Powering Progress: Unlocking Energy Efficiency in Bangladesh's Industrial Sector

The efficient use of energy resources in the industrial sector of Bangladesh is an imperative issue that warrants significant attention due to its implications for economic growth, environmental sustainability, and energy security. As Bangladesh continues to undergo rapid industrialization, the energy demand in this sector has surged, leading to an increased reliance on fossil fuels and, consequently, higher greenhouse gas emissions (World Bank, 2022). This reliance not only strains the country's finite energy resources but also exacerbates environmental degradation and contributes to global climate change (IEA, 2021).

In the context of Bangladesh's industrial sector, particularly the garments and textile industries, which account for over 80% of the nation's export earnings and contribute more than 10% of its GDP, there is considerable potential for energy efficiency improvements (BGMEA, 2023). Studies indicate that implementing energy-efficient technologies and practices could enhance the aggregate energy efficiency by 25-31% within these sectors (Rahman et al., 2020). Such improvements can lead to substantial cost savings, reduction in energy consumption, and a significant decrease in greenhouse gas emissions, aligning with both national economic goals and international environmental commitments (UNFCCC, 2018).

Furthermore, the integration of renewable energy sources, such as rooftop solar panels, presents a viable pathway to enhance energy efficiency and sustainability in the industrial sector. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has demonstrated a proactive approach by committing to a 30% reduction in greenhouse gas emissions by 2030, underlining the industry's recognition of the importance of energy efficiency (BGMEA, 2023). By prioritizing energy efficiency and adopting advanced technologies, Bangladesh can enhance its industrial competitiveness, ensure economic growth, and contribute to global efforts to combat climate change (World Economic Forum, 2023). This study aims to identify the current state of energy use in the industrial sector, evaluate the potential for implementing energy-efficient technologies, and recommend strategies to achieve substantial energy savings and reduce environmental impacts.

Current Energy Landscape in Bangladesh 

The industrial sector in Bangladesh relies on a diverse mix of energy sources to meet its growing demand for power. Natural gas is the dominant energy source, contributing approximately 51.05% of the total energy consumed in the industrial sector. This heavy reliance on natural gas is primarily due to its domestic availability and cost-effectiveness. Furnace oil is the second-largest energy source, accounting for 28.15% of the total energy used. It is widely used in industries for its high energy density despite its higher environmental impact compared to other fuels. Coal, contributing 7.86%, is mainly used in energy-intensive industries such as cement and steel. The use of coal has been growing due to its relatively low cost and abundant supply, although it raises significant environmental concerns due to high greenhouse gas emissions. Diesel accounts for 5.74% of the energy consumption in the industrial sector and is primarily used in backup generators and for transportation within industrial operations. Renewable energy sources, including solar and wind, account for around 1.02% of the energy mix. While their current share is relatively small, there is significant potential for growth in the adoption of renewables. Hydroelectric power also contributes 1.02%, offering a clean and sustainable energy source, although its expansion is limited by geographical and resource constraints. Overall, the industrial sector's energy mix highlights the urgent need for diversifying energy sources, improving energy efficiency, and increasing the adoption of renewable energy to ensure sustainable industrial growth in Bangladesh (Our World in Data, n.d.; World Economic Forum, 2023; Hydrocarbon Unit, 2021; Mongabay, 2022; IEA, n.d.).

Energy Consumption Patterns in Key Industrial Sectors

Textiles and RMG (Ready-Made Garments)

The textiles and Ready-Made Garments (RMG) sector is the largest energy-consuming sector in Bangladesh and plays a vital role in the country's economic development. In 2022, the RMG sector accounted for over 84% of Bangladesh's total exports, underscoring its critical importance (Bangladesh Garment Manufacturers and Exporters Association, 2022). However, this sector's high energy consumption poses substantial environmental challenges. Textile dyeing mills, for example, are among the largest consumers of energy and water, significantly contributing to the carbon footprint and water pollution in the country (World Bank, 2022). The processes involved in textile production, such as spinning, weaving, and dyeing, are energy intensive and rely heavily on natural gas and electricity. Given the sector's dominant role and its substantial environmental impact, efforts to enhance energy efficiency and sustainability are crucial. Initiatives such as implementing energy management systems, upgrading to energy-efficient machinery, and promoting renewable energy use are essential steps toward reducing the sector's energy consumption and environmental footprint (International Finance Corporation, 2020). These measures not only help in conserving energy but also improve the competitiveness of Bangladesh's textile and RMG industry in the global market, where there is increasing demand for sustainable and eco-friendly products (International Labour Organization, 2021). Thus, addressing the energy challenges in the textiles and RMG sector is vital for the sustainable development of Bangladesh.

