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BARRIERSTO PROMOTING ENERGY EFFICIENT AND
ENVIRONMENTALLY FRIENDLY TECHNOLOGIES TO SMIs IN ASIA
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Barriers
S. Kumar
C. Visvanathan
Sizhen Peng
R. Rudramoorthy
Alice B. Herrera
Gamini SenanayakeLy Dinh Son
to Promoting Energy Efficient and
Environmentally Sound Technologies
to SMIs in Asia
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Barriersto Promoting Energy Efficient and
Environmentally Sound Technologies
to SMIs in Asia
PUBLISHED BY
School of Environment, Resources and DevelopmentAsian Institute of Technology
PO Box 4, Klong LuangPathum Thani 12120ThailandFax: (66) 2 524 5439Email: [email protected] and [email protected]
DISCLAIMER
Neither the Swedish International Development Cooperation Agency (Sida) nor the AsianInstitute of Technology (AIT) and its partners, the National Research Institutes of thestudy countries, make any warranty, expressed or implied, or assume any legal liability forthe accuracy or completeness of any information, apparatus, products, or represents that itsuse would not infringe privately owned rights. Reference herein to any trademark ormanufacturers or otherwise does not constitute or imply its endorsement, recommendation,or favoring by Sida or AIT.
ISBN: 974-8208-60-5600 copies
Printed in ThailandAsian Institute of Technology, 2005
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Project Team
Principal Investigators
Dr. S. Kumar, Professor, Energy Field of Study, School of Environment, Resources andDevelopment, Asian Institute of Technology, Thailand ([email protected])
Dr. C. Visvanathan, Professor, Environmental Engineering and Management Field of Study,School of Environment, Resources and Development, Asian Institute of Technology, Thailand ([email protected])
National Research Institute (NRI) Team Leaders
Dr. Sizhen, Peng, Director, Center for Environmentally Sound Technology Transfer,Administrative Center for Chinas Agenda 21, Beijing, China ([email protected])
Dr. R. Rudramoorthy, Professor, Energy Engineering Department, PSG College ofTechnology and Industrial Institute, Coimbatore, India ([email protected])
Dr. Alice B. Herrera, Fuel and Energy Division, Industrial Technology Development Institute,
Department of Science and Technology, Metro Manila, Philippines ([email protected])
Mr. Gamini Senanayake, Director, Industrial Services Bureau of North Western Province,Kurunegala, Sri Lanka ([email protected])
Mr. Ly Dinh Son, Director, Consulting Center for Cooperative Promotion and CapacityBuilding, Hanoi, Vietnam ([email protected])
Research Staff
Mr. Aruna Manipura (March 2002 - December 2003)Ms. Priya Ambashankar (December 2003 - August 2004)Mr. Prajapati Shapkota (September 2003 - November 2004)Mr. Prantik Bordoloi (Since May 2004)
Research Fellows
Mr. I.S.B.P. Ratnakumara (June 2004)Mr. Oscarlito Malvar (June 2004)
Mr. R. Kannan (March - May 2005)
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Preface
The Asian Regional Research Programme on
Energy, Environment and Climate(ARRPEEC) funded by SwedishInternational Development Cooperation Agency (Sida) and coordinated by AsianInstitute of Technology (AIT), is aimed atpolicy-oriented research in selected areas ofenergy, environment and climate change.Other objectives include capacitymobilization and enhancement of theparticipating research institutions and linkageof the project activities with national,regional and global initiatives for reducinggreenhouse gases and other hazardousemissions. Small and Medium ScaleIndustries in Asia (SMI in Asia) project isone of the regional research projects under ARRPEEC and involves the followingresearch institutions: Center forEnvironmentally Sound Technology
Transfer, China; PSG College of Technologyand Industrial Institute, India; IndustrialServices Bureau of North Western Province,Sri Lanka; Industrial TechnologyDevelopment Institute, Philippines; andConsulting Center for CooperativePromotion and Capacity Building, Vietnam.
Phase I of ARRPEEC focused on the
assessment, adoption and propagation ofenergy efficient and environmentally soundtechnologies (E3STs) among the selecteddeveloping countries, (China, India,Philippines and Sri Lanka) and a crosscountry analysis was made on large industrysectors representing steel, cement and pulp& paper.
In phase II, the focus was narrowed down toSMIs in participating countries, with the
addition of Vietnam. Phase II analyzed the
energy and environmental issues of thedesiccated coconut, tea, foundry & metalcasting, textile, and brick, tile & ceramicsectors and studied the policy issues topromote E3STs concerning the above sectorsin these participating countries.
The current phase, as a continuation fromPhase II, addressed the following issues forthe same sectors as in Phase II:
Estimation of the greenhouse gas (GHG)emissions in selected SMIs
Study and prioritization of barriers thatinhibit the promotion of E3STs in SMIs
Techno-economic evaluation of E3STsavailable for mitigating GHG emissions,improving energy efficiency and abatingenvironmental pollution
This report discusses the availability, degreeof impedance, and provides a comparisonof barriers inhibiting the promotion ofE3STs for the selected sectors based on thestudies carried out in the study countries.Ranking the barriers from the perspective ofindustry personnel and policy personnel has
been done and recommendations are madeto incorporate the mechanisms to removethese barriers while formulating nationalpolicies for promoting the use of E3STs inSMIs.
Documentary research indicates that noprevious studies had been carried out with aspecific focus on SMIs and E3STs. Therefore,this report will act as a start up documentfor providing the impetus to further remove
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barriers that inhibit the promotion of
environmentally sound energy technologies.
We would like to acknowledge the supportof Mr. Aruna Manipura, Ms. Priya Ambashankar, Mr. Prajapati Shapkota andMr. Prantik Bordoloi, Research Associatesof SMI Asia Project of the School ofEnvironment Resources and Developmentof the Asian Institute of Technology,Thailand; and Research Fellows Mr. I.S.B.P.Ratnakumara, Mr. Oscarlito Malvar and Mr.R. Kannan, who contributed to this study.
The financial support of the sponsor, SwedishInternational Development Cooperation Agency (Sida), is gratefully acknowledged.We would like to thank Dr. Gity Behravan,Senior Research Advisor, Sida, withoutwhose support and guidance this study could
not have been carried out.
S. KumarC. VisvanathanSizhen PengR. RudramoorthyAlice B. HerreraGamini SenanayakeLy Dinh Son
September 2005
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Executive Summary
The contribution of SMIs to the national
economies of the selected countries issignificant. The energy and environmentalperformance of SMIs, however, is poor. SMIscontribute 7-9% to the national GHGinventories in the study countries, in additionto significant environmental pollution from wastewater and solid wastes. Because theyface a number of barriers, the use of energyefficient and environmentally sound
technologies (E3STs) is limited to a fewdemonstration projects.
This report presents the results of a studycarried out to identify the barriers faced bySMIs for E3ST application and theirprioritization. This is expected to assist policymakers develop mechanisms for the removalof these barriers by formulation of suitablepolicies focused on SMIs.
Views regarding the barriers to promoteE3STs vary amongst the SMI stakeholdersi.e., policy makers, SMI management,representatives from financial institutionsand technocrats. The study has found thatthe most significant barriers are financial andpolicy barriers. The degree of significancevaries from country to country.
The most significant barrier in India, Sri Lankaand the Philippines is the high cost of E3STs;in China it is the lack of financial incentives;and in Vietnam it is the managements fearof the high cost of production due to E3STs.In none of the countries is the non-availability or the lack of technical ormanagerial skill seen as a major barrier for
adoption of E3STs.
In China, the lack of financial and fiscal
incentives such as tax exemptions orsubsidies for installation of E3STs is animportant barrier. Weak enforcement ofenvironmental regulation is also an importantbarrier.
