Brick Kiln Prpsl 8.30.03

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					                           UNITED NATIONS DEVELOPMENT PROGRAMME
                                    Global Environment Facility
                                  Proposal for PDF Block B Grant


IDENTIFIERS:

PIMS Number                            2837
Project Number:                        BGD/03/GXX
Project Title:                         Bangladesh: Improving Kiln Efficiency in the Brick Making Industry
                                       (IKEBMI)
PDF-B Duration:                        15157 months
Implementation Agency:                 UNDP
Executing Agency:                      UNOPS
Requesting Country:                    Bangladesh
Country Eligibility:                   Ratified by the UNFCCC on 15 April 1994.
GEF Focal Area:                        Climate Change
GEF Operational Programme:             OP-5: Removal of Barriers to Energy Conservation and Energy
                                       Efficiency

Block A Grant Requested:               No


SUMMARY

Brick making is one of the largest sources of greenhouse gas emissions in Bangladesh. Outmoded,
inefficient and poorly constructed kilns and the use of substandard fuels such as high sulphur coal, tires
and wood energy in the kilns have all contributed to these high levels of kiln emissions. The situation has
exacerbated in the last decade due to the rapid expansion of brick production using these same
technologies and methods. Unless interventions that will induce change are implemented, greenhouse gas
(GHG) emissions will continue to grow unabated. .

The purpose of the proposed GEF-OP5 project is to create an enabling environment to facilitate the
adoption of energy efficient and cost effective kiln technologies to reduce GHG emissions. . To this end,
the project will undertake activities to remove existing policy, institutional, technical, informational and
financial barriers that have inhibited the use of efficient technologies and practices in the past. .

Adoption of proposed energy efficient kiln technologies will also lead to a decline in the emissions of other
pollutants and markedly improve the profitability of the small to medium enterprises (SME’s) that form the
bulk of the industry. . This will assist in the commercialisation of the technologies and ensure their long-
term sustainability. The project is timely in that the government, and the citizens of urban areas who have
been severely affected, are urgently seeking ways and means to mitigate the impact of brick making on the
environment.


                                                                                                      Page 1 of 54
The PDF B activities for which funding is being sought will identify and design the scope and activities of
the full project to ensure effective dissemination of energy efficient technologies. . The preparatory
activities conceived for this exercise, however, depart from traditional design methodologies in one
significant way: it envisages the design and construction of one demonstration kiln, which would normally
be a project activity. . This has been proposed to enable early testing of new kilns using local clay
materials. . During the PDF B stage, a full package of activities will be undertaken to identify existing
barriers and to formulate a critical intervention path to ensure the expected outcomes. It is anticipated that
these activities will create the critical mass necessary to develop the GEF Project Brief and the UNDP Draft
Project Document and to bring together a large number of potential and existing stakeholders such as the
brick industry, commercial lending institutions, government regulators, technology arbiters (the technical
academic institutions from China and Bangladesh) and civil society. Considering the number of barriers to
be removed and the complex nature of the activities, the PDF B grant being sought is considered
reasonable and eminently justifiable. . The project proponents and stakeholders have already undertaken
a number of pre-project activities to accelerate the implementation of the project and to ensure its early
success.


Burnt bricks are the major source of building materials used in Bangladesh while. A, at the same time, it is
also being one of the largest sources of GHG emissions. The main cause for this is the use of outmoded
kilns that burn inefficiently and leak through the kiln walls. iIn an industry that is energy-intensive and
resource depleting,. Ssuch excessive use of energy has also put increasing pressure on producers as they
struggle to maintain profitability, causing them to substitute sub-standard energy resources which. This has
led to a worsening situation.

This GEF-OP 5 project intends to introduce clean, efficient and cost effective kiln technologies to reduce
greenhouse gasses that are now being emitted by the brick industry. To this end, effective technology
diffusion activities will be undertaken to ensure widespread adoption of the proposed technologies through
removal of existing policy, institutional, technical, informational and financial barriers that have inhibited the
adoption of more energy efficient technologies and practices in the past. In addition to the reduction in
GHG emissions, adoption of the proposed energy efficient kilns (EEK) will lead to collateral reductions in
local pollution and increase in the profitability of the small to medium brick making enterprises (SME’s) that
form the bulk of the industry. This latter consequence is expected to lead to the commercialisation of the
technologies, thereby ensuring its long-runterm sustainability. The project is timely in that the government,
and the citizens of urban areas who have been severely effected, are urgently seeking ways and means to
mitigate the impact of brick making on the environment.

This is a PDF B proposal to identify and design the scope of activities and the steps to be undertaken to
ensure implementation of the proposed project. The preparatory activities conceived for this exercise,
however, departs from traditional design methodologies in one significant way.: It envisages the design
and construction of one demonstration kiln which would normally be a full project activity. This has been
proposed to enable early testing of the kilns using local clay materials. During the PDF B stage, a full
package of activities will be undertaken to identify the barriers will be undertaken and a critical intervention
path will be designed to ensure the expected outcomes. The proposed PDF B activities are expected to
create the critical mass necessary to develop the Project Executive Summary and the Project Document
and to bring together a large number of potential and existing stakeholders such as the brick industry,
commercial lending institutions, government regulators, technology arbiters (the technical academic


                                                                                                           Page 2 of 54
institutions from China and Bangladesh) and civil society. Considering the number of barriers to be
removed and the complex nature of the activities, the PDF B grant being sought is considered reasonable
and eminently justifiable. The project proponents and stakeholders have already undertaken a number of
pre-project activities to accelerate the implementation of the project and to ensure its early success.



COSTS AND FINANCING (US$)

                  GEF                                            US$           64%
                                                      350,348,000000
                  Co-financing:
                   UNDP Bangladesh                     US$ 2255,000             5%
                   Government of China                                                                         Formatted: Bullets and Numbering
                   Bangladesh University of
                      Engineering and Technology         US$ 15,000$             2%
                      (in-kind)                               10,000
                   Clean Energy Alternatives (in-
                      kind)                                                      2%
                   Private Sector Financial               US$ 35,000
                      Institutionsgroups (cash)                11,000            1%
                  Private Sector Brick Making
                      EntitiesTechnology Owners                                18%
                      (in kind)                          US$ 306,000
                   Bankers (in kind)                                            9%
                                                                 US$
                                                         2096,000,000

                                                        US$ 1052,000

                  Total                                         US$          100 %*
                                                       4855486870,00
                                                                   0

* Percentages may not add up due to rounding




                                                                                                 Page 3 of 54
Page 4 of 54
Background and Context

In aggregate starved Bangladesh, fired clay bricks form the bulk of the materials used in the construction
industry. . They are the major “building-blocks” in all infrastructure, building, road and highway projects.
Studies in the 1990’s show that out of 14.8 million households, 3.7 million or 25% used bricks as wall
materials. Growth trends also show that demand for bricks has been steadily increasing at about 10%
annually. The growth has come mainly from the construction industry, which has been growing above GDP
rates. In the 1980’s and 1990’s while GDP grew at about 4%, the construction industry grew at 5.5%. .
There has also been a perceptible increase in its use in non-traditional areas as incomes have risen; bricks
are a preferred material for housing since they have superior thermal properties and are visually more
pleasing. . The output of bricks has also been quite elastic, growing in response to increases in demand.
There are now between 4,000 and 8,000 kilns operating in Bangladesh. . The large discrepancy in
estimates is due to unlicensed, informal kilns that operate every brick-making season. .

Brick making is yet to be classified as an industry in Bangladesh. . Characteristically, though, it can be
described as a “footloose” industry. . Production is seasonal, confined to the six to seven dry months of the
year; technology outdated; labor productivity low; capitalization non-existent, mostly operating on equity
capital; and management, informal. . Small and medium enterprises (SMEs) dominate the ownership
pattern with little or no cooperative or large-scale operations. . An overriding characteristic of brick makers
is the extreme difficulty that they have with working capital; they are able to finance their activities only
through informal “banking” channels such as family, friends and moneylenders. . In addition to high lending
rates, these channels are cumbersome, time consuming and, mostly, inadequate. . A national standard for
building bricks exists, but most of the production does not meet these standards in one or more of the
specifications. .

There are several barriers that contribute to the current state of the brick making “industry” (BMI) and its
inability to bring about changes:

       Lack of supporting regulations to encourage more energy-efficient practices and technologies. .                Formatted: Bullets and Numbering
        There has been little or no activity by the government to assist the brick industry in developing a
        comprehensive program to make the industry less polluting and more profitable. . Brick makers
        have been left to develop the industry on their own which they have failed to do. . Some changes,
        however, have been initiated but these have come not from the traditional brick makers but a few
        new entrants;

       Lack of access to energy efficient technologies that can also lower production costs. .                        Formatted: Bullets and Numbering
        Comprehensive technology diffusion programs that demonstrate the potential economic benefits of
        energy-efficient technologies have yet to be carried out;

       Lack of access to liquidity to finance modernisation of plant and equipment; and                               Formatted: Bullets and Numbering


       Lack of awareness of energy-environmental issues. The members of the Bangladesh Brick                          Formatted: Bullets and Numbering
        Manufacturing Owners Association (BBMOA) lack understanding of the basic concepts of climate
        change impacts as it relates to GHG emissions.




                                                                                                        Page 5 of 54
It is in this context that a barrier removing, technology market transformation model has been proposed. .
This project will be one of Bangladesh’s first climate change projects and will be viewed as a catalyst for
such projects in the future.


In aggregate starved Bangladesh, fired clay bricks form the bulk of the materials in used in the construction
industry. It is the major “building-block” in all infrastructure, building, road and highway projects. For
instance, in the 90’s out of 14.8 million households in the 1990’s, 3.7 million or 25% used bricks as wall
materials. In recent years, demand for bricks has grown substantially along with the growth in urban
population. There has also been a perceptible increase in its use elsewhere as incomes have risen in
semi-rural areas. Bricks are a preferred material for housing since they have superior thermal properties
and are visually more pleasing. The output of bricks has also been quite elastic, growing in response to
increases in demand. There are now between 4,000 and 8,000 kilns in operation. (The large discrepancy
in these estimates is due to the unlicensed, informal kilns that operate every year). Studies indicate that
the construction industry has been growing above GDP growth rates. In the 80’s and 90’s whilest GDP
grew at about 4%, the construction industry grew at 5.5%. The Bangladesh University of Engineering and
Technology (BUET)/ Pembina Report (footnote reference??) and the Bangladesh Brick Manufacturers
Owners Association (BBMOA) expect the number of brick kilns to grow by more than 50% in the next
decade. A major portion of the capacity expansion and the accompanying growth in emissions is expected
to occur along the same lines as the existing “industry” unless effective interventions are carried out.

Brick making is yet to be classified as an industry in Bangladesh. Characteristically, though, it can be
described as a “footloose” industry. Production is seasonally confined to five dry months of the year;
technology is outdated; labor productivity is low; capitalization is non-existent, mostly dependent on equity
capital; and management is informal. Small and medium enterprises (SMEs) dominate the ownership
pattern, and; cooperative or large-scale operations are mostly absent. A national standard for building
bricks exists, but most of the production does not meet standards in one or more of the specifications.

As observed previously, the technology used in most of the kilns is primitive and energy intensive,. They
are predominantly based on the Bull’s Trench Kiln (BTK), a technology that is over 150 years old. These
kilns are highly inefficient in terms of fuel use and, being poorly constructed, cause excessive air leakage
and heat loss from the system resulting in high GHG emissions. Annual CO2 emissions from brick kilns are             Formatted
estimated to be anywhere between 3.3 to 6.6 million tonnes of CO2. This excessive use of energy has put
increasing pressure on profits, causing producers to substitute sub-standard and easily available energy
resources. Most alarming is the use of firewood in a country where such resources are scarce. Most
studies carried out in the early 1980s identified this as the primary cause of deforestation in Bangladesh.
The BBMOA estimates that as much as 25% of the fuel used in brick kilns are is still from firewood. In
attempts to regulate the environmental impacts from the BMI, the government (GoB) prohibited the use of
firewood in brick kilns in 1989 through the promulgation of a “Brick Burning (Control) Act, 1989, (Act #8 of
1989) and the Brick Burning (Control) Amendment Act, 1992 which controls brick burning through issuance
of licenses from the appropriate authorities. The National Environment Management Action Plan (NEMAP)
of the early 1990s was an opportunity for civil society inputs into managing the country’s environmental
concerns. One of NEMAPs environmental priorities was reducing the pollution from the BMI. GoB’s
response to NEMAP was to promulgate the Environmental Conservation Act 1995 and Rules 1997 that
included legislation to control brick kiln emissions. A 2001 decision by the Ministry of Environment and
Forest (MoEF) in 2001 now only permits new brick kilns to be operational only if 120-foot high chimneys are
constructed. There have been reports of compliance to this regulation only in areas where the likelihood of


                                                                                                      Page 6 of 54
enforcement is higher; in others, BTK’s continue to operate in large numbers. Enforcement has failed
primarily because government interventions lack stakeholder “buy-in”; interventions are more protectionist
and policing and less developmental. Moreover, both the Department of Environment (DoE) and the
District Commissioners who have been tasked directed to enforce regulations lack the ability to do so. The              Comment [arp1]:               Page: 4
government has, for a variety of reasons, been unable to assist the BMI too in converting their kilns to clean          Can this be replaced by “controlling” or
                                                                                                                        “restrictive”?
and cost effective technologies. The BMI too also has been unable, collectively or individually, to develop
                                                                                                                        Comment [arp2]: Page: 4
and adapt technological innovations or to access cost-effective and clean technologies on its own because               What does this mean? Less developmental how/in
due toof its inherent characteristics.                                                                                  what way?
                                                                                                                        Comment [arp3]: Page: 4
Some attempts have been made to introduce different types of kilns in Bangladesh, but these have been                   Adapt or adopt?

largely from India where the industry is still in a transitional state. Therefore, the attempts have been
mostly based on intermediate technology compriseding of the Fixed Chimney Kiln (FCK) and the Zigzag
Kiln, both fuelled by coal or natural gas. The Hoffman Kiln, which uses only natural gas, has also been
tried; but this kiln is expensive and hence not suitable for the SME’s. There are a number of other energy
efficient kilns (EEKs) that have innovative design features and operating procedures that could readily be
adopted for use in Bangladesh. Among them are the VSBK and the Forced Draft Tunnel Kiln (FDTK),
technologies. Both of these kilns are widely used in China and are highly efficient in terms of fuel usage
and have extremely low emissions. Their design and size also generate scale economies making them low
cost operations. In the early 1990s an attempt was made to introduce the Vertical Shaft Brick Kiln (VSBK),
but it did not prove to be successful for a variety of reasons.