Cement and Steel

The cement and steel industries in Bangladesh are known for their high energy intensity, making them significant contributors to the country's industrial energy consumption. Cement production, in particular, is one of the most energy-intensive processes, accounting for nearly 15% of the total industrial energy use. This is due to the high temperatures required for the calcination process and the energy needed to grind raw materials into a fine powder. Similarly, steel production is also energy-intensive, involving processes such as melting, refining, and casting, which require substantial amounts of energy (World Bank, 2022).

Pharmaceuticals and Chemicals

The pharmaceuticals and chemicals sectors in Bangladesh are experiencing a rising demand for energy due to their rapid growth. The pharmaceutical sector, in particular, has seen substantial growth, with Bangladesh meeting nearly 98% of its domestic demand for pharmaceutical products and exporting to approximately 150 countries. This growth has led to increased energy consumption, making energy efficiency measures essential for sustainable development. The chemicals sector also requires significant energy for various processes, including the production of raw materials and finished products.

Other Sectors

The shipbuilding, electronics, and agribusiness sectors in Bangladesh are all significant energy consumers, each with distinct energy requirements. The shipbuilding industry relies heavily on energy for processes such as steel cutting, welding, and painting, utilizing considerable amounts of electricity and fossil fuels (Islam, 2020). The electronics industry also consumes substantial energy, primarily in the form of electricity, to power manufacturing, assembly, and testing processes, with companies increasingly adopting energy-efficient technologies like energy audits and rooftop solar panels (Sustainable and Renewable Energy Development Authority, 2022). In the agribusiness sector, energy is used for irrigation, mechanized farming, and processing, with a growing adoption of energy-efficient practices such as alternative wetting and drying (AWD) for irrigation and agrivoltaics to optimize land use and energy efficiency (Bangladesh Investment Development Authority, 2023). These sectors are crucial for the country's economic development, and improving energy efficiency within them is essential for sustainable growth.

Opportunities for Energy Efficiency

Energy efficiency is defined as using less energy to provide the same product or service, such as lighting, heating and transportation. Together with the move to renewable energy sources, increasing energy efficiency is considered to be one of the twin pillars of sustainable energy policy. Energy efficiency is key to ensuring a safe and reliable reduction in energy consumption and greenhouse gas emissions. The International Energy Agency (IEA) has stated that improved energy efficiency in industrial processes, transportation, and buildings could lead to a 30% reduction in the world’s energy needs by 2050 and help control global emissions of greenhouse gases (The HUMAN JOURNEY).

Bangladesh's socioeconomic development is hindered by inconsistent electricity supply due to gases. ((ed natural gas reserves essential for power generation. The unregulated gas usage and scarcity of new gas fields raise concerns for future electricity production. Rising global coal and oil prices have prompted the government to pursue renewable energy sources, implementing load-shedding and market closures at night to conserve gas. Renewable energy projects in progress are expected to meet slightly over 10% of total demand by 2030, which may fall short due to declining gas supply. Given the country’s geographic suitability, expanding solar, wind, hydro, and biogas energy is essential. The government has introduced subsidies and favorable financing to boost renewable energy projects, but large-scale adoption requires addressing infrastructure barriers and enhancing policy support. By advancing renewable energy, Bangladesh can reduce reliance on gas, lower emissions, and establish a resilient energy sector to sustain future industrial growth.(Shah Mohazzem Hossain 2023)

Innovation in Energy-Efficient Machinery

Energy-efficient machines reduce electricity bills by using less power, especially benefiting industries with continuous or heavy-duty operations. These machines also lower maintenance costs due to reduced wear and tear and often include smart technology for predictive maintenance, preventing breakdowns and minimizing downtime. Additionally, government incentives and tax breaks further enhance savings, making energy-efficient machinery a cost-effective choice for manufacturers looking to cut expenses and boost productivity. The adoption of high-efficiency motors, compressors, energy efficient HVAC systems, etc. These sorts of energy-efficient equipment not only support sustainability efforts but also improve operational efficiency across manufacturing plants. (IndMALL Automation)

In small- and medium-sized enterprises (SMEs) in the leather goods and footwear manufacturing sector in Bangladesh, the adoption of an energy-efficient servo motor for stitching machines is intervened. (IPA) 

The sixteen options analyzed, the more important are summarized below

Source: World Bank (n.d.)

