【世界銀行】尼泊爾制磚業(yè)減排的經(jīng)濟與政策分析（英）

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PolicyResearchWorkingPaper10833

EconomicandPolicyAnalysisforEmissionReductionfromtheBrickIndustryinNepal

GovindaRTimilsina

SunilMalla

MartinPhilippeHeger

WORLDBANKGROUP

DevelopmentEconomics

DevelopmentResearchGroupJune2024

PolicyResearchWorkingPaper10833

Abstract

ThebrickindustryisoneoftheprimarysourcesofcarbondioxideemissionsandlocalairpollutantsinNepal.Coal,whichaccountsforone-thirdofthecurrentnationalcarbondioxideemissionsfromfossilfuelsourcesandisentirelyimported,istheprimaryfuelinthebrickindustry.Thebrickindustryaccountsfor27percentofthetotalcarbondioxideemissionsfromcoalconsumption.Theadoptionofcleantechnologiesorfuelsinthebrickindustryiscrucialforimprovingairquality,enhancingenergyindependence,andmeetingthecountry’snationallydeterminedcontri-butionundertheParisClimateAccordandthenet-zeroemissiontargetsetfor2045.Substitutionofimportedcoalwithdomesticenergyresourcesinthebrickindustrysubstantiallyreducesthecountry’simportbills.Thisstudyexaminestheeconomicsofvariousalternativestoreducecoalconsumptionandcorrespondingemissionsfromthebrickindustry.Thestudyconsidersarangeofcarbontaxes

(US$10toUS$100pertonofcarbondioxide),anenviron-mentalfiscalpolicy.TheUS$10pertonofcarbondioxidetaxwouldincreasebrickproductioncostsby2to6percent,dependingontheenergyefficienciesofthetechnologies.IfthecarbontaxwereUS$100pertonofcarbondiox-ide,thecostofbrickswouldincreaseby12to36percent.However,implementationofthepolicymaynotbesuc-cessfulwithoutenablinglowercost,cleanalternatives.Forexample,replacingmorecoalwithbiomassprovidesdirectcostandenvironmentalsavingsbutwouldrequirerelaxingstrictforestprotections.Thestudyrecommendsvariouspromotionalpoliciesfornon-firedalternativebricks.ItalsoarguesthatsinceusingelectricityforfiringbricksisanidealoptionforreducingemissionsfromthebrickindustryinNepal,thegovernmentanddevelopmentpartnersshouldprioritizepilotprojectsforelectrickilns.

ThispaperisaproductoftheDevelopmentResearchGroup,DevelopmentEconomics.ItispartofalargereffortbytheWorldBanktoprovideopenaccesstoitsresearchandmakeacontributiontodevelopmentpolicydiscussionsaroundtheworld.PolicyResearchWorkingPapersarealsopostedontheWebat

/prwp

.Theauthorsmaybecontactedatgtimilsina@.

ThePolicyResearchWorkingPaperSeriesdisseminatesthefindingsofworkinprogresstoencouragetheexchangeofideasaboutdevelopmentissues.Anobjectiveoftheseriesistogetthefindingsoutquickly,evenifthepresentationsarelessthanfullypolished.Thepaperscarrythenamesoftheauthorsandshouldbecitedaccordingly.Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthors.TheydonotnecessarilyrepresenttheviewsoftheInternationalBankforReconstructionandDevelopment/WorldBankanditsaffiliatedorganizations,orthoseoftheExecutiveDirectorsoftheWorldBankorthegovernmentstheyrepresent.

ProducedbytheResearchSupportTeam

EconomicandPolicyAnalysisforEmissionReductionfromtheBrickIndustryinNepal1

GovindaRTimilsina,SunilMalla,MartinPhilippeHeger2

KeyWords:Nepal,BrickIndustry,BrickManufacturingTechnologies,EconomicAnalysis,EmissionReduction.

1TheauthorswouldliketothankCarolynFischer,AngilaMisra,andArtiShresthafortheirvaluablecommentsandsuggestions.TheviewsandinterpretationsareoftheauthorsandshouldnotbeattributedtotheWorldBankGroupandtheorganizationstheyareaffiliatedwith.WeacknowledgetheWorldBank’sSouthAsiaDepartmentforEnvironmentandBlueEconomyforfinancialsupport.