In India, the high capital cost of E3STs andpoor returns are identified as importantbarriers. SMI management appears to be
satisfied with their current processes andtechnologies and are wary of adopting newtechnologies. Their investment priority is forexpansion of production capacity rather thanimproving technologies.
In the Philippines, high capital cost of E3STsand difficulties in accessing finance areidentified as important barriers.Managements priorities are towards
expansion of production capacity andincreasing market share rather thanimplementing E3STs.
In Sri Lanka, high capital cost of E3STs,difficulties in accessing finance and poorreturns on capital are identified as majorbarriers. Lack of information and non-availability of E3STs and service are also
important barriers.
In Vietnam, management is deeplyconcerned that adoption of E3STs wouldincur additional costs and undermine theircompetitiveness in the marketplace. Lack ofinformation on E3STs is identified as thesecond most important barrier although non-availability is not seen to be a barrier. Lack
of enforcement of regulations is alsoidentified as an important barrier.
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The following broad recommendations are
suggested:
Re-evaluation of existing energy andenvironmental policies, impacts andconstraints in promoting E3STs in allsectors.
Integration of energy and environment,financial and technical policies, so thatthey are constructive in application,
monitoring and enforcement. Assess the introduction of market-basedinstruments backed by fiscal policiesacross sectors.
Include financial institutions in existingand future capacity building programmeson E3STs.
Develop mechanisms to carry availablefinances to lower level strata of theindustry sector.
Enrolment of public support into theenergy and environmental dialogue tostrengthen the enforcement andacceptance of innovative policies topromote E3STs in the SMI sector.
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Table of Contents
Project Team ................................................................................................................................. IIIPreface ............................................................................................................................................. IV
Executive Summary ...................................................................................................................... VI
Chapter 1 Introduction ................................................................................................................. 11.1 Background ................................................................................................................................ 11.2 Status of the Study Sectors ..................................................................................................... 21.2.1 Foundry & metal castiing ..................................................................................................... 31.2.2 Texttile sector ........................................................................................................................ 41.2.3 Brick, tile & ceramic sector ................................................................................................. 51.2.4 Tea production sector ........................................................................................................... 7
1.2.5 Desiccated coconut sector ................................................................................................... 71.3 Rationale and Objectives ........................................................................................................ 81.4 Organization of the Report .................................................................................................... 9
Chapter 2 An Overview Of Barriers ........................................................................ 11
2.1 Barriers to Promoting E3STs in the Study Countries ...................................................... 112.1.1 China ..................................................................................................................................... 112.1.2 India ....................................................................................................................................... 122.1.3. Philippines ........................................................................................................................... 132.1.4 Sri Lanka ............................................................................................................................... 132.1.5 Vietnam ................................................................................................................................. 142.2 Types of Barriers .................................................................................................................... 142.2.1 Managerial barriers .............................................................................................................. 142.2.2 Human resource barriers .................................................................................................... 162.2.3 Technical barriers ................................................................................................................ 162.2.4 Financial barriers ................................................................................................................. 162.2.5 Market barriers ..................................................................................................................... 172.2.6 Regulatory barriers .............................................................................................................. 172.2.7 Information barriers ............................................................................................................ 18
2.2.8 Research and development ................................................................................................ 182.3 Earlier Studies on Barriers Inhibiting Adoption of E3STs ............................................. 192.4 Summary ................................................................................................................................... 21
Chapter 3 Study Approach & Activities ................................................................... 25
3.1 Identification and Finalization of the Barriers .................................................................. 253.2 Tools for Prioritization of Barriers ...................................................................................... 253.3 Procedure of the Study .......................................................................................................... 293.4 Allocation of Weights for Judgments .................................................................................. 32
3.5 Consolidation of Responses ................................................................................................. 333.6 Summary ................................................................................................................................... 33
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Chapter 4 Results & Discussion .............................................................................. 35
4.1 Overall Assessment ................................................................................................................ 35
4.2 Assessment of Barriers by Policy Personnel ...................................................................... 374.3 Sector Specific Overall Ranking of Barriers ...................................................................... 374.4 Country Specific Factors ....................................................................................................... 424.5 Enhancement of Energy and Environment Performance by Removal of Barriers .... 454.6 Incorporation of Barrier Removal in National Policy Implementation ......................... 474.6.1 Policy Framework ................................................................................................................ 474.6.2 Regulations and Standards ................................................................................................. 504.6.3 Financing E3STs ................................................................................................................. 504.6.4. Strategies/Drivers .............................................................................................................. 55
4.7 Summary ................................................................................................................................... 55
Chapter 5 Conclusions ............................................................................................. 57
5.1 Prioritized Barriers .................................................................................................................. 575.2 Recommendations .................................................................................................................. 59
References .................................................................................................................. 61
Appendix A: Sample Questionnaire used in Ranking of Barriers ......................................... 65Appendix B: Weights and Ranking of Barriers for each Study Sector and Country .......... 69
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AHP Analytical Hierarchy Process
AIT Asian Institute of Technology APCTT Asian and Pacific Center for Transfer of TechnologyAPEC Asia Pacific Economic CooperationARRPEEC Asian Regional Research Program in Energy, Environment and ClimateAWPLR Average Weighted Prime Lending RateBOD Biochemical Oxygen DemandCDM Clean Development MechanismsCP Cleaner ProductionDC Desiccated Coconut
DNA Designated National AuthorityDOE Department of Energy E3ST Energy Efficient and Environmentally Sound TechnologyECP Endless Chain PressureEMB Energy Management BureauFBD Fluidized Bed DryerFRP Fiber Reinforced PlasticsGEF Global Environment Facility GERIAP Greenhouse Gas Emission Reduction from Industry in Asia and PacificGHG Greenhouse Gases
ISB Industrial Services BureauLPG Liquefied Petroleum GasMBI Market Based InstrumentsMCDM Multi-criteria Decision MakingNDB National Development BankNRI National Research InstituteSETC State Economic and Trade CommissionSIDBI Small Industry Development Bank of IndiaSLR Sri Lanka Currency, Rupees
SMI Small and Medium Scale IndustriesTERI The Energy and Resources InstituteTVE Town and Village EnterprisesUNIDO United Nations Industrial Development OrganizationUPASI United Planters Association of Southern IndiaUSAID United States Agency for International DevelopmentVND Vietnamese Currency, Dong
List of Abbreviations
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Introduction
1Chapter 1
INTRODUCTION
Box 1.1 Asian Regional Research
Programme in Energy, Environment and
Climate
The Asian Regional Research Programme in
Energy, Environment and Climate (ARRPEEC)
is a regional network involving 22 national
research institutes (NRIs) from seven Asian
countries. ARRPEEC is funded by the Swedish
International Development Cooperation Agency
(Sida) and coordinated by the Asian Institute
of Technology (AIT), Thailand.
The main objectives of ARRPEEC are:
Production of high quality policy oriented
outputs in the selected areas of energy,
environment and climate research.
Capacity mobilization and enhancement at
NRI level through project level joint activitiesand fellowships.
Linkage of project level activities in the
participating countries with national,
regional and global initiatives for reducing
GHG and other hazardous emissions.
Dissemination of results among policy
personnel with a view to creating an impact
on policy making.
ARRPEEC carried out research on the power,
industrial technologies, urban transport andbiomass sectors and focused on policy
aspects of GHG mitigation emissions and
pollution reduction. The first and second
phases of ARRPEEC started in 1995 and 1999
and the third phase began in 2002.
More information on ARRPEEC and its
activities are available at www.arrpeec.ait.ac.th
Chapter 1
1.1 Background
Small and medium scale industries (SMIs) are
a significant sub-sector of the industrial
economy in Asia and play an important role
in national economies in terms of
contribution to Gross Domestic Product(GDP) and employment creation. They are
found in all major manufacturing sectors.
