) 500.0 B. Counterpart Financing 1. Office Accommodation and Transport 100.0 2. Remuneration and Per Diem of Counterpart Staff 100.0 Subtotal (B) 200.0 Total 700.0 Financed by the Asian Development Bank s technical assistance funding program. Equipment will include desktop computers, servers, and associated computer hardware required for emission tracking system and allowance tracking system. Source: Asian Development Bank estimates.
Appendix 3 9 A. International Consultants OUTLINE CONSULTANTS TERMS OF REFERENCE 1. International SO 2 Emission Trading Specialist (2 person-months). The international emission trading specialist will undertake the following tasks under component 1: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) Act as team leader for component 1 and work closely with the national consultants to achieve the proposed scope of works. Provide technical support for preparation of the emission trading system (ETS) and allowance trading system (ATS) operational manuals including, but not limited to, (a) determining manual contents, (b) developing detailed work tasks and delivery schedules for consultants, and (c) technical quality assurance and control of the outputs. The operational manuals will detail procedures for the management and day-to-day operations of the emission trading system. Incorporate international experience regarding operation of ETS and ATS into the operational manuals. Develop the draft terms of reference and evaluation criteria for the selection of the software developer. Liaise closely with the software developer to ensure that the operational manuals are consistent with the ETS and ATS software design. Provide technical input into the design of the training program for Government officials in the operation of the existing United States Environmental Protection Agency (USEPA) SO 2 trading ETS and ATS. Design the ETS and ATS pilot testing programs under component 1. Provide supervision for the pilot testing and quality assurance of the output. The pilot testing will be managed and undertaken by the national SO 2 emissions trading specialist. Liaise closely with the Ministry of Environmental Protection (MEP) and Chinese Academy of Environmental Planning (CAEP) on the implementation requirements, and with the National Development and Reform Commission (NDRC) on policy issues. Provide guidance and technical input for the design of the proposed workshops under component 3. Submit the operational manuals in draft format for review by MEP, CAEP, Asian Development Bank (ADB), and USEPA. Incorporate comments received into the final report. All draft and final manuals will be provided in English and Chinese. Closely manage the quality of the English version of the operational manuals. 2. International Emissions Monitoring Specialist (2 person-months). The international emissions monitoring specialist will undertake the following tasks under component 2: (i) (ii) (iii) (iv) Act as team leader for component 2 and work closely with the national consultants to achieve the proposed scope of works. Prepare a stakeholder consultation plan for review and approval by MEP and ADB. Supervise consultation with key stakeholders including, but not limited to (a) MEP, (b) CAEP, (c) power plant owners and operators, (d) China Electricity Council, and (e) provincial-level environmental protection bureaus. Assess current practices and issues in the PRC related to SO 2 emission monitoring, verification, and reporting. Develop recommendations to overcome
10 Appendix 3 issues and barriers. Incorporate lessons learned and recommendations into the draft monitoring, verification, and reporting standards. (v) Prepare draft standards for power plant emission monitoring, verification, and reporting, including (a) monitoring-equipment requirements, (b) monitoringequipment installation and maintenance requirements (c) stack emission monitoring procedures, (d) verification procedures, and (e) data recording, storage, and reporting procedures. (vi) Incorporate international experience regarding SO 2 emission monitoring, verification, and reporting of ETS and ATS systems into the draft standards. (vii) Submit the draft emission monitoring and reporting standards for review by MEP, CAEP, ADB, and USEPA. Include consultation activities undertaken. Incorporate comments received into the final report. All draft and final manuals will be provided in English and Chinese. (viii) Provide technical input for the design of the proposed workshops under component 3. (ix) Closely manage the quality of the English version of the emission monitoring, verification, and reporting standards. B. National Consultants 3. National Senior SO 2 Emission Trading Specialist (6 person-months). The national senior emission trading specialist will undertake the following tasks under component 1: (i) Act as team leader of the national consultants for component 1 and work closely with the international consultant to achieve the proposed scope of works. (ii) Prepare the ETS and ATS operational manuals, in accordance with the contents determined by the international consultant. The operational manuals will utilize, where suitable, existing documents used by the United States SO 2 emission trading system. The operational manuals will detail procedures for the management and day-to-day operations of the emission trading system, including, but not limited to, (a) detailed design of ETS and ATS systems, (b) organizational structure and delegation of responsibilities for the controlling body, (c) reporting requirements, procedures, and formats, (d) data flow and quality assurance procedures, and (e) compliance procedures. (iii) Develop the draft terms of reference and evaluation criteria for the selection of the system developer. Liaise closely with the software developer to ensure that the operational manuals are consistent with the ETS and ATS software design. (iv) Consult closely with MEP, CAEP, and NDRC. (v) Submit the operational manuals in draft format for review by MEP, CAEP, ADB, and USEPA. Incorporate comments received into the final report. All draft and final manuals will be provided in English and Chinese. (vi) Prepare program design and act as resource person for the proposed workshops under component 3. (vii) Prepare short reports detailing training activities undertaken on the US SO 2 trading system and the regional workshops under component 3.
Appendix 3 11 4. National SO 2 Emission Trading Specialist. (6 person-months). The national emission trading specialist will undertake the following tasks under component 1 and component 3: (i) (ii) (iii) (iv) (v) (vi) Conduct the pilot testing of the ETS and ATS processes, using the ETS and ATS management software. The detailed scope of works of the pilot testing will be determined in detailed discussion with MEP and the international consultant. The pilot testing will include (a) using real-time emissions data to assess the reporting procedures and software capacity, and (b) development of "dummy" allowance allocations and trade to test the ATS software. Conduct the pilot testing in close coordination with the software designers and provide clear feedback to the designers on requirements for improvements. Prepare a report on the outcome of pilot testing of the ETS and ATS, including a review of the pilot design, results from the pilot (including raw data), analysis of results, lessons learned, and recommendations regarding ETS and ATS design and operation. Submit the draft report for review by MEP, CAEP, ADB, and USEPA. Incorporate comments received into the final report. All draft and final manuals will be provided in English and Chinese. Design technical content for workshops under component 3, including coordination of workshop presentations, speakers, and schedules, and act as resource person for the workshop. 5. National emission monitoring specialists (2 positions, 6 person-months each). The national specialists will undertake the following tasks: (i) (ii) (iii) (iv) (v) (vi) (vii) Work closely with the national consultants to achieve the proposed scope of works. Assist the international consultant with preparing a stakeholder consultation plan for review and approval by MEP and ADB. Undertake consultations with key stakeholders including, but not limited to, (a) MEP, (b) CAEP, (c) power plant owners and operators, (d) China Electricity Council, (e) provincial-level environmental protection bureaus. Assess current practices and issues in the PRC related to SO 2 emission monitoring, verification, and reporting. Develop recommendations to overcome issues and barriers. Incorporate lessons learned and recommendations into the draft monitoring, verification, and monitoring standards. Prepare draft standards for power plant emission monitoring, verification, and reporting including (a) monitoring-equipment requirements, (b) monitoringequipment installation and maintenance requirements (c) stack emission monitoring procedures, (d) verification procedures, and (e) data recording, storage, and reporting procedures. Submit the draft emission monitoring, verification, and reporting standards for review by MEP, CAEP, ADB, and USEPA. Include details of consultation activities undertaken and analysis of issues. Incorporate comments received into the final report. All draft and final manuals will be provided in English and Chinese. Provide technical input for the design and act as resource person for the proposed workshops under component 3.