2GovindaTimilsina(gtimilsina@)andMartinHeger(mheger1@)are,respectively,SeniorResearchEconomistandSeniorEnvironmentalEconomist,atWorldBankGroup.SunilMalla(malla.sunil@)isaShort-termConsultanttotheWorldBankGroup.

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1.Introduction

Nepaldependsonimportsforitsfossilfuelsupplies.Thisimpliesthatalmostallfuel-basedCO2emissionsandmostofthelocalairpollutantsarecausedbyimportedfuels.Coal,themostcarbon-intensivefuel,currentlyaccountsfor36%ofthetotalnationalCO2emissionsfromfossilfuelcombustion.3Brickmakingisanenergy-intensiveprocessduetothehigh-temperatureheatrequirementandcoalisthemostcommonfuelusedforheatinNepal.Thebrickindustryaloneconsumesmorethanone-thirdofthetotalcoalsupplyinNepal(ICIMOD,2019a),andthisindustryaccountsfor27%ofthetotalnationalCO2emissionsfromcoalconsumption(Sadavarteetal.,2019).SeveralcitiesinNepalaresufferingfromlocalairpollutionasthepollutionlevelsaremanytimeshigherthanstandardssetbytheWorldHealthOrganization(WHO).ThecapitalcityKathmanduwastheworld’smostpollutedcitywithitsAirQualityIndex(AQI)265at11:06amonApril10,2024.Thefineparticulatematterpollution(PM2.5)levelwas34timestheWHO’sannualairqualityguidelinevalueatthattime.4BrickkilnsareoneofthesourcesofPM2.5emissionsinthecity.The2023averagePM2.5concentrationinNepalwas8.5timestheWHOannualairqualityguidelinevalue.5

Nepalisexperiencingrapidurbanizationandpost-earthquakereconstructionofbuildingswithrisingdemandforbricks.Forexample,betweenthelasttwocensusyears(2011and2021),thenumberofhousingunitsbuiltwithbrickwallsincreasedby21%(CBS,2014;NSO,2023).Ifthecurrentpracticeofbrickmanufacturingcontinues,CO2emissionsfromthebrickindustrywillincrease,therebychallengingNepal’sabilitytomeetitsnationallydeterminedcontribution(NDC)by20306andnet-zeroemissiontargetby2045.Moreover,localairpollutionfromthebrickindustry,particularlyPM2.5,causesmajorhealthproblems.ItisestimatedthatambientPM2.5caused11,619deathsin2015,andaroundone-fifthofthetotalPM2.5inthecountryisemittedfrombrickkilns(WorldBank,2019).

3WhatarethemainsourcesofCO2emissionsinNepal?

/countries/nepal/emissions#what-are-the-main

-sources-of-co2-emissions-in-nepal

4“Kathmanduworld’smostpollutedcity,again”.KathmanduPost,April10,2024.

/climate-environment/2024/04/10/kathmandu-world-s-most-polluted-city-again

.5

/nepal

.

6NepalhasnotspecifiedanemissionreductiontargetundertheNDC,insteadithasspecifiedactivitiestobeundertaken.Theseinclude:(i)expandingcleanpower(mainlyhydro)capacityfromcurrent3,000MWto15,000MW;(ii)90%ofallpassengervehiclessoldtobeelectric;(iii)25%ofhouseholdstoswitchtoelectriccooking;and(iv)maintainingcurrent45%ofthetotalareaofthecountrycoveredbyforest(MOFE,2021).

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Intheabsenceofalternativefuels,coaluseforfiringclaybrickshasbeencontinuouslyincreasinginthecountry.Forexample,between2010and2022,coalimportsincreasedbymorethanfourfold,from244milliontonsin2009to1,248milliontonsin2022(NTIP,2023).7MostcoalisimportedfromIndia,Indonesia,theUnitedStates,SouthAfrica,andAustralia,andaverysmallquantityoflow-gradeligniteisdomesticallyproduced.Coalaccountedforabout7%ofthetotalfossil-fuelimportsinNepalin2018(CBS,2022b).