Usually they employ traditional, labour
intensive and inefficient technologies and are
not very much concerned about the impact
of their energy use (Visvanathan and Kumar,
1999; Kumar et al., 2005; Thiruchelvam et
al., 2003). Despite this lack of concern, there
have been no significant efforts undertakento address SMI energy-environment issues.
The Small and Medium Scale Industries in
Asia: Energy, Environment and Climate
Interrelations (SMI in Asia) is one of four
components of the Asian Regional Research
Programme in Energy, Environment and
Climate (ARRPEEC) to address the energy-
environment issues of SMIs (Box 1.1).
The industry sector study of ARRPEEC
Phase I addressed the status of technologies
in energy intensive and environmentally
polluting industries in Asia. It also assessed
the impacts and the pollution mitigation
potential of energy efficient and
environmentally sound technologies (E3STs)
in large-scale industries in China, India, Sri
Lanka and the Philippines. ARRPEEC PhaseII concentrated on Small and Medium Scale
Industries (SMIs) in Asia and carried out
cross-country evaluations on energy andenvironment issues with a focus on processes
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Barriers to Promoting E3STs to SMIs in Asia
2 Chapter 1
in five SMI sectors: foundry and metal
casting, textile, desiccated coconut, brick, tile
& ceramic and tea processing. The study
countries were China, India, the Philippines,
Vietnam and Sri Lanka. The project activitieswere focused on capacity building, analyzing
and benchmarking energy use patterns of
selected SMI sectors, and identification of
E3STs for SMIs (AIT, 2002a; 2002b; 2002c).
In the current phase (ARRPEEC III), the SMI
in Asia Project continuing from Phase II
addressed the following issues:
Greenhouse gas emission estimation in
selected SMIs,
Study and prioritization of barriers that
inhibit the promotion of E3STs in SMIs,
and
Techno-economic evaluation of E3STs
available for mitigating GHG emissions,
improving energy efficiency and abating
environmental pollution.
As an outcome of the project, the GHG
emissions from the selected SMI sectors and
their mitigation potentials were estimated
and reported elsewhere (Kumar et al., 2005).
This document presents the results of the
research carried out to study the barriers
inhibiting the adoption of E3STs in SMIs.Overviews of the energy and environmental
status in the study countries relevant to the
selected SMI sectors are presented. This
report discusses previous studies in barrier
analysis and the details of the methodology
adopted in this study and the activities carried
out. The barriers were prioritized based on
inputs from policy makers, SMI management,
representatives from financial institutions andtechnocrats. Based on the activities carried
out, the results of the prioritization are
presented and recommendations suggested.
1.2 Status of the Study Sectors
The selected SMI sectors were foundry &
metal casting, textiles, desiccated coconut,
tea processing and brick, tile & ceramics in
China, India, Philippines, Sri Lanka and
Vietnam (Table 1.1). These sectors were
selected based on their importance in the
study countries. A brief summary of theirindustrial status in the countries and the
relevant energy and environment issues is
presented below.
1.2.1 Foundry & metal castiing
Foundry & metal casting is one of the oldest
industries in the world and is an important
base for the manufacturing world. Technology improvements in the foundry
sector have led to improved product quality,
efficient use of resources and reduction in
environmental pollution. Variations in
technology use and production costs make
the foundry industry diverse from one country
to another.
Foundry & metal casting industries in Chinaand India consist of both large and small-
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Introduction
3Chapter 1
scale industries. There has been a steady
increase in the production of foundry
products over the years in these two
countries, while in the Philippines there is a
decrease due to increasing costs ofproduction. Table 1.2 summarizes the state
of the sector in the study countries. In India,
the sector contribution to GDP is estimated
at 0.4%. The foundry & metal casting sector
in China and India is still dominated by
ferrous casting with almost 80% dedicated
to cast iron products and the remaining 20%
shared by cast steel and non-ferrous products.
In the Philippines, about 50-60% are castiron (Gray iron products), while 40-50% are
cast steel and non-ferrous products.
Foundries are highly energy intensive
processes and pollute significantly ifinefficient technologies are used. In India
and China the main fuels are coke, coal, oil,
natural gas and electricity, while in the
Philippines LPG is used.
The melting furnace is the main equipment
in a foundry. Cupola furnaces and electric
induction furnaces are the most common.
Cupolas are widely used mainly because theyare cheap and a variety of metal, including
scrap, can be melted and used. The main
disadvantages of this type of furnace include
the low capacity of the system and the
environmental pollution caused by dust and
slag produced during operation.
The foundry industry mainly contributes to
air pollution. The degree may vary with the
type of resource and raw material use and
the technology adopted. The use of low-
grade fuel, especially coal with high sulfur
content, is the main reason for air pollution.The amount and quality of emission also
depends on the type of cupola used. Small-
scale foundries do not have the capacity to
employ soot or ash recovery equipment or
use better fuel with efficient combustion
technologies.
In India, air pollution problems are the main
concern though there is also significantinorganic solid waste. Chinese foundries have
problems meeting national standards for dust
emission, waste residue and noise. In the
Philippines, emissions of dust and harmful
gases with bad odors are the main problems.
CO2
emission in Chinas foundry sector was
estimated to be about 16.69 million tonnes
in 2000. For India and the Philippines it was
about 1.6 and 0.24 million tonnes of CO2respectively (Kumar et al., 2005).
Medium scale foundry in India
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Barriers to Promoting E3STs to SMIs in Asia
4 Chapter 1
1.2.2 Texttile sectorIntroduction of E3STs such as replacing
conventional cupolas with cokeless cupolas
or converting them to burn natural gas (Box
1.2) will help reduce energy consumption,
thereby making the sector more competitive
while reducing GHG emissions.
The textile process consists of several unit
operations and involves a large amount of
machinery of varying scale and uses both
electrical and thermal energy. The Indiantextile industry is characterized by its
innovativeness and growth in terms of the
technology and scale. India produces and
exports a substantial amount of the worlds
textile requirements. The Indian textile
industry encompasses both large enterprises
and SMIs. Table 1.3 shows the details of the
textile sector in the study countries.
The textile industry is energy intensive.
Energy accounts for nearly 20% of the total
production cost. The Indian textile sector
consumes about 9-10% of the industrial
energy use in India. Thermal and electrical
energy demands are met by using coal,
firewood and electricity.
The main environmental issues for the textile
industry are emissions from energy use and
water pollution, of which the latter is
significant. The textile industry uses water
as the principal medium in removing
impurities, applying dyes and finishing agents,
and steam production. The effluents from
textile processes have a high level of
biochemical oxygen demand (BOD), high
dissolved solids and high temperature. When
released to ground or common water channels
without proper treatment, they damage water
Box 1.2 Selected technologies available
for improvement of energy and
environmental performance
Foundry sector
Replacement of main frequency induction
furnace, medium frequency furnace
Replacement of cupola furnaces with
electric induction furnaces
Conversion to natural gas from coal
Brick and tile sector
Autoclave aerated concrete block instead
of clay brick
Insulation of inner walls with ceramic fiber
Replacement of traditional kilns with vertical
continuous kilns
Tea sector
In-house power generation Two-stage motors for withering troughs
Replacement of indirect oil fired heater with
direct oil fired heater
Desiccated coconut sector
Flash steam recovery in dryer
Use of dual fuel boilers
Use of energy efficient motors for processing
& materials handling units
Textile sector Installation of photocells for speed frame
Installation of soft starter cum energy saver
in simplex frame
Use of FRP (fiber reinforced plastic) fan
blades for humidification fans in weaving
Source: Kumaret al., 2005
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Introduction
5Chapter 1
quality, kill or damage fish and living
organisms and make water sources unusable.
