Dhaka, Bangladesh (BBN)- A country’s leading financial institution has entered into billion dollar carbon trading aiming to mitigate global warming through adoption of new technology in different carbon-emitting industries.

The Industrial and Infrastructure Development Finance Company Limited (IIFDC), a non-banking financial institution, signed two emissions reduction purchase agreements (ERPA) for the first time with the World Bank and the Danish government on Tuesday to transfer 249,000 tones carbon dioxide (CO2) reduction from brick fields, the company said.

The ERPA means a transaction that transfers carbon credits between two parties under the Kyoto Protocol.

As per the guidelines of the Kyoto protocol, Bangladesh will receive US$15.20 from the global Community Development Carbon Fund for reducing each ton of carbon emissions.

Under the deals, the IIFDC will act as a 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 tones per year, according to the project proposal.

Currently, brick making is a highly energy-intensive and carbon-emitting activity,” said the IIDFC in its project proposal, adding that 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 tones of CO2 annually.

“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,” Managing Director of the IIDFC Assaduzzaman Khan 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, he added.

Mr. Khan also said at least two brick fields are now under production using HHK technology.

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 Production is seasonal, confined to the six dry months of the year; technology is outdated; labour productivity low; capitalization non-existent and mostly operating on equity capital; and management is informal, according to the project proposal.

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 project will reduce an estimated 881,000 tons of CO2 during project period from 2010 to 2020, the IIFDC estimated.

BBN/SS/SI/AD-26August09-1:12 am (BST)