Bangladesh's industrial sectors hold significant untapped energy efficiency potential: Institute for Energy Economics and Financial Analysis

The industrial sectors in Bangladesh hold significant untapped energy efficiency potential, said the Institute for Energy Economics and Financial Analysis ( IEEFA).

"For Bangladesh's industries to remain competitive in an environment of highly volatile fossil fuel prices in the international markets and rising energy tariffs, industries must fully utilise readily available energy efficiency measures,"  said an article by IEEFA's Energy Finance Analyst for Bangladesh Shafiqul Alam on Tuesday (6 June).

It said successful energy efficiency interventions yield a wide range of benefits for Bangladesh, including reduced energy demand, lower energy imports, and cost savings.

"The recent inclusion of mandatory energy auditing in the revised energy efficiency and conservation rules represents a significant step towards enhancing energy efficiency across various sectors, particularly industries," the article read.

According to the IEEFA, Bangladesh's garments and textile sectors, which contribute over 80% of the country's export earnings and more than 10% of its GDP, can enhance aggregate energy efficiency by 25% to 31%.

"Similarly, targeted energy efficiency measures can help the steel and cement industries reduce energy consumption by 22% to 32% and 21% to 28% respectively. Other sectors also have the potential to achieve significant energy savings," it said.

Energy efficiency is not only crucial from an economic standpoint but also for meeting the environmental, social, and governance (ESG) requirements of global clients, IEEFA added.

"To meet international buyers' obligations to reduce greenhouse gas (GHG) emissions, Bangladesh's garment manufacturers have committed to a 30% reduction in sector emissions by 2030 through initiatives like the United Nations fashion industry charter for Climate Action," the article read.

While cheap rooftop solar contributes to clean energy generation, it alone cannot propel the apparel sector towards achieving the 30% GHG reduction target due to the significant natural gas consumption in production processes and captive generation. Consequently, energy efficiency measures become imperative, it added.

"The recent surge in gas prices and electricity tariffs, coupled with uncertainties surrounding energy supply, further emphasises the need for industries to adopt energy-efficient technologies promptly. Enhancing energy efficiency on the demand side can have far-reaching impacts on the economy as electricity demand continues to rise."

By optimising energy efficiency, existing industries can reduce their natural gas consumption, leading to significant savings. A 20% improvement in industrial gas efficiency alone could save 73.4 billion cubic feet (bcf) of liquefied natural gas (LNG) annually, corresponding to approximately 30% of Bangladesh's LNG imports, IEEFA said.

It added that energy efficiency measures will reduce grid-based electricity consumption, conserving energy for future industries.

"Apart from economic and environmental benefits, industrial energy efficiency initiatives will create job opportunities for technical and financial professionals," IEEFA remarked.

Energy efficiency and conservation can enhance the competitiveness of export-oriented industries by reducing energy consumption and associated costs, enabling them to offer competitive prices for their products in the international market.

"The introduction of energy auditing certification and the establishment of a data repository at the Sustainable and Renewable Energy Development Authority (SREDA) will create an enabling environment for periodic energy auditing in industries," the article said in conclusion.