The other aspect is air pollution from the
combustion of fossil fuels. The total CO2
emission from textile industries in India in
the year 2000 was about 18.12 million tonnes(Kumar et al., 2005).
Lack of modernization of textile mills
through the introduction of E3STs has been
the main reason for continued pollution in
the sector. Installation of energy efficient
pneumatic fans in spinning mills,
implementation of soft-flow dyeing, and use
of equipment for recovery of chemicalsotherwise discharged as effluents are some
of the technology options for improvement
of energy and environmental performance.
1.2.3 Brick, tile & ceramic sector
The brick, tile & ceramic sector by definition
includes manufacture of all clay products,
including bricks, roofing tiles and small-scale
ceramic manufacture. The brick, tile &
ceramic sector is considered a cottage
industry and uses traditional technologies.
The roofing tile industry, even though it still
uses traditional technologies, is no longer
considered under cottage industry status.
Only brick and roofing tile manufacture are
discussed here. Table 1.4 shows details of
the brick, tile & ceramic sector.
The Chinese brick-making industry is mainly
under Town and Village Enterprises (TVEs).
The total number of enterprises involved has
been declining steadily over the years. About
77% of the total brick production is solid clay
bricks and the rest hollow bricks. In thePhilippines, the brick, tile & ceramic sector
has its base in the traditional manufacture of
terra cotta products and pottery by small-
scale and cottage type operations.
In India, about 65-70% of the bricks are
made in the northern and eastern plains. In
Vietnam, the brick industry is widely
dispersed in four key economic regions in the
northern part of the country. Sri Lankan tile
manufacturing is centered in the western part
of the country and the total monetary value
of tile production was around SLR 600
million (US$ 6 million) in 2000.
The major energy source in China, India and
Vietnam is coal. In Sri Lanka it is firewood
and in the Philippines LPG is used in ceramicSpeed frame of a textile mill in India
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Barriers to Promoting E3STs to SMIs in Asia
6 Chapter 1
Stacking bricks in a continuous fired tunnel kiln in
Vietnam
Box 1.3 Improvement of energy efficiency
in the brick industry
The brick industry is flexible in energy sourcing
and brick makers prefer certain fuels (notably
fuelwood and coal). However, these are not
always available at competitive prices and
hence they use lower grade fuels. Little is
known about specific energy consumption in
different kilns among brick makers or
technology providers. Hence, possibilities to
improve the energy efficiency by relatively
simple measures are disregarded. The newly
developed kilns appear to be attractive and offer
larger production capacity, but often require
higher investments. The better technologies
offer better energy efficiencies and less
pollution.
Energy Statistics of commonly used brick kilns
Source: FAO, 1993
tile production. The Indian brick industry
consumes about 20 million tonnes of coal
(TERI, 2003). Sri Lanka consumes around
40 m3 of fuel wood per batch (i.e. 15,000
tiles). The average, production is 3-4 batches
per month.
The main pollution issues from brick and tile
production are GHG emissions and the
destruction of agricultural land due to clay
extraction. Most of the brick and tile kilns
are inefficient in combustion and hence emit
high amounts of GHG. The use of coal in
China, Vietnam and India creates significant
pollution. In 2000, the total CO2 emissionsfrom the SMI brick, tile & ceramic sector was
about 197, 35, 1.8 and 0.04 million tonnes
of CO2
in China, India, Vietnam and Sri
Lanka, respectively (Kumar et al., 2005).
The destruction of agricultural land is a
serious environmental impact of this industry
in all countries. Production of 5 million solid
clay bricks needs around 12,000 m3 of clay,
rendering the land unusable for agricultural
purposes for a long time after extraction. This
is in addition to soil erosion, localized
pollution and reduced aesthetic value of
natural woodlands.
The type of kilns used has an effect on the
energy efficiency and level of pollution (Box
1.3). Brick production uses only 25% of the
heat supplied to the kiln while the rest is lostin exhaust and losses due to imperfect
burning, radiation and convection from the
kiln walls. Some heat loss in the flue gas could
be recovered and used for drying.
The industry represents a substantial
component of SMIs. If technology can be
introduced to increase energy efficiency, the
savings in money, resources and reducedpollution will be substantial.
Capacity ('000 bricks)Kiln type
Per firing Per day
Specific energy
consumption(MJ/kg)
Investment
(US$ '000)
Clamp kiln 5 - 1,000 2.0 - 8.0
Scove kiln 5 - 100 2.0 - 8.0
Scotch kiln 5 - 40 2.0 - 8.0 < 5
Downdraft kiln 10 - 40 2.0 - 6.0 < 20
Hoffman kiln 2 - 24 1.5 - 2.8 > 80
Bull's Trench kiln 10 - 48 1.5 - 2.8 > 7
High Draught kiln 20 - 40 1.2 - 1.8 > 15
Tunnel kiln 50 - 150 1.2 - 2.5 > 1,000
Vertical Shaft Brick kiln 4 - 30 0.8 - 0.9 > 4
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Barriers to Promoting E3STs to SMIs in Asia
8 Chapter 1
Sri Lankan DC industry generates an
estimated 0.5 million cubic meters of
wastewater annually with around 10 tonnes
of suspended solids and 3,850 tonnes of
BOD.
1.3 Rationale and Objectives
E3STs address the energy and environmental
concerns of industries, but many barriers
prohibit their adoption. Due to scarcity of
resources (funds, labour and time), all the
barriers cannot be addressed simultaneously,
hence, priority must be given to the most
serious and pervasive barriers.
Though general studies on the various
barriers inhibiting the promotion of E3STs
are available, prioritization of barriers from
the perspective of SMIs, technocrats and
policy makers would provide an important
basis for introducing E3STs and thus lead to
energy efficiency, reduced pollution and
GHG emissions. By prioritizing the barriers
in terms of their importance, appropriate
strategies and action plans can be developed
to use the limited resources. This approach
will be beneficial to SMIs and will yield
positive impacts that could be translated to
a bigger scale as energy savings and emission
reductions at the national level (Box 1.4).
The main objectives of the study are:
To identify the prominent barriersinhibiting the promotion of E3STs in the
SMI sectors in the study countries
To prioritize these barriers according tothe views of the stakeholders, and
To disseminate the outcomes amongpolicy makers and other stakeholders for
necessary action in formulation ofenvironmentally friendly policies.
Box 1.4 Institutional intervention to
promote E3STs in SMIs through
identification and prioritization of barriers
Case study: Firozabad glass industry cluster
in India
To save the famous Taj Mahal, situated close
to Firozabad, the Indian Supreme Court passed
a landmark judgment and directed 292 specified
industries using coke/coal as fuel to switch over
to natural gas, relocate outside the zone, or
shut down.
Through detailed diagnostic studies carried out
in various SMI clusters in 1995, it was found
that there is tremendous scope for increasing
energy efficiency in the glass industry cluster.The cluster accounts for roughly 70% of the
total glass production in the small-scale sector.
A new design focused on the pot and muffle
furnaces in view of their high share of coal use
(48% for pot furnaces and 27% for muffle
furnaces), very low operating efficiency and
inability of the segment to mobilize support for
technology upgrades.
The demonstration pot furnace using natural gaswas commissioned in February 2000. The
specific energy consumption was found to be
2,460 kcal/kg of glass, a reduction of nearly 60
per cent while meeting environmental standards.
Natural-gas fired TERI furnace
Source: TERI, 2000
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Introduction
9Chapter 1
Fig 1.1 Organization of report
The study used Analytical Hierarchy Process
(AHP), a multi-criteria decision tool, for
prioritizing barriers. Once the barriers are
prioritized, issues that lie within the
enterprise or factory level, industry level and
national level can be segregated and targetedfor elimination or mitigation by factory
owners, SMI associations or policy makers
as appropriate.