The VSBK was first introduced in China about 35 years ago in the late 70’s, and is still in use where market
size is relatively small. The VSBK kiln is a tall shaft that works like a chimney. The inner kiln lining is
usually made from firebricks, while the space between the inner shaft and the outer wall supporting the kiln
structure is filled with insulating material such as coal slag or a mix of sawdust and clay. Fireboxes are built
into the kiln so that they can be used as observation holes to monitor the different firing zones. The bricks
are stacked in the shaft, which measures about 1m x 1m square and 6m in height. Green bricks are loaded
from the top in batches of about 200, with four batches being fired at one time, and the firing time is usually
about 1.5 hours. Combustion takes place in the middle of the vertical shaft with the air entering from the
bottom and moving up the already fired bricks so that when the air reaches the combustion zone it is
preheated to about 7500C. As combustion occurs, the hot flue gasses move up over the unfired bricks
efficiently. This allows the heat stored in the already fired bricks to be used to fire the next batch of green
bricks, creating significant savings in energy usage. The draught can be regulated, if required, by changing
the setting density of the green bricks and altering their patterns. This makes it simple and uncomplicated,
and hence less susceptible to errors. The fired bricks are unloaded at the bottom of the shaft at about the
same rate that they are put in at the top. The unloading device is a chain pulley that is attached to a single
iron beam set in the walls of the kiln. The chain pulleys, in turn, are attached to outside gallows made from
heavy iron beams.

The VSBK kiln is a tall shaft that works like a chimney. The inner kiln lining is usually made from firebricks,
while the space between the inner shaft and the outer wall supporting the kiln structure is filled with
insulating material such as coal slag or a mix of sawdust and clay. Fireboxes are built into the kiln so that
they can be used as observation holes to monitor the different firing zones. The bricks are stacked in the
shaft, which measures about 1m x 1m square and 6m in height. Green bricks are loaded from the top in
batches of about 200, with four batches being fired at one time. The firing time is usually about 1.5 hours.
Combustion takes place in the middle of the vertical shaft with the air entering from the bottom and moving
up the already fired bricks so that when the air reaches the combustion zone it is preheated to about


                                                                                                         Page 7 of 54
7500C. As combustion occurs, the hot flue gasses move up over the unfired bricks efficiently. This allows
the heat stored in the already fired bricks to be used to fire the next batch of green bricks creating
significant savings in energy usage. The draught can be regulated, if required, by changing the setting
density of the green bricks and altering their patterns. This makes it simple and uncomplicated, and hence
less susceptible to errors. The fired bricks are unloaded at the bottom of the shaft at about the same rate
that they are put in at the top. The unloading device is a chain pulley that is attached to a single iron beam
set in the walls of the kiln. The chain pulleys, in turn, are attached to outside gallows made from heavy iron
beams.

The FDTK is a hybrid version of the Hoffman kiln. Structurally, it is built like the Hoffman but, unlike the
traditional Hoffman, the fuel used is coal. The kiln can be made from firebricks or from green bricks. In the
latter event, the green bricks get “cooked” during kiln operation. The inner kiln lining is made from
refractory bricks and then plastered over by refractory cement. In this version, the firing chamber is filled
manually with green bricks, usually about 14,000 units at one time, in line stacks of 2,000. Thus, there are
7 line stacks; and. Tthe firing time for each line stack is about half an hour. The fuel, granulated coal, is
fed into the firing zone in the kiln through stoke holes on the roof like the BTK. Air required for the
combustion process is forced from behind; and, ias it reaches the line to be fired, it is already preheated
from the previous firing zone thus reducing firing time and energy usage. The temperature in the firing
zone is about 8000C. The process is extremely simple and is carried out manually, reducing the
mechanical process of the VSBK considerably.

In addition to kiln efficiency, a technique commonly used in China to reduce fuel consumption and,
therefore, emissions, is injecting fuel into the green bricks. This technique enables better thermal bonding,
and reduces fuel usage, as well as and CO2 and other emissions as well. In China, clay is premixed with               Formatted
granulated coal and then extruded to produce the green bricks. This is a unique process and is
fundamental to the energy efficiency achieved in brick making in China. Of the total energy consumed in
the production of bricks, about 80% of the fuel is in the bricks themselves and only about 20% is fed
externally into the firing chamber. Most of the fuel mixed into the bricks, over 95%, is completely burnt
during baking. This technique significantly reduces.                                                                  Comment [arp4]: Page: 4
                                                                                                                      Reduces what? Something is left out here.

Given the size and type of existing entities, both the VSBK and the FDTK are appropriate systems for
replication in Bangladesh. VSBK’s are particularly popular among SMEs in China, one of the largest brick
producers in the world. The system is more efficient and less polluting than BTK’s. CO2 emission rates are
ofn the order of about 0.13 - 0.20 kg CO2/kg brick. Although the actual economics of both the VSBK and
the FDTK will be established during project design, preliminary studies done by BUET and the Asian
Institute of Technology (AIT) show that VSBKs are cost effective replacements for BTK units. On an equal
production volume basis, VSBKs will consume less fuel than a BTK, and they are economically more
viable. For example, on the basis of 2 million bricks/year production and 5 years operation, the NPV (@
10% discount rate) of BTK operation is more than twice that of VSBK operation. Although the initial capital
investments are higher, these are more than offset by the lower operating costs of the VSBK. In fact, the
IRR on the incremental investment cost is about 130%, and the payback period on the incremental
investment is less than a year. The advantages of these VSBK are summarized below:                                    Comment [arp5]: Page: 4
                                                                                                                      Why just VSBK, or is this to also include the
                                                                                                                      FDTK?
    Highly energy efficient: VSBK technology results in energy saving of about 50% compared to clamps                Formatted: Bullets and Numbering
        and 20-30% and the FDTK about 60% compared to BTKs;                                                           Comment [arp6]: Page: 4
    Compact Kiln: VSBK’s need only about 25 to 30% of the land required for BTKs;                                     This section does not make sense – something
                                                                                                                      seems to be missing.




                                                                                                       Page 8 of 54
    Operation: Easy to operate and do not require electricity for functioning;
    Construction costs: Though slightly higher than BTKs, VSBK’s are still reasonably low;
    Weather Proof: Kiln operations are unaffected by variations in weather. They can be operated during
       the monsoons because, unlike other kilns in use, both these have roofs, which affords protection                  Comment [arp7]: Page: 4
                                                                                                                         Why “both” when presently addressing only
       from rain and allows year round operations. The BTK can be operated for only 5 to 6 months a                      VSBKs?
       year;
    Suitable for internal fuel bricks: The kilns are highly suitable for use where fuel is added internally into
       the brick. In several parts of the country, agriculture residue like rice husk or fuels like coal dust
       are mixed with clay before molding. This allows the use of lower-grade fuel and, in general,
       reduces production costs.
    Modularity in construction and flexibility in production are important attributes of the technologies
    Economic viability: Although the initial capital costs required to construct either of the kilns are                Comment [arp8]: Page: 4
                                                                                                                         same as comment 7 above.
       greater than the traditional kilns (about three to four times that of the BTK), the profitability of kilns
       are significantly greater due to increased production rates and lower energy usage. The 1996
       study of the VSBK by the Swiss Development Corporation (SDC) indicated that the total cost
       recovery period is less than 6 months.


There are several barriers, however, that contribute to the current state of the BMI and its inability to adopt
EEKs:

    Lack of supporting regulations to encourage the BMI to adopt more energy-efficient practices and                    Formatted: Bullets and Numbering
       technologies. The GoB’s decision requiring a 120-foot chimney decision by the GoB will only will
       have only a marginal impact on reductingons in impacts on emissions, while raising capital costs
       and adversely impacting the market. The BMI would be more driven to a technology that reduces
       overall production costs;

    Lack of access to energy efficient technologies that can lower production costs;                                    Formatted: Bullets and Numbering


    Lack of awareness of energy-environmental related issues. Comprehensive technology diffusion                        Formatted: Bullets and Numbering
       programs that demonstrate the potential economic benefits to energy-efficient technologies have
       not been carried out. The BBMOA members lack understanding of the basic concepts of climate
       change impacts as it relates to GHG emissions;

    Little or no access to bank loans to assist transformation to more energy-efficient technologies.                   Formatted: Bullets and Numbering
         Ownership patterns and the nature of operations have inhibited banks from lending to this sector.
         In reality, about 80%, have been operating outside the formal banking sector. This has had two
         significant results.: First, capital investments to modernize plant and equipment have not been
         available; and, second, there has been no “need” to operate in a formal, organized manner.
         Capital investments and variable expenditures have both been treated as a single cost item, thus
         creating a “mind-set” and inhibiting transformation of the brick making “industry” from the traditional
         to the modern sector. As a result, financial institutions have been unwilling to grant loans to these
         businesses, and the BMI are is unable to secure the necessary capital to improve their industry.

It is in this context that the proposal has been developed to remove barriers to the adoption of energy
efficient technologies in for the production of bricks in Bangladesh. The proposed GEF supported project


                                                                                                          Page 9 of 54
for “Improving Kiln Efficiency for the Brick Making Industry” (IKEBMI), will lead to a reduction of emissions
from existing kilns, as well as from future ones, through innovative market transformation measures.
Successful implementation of the project will result in a minimum emissions reduction of 1.0 million tonnes
of CO2 annually. Moreover, the unique technique of injecting the fuel into the green bricks that this
technology intends to employ, i.e., injecting the fuel into the green bricks, will reduce the use of firewood
and thereby removeing the pressure on Bangladesh’s scarce carbon sinks. Use of the proposed
technologies will also comsiderably increase profitability of the kilns, considerably thus ensuring technology
commercialisation and sustainability after the project has ended. Another major collateral impact will be on
the reduction of local pollution. More information, however, is required to better understand the industry, its
energy utilization and current trends. This project is one of Bangladesh’s first climate change projects and
will be viewed as the catalyst for future climate change projects.


1.0     PROJECT RATIONALE AND OBJECTIVES

Brick making is an energy consuming and resource depleting industry. . This awareness led the
government in 1989 to prohibit the use of firewood in brick kilns through the promulgation of a “Brick
Burning (Control) Act 1989 (Act #8 of 1989) and the Brick Burning (Control) Amendment Act 1992 which
controls brick burning through issuance of licenses from the appropriate authorities. The National
Environment Management Action Plan (NEMAP) of the early 1990s afforded an opportunity to civil society
to provide inputs to develop the country’s environment policies. One of NEMAPs environmental priorities
was reducing pollution from brick kilns. GoB’s response to NEMAP was to promulgate the Environmental
Conservation Act 1995 and Rules 1997 that included legislation to control brick kiln emissions. . In this
effort to regulate emissions, the Ministry of Environment and Forests (MoEF) recently issued a directive
requiring brick kilns to construct 120-foot high chimneys. . There have been reports of compliance with this
regulation only in areas where the likelihood of enforcement is higher; in others, the older kilns, the Bulls
Trench Kiln (BTK) continue to operate in large numbers. . Enforcement has failed primarily because
government interventions have lacked stakeholder “buy-in”; the interventions have been more protectionist
and policing and less developmental and producer friendly. . The BMI also has failed to develop and adopt
technological innovations or to access cost-effective and clean technologies on its own. .

Some attempts to introduce different types of kilns have been made in Bangladesh. . However, these have
been sporadic and based mainly on intermediate technologies such as the Fixed Chimney Kiln (FCK) and
Zigzag Kiln from India where the industry is still in a transitional state. . Moreover, these technologies have
only marginal impacts on emissions and do little to improve production efficiencies and costs. . The
Hoffman Kiln, which uses only natural gas, has also been tried; but this kiln is expensive and not suitable
for SME operations. . Therefore, these efforts have proven to be relatively unsuccessful. . There are a
number of other energy efficient kilns (EEKs) with innovative design features and operating procedures that
could readily be adopted for use in Bangladesh. . However, brick makers can and will adopt them only if
effective technology dissemination programs can be carried out. .

The principal objective of the proposed project is the reduction of GHG emissions from existing kilns and
from kilns expected to be built in the future through removal of barriers that have so far inhibited energy
efficient technologies from being widely adopted. .

The development goals of the project are to:



                                                                                                       Page 10 of 54
        Reduce GHG emissions from existing and future kilns;                                                        Formatted: Bullets and Numbering
        Relieve the pressure on existing woodlands and forests by introducing cost effective energy use in
         kilns;
        Create a stable workforce through year-round, rather than seasonal, employment, and improved
         working conditions; and
        Ensure the survival and growth of an energy efficient brick industry. .


The project objectives are:

       To remove technical, financial, awareness and institutional barriers that inhibit technological              Formatted: Bullets and Numbering
        change; and
       Ensure that brick industries adopt energy efficient kiln technologies.


The outputs of this project will be:

       Demonstration kilns using technologies that reduce fuel consumption, improve product quality and             Formatted: Bullets and Numbering
        lower emission levels;
       Techniques to inject fuel into green bricks;
       Trainers to train others to construct EEKs;
       Trainers who will train other men and women to operate the new kilns and produce better quality
        bricks;
       Financial and economic models establishing the feasibility and profitability of the new technologies;
       Amendments to existing institutional and policy framework to encourage brick owners to adopt
        clean technologies;
       Construction and operating manuals for EEKs;
       Seminars and workshops to share and exchange information and results of the programs.

These outputs are expected to achieve the project objectives listed above. . The demonstration kilns would
establish the workability of these technologies under Bangladesh climatic and soil conditions; the training
activities would raise the confidence level of owners to adopt the new technologies; the financial and
economic models will facilitate loans from the banking sector to enable brick kiln owners to finance the new
kilns; and, together they will provide knowledge and information to regulators and other concerned
stakeholders to encourage regulations and policies to facilitate the widespread use of energy efficient
technologies.

The proposed project will alter the way in which brick manufacturers do business. . With the new
technologies, the industry will operate under higher energy efficiencies, better energy control capabilities,
higher rates of production and processing, all of which could bring about reduced production costs,
improved product quality, lower local pollution and, most importantly, reduced GHG emissions. .

The principal objective of the proposed project is theo reductione of GHG emissions from existing kilns and
from that of kilns expected to be built in the future through the removal of barriers that have inhibited
adoption of energy efficient technologies. The successful application of such EEK technologies is expected
to reduce GHGs by a minimum 1.0 million tons CO2. With increasing production of bricks, GHG emissions


                                                                                                     Page 11 of 54
will also grow; and hence, with the proposed interventions, there will be a reduction in the growth of future
GHG emissions as well. This project is amongst the first climate change mitigation projects in Bangladesh
that is based on innovative market-based mechanisms.

The project objectives are:

    To rReductione of GHG emissions from existing kilns;                                                            Formatted: Bullets and Numbering

    To help rRelievinge pressure on existing woodlands and forests by introducing cost effective energy
       use in kilns;
    To cCreatione of a stable workforce through year-round, rather than seasonal, by making their
       employment, annual and improveding working conditions; and
    To eEnsuringe the survival and growth of the brick industry by improving technology, management
       and skill levels of workers.

