Let’s evaluate a simple energy-saving scenario. You use a conventional ‘tube light’ to light up your room. Now you get a LED bulb from your local retail shop to replace the existing light in your room. Be assured that, at the end of the month, your energy bill will be less. The reason is simple: a LED bulb uses less energy to light up your room.

By opting for the LED bulb, you made two significant impacts: saving on your personal energy bills and helping your country by reducing the pressure on its energy sector. For a country like Bangladesh, this means less energy is needed for its citizens’ consumption. The LED light was one example but similar energy-saving consumption can apply to your ACs, fans, cars and endless other items.

At a household level, such a consumption pattern can help you save money while using more appliances. At a country level, it can largely decouple economic development from its energy use.

Cross-country comparison

Among the Asian countries, China, India and Singapore produced one unit of their gross domestic product (GDP) by paying less than one unit of energy during their fast-growth phase. Unfortunately, Bangladesh’s case is not so rosy. Bangladesh is now in its fast-growth phase. But unlike its Asian predecessors, to produce one unit of GDP the country is paying more than one unit of energy.

This means the energy intensity (the energy/GDP ratio) is more than 1 for Bangladesh whereas it is less than 1 for countries like China, India and Singapore.

So, while these countries could grow through the efficient use of energy, Bangladesh is missing out on this advantageous growth path. There have also been bad Asian examples: Malaysia and South Korea were also energy – inefficient during their fast – growth phase. But Bangladesh shouldn’t use this as an excuse.

Energy efficiency is critical to how a country deals with the challenges of climate change, economic development and energy security. For Bangladesh, the energy efficiency level of its manufacturing industries is way below the international benchmark. There is immense saving potential across the country’s manufacturing sector. For instance, there is plenty of room for improvement in industries like textile and steel.

For Bangladesh, the energy efficiency level of its manufacturing industries is way below the international benchmark.

Gaps in policy orientation

Between 2021 and 2041, Bangladesh wants to cross two milestones – graduating out of the United Nations-designated least developed country (LDC) grouping and becoming an advanced economy. For these, the country will need more energy. But the question is how much more? Different long-term policy documents come up with different numbers. The debate on the numbers will surely continue among stakeholders.

Without focusing on the numbers, Bangladeshi policy-makers should focus on solution-oriented discussions. What are the concrete long-term solutions to the energy sector’s problems? First off, the discussion has to go beyond ‘energy produced’ and towards ‘energy saved.’

In general, long-term energy policy documents make a common mistake while calculating energy needs: they ignore the innovations in energy efficiency that can immediately reduce the energy needs of a fast-growing country. Through smart innovations, Bangladesh’s energy use per unit of GDP can be reduced by some 20%, when compared with the energy use of the fast-growing countries in the 20th century. It has become easier to adopt energy-efficient machines for development projects because new investments can now go into the most innovative products rather than into conventionally used items from loyalty brands.

Innovation and consumption

Since the early 1980s, innovations have progressed enormously globally. Meanwhile, policies on energy efficiency have also expanded quite successfully. These policies have helped reduce various consumption needs. Energy efficiency programmes in many countries have reduced energy use per unit of economic output. They have also spurred on job creation, improved social welfare and reduced emissions.

Studies show that 21st century developing countries can grow by implementing energy-efficient systems. These systems can enable decent living standards for everyone with a tenth of the energy consumed by the United States in 2020.

Several energy improvements are possible in many places. But what needs to be done in the ‘lagging behind’ countries? For this, let’s refer to the international climate change-related Paris Agreement of 2016. In the Paris Agreement, a political decision was made to ‘leave no one behind’ on the path to progress. In this journey, energy-efficient consumption plays a pivotal role.

Nine barriers

An in-depth analysis by the authors shows that there are nine major barriers for Bangladesh in pursuing energy-efficient economic growth:

  1. A dearth of skilled manpower: There is a shortage of technical experts and professionals for energy sector management (such as energy auditors).
  2. Coordination impediments between different energy-related government agencies hamper energy-efficient practices. A complex bureaucratic system makes the situation worse. Moreover, there is very little interaction between the energy service companies and the relevant industries.
  3. Absence of strong energy governance: The regulations for energy efficiency standards, project implementation, financing, pricing and energy audits do not favour energy efficiency. Moreover, unfavourable policies enhance taxes on energy-saving equipment, thus blocking the penetration of the new technologies.
  4. Research and development (R&D) and pilot projects are limited. This creates technological uncertainty.
  5. Capital inflow and private investments in the energy sector are limited. The energy sector has limited access to finance and high initial costs. Therefore, private investment is not going towards energy efficiency projects.
  6. There is an inability to incentivise energy efficiency measures. Low prices of energy disincentive energy-saving practices for Bangladesh. In addition, a complex non-uniform energy pricing policy, limited financial incentives and unpredictability of energy prices make it difficult to implement energy efficiency measures.
  7. Investors prioritise production output over energy efficiency while making decisions.
  8. Absence of data collection and quality of information: Failure to identify cost-benefits, technological benchmarks and opportunities limits energy efficiency improvement.
  9. Main stakeholders (especially energy service users, financiers and industrialists) are unaware of the benefits of energy-efficient technologies.