1.4 Organization of the Report
The report is organized in five chapters with
the structure shown in Figure 1.1. The
objectives are organized for clarity within the
structure of the report.
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An Overview of Barriers
11Chapter 2
This chapter describes the various barriers
that inhibit the promotion of E3STs and their
significance from the viewpoint of SMI
stakeholders. This initial assessment ofbarriers has been consolidated using similar
studies done elsewhere.
2.1 Barriers to Promoting E3STs in theStudy Countries
Despite their significant contribution to
economic development in the Asian region,SMIs are energy inefficient and cause
environmental pollution. Under these
circumstances, E3STs provide sustainable,
adoptable and affordable technology
solutions that will conserve energy, mitigate
pollution and reduce unfavorable impacts on
climate. Application of E3STs in industries
ensures that energy resources are used more
efficiently, eco-efficiency is improved and theenvironment is preserved and is therefore an
important means of achieving the dual goals
of energy conservation and emission
prevention and reduction. Many developed
countries have adopted cleaner production
technologies and gained the economic
benefits. However, E3STs are not widely
adopted in developing countries outside of
large industries that can easily adopt themand benefit financially. SMIs are still hesitant
AN OVERVIEW
OF BARRIERS
Chapter 2
to adopt E3STs due to their reluctance to
change and other barriers. To promote the
dissemination of E3STs, the barriers in
adopting them were identified. They includelack of awareness, education and training on
E3STs; financial and economic factors; lack
of coordination and slackness; and lack of
infrastructure (Thiruchelvam et al., 2003).
The following sections provide an overview
of the barriers inhibiting the promotion of
E3STs in the study countries. The key
elements and diversity of the environmentalissues in relation to energy and environmental
performance vary from one country to
another.
2.1.1 China
As one of the fastest growing economies in
the world, China experiences the ill effects
of rapid development in the most obviousway. The environmental pollution in China
has been unprecedented, especially in the
industrial areas, and the Chinese government
has given a high priority to abating
environmental pollution due to
industrialization (Jonathan, 1999).
Increased employment requirements
focused more on workers skills andphysical abilities than on their ability to
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Barriers to Promoting E3STs to SMIs in Asia
12 Chapter 2
Box 2.1 Growth of consumption of energy
and GHG emissions in India
Indias high concentration of pollution is notdue to the absence of a sound environmentallegal regime, but due to lack of environmentalenforcement at the local level. Regulatoryreforms aimed at improving the air pollutionproblem in cities such as New Delhi have beendifficult to implement.
The brick and tile industry finds it difficult
to access new technologies and market
information and still operates in a
traditional way.
cope with the consequences of poor
environmental management. Managerial
staff lack capacity to educate workers
because they themselves have a low
awareness of E3STs and their positive
impacts. Chinese SMIs lack capacity in identifying,
assessing, introducing and applying
E3STs at factory level. Even when capital
is available it is often accompanied by
introduction of obsolete process
technologies and inefficient equipment
that pollutes the environment.
Lack of experience and resources,
including capital, is the main reason fordifficulties in technology transfer options.
2.1.2 India
The Indian economy is growing rapidly and
pollution has increased, fueled by industrial
production (Box 2.1).
The industrial value chain consists of cottage
level manufacturing, subcontracting by SMIs,
and outsourcing by medium to large
companies. However, the SMI sector still
uses outdated technologies although some
larger manufacturers have upgraded their
technologies and improved their efficiencies.
The SMI sector in India is grappling with
problems of outdated management
practices and use of inefficient and
polluting processing technologies. Many
employees are not skilled or technically
competent to operate and maintain
advanced energy saving technologies.
The foundry sector in India generates
heavy environmental pollution and wastes
resources and energy because of outdated
technologies and equipment.
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An Overview of Barriers
13Chapter 2
High cost of equipment for E3ST
application is an impediment, as most of
these items are imported. This raises the
issue of technology transfer related to
E3ST technologies such as locally
manufacturing these technologies. Theobstacle here is the lack of competent
technical service providers.
Policy level barriers come from either not
having a mechanism for SMIs for adopting
better technologies or having an equal
policy for all industries irrespective of
2.1.3. Philippines
The SMI sector in the Philippines lacks
awareness of energy and environmental
issues. At enterprise level, lack of collateral has
been a major obstacle in obtaining
finances from banks for implementation
of E3STs. Due to a lack of financial
records and collateral requirements,
assessing credit risk is difficult for lenders.
The tedious procedures for
documentation, processing and reporting
requirements are also obstacles forprocuring funds. Lack of expertise to
appraise E3STs is a barrier for lending
institutions.
The use of E3ST initiatives as a political
tool by pressure groups that claim that
these initiatives are trade barriers retard
investment in E3STs. Industries succumb
to these pressure groups because of their
limited knowledge and understanding.
2.1.4 Sri Lanka
SMIs in Sri Lanka are faced with unfavorable
conditions locally and from high competition
from neighboring countries. Increasing cost
of inputs and insufficient economies of scale
have decreased their profit margins.
Reasons for not implementing E3STs are
primarily cost oriented. Additional capital
deployment, increased operational costs
and non-realization of net financial-gains
from E3STs are some of the important
reasons. Even the implemented E3STs or
those proposed to be implemented are
more or less compliance driven rather
than needs driven.
Box 2.2 Non-enforcement of regulations is
a barrier to promoting E3STs
Sri Lanka
The Sri Lankan Desiccated Coconut sectorfaces the continuing problem of treatingwastewater. Some research institutions havedeveloped solutions for treatment, but theseare not adopted widely. Further development
and promotion of available methodologies isnot progressing since the factory owners donot consider them a necessity. Measures likeE3STs can only be developed or marketed ifthere is a strong need at industry level.
Philippines
The Department of Energy and EnvironmentalManagement Bureau (EMB) are two keyinstitutions, which oversee the energy andenvironment sector in the Philippines. DOE hasno regulatory power and activities are mainlylimited to raising awareness and informationdissemination. They cannot force a companyto be energy efficient. EMB is theenvironmental regulatory agency, which carriesout monitoring and enforces environmentallaws. Due to the wide scope of EMB, it cannotcomprehensively conduct monitoring andenforcement activities on all industries. SMIsalso pose difficulties for the enforcementagency due to their fragmented nature and
large number.
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Barriers to Promoting E3STs to SMIs in Asia
14 Chapter 2
their size or sector. These perceived
anomalies at policy level prevent SMIs
from taking action in implementation of
E3STs (Box 2.2).
2.1.5 Vietnam
The Vietnamese economy is in a transition
from central control to a market economy.
Still, the government owns most of the
enterprises, although private investments are
picking up. Government enterprises mostly
use outdated technologies. During the period
of a centrally controlled economy, the
principle had been to build the largest possiblefactories with the aim of providing
employment. Revamping these enterprises
will be a major task in terms of technology
and investment.
Enforcement of environmental
regulations has had a low profile and is
one of the reasons that SMIs, both existing
and new, are reluctant to invest in E3STs. Cost of new technologies and difficulties
in obtaining finances are barriers in
Vietnam for the promotion of E3STs.
During this transition from centralized to
market economy, many industrial sectors
resist introducing E3STs. However, the
brick sector has been an exception (Box
2.3).
2.2 Types of Barriers
Barriers can mainly be categorized as market,
technical, financial, management,
environmental, information and regulatory.
These categorizations also have perspectives
at enterprise, industry or national levels.
Hence, a fundamental categorization of
barriers that inhibits the promotion of E3STs
could be illustrated as follows (Table 2.1),
with some examples at each level.
The following sections describe these barrier
categories specific to the promotion of
E3STs through examples.
