Hubei’s biggest fertilizer producer on Tuesday borrowed 100 million yuan ($15.6m) from the Export-Import Bank of China using CO2 permits as collateral, according to state media.

The loan to Hubei Yihua Chemical Industry Corp. is the biggest in China so far using carbon allowances as collateral, and marks a trend that sees cash-strapped manufacturers use their CO2 permits to gain access to hard-to-get bank loans.

The company reported an 8% drop in revenue for the first six months of the year, in line with much of China’s ailing manufacturing industry.

Last year, Yihua borrowed 40 million yuan from the China Industrial Bank in a similar deal.

Hubei allowances closed Tuesday at 24.68 yuan, but the report in People’s Daily did not reveal the discount factor used in the deal, or how many allowances were involved.

Meanwhile, the Export-Import Bank of China has signed up to the Hubei Emissions Exchange where it plans to work on green loans and carbon finance products, the paper said.

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