ANNEX AQ MICRO-SCALE VALIDATION REPORT TEMPLATE

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1 ANNEX AQ MICRO-SCALE VALIDATION REPORT TEMPLATE CONTENTS A. Brief Project Description B. Objective Observers opinion C. Details about the site-visit 1. Team on site 2. Period of site-visit 3. People interviewed 4. Means for interviews D. Stakeholder Consultation Process 1. Evaluation of the Local Stakeholder Consultation Process 2. Evaluation of the Stakeholder Feedback Round 3. Evaluation of the Continuous input / grievance mechanism implemented E. Evaluation of the risks potentially associated with the project activity 1. Do no harm assessment 2. Evaluation of the proposed mitigation measures F. Evaluation of sustainable development related issues potentially associated with the project activity 1. Environmental issues 2. Social and economic issues G. Sustainable Development Eligibility criteria for inclusion of a VPA to the PoA

2 SECTION A. BRIEF PROJECT DESCRIPTION Please indicate the scheme applicable to the micro-scale activity: 1. Project activity is applying under the micro-scale scheme 2. Project activity is applying under the micro-programme scheme Title of the Activity or VPA: Balsas Renewable Energy Project Title of the PoA: Not applicable. Discuss the current status of the project activity and what will happen as per the project scenario. Briefly discuss the technology employed by the project activity. The project activity is the project of Balsas Ceramic, which is a red ceramic factory located in Balsas municipality, State of Maranhão, northeast of Brazil. Balsas Ceramic produces structural ceramic bricks destined mainly for the regional market in the municipalities of Balsas, Mangabeira, Fortaleza dos Nogueira and Alto Parnaiba. Before August, 2008 Balsas Ceramic production process encompassed one Tunnel 1 kiln which operated using exclusively native firewood (wood without sustainable forest management) from the Cerrado Biome as fuel. In the middle of August, 2008 the ceramic company started testing renewable biomass, such as rice husks 2, in the Tunnel kiln. By December, 2008 they finished the construction of two Round 3 kilns which also started to operate using exclusively native firewood up to March, The fuel switching, from non-renewable biomass (native firewood) to renewable biomass (rice husks) - in the Tunnel kiln and in the both Round kilns - occurred in March 21 st, It is important to state that, the fuel switching was not expected in absence of the project activity, once there were no the incentives from the carbon credits revenues to support the fuel switching. The Cerrado biome has the highest deforestation rate on Brazil and the common practice in the project region is the use of non-renewable native wood 5 1 Tunnel kiln has three sections: heating, burning and cooling, with the reutilization of heat among the sections. This kind of kiln is more efficient and modern, where the ceramic pieces are transported through a conveyor belt or special karts inside the kiln. 2 During the crediting period other types of renewable biomasses can also be used, such as: wood residues, biomass from forests and biomass from cropland and/or grasslands. 3 Round kilns are extremely economical and work well with any type of fuel. It is an easy kiln to operate and it considered the best kiln to cook and burn roof tiles. 4 According to the ceramic owner, the complete fuel switch has occured in 01/04/ BRASIL. Ministério do Meio Ambiente (MMA). Projeto de monitoramento do desmatamento nos biomas brasileiros por satélite (PMDBBS). Brasília, Disponível em: < Acesso em: 15 abr

3 As the project activity, besides the proponent has switched its fuel to renewable biomass the ceramic company has also acquired new equipments, including automatic feeders, to allow an efficient use of renewable biomass as fuel. The main goal of this project activity is to minimize the negative impacts of deforestation to obtain firewood, whose consumption also leads to GHG emissions that contribute to climate change. Moreover, in opposition to the identified baseline, the project activity will generate thermal energy exclusively from renewable sources, by using abundant renewable biomasses in the region. All these measures contribute to sustainable development by promoting renewable energy, mitigating atmospheric pollution and improving the quality of employment for the ceramic workers. SECTION B. OBJECTIVE OBSERVERS OPINION Please provide an opinion as to whether the project activity is in line with The Gold Standard principles and should be validated. (To be filled only in the event of the use of an Objective Observer) Not applicable. This requirement is only applicable for projects being validated internally by Gold Standard Secretariat. SECTION C. DETAILS ABOUT THE SITE-VISIT (To be filled only in the event of the use of an Objective Observer) i. Individual or team on site List Objective Observer(s) that went on site. Provide brief information about his/her (their) background and relevant skills. Not applicable. This requirement is only applicable for projects being validated internally by Gold Standard Secretariat. ii. Period of site-visit Time period during which Objective Observer(s) was (were) on-site. Not applicable. This requirement is only applicable for projects being validated internally by Gold Standard Secretariat.