The outputs of this project will be:

   The iIntroduction and commissioning of demonstration kilns using technologies that reduce fuel                   Formatted: Bullets and Numbering
        consumption, improve product quality and lower levels of emission;
   The iIntroduction of new fuel- injected clay-molding techniques;
   InstructingTraining of trainers who will train teach workers to and raise skills levels in order to
        construct the kilns;
   Training ofEducating trainers who will train instruct other men and women to enablinge them to
        operate the new kilns and produce better quality bricks;
   Development of financial models to enable the banking sector to extend loans to existing and future
        kiln owners;
   Bring about changes in existing institutional and policy framework so that brick owners will be
        encouraged to adopt clean technologies;
   Developmenting of specific construction and operating manuals;
   Holding seminars and workshops on the results of the programs.
   
The project objectives and out puts are to be achieved through:

        Identification and transfer of low cost kiln technologies that can be adapted to local conditions;          Formatted: Bullets and Numbering
        Researching and testing alternative molding techniques using local clay and raw materials;
        Development of models to demonstrate the technical, economic and financial viability of the kilns;
        Training of workers in the construction and operations of the new technology kilns;
        Developmenting of innovative financing mechanisms;
        Training of brick plant owners on improved management techniques, finance and accounting
            methods;
        Involvement of regulatory authorities to bring about changes in existing institutional and policy
            framework;
        Extensive promotional campaigns and involvement of civil society to create moral persuasion;.




                                                                                                     Page 12 of 54
Under the full GEF project, EEKs would be demonstrated at sites where their impacts of the
demonstrations would provide optimal technology dissemination benefits. These, along with the training
activities and financial models would ensure the confidence of owners in the workability of these
technologies under Bangladesh climactic and soil conditions, as well as and the economic and
environmental benefits to be derived from adopting the technologies. These activities would also provide
knowledge and information to regulators and other concerned stakeholders to encourage regulations and
policies to which would facilitate the market transformation. Most brick makers in Bangladesh, in particular
the smaller producers, have great difficulty with working capital and can only finance their activities only
through informal “banking” channels such as family, friends and money lenders. In addition to high lending
rates, these channels are cumbersome, time consuming and, mostly, do not adequately address the
requirements. adequately. This is a significant barrier and which will be addressed in the full project by
involvingement of lenders from the start..




                                                                                                    Page 13 of 54
                Fill in with Norsker data
     Three Business Options for Brick makers
a BTK                        Hoffman               VSBK - 3 shafts
     4.8                     12.0                  10.0
     172,500                 11,000,000            475,000
     1,781,429               13,527,055            1,086,516
     1.05                    1.12                  0.78
     1,401,149               4,421,895             2,313,613
     608                     666                   964
     90                      86                    41
     1.2 years               2.8 years             0.5 years
 Investment
     1,632,806               4,691,895             2,419,186
     708                     707                   1008
     27                      78                    19
     1.1 years               2.7 years             0.4 years
                Source: Henrik Norsker, SDC, April 1994


                The question that arises is: wWill the lower marginal costs of the “new technology” bricks translate into
                lower prices in the market? The likely scenario is that since producers will continue to face constant or even
                rising demand, they will hold prices and increase profits. In the next stage, this action by the producer is
                not likely to dampen demand as long as producers maintain the previous nominal prices; from the
                consumer perspective, they will be facing constant or even declining real prices.

                Brick prices in Bangladesh have been rising in nominal terms over the last 10 years at an average annual
                rate exceeding 10%. A part of this increase can be attributed to rising input prices and a part to rising
                demand and supply rigidity. In addition to this overall increasing demand, the “disaggregated” demand for
                new technology bricks would, in fact, increase because of improvements in quality. The “new technology”
                bricks would be have better characteristics of color, texture and module design.

                In the long-term, demand for improved quality bricks will expand because of growths in urban population
                and urban income. In most developing nations, urban population grows at a rate faster than the overall
                growth rate. In Bangladesh, the urban population growth rate has been phenomenal, rising from 2.6 million
                in 1961 to 22.5 million in 1991. In the case of Dhaka, the rate was 8% during this period far exceeding the
                1.5% rural growth rate and the 2.5% national growth rate. At these growth rates, Dhaka will become the
                seventh largest city by the year 2015. Even though overall urban growth rates may flatten somewhat in the
                future, the trend is not expected to change much in the intermediate term. The correlation between demand
                for housing and therefore, for bricks, and per capita incomes is also well known. This means as per capita


                                                                                                                      Page 14 of 54
incomes rise, demand for construction materials expands. A joint UN/World Bank study in 1996 predicted
that 80% of the growth in the developing world would occur across its cities and towns. In Bangladesh, per
capita incomes have been rising at about 2.5% annually but it has been growing at a much faster rate in the
urban areas. This is why Dhaka city today contributes about 31% to the National GDP even though its
share of the national population is only 7%. We can therefore, conclude that the demand for better quality
bricks produced at lower cost in energy efficient kilns will increase over time.

If GHG reductions were to be realized for the BMI in Bangladesh, a project that facilitates a market
transformation of the industry towards EEKs using the collaborative efforts of all stakeholders would be
required. Currently, the majority of brick making entities are committed to complying with the GoBs latest
rule of installing a 120 ft high chimney, which only marginally reduces GHG emissions but significantly adds
to their operational costs. The GoB, however, has agreed to place a moratorium on this rule if a more
energy efficient technology such as the VSBK can be demonstrated on this project to reduce GHG
emissions while reducing production costs. Amendments would then be made to the rule if there is a
technology that is acceptable for to all project stakeholders. For this reason, it is now very timely for
Bangladesh to implement a full GEF project on IKEBMI (under GEF-OP5).


However, before the project could be prepared and executed, project planning, stakeholders’ consultation,
and detailed assessments are required to obtain the relevant information that will be utilized in designing
the full project. To facilitate this, financial assistance from the GEF in the form of PDF-B funds will be
essential to fill in information gaps and design the full GEF project.

Time sensitivity of proposal??

Baseline scenario:                                                                                                      Formatted


Although there are now a growing number of 120 ft FCKs, most, almost 90%, of Bangladesh’s estimated
8,000 kilns are based on the Bulls Trench kiln (BTK) technology. . BTK technology is primitive, over 150
years old, and highly energy intensive. These kilns are not only exceedingly inefficient in terms of fuel use
but because they are poorly constructed; there are leaks through the kiln walls that cause excessive air and
heat loss from the system. . Annual CO2 emissions from brick kilns are estimated to be anywhere between
3.3 to 6.6 million tonnes of CO2. The excessive use of energy has also put increasing pressure on profits,
causing producers to substitute sub-standard and other easily available energy resources. . Most alarming
is the use of firewood in a country where such resources are scarce. . Studies carried out in the early
1980s identified this as a primary cause of deforestation in Bangladesh. The BBMOA estimates that as
much as 25% of the fuel used in brick kilns is still from firewood.

The fuel being used in the kilns also contribute considerably to emissions. Typically, low-grade coal from
India along with firewood, tires and rice husks, are used to fire the kilns. . The following salient features of
BTK operations in Bangladesh provide one way to estimate the levels of emissions and to compare the
technological options:

       One BTK consumes 600 tonnes of low grade coal from India to produce over 2 million bricks during                Formatted: Bullets and Numbering
        the 5-month Bangladesh dry season;




                                                                                                        Page 15 of 54
       This low grade coal has a heating value of 14.6 million joules (MJ) per kilogram of coal which when
        used for producing 2 million bricks in one BTK, provides 8.8TJ/kiln per year (source: Coal India
        Ltd., the Ministry of Energy and Mineral Resources, Bangladesh and the BBMOA);
       If the average emission factor for coal is 94.6 tonnes of CO2 per TJ, each kiln produces an
        estimated 830 tonnes of CO2 per year;
       The 4000 to 8000 BTKs in Bangladesh emit about 3.3 to 6.6 million tonnes of CO2 each year.

As noted previously, kiln technology in Bangladesh has not changed in any significant way in the last 150
years; neither regulatory requirements nor market imperatives have made change a necessity. .
Consequently, age-old practices and doing things the old way have been the hallmark of the brick industry
in Bangladesh. .

Ownership patterns and the nature of business operations are also not conducive to modernisation. .
These have combined to inhibit banks from lending to this sector and restricted the availability of credit
needed for plant and equipment modernisation. . In reality, about 80% have been operating outside the
formal banking sector. This has had two significant results: first, brick-makers have been unable to access
capital; and, second, as a cyclical consequence, kiln owners have not felt the “need” to reorganize
themselves as formal business operations. . Kiln owners, in fact, lack the incentives to improve business
practices and continue to operate in the old entrepreneurial and management “mind-set”. .

The number of brick kilns is expected to grow by more than 50% in the next decade due to increases in
demand for bricks by a burgeoning urban population requiring additional building and transport
infrastructure. This would increase the number of kilns to over 12,000 kilns by 2014 with GHG emissions
expected to double to about 5 to 10 million tonnes of CO2 annually. .


In the absence of the proposed full GEF supported project, the proliferation of the BMI with BTKs and kilns
with 120-foot chimneys is expected. Currently, it is estimated that there are 4,000 to 8,000 brick making
business entities in Bangladesh that are typically Small to Medium Enterprises (SME) consisting of one
person or one family enterprises. It is estimated that 90% of these kilns are BTKs with a growing number of
Fixed Chimney Kilns (FCKs) with 120-foot chimneys instigated by the GoB regulations for this type of kiln.
Most of these FCKs are likely located in the areas of peri-urban Dhaka where enforcement of this
regulation is stronger.

Typically, a low-grade coal from India along with firewood and rice husks, are used to fire the kilns. BUET
and the Tata Energy Research Institute (TERI) in their research on BTKs found that the kilns tend to be
poorly constructed and are highly inefficient in terms of fuel consumption. They also found excessive air
leakage and heat loss from the system causing high levels of emissions. The following salient features of
BTK operations in Bangladesh provide one way to estimate the levels of emission and to compare the
technological options:

    One BTK consumes 600 tonnes of low grade coal from India to produce over 2 million bricks during               Formatted: Bullets and Numbering
       the 5-month Bangladesh dry season;
    This low grade coal has a heating value of 14.6 million joules (MJ) per kilogram of coal (source: Coal
       India Ltd., GoB’s Ministry of Energy and Mineral Resources and BBMOA) which when used for
       producing 2 million bricks in one BTK, provides 8.8TJ/kiln per year;


                                                                                                    Page 16 of 54
    If the average emission factor for coal is 94.6 tonnes of CO2 per TJ, each kiln produces an estimated
         830 tonnes of CO2 per year;
    The 4000 to 8000 BTKs in Bangladesh emit about 3.3 to 6.6 million tonnes of CO2 each year.

Without the proposed GEF project, the Bangladesh University of Engineering and Technology (BUET)/
Pembina Report (footnote reference??) and the BBMOA expect the number of brick kilns to grow by more
than 50% in the next decade because of increases in demand for bricks driven by a burgeoning urban
population and requirements for additional building and transport infrastructure. This would translate to
over 6000 to 12,000 kilns by 2014 with emissions from 5 to 10 million tonnes of CO2 annually.

Alternative scenario:                                                                                                      Formatted
                                                                                                                           Formatted
Introduction and adoption of new energy efficient technologies are expected to reduce emissions                            Formatted
substantially. These technologies will reduce energy consumptions significantly and since they do not
require a high degree of mechanisation will have little effect on existing employment. . Among the
alternative technologies identified are the Vertical Shaft Brick Kilns (VSBK) and the Forced Draft Tunnel
Kiln (FDTK) systems. . Both of these kilns are widely used in China and are highly efficient in terms of fuel
usage with accompanying low emissions. Their design and size also generate scale economies making
them low cost operations. .

The VSBK was first introduced in China about 35 years ago in the late 70’s, and is still in use where market
size is relatively small. The VSBK kiln is a tall shaft that works like a chimney. The inner kiln lining is usually
made from firebricks, while the space between the inner shaft and the outer wall supporting the kiln
structure is filled with insulating material such as coal slag or a mix of sawdust and clay. . Fireboxes are
built into the kiln so that they can be used as observation holes to monitor the different firing zones. . The
bricks are stacked in the shaft, which measures about 1m x 1m square and 6m in height. . Green bricks
are loaded from the top in batches of about 200, with four batches being fired at one time, and the firing
time is usually about 1.5 hours. . Combustion takes place in the middle of the vertical shaft with the air
entering from the bottom and moving up the already fired bricks so that when the air reaches the
combustion zone it is preheated to about 7500C. . As combustion occurs, the hot flue gasses move up over
the unfired bricks efficiently. This allows the heat stored in the already fired bricks to be used to fire the next
batch of green bricks, creating significant savings in energy usage. . The draught can be regulated, if
required, by changing the setting density of the green bricks and altering their patterns. . This makes it
simple and uncomplicated, and hence less susceptible to errors. . The fired bricks are unloaded at the
bottom of the shaft at about the same rate that they are put in at the top. . The unloading device is a chain
pulley that is attached to a single iron beam set in the walls of the kiln. . The chain pulleys, in turn, are
attached to outside gallows made from heavy iron beams. .

The FDTK is a hybrid version of the Hoffman kiln. . Structurally, it is built like the Hoffman but, unlike the
traditional Hoffman, the fuel used is coal. . The kiln can be made from firebricks or from green bricks. . In
the latter event, the green bricks get “cooked” during kiln operation. . The inner kiln lining is made from
refractory bricks and then plastered over by refractory cement. . In this version, the firing chamber is filled
manually with green bricks, usually about 14,000 units at one time, in line stacks of 2,000. . Thus, there are
7 line stacks; and the firing time for each line stack is about half an hour. . The fuel, granulated coal, is fed
into the firing zone in the kiln through stoke holes on the roof like the BTK. . Air required for the combustion
process is forced from behind; and, as it reaches the line to be fired, it is already preheated from the



                                                                                                           Page 17 of 54
previous firing zone thus reducing firing time and energy usage. . The temperature in the firing zone is
about 8000C. . The process is extremely simple and is carried out manually, reducing the mechanical
process of the VSBK considerably. .

In addition to kiln efficiency, a technique commonly used in China to make bricks is to inject fuel into the
green bricks. . This technique enables better thermal bonding and reduces fuel usage, and hence CO2 and
other emissions. . Clay is premixed with granulated coal and then extruded to produce the green bricks. .
This is a unique process and is fundamental to the energy efficiency achieved in brick making in China. .
Almost 80% of the total energy required is injected into the bricks and only about 20% is fed externally into
the firing chamber. Most of the fuel mixed into the bricks, over 95%, is completely burnt during firing. . The
technique has been conspicuously absent from the Indian subcontinent and it is only recently that some
attempts have been made in India to combine other materials with clay to reduce clay use.