TheGovernmentofNepalhasenactedseveralpoliciestoreduceenvironmentalandsocialdamagefromthebrickindustry.Thekeypoliciesspecifictothebrickindustryincludei)thebanontraditionalBullTrenchkilnswithmodernkilns,suchaszig-zag,verticalshaftbrick,tunnel,andHoffmankilns,in2009,andii)thepromotionofrelativelyenergy-efficientverticalshaftbrickkilnsin2010(SMSEE,2017).Thegovernmenthasalsoupgradedstandardsonemissionsandstackheightfordifferentkilntypesin2018frompreviouslypromulgatedstandardsin2008(MOFE,2018).Inresponsetogovernmentregulations,brickkilnsincreasinglyadoptedazig-zagtechnologysystem.Thezig-zagtechnologyreducedtheemissionsofsuspendedparticulatematters(SPMs)from700mg/Nm3(government-allowedrate)to113mg/Nm3.8Likewise,thegovernment’sbrickindustry-specificdirectives/guidelinesrelatedtooccupationalsafetyandhealth(OSH)forworkersin2017includei)notmorethan8hoursofdailyworkwithhalfanhourofrestafter5hoursofcontinuouswork,ii)relativelyshorterworkdurationforworkersinvolvedinthefurnaceandbrickfiringarea,andiii)prioritizationofdustcontrolandtheregulationofnoiseinthebrickindustry(ILOandMOLESS,2022).

Despitethegovernment’seffortstoreducetheenvironmentalandhealthexternalitiesofthebrickindustry,theshifttowardmodernandclimate-friendlybrickproductionhasbeenslowinNepal.Forexample,theverticalshaftbrickkiln(VSBK)9representslessthan2%ofallkilnsandtheremaining1%ofallkilnsareHoffmankiln(HK)andTunnelKiln(TK)(ICIMOD,2019a).Thelimitedresponseofthebrickindustrytowardsgovernmentregulationsindicatesthatsome

7Importedcoalismainlyusedbythebrickandcementindustries,buttheshareofcoalusedbytheseindustriesinNepalisnotwelldocumentedbecauseindustrieshavetheoptiontoimportcoaldirectlyfromothercountries(WECS,2023).

8“Brickkilnsadoptingzig-zagtechnology”.TheHimalayan.Dec31,2016.

/business/brick-kilns

-adopting-zig-zag-technology

9Despiteaneffortfromthegovernmentandinternationalagencies(e.g.,SwissAgencyforDevelopmentandCooperation,SwissResourceCenterandConsultanciesforDevelopment,St.Gallen,Switzerland,andDevelopmentAlternatives,India)intransferringandhelpingtoestablishVSBKtechnologytoclay-firedbrickentrepreneursintheearly2010s,itsuptakehasbeenlow.AstudybyEiletal.(2020)reportedabout38VSBKsinNepal,including3inKathmanduValley,ofwhichonly1isinoperationasof2016.ThestudyfindsinferiorqualityofbricksproducedandhigherinitialinvestmentrequirementscomparedtootherbrickkilnsarethemainreasonsforthelowuptakeoftheVSBKs.

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otherpolicymeasures,suchaspricingandfiscalmeasures,wouldbenecessarytoreduceCO2andlocalairpollutantsfromthebrickindustry.However,beforethegovernmentconsiderspricingpolicies,itisnecessarytounderstandthetechnicalaswellaseconomicfeasibilityofthosepolicies.NorigorousandquantitativeanalysesareavailableforNepalinthisarea.Thisstudyaimstocontributetofillingtheknowledgegaps.