2.2.1 Managerial barriers
Promotion of E3STs in SMI sub-sectors faces
many barriers due to management at the
enterprise level. Specific examples of these
managerial barriers are as follows:
Resistance to Change. SMIs inherently resist
change. Any alteration to achieve a (positive)
Box 2.3 Lack of government assistance is
a barrier to promoting E3STs
An assessment on the Vertical Shaft Brick Kiln(VSBK) Technology in Vietnam focused on its
technology status, performance andgovernment policy in promoting it. Some of thefindings of the study are highlighted below:
In the short span of two years about 100new VSBKs were added. The technologyseems to have become firmly establishedin the country. This has been a noteworthyachievement given the history of slow andoften-difficult introduction in several othercountries.
VSBK is the most efficient kiln among thedifferent types of brick kilns used inVietnam, with a specific energyconsumption of 0.85-1.1 MJ/kg of fired brick.Stack emissions from VSBK are lowercompared to other kilns.
VSBKs are replicating very quickly in differentlocations in Vietnam, but at the central level,there is no clear policy to support thetechnology.
Source: TERI, 2003
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An Overview of Barriers
15Chapter 2
change is often perceived as a disruption of
the present status. This is common for both
managerial staff and employees. In such a
situation, efforts to adopt E3STs are not
likely to be well received. In the case of non-
compliance of standards, SMIs may prefer
to pay the penalties rather than to adopt
cleaner production technologies.
Inadequacies in Internal Management. SMIs, in
trying to achieve cost advantages, tend to
hire managers or staff who may not have the
capacity to appreciate the complexities of the
global or national environmental aspects
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Barriers to Promoting E3STs to SMIs in Asia
16 Chapter 2
related to the business they are engaged in.
These inadequacies hinder the adoption of
E3STs in SMIs.
2.2.2 Human resource barriers
Lack of technical education and training of
SMI employees on E3STs make its promotion
and implementation difficult. These are the
human resource barriers, a primary example
of which is:
Inadequate Education of Employees. E3STs
and their benefits are sometimes beyond
the understanding of employees of SMIsbecause they represent a new concept in
energy and environmental performance.
Their understanding is important for
proper installation and functioning of
E3STs at factory level. Poor understanding
of the functionalities of E3STs will
increase costs, hamper the achievement
of desired results and disrupt production.
2.2.3 Technical barriers
Availability and cost of E3STs constitute
technical barriers. These barriers affect the
sustainability of E3STs in relation to their
adoption in SMIs.
Limited Availability of Technology. SMI sectors
are diverse and in most cases are processoriented where solid wastes, effluents and
emissions are generated as part of the process.
SMIs have not kept up with technical
innovations, such as the use of Information
Technology (IT), for better resource control
and Cleaner Production (CP) for better
environmental control.
Cost of Technology. Upgrading using E3STs is
sometimes costly, especially the initial
investment. Environmental technologies
undergo substantial research and enterprise
level prototyping is required, and these add
to costs. For SMIs, it is not merely the cost
of new technologies that matter but also the
cost of retrofitting, as these enterprises have
already invested in equipment and
technologies that are not E3STs. Box 2.4
gives an example of how high cost associated
with import of technologies is a barrier to
the promotion of E3STs in Sri Lanka.
2.2.4 Financial barriers
Financial barriers constitute a principal barrier
faced in promoting E3STs. Some financial
barriers are as follows:
Limited Access to Funding. Both development
banks and commercial banks offer funding
for the implementation of E3STs under
various schemes. Although sources of credit
and finance are available, few SMIs use thesefacilities because either they are unaware of
them or are unable to fulfill the criteria of
the lending organizations. SMIs often have
no reliable financial records and have
difficulties with security and collateral
requirements. Hence, from the lenders point
of view, assessing an SMIs credit risk is
difficult, considering the long payback
periods related to E3STs.
Procedural Setbacks. Even SMIs that can
establish their creditworthiness need to
follow tedious procedures. This is more
common when interest rates are low. SMIs
do not feel comfortable with these delays and
they do not want to obtain commercial loans
at high interest rates, which would offset the
enterprise finances.
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An Overview of Barriers
17Chapter 2
Box 2.4 High cost associated with import
of technologies is a barrier to promoting
E3STs
To meet rising demand, raw steel is imported
into Sri Lanka. Due to the limited supply offinished products, the effect of value additionis very important in Sri Lanka where finishedproducts are nearly four times the price of rawmaterial. Thus, steel fabrication factories inSri Lanka get maximum benefit from increasedproductivity rather than from energyconservation. Initial investment is high in SriLanka due to the:
necessity to import all equipment andtechnologies for making improvements
time required for improvements to beimplemented
high cost of borrowing capital
Source: UNEP, 2002
Conventional Appraisal Criteria. Lending
institutions operate on a risk minimization
approach and often they prefer collateral to
cash flow. Under such circumstances, E3STprojects do not always produce acceptable
appraisal results. The lack of technical
competencies of staff to appreciate the
broader economic and environmental
impacts of E3STs results in lending
institutions relying entirely on financial
factors.
2.2.5 Market barriers
Limited markets for products manufactured
with E3STs and also limited demand for
E3STs act as a barrier for adoption. Primary
market barriers are:
Limited Market for E3STs. The market size is
a barrier for the promotion of E3STs. Being
specialized applications, E3STs need to becustomized for each enterprise at factory
level, in either scale or added features. This
makes it difficult for some E3ST application
providers to design and manufacture
equipment in a way that makes it possible to
reap the benefits of economies of scale.
Emphasis on Green Products. The importance
or requirements customers place on products
manufactured using E3STs have an impact
on SMIs adopting E3STs. If a particular SMI
caters to green product markets, they have
to adopt E3STs. But often, green products
give more importance to product features
than to processing techniques.
2.2.6 Regulatory barriers
Regulatory policies and their enforcement at
the national level constitute some major
barriers to promoting E3STs. Some examples
are as follows:
Inconsistent Enforcement of Laws and Policies.
Inconsistent enforcement of laws reduces
the credibility of both the environmental laws
and the agencies responsible for
enforcement. The result is that SMIs - and
other polluters - disregard the need for
compliance. From the promoters point of
view, without a strong regulatory requirement,
E3STs may not have a place in the market.
Capacity of the Regulating Agencies. Regulating
agencies, policy makers, environmental
pressure groups and the government need to
advise and assist SMIs by promoting E3STs.
Enforcement and penalizing defaulters have
not addressed the promotion and adoption
of E3STs. Field level staff and regulatory
personnel are not technically knowledgeable
enough to advise on the improvement of
processes or equipment to reduce waste,
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Barriers to Promoting E3STs to SMIs in Asia
18 Chapter 2
Box 2.5 Lack of institutional coordination
and implementation as barrier
Coordination among agencies anddepartments is important in implementingpolicies. Lack of coordination may lead tohaphazard solutions.
In the case of acid processing firms in Calcutta,India, inefficient operations resulted in indoor
and outdoor pollution. Due to lack ofcoordination between energy and environmentdepartments, the proposed solution ofconstructing a central effluent treatment plantwas not beneficial and did not yield resultssince the solution did not address the mainsource of pollution inefficiency in processflow, work practices and poor knowledge ofhealth and safety. Authorities disregarded thecore issues and addressed peripheral issuesdue to lack of expertise (Das Gupta, 1998).
In contrast, in one of the textile clusters inTirupur, South India where there are about 750dyeing and bleaching units in operation, theunits have joined through association andconstructed common wastewater treatmentfacilities. There are now eight commonwastewater treatment plants operatingsuccessfully in the cluster.
effluents and emissions (Box 2.5). This is not
a conducive situation for promotion of
E3STs from the policy or national
perspective.