4 iii. People interviewed Provide the list of the individuals interviewed during the site visit and include relevant information on the group or organisation they represent. Not applicable. This requirement is only applicable for projects being validated internally by Gold Standard Secretariat. iv. Means for interviews Describe the means used to interview individuals during site visit; e.g. one to one interactions, telephonic conversations, etc. Not applicable. This requirement is only applicable for projects being validated internally by Gold Standard Secretariat. SECTION D. STAKEHOLDER CONSULTATION PROCESS (To be filled only in the event of the use of an Objective Observer) D. 1. Evaluation of the Local Stakeholder Consultation Process Please discuss whether attendance was representative enough (both qualitatively and quantitatively), whether the comments raised have been answered and addressed appropriately, and summarise what the main outcomes were. Not applicable. This requirement is only applicable for projects being validated internally by Gold Standard Secretariat. D. 2. Evaluation of the Stakeholder Feedback Round Please discuss the comments raised or assess if any open issues raised by the stakeholders during the LSC have been addressed. Not applicable. This requirement is only applicable for projects being validated internally by Gold Standard Secretariat

5 D. 3. Evaluation of the Continuous input / grievance mechanism implemented Please evaluate whether the approved/selected methods of Continuous Input/Grievance Mechanism from the LSC report / other consultations have been implemented on site. For retroactive projects check that appropriate means were used by the PP to reach out to relevant stakeholders and seek their feedback on the Continuous Input / Grievance Expression methods as there was no LSC conducted for retroactive projects. Not applicable. This requirement is only applicable for projects being validated internally by Gold Standard Secretariat SECTION E. EVALUATION OF THE RISKS ASSOCIATED WITH THE PROJECT ACTIVITY i. Do no harm assessment [See GS Annex H for guidelines on safeguarding principles] Safeguarding principles associated with a medium to high risk Assessment of project risks breaching it (low/medium, high) Mitigation or compensation measure proposed by project proponents after discussion with Objective Observer(s) HUMAM RIGHTS 1. The project respects Low. The project is not expected to result in None internationally proclaimed Human right abuses. Brazil ratified several human rights including treaties and conventions on human rights, dignity, cultural property including the American Convention on Human and uniqueness of Rights (also known as the Pact of San José) 6. indigenous people. The project is not complicit in Human right abuses 2. The project does not Low. The project does not involve any kind of None involve and is not complicit in involuntary resettlement resettlement or relocation. 3. The project does not Low. The project has no impact on cultural None 6 More information on: < 32_American_Convention_on_Human_Rights_sign.htm>.

6 Safeguarding principles associated with a medium to high risk involve and is not complicit in the alteration, damage or removal of any critical cultural heritage. Assessment of project risks breaching it heritage. (low/medium, high) Mitigation or compensation measure proposed by project proponents after discussion with Objective Observer(s) 4. The project respects the employees freedom of association and their right to collective bargaining and is not complicit in restrictions of these freedoms and rights. LABOUR STANDARDS Low. The project will not affect the employees freedom of Association. The Brazillian Government has ratified 5 conventions of the International Labour Organization on Freedom of Association, Collective Bargaining, and Industrial Relations 7. These include Conventions C098 (Right to Organize and Collective Bargaining Convention), C135 (Workers Representatives Convention), C141 (Rural Workers Organizations Convention), C151 (Labour Relations (Public Service) Convention) and C154 (Collective Bargaining Convention). Such conventions aim to provide workers with important rights and benefits, such as protection against acts of anti-union discrimination in respect of their employment, effective protection against any act prejudicial to workers based on their status or activities as a workers' representative or on union membership or participation in union activities, ensure rural workers and public employees the principles of freedom of association, amongst others. None 7 More information on: <