Themainobjectiveofthisstudyistoexaminetheeconomicsofvarioustechnologiesandfuelsforclay-firedbrickproduction,suchastheadoptionorretrofitofenergy-efficienttechnologies,applicationofcleanerrenewable(zerocarbon)biomassfuels(e.g.,sustainablefuelwood,woodpellets/chips,sawdust,andbagasse),andelectrictechnology.Thisstudyalsoexaminestheeconomicsofresource-efficientbricks10(e.g.,CompressedStabilizedEarthBlocks(CSEB)andHollowConcreteBlock(HCB))andmodificationofbrick-basedbuildingswithothersustainablealternatives(e.g.,wood-framestructureswithplywoodforroof,wall,andfloorbuildings)inreducingharmfulairpollutionbyreducingdemandforclay-firedbricksinthefuture.Thestudyconductedeconomicanalysisfrombothprivateandsocialperspectivesbasedonatechno-economicanalysisframeworkforthebrickindustry.Thestudyalsoutilizestheinformationcollectedthrougharapidfield-visitsurvey,physicalobservationsof22brickkilnsselectedacrossthecountry,andconsultationwithbrickindustryexpertsinNepal(TimilsinaandMalla,2023).

Thepaperisorganizedasfollows.Section2brieflyintroducesNepal’sbrickindustry,followedbymethodologicaldevelopmentinSection3.DatacollectionthroughasurveyisbrieflydiscussedinSection4.ThemainresultsalongwithsensitivityanalysesarepresentedinSection5.Section6presentspolicyimplications/recommendations.Section7concludesthepaper.

2.OverviewofNepal’sBrickIndustry

In2018,therewereabout1,349operatingbrickkilnsinNepal,11andtheyproducedanestimated

5.14billionbricks,andthebrickindustrycontributed4%totheGDP,andemployednearly

10Resource-efficientbrickshererefertobricksproducedusingsand,stonedust,cement,andsoilmixedindifferentproportionsandthatdonotgothroughthefiringprocess.Sincetheyareuncooked,theirlifetimeisshorter(20-30years)ascomparedtothefiredbrickswhichlasthundredsofyears.

11ThebricksectorinNepalisapoorlyregulatedandunorganizedsector,andinformalinnature.Thebricksectorstatistics,suchasthenumberofregisteredbrickkilns,theirproductionvolumeandkilntechnologytypes,thenumberofpeopleinvolved,andthequantityofenergyconsumptionandtypes,areingeneralnotwelldocumented.Thetaskofcapturingthesedataischallenging.Forinstance,thereisawidevariationinnumberofbrickkilns(registeredorinoperation)andvolumeofbrickproductionstatisticsinNepal.Forexample,ILOetal.(2020)reported966kilnsproducing3.04billionbricksin2018,ICIMOD(2019a)reported1,349kilnsproducing5.14billionbricksin2018,FNCCI(2017)estimated1,100kilnsinoperationin2012withaproduction

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246,000people(CBS,2022a;ICIMOD,2019a).AbriefsnapshotofNepal’sbrickindustryissummarizedinTable1.

Table1:SnapshotofNepal’sbrickindustry

Parameter

Year

Value

DataSource

Numberofbrickkilns

2018

1,349

(ICIMOD,2019a)

Distributionofkilnsbyprovincea

2018

P1(8.8%),P2(30.2%),P3(21.2%),P4(6.4%),P5(23.4%)andP7(9.8%)

(ILOetal.,2020)

Annualproduction

2018

5.14billion

(ICIMOD,2019a)

Valueofannualoutputb

2020

NRs14billion

(CBS,2022a)

ContributiontoGDP

2020

4%

(CBS,2022a)

Coalconsumption

2018

504,750tons

(ICIMOD,2019a)

CO2emissions

2016

2.2milliontons

(Eiletal.,2020)

Totalindustryemploymentc

2018

186,150

(ILOetal.,2020)

Brickpriceindex(2015=100)

2021

127

(CBS,2022b)

AAGRdoftheconstructionindustry

2013-22

6.3%

(CBS,2022b)

Notes:aP1isKoshi,P2isMadesh,P3isBagmati,P4isGandaki,P5isLumbiniandP7isSudurpachimprovinces.Karnali

provincereportedonly2kilnsintheoperation.bBasedonthesumofthreenationalclassificationsofindustrialcodes(NSIC),

i.e.,2391,2392,and2393.cOutoftotalemployment,95%aremanualworkersand5%areadministrativeworkers.Abouthalfof

themanualworkersareofIndianorigin.Thetotalbrickindustryemploymentrepresentsabout17%ofthecountry’stotalmanufacturingindustryworkforce.dAAGRistheaverageannualgrowthrate.

