Federal Department of Foreign Affairs FDFA

Swiss Agency for Development and Cooperation SDC

Global approaches for Energy Efficiency in MSME clusters – A case study from the brick sector

Changing Paradigm of Cluster Development: Learning form Global Experiences

20-22 February, 2014

Daniel Ziegerer, Director of Cooperation,Global Programme Climate Change (GPCC) SDC,

Embassy of Switzerland, India

Overview of brick sector intervention of SDC

Global Environment Programme of the Swiss Agency for Development and Cooperation (SDC) initiated from a commitment made on the occasion of 700 years of Swiss Confederation in 1991.

SDC India initiated an Action Research Programme to improve energy efficiency in select energy intensive small industry sectors. Brick production was identified as one of them.

Over the last 20 years, brick initiatives supported in 17 countries on three continents.

Shift from a technology driven towards a systemic approach of the sector.

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SDC brick projects and programmes

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Vertical Shaft Brick Kiln (VSBK):• Asia: India, Nepal, Pakistan, Afghanistan, Vietnam• Africa: South Africa

Improvement of existing, introduction of cleaner technologies:• Latin Amercia: Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Peru, Honduras, Nicaragua (EELA) • Africa: Burundi, Ruanda (new)

SDC‘s intervention strategy Technology and Know-How Transfer:

Development and adoption of VSBK and other cleaner technologies for brick production with different fuels in different climatic conditions and with different ownership forms (informal & formal sector)

Development and promotion of best practices (increased energy efficiency) in the existing firing technologies (e.g. introduction of fans)

Establishment of baselines & monitoring systems for energy consumption and CO2 emissions

Enabling environment: Development of emission norms with regulatory authorities;incentives for VSBK in government schemes and notifications.

Setting up a partner networks andstrengthening of technology and service providers to anchor and promote the technology

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SDC‘s intervention strategy (contd.)

Capacity building of partner agencies, entrepreneurs (business skills),workers (labour skills) and associations.

Innovative strategies to improve living conditions of workers and their families

Co-financing of pilot kilnsand facilitating of access to finance (e.g. credit lines, CDM)

Sharing of experiences with allstakeholder (Government, bilateral and multilateral agencies, NGOs, etc.) and South-South Knowledge Transfer toother countries (e.g. Nepal/India – RSA)

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Sustainability Benefits

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EconomicReduced energy costsFaster production -> faster returnImproved labour efficienciesImproved quality of products -> higher sales prices Access to new market segments

EnvironmentalReduced energy consumptionReduced GHG emissions – (VSBK: 50-60 %)Reduced PM and Black Carbon

SocialImproved health and safety working conditionsIncreased sense of securityIncreased skill levelsIncreased remuneration potentialLess staff turn over

Lessons learned: Challenges for promotion of cleaner brick production

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Enabling Environment: Lack of favourable policy environment (policies, rules and regulations) Lack of disincentives to stop the old technologies Administrative requirements for formalization, licensing, permits potentially pose

traps for the technological change (e.g. EIA) Lack of enforcement of laws and regulations of local and national governments

Socio-economic and institutional conditions: Structure of the brick sector (informal/formal, household/enterprise) Transformation from informal sector to formal sector. Change of habits (e.g. seasonal/all year round activity, 24/7 operation in VSBK)

Finance: Lack of initial investment in a low margin industry (e.g. VSBK) Access to finance (e.g. credits, equity funds, carbon finance, etc.) Lack of economic incentives (e.g. tax reduction, recapitalization funds etc.) Perception of long payback period

Lessons learned: Challenges for promotion of cleaner brick production (contd.)

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Technology: Availability of fuel (e.g. VSBK operated by coal) Production capacity (e.g. manual brick making

practices) Limited diversification of products (e.g. VSBK) Access to appropriate technology and services Availability of labour

Environment: Look at the whole value chain (origin of fuel and clay,

burning process, commercialization of bricks, construction) - Life Cycle Analysis

Black carbon – Air Pollution nexus and impact on climate change

Markets: Vulnerable to external shocks (e.g. financial crisis,

crisis of construction sector, fuel prices) Lack of understanding of dynamics of the market (e.g. market segments, prices, etc.)

Potential for further scaling up: Climate and Clean Air Coalition (CCAC) Voluntary partnership uniting governments, intergovernmental and non-

governmental organizations and and the private sector in dealing with the collective challenge of Short-lived Climate Pollutants. (Secretariat: UNEP)

One of the thematic initiatives focuses on Mitigating Black Carbon and Other Pollutants From Brick Production (Switzerland among lead countries)

Objectives of the Brick Initiative:

Raising political awareness

Information sharing and knowledge transfer

Market-based pilot projects

Groundwork for moderanization of the brick kiln industry

More information: www.unep.org/ccac

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Contacts

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Switzerland:

Reto Thönen Senior Expert Energy

Swiss Agency for Development and Coopration (SDC)Global Programme Climate Change (GPCC)

Freiburgstrasse 130CH-3003 BernSwitzerland

Tel.: +41 (0)31 324 73 61Fax: +41 (0)31 325 93 62 e-mail: reto.thoenen@eda.admin.ch 

India:

Daniel ZiegererDirector of Cooperation

Swiss Agency for Development and Cooperation (SDC)Embassy of SwitzerlandClimate Change and Development

Chandragupta Marg, Chanakyapuri,New Delhi – 110 021 India

Tel.: +91 11 4995 9670Fax: +91 11 4995 9589

e-mail: daniel.ziegerer@eda.admin.ch