Innovation in Automation and Smart Technologies 

Automation is essential for maximizing energy efficiency in manufacturing, as it improves production speed, reduces errors and also optimizes energy use. Automated systems can adjust energy levels in real time, powering down machinery during idle times and reducing waste without human intervention. Additionally, automation enables predictive maintenance by detecting issues early, preventing energy loss from malfunctioning equipment. By tracking and analyzing energy usage data, manufacturers can identify inefficiencies and optimize operations further, making automation a key tool for achieving sustainability and cost savings. Using IoT and AI for optimized energy management. (IndMALL Automation). Bangladesh is on a transformative journey to become a "Smart Bangladesh," leveraging technology to improve citizen welfare, governance, and sustainable economic growth. A shift from "Digital Bangladesh" to "Smart Bangladesh," highlighting the role of advanced technologies like IoT, AI, and blockchain in this evolution. The challenges emphasise the need for coordinated efforts among the government, private sector, academia, and civil society, along with comprehensive policies to govern new technologies. These insights aim to guide sustainable development, empower communities, and create a brighter future for all citizens (Tanjil Ahmed, 2023).

Waste Heat Recovery

Industrial waste heat, the unused energy from industrial processes, can be harnessed through various waste heat recovery technologies to reduce energy consumption. Different methods and technologies used for heat recovery in different industries like power generation, steel, food, and ceramics, assessing practices that enhance energy efficiency. Common technologies examined include recuperators, regenerators, preheaters, heat exchangers, and economizers, along with advanced systems like heat pumps, Organic Rankine cycles, and heat recovery steam generators (HRSGs). Emerging techniques for converting heat directly to power, such as thermoelectric and thermo-photovoltaic generation, are also notable (Hussam Jouhara, 2018).

Process Optimization

In today’s competitive business environment, achieving optimal efficiency is essential for long-term success, and process optimization offers organizations a way to reach that goal. By streamlining operations, reducing redundancies, and making better use of resources, businesses can operate more smoothly and efficiently. Additionally, process optimization involves proactive risk management, identifying potential issues before they disrupt operations and enhancing the organization’s resilience. It also targets cost-saving opportunities without compromising quality, making businesses more cost-effective. With a focus on continuous improvement, process optimization fosters better outcomes and more sustainable results. It enables organizations to maximize productivity, achieving more with the same or fewer resources. Furthermore, it enhances time management by reducing delays, speeding up project timelines, and ensuring on-time delivery, which collectively allows the organization to perform at its highest potential. While process automation, such as low-code solutions or ERP systems, is often seen as key to operational excellence, not all processes are suitable for automation. Applying automation to inefficient processes can worsen issues, so businesses must analyze and optimize processes before implementing automation for the best results. Streamlining manufacturing processes to minimize energy wastage. (BOC Group)

Renewable Energy Integration

Renewable energy accounts for around 22% of global power generation, but this share is expected to double in the next 15 years, partly due to the rapid growth of variable renewable energy from solar photovoltaics and wind. There are several technology options available that can help integrate variable renewable energy into power systems. Furthermore, new advances in wind and solar technologies allow them to be used over a wider range of conditions. In the longer run, however, power systems with high shares of variable renewable power generation will require a rethinking of the traditional designs, operations, and planning practices from a technical and an economic point of view. More than half of the total global renewable energy consumption today is based on biomass. Biomass is commonly co-fired with coal in large power plants and used in combined heat and power (CHP) plants at smaller scales. It serves as a source of heating, hot water, and industrial process heat in sectors like chemicals, cement, pulp and paper, and food processing. (International Renewable Energy Agency). Bangladesh’s development progress is driving a need for sustainable power generation, with a focus on renewable energy to secure long-term energy and environmental sustainability. The country currently relies heavily on natural gas, though reserves are depleting, and future plans include coal and oil, which are less sustainable. Bangladesh aims to increase its renewable energy share as part of the UN’s Sustainable Development Goal 7 (SDG 7) and the Paris Agreement's target to limit global warming below 2°C. While the goal to reach 10% renewable energy by 2020 (about 2000 MW) has fallen short, with only 2.85% achieved, the government is pursuing initiatives to gradually expand renewable energy use despite recent challenges. (Lway Faisal Abdulrazak et.al. 2021)

Barriers to Energy Efficiency

Financial Constraints

Bangladesh's renewable energy sector holds significant potential but currently comprises only about 1% of the energy mix, limited by technological, regulatory, and policy gaps. Financial barriers also restrict green project growth, as banks and financial institutions often lack understanding and capacity for green finance. Bangladesh's Solar Home System program, led by IDCOL, has installed millions of solar systems through public–private partnerships, highlighting the potential for green financing. However, this program now faces challenges due to uncoordinated grid expansion, poor financial management, and lack of policy oversight. For sustainable development, Bangladesh must build financial sector capacity, develop bond and equity markets, create a coordinated policy framework, and mainstream green finance. (Asian Development Bank, 2018)