ThebasictypesofbrickkilnsforfiringclaybricksinNepalaretheclampkiln(CK),fixedchimneybull’strenchkiln(FCBTK),improvedzigzagkiln(ZZK),verticalshaftbrickkiln(VSBK),Hoffmankiln(HK),andtunnelkiln(TK).Thesekilnscanbeclassifiedastraditionalormodernkilns.12However,traditionalkilnsdominateallkilns,representingabout76%ofallkilns(ICIMOD,2019a).Amongthesetypesofbrickkilns,theCKandFCBTKaretheleastenergyefficientandmostpollutingwhiletheTKisthemostenergyefficientandleastpolluting.ItispossiblethatFCBTKscanbeupgradedtoimprovedZZKsbecauseofthesimilarityintheirtechnicaldesigns.However,veryfewFCBTKareconvertedtoZZKkilnsduetoalackofskilled

capacityrangingfrom15,000to50,000bricksperday,Eiletal.(2020)reported1,595kilnsproducing4.9billionbricksin2016,andDOI(2022)reportedtotalnumberofregisteredkilnssince1993as1,577attheendof2018andCBS(2022a)reported1,008registeredbrickkilnsin2018buttheirinformationonhowmanyofthemareinoperationisnotavailable.Manyfactorscontributetothesewidevariationsinthenumberofkilns,suchastheoperationofseveralnon-registeredbrickkilnsaroundthecountry,andpoorgovernmentdocumentation.

12Thereareseveralclassificationsofclay-firedbrickkilns,e.g.,intermittent,andcontinuouskilnsbasedontheproductionprocess,up-draught,down-draft,andcross-draftkilnsbasedonairflow,andnaturalandinducedorforceddraftkilnsbasedonthemethodofproductionKumarandMaithel(2016).Weclassifybrickkilnsaseithertraditionalormodernbasedonthecombinationofkilntechnologydifferentiatedbytheirspecificenergyconsumption(SEC),i.e.,theenergyrequiredinMJtoproduce1kgofclay-firedbrick,thequalityofbrickproduced,brickquality,laborproductivity,andemissions.Inthisstudy,sixbrickkilnsareconsideredthatareoperatedinNepal.Twoofthesesixkilns(CKandFCBTK)areconsideredastraditionalkilnsandtheremainingfour(ZZK,VSBK,HKandTK)areconsideredasmodernkilns.NotethatmodernkilnshavebetterSEC(fuelefficiency)andloweremissions,betterbrickqualityandhigherlaborproductivitythanthetraditionalkilns.SimilarterminologiesareusedbyEiletal.(2020).WeconsiderZZK,whichisanimprovedandretrofittedversionofFCBTK,asmodern,becauseitcanpotentiallyachievegreaterfuelefficiencyduetooptimizedairflowandreducedheatloss(Maitheletal.,2013;Tibrewaletal.,2023).

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workersfortheconstructionandoperationofZZKs,andthelimitedaccesstofinancingtheinvestmentrequirementforbrickkilnowners.

Thealternativebricksdefinedearlierhavetwotypes:fly-ashbricksandsolidorhollowblocks)(Rawaletal.,2020).Thefly-ashbricksaremadeinmechanizedplantswhereapan-mixerisusedtomixfly-ash(aby-productofcoalcombustion)withsand,stonedust,lime,andcementtopreparetherequiredblendofthemixture.Similartofly-ashbricks,thesolidorhollowblocksusedinbuildingconstructionaremadeinsemi-mechanizedormechanizedplantsbymixingtherequiredblendofrawmaterials,e.g.,solidorhollowconcreteblock(mixtureofcement,sand,andfinegravel),autoclavedaeratedconcrete(mixtureofsand,gypsum,lime,cement,andaluminumpower),andcompressedstabilizedearthblock(mixtureofsoil,sand,finegravelandcement).Themaindifferencebetweenthesealternativebricksisthecompositionofdifferenttypesofrawmaterials.Themainadvantagesofthesealternativebricksarebetterchemicalcompositionandareductionintheenvironmentalfootprint(Vasi?etal.,2021).ThesealternativebricksaregainingpopularityinNepalduetorecentclimate-relatedpolicies,however,theircurrentactualproductionandshareinthecountry’stotalbricksproductionarerelativelysmallandlimitedtourbanareas.