7 Safeguarding principles associated with a medium to high risk 5. The project does not involve and is not complicit in any form of forced or compulsory labour 6. The project does not employ and is not complicit in any form of child labour. Assessment of project risks breaching it (low/medium, high) These principles are respected by the project proponents. Low. The project will not involve any form of forced or compulsory labour. Brazil has ratified ILO Conventions C29 (Forced Labour Convention) and C105 (Abolition of Forced Labour Convention) 8. These conventions determine that each Member which ratifies it undertakes to take effective measures to secure the immediate and complete abolition of forced or compulsory labour: (a) as a means of political coercion or education or as a punishment for holding or expressing political views or views ideologically opposed to the established political, social or economic system; (b) as a method of mobilizing and using labour for purposes of economic development; (c) as a means of labour discipline; (d) as a punishment for having participated in strikes; (e) as a means of racial, social, national or religious discrimination. Low. The project will not involve any form of child labour. Brazil has ratified ILO Conventions C138 (Minimun Age Convention) and C182 (Worst Forms of Child Labour Convention) 9. Convention C138 determines that each Member for which this Convention Mitigation or compensation measure proposed by project proponents after discussion with Objective Observer(s) None None 8 More information on: < 9 More information on: <

8 Safeguarding principles associated with a medium to high risk 7. The project does not involve and is not complicit in any form of discrimination based on gender, race, religion, sexual orientation or any other basis Assessment of project risks breaching it (low/medium, high) is in force undertakes to pursue a national policy designed to ensure the effective abolition of child labour and to raise progressively the minimum age for admission to employment or work to a level consistent with the fullest physical and mental development of young persons. Convention C182 determines that Each Member which ratifies this Convention shall take immediate and effective measures to secure the prohibition and elimination of the worst forms of child labour as a matter of urgency. Worst forms of child labour include: all forms of slavery or practices similar to slavery, the use, procuring or offering of a child for prostitution, for the production of pornography or for pornographic performances, the use, procuring or offering of a child for illicit activities, in particular for the production and trafficking of drugs, work which, by its nature or the circumstances in which it is carried out, is likely to harm the health, safety or morals of children. No child labor is involved in any phase of this project activity, nor in the collection of biomass used by the project proponents. Low. The project will not result in any form of discrimination. Brazil has ratified international conventions on discrimination, such as the ILO C100 Convention (Equal Remuneration Convention) and ILO C111 (Discrimination (Employment and Occupation) Mitigation or compensation measure proposed by project proponents after discussion with Objective Observer(s) None

9 Safeguarding principles associated with a medium to high risk 8. The project provides workers with a safe and healthy work environment and is not complicit in exposing workers to unsafe or unhealthy work environment Assessment of project risks breaching it (low/medium, high) Convention) 10. Convention C100 determines that each Member shall, promote, ensure the application to all workers of the principle of equal remuneration for men and women workers for work of equal value. Convention C111 determines that each Member for which this Convention is in force undertakes to declare and pursue a national policy designed to promote, equality of opportunity and treatment in respect of employment and occupation, with a view to eliminating any discrimination in respect thereof. Medium. The project might expose workers to the risk of accidents and other safety related concerns if due caution is not taken or if IPE is used inadequately. The ceramic employees use IPE correctly, once is required by the current legislation. Mitigation or compensation measure proposed by project proponents after discussion with Objective Observer(s) Health and safety regulations are complied with. The project is expected to have a positive effect on the working conditions. However, the use of biomass residues as rice husk might expose workers to airborne particulate matter. As a mitigation measure, the project will improve the control under the Individual 10 More information at: < >.

10 Safeguarding principles associated with a medium to high risk 9. The project takes a precautionary approach in regard to environmental challenges and is not complicit in practices contrary to the precautionary principle 10. The project does not involve and is not complicit in significant conversion or degradation of critical natural habitats, including those that are (a) legally protected, (b) officially proposed for protection, (c) identified by authoritative sources for their big conservation value, or (d) recognized as protected by traditional local communities. 11. The project does not involve and is not complicit to corruption Assessment of project risks breaching it (low/medium, high) ENVIRONMENTAL PROTECTION Low. Sustainable Carbon has significant experience with the project measures. It has helped over 50 ceramic factories in Brazil to apply renewable biomass as fuel. Hence, the company has a lot of experience with technology/measures applied by the project. Low. The project will predominantly use abundant biomass residues as fuels. Hence, the impact on environmentally protected areas is not expected. ANTI-CORRUPTION Low. The project does not involve corruption. Brazil has ratified the United Nations Convention against Corruption 11. Mitigation or compensation measure proposed by project proponents after discussion with Objective Observer(s) Protection Equipment (IPE) use in Balsas ceramic. None The project will monitor the origin of biomass used to assure they are renewable and do not result in environmental degradation. None 11 More information at: <

