FaL-G as CDM Project with CDCF, the World Bank

In view of holistic compliance to the indicators of Sustainable Development and agenda of Community Development, the World Bank agreed to take up FaL-G as CDM project. Promoting a carbon abatement activity as CDM project is a laborious exercise, involving a lot of intellectual input and record work. Keeping in view the consultancy from high profile experts, the transaction costs are very high that deter small scale and tiny sector units in staking their claims for credits, despite their virtuous activity for achieving emission reductions (ERs).

To overcome this barrier to SSI units, INSWAREB opted to avail the scope of ‘Bundling’ provided by UNFCCC to small scale activity, by which, micro industrial plants producing FaL-G bricks, each with a potential to generate over 1000 ERs every year, have been targeted into a few bundles and offered as CDM projects.

In view of commercial deals involved in promoting CDM project for which INSWAREB has constraints as NGO outfit, the Scientists have promoted a corporate body, Eco Carbon Pvt. Ltd. (ECPL), in 2003, who have assumed the role of Project Entity and signed MOU with Community Development Carbon Fund (CDCF) in 2004. This is followed by signing Emission Reduction Purchase Agreement (ERPA) in June 2006, offering to transfer 600,000 ERs, which is rescheduled to 451,000 after considering the leakages into consideration.  Though there is contractual commitment for 200,000 ERs under call option, World Bank decided not to invoke this call option.

Since the contract with the World Bank is accomplished with the delivery of ERs by 2014, well ahead of schedule, no more entrepreneurs are enrolled under this project.

How did the Carbon Credit program functioned?

The FaL-G brick manufacturing units filled up the Application and sent to ECPL along with prescribed enclosures. Upon the acceptability of application, ECPL’s inspectors visited and inspected the entrepreneur’s plant as well as the records. Upon getting satisfied, ECPL signed Emission Reduction Transfer Agreement (ERTA) with the Sub-Project Entity (SPE), the identity given to the entrepreneur. Upon Validation and Registration of the Bundle with CDM-EB, There upon carbon credit accrual started to the account of SPE against the monthly reports of activity submitted to ECPL in prescribed form every month. SPEs’ units have been inspected periodically by ECPL, and if any violation of Agreement is noticed, erring SPEs have been dropped from the Bundle.

Once in a year or in suitable time span, the accrued credits are subjected for Verification by the Designated Operational Entity (DOE) by Verifying the records of SPEs, who in turn Certified the Credits and submit the same to CDM-EB for issuance of CERs. These CERs are transferred to the buyer’s account and, upon receipt of sale proceeds, revenue is transferred to SPEs’ accounts as per terms agreed in ERTA.

FaL-G CDM Projects for Gold Standard Accreditation 

In order to get better market realisation for carbon credits to  the entrepreneurs (Sub-Project Entities) of all registered CDM Bundles, these bundles are also getting registered with Gold Standard. Incidentally, FaL-G brick and block production is the unique activity, serving both environment and community in exemplary dimensions and, thus well positioned to get Gold Standard accreditation.

Future Program for FaL-G in CDM

Despite over 27,000 operating plants throughout the country producing over 81 billion bricks or equivalent volume of blocks, the penetration is mere 27% against 300 billion national brick market. This demand is likely to cross over 400 billion in the coming decade with rapid increase in urbanization and relevant construction activity. This is notwithstanding the potential scope of FaL-G brick/block in infrastructure segment which may be over 400 billion.

On supply side, against the generation of over 250 million tons of fly ash, approx. 60 million tons are used towards brick, leaving a huze hiatus. Moreover, 40-60 million tons of generation is expected to be added in the coming decade (2020-30). Hence any amount of efforts to work for proliferation of FaL-G units prove insufficient.

The global efforts to work for ‘food security’ summons for protecting fertile soils from denudation and putting them back to cultivation. This agenda would be served unasked for when FaL-G bricks pervade on walling market and prevent the production clay bricks. Hence INSWAREB owns the target in catalysing the promotion of 100,000 FaL-G brick units, producing over 300 billion bricks that can abate over 93 million tons of GHG emissions.

India’s voluntary commitment stands at 30% reduction in GHG emissions by 2030. Against total emissions of 2,800 million tons in India, the country has to abate emission of 840 million tons in order to live up to its commitment. FaL-G bricks alone could abate 93 mn. tons contributing to 11% of its commitment.

Unmindful of these imperatives and opportunities, while Ministry of Power is encouraging TPPs (Thermal Power Plants) for making money through bidding process; Ministry of Finance is taxing the product with undue GST (6% without ITC or 12% with ITC) at par to that of eco-hostile clay bricks.

In this back ground, in order to buttress the efforts of proliferation to the whopping target of 100,000 units with due incentive mechanism, ECPL envisaged to register large number of bundles under Program of Activities (PoA), taking the support of fly ash generators in private sector and also some State Governments. But subsequently abandoned the efforts due to complexities of mechanism and hostile environment prevailed with certain DOEs. Intrinsically fly ash generators and Government are not keen to take advantage of this mechanism! Undoubtedly, FaL-G activity offers multilateral benefits to all the stake holders, be it government, entrepreneurs, consumers or community. But in present context of CDM market laden with complexities in CDM Validation and Verification procedures, proposals to promote PoA are put on hold.

In today’s context, industry means disturbance to Community and deformity to Ecology. Advancement in Technologies may assuage the magnitude but may not be successful in alleviating the maladies totally. In this background FaL-G is the unique and “Holistic E4 Technology” in serving Ecology, Environment, Economy and Empowerment.