3.MethodologyfortheEconomicAnalysis

Forthisstudy,atechno-economicassessmentthatmakesadistinctionbetweentheprivateandsocialcostsofbrickproductionisdeveloped.Thetechno-economicassessmentprimarilyfocusesontheproductionphase,reflectingtheperspectiveofaproducer,andanalyzesthetechnicalandeconomicviabilityofswitchingtocleanerfuelsfromexistingcoalinbrickproduction.

Therearethreeprimarysystemelements(preparation,mechanization,andbaking)thatarenecessarytomaketheclay-firedbrick.Process1(preparation)makesuseofmachine,electricity,diesel,animal,andhumanlabor,process2(mechanization)makesuseofmachine,electricity,andhumanlabor,andprocess3(bakingorfiringtechnology)makesuseoffossilandbiomassfuels.Allthreeprocessesoperateinaflowprocessovertheyearexceptforplanneddowntime(Figure1).Thecostsassociatedwithonlyactivitiesthattakeplacewithinthebrickkilnareasareconsidered.Otheractivitiesandcostsoutsidethekilnareas,suchastransportationofrawmaterials

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orfinalproductcosts,areexcluded.Forinstance,inFigure1,thecostestimationinthisstudyisassociatedwithonlymechanizationandbakingtechnology.

Mechanization

Animal,diesel,electricity

Electricity

Rawmaterial1

Coal,lignite,sawdust,

firewood,rickehusk,

bagasse,briquette,LPG

Claymining/Preparation

Molding/Drying

Finalproduct

Rawmaterial2

Water

Rawmaterial3

Clay

Baking/Firing

BakingTechnology

Preparation

Figure1:Thebrick-makingprocesses

Economicanalysesareconductedfrommultipleperspectives.First,thecurrentproductioncostsarecomparedbytechnologiesandbyprovincesfromaprivate(financial)perspective.Thisisfollowedbythecomparisonofcostsfromasocialperspective.Fromtheprivateperspective,theproductioncostsincludecapitalexpenditures(e.g.,costsofakiln,landrental,andregulatoryandcomplianceequipmentcosts),energycosts(e.g.,coal,biomass,andelectricity),laborcosts,andthecostofmaterials(e.g.,clay,water,andadditives).Thesocialproductioncostsincludeenvironmentalandhealthdamagecostsassociatedwithbrickproductioninadditiontotheprivatecosts.Thestudyalsoincludestheeconomicsofthesubstitutionofcoalwithadvancedbiomassfuelsforcommonlyusedbrickproductiontechnology(ZZK)andtheproductionofalternativebricks.Alltheseeconomicanalysesusetheinformationfromthetechno-economicassessmentandtherapidsurveyconducted.

First,weestimatedtheprivatecostofproducingclay-firedbricksinNepal.Theprivatecostofbrickproduction(cip,j(t))foreachprovince(i)andeachtechnologytype(j)inNepalincludesoperationalexpenditures(OpEx)andcapitalexpenditures(CapEx)foraparticularyear(t)(Equation1).

cj(t)=OPExi,j(t)+caPExi,j(t)(1)

Theoperationalexpenditures[OPExi,j(t)]representtheongoingmanufacturingcostsrequiredtoproduceabrick(Equation2).Itincludesdirectandindirectcosts.Thedirectcosts

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includetherawmaterials(e.g.,clay,water,andenergycosts)andlaborcosts,andtheindirectcostsincludeoperationandmaintenancecosts,andutilities.Theoperationalexpenditurecanalsobedividedintovariablecostsandfixedcosts.Variablecostsdependdirectlyontheamountofproductproduced(e.g.,rawmaterials)andfixedcostsdonotdirectlydependontheamountofproductproduced(e.g.,labor).Therearethreemaincomponentsofoperationalexpenditures(Equations2.1-2.3).

