Iraq’s Central Bank launches environmental initiative to support brickworks transition to cleaner energy

BAGHDAD — Iraq’s Central Bank announced Sunday a new environmental initiative offering cheap loans to local brickworks to help them transition from high-pollution fuel oil to cleaner liquefied gas, aiming to reduce air pollution. The bank has raised the loan ceiling to 500 million Iraqi dinars ($340,136) per factory to support the shift.

“In line with global trends and the policies of central banks to reduce carbon emissions and enhance environmental sustainability, we are adopting clean energy solutions in coordination with the Ministry of Environment to contribute to sustainable development,” the bank said in a statement.

The initiative is part of Iraq’s renewable energy program and specifically targets the brick manufacturing sector, which heavily relies on black oil—a major source of air pollution. Loans will be distributed through licensed Iraqi banks, enabling factories to finance the switch to cleaner fuel sources.

Iraq faces severe environmental challenges, with air pollution ranking among its most pressing issues. The government recently established a specialized committee to investigate recurring sulfur emissions affecting Baghdad and surrounding areas. A key contributor to this crisis is the widespread use of fuel oil in brick factories, which, when burned, releases thick black smoke and harmful emissions that worsen air quality.

Nahrawan, located about 35 kilometers northeast of Baghdad, is among the worst affected areas. The region is home to over 360 brick factories, employing more than 9,000 workers. Continuous burning of black oil has severely polluted the environment, making Nahrawan one of Iraq’s most contaminated areas.

On Oct. 18, 2024, the Ministry of Industry announced that all brick factories in Baghdad and other governorates must transition from heavy fuel oil to natural gas within the next 18 months. Heavy fuel oil, also known as bunker fuel, is a thick, viscous byproduct of crude oil refining that emits high levels of sulfur and pollutants, exacerbating Iraq’s environmental crisis.

Additionally, the Central Bank has allocated 1 billion Iraqi dinars (USD 680,272) to the Environmental Protection and Improvement Fund to combat air pollution and address environmental challenges.

“These decisions align with the requirements of green economic development, reducing the environmental impact of industry, and supporting a gradual transition toward a more sustainable economy,” the statement concluded.