It is not possible to encode "only-gray scale" with the MPEG-4 SP/ASP encoder library since MPEG-4doesn't support it. However, it is possible to interface a B&W camera capable of outputing only "Luma" data. If such a camera is used then the application must fill the "u" and "v" data in the PPI input buffer with 128(for the color component to be 0) before it passed into the encoder. Note that there is no saving on the encoder bandwidth but PPI bandwidth is saved.
The H.264 BP encoder does support "only-Gray scale" (Luma-only) encoding.