11 ii. Evaluation of mitigation or compensation measures proposed by project proponents Mitigation measure Monitor the origin of biomass Comments The project will monitor the origin of biomass used to assure they are renewable and do not result in environmental degradation. SECTION F. EVALUATION OF SUSTAINABLE DEVELOPMENT RELATED ISSUES POTENTIALLY ASSOCIATED WITH THE PROJECT ACTIVITY [See GS Annex I] i. Environmental issues Does the implementation of the project activity contribute to any negative environmental impacts, (e.g. on air quality, water quality and/or quantity, soil condition, biodiversity or any other pollutant) compared with the baseline situation (i.e. current situation or most likely situation in the absence of the project activity)? Air quality The project is not expected to generate negative impacts on air quality. The project activity aims to improve operational procedures related to fuel usage. In the baseline scenario, Balsas ceramic used native firewood as fuel and a little control existed on the kilns feeding, leaving the possibility of high atmospheric pollution due to irregular burning (i.e. excessive feeding of the kilns and burning of wet firewood). In addition, the project activity will provide a more efficient burning of fuels, as automatic feeders tend to maximize the use of fuels and avoid excess of smoke due to irregular burning. Impacts on air quality due to the transportation of biomass are also not expected, since similar means of transportation (mainly trucks) were used in the baseline for the transportation of non-renewable biomass. The project will also improve the monitoring procedures on atmospheric emissions, by applying the following indicator from Social Carbon Standard 12 : Social Carbon indicators for Ceramic Industry 13 : Emissions to the atmosphere - Evaluates the control over the atmospheric emissions involving the gases emitted during the productive process, except the greenhouse gases. This indicator is used to guaranty that appropriated measures is taken regarding the atmospheric emissions in over 40 ceramic factories in Brazil, through a more practical method based on participatory interviews and meetings 12 The SOCIALCARBON Standard is a certification adept at bringing demonstrable social, environmental and economic benefits to the stakeholders of carbon offset projects. More information at: < >. 13 Available at: < >. Last visit on 14/01/2011.

12 with stakeholders. The project situation will be analyzed on each monitoring period by the Sustainable Carbon team. This indicator is scored from 1 to 6, where 1 represents a critical situation and 6 represents a sustainable scenario. For the Emissions to the atmosphere indicator, the following scenarios are defined: 1. There is not monitoring of the emissions. There are not actions to control and reduce the emission. 2. There is monitoring, but the entrepreneur can t guarantee that it is in conformity with the legislations, norms and applies requisites. There are not actions to control and reduce the emission. 3. There is not monitoring of the emissions. There are actions to control and reduce the emission with evident results, even though not measurable. 4. There is monitoring, but the entrepreneur can t guarantee that it is in conformity with the legislations, norms and applies requisites. There are actions to control and reduce the emission with evident results and/or measurable. 5. There is monitoring and the entrepreneur can guarantee that it is in conformity with the legislations, norms and applies requisites. There are actions to control and reduce the emission with evident results. 6. There is monitoring and the entrepreneur can guarantee that it is in conformity with the legislations, norms and applies requisites. There are actions to control and reduce the emission with measurable results. Therefore, the project proponent will rely in site visits and interviews to determine the level of control over the atmospheric emissions. The aim of the project is to assure air pollution is avoided. Emissions to the atmosphere will also be monitored on a frequent basis with the use of Ringelmann smoke charts. Impacts on air quality due to the transportation of biomass are not expected, since similar means of transportation (mainly trucks) were used in the baseline for the transportation of non-renewable biomass. Water quality and/or quantity The fuel switching project is not expected to result in impacts in water quality and quantity. Although water is used in the brick production process during the molding phase, the project only involves modifications in the burning phase, where impacts on water are unlikely to occur. The use of water shall remain similar to the baseline situation, where major impacts on water quality and quantity are not observed. Soil condition The project might result in environmental pollution in case appropriate procedures to manage and dispose ashes are not followed. During the project operation, ashes result from the burning of biomass. In the baseline situation, Balsas ceramic tries to minimize the environmental impact of the ashes incorporating it into the clay mass. However, proper procedures are not always observed and

