Promoting Green Building Material Enterprises

India's Waste Problem

The Indian economy has been one of the fastest growing economies of the world for the past few years. Recent government estimates indicate that the real Gross Domestic Product (GDP) for India grew at a rate of 7.1% in 2016-17. Much of this growth is attributed to the progress by industrial sectors such as manufacturing, construction, transportation, communication, utility services etc. growing at a steady rate. Although, rapid economic growth has brought huge benefits to India, such fast paced progress has had a detrimental effect on the country's environment and has exposed urban centres to serious pollution. For instance, India's CO2 emissions increased to 2.47 billion tonnes in 2015, 5.1 per cent higher than CO2 emissions in 2014. In addition to burdening India's natural resources this has also lead to generation of vast amount of waste. What compounds this problem is the increasing per capita income of individuals. Consumers are trending towards newer lifestyles, which have resulted in rapid commercialisation, which in turn has led to waste generated from consumer based packaged products. While this is fast becoming a problem for India with major urban centres lacking space for landfills to dispose of this waste, India with a high rate of urbanisation at least in the near future faces severe waste management concerns. Currently just over 33% of the Indian population is urbanised, rising at an annual rate of 2.3%. It is estimated that 50% of Indians will be living in cities by 2030.The situation thus warrants a need for adopting greener practices for growth and to invest in new technologies and business models, which will help, solve the puzzle of balancing resources and reducing pollution while still supporting growth.

Improving resource productivity and implementing the principles of reduce, reuse and recycle (the 3Rs) are crucial in order to ensure sustainable development. However, incorporating such practices would come at an increased cost of adopting new technologies, creating adequate infrastructure and building capacities of people. To do this specifically in large industries will be particularly challenging. However, MSMEs - significant providers for employment and also major contributors to waste generation can help solve the problems of waste management.

Waste Recycling through Green Building Materials

There is a massive demand for housing in urban areas across India. However, in terms of choice of construction materials and technologies, the sector is still using traditional materials such as red bricks, stone aggregates etc. which have severe environmental implications such as carbon emissions, water requirement, land degradation, etc. A bulk of these materials is provided by the MSME sector. This scenario presents a unique opportunity to make specific interventions to green the building material sector and develop and promote the uptake of green building materials. Technology options that utilise waste to make building materials such as fly ash bricks, construction and demolition waste recycling and bricks made from the use of waste materials such as marble sludge, pond ash, foundry slag, plastic waste etc. can contribute significantly to managing the waste problem in India while also reducing the environmental implications of urban housing.

The Development Alternatives Group has been working in the sphere of waste recycling for 25 years and has innovated multiple technologies in the green building materials sector, while also building replicable and viable business models around them. One business model is to create decentralised production systems for the under-developed communities and then aggregating the products to be sold in the extended markets for them to be part of the mainstream economy. Keeping in mind, India's lack of basic infrastructure and systems required to collect waste, logistic challenges and ensuring a steady and active market demand to fill the supply; decentralised enterprises and clusters present a very strong case for success. Such waste to wealth-recycling enterprises, beyond solving the massive waste problem, also lead to extended impacts such as job creation and income generation.

Lessons from the ground in Bihar

The Bihar brick industry is based on decentralised production activity using energy intensive, resource depleting and highly polluting technologies and production methods. Fired clay bricks consume around 2-4 million tonnes of coal per year leading to emissions of 4-6 million tonnes of carbon dioxide (CO2) per year. In order to ensure that the state's economic growth is not at the cost of the environment and public health, the Bihar government took initiatives such as banning red brick production in districts near Patna and promoting preferential procurement of fly ash bricks for promoting cleaner brick production technology and waste management. This encouraged setting up of many fly ash bricks enterprises in and around the city of Patna.

Policy Priorities

Policy will play a crucial role in promoting green building materials through MSME enterprises. The MSME sector lacks both the knowledge and incentives to switch to clean building material technologies and products. Thus designing and adopting adequate policies that incentivise entrepreneurs to establish green building material enterprises is the need of the hour. Of utmost importance is to develop policies not just to promote formation of more enterprises for production of these products, but also uptake of the new products by the market. Some policy requirements to promote green building materials are mentioned below:

1. Policies for preferential procurement of green building materials: A strong focus is required on developing preferential procurement policies to support the application and use of resource efficient construction techniques and materials in the Indian construction sector. For example the Delhi government has implemented a policy that 5% of materials used in all government construction projects need to be secondary raw materials. Preferential procurement of green building materials will allow enterprises that produce such products to ensure their sustainability. This also needs to be supplemented with stakeholder engagement across the value chain to increase knowledge and awareness of the benefits (both short-term and long-term) of using such green products. Promoting clusters of MSMEs producing green building materials in large quantities and promoting supply from these clusters to large builders and contractors will also promote the sustainable production and consumption of these products.

2. Policies promoting products which have a strong potential to contribute in ensuring sustainable development: Construction and demolition activities spurring out as a result of the growing economic activities generates huge amount of waste each year which is seen to be often disposed in landfills. In 2015, the Urban Construction and Demolition (C&D) Waste generation in India was estimated to be 716 million tonnes and is projected to increase to 2.7 billion tonnes per annum in 2041 (GIZ, 2016). While still a relatively less developed area, C&D waste recycling has a huge potential to be scaled up and have large-scale impact on waste disposed of in landfills. Priorities at this stage (both national and state) need to be focused on the development of policies for proper C&D waste management systems that minimise dumping and maximise reuse. There needs to also be clarity brought about on who should handle waste, how should it be handled, how should it be processed and disposed. As mentioned earlier policies for preferential procurement would be crucial for sustainability of C&D waste recycling enterprises. Additionally, capacity building activities for the important stakeholders in the value chain will help in raising awareness and result in an increased understanding on the utilisation of C&D waste and thus help make this into a mainstream product.

3. Taxation under Goods and Services Tax (GST): Under the new GST regime, green building products need to be taxed at a rate comparable to traditional products such as red bricks to motivate potential entrepreneurs to set up green building material enterprises. For example, environmentally sustainable fly ash bricks, which have been taxed at 12% compared to 5% for the polluting red bricks need to be taxed at the same rate as red bricks.

4. Policy tools to build a proper ecosystem: Green financing schemes to subsidise the cost of technology for enterprises and loan programmes allowing easy access to finance and developing decision making support tools to enable assessment and adoption of green technologies and products specifically targeted at bulk consumers and industries are priorities for promoting growth of such enterprises.

5. Other priorities: Re-envisioning how we promote traditional building materials such as red clay bricks, which have huge environmental implications is important, as these are a major source of livelihoods. Here policy to promote switching over to clean production technologies such as Vertical Shaft Brick Kilns (Eco-Kiln) and incorporating elements of resource efficiency such as a move towards Hollow Red Bricks can help reduce the environmental impacts of these products.

For a developing economy like India, moving towards green growth and setting-up a resource efficient economy while still growing at a steady rate is going to be a challenging task. Nevertheless, improving resource productivity and putting in place policies that implement the principles of reduce, reuse and recycle (the 3Rs) is crucial in order to ensure sustainable development. 

Samarth Gupta

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