Given the size and type of existing entities, both the VSBK and the FDTK are appropriate systems for
replication in Bangladesh. . VSBK’s are particularly popular among SMEs in China, one of the largest brick
producers in the world. . The system is more efficient and less polluting than BTK’s. . CO2 emission rates
for the VSBK are in the order of about 0.25 - 0.40 kg CO2/kg-brick compared to the BTK emission rate of
0.45 - 0.55 kg CO2/kg-brick. . Although the actual economics of both the VSBK and the FDTK will be
established during project design, preliminary studies done by BUET and the Asian Institute of Technology
(AIT) show that VSBKs are cost effective replacements for BTK units. . On an equal production volume
basis, VSBKs will consume less fuel than a BTK, and they are economically more viable. . For example, on
the basis of 2 million bricks/year production and 5 years operation, the NPV (@ 10% discount rate) of BTK
operation is more than twice that of VSBK operation. . Although the initial capital investments are higher,
these are more than offset by the lower operating costs of the VSBK. . In fact, the IRR on the incremental
investment cost is about 130%, and the payback period on the incremental investment is less than a year.
. The advantages of the proposed technologies are summarized below:

       Highly energy efficient: VSBK technology results in energy saving up to 50% compared to clamps,                 Formatted: Bullets and Numbering
        and 20-30% to BTK’sBTKs, while the FDTK saves about 60% energy when compared to BTKs;
       Compact Kiln: : VSBK’sVSBKs need only about 25 to 30% of the land required for BTKs;
       Operation: Easy to operate and do not require electricity for functioning;
       Construction costs: Though slightly higher than BTKs, , VSBK’sVSBKs are still reasonably low;
       Weather Proof: Kiln operations are unaffected by variations in weather. . They can be operated
        during the monsoons because, unlike other kilns in use, both these have roofs, which afford
        protection from rain and allows year round operations. . The BTK can be operated for only 5 to 6
        months a year;
       Suitable for internal fuel bricks: The kilns are highly suitable for use where fuel is added internally
        into the brick. . In several parts of the country, agriculture residue like rice husk or fuels like coal
        dust are mixed with clay before moulding. This allows the use of lower-grade fuel and, in general,
        reduces production costs.
       Modularity in construction and flexibility in production are important attributes of the technologies
       Economic viability: Although the initial capital costs required to construct either of the kilns are
        greater than the traditional kilns (about three to four times that of the BTK), the operating
        profitability of the kilns are significantly greater due to increased production rates and lower energy
        usage. . The 1996 study of the VSBK by the Swiss Development Corporation (SDC) indicated that
        the total cost recovery period is less than 6 months.


                                                                                                        Page 18 of 54
Successful implementation of the project will result in reduction of a minimum of 1.0 million tonnes of CO2
annually from existing kiln operations and in the growth of future GHG emissions as well. . Without the
proposed interventions, there will be unrestricted growth in GHG emissions if kilns using inefficient
technologies are permitted to proliferate. The project will also eliminate firewood use removing a major
cause of diminishing carbon sinks in Bangladesh. . It will also significantly reduce particulate emissions
that are a major health hazard in the local environment. .

The proposed technologies will also increase profitability of brick kiln operations significantly. . Long-run
marginal costs are expected to decline leading to a decline in long-run real prices. This will stimulate
demand for the “new” bricks. . At the same time, as urban population and incomes rise over the coming
years demand for bricks will expand leading to further demand increases for the new technology bricks.
Urban population growth rate has been phenomenal in Bangladesh, rising from 2.6 million in 1961 to 22.5
million in 1991. . Incomes too have shown a steady growth pattern. . The new technologies will also
improve brick quality significantly. . They will have better color, texture and module design characteristics.
These will all combine to catalyse and enhance the long-run demand for good quality bricks from the
cleaner kilns and ensure the commercialisation of the technologies and help sustain them even after the
project has ended. .

The main drivers of the market transformation to EEKs would be:

       demandDemand from brick manufacturers since the new technologies would lower production                       Formatted: Bullets and Numbering
        costs and improve product quality significantly;

       pressurePressure from civil society and government pressuring               topressuring to reduce            Formatted: Bullets and Numbering
        smokestack emissions; and

       consumersConsumers benefiting from lower production costs and better quality bricks.                          Formatted: Bullets and Numbering




Other drivers of market transformation will be:

       marketMarket imperatives, since lower product costs and improved quality will drive producers to              Formatted: Bullets and Numbering
        the new technologies. . In the very short run, prices may not decline as producers strive to recover
        the additional costs of the new technologies; but in the intermediate phase, other things remaining
        the same, prices will decline or at the least hold steady so that real prices will decline thus
        stimulating demand for the new product. . In the long run, aggregate demand will increase
        because of demand increases from the construction and building industries;

       regulatoryRegulatory reform actions and enforcement policies of the government that set stringent             Formatted: Bullets and Numbering
        standards and send important signals to producers to meet levels of emissions reductions. . The
        BMI will comply through solutions that are technology-neutral and market friendly. . The
        government’s recent decision to require brick makers to construct 120 ft chimneys to reduce local
        pollution is an example of regressive regulatory policy, which does not achieve its intent; and




                                                                                                      Page 19 of 54
       Availability of investment funds to finance the new technologies, support from technology                    Formatted: Bullets and Numbering
        “champions”, training of workers, and better business practices, all of which will combine to make
        the new energy efficient technologies attractive alternatives. .

Under the proposed supported project, efficient brick kiln technology or EEKs, in particular, the VSBK, will
be disseminated through the BMI in Bangladesh through innovative market transformation measures. This
will involve the implementation of specific initiatives to achieve the desired emission reductions within the
BMI including:

    confirmation and comparative studies of production, economic and environmental data of EEKs and                 Formatted: Bullets and Numbering
       technologies currently in use by the BMI in Bangladesh and abroad;

    building capacity of the BMI on implementing EEK design, construction, operation, maintenance and               Formatted: Bullets and Numbering
        best management practices;

    building capacity of the BMI in business management to the extent that it can secure loans from                 Formatted: Bullets and Numbering
        financing institutions;

    implementing innovative financing schemes for EEK adoption in collaboration with financing                      Formatted: Bullets and Numbering
       institutions;

    conducting stakeholder awareness programs on EEK technologies, emissions, financing                             Formatted: Bullets and Numbering
       mechanisms, and energy-environment issues;

    technology transfers to stakeholders in the form of technical seminars at EEK demonstration sites;              Formatted: Bullets and Numbering


    monitoring effectiveness of technology dissemination and financing mechanisms;                                  Formatted: Bullets and Numbering


    verifying emission reductions through monitoring of fuel consumption and smokestack emissions.                  Formatted: Bullets and Numbering


These objective-oriented activities are to be better defined in a logical framework analysis (LFA) exercise
that is scheduled for completion during the PDF B phase. The LFA exercise will also define the relevant
project outcomes, which will bring about the removal of barriers and widespread application of VSBKs or
other appropriate EEKs in the BMI. GHG emission reductions are estimated to be in the order of 1.0 to 2.4
millions tonnes of CO2 annually (justify and expand using Ijaz’s paper).

This is viewed as an acceptable solution to reducing high levels of GHGs emissions from the existing BMI
in Bangladesh. The proposed project will alter the way in which brick manufacturers do business. With
EEK technologies such as the VSBK, the industry will operate under higher energy efficiencies, better
energy control capabilities, higher rates of production and processing, all of which could bring about
reduced production costs and improved product quality, and most importantly, the desired market
transformation. These are among the benefits that the project will bring about in promoting more energy
efficient kiln technologies.

The main drivers of the market transformation towards EEKs would be:



                                                                                                     Page 20 of 54
    demand from brick manufacturers due to the lower production costs of the new technologies and                    Formatted: Bullets and Numbering
       improved product quality;

    public pressure from civil society and the government on the “industry” to reduce pollution from brick           Formatted: Bullets and Numbering
       making activities;

    consumers who will benefit from increased availability of better quality bricks on the Bangladesh                Formatted: Bullets and Numbering
       market.


Other drivers of market transformation will be:

    an increasing demand for the product from cost reductions and quality improvements. These will lead              Formatted: Bullets and Numbering
        to increases in short-run consumption of the “new” bricks, and expansion of long-run aggregate
        demand will occur from increases in population and income. This is expected to lead to
        commercialization of the new brick making technology and its long-term sustainability;

    the government’s recent decision to require brick makers to enhance the size of kilns to 120 ft to               Formatted: Bullets and Numbering
        reduce local pollution would increase capital costs without any associated reductions in production
        costs. Brick makers can only recover these costs by increasing prices or reducing profits, neither
        of which are conducive to long-run sustainability. Thus, brick makers will be driven towards a
        technology that is more efficient, is cleaner and results in lower production costs;

    a strengthened regulatory framework and enforcement capacity that is producer friendly and                       Formatted: Bullets and Numbering
       promotes end use demand.. This will occur once an EE brick kiln technology has been accepted
       as a viable alternative.

The market transformation concept being promoted in this project recognizes the “non-formal” nature of the
BMI and proposes the introduction of formal financing mechanisms as an important and necessary step in
the transition process. It is felt that involvement of the banking sector will provide much needed capital for
new brick making technologies such as plant, equipment and working expenditures and lead to the creation
of more formal management structures within the entities. One immediate, perverse effect may be an
increase in overhead expenditures and capital costs; but savings generated from adopting more efficient
production and management techniques should offset these additional costs. Producers would become
more conscious of production costs and make any necessary adjustments to become profitable.

       There have been precedents in Bangladesh of the banking sector becoming involved with non-                    Formatted: Bullets and Numbering
        formal industries and marginal income earners. One recent example includes an agreement with a
        consortium of banks and leasing companies in March 2001 with the CIDA-funded Bangladesh
        Environment Management Project (BEMP) to provide finance to auto-rickshaw operators for the
        conversion of their vehicles to domestically available compressed natural gas. While loans to such
        borrowers would entail a higher risk to the banking sector, the consortium of banks and leasing
        companies became involved as a means to improve urban air quality in Dhaka City, which still
        remains at critically poor levels. Furthermore, risks to the banking sector on this scheme were to
        be further reduced through the involvement of the US AID LPG program that would underwrite loan
        of up to 50%. Clearly, the banking sector in Bangladesh has shown willingness to become


                                                                                                      Page 21 of 54
        involved in the promotion and financing of clean technologies that would improve domestic
        environmental conditions.

GEF involvement:                                                                                                       Formatted


Brick manufacturing is a significant contributor to GHGs on the Indian sub-continent, and more broadly, in
Asia. . This situation will only exacerbate itself as urban populations expand and create a growing demand
for bricks. . In some countries, such as China, energy conservation was the driving force behind
government interventions to improve kiln technology. This became increasingly critical as brick production
expanded which led to significant investments in research and development of kiln technologies to reduce
energy usage. . In a developed economy such as China, the government was capable of providing the
financial resources for such R&D activities. . However, in less affluent, cash poor economies such as
Bangladesh, there is a shortage of internal resources required to bring about such changes. . Additionally,
the government lacks the knowledge and wherewithal to implement a program of such magnitude and
scope. . Therefore, international assistance, such as that being sought from GEF, is compelling.

The proposed project would achieve the objectives set out in GEF Operational Program 5 to reduce net
GHGs from anthropogenic sources and by protecting removal of such gases by sustaining available carbon
sinks. . The project would directly and indirectly attain the OP-5 target outputs by:

 Reducing energy use in kilns; and                                                                                    Formatted: Bullets and Numbering


 Reducing GHG emissions.                                                                                              Formatted: Bullets and Numbering


 Introducing moulding and other energy-efficiency techniques that will restrict wood from being used as               Formatted: Bullets and Numbering
   a fuel.

To ensure that the OP-5 targets will be achieved, specific initiatives will be undertaken. . These will include
the following:

       Confirmation and comparative studies of production, economic and environmental data of EEKs                    Formatted: Bullets and Numbering
        and technologies currently in use in Bangladesh;

       Building capacity to design, construct, operate and maintain EEK kilns;                                        Formatted: Bullets and Numbering


       Building capacity of the BMI in business management practices;                                                 Formatted: Bullets and Numbering


       Building capacity of workers;                                                                                  Formatted: Bullets and Numbering


       Implementing innovative financing schemes in collaboration with commercial banks and                           Formatted: Bullets and Numbering
        development partners;

       Conducting stakeholder awareness programs on EEK technologies, emissions, financing                            Formatted: Bullets and Numbering
        mechanisms, and energy-environment issues;

       Technology transfers to stakeholders through technical seminars at demonstration sites;                        Formatted: Bullets and Numbering




                                                                                                       Page 22 of 54
       Monitoring effectiveness of technology dissemination and financing mechanisms;                              Formatted: Bullets and Numbering


       Verifying emission reductions through monitoring of fuel consumption and smokestack emissions.              Formatted: Bullets and Numbering


The current regulations requiring installation of 120 ft high chimneys is inadequate and, in some ways,
cosmetic and does not address the critical need for technological change to reduce GHG and other
emissions. . The Government of Bangladesh recognizes that this is an interim measure and has agreed to              Formatted
place a moratorium on this rule if a more energy efficient technology such as the VSBK or the FDTK can
demonstratively reduce GHG and other emissions while reducing production costs. . Without this                      Formatted
moratorium, it is expected that many credit-worthy brick kiln owners will convert to the 120-foot chimney
within the next 24 months; as a consequence, they would be unwilling to re-invest in EEK technologies for
another 5 to 10 years. . For these reasons, it is particularly timely now to implement a full GEF technology        Formatted
market transformation project.

                                                                                                                    Formatted
The proposed IKEBMI project would achieve the objectives set out in GEF Operational Program 5, to
reduce net GHGs from anthropogenic sources and by protecting removal of such gases by sinks. The
project would directly and indirectly attain the OP5 target outputs through:

Reducing GHG emissions through removal of barriers that currently inhibit wide adaptation of EE                    Formatted: Bullets and Numbering
   technologies into the BMI in Bangladesh;

Ensuring activities that support the sustainability of least-cost and “win-win-win” energy efficiency and          Formatted: Bullets and Numbering
   conservation measures. This includes the important issues of financial sustainability;

Introducing technologies that will restrict wood from being used as a fuel.                                         Formatted: Bullets and Numbering


This GEF project would create an enabling environment for market transformation of the BMI in
Bangladesh towards energy-efficient kiln technology. The proposed full GEF IKEBMI project would be
defined and developed during PDF-B activities, particularly in the Logical Framework Analysis (LFA).
Generally, the full BIPV project is envisioned to consist of the following components:

Component A: Removal of Technical Barriers                                                                         Formatted: Bullets and Numbering
Component B: Removal of Awareness Barriers
Component C: Removal of Financial Barriers
Component D: Removal of Institutional Barriers
Component E: Monitoring and Managing Project Effectiveness

The above-listed barriers are neither complete nor discrete in nature. Their interdependence and causality
are to be thoroughly analysed and evaluated in an LFA exercise envisaged during the PDF B phase. The
LFA will evaluate issues, barriers and detail problems facing the Bangladesh brick making industry, thereby
ensuring a comprehensive analytical framework.




