IIFDC strikes billion dollar carbon trading deals to improve energy efficiency
Thursday, 27 August 2009
Siddique Islam
A country's leading financial institution has entered into billion dollar carbon trading aiming to improve energy efficiency through adoption of new technology in different carbon-emitting industries.
The Industrial and Infrastructure Development Finance Company Limited (IIFDC), a leading non-banking financial institution, signed two emissions reduction purchase agreements (ERPA) for the first time with the World Bank and the Danish government Tuesday to transfer 249,000 tonnes carbon dioxide (CO2) reduction from brick fields.
The ERPA means a transaction that transfers carbon credits between two parties under the Kyoto Protocol.
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC), an international environmental treaty with the goal of achieving "stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system."
Under the deals, the IIFDC will act as the bundling agent to facilitate implementation of a project titled improving kiln efficiency in the brick marking industry in Bangladesh.
At least 20 new energy efficient kilns will be constructed to produce 300 million high quality bricks annually and are expected to reduce emissions of CO2 in Bangladesh by approximately 115,000 tonnes per year, according to the project proposal.
World Bank Acting Country Director Robert Floyd, Deputy Programme Director of the Danish Energy Agency under Danish Ministry of Climate and Energy Ulla Blatt Bendtsen and Managing Director of the IIDFC Asaduzzaman Khan signed the deals on behalf of their respective organisations.
"At present, brick making is a highly energy-intensive and carbon-emitting activity," said the IIDFC in its project proposal. It is one of the largest sources of greenhouse gas emission in the country, which is estimated to be in the order of 8.75 million tonnes of CO2 annually, it added.
"The success of the project of emission reduction in the brick manufacturing industry will encourage other brick manufacturers to come forward and switch to environmental friendly hybrid hoffman kiln (HHK) technology," Asaduzzaman Khan told the FE.
He also said the success of the project will not only have a sustainable positive impact on the environment of Bangladesh but also encourage development of other potential clean development mechanism (CDM) projects in different sectors including construction materials production, power and renewable energy sectors.
"At least two brick fields are now under production using HHK technology," Mr. Khan added.
The brick-making industry in Bangladesh is best described as a "footloose" industry. Production is seasonal, confined to the six dry months of the year; technology is outdated; labour productivity low; capitalisation non-existent and mostly operating on equity capital; and management is informal.
Total brick production in Bangladesh is estimated to be about 8.7 billion bricks annually with an estimated sale value of around US$450 million, almost one per cent of the country's gross domestic product (GDP), the project proposal said.
The proposed project will support brick-making sector of Bangladesh through purchasing the certified emission reductions (CER) generated from adoption of energy efficient HHK.
The project will reduce an estimated 881,000 tonnes of CO2 during project period from 2010 to 2020, the IIFDC estimated.
A country's leading financial institution has entered into billion dollar carbon trading aiming to improve energy efficiency through adoption of new technology in different carbon-emitting industries.
The Industrial and Infrastructure Development Finance Company Limited (IIFDC), a leading non-banking financial institution, signed two emissions reduction purchase agreements (ERPA) for the first time with the World Bank and the Danish government Tuesday to transfer 249,000 tonnes carbon dioxide (CO2) reduction from brick fields.
The ERPA means a transaction that transfers carbon credits between two parties under the Kyoto Protocol.
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC), an international environmental treaty with the goal of achieving "stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system."
Under the deals, the IIFDC will act as the bundling agent to facilitate implementation of a project titled improving kiln efficiency in the brick marking industry in Bangladesh.
At least 20 new energy efficient kilns will be constructed to produce 300 million high quality bricks annually and are expected to reduce emissions of CO2 in Bangladesh by approximately 115,000 tonnes per year, according to the project proposal.
World Bank Acting Country Director Robert Floyd, Deputy Programme Director of the Danish Energy Agency under Danish Ministry of Climate and Energy Ulla Blatt Bendtsen and Managing Director of the IIDFC Asaduzzaman Khan signed the deals on behalf of their respective organisations.
"At present, brick making is a highly energy-intensive and carbon-emitting activity," said the IIDFC in its project proposal. It is one of the largest sources of greenhouse gas emission in the country, which is estimated to be in the order of 8.75 million tonnes of CO2 annually, it added.
"The success of the project of emission reduction in the brick manufacturing industry will encourage other brick manufacturers to come forward and switch to environmental friendly hybrid hoffman kiln (HHK) technology," Asaduzzaman Khan told the FE.
He also said the success of the project will not only have a sustainable positive impact on the environment of Bangladesh but also encourage development of other potential clean development mechanism (CDM) projects in different sectors including construction materials production, power and renewable energy sectors.
"At least two brick fields are now under production using HHK technology," Mr. Khan added.
The brick-making industry in Bangladesh is best described as a "footloose" industry. Production is seasonal, confined to the six dry months of the year; technology is outdated; labour productivity low; capitalisation non-existent and mostly operating on equity capital; and management is informal.
Total brick production in Bangladesh is estimated to be about 8.7 billion bricks annually with an estimated sale value of around US$450 million, almost one per cent of the country's gross domestic product (GDP), the project proposal said.
The proposed project will support brick-making sector of Bangladesh through purchasing the certified emission reductions (CER) generated from adoption of energy efficient HHK.
The project will reduce an estimated 881,000 tonnes of CO2 during project period from 2010 to 2020, the IIFDC estimated.