Bangladesh’s Energy Efficiency Push Delivers Billions In Savings, Poised For Sustainable Development And Growth Ahead Of 2030 Target

Bangladesh’s nearly decade-long push to improve energy efficiency is showing significant results, and with continued efforts, the country is well-positioned to achieve its energy efficiency goals ahead of schedule, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA). The study, titled “Bangladesh’s energy efficiency goals within reach”, was authored by Shafiqul Alam, Lead Energy Analyst for Bangladesh at IEEFA South Asia. It highlights how targeted measures over the past decade have generated both economic and environmental benefits, including substantial savings in fossil fuel imports.

Since 2016, Bangladesh has made steady progress in energy efficiency, saving billions of dollars by reducing fossil fuel consumption. The report examines trends in the nation’s primary energy consumption relative to GDP to assess the effectiveness of its policies and measures. Between fiscal year (FY) 2014-15 and FY2023-24, energy efficiency improved by 13.64%, moving closer to the 20% target set for 2030. In FY2023-24 alone, improvements in efficiency helped the country reduce fossil fuel consumption by 7.02 million tonnes of oil equivalent, avoiding roughly USD 3.34 billion in import costs.

Early progress in energy efficiency was promising but uneven. The global energy price shocks and supply disruptions in FY2021-22 accelerated the need for stronger energy security and efficiency measures. Bangladesh benefited from having the Energy Efficiency and Conservation Master Plan, developed in 2016, which provided a framework to respond effectively to these challenges. Subsequent regulations, low-cost financing, and supportive programs have put the country on track to not only meet but potentially surpass its energy efficiency targets.

Alam notes that Bangladesh’s average annual energy efficiency improvement rate of approximately 1.52% positions the country to achieve its 2030 goal a year ahead of schedule. Similarly, the updated Nationally Determined Contributions (NDCs) include an energy efficiency target of 19.2% by 2035, and the report finds that Bangladesh is on course to reach this goal early as well. The study suggests that even greater gains are possible, particularly by targeting the household and industrial sectors, which together account for two-thirds of the country’s total energy consumption.

The report highlights several positive developments. A significant shift from compact fluorescent lamps (CFLs) and incandescent lights to energy-efficient LEDs has occurred across households, commercial spaces, and industries. Consumers are also increasingly adopting energy-efficient air conditioners. Alam emphasizes that energy efficiency labels can further drive adoption by reducing information gaps on minimum energy performance standards, helping consumers make more informed choices.

Despite these advances, there are still areas with high potential for improvement. In the industrial sector, efficiency in motors, motor-driven systems, and captive generators can be enhanced. Transitioning from gas to electric boilers offers additional savings. In the commercial sector, where cooling demand is high, energy efficiency labels and passive design strategies are critical. The report also notes that import duties on LED components and inverter-equipped compressors—currently as high as 62%—should be reduced to make efficient appliances more affordable for price-sensitive consumers.

Building on the progress of the past decade, the report provides several recommendations to sustain and accelerate energy efficiency gains. These include conducting regular public awareness campaigns, expanding energy-saving targets to a broader base of large consumers, enforcing the National Building Code 2020 to encourage passive building design, and establishing a super energy service company (ESCO) to manage energy efficiency projects systematically. Additionally, increasing access to low-cost financing and exploring new financial mechanisms for capital-intensive projects, supported by multilateral development banks, is critical.

Alam concludes that energy efficiency is more than a cost-saving measure; it has the potential to transform Bangladesh’s energy system. To maximize impact, a coordinated approach involving regulatory authorities, energy consumers, financial institutions, and technology providers is essential. With continued focus and strategic implementation, Bangladesh is poised to achieve its energy efficiency objectives ahead of schedule while fostering economic growth and environmental sustainability.