Lack of Awareness and Technical Expertise

Energy management in the textile industry of Bangladesh is identifying barriers such as limited cost-effective technical measures, insufficient capital, and weak R&D. Despite these challenges, concerns over rising energy costs, support from energy experts, and structured energy management programs are driving efforts toward efficiency. However, textile mills are unfamiliar with the concept of energy service companies (ESCOs) and lack trained professionals, which hinders progress. Implementing energy management practices could improve energy efficiency in the sector by 3-4%. (A S M Monjurul Hasan. et al, 2019)

Policy and Regulatory Gaps

To enhance energy efficiency (EE) and energy security, Bangladesh must prioritize policy enforcement. The 2018 Energy Audit Regulations (EAR), updated in 2024, outline procedures for energy audits and certifications. The Sustainable and Renewable Energy Development Authority (SREDA) has designated 189 enterprises as high energy consumers, requiring them to conduct audits and report periodically. However, merely collecting data through audits may not drive significant change. Instead, establishing annual energy-saving targets for these enterprises could enforce compliance and encourage consistent improvements in efficiency. SREDA could then review EE results and recommend corrective actions where necessary. Additionally, the 2023 EE labelling regulations introduce minimum energy performance standards (MEPS) for appliances, enabling consumers to make energy-efficient choices, which should further support EE improvements across sectors. (Institute for Energy Economics and Financial Analysis 2024).

Future Outlook

Innovation in Energy Efficiency 

The future of Bangladesh’s industrial sector will hinge on innovations in energy efficiency. Technologies such as IoT-driven automation and smart energy management systems allow factories to monitor and control energy use in real time, reducing waste. For example, advanced monitoring systems in the shipbuilding and electronics industries are optimizing energy consumption, improving productivity, and contributing to the government’s vision for a "Smart Bangladesh" (Tanjil Ahmed, 2023; IndMALL Automation, 2023). These digital solutions, coupled with energy-efficient machinery, can lead to operational efficiency across various industrial processes.

Potential for Renewable Energy 

Expanding the share of renewable energy within Bangladesh’s energy mix remains a key objective. Industrial facilities, particularly in the RMG sector, have demonstrated successful integration of solar power as a renewable energy source. Additionally, solar mini-grids have been set up in off-grid areas, helping small- to medium-sized enterprises (SMEs) transition to sustainable energy (Islam, 2020; Asian Development Bank, 2018). This shift reduces reliance on fossil fuels, strengthens energy security, and supports long-term sustainability goals for Bangladesh’s industries.

The Path Forward 

To support the continued transition to efficient and renewable energy, Bangladesh’s government has implemented supportive policies, including subsidies and tax incentives for companies investing in sustainable energy technologies. The Sustainable and Renewable Energy Development Authority (SREDA) plays a crucial role by encouraging industries to adopt green practices, further supported by the Power System Master Plan (PSMP) 2016 and the Renewable Energy Policy (Government of Bangladesh, 2016; Sustainable and Renewable Energy Development Authority, 2022). Through such policies, Bangladesh is positioned to develop a resilient industrial sector that is both environmentally conscious and economically robust.

Conclusion

The efficient use of energy resources in Bangladesh’s industrial sector is essential for ensuring long-term economic growth, sustainability, and energy security. This paper highlights the complex interplay between different types of energy—natural gas, electricity, coal, oil, and renewables—and the industrial sector's productivity, operational costs, and environmental impact. Natural gas and electricity remain the primary sources driving industrial output, but reliance on these sources brings challenges related to supply stability, pricing, and environmental concerns. Coal and oil, while cost-effective, are less sustainable, underscoring the need for cleaner alternatives.

Renewable energy, though currently a minor contributor, offers a promising path toward a resilient and sustainable energy system. Solar, biomass, and other renewable sources have the potential to reduce dependency on fossil fuels and lower greenhouse gas emissions. However, adopting these technologies requires overcoming financial, infrastructural, and awareness-related barriers. Government incentives, regulatory reforms, and partnerships with international organizations are crucial to accelerating this transition.

Overall, achieving energy efficiency in Bangladesh’s industrial sector demands a multi-faceted approach. This includes policy adjustments to encourage renewables, modernization of outdated infrastructure, and implementation of energy management systems. With a strategic energy mix and commitment to sustainability, Bangladesh can enhance industrial productivity, reduce operational costs, and meet its sustainable development goals, thereby strengthening the foundation for a resilient industrial future.