                                                                                                    Page 23 of 54
2.0     GLOBAL SIGNIFICANCE

The growing demand for bricks in Bangladesh will result in further proliferation of high energy consuming
kilns and make it more difficult for the government to reduce GHG emissions in the future. The model
developed to usher in technological change in an “industry” that has been unable to do so on its own, is
comprehensive, holistic and a “win-win” for all stakeholders, particularly, the producers and the consumers.
. The project focuses on market imperatives to drive the technology changes and sustain it. . Cost
reductions and improved qualities are the trademarks of the new technologies and these along with strong
stakeholder participation point clearly to success. . A unique dimension in this project is diverse
stakeholder participation, even those who are, at present, not strictly stakeholders, i.e., commercial banks
and technical institutes.

The potential for success of this project will have significant global and regional impact. . It could become a
model for replication in the region and elsewhere where such types of energy efficient technologies are not
in use. The alternative scenario of unabated GHG emissions from the brick industry is worrisome for the
entire region. . The project intends to share and build awareness of these technologies, whose adoption
can lead to significant abatement in GHG emissions and, equally, meet energy conservation goals and
reduce costs. . A number of neighbouring countries have attempted to introduce energy efficient kilns and
practices, but these have not proven successful. . The fundamental reason for this, experts opine, is that
these programs have not been accompanied by comprehensive market transformation activities. .
Therefore, a successful effort in Bangladesh will be a model for other countries to follow. .

Brick manufacturing is a significant contributor to GHGs on the Indian sub-continent, and more broadly,
throughout Asia. The projection of urban growth in Asia will increase demand of bricks. This would lead to
more GHG emissions, resulting from the increase of coal consumption for baking bricks, thus causing more
serious problems to the global environment. Even though EEKs are in operation throughout more
developed countries such as China, less developed nations such as India and Bangladesh have not had a
significant penetration of EEKs within their BMIs for a number of undetermined reasons. Industry experts
surmise that technology dissemination programs for EEKs in India were not fully developed.

The success of the financial sector in “formalizing” the brick making industry in Bangladesh will have
profound implications for other industries in Asia where such measures are required to reduce GHG
emissions. The significant challenges on the proposed GEF supported project will be the transformation of
the BMI into an industry with formal business practices.

The implications of unabated GHG emissions from the BMI are truly worrisome, and this proposed GEF
project, if successfully implemented, will have global significance in the context of facilitating a market
transformation for a “semi-free” economy such as Bangladesh, and the subsequent GHG emission
reductions (is there an economic term to describe Bangladesh’s market system??). The outputs of
the GEF supported project would be shared with neighbouring countries, to build awareness on the
significance of removing financial barriers to a “non-formal” industry. It is anticipated that the project will be
sufficiently attractive to replication, and identical projects could be implemented in other Asian countries,
contributing further to the reduction of global GHG emissions.




                                                                                                          Page 24 of 54
3.0    FULL GEF PROJECT COMPONENTS AND EXPECTED RESULTS

The full GEF project components, objectives and expected results would be defined and developed during
PDF-B activities, particularly during the Logical Framework Analysis (LFA). . As previously mentioned,
theThe envisioned full GEF IKEBMI project would comprise of 5 five interdependent components that would
address various issues in removing barriers to the full adoption of EEKs, and provide result-based
management of these components to maximize effectiveness of the proposed project. .

The project objectives and outputs are to be achieved through:

            Identification and transfer of low cost kiln technologies that can be adapted to local conditions;        Formatted: Bullets and Numbering
            Introduction and commissioning of demonstration EEKs;
            Researching and testing alternative moulding techniques using local clay and raw materials;
            Development of models to demonstrate the technical, economic and financial viability of the
             kilns;
            Training of workers in the construction and operations of EEKs;
            Development of innovative financing mechanisms with lending institutions and prospective
             EEK owners
            Training brick plant owners on improved management techniques, finance and accounting
             methods;
            Involvement of regulatory authorities to bring about changes in existing institutional and policy
             framework;
            Extensive promotional campaigns and involvement of civil society to create moral persuasion.



The components are listed in a logical order designed to meet the overall objectives of the project:

1.Currently, there is little knowledge in the BMI about EEK options, and hence, the first component is the             Formatted: Bullets and Numbering
removal of a technical barriers through demonstrations of EEKs and building capacity of an “elite” group of
experts on the EEKs;

2.The second component is designed to facilitate the wider dissemination of EEK knowledge to                           Formatted: Bullets and Numbering
stakeholders outside the “elite” group. This would include other brick kiln businesses, the financial sector,
government regulators and other concerned stakeholders;

3.Upon successful dissemination of operational, economic and environmental benefits of EEKs, a third                   Formatted: Bullets and Numbering
component can be commenced to remove financial barriers in collaboration with the loan institutions;

4.Similarly, a fourth component removing regulatory barriers can be commenced through regulatory                       Formatted: Bullets and Numbering
agencies with the promulgation of policies that favour the adoption of EEKs

5.A fifth component will be setup to monitor and ensure effectiveness of the aforementioned project                    Formatted: Bullets and Numbering
components.

An overarching aspect to these activities is a the focus on stakeholder interaction that is planned to
influence and facilitate the market transformatition. . It is the intent of tThe project intends to involve a


                                                                                                       Page 25 of 54
number ofall stakeholders, brick kiln manufacturers, engineers, designers, consultants, entrepreneurs,
workers, government regulators, financial/banking professionals, in a coordinated and collaborative manner
on all aspects of the project from the demonstration of the techno-economic viability of the design, to the
financing, installation, operation and maintenance of the new technology kilns. . . The project will
emphasize and recognize the roles of each Each type of stakeholder in a holistic manner. (from brick kiln
manufacturers, engineers, designers, consultants to the entrepreneurs and workers in the brick making
industry, government regulators as well as the financial/banking institutions providing financing for
industries and the construction industry) will play an important role in the demonstration scheme, and the
technology dissemination.

TheFurther to stakeholder involvement on this project also recognizes the need for , there is recognition
that “technology champions”, and hence a team comprising of: are needed to promote the technology.
Toward this end, the project proposes to assemble a “champion” group comprising of:

       BUET, the premier technology institution of Bangladesh and viewed as the most respected arbiter
        of new technology evaluations by the Government of Bangladesh;
       the BBMOA, who have been active to date in developing this project, and who represent
        awareness of their industryXian Insititute of Wall Materials, a China government institute that is
        responsible for both research and development of wall materials as well as setting national quality
        standards; and
       the brick kiln ownerscommercial organizations that will promote technology sales.

Such a structure for stakeholder participation and the development of “champions” would facilitate a
meaningful dialogue between stakeholders, UNDP and the concerned GoBvernment of Bangladesh’s
concerned ministries that includes the Ministry of Environment and Forest, Ministry of Energy and Mineral
Resources and the Ministry of Industry. . This dialogue would be buttressed against the technology
evaluations of BUET (, the disseminators of the technology) and the BBMOAXian Institute, (owners of and
the opinions of the technology) owners, and will facilitate policy development and harmonization between
the various concerned government ministries, and most importantly, the market transformation of the brick
making industry in Bangladesh.

1.13.1 Component A: Removal of Technical Barriers                                                                   Formatted: Bullets and Numbering


This component would leverage information from past comparative studies on various brick kilns and PDF-
B activities, to confirm operational, cost and fuel consumption data. . Once the technologies have been re-
confirmed, a critical mass of technology specialists needs willto be built as part of the technical removal
barrier activity. . As such, this component will remove technical barriers through building the capacity of
these specialists through transfer of knowledge and on-job training. Through project demonstration kilns,
technical assistance and, and transfer of knowledge would be provided to local players in terms of design,
construction, and installation, operation and maintenance (to industry specialists such as engineers,
contractors, building owners), would be carried out, thereby greatly improving the ‘learning by doing’
process. . With time, an “elite group” is expected to emerge to become

Furthermore, there is a necessity to strengthen the local project management managers,and project
investors and technical support personnel in who will adopt, manageing and promote the EEK
technologies in the future and managing their operation. . It is also intended that the regulatory agencies



                                                                                                    Page 26 of 54
and financial professionals will also be included in these technical demonstrations from the start to
familiarize them with what the demonstration can achieve. . The capacity of policy makers would also need
to be further developed to be able to introduce suitable policy and regulatory initiatives. This is important,
as there is an absence of suitable financial and regulatory incentives that deters most of the brick making
entities from adopting EEK technologies.

Based on the findings of related PDF-B activities, this component would also develop local capacity in EEK
installation and technical support. Transfer of technology and know-how would be promoted through
technology specialists from outside of Bangladesh. A more direct approach would be to enhance
competency and service level provided by the EEK technology suppliers through direct participation in the
demonstration projects. The aim is to improve industry and public confidence in EEK technologies and
service support qualities. The EEK players would also be supported in setting-up of a brick making
association or strengthening the BBMOA, while a BUETcould become a focal point for EEK local network
and international linkages.

Among the issues to be addressed under this component are:

       Dissemination of comparative and operational data amongst a select group of stakeholders who                  Formatted
        will “champion” the appropriate technologies. . This would include the setupset-up and operation of
        a BMI database by project personnel and participating stakeholders;

       Setting up of two a minimum of two demonstration EE kilns in two distinct geographic divisions                Formatted
        using available information and the BMI database. . An effort will be made to operate theseTwo                Formatted
        demonstration kilnss will under different ownership regimes, such as SMEs, large corporations and             Formatted
        cooperatives. This effort will contribute towards a better understanding of how be operateddifferent          Formatted
        ownership arrangements operate in the Bangladesh business environment under two different
        ownership regimes: a privately owned brick making company and a community-based entity. Data
        from these demonstrations can be added to the BMI database for training purposes;

       Testing alternative moulding techniques to inject fuel into green bricks, and to train technicians on         Formatted: Bullets and Numbering
        such moulding techniques;                                                                                     Formatted
                                                                                                                      Formatted
       Building capacity of the technology “champions” on all aspects of the kilns, from design,                     Formatted
        construction, operation, maintenance and best business management practices of the brick kiln                 Formatted
        owners. . This would include kiln managers, fire masters,(??). and laborers;In particular, if the             Formatted
        technology diffusion is to be rapid, technical assistance will be required for stakeholders who are
                                                                                                                      Formatted
        interested in operating an EEK fabrication business;
                                                                                                                      Formatted
                                                                                                                      Formatted
       Conduct a “training of trainers” program to facilitate more rapidwidespread diffusion of the EE
        technologies. . This would occur at a later stage of this component;                                          Formatted
                                                                                                                      Formatted

       Conduct a program for product equivalence. . Quality of the bricks produced by EEKs is                        Formatted
        anticipated to be improved over those bricks produced by BTKs and other technologies currently
        used by the Bangladesh BMI. . Quality criteria and inspection protocols for determining overall
        improvements in brick quality will be determined during this component.




                                                                                                      Page 27 of 54
1.23.2 Component B: Removal of Awareness Barriers                                                                    Formatted: Bullets and Numbering


This component will focus on generating awareness and better understanding of EEK technology and
applications. . The current awareness level amongst the public, policy makers, government regulatory
agencies, local authorities, financiers and other stakeholders is generally low. . As is usually the case,
introduction of new technologies and alternative business practices are usually met with scepticism, thus
information dissemination has to be specially designed to highlight the advantages of the new technologies.
. Although some EEK technologies such as VSBKs have been proven to be technically feasible and
economically viable in China and other countries, there is a perception that it will fail in Bangladesh. Once
EEK technology has been verified in Component A, pertinent information will be disseminated to remove
these perceptions in formats commensurate to the absorptive capacity of the various stakeholders. For
example, government regulators will need to have a basic understanding of the kiln operations as it
pertains to reducing fuel consumption and smokestack emissions;. bBrick kiln operators from districts far
from the demonstration sites will require more specific information such as performance data, financing
details and energy-environment-related issues if they are to be interested in opportunities to adapt to an
EEK. Thus, a specific component to ensure continuing diffusion of the EEK technology can be justified.

. . Public pPromotion campaigns likely willwill also reach out to a larger audience. The target audience for
such campaigns would be to all relevant stakeholders, especially the public and school students.
Furthermore, as some public would be the recipients of the technology demonstrations, immediate benefits
would be gained through direct exposures. focus on important project impacts related to pollution reduction
and related positive public health impacts. . Additionally, some of the activities would also include
stakeholders from other countries so as to generate awareness and spur EEK adoption within those
countries.

Issues to be addressed under this component include:

       Establishment of a technology dissemination center that would evolve into a national centre of               Formatted
        excellence on brick making technologies. The centre would then become a focal point in EEK
        technology development and information dissemination that would benefit the industry and market
        development;

       Designing an information dissemination program including selection of appropriate media. . This              Formatted
        will include programs tailored for specific stakeholders such as regulators and brick making
        businessesentities;

       Enhancement of technology diffusion through organizing technical visits (both domestic and                   Formatted
        international) for brick making owners and operators to demonstration EEK sites;

       Conducting special information exchange sessions between industry experts and businesses on                  Formatted
        best practices and related issues in in brick making.                                                        Formatted


                                                                                                                     Formatted




                                                                                                     Page 28 of 54
1.33.3 Component C: Removal of Financial Barriers                                                                     Formatted: Bullets and Numbering


The most of the operating entities of the BMI in Bangladesh have not had access to financing from the
lending institutions due to the “non-formal” nature of the business. This has left the BMI undercapitalised
without the ability to make the necessary investments to improve their energy efficiencies.

