ADB to Help Improve Environment by Financing Cleaner Brick Kilns

DHAKA, BANGLADESH – The Asian Development Bank (ADB) is providing $50 million in loans to help improve the environment by financing more energy-efficient brick kilns in Bangladesh.

“Brick-making is one of the biggest polluting industries in the country,” said Anqian Huang, Finance Specialist in the Public Management, Finance Sector, and Trade Division of ADB’s South Asia Department. “By helping brick makers to switch to cleaner kinds of kilns, the air in Bangladesh will be cleaner and people’s health much improved.”

ADB’s Board of Directors approved the “Financing Brick Kiln Efficiency Improvement Project” on 10 May. Under the project, ADB will provide $50 million in local currency to Bangladesh Bank which will relend the funds to participating financial institutions. These financial institutions will then provide loans to brick makers seeking to upgrade their existing kilns to cleaner kinds of kilns or to those looking to build the cleaner kilns for the first time.

The brick sector contributes around 1% of the Bangladesh economy. However, it is highly polluting, burning about at least 6.0 million tons of coal and emitting at least 9.8 million tons of carbon dioxide (CO2) every year, largely because most of Bangladesh’s estimated 5,000 brick fields use the highly polluting fixed chimney kilns.

A fixed chimney kiln uses 240 tons of coal and emits 582 tons of CO2 per million bricks produced. This compares with the cleanest tunnel chimney which uses only 100-120 tons of coal and produces 291 tons of CO2.

The Bank and Financial Institutions Division under the Ministry of Finance will be the executing agency while Bangladesh Bank will be the implementing agency. The project will be implemented from 2012-2015.

As part of efforts to reduce pollution and coal use, the Bangladesh government has already passed a ruling that no new yearly licenses for fixed chimney kilns will be renewed after September 2012 and banning all such kilns from September 2013.

To help make the changes in the brickmaking sector proceed more smoothly, ADB is also preparing a technical assistance, financed by the Government of Japan. This will, for example, help the government formulate brick sector policy and regulations, support Government and financial intermediaries implement the ADB loans, and build understanding among brick makers of the value of switching to cleaner kilns.