CONTRIBUTE TO THEIR EDUCATION WHILE NEUTRALIZING YOUR EMISSIONS. Guaraí, Itabira

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1 CONTRIBUTE TO THEIR EDUCATION WHILE NEUTRALIZING YOUR EMISSIONS socially-premium CO2e Reduction Project PROJECT Guaraí, Itabira & Santa Izabel

2 Guaraí, Itabira & Santa Izabel Ceramic Facility Fuel Switching Project This project will reduce 2 tons of CO 2 equivalents during a ten year period. SOCIALCARBON Standard Description of the Project This project is a bundling of three small ceramic manufacturing businesses: Guaraí, Itabira and Santa Izabel Ceramic Factories. Situated in the Itaboraí municipality, in the state of Rio de Janeiro, they produce structural ceramic products such bricks, to be sold in the regional market. Itaboraí is a region that is in need of environmental conservation because of the proximity of the Atlantic Forest, a Nature Conservancy hotspot due to its high degree of biodiversity. Only 7% of the original forest remains and only 2% is protected. The forests closest to these ceramics are located in the Serra do Barbosão, Serra de Tapuaba and Serra do Lagarto. The mangrove of Itambé, which is close to these facilities, is also important as they are breeding grounds for fish that feed the local community. The ceramics had used heavy oil as fuel for the kilns to produce its products, endangering the fragile ecosystems in the region. Understanding the impact that this had on the environment, the ceramics wanted to pursue a more sustainable form of production and replaced the heavy oil used in production to renewable biomass to generate thermal energy for the ceramic kilns. The renewable biomass now used is sawdust and wood residues from certified, sustainably-managed forests. It has been estimated that approximately 2 tons of CO 2 equivalents will be reduced during the ten year crediting period of the project. Renewable biomass Burns hotter and more efficiently than heavy oil, leading to better product quality and reduced greenhouse gas emissions Workers wearing personal safety equipment as they put recently-formed bricks on a cart to be taken to the drying area before being fired The SOCIALCARBON Standard monitors the improvements of a project over time, providing assurance and evidence of its contribution to sustainability. The SOCIALCARBON application consists of monitoring the project in six crucial areas of sustainability. On the following page, the SOCIALCARBON Hexagon graphically represents the sustainability baseline scenario (Point Zero, 28) and where the project is today (Point One, 2). Project Location Municipality of Itaboraí, state of Rio de Janeiro, Brazil. Technical Data This project applied the Small Scale Methodology: AMS- I.E: Switch from Non Renewable Biomass for Thermal Application by the User Version from February of 28, approved by the UNFCCC. It was validated and verified by TüVNORD, a DOE accredited by UNFCCC, in accordance with VCS 27. and SOCIALCARBON Standards. To ensure reliability and transparency, the issued credits are registered on the Markit SOCIALCARBON Registry. For further information, please visit: m/socialpublic.php.

3 Project Contribution to Sustainability Guaraí SOCIALCARBON Hexagon All three of these ceramic facilities have high levels of social inclusion, with a notable number of women and handicap persons employed Recovery of clay extraction areas, where the project proponents have replanted native trees and grasses, goes above and beyond Brazilian environmental compliance laws Excellent record-keeping of biomass used ensures that only certified, renewable biomass is being used in the ceramic facilities There are efficient machines used in the ceramics that improve the production process, including mechanical burners, automated dryers, energy efficient kilns, among others Resource,8, 2, 2,,7, Resource No tracking of the turnover rate, though probably high per industry norms Life insurance and food staple are provided as benefits Two women, two handicap persons are employed very socially inclusive Develop a plan to help increase the social return of the project 2 2, 2,9, Point Resource Acceptable sanitary conditions On-site training and professionalization courses are want Facility engages in Work Environment Risk Protection Program to ensure proper safety equipment is used and is at hand, an improvement since the last monitoring period The facility uses high to medium efficiency kilns; of the medium efficiency kilns, practices have been put in place to increase efficiency Heat from the kilns are reused to dry recentlyformed bricks On-site machine shop keeps equipment in peak condition Buy equipment that will automate the feeding process of the round kiln and contribute to better working conditions Resource The ceramic facility reuses the ash it produces in the cement mixture it uses for on-site purposes, like sealing the oven doors Testing of using coal ash in brick production to see how it affects quality Obtain expected renewal on environmental permit Request copy on the certificate of the company that extracts clay to make sure its clay is sustainably-sourced The ceramic facility has taken out loans to purchase equipment that will allow expansion in production no known difficulties in repaying the loans locally-sourced, renewable biomass Expand business operations and production capacity

4 Itabira SOCIALCARBON Hexagon Resource Two more round kilns are being constructed. These kilns are of medium-efficiency Bricks are dried naturally, and there is a good greenhouse system in place to protect the bricks from rain and optimize drying On-site machinist keeps equipment in good condition,8 2,9, 2,7 Resource Reduced employee turnover rate due to good relations between the owner and workers an improvement since the Point Zero report Life insurance and food staple are provided as benefits Six women work in administrative roles very socially inclusive The social return of the project is still dependent on job creation Increase the number of women working on the production line 2 2, 2,8 2, Resource 2,7,7,2 The factory has reforested/recovered clay extraction sites, going above and beyond compliance Water is economized, a differential in the ceramic industry Reuse of residues for on-site applications e.g. roads and cement mixture Obtain environmental permit and renew clay extraction license Point Resource Literacy rate is tracked On-site training and professionalization courses are still want this aspect did not improve over the course of the last monitoring period Some unfavorable work conditions still exist, like manually supplying the kilns with biomass and exposure to heat The ceramic facility has not purchased any equipment or taken out any loans renewable biomass Entrepreneur is hoping to sell the carbon credits generated to increase the social and human return of the project Expand business operations and production capacity

5 Santa Izabel SOCIALCARBON Hexagon Resource Resource Donations given to the local church and orphanage Life insurance, food staple, commission, company parties are among a host of benefits provided Ten women and one handicap (deaf) person is employed very socially inclusive Modernize the production process to improve working conditions Resource Literacy rate is tracked and illiteracy at the factory is uncommonly low for this industry SENAI and SESI, two organizations focused on small business and quality control, are invited to give training lectures There have been marked improvements in the sanitary conditions of the facility along with construction of a bike rack and covered parking lot The facility has PPRA, PCMSO and ASO health and safety accreditations,7 2 2,7,, 2,2 Point Bricks are dried naturally, and there is a good greenhouse system in place to protect the bricks from rain and optimize drying Real-time temperature diagnostics allow for continuous temperature which increases product quality Clay homogenization machine was purchased since last report, which increases product quality Acquire product quality certification by PSQ, Resource, Operational and Clay Extraction licenses are current and on file The factory has reforested/recovered clay extraction sites, going above and beyond compliance Water is economized, a differential in the ceramic industry Reuse of residues for on and off-site applications e.g. road construction and cement mixture Install a particulate filter to remove soot The ceramic facility has taken out loans to purchase a clay excavator and there has been no reported problem in making payments locally-sourced, renewable biomass (afforested wood) Build a shed to store/protect the biomass