This component addresses the removal of these financial barriers to enable the brick making entities tohat
would allow the BMI to access the necessary financial resources to transform itself towards energy-efficient
kilns that will be required for adoption of EEKs, related plant equipment and working capital. . Issues to be
addressed under this component include:

         Developing financial models to enable the banking sector to provide loans to finance the new                Formatted: Bullets and Numbering
          technologies. . This would include the manner of financing such as lease financing, term loan
          financing, debt financing or a combination of these alternatives;

         Building capacity of brick kiln owners on formal business management practices. . Skills to be              Formatted: Bullets and Numbering
          imparted would include inventory management, invoicing, accounting systems and personnel
          management;
                                                                                                                      Formatted
         buildingDeveloping the innovative financing schemes to reduce the risk profiles of the SME’sSMEs.           Formatted: Bullets and Numbering
          This may include the US AID Loan Portfolio Guarantee (LPG) program, which has been designed                 Formatted
          to mitigate lending risks since most commercial lending in Bangladesh is collateralised financing.
          capacity of the BMI in business management, the main objective of which is to strengthen                    Formatted
          accountability of the BMI entities to qualify for financing from lending institutions. Skills to be
          imparted would include inventory management, invoicing, accounting systems and personnel
          management;
      

 setup and implementing an innovative financing mechanism to provide financing to BMI entities. This may              Formatted
include the US AID Loan Portfolio Guarantee (LPG) program to reduce loan risks on participating                       Formatted: Bullets and Numbering
Bangladeshi commercial banks;


3.4       Component D: Removal of Institutional Barriers

As in most developing nations, regulators tend to be protectionist when regulating public good and
therefore tend to be policing than developmental. . These regulators also do not have the capacity to
develop a suite of technological options that would assist in promoting best environmental practices. .
Therefore, an essential activity of the project must include capacity building of government regulators to
establish rules, regulations and set standards for technologies that have low emissions and are
commercially profitable. . TTo date, many of the regulations and rules governing the BMI in Bangladesh
have been ineffectual, and there is a need to establish some standards by which the BMI can regulate
itself. However, by what benchmark should new GoB regulations be set for the BMI? This component will
address the removal of institutional barriers that do not provide an enabling environment for the BMI to
become energy efficient. Issues to be and addressed itself to the creation of an investor friendly regulatory
regime:in this component includes:



                                                                                                      Page 29 of 54
         Evaluation of emissions and fuel consumption between current and energy efficient kiln                       Formatted
          technologies. . This overlaps with the technology comparative evaluations of Component A. .
          However, this component will allow the Department of Environment (DoE) to undertake its
          independent evaluations, and select an appropriate new “baseline” technology by which to base its
          new regulations;

         Build the capacity of concerned regulatory agencies to formulate appropriate industry standards in           Formatted
          brick kiln quality, brick quality and emissions. . This will involve consultations and collaborative
          discussions with BMI representatives as well as other concerned government ministries notably the
          Ministry of Energy and Mineral Resources on issues of fuel quality and security, and the Ministry of
          Industry;

         Build capacity of the DoE to enforce emission standards and provide environmental clearances for             Formatted
          EEKs. . This would include setting up emission monitoring protocols and efforts to create a proper
          billing systems to monitor fuel consumption all in collaboration with the BMI and fuel suppliers;

         Build capacity of the Bangladesh Brick Manufacturers Owners Association (BBMOA) or an                        Formatted
          equivalent organization to to assist the GoB in the formulation of policies that encourage the               Formatted
          adoption of EEKs in the BMI. . The BBMOA can also be the institution that assists various brick
          making SMEs in guiding them towards or providing financial and technical resources to assist their
          transformation to EEKs.

.

3.5       Component E: Monitoring and Managing Project Effectiveness

This component will assist to achieve To ensurethe full GEF project activities will achieve their intended
objectives. . The monitoring program , a separate component to monitor project effectiveness is required.
Monitoring programs to be setup includewill include:

         Monitoring technology diffusion. . The effectiveness of the technology diffusion program will be             Formatted
          monitored through a Mmanagement database. . of the full GEF project will have a database setup
          to monitor locations where EEKs have been adopted. This database should then be transferred to
          the Ministry of Environment and Forest and the proposed Centre of Excellence to enable
          monitoring to continue after an institutions such as the BBMOA or BUET where the monitoring can
          be continued after GEF support is withdrawndiminishes;

         Monitoring emissions. . Since the principal objective of the full project is to reduce emissions from        Formatted
          kilns, it will be necessary to measure the reductions. . This will conducted in two ways: This can           Formatted
          be done through examination of fuel consumption of the old and new kilns; and, . Verification of
          these emissions can be implemented through monitoring of smokestack emissions. . Environment
          Canada who have developed a new technology specifically for brick kilnfor smokestack emission
          measurementss will provide technical assistance in this regard;




                                                                                                       Page 30 of 54
         Monitoring performance of the financing schemes for SMEs of the BMI. . Overall, the number of             Formatted
          SMEs converting to EEKs would be indicative of the success of the financing schemes; however,             Formatted
          the efficiency and administrative effort to implement the scheme would be of interest to this
          monitoring program along with measures to increase its efficiency of processing;

         Conduct EIAs and socio-economic impact assessments of new EEK installations;                              Formatted


      Creation of an industry that can provide the financial and technical guidance to the BMI.                    Formatted
                                                                                                                    Formatted: Bullets and Numbering




4.0       DESCRIPTION OF PROPOSED PDF-B ACTIVITIES

The proposed The PDF-B activities are aimed at identifying and designing the scope of activities that need
to be undertaken to ensure implementation of the full pproject, identify all barriers in detail, develop an
intervention path to ensure project outcomes, and develop a project documentment preparatory assistance
that will be carried out with the proposed PDF-B grant, and other co-funding sources, will come up with the
design of the full GEF IKEBMI project components. The PDF-B activities will also address the design of
appropriate mechanisms to facilitate the smooth coordination, implementation, monitoring, and
management of the project components. . . In view of the time sensitivity of the full project and the
necessity for its quick implementation, the PDF-B activities will be conducted as a UNDP Project
Preparatory Assistance Program. . The following describe the proposed project developmentPDF-B
activities:

4.1       Activity 1: Establishment of Implementation Arrangements and Office Operationss

Objectives:

1)To establish operational modalities between the Executing Agency and the Ministry of Environment and
     Forest;
2)1) To establish a Project Preparation TeamPDF-B executing team and local office;                                  Formatted: Bullets and Numbering
2) To identify and appoint the Project Preparation TeamPDF-B Team members;
3) To establish operational modalities between the Executing Agency and the MOEFMinistry of                         Formatted: Bullets and Numbering
     Environment and Forest.

Project PreparationPDF-B Team:

The Project Team PDF-B Team iswould be the core group to implement the PDF-B activities. . The Team
would be recruited using the key members in implementing the GEF supported project on IKEBMI.
Immediately upon PDF-B project approval, UNOPS selection criteria and will include:would be responsible
to select the Project Team and appoint the team members. The Project Team would then execute the
PDF-B project activities, according to the terms of reference (ToR) and scope of works.

The members of PDF-B Project Preparation Team would include:

1) an International One PDF-B Chief Technical Advisor;



                                                                                                    Page 31 of 54
2) a One PDF-B Local Technical Director assisted by senior, intermediate and junior support staff;
3) a One fFinancial specialist;
4) tTwo Iinternational tTechnical Sspecialists in kiln technology (2);
5) a Technology Specialist;                                                                                          Formatted: Bullets and Numbering
5)One lanocal economistEconomist;                                                                                    Formatted: Bullets and Numbering
6) One international emissions specialist;
7) One laocal regulatory Regulatory specialistSpecialist;
8) One alocal capacity Capacity building Building specialistSpecialist.

Target Outputs PDF-B 1:Outputs:

1) Appointed PDF-B Team members;                                                                                     Formatted: Bullets and Numbering
2) An established and operational PDF-B office with logistical support systems;                                      Formatted: Bullets and Numbering
3) Established operational modalities between UNDP Bangladesh and the MoEF;                                          Formatted: Bullets and Numbering
2)4) Periodic meetings (every two months) to monitor and evaluate project PDF-B developmentprogress.;                Formatted: Bullets and Numbering

It is worth noting that the estimated GEF funding request shown below will be used towards the setup of the
PDF B management unit, and not towards the UNOPS fee or other fees for implementation support from
UNDP. Furthermore, no GEF funds will be used for any administrative purposes to setup the project; this
includes the identification of PDF-B Team members.
3)Establishment of the PDF-B Project Preparation Team;                                                               Formatted: Bullets and Numbering
4)Appointment of PDF-B Project Preparation Team members.

Estimated Budget (Activity 1):

GEF                                           US$
                                          4548,000
Co-financing:
 UNDP                                  US$ 10,000
 Government of China(in-kind)              US$ 0                                                                    Formatted: Bullets and Numbering
 BUET (in-kind)                            US$ 0
 Clean Energy Alternatives (in-
    kind)                                    US$ 0
 Private Sector Financial
    Institutions (in-kind)                    US$ 0
 Private Sector Brick Making                                                                                        Formatted: Bullets and Numbering
    Entities                                 US$ 0
TTotal                                        US$
                                      58,000845,00
                                                 0


4.2    Activity 2: Logical Framework Analysis

Objectives:




                                                                                                     Page 32 of 54
1) To define the full project objectives, expected results, framework design, detailed components,                   Formatted: Bullets and Numbering
   implementation plan;
2) To identify full project success indicators, means for verification, project risks and mitigative actions;
3) To identify key requirements and local organisational support for full project success;

A national participatory workshop would be organised involving participation from all stakeholders
(government, the BMI, technology adaptors (BUET), financial institutions, NGOs, etc.). During this
workshop, a logical framework analysis would be conducted and completed through an LFA facilitator
where strong participation from the stakeholders would be critical in addressing the following:

   Definition of the full project objectives and expected results;                                                  Formatted: Bullets and Numbering
   Identification of the EEK technology application barriers and root causes;
   Definition of the full project component activities, identifying which are baseline and which are
    incremental activities;
   Identification and evaluation of the associated risks for each project activity and to prepare mitigating
    measures to reduce the risks;
   Identification of key requirements and local organisational support in ensuring success of the full
    project.

All these activities would lead to a complete IKEBMI project framework design with a more concrete set of
prioritized objectives, expected measurable outputs, and project components, including the success
indicators for the full IKEBMI project and means for verification of project outputs.

Target Outputs:

1) National participatory LFA workshop (including proceedings);                                                      Formatted: Bullets and Numbering
2) Defined full project objectives, expected results, components, implementation plan, and risks
   assessment;
3) Technology barriers and root-causes;
4) Full project success indicator, means for verification and critical assumptions;
5) Potential project risks and mitigating actions to reduce the risks;
6) Key requirements and local organisational support for full project success;

Estimated Budget (Activity 2):

GEF                                        US$ 25,000
Co-financing:
 UNDP                                          US$ 0                                                                Formatted: Bullets and Numbering
 Government of China                           US$ 0
 BUET (in-kind)                                US$ 0
 Clean Energy Alternatives (in-
    kind)                                       US$ 0
 Private Sector Financial
    Institutions (in-kind)                      US$ 0
 Private Sector Brick
    Manufacturing Entities (in-kind)            US$ 0
Total                                      US$ 25,000


                                                                                                     Page 33 of 54
4.3         Activity 3: Data and Information Collection and Technology Assessments on EEKs                              Formatted: Bullets and Numbering


Objectives:

1) To develop a stronger profile and understanding of the brick making industry in Bangladesh;                          Formatted: Bullets and Numbering
2) To collect relevant data and information related to technology application in Bangladesh;
3) To undertake technology market potential assessment;
4) To conduct baseline assessment on the brick making industry and EEK technology application and
   demonstration;
5) To set-up one demonstration EEK for the full project.

This activity is very important in acquiring the information crucial to a successful design of the full project.
The collection of data and information would be based on the identified activities in the LFA workshop and
would narrow the wide divergence of data available on the BMI in Bangladesh including the number of
kilns; fuel consumed per unit bricks produced and operational costs. These data and information would
allow for complete analysis that would be directly related and critical in implementing the full project
components. However, it is vital that these tasks are conducted during the PDF-B project activities so that
the underlying scenario could be adequately addressed in the project brief. Furthermore, this would allow
the full project activities to focus straight into implementation issues and thus, save valuable resources and
time.

Activity 3 also proposes a departure from “traditional” PDF B activities in one significant way: It envisages
the design and construction of one demonstration kiln, which would normally be a full project activity. This
has been proposed to enable early testing of the kilns using local clay materials. A full package of
demonstration activities will be undertaken in Activity 3 to identify the barriers in the technology
demonstration and to design a critical intervention path to ensure the expected outcomes. The data and
information required for the baseline assessment were identified during the preliminary LFA Workshop (July
2003) and verified and supplemented in the LFA workshop in PDF-B Activity 2. These includes:

     Act.                                                                                Full GEF Project
                                       Data and Information
       #                                                                                    Reference
     3.1      Full desk analysis kiln technology options                                  Component A
     3.2      Profile and database creation of the existing brick making industry         Component A

     3.3      Baseline emissions of the current brick making industry with BTKs and
                                                                                           Component A
              FCKs
     3.4      Monitoring and evaluating the dDesign and set-up of a demonstration          Component A
              EEK                                                                          Component B
                                                                                           Component C
     3.5      Suitability of EEK technologies based on demonstration data                  Component A,
                                                                                           Component B
     3.6      Training support needs based on EEK demonstration design and set-up          Component A
     3.7      Technical visits to EEK sites outside of Bangladesh                          Component B
     3.8      Studies of regulatory regime governing the brick making industry             Component D


                                                                                                        Page 34 of 54
  3.9      Capacity building needs of the brick making industry                             Component A
                                                                                            Component D
   3.10    Conduct a data and information gap analysis and measures to acquire
                                                                                           All components
           the data and information

It is important to distinguish the extent of GEF funding for Activity 3.4 for “Monitoring and Evaluation of the          Formatted
Design and Setup of Demonstration EEK”. GEF funds will be used by PDF B personnel (that includes TA                      Formatted
specialists from China) to evaluate and monitor this aspect of the project, considered essential to the                  Formatted
preparation of the full project insofar as the outputs of these activities provide a benchmark for capacity              Formatted
building efforts required for the full project, notably during kiln design, construction and operation. More             Formatted
importantly, this reduces the uncertainties for the full project design. Direct costs towards the
                                                                                                                         Formatted
demonstration kiln, however, are not eligible for GEF funding and will be funded from private sector entity
                                                                                                                         Formatted
and financial institutional sources to cover kiln materials supply, construction TA and construction labor.
                                                                                                                         Formatted
The projected cost of the two demonstration EE kilns is estimated to be in the order of $130,000 and will be
financed by private sector brick making entities supported by private sector financial institutions in                   Formatted

Bangladesh. One EE kiln is expected to be a VSBK and the other a coal-fired Hoffman kiln. These costs                    Formatted
also reflect the contributions of various stakeholders of the extra time and effort required to properly design          Formatted
and construct these kilns, which have not as yet been built in Bangladesh.                                               Formatted
                                                                                                                         Formatted
To maximize and process the amount of valuable data and information generated by the demonstration kiln                  Formatted
that can be used towards the effective design of the full project, other activities to support Activity 3.4
                                                                                                                         Formatted
includes:
                                                                                                                         Formatted
                                                                                                                         Formatted
         Activity 3.5 - Determining Suitability of EE Kiln Based on Demonstration Data: Involves monitoring
                                                                                                                         Formatted
          operating costs, brick productivity and energy consumption of the demonstration EE kiln for over 4
          weeks as appropriate, and collecting the data from this operation to determine cost reductions and             Formatted

          energy savings versus the baseline technologies. It is important to establish kiln energy                      Formatted
          consumption under Bangladeshi conditions. This activity would be partially a field activity                    Formatted
          (collection of data) and an office exercise (analysis of data and comparisons to the baseline);                Formatted: Bullets and Numbering


