Carbon Finance in Bangladesh - World Bank

Uncontrolled industrialization, inefficient burning of fossil fuels and consumption of energy have endangered the Global Environment as well as the entire human species. The effects of climate change include an upward trend in global mean temperature, rise in the sea level and a probable increase in the frequency of some extreme weather events such as drought, changing rain pattern, flood etc. IPCC, in its Annual report on Climate Change has already identi¬fied Bangladesh as one of the most vulnerable countries to Climate Change.

To combat with climate change IIDFC has introduced & developed “Carbon Finance” which is a market based mechanism to encourage Climate Change Mitigation. Under such scheme, IIDFC has taken up a Clean Development Mechanism (CDM) project titled as “Improving Kiln Efficiency in the Brick Making Industry in Bangladesh”, an Hybrid Homan Kiln (HHK) Project to construct 16 new energy efficient brick kilns in two bundles to signifi¬cantly reduce emission of Carbon dioxide (CO2) gas and other local pollutants that are generated by the traditional brick kilns of the country.

IIDFCL, being the ¬first local Financial Institute, entered into Carbon Trading through signing Certified Emission Reduction Purchase Agreement (CERPA) with the World Bank & the Government of Denmark on 25th August, 2009 to sell a total of 249,000 tons of Certified Emissions Reductions (CER) to be generated from these 16 kilns. But due to some constraints which become visible while implementing these projects, a total of 125,000 tons of CERs are now to be expected to be generated up to December 2015. Being a modified Chinese version of the original German technology, Hybrid Hoffman Kilns were difficult to set up and operate smoothly in the geographical condition of Bangladesh. The initially built kilns of this project faced various difficulties with the design & size of the dryer, nature of the local soil and scarcity of skilled firemen. But these issues have now been successfully addressed and many local entrepreneurs are coming forward to invest in this technology. This initiative of IIDFC not only helped to reduce Green House Gas (GHG) emissions but also helped to establish a new greener and sustainable technology in the country. It can be mentioned that, every single sized HHK replaces 7 to 8 environment polluting and energy inefficient Fixed Chimney Kilns (FCK).

Apart from the environmental issues the projects implemented under this CDM has been playing a great role in improving the workers’ Social and Occupational Health & Safety issues. All of these projects provide necessary Safety Gears, safety signs & barriers with adequate fire-fighting equipment in the workplace. Proper sanitation facilities have been built separately for both male & female workers along with washing areas. Male & female workers have separate resting cum dining areas inside the factories. To check the health condition of the workers, a physician visits the kilns every 15 days and provides them with free consultation with some medicines. These measures have improved the working conditions of the factory which is otherwise absent in the traditional Brick kilns.

All these hard works yielded in the issuance of CERs by United Nations Framework Convention on Climate Change (UNFCC) on 21st February, 2014. IBRD, as the trustee of the project transferred CER revenues worth USD 240,000 for the first monitoring period of this project. IIIDFC, as the Project Entity, successfully distributed the achieved revenue among the participating HHK owners. Another 52,000 tons of CERs worth around USD 790,000 are now awaiting issuance.