13 the potential for environmental impacts exists. With the project activity, new kinds of fuels will be used (renewable biomasses such as biomass residues) and the generation of ashes might increase. Therefore, the project proponent will monitor the procedures to control and dispose ashes on Balsas ceramic. The project will apply the following indicator from Social Carbon Standard 14 : Social Carbon indicators for Ceramic Industry 15 : Ashes - Evaluates the procedures adopted by the entrepreneur in order to control the ashes and its destination. This indicator is used to guaranty that appropriated measures is taken to regarding the displacement of ashes in over 40 ceramic industries in Brazil, through a more practical method based on participatory interviews and meetings with stakeholders. The project situation is analyzed on a periodical basis and is scored from 1 to 6, where 1 represents a critical situation and 6 represents a sustainable scenario. For the Ashes indicator, the following scenarios are defined: 1. Ashes deriving from the biomass burning in the kilns are discarded without any environmental control. 2. Part of the ashes is designed in an inadequate way and the other part is reused/donates without specific control. 3. Ashes are totally reused or donated, but without specific control. 4. Ashes are totally reused or donated, with control of the quantity and destination of the material. 5. In addition to the last item, part of them is commercialized. 6. The company presented management system that includes procedures to store, to monitor, to reduce the generation, and others. Therefore, the project proponent will rely in site visits and interviews to determine the level of control over the handling and disposal of ashes. In addition, the ceramic manager will regularly monitor the production and destination of ashes. More information is described in F.iii of this document. The aim of the project is to assure environmental impacts are avoided and a sustainable use and disposal of ashes is obtained. Biodiversity The fuel switching project is not expected to result in negative impacts on biodiversity, since it will likely result in the reduction of deforestation of the Cerrado biome by providing alternative fuels. However, the actual effects on biodiversity and on the conservation of the Cerrado biome depend on several factors outside the project boundaries. Furthermore, the project will use, preferably, locally abundant biomass residues as fuel. Hence, as a conservative measure, a neutral impact on 14 The SOCIALCARBON Standard is a certification adept at bringing demonstrable social, environmental and economic benefits to the stakeholders of carbon offset projects. More information at: < >. 15 Available at: < nglish.pdf >. Last visit on 14/01/2011.

14 biodiversity is considered. The project is not expected to result in land use change nor in pressure on ecosystems or existing biomass chains. Other pollutants The fuel switching project is not expected to result in increase or decrease of other pollutants. Brazilian legislation does not establish emission standards to ceramic industries, which indicates that these impacts are not expected to occur. Impacts on other pollutants due to the transportation of biomass are not expected, since similar means of transportation (mainly trucks) were used in the baseline for the transportation of non-renewable biomass. ii. Social and economic issues Does the implementation of the project lead to any negative social and economic impacts e.g. was there any deterioration of livelihoods, or reduction in the quality and quantity of employment, compared with the baseline situation (i.e. current situation or most likely situation in the absence of the project activity)? Quality and quantity of employment The fuel switching project is not expected to significantly affect the quality and quantity of employment. The project includes a certain level of automation in the logistics and fuel usage, improving the working conditions of employees responsible for feeding the kilns with bricks and fuels. However, following the automation, employees dismissal has occurred. The ceramic owner has minimized such negative impact by reallocating employees to other areas as much as possible. The employees were reallocated, mainly, to activities related to the burning of rice husk, such as logistics, and cleaning/maintenance of kilns and furnaces. With the project activity, new kinds of fuels will be used (renewable biomasses such as biomass residues) and the generation of ashes might increase. In the case of utilizing rice husk as a renewable biomass, the workers who load and feed the kilns are exposed to airborne particulate matter, which irritates eyes and lungs. Therefore, the use of IPE is required by the current legislation. Livelihood of poor The project is not expected to affect the living conditions of the poor. iii. Sustainability Monitoring Plan [See Toolkit section and Annex I] No 01 Indicator Air quality