         Activity 3.6 - Providing Training Support for Demo Operations: When the demonstration kiln is                  Formatted: Bullets and Numbering
          constructed and operational, a number of key personnel will be "trained-on-the-job" in construction
          and subsequently, the operation of the kiln. These personnel will be eventually responsible for
          training other kiln constructors and operators. Kiln technologists from the Chinese Government
          Institute for Wall Materials will be operating the kiln to demonstrate its optimal performance as well
          as training a select number of Bangladeshi operators. Training needs for the full project will be
          assessed during this 3-month PDF B activity to optimize training effectiveness;

         Activity 3.9 - Study of Capacity Building Needs: This field activity will collect information from             Formatted: Bullets and Numbering
          representatives of the brick industry as to what support they will require to build an industry support
          group that will assist fledgling brick making businesses on technology choices and financing
          options. The information would then be analysed in the office formulate an effective Brick Making
          Industry capacity building strategy for the full project. A small workshop to reach a consensus on
          strategic planning of the brick industry and its capacity building needs. Information collected on
          this activity will go beyond construction and operations of the demonstration kilns and examine
          what capacities are required for an association that represents the brick industry that would



                                                                                                         Page 35 of 54
        disseminate the technology on a wider scale. This would include capacity to better organize and
        manage growth of EE kilns, to train other trainers on EE kilns, to maintain quality standards and
        other safeguards that will sustain a trend towards a cleaner industry and reduction of GHGs;
                                                                                                                    Formatted
The results of Activity 3 would be discussed and re-evaluated during a second National Participatory
workshop (PDF-B Activity 4) and properly incorporated into the full project design (PDF-B Activity 4).
Critically, the baseline study and incremental cost analysis are one of the key subjects to be addressed in
the final project brief and document (PDF-B Activity 5).

Target Outputs:

1)   A stronger profile of the brick making industry in Bangladesh;                                                 Formatted: Bullets and Numbering
2)   Relevant data and information related to IKEBMI technology application in Bangladesh;
3)   An assessment of EEK technology market potential;
4)   Baseline assessment of the brick making industry and EEK technology application and demonstration.

Estimated Budget (Activity 3):

GEF                                        US$ 178,000
Co-financing:
 UNDP (in-kind)                                 US$ 0                                                              Formatted: Bullets and Numbering
 Government of China                       US$ 10,000
 BUET (in-kind)                             US$ 5,000
 Clean Energy Alternatives (in-
    kind)                                    US$ 5,000
 Private Sector Financial
    Institutions (in-kind)                 US$ 910,000
 Private Sector Brick
    Manufacturing Entities (in-kind)       US$ 40,000
Total                                        US$
                                         32248,000



4.24.4 Activity 24: Project Design & Co-financing Development                                                       Formatted: Bullets and Numbering


Objectives:

1) To design the different activities that will make up the various components of the project;                      Formatted: Bullets and Numbering
1)To develop and identify financing models that meet the needs of both the financial institutions and the
    brick manufacturing entities;
2)                                                                                                                  Formatted: Bullets and Numbering
3) To evaluate baseline and incremental activities, and the corresponding costs                                     Formatted: Bullets and Numbering
2)To define the full GEF IKEBMI project objectives, expected results, framework design, detailed
    components, implementation plan, and risks assessment;
To identify full GEF IKEBMI project success indicators, and means for verification, project risks and
    mitigative actions;


                                                                                                    Page 36 of 54
     ;                                                                                                              Formatted: Bullets and Numbering
4)To evaluate project risk and identify mitigating action;                                                          Formatted: Bullets and Numbering
5)TTo identify key requirements and local organisational support for IKEBMI full project success;
4) To prepare budgets for the full project;                                                                         Formatted: Bullets and Numbering
6)5) To identify and confirm co-financing commitments for the full IKEBMI project;                                  Formatted: Bullets and Numbering
7)6) To prepare the full pProject Tteam structure and identify potential candidates and lead organisations;
8)7) To prepare the terms of reference (TORToR) for the people who will be involved in Project Preparation
     TeamPPT for the full project.

Two national participatory workshops would be organised involving participation from all stakeholders
(government, the BMI, technology adaptors (BUET), financial institutions, NGOs, etc.). The first workshop
would be organised at the beginning of the PDF-B project activities. During this workshop, an logical
framework analysis would conducted and completed through an LFA appointed expert facilitator would
coordinate and conduct completion of the logical framework analysis (LFA), where strong participation from
the stakeholders would be critical in addressing the following:

Definition of the full IKEBMI project objectives and expected results;                                             Formatted: Bullets and Numbering
Identification of the EEK technology application barriers and root causes;
Definition of the full IKEBMI project component activities, identifying which are baseline and which are
    incremental activities;
Identification and evaluation of the associated risks for each project activity and to prepare mitigating
    measures to reduce the risks;
Identification of key requirements and local organisational support in ensuring success of the full IKEBMI
    project.

A second and final workshop would be organised at the middle partnear the end of the PDF-B
exercisephase. All participants of the first workshop, as well as new interestednewly interested parties,
would be invited to participate. . The second workshop will:

   Re-evaluate the results of the first workshop for further refinement;
   Review preliminary results of the EEK technology assessments and incremental cost analysis; (PDF-B
    Activity 3);
   Identify baseline and potential barrier for IKEBMI technology demonstration at selected premises (PDF-
    B Activity 3);
   Address new or additional issues related to IKEBMI and the full project plan;
   Strengthen stakeholders understanding and commitments towards EEK technology application for the
    BMI.

Additionally, within this component, the PDF-B Project Preparation TeamTeam would also estimate the full
project budget while specifying the baseline and incremental costs, and obtain confirmation for co-financing
commitments. These activities would be supported by the outputs from PDF-B Activity 3. . These full
project budget and co-financing commitments, as well as EEK technology assessments and incremental
cost analysis (PDF-B Activity 3), are critical in defining the full GEF project.

All these activities including the National Participatory workshops would lead to a complete IKEBMI project
framework design with a more concrete set of prioritised objectives, expected measurable outputs, and
detailed project components. Additionally, the success indicator for the full IKEBMI project and means for


                                                                                                    Page 37 of 54
verification of project outputs would be identified. The results of all PDF-B activities would then be
presented to the stakeholders for feedback through a the second and final stakeholder workshop, to be
organised at the final stage of PDF-B activities. The participants of this final workshop would be from the
previous workshops as well as relevant parties..

In addition, the PDF-B Project Preparation TeamTeam would also prepare the structure of the Full Project
Team, for efficient management and implementation of the full GEF project. This task includes preparation
of terms of reference (TOoR), identifying potential candidates for the key team positionsroles, and
identifying the relevant organisations to lead the execution of each of the full project components and sub-
components. Upon identification of the relevant organisations, the suitable and qualified staff from those
organisations would be targeted as the relevant project managers.

Target Outputs:

1)Design of the various activities for each component of the project;National participatory and final
     stakeholder workshops (including proceedings);
2)Defined full IKEBMI project objectives, expected results, components, implementation plan, and risks              Formatted: Bullets and Numbering
     assessment;
3)Identification ofT IKEBMI technology barriers and root-causes;
4)Identification ofF ull project success indicator, means for verification and critical assumptions;
5)Evaluation of potentialPotential project risks and mitigating actions to reduce the risks;
6)1) Identification ofK key requirements and local organisational support for IKEBMI full project success;
2) A suite of financial models to enable brick making entities to finance EEKs;                                     Formatted: Bullets and Numbering
7)3) Confirmation of coCo-financing commitments for the full IKEBMI project;                                        Formatted: Bullets and Numbering
4) Full project budget                                                                                              Formatted: Bullets and Numbering
8)5) Preparation of the Full Project Team structure and identification of key candidates and lead                   Formatted: Bullets and Numbering
     organisations;
9)6) Preparation of the terms of reference (TOoRs) for the Full Project Team.

Estimated Budget (Activity 42):

GEF                                             US$
                                       50,0006675,00
                                                   0
Co-financing:
 UNDP                                         US$ 0
 Government of China (in-kind)                US$ 0                                                                Formatted: Bullets and Numbering
 BUET (in-kind)                            US$ 5,000
 Clean Energy Alternatives (in-
    kind)                                   US$ 5,000
 Private Sector Financial
    Institutions (in-kind)                  US$ 5,000
 Private Sector Brick
    Manufacturing Entities (in-kind)
                                          US$ 10,000
Total                                           US$
                                       70,0009915,00


                                                                                                    Page 38 of 54
                                                        0


4.3Activity 3: Data and Information Collection and Technology Assessments on EEKs                                         Formatted: Bullets and Numbering


Objectives:

1)To develop a stronger profile and understanding of the brick making industry in Bangladesh;                             Formatted: Bullets and Numbering
2)To collect relevant data and information related to IKEBMI technology application in Bangladesh;
3)To undertake IKEBMI technology market potential assessment;
To conduct baseline assessment on the brick making industry and EEK technology application and
    demonstration;
    To setup one demonstration EEK for the full project..                                                                 Formatted: Bullets and Numbering


PDF-BThis activity Activity 3 is very important in preparing the adequate assessments beforeacquiring the
information crucial to a successful design of the full IKEBMI project could be implemented. The purpose of
this activity is to gathercollection of important data and information related to the profile of the brick making
industry. There iswould narrow the a wide divergence of data available on the BMI in Bangladesh including
the number of kilns,kilns, fuel consumed per unit bricks produced and operational costs. These data and
information would allow for complete analysis that would be directly related and critical in implementing the
full project components. However, it is vital that these tasks are conducted during the PDF-B project
activities so that the underlying scenario could be adequately addressed in the project brief. Furthermore,
this would allow the full project activities to focus straight into implementation issues and thus, save
valuable resources and time.

Activity 3 also proposes a departure from “traditional” PDF B activities in one significant way: It envisages
the design and construction of one demonstration kiln, which would normally be a full project activity. This
has been proposed to enable early testing of the kilns using local clay materials. A full package of activities
will be undertaken in Activity 3 to identify the barriers and to design a critical intervention path to ensure the
expected outcomes.

 The required data and information required for the baseline assessment was identified during the July
2003 LFA Workshop are as followsand includes:

  NoA                                                                                      Full GEF Project
                                     Data and Information
  ct. #                                                                                       Reference
  1.3.    Full desk analysis kiln technology options Profile and database creation                                        Formatted: Bullets and Numbering
                                                                                             Component A
  1       of the existing brick making industry
  2.3.    Profile and database creation of the existing brick making industry                                             Formatted: Bullets and Numbering
                                                                                             Component A
  2       Baseline emissions of the current brick making industry with BTKs and
          FCKs
  3.3.    Baseline emissions of the current brick making industry with BTKs and                                           Formatted: Bullets and Numbering
                                                                                             Component A
  3       FCKs Full desk analysis technology options
  4.3.    Design and setup of two a demonstration EEK EEKsites                              Component A                   Formatted: Bullets and Numbering
  4                                                                                         Component B
                                                                                            Component C



                                                                                                          Page 39 of 54
  5.3.    Suitability of EEK technologies based on demonstration data                   Component A,                 Formatted: Bullets and Numbering
  5                                                                                     Component B
  6.3.    Training support needs based on EEK demonstration design and setup                                         Formatted: Bullets and Numbering
                                                                                        Component A
  6
  7.3.    Technical visits to EEK sites outside of Bangladesh                                                        Formatted: Bullets and Numbering
                                                                                        Component B
  7
  8.3.    Studies of regulatory regime governing the brick making industry                                           Formatted: Bullets and Numbering
                                                                                        Component D
  8
  9.3.    Capacity building needs of the brick making industry                          Component A                  Formatted: Bullets and Numbering
  9                                                                                     Component D
  10.3    Conduct a data and information gap analysis and measures to acquire                                        Formatted: Bullets and Numbering
                                                                                        All components
   .10    the data and information



Based on the data and information gathered, the complete baseline study, incremental cost analysis, and
market evaluation on BIPV technology application, as well as on the identified BIPV demonstration sites
could be prepared. In between,The results of Activity 3 preliminary assessments would be discussed and
re-evaluated during the second National Participatory workshop (PDF-B Activity 2) and properly
incorporated into the full project design (PDF-B Activity 2). to further refine the findings. Critically, the
baseline study and incremental cost analysis are one of the keys subjects to be addressed in the final
project brief and document (PDF-B Activity 4).

Target Outputs:

1)A stronger understanding profile of the brick making industry in Bangladesh;                                       Formatted: Bullets and Numbering
2)Relevant data and information related to IKEBMI technology application in Bangladesh;
3)IKEBMI An assessment of EEK technology market potential assessment;
4)Baseline assessment of the brick making industry and EEK technology application and demonstration.

Estimated Budget (Activity 3):

GEF                                     US$ 165178,000
Co-financing:
UNDP (in-kind)                                   US$ 0                                                              Formatted: Bullets and Numbering
Government of China                         US$ 10,000
BUET (in-kind)                              US$ 5,000
Clean Energy Alternatives (in-
    kind)                                    US$ 5,000
Private Sector Financial
    Institutions (in-kind)                US$ 5010,000
Private Sector Brick
    Manufacturing Entities (in-kind)
                                           US$ 9540,000
Total                                           US$
                                          330248,000


                                                                                                     Page 40 of 54
4.44.5 Component Activity 54: Preparation of GEF Project Executive Summary and Draft UNDP                             Formatted: Bullets and Numbering
       Project Document

Objectives:

   To prepare and complete the GEF Project Executive Summary and UNDP Project Document;
   To submit the GEF Project Executive Summary and Project Document according to schedule; and,
   To adequately address EEK technology baseline assessment and incremental cost analysis in the GEF
    project brief.

All findings and outputs from PDF-B Activities 1,y 2 , 3 and 34 would be finalised under this activity and
would directly contribute to the preparation of the full GEF project brief and draft UNDP project document.
The Project Brief would be prepared following the guidelines for Operational Programme No.GEF OP- 5 in
the official UNDP/GEF format for delivery to UNDP-GEF (Kuala Lumpur), and to the UNDP-GEF-RBAP, by
January 2005September 2003.