2.2.7 Information barriers
The inability of SMIs to access information
on E3STs and their applicability is a primary
inhibitor. Information barriers include:
Limited Access to Information. Lack of technical
understanding of energy and environmental
issues in SMIs leads to distortion and
misinterpretation of facts with the result that
the best option may not be chosen. One of
the main reasons for this lack of technical
understanding is due to limited access to
information on E3STs and SMIs inability
to evaluate the best options available. Non-
availability of sector specific norms and
benchmarks make it difficult, not only for
SMIs but also for advisors, to compare in-
plant situations with desired situations that
could be achieved by the adaptation of
E3STs.
Inadequate Communication. Information on the
non-professional perspective from the use of
E3STs is an important criterion for
promotion. An issue like greenhouse gas
emissions endangering society cannot be well
understood unless it is translated intofinancial terms such as reduced fuel costs,
or benefit terms such as increased incentives,
financial or social.
2.2.8 Research and development
Barriers to the promotion of E3STs also arise
from inefficiency in disseminating
information from research and developmentactivities carried out at universities and
research institutions.
Lack of Dissemination. Research institutions
and universities conduct research on
industrial pollution, publicise their studies in
various forms and come up with solutions
including E3STs. But dissemination of these
findings to the appropriate industries is at a
very low scale. Without dissemination,
technology providers, E3ST developers and
SMIs have no way of knowing about work
done in the area.
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An Overview of Barriers
19Chapter 2
Figure 2.1Response for adopting technologies in SMEs
The ADB (2003) study reveals that the
primary barriers inhibiting the adoption of
technologies by SMIs were financial,
followed by technological barriers. Figure 2.1
further elaborates the survey results.
Table 2.2 summarizes previous studies on
bariers that used more conventionaltechniques for assessment of inhibitors. Since
these previous studies are used as a baseline
or cross-country comparison at various
levels, the techniques used are more
conventional than scientific and involved
mainly the beneficiaries of the policies, i.e.
industrialists. Involvement of the policy
level, made only through discussion, had not
been prominent. None of the studies were
sector specific and they did not address
sustainability issues in detail.
Some studies (UNEP, 1989; UNIDO, 1999)
focused on cleaner production (CP) rather
than E3STs. These studies emphasized
energy conservation and resource
consumption reduction and environmental
technologies in general, but they were not
specific to industry or SMIs and addressed
technological aspects rather than policy
options. Even though there are no specificstudies with regard to the promotion of
E3STs or barriers hindering them, the barriers
for the promotion of CP (Box 2.6), energy
efficiencies and SMI promotion also fall in
line with the barriers for E3STs. The barriers
that have been discussed in these studies can
be classified under the various barrier
categories described in section 2.2.
Vine (2005) has shown that lack of
government policy, subsidized energy cost
and unfavorable tax regimes are barriers for
promoting energy efficiency through energy
service companies (ESCO) which are
expected to play an important role in
promoting energy efficiency.
2.3 Earlier Studies on Barriers InhibitingAdoption of E3STs
In the past decades, more attention has been
given to SMIs as a catalyst to improveeconomies. The scope of earlier studies
indicates that they have focused more on
business promotion or overall
competitiveness of SMIs. The introduction
of technologies (not only energy efficient
technologies) is one key area these studies
addressed. These served as a baseline for
further elaboration at policy level not only
for SMIs but also for larger industries as well.
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An Overview of Barriers
21Chapter 2
Box 2.6 Barriers for promotion of CP
technologies
UNEP training material for the promotion ofCleaner Production shows that political and
regulatory barriers contribute to the non-adoption of CP technologies. The studyconcludes that addressing these issuesthrough training and awareness will promoteapplication of CP.
Source: Huisingh, 2002
Furthermore, previous studies did not focus
on sustainable technology adoption by SMIs
as a policy option for mitigating GHGemissions, or address issues related to energy
efficiency or environmental pollution. They
were not oriented towards SMI needs for
fulfilling the broader goal of GHG mitigation
through either technical options or policy
options at national level.
For this study, barriers are grouped under four
broad categories as follows:
Managerial and Organizational Barriers. Barriers
related to internal management, operational
requirements, capacities of human resources
and attitudinal issues. The type of industry
and ownership governs these parameters and
they have an effect on the adoption of E3STs
(Box 2.7).
Financial and Economic Barriers. Barriers related
to availability of finance, affordability of
finance, cost/benefit from investments,
attitudes of managers and lenders on
investing in technology. This is relevant also
in the context of developed countries (Box2.8).
Technical and Information Barriers. Barriers
related to the existence and appropriateness
of technology, availability of information of
procuring, evaluation and adoption, technical
competence in assessing needs, and additional
requirements needed for implementation.
Policy and Market Barriers. Barriers related togovernment recognition and acceptance of
E3STs, policy options and directions for
adaptations, mechanisms of enforcement,
and public opinion about products that
address environmental concerns.
2.4 Summary
Barriers for the promotion of energy
efficiency and reducing pollution in all
industrial sectors appear to have much in
common. In the overall industry sector, larger
companies have the resources and the
expertise to invest in E3STs and have
benefited financially, socially and
environmentally.
Though some achievements have been seen
in the SMI sector in Asia, it has dealt with
barriers related to development and business
expansion rather than the adoption of E3STs.
Increasing competition in global markets and
declining government support have lowered
the priority given to implementation of
E3STs. The most prominent barriers arefinancial, technical, managerial and policy
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An Overview of Barriers
23Chapter 2
Box 2.8 Barriers to promoting E3STs in the EU and the USA
EU Action Plan to Boost Environmental Technologies
The European Commission has released an action plan to help new environmental technologies
overcome barriers to their development such as difficulty in access to capital. The action planincludes the launch of technology platforms, establishing environmental performance targets forproducts and services and making the most of funding schemes and public and private procurement.(Royal Institute of Chartered Surveyors, News item 06 February 2004)
Barriers to Integrating Energy & Environmental Approaches, USA
While there are numerous benefits associated with integrating energy and environmentalapproaches, states and localities are still faced with a number of challenges when transitioningfrom single-agency, single-pollutant strategies to more collaborative multiple-agency, multiple-pollutant solutions. Some of these barriers include:
Jurisdictional boundaries that separate energy, environmental and public utility agencies; Regulatory provisions in energy, air and utility statutes that purposely or inadvertently impede
integrated, innovative approaches; Political impediments imposed by partisan or interest group actions; Resource and time limitations facing state and local energy, environmental and public utility
agencies that already have too much on their plates; Large scale, scope and complexity of issues that can be daunting if not examined in smaller,
focused pieces; and Rapidly changing power situation that has unpredictable impacts on the focus for other energy
and environmental issues in states and local communities.
These impediments, while presenting varying degrees of challenge, do not necessarily representpermanent barriers to success. (Extract from Whitepaper on Taking Steps Toward IntegratedApproaches on Energy and Environmental Issues for State and Local Policy-Makers. Availablefrom Energy, Environment & Transportation Clearing House, http://www.eandeclearinghouse.com(Accessed 20 June, 2004)
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Study Approach & Activities
25Chapter 3
This chapter elaborates the approach and
methodology adopted in this study. It
provides a description of the study
methodology, tools used, rationale for
selection of tools, composition of the
stakeholders in each study country and the
potential for replication of the methodology
for similar studies. Figure 3.1 illustrates the
overall framework of the study, which is
described in the following sections.
An initial list of barriers was developed in
each country based on discussions with the
stakeholders of SMIs and from the literature
(Chapter 2). During the discussions, SMI
management, policy makers and other
stakeholders highlighted the major barriers
inhibiting the adoption of E3STs. This was
found to complement the findings of Phase
I and II of the ARRPEEC Programme
industry sector projects.
The list of barriers was identified and
finalized through consultation workshops
attended by the major stakeholders. The final
list of barriers was grouped into four major
categories: management and organizational,financial and economic, technical and
information, and policy and market barriers,
with sub-categories as depicted in Table 3.1.