15 Mitigation measure Chosen parameter Current situation of parameter Estimation of baseline situation of parameter Future target for parameter None. Emissions to the atmosphere The project developers are preparing procedures to control and monitor atmospheric emissions. In the baseline situation, the ceramic factory lack specific procedures to control and monitor atmospheric emissions. A quantification of these emissions in the baseline is not possible, since information is not available. Increased control over atmospheric emissions, including regular monitoring. The project proponents will control atmospheric emissions by improving the use of fuels in the kilns. Automatic feeders avoid irregular feeding that result in excessive smoke. The ceramic owner will also monitor atmospheric emissions with the use of Ringelmann smoke charts as recommended by the environmental authority of Maranhão. The project will apply the following indicator from Social Carbon Standard 16 : Social Carbon indicators for Ceramic Industry 17 : Emissions to the atmosphere. The target is to obtain a higher score than the estimated for the baseline situation. The scoring system of the Social Carbon Standard is described in Section F.2. The project situation will be analyzed on each monitoring period by the Sustainable Carbon team. The scoring system of the Social Carbon Standard is described in Section F.i. Way of monitoring How Evaluations by applying Ringelmann smoke charts as recommended by SEMA (Environment Department and Natural Resources of Maranhão State), the environmental authority. Results shall be stored to assess the intensity of atmospheric emissions. When By who On an bi-weekly basis Ceramic factory employees. No 02 Indicator Quality of employment 16 The SOCIALCARBON Standard is a certification adept at bringing demonstrable social, environmental and economic benefits to the stakeholders of carbon offset projects. More information at: < 17 Available at: < >. Last visit on 14/01/2011.

16 Mitigation measure Chosen parameter Current situation of parameter Estimation of baseline situation of parameter Future target for parameter Monitoring the IPE use IPE use The current use of IPE is generally good and Balsas ceramic complies with local regulations in the subject. However, there is some resistance by part of the employees and the ceramic company does not maintain consistent monitoring of the IPEs use. No specific monitoring on the IPE use exists. The aim of the project is to reduce resistance and obtain higher usage rates of safety equipments by employees working with biomass and around the kilns. In the case of utilizing rice husk as a renewable biomass, as a mitigation measure, the ceramic will provide workers with protection against airborne particulates in the form of respiratory masks, eye goggles, and gloves. Way of monitoring How Site visits and interviews with employees and the Manager of Balsas ceramic. The ceramic manager shall use spreadsheets to control the use of safety equipments by employees. Employees shall provide their signatures on such spreadsheet each time they receive safety equipment. When By who Annually Project participants: Sustainable Carbon will help the ceramic owner monitoring the IPE usage rate through the use of spreadsheets. No 03 Indicator Mitigation measure Chosen parameter Current situation of parameter Estimation of baseline situation of parameter Soil condition Monitoring the procedures related to the control and disposal of ashes Procedures related to the control and disposal of ashes. Balsas ceramic minimize the environmental impacts of the ashes. Major incidents or impacts were not observed due to the disposal of ashes. In the baseline situation, the ceramic company tries to minimize the environmental impact of the ashes incorporating it into the clay mass. However, proper procedures are not always observed and the potential for environmental impacts exists.

17 Future target for parameter The aim of the project is to assure environmental impacts are avoided and a sustainable use and disposal of ashes is obtained. The project will apply the following indicator from Social Carbon Standard 18 : Social Carbon indicators for Ceramic Industry 19 : Ashes. The target is to obtain a higher score than the estimated for the baseline situation. The scoring system of the Social Carbon Standard is described in Section F.i. Way of monitoring How Ashes shall be quantified by using the number of wheelbarrows transported until the storage site and the number of buckets that is added to the clay mass by the trucks. Employees on the ceramic shall use spreadsheets to record the number of carts each time ashes are collected and transported to the storage site and the number of buckets added into the clay mass. Photographs shall be used as evidencing to its final destination. Interviews and meetings with stakeholders and ceramic personnel on Balsas ceramic shall also be applied to identify the relevant score under the Social Carbon indicator. When By who Ashes shall be quantified and have their destination monitored whenever they are collected and transported to the storage site and to the clay mass. The assessment on the relevant score of the Social Carbon indicator will be performed once every monitoring period. Project participants. Ceramic owner shall assign personnel to quantify and monitor the final destination of ashes. Sustainable Carbon will help the ceramic owner identify the corresponding scoring of the Project scenario, following the requirements of Social Carbon Standard. No 04 Indicator Mitigation measure Chosen parameter Access to affordable and clean energy services None. Total energy produced from renewable sources 18 The SOCIALCARBON Standard is a certification adept at bringing demonstrable social, environmental and economic benefits to the stakeholders of carbon offset projects. More information at: < 19 Available at: < nglish.pdf >. Last visit on 14/01/2011.