The full GEF Project Brief and the draft UNDP Project Document would address the project justification,
project design, project plan, institutional and logical framework analysis, baseline study, market
sustainability, and technology replicabilitydiffusion. The incremental cost of the project would be analysed
and the co-financing resources would be specified. . Co-funding would also be identified for the non GEF-
eligible activities.

It is estimated that for this OP-5 project, the total project cost will be about US$ 25 million. The estimated
incremental cost would be about US$ 3 million, and the rest would be from co-financing sources (e.g., brick
makers, private sector lending institutes, Government of Bangladesh, other donor agencies such as UNDP,
CIDA and US AID).

The Project Brief would be finalised after full consultation with all relevant stakeholders and the government
organisations. In addition, the Executive Summary of the project will be prepared using the official GEF
format. In parallel to the GEF approval of the Project Brief, the UNDP Project Document will be drafted
consistent with the official UNDP format.

Target Outputs:

1)Completion of the GEF Project Executive Summary and draft UNDP Project Document;
2)1) Submission of the GEF Project Executive Summary and Project briefdocument by December
     2003January 2005;
3)2) Complete discussion on EEK technology baseline assessment and incremental cost analysis in the                   Formatted: Bullets and Numbering
     GEF Project Brief;
4)3) Preparation of the draft UNDP Project Document;
5)4) Confirmation Cof co-financing confirmation.




                                                                                                      Page 41 of 54
Estimated Budget (Activity 45):

GEF                                    US$ 3047,000
Co-financing:
 UNDP (cash)                           US$ 25,000$
 Government of China                        15,000
 BUET (in-kind)                         US$      0
 Clean Energy Alternatives (in-           US$US$
    kind)                                    11,000
 Private Sector Financial
    Institutions (in-kind)                US$ 1,000$
 Private Sector Brick                         1,000
    Manufacturing Entities (in-kind)
                                          US$ 1,000$
                                               1,000


                                          US$2,000$
                                               2,000
Total                                           US$
                                        60,00067,000


5.0     PROJECT SUPPORT

1.15.1 Support From the Government of Bangladesh Brick Making Industry and the Brick Making                        Formatted: Bullets and Numbering
        Industry Government of Bangladesh

During the July 25, 2003 meeting at UNDP Bangladesh’s Dhaka office to summarize the findings of a
preliminary LFA workshop for IKEBMI, the GoB agreed to place a moratorium on the 120-foot chimney rule
decision if a more energy efficient technology such as the VSBK can be demonstrated on this project to
reduce GHG emissions while reducing production costs. . Amendments would then be made to the rule
decision if there were a technology that is acceptable for to all project stakeholders. . During the same
meeting, representatives from the BBMOA and the various brick making entities in Bangladesh agreed to
adopt these EEKs if they could manage the short-term increases in production costs, if any. .

These agreements are very significant due to the recognition by all stakeholders, notably the GoBAs such,
the GoB, the BBMOA and representatives from various brick making entities of the all agreed to the
urgency of commencing this project as soon as possible. . Issues related to this urgency are elaborated in
Section 7, “Justification of PDF-B Grant”.


5.2     On-going support

The PDF-B project development is expected to derive benefits from the ongoing GEF supported NAPA
project, designed to assist in the capacity building in Bangladesh to formulate and manage GEF projects. .
Potential benefits of the NAPA project with the PDF-B phase are:


                                                                                                   Page 42 of 54
         Aminul: your input is required for this section“on-the-job” training for NAPA participants on the           Formatted
          development of this project. . This may include GoB officers from the Ministry of Environment and
          Forest, the focal ministry for GEF-supported projects;                                                      Formatted
         attendance of NAPA participants to the National Participatory Workshops to facilitate effective
          GoB officer-stakeholder interactions, and to promote collaborative working relationships.


6.0       IMPLEMENTATION ARRANGEMENTS

This projectThe PDF B Phase is to be implemented by UNDP with administrative assistance from UNOPS
for recruitment of the PDF-B phase activitiesTeam members. . A Local Technical Director, assisted by
local and international Technical Advisors and supported by senior, intermediate and junior support staff,
would lead manage the PDF Project Team. . As such, the Local Technical Director will be fully accountable
to the completion of the project and submission of the GEF project brief. . All members of the Tteam would
be paid consultancy fees, based on the respective terms of reference (ToR). . The PDF-B Project Team
would be responsible for the day-to-day activities of the project that would lead towards successful project
outputs.


Additionally, the PDF-B project will Team will also engage the following non-core consultants:

 An expert on the Logical Framework Analysis facilitator for the National Participatory Workshops;
 Specialists to undertake the study of the brick making industry profile;
An expert on UNDP/GEF project document for the preparation of the GEF Project Brief and draft UNDP                   Formatted: Bullets and Numbering
   Project Document


7.0       JUSTIFICATION FOR PDF B GRANT                                                                               Formatted: Bullets and Numbering


The Government of Bangladesh and the Brick Making Industry of Bangladesh have not succeeded to date
in tackling the issues of energy efficiency and pollution reduction in a concerted manner. . The effort
required to tackle these issues includes demonstration and testing of energy efficient kilns that can be
economically adopted by the BMI; ensuring a continuity of informational dissemination activities; improving
the manner in which business is conducted by the BMI to the extent that they can secure loans from
lending institutions; and finally, the promulgation of a regulatory environment that favors the use of EEKs. .
However, before an effective full project can be designed and implemented, studies and detailed
consultations with stakeholders are required to strengthen baseline knowledge. . The requested PDF-B
grant would finance the needed activities and collection of information necessary to produce the effective
design and facilitate start-up of a successful and replicable IKEBMI project.

The proposed activities would enable preparation of an effective and functional organizational structure for
the full project that includes stakeholders of the project. . The targeted data and information collection
activities and technology assessments of the EEKs will also address critical needs for a well-designed and
feasible project. . This includes confirmation of the economic, technical and environmental viability of




                                                                                                      Page 43 of 54
various EEKs notably the VSBK that appears to be a favored and appropriate option for the BMI, and the
FDTK. .

Considering the growth of the urban population of Bangladesh and the projected demand for an indigenous
building material, baked bricks, a well-designed IKEBMI project will provide valuable assistance to
Bangladesh in meeting its commitment to reduce GHGs and blaze a path for other countries in the region
to replicate the IKEBMI project. . Furthermore, it is important for the PDF-B and the full project to be
implemented as soon as possible. . If implementation of the full IKEBMI project were delayed for one more
year to 2005, the IKEBMI objectives would be very difficult to achieve due to:

         the delay of the promised GoB moratorium and amendment of the 120-foot chimney decision;                      Formatted: Bullets and Numbering
         the continued compliance of credit-worthy brick making entities in constructing 120 foot chimneys;
          and
         their subsequent lack of incentive to convert to an EEK given these sunk costs. .




           Project PDF-B Implementation Structure (Aminul – what do you suggest)Structure                               Formatted
                                                                                                                        Formatted
                                               UNOPS/UNDP-GEF



                                                UNDP Bangladesh



                 Chief Technical                    Local Technical                   Technology
                  Director (Int’l)                     Director                        Specialist

                                                                                     Support Staff



        Financial             Economist             Kiln Specialist s        Capacity Building       Regulatory
        Specialist                                        (Int’l)               Specialist           Specialist


                                                       Assistant
                                                      Technology
                                                      Specialists


                                        LFA                         Market Survey
                                      Facilitator                    Specialist




                                                                                                        Page 44 of 54
7.0JUSTIFICATION FOR PDF B GRANT                                                                                    Formatted: Bullets and Numbering


The Government of Bangladesh and the Brick Making Industry of Bangladesh have not succeeded to date
in tackling the issues of energy efficiency and pollution reduction in a concerted manner. This includes
demonstration and testing of energy efficient kilns that can be economically adopted by the BMI. It also
includes improving the manner in which business is conducted by the BMI to the extent that they can
secure loans from lending institutions, and finally, the promulgation of regulatory environment that favors
the use of EEKs. However, before a successful full project can be designed and implemented, studies to
strengthen baseline knowledge and consultations with stakeholders is required. The requested PDF-B
grant would finance the needed activities to produce deliverables that would facilitate the definition of a
successful and replicable IKEBMI project.

The proposed activities would also prepare an effective and functional project organizational structure that
includes stakeholders of the project. The targeted data and information collection activities and technology
assessments of the EEKs will also address critical needs for a well-designed and feasible project. This
includes confirmation of the economic, technical and environmental viability of various EEKs notably the
VSBK that appears to be a favored and appropriate option for the BMI.

       Considering the growth of the urban population of Bangladesh and the projected demand for an                Formatted: Bullets and Numbering
        indigenous building material, bricks, this project will assist Bangladesh in meeting its commitment
        to reduce GHGs. Furthermore, if this project were delayed for one more year, its objectives would           Formatted
        be more difficult to achieve due to the current need of the BMI to comply with the 120-foot
        chimney, and the subsequent lack of incentive by some of these brick making entities who have
        already invested in the chimney, to convert to an EEK.




                                                                                                    Page 45 of 54
Based on the PDF-B work, a full project will be needed to remove the technical, awareness, financial and
institutional barriers required to transform the BMI towards EEKs. This will ultimately reduce GHG
emissions from the BMI of Bangladesh and blaze a path for other countries in the region to replicate the
IKEBMI project.




                                                                                                 Page 46 of 54
8.0      WORK PLAN AND BUDGET

1.18.1 Work Plan                                                                                          Formatted: Bullets and Numbering


Please refer to Annex 1.

1.28.2 Budget                                                                                             Formatted: Bullets and Numbering


                                                                                            P
                                                                                            /
                                                                                            S

                                                                                            B
                                                                                            r
                                                                                            i
                                                                                            c
                                                                                            k

                                                       Govt              Clean            M
                           Total                         of             Energy     P/S    a
                                      GEF      UNDP             BUET
      PDF-B Activity        Cost                       China            Alterna Financial k
                                     (US$)     (US$)            (US$)
                           (US$)                        (In-             tives    Instit. i
                                                       kind)             (US$)            n
                                                                                          g

                                                                                            E
                                                                                            n
                                                                                            t
                                                                                            i
                                                                                            t
                                                                                            i
                                                                                            e
                                                                                            s
      Activity 1:
      Establishment of
                           45,000    45,000      0       0       0        0        0        0
      the National
      Project Structure
      Activity 2:                                                                           1
      Project Design &                                                                      0
      Co-financing                                                                          ,
                           91,000    66,000      0       0      5,000   5,000    5,000
      Development                                                                           0
                                                                                            0
                                                                                            0
      Activity 3:                                                                           9
                           330,000   195,000     0     10,000   5,000   5,000    50,000
      Data and                                                                              5



                                                                                          Page 47 of 54
     Information                                                                                    ,
     Collection and                                                                                 0
     Technology                                                                                     0
     Assessments on                                                                                 0
     EEKs
     Activity 4:
                                                                                                    2
     Preparation &
                                                                                                    ,
     submission of
                           60,000     30,000     25,000      0         1,000    1,000    1,000      0
     GEF Project Brief
                                                                                                    0
     and Draft UNDP
                                                                                                    0
     Project Document
                                                                                                    1
                                                                                                    0
                                                                                                    7
                          556,000     336,000    25,000    10,000     11,000    11,000   56,000     ,
     TOTAL
                                                                                                    0
                                                                                                    0
                                                                                                    0
                           100%         %            %       %           %        %        %        %




                                                                          US$

  PDF-B Activity                                                                                                   P/S Brick
   Description                                                      Govt of                        P/S Financial
                         Total Cost            GEF        UNDP                  BUET      CEA                       Making
                                                                    China                              Inst.it
                                                                                                                    Entities


Activity 1: Establish
Implementation
Arrangements and
Office Operation             $58,000         $48,000 $10,000        $0           $0       $0            $0             $0
Activity 2: Project
Design and Co-
Financing
DevelopmentLogical
framework Analysis
(LFA)                  $25,00095,000    $25,0075,000      $0        $0       $5,000       $0        $5,000        $10,000
Activity 3: Data and
Information
Collection and
Technology
Assessments on EE
Kilns                    $248328,000        $178,000      $0 $10,000         $5,000 $5,000       $1090,000        $40,000
Activity 4: Project
Design and Co-
Financing
DevelopmentActivity
3: Data and          $70,000$248,000 $50,000$178,000    $0$0 $0$10,000 $5,000$5,000 $0$5,000 $5,000$10,000 $10,000$40,000



                                                                                                  Page 48 of 54
Information
Collection and
Technology
Assessments on EE
Kilns
Activity 45:
Preparation of GEF
Project Brief and
Draft UNDP Project
Documents             $67,000    $47,000 $15,000       $0     $1,000   $1,000        $1,000    $2,000
                     $548,000   $348,000 $25,000   $10,000   $11,000   $6,000       $96,000   $52,000
Totals
                        100%        64%      5%        2%        2%       1%            18%       9%
,




                                                                            Page 49 of 54
Page 50 of 54
                                                                             Annex 1
                                                               IKEMBI PDF-B Schedule of Activitiesies

                                                                                                           MONTHS
                         PDF-B Activities
                                                                              1 2    3     4   5   6   7     8      9   10   11   12   13   14      15
Activity 1: Establishment of Implementation Arrangements and Office Operations
Establishment of a PDF-B executing team and local project office
(including appointment of PDF-B Team members)
Establishment of operational modalities between the Executing Agency and
the Ministry of Environment and Forest
Periodic meetings (every two months) for monitoring and evaluating PDF-B
exercise progress.
Activity 2: Logical Framework Analysis
Definition of full project objectives, expected results, framework design,
detailed components, implementation plan;
Identification of full project success indicators, means for verification,
project risks and mitigative actions
Identification of key requirements and local organisational support for full
project success
Activity 3: Data and Information Collection and Technology Assessments on EEKs
Development of a stronger profile and understanding of the brick making
industry in Bangladesh
Collection of relevant data and information related to technology application
in Bangladesh;
Technology market potential assessment;
Conduct baseline assessment on the brick making industry and EEK
technology application and demonstration;
Setting up of one demonstration EEK facility
Operation and monitoring of demo EEK facility
Activity 4: Project Design & Co-financing Development
Design of the different activities in each project component;
Identification and development of financing models that meet the needs of
both the financial institutions and the brick manufacturing entities
Evaluation of baseline and incremental activities
Preparation of budget for the full project
Consultation meetings to confirm co-financing commitments for the full
Preparation of full project team structure
Preparation of the terms of reference (ToR) for the PPT for the full project
Activity 5: Preparation of GEF Project Executive Summary and Draft UNDP Project Document
Preparation of the GEF Project Executive Summary and Project brief
Preparation of the Draft UNDP Project Document

                                                                                                                                                 Page 51 of 54
Page 52 of 54
Annex B
ToRs for the PDF-B Team




                          Page 53 of 54
Annex C
IKEMBI LFA??


                               Formatted




               Page 54 of 54

				
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