OpExi,j(t)=Ri(t)+Li(t)+O&Mi,j(t)(2)

wherek={w(water),c(clay),e(energy)}

Li(t)=Σi+Othersi(t)(2.2)

O&Mi,j(t)=ui,j(t)+Mi,j(t)(2.3)

Thefirstcomponentistherawmaterialscost[Ri,j(t)](Equation2.1).Therawmaterialsforbrickproductionincludewater,clay,anddifferentenergysources.Thecostsassociatedwithwaterandclayrawmaterialsthatareusedduringthemoldingprocessandthecostsassociatedwithenergysourcesthatareusedduringthebaking(firing)process.Thepricesandthequantityofrawmaterialsrequiredforbrickproductionareobtainedfromthesurveyandtechno-economicassessment.Thesecondcomponentisthelaborcost[Li(t)]whichhastwoparts(Equation2.2).Thedirectlaborcostisestimatedusingatechno-economicassessmentandthesurvey,suchastheaveragewageandtheweightofabrick,andawageindexthatvariesacrosstheprovinces(i).Theindirectlaborcosts(others)suchaspurchasingofofficesuppliesandadvertisements,areexcludedfromthestudy.Inthisstudy,weassumethelaborcostsareindependentofthetechnologyusedforbrickproduction.Thethirdcomponentistheoperationandmaintenancecosts[O&Mi,j(t)](Equation2.3).Thesecostsincludeutilities[ui,j(t)],suchaselectricityforlightingandbrickmoldingprocessbutnotforbrickfiring,andthemaintenancecostofthebrickkiln[Mi,j(t)].

Thecapitalexpenditures[capExi,j(t)]includethefixedcapitalinvestment(e.g.,landandchimneycost)andothercostitemssuchasinsuranceandcontingencies(Equation3).Weusea

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simplefinancialfunction(PMT)tocalculatethefuturecapitalexpenditurepaymentsforaloan,assumingconstantpaymentandaconstantcostofcapital.Thefixedcapitalinvestmentfortheland[capLi,j(t)]andchimney(technology)[capTi,j(t)]isestimatedusingthePMTfunctionandthetechnicalparameters(Equations3.1and3.2).InPMTestimation,PLandPTaretheperiodicpaymentamountsforlandandchimney,risthecostofcapital(interestrate),andnisthetotalnumberofpaymentsoverthelifetimeofthebrick-makingplant.Thetechnicalparametersincludetheweightofthebrick[wi,j(t)]andthetotalnumberofbrickproductionsineachyear[Ni,j(t)].However,inthisstudy,thepaymentincludesprincipalandinterestbutexcludestaxes,reservepayments,orfeessometimesassociatedwiththeloans.Thecostiscalculatedfortheentireplantover1yearwhenproducingthespecifiedannualproductionvolume,leadingtoanNRsperyearmetric.Thepercentagesofmanufacturingoverheadcosts(insurance)arealsocalculated[capIi,j(t)](Equation3.3).Itisestimatedusingtheannualinsurancepercentage[Iratei,j(t)]ofland(L)andtypesofequipment(q)suchaschimneysandothermachines,andthetechnicalparameters.

capExi,j(t)=capLi,j(t)+capTi,j(t)+capIi,j(t)(3)

capIi,j(3.3)

Second,aspartofthesensitivityanalysis,wealsoestimatedtheaveragecostofbrickproduction[cjp(t)]underdifferentcoalpricesandcarbontaxesforcommonlyusedbrick-makingtechnologiesatthenationallevel(Equations4and5).Theestimatedaveragecostofbrickproductionissimplythedifferencebetweenthecurrentcostofbrickproduction[cp(t)]andthechangesincostduetocoalprices[Δcjp(t)]andcarbontaxes[cTrate(t).cEj(t)],wherecTrateisthecarbontaxrateandt