18 Current situation of parameter Estimation of baseline situation of parameter Future target for parameter Following the project measures, 100% of the energy used for the productive process of Balsas ceramic comes from renewable sources 20. In the baseline situation, Balsas ceramic used 100% of nonrenewable woody as fuel. The aim of the project is to allow the complete substitution of nonrenewable biomass with renewable biomasses. The target is to generate all the energy demand of the ceramic company from renewable sources. Way of monitoring How The amount of renewable biomass used by Balsas ceramic will be monitored during the crediting period (through purchase invoice, delivery notes or other documents concerning the acquisition of biomass). By using default values of energy content, the project proponents will be able to determine the amount of renewable energy produced during each year of the crediting period. When On a monthly basis. Data will be consolidated on an annual basis By who Project Participants. Staff from Balsas ceramic shall store information on biomass purchase and acquisition. Sustainable Carbon shall determine the amount of renewable energy generated during the crediting period. No 05 Indicator Mitigation measure Chosen parameter Current situation of parameter Estimation of baseline situation of parameter Future target for parameter Quantitative employment and income generation None. Voluntary Emission Reductions issued. The project has not issued Voluntary Emission Reductions (or other forms of carbon credits) so far. In the baseline scenario, Balsas ceramic had no incentive to reduce their GHG emissions and consequently did not invest in reducing their emissions. The project is expected to reduce 50,880 tco 2 e during the crediting period. However, the actual emission reductions will depend on the production and the related amount of renewable biomass used. Hence, a positive impact for this indicator is achieved in case the project is able to generate and issue carbon credits. 20 More information is available in the Project Design Document.

19 Way of monitoring How The issuance of Voluntary Emission Reductions (or similar assets from the carbon market) will be monitored. When Yearly By who Project Participants. Staff from Balsas ceramic shall store information regarding the project operation, including fuel usage and production output. Sustainable Carbon shall determine the emission reductions resulting from the project. No 06 Indicator Mitigation measure Chosen parameter Current situation of parameter Estimation of baseline situation of parameter Future target for parameter Quantitative employment and income generation None. Additional revenues for biomass suppliers Currently, ceramic owner controls the payments to each of their biomass suppliers. Only renewable biomass is used. In the baseline, revenues were being destined to individuals who explored the Cerrado biome to obtain firewood, which cause deforestation. Revenues were rather low, since this type of fuel was inexpensive The project is allowing Balsas ceramic to use exclusively renewable biomass as fuel. Since these types of fuels are more expensive than native firewood, it is likely that total revenues to biomass suppliers will increase. Furthermore, these revenues are now being destined to suppliers of renewable biomass, which do not cause deforestation. Way of monitoring How Total revenues will be monitored by storing purchase invoices, receipts of sale and other documents related to the biomass acquisition. Only documents issued from either government agencies or control documents that were provided or validated by the biomass suppliers will be considered as "other documents". Total revenues shall be compared to the baseline fuel cost for Balsas ceramic which was destined to native firewood suppliers. This parameter is defined ex-ante using data from 2008 (the most recent year prior to the project start date) 21. A conservative correction 21 The same data was used for the assessment of additionality. Hence, this approach provides consistency. Furthermore, it is not feasible to monitor the cost of non-renewable biomass ex-post, since this biomass is no longer used by the project.