Low prices of energy disincentive energy-saving practices for Bangladesh.

Rethinking the barriers

According to the authors’ analysis, lack of skilled labour is the biggest impediment to improving energy efficiency in Bangladesh. Moreover, issues related to governance, cost–benefit information and technological benchmarking need to be addressed simultaneously. These are the most important barriers. Overcoming these barriers would address some of the other barriers, such as in orienting investors to energy efficiency projects and increasing private investment.

Four of the barriers – lack of R&D, lack of quality data, lack of ‘efficiency’ awareness and gaps in stakeholder (including interagency) collaboration – can be resolved through targeted policy actions. In Bangladesh, there is no comprehensive ‘energy’ database. Hence, decisions on access to energy are not data-driven and are often taken on a constituency basis on persuasion by political leaders or vested interests. This too can be resolved by smart policy interventions.

Bangladesh’s energy strategy faces some fundamental challenges. The country intends to increase its power imports from neighbouring countries. But this option will not create an affordable domestic energy supply. The global geopolitics-induced energy trade disruptions have hit Bangladesh hard. Meanwhile, coal is not a sustainable solution.

In both the short and the long run, Bangladesh needs to inculcate the diffusion of technology to reduce energy wastage. Energy efficiency needs to be part of the long-term sustainability agenda of Bangladesh’s growth journey for the two decades leading up to 2041.

In both the short and the long run, Bangladesh needs to inculcate the diffusion of technology to reduce energy wastage.

The supply of Bangladesh’s main domestic fuel, gas, may continue for the next two decades. Using energy-efficient equipment across sectors can make this supply more reliable while reducing the cost. As such, efficiency inculcation can reduce the overall energy demand of the country.

The opportunities

There is also an immense opportunity to generate jobs in energy provisioning services. The shortage of skilled professionals means there is demand for people with industry insights. Professionals who can conduct energy audits, lead innovation, deploy technology and develop local manufacturing will be in high demand. Capacity-building programmes and creating a web of training institutions can reduce the gap. Collaboration with international institutes can help with training of trainers.

In Bangladesh, limited access to information hampers reliable, efficient affordable power. There is a lack of data in the public domain on inefficiencies and resource potential. There is also no site-specific data on solar radiation or wind speed. Lack of demand-side data, like on cultural characteristics, diffusion potential and consumer satisfaction, is yet another impediment to energy efficiency.

To overcome the barriers to energy efficiency in Bangladesh, all stakeholders (such as businesses and users) can create a socio-political environment by reforming institutions and integrating experts. Other plausible steps include formulating a demand–supply energy database and improving coordination across energy-related government agencies.

If the solutions are so obvious, then why do Bangladesh’s policies not reflect an energy-efficient growth path? Currently, the country has conventional supply-oriented planning for its energy sector. This has been in the making for decades and has created vested interest groups. This setup creates structural barriers to new business models.

 

Photo ©️ Mahmud Hossain Opu

a
Joyashree Roy is Founder Director of the Centre on South and South East Asia Multidisciplinary Applied Research Network on Transforming Societies of Global South. She is an economist. She was Bangabandhu Chair Professor at the Asian Institute of Technology (AIT), Thailand, a national fellow at Indian Council of Social Sciences Research and a postdoctoral fellow at Lawrence Berkeley National Laboratory, Berkeley, US. She was awarded the 2021 Paradigm Award by the Breakthrough Institute, California. She specialises in energy economics, environmental economics, econometrics, climate change, water pricing and economy-wide modelling exercises for policy. She pursued her doctoral studies in economics at Jadavpur University, India.
a
Hasan Mahmud is Director of Innovation at Bangladesh Energy and Power Research Council. He is an engineer. He was Bangabandhu Chair Researcher at the Asian Institute of Technology (AIT), Thailand, and Deputy Manager at Sylhet Gas Fields Limited, Bangladesh. His research focuses on energy sector development and sustainable energy solutions. He pursued his doctoral studies in Energy Economics at the School of Environment, Resources and Development, at AIT, Thailand.