3.2 Tools for Prioritization of Barriers
For the identified barriers, each stakeholderattaches his or her own relative importance.
STUDY
APPROACH &
ACTIVITIES
Chapter 3
3.1 Identification and Finalization of the
Barriers
Figure 3.1 Framework of Research Methodology
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Study Approach & Activities
27Chapter 3
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Therefore, the priority varies among the
stakeholders and also among the industrial
sectors. To achieve a common prioritization,
a conventional criteria-ranking method based
on point allocation, percentage weighting or
qualitative ranking could not be used, andso for this study a Multi-criteria Decision
Making (MCDM) methodology was used.
The benefits of using an MCDM model are
that it (Denis, 2003):
provides a formal decision process and
focuses on key issues and uncertainties
helps identify non-critical issues and
provides immediate feedback helps identify and evaluate tradeoffs and
benefits
bui lds consensus and encourages
accountability
MCDMs are used for a variety of applications,
such as strategic and programme planning,
resource allocation, technology selection and
prioritization and consensus building. Several
MCDM tools are used as decision support
tools and a sample list is given in Box 3.1.
The MCDM method employed for this study
was the Analytic Hierarchy Process (AHP)
introduced by Saaty (1980), which is a
pairwise comparison method. It provides a
proven, effective means to deal with complex
decision-making and can assist with
identifying and weighing selection criteria and
expediting the decision-making process. It isa powerful and flexible decision-making
methodology to help set priorities and make
the best decision when both qualitative and
quantitative aspects of a decision need to be
considered (Saaty, 1999). By reducing
Source: http://www.evergladesplan.org/
Box 3.1 Multi-criteria decision tools
The following list gives an overview on the various MCDM tools:
Curriculum assessment: http://fie.engrng.pitt.edu/fie98/papers/1370.pdf
Portfolio management: http://www.sbaer.uca.edu/Research/1999/WDSI/99wds230.htm
Sub contractor evaluation: http://fire.nist.gov/bfrlpubs/build02/PDF/b02143.pdf
Product, process, environment matching:http://www.environmental-center.com/magazine/inderscience/ijetm/art5.pdf
A Selected List of Multi-criteria Decision Tools
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Study Approach & Activities
29Chapter 3
complex decision problems to a series of one-
on-one comparisons (pairwise) and then
synthesizing the results, AHP not only helps
decision-makers arrive at the best decision,
but also provides a clear rationale for arrivingat that decision (Liberatore and Nydick,
2003). Research on the application of AHP
techniques for decision-making specific to
renewable energy and energy efficiency is
available. For example, Pohekar and
Ramachandran (2004) have provided an
extensive review of the application of AHP
techniques in the energy sector.
In the AHP methodology, the stakeholders
determine their preference between two
barriers and specify their relative importance
with respect to their contribution to the
desired objective. Stakeholders indicated the
relative importance for each barrier using a
ra t ing sca le (Tab le 3 .2 ) . The AHP
methodolog y provides an indication of the
inconsistency of the comparison as well. Theinconsistency level indicates the degree of
understanding of the issues by the respondent
and how that understanding (or lack of
understanding) contributes to the final
judgment. If the inconsistency is more than
0.1 (i.e. consistency ratio of greater than 10%)
it is suggested to revisit the problem and
revise the judgments (Merit Decisions; Saaty,
1999).
3.3 Procedure of the Study
A hierarchy structure based on AHP was
developed to prioritize the barriers inhibiting
the promotion of E3STs in SMIs (Box 3.2).Based on the hierarchy structure, the listed
barriers (Table 3.1) were transformed into a
questionnaire (Appendix A) which was
completed by the stakeholders (managers/
owners of SMIs, technicians, bank managers,
personnel from industrial associations, policy
personnel, etc.) in the five countries. The
questions were framed in such a way as to
extract responses based on a pairwisecomparison of all the barriers. To complete
the questionnaire, the stakeholders used one
of the three rating scales shown in Table 3.2.
For example, if barrier A is more important
than barrier B for non-implementation of
E3STs, the stakeholder could rate (i) 7 or (ii)
very strong or (iii) 175 for A versus B.
To complete the questionnaires, workshops were organized for stakeholders. The
workshop agenda included an introduction
to the SMI in Asia project, the purpose of
the study, guidelines to complete the
questionnaires, and the expected outcomes
of the exercise.
Policy makers in the Philippines engaged in
filling in the questionnaire
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The workshops were also helpful for
discussing barriers with stakeholder groups.
Other methods used to complete the
questionnaire included:
One-on-one interviews with managers
(India, Sri Lanka)
F ac si mi le a nd d ir ec t ma i li ng o f
questionnaires to stakeholders, who were
identified and selected through the list of
institutional clients (Philippines) and
Box 3.2 Hierarchy model for prioritization
After the identification and finalization of the prominent barriers that hinder the promotion of E3STs,
a tree-hierarchy based on AHP methodology can be structured to facilitate the prioritization process
(figure below). The tree is segmented into four levels: the top level is the overall barriers inhibiting
the promotion of E3STs; the second level has the four barrier categories; the third level includesfive specific sub-barriers under each barrier category, 20 in total, and the last level is the final goal
of this studyprioritization of the barriers inhibiting E3ST promotion in SMIs.
* For details on specific barriers refer to Table 3.1.
Adapted from Peng et al., 2005
AHP methodology workshop for desiccatedcoconut millers in Sri Lanka
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Study Approach & Activities
31Chapter 3
The stakeholders in the technical category
included managers and technicians of SMIs,
energy auditing consultants, and technical
project appraisers of financial institutions.
The financial category stakeholders were
managers or representatives of banks, fund-
ing agencies and financial institutions. Policy
personnel were from Ministries, statutory
boards and industrial associations.
mailing lists of participants of earlier
events (China)
Interviews with experts from selected sec-
tors (Vietnam)
Workshops to obtain the views of policy
makers (Philippines, Vietnam and SriLanka)
In the workshops, the stakeholders were
provided with details to familiarize them with
the study objectives and methodology and
the AHP approach in particular. The
participants were also given presentations on
the use of AHP to explain the complex
nature of the pairwise comparisons with anexample based on a comparison of cars
(Liberatore and Nydick, 2003).
Considering the diverse nature of the stake-
holder group, their responses were grouped
into four categories: managerial, technical,
financial and policy personnel. Table 3.3
shows the number of responses in each cat-
egory in each country.
The managerial category stakeholders were
owners or senior management of SMIs who
take decisions on implementation of E3STs.
Box 3.3 Expert Choice software
Expert Choice is intuitive, graphically based
and structured in a user-friendly fashion to for
conceptual and analytical thinkers, novices
and category experts. Because the criteria are
presented in a hierarchical structure, decision-makers are able to drill down to their level of
expertise and apply judgments to the
objectives deemed important to achieving their
goals. At the end of the process, decision-
makers are fully cognizant of how and why
the decision was made, with results that are
meaningful, easy to communicate, and
actionable.
The software automates the decision-making
process by enabling organizations to structureand justify decisions. Expert Choice helps
groups to structure their objectives into a
decision model, prioritize using pairwise
comparisons, and justify decisions using
graphical reports and sensitivity analyses.
With Expert Choice, organizations can focus
on the strategic value of alternatives rather than
making decisions over table conversations. It
can be used to: predict likely outcomes, plan
projected and desired futures, facilitate group
decision-making, exercise control overchanges in the decision-making system,
allocate resources, select alternatives, do cost/
benefit comparisons, evaluate employees and
allocate wage increases.
Source: http://www.expertchoice.com
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32 Chapter 3
Figure 3.2 Sample output of pairwise comparison
response/judgment of the stakeholders. Ex-
pert Choice, a multi-criteria software pack-
age was used (Box 3.3). The rating given by
the stakeholders for each pair of barrier
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