20 factor of 15% will be applied annually, to account for general price increase due to inflation 22. When By who Once every monitoring period Project Participants. Staff from Balsas ceramic shall store information biomass acquisition and costs. Sustainable Carbon shall determine the additional revenues by comparing monitored values with figures estimated for the baseline situation. No 07 Indicator Mitigation measure Chosen parameter Current situation of parameter Estimation of baseline situation of parameter Future target for parameter Origin of renewable biomass Monitoring the origin of biomass Origin of renewable biomass Following the project measures, Balsas ceramic have begun utilizing renewable biomass as fuel. Currently, the ceramic company uses exclusively renewable biomass as fuel. In the baseline situation, Balsas ceramic used 100% of nonrenewable woody for thermal energy generation. The aim of the project is to allow the complete substitution of nonrenewable biomass with renewable biomasses. The target is to generate all the energy demand of Balsas ceramic from renewable sources. Way of monitoring How The origin of the renewable biomass will be assessed storing documents (receipts, invoices) from the biomasses providers, thus allowing determining its origin. In addition, documents issued from either government agencies or control documents that were provided or validated by the biomass suppliers will be considered. The biomasses shall be considered renewable as fulfilling definitions of renewable biomass approved by the CDM Executive Board 23. When By who Once every monitoring period Project Participants. Staff from Balsas ceramic shall store information regarding the biomass purchase and acquisition. Sustainable Carbon shall assess the source of biomass and confirm they comply with CDM EB definitions of renewable biomass. 22 No methodology was found to correct the price of non-renewable biomass in Brazil, since this is mostly an informal market. A 15% correction factor is considered conservative since it is above current inflation levels in Brazil. 23 EB 23, Annex 18 Definition of renewable biomass. Available at: <

21 No 08 Indicator Mitigation measure Chosen parameter Current situation of parameter Estimation of baseline situation of parameter Future target for parameter Competing uses of biomass Monitoring the origin of biomass. Biomass surplus Following the project measures, Balsas ceramic have begun utilizing renewable biomass as fuel. Currently, 100% of the energy used for the productive process of the ceramic company comes from renewable sources. In the baseline situation, Balsas ceramic used a 100% of nonrenewable woody biomass for thermal energy generation. Although it is not feasible to determine the amount of native firewood available, this type of fuel has been an important source of energy for the ceramic sector 24. The project aims to allow the complete switch from non-renewable biomass to renewable biomasses. The target is to generate all the energy demand of Balsas ceramic from renewable sources. Way of monitoring How Sustainable Carbon will assess the biomass surplus by using published literature, official reports or surveys. In case this information proves to be unavailable, Sustainable Carbon will hire third party experts on biomass to determine the existence of biomass surplus for each biomass type used by Balsas Ceramic in the project region. Such assessment will be made ex ante. During the monitoring period, Sustainable Carbon shall annually determine if the quantity of available biomass in the region (as determined ex ante), is at least 25% larger than the quantity of biomass that is utilized including the project activity. When By who Annually Project Participants. Staff from Balsas ceramic shall store information regarding the project operation, including biomass usage. Sustainable Carbon shall assess the biomass surplus and determine the occurrence of leakage. 24 Brazilian Energy Balance, Chapter 3. Available at:

22 SECTION G. Sustainable Development eligibility criteria for inclusion of a VPA to the PoA (This section is applicable for micro-programme scheme only) Not applicable. The project activity will not be applied under a micro-programme scheme.

23 CONFLICT OF INTEREST DECLARATION (To be filled only in the event of the use of an Objective Observer) I, [insert full name], aged [insert age] years, residing at [insert full home address], and working for [insert company name], which is located at [insert company headquarters address], having been selected to serve as an Objective Observer on behalf of The Gold Standard Foundation, hereby certify and declare as follows: Neither I nor anyone else having influence over me has an interest with any person or in any firm, corporation or other business entity that is involved in the assessed project activity GS nor have I participated, directly or indirectly, by committee or as a consultant, advisor, employee, officer, director, agent, trustee, or otherwise, in the development, implementation, or administration of GS. I further certify and declare that in no way do I have a bias in favor or against any person, firm, corporation or business entity involved with GS, and I understand that such bias would disqualify me as an Objective Observer. If at any time during the evaluation process I should become aware of any interest or bias, I will report it immediately to The Gold Standard Foundation. For purposes of this declaration, I understand interest to include any consideration or other thing of economic value, including future consideration. Name: Signed this day of Year