The process of energy transition involves shifting from a fossil fuel-based energy system to a low-carbon alternative, presenting a significant challenge for many nations worldwide. The global increase in energy demand driven by industrialization, urbanization, and improved living standards has spurred countries to seek additional energy sources. Bangladesh, too, is on a similar path, focusing primarily on expanding energy generation while neglecting many available energy sources. Energy efficiency, which involves using less energy to perform tasks or deliver services by enhancing energy productivity, plays a crucial role in this context.
Enhancing energy efficiency can be achieved through supply-side energy efficiency (SSEE) and demand-side energy efficiency (DSEE). SSEE aims to reduce energy losses along the supply chain, while DSEE enables consumers to achieve the same service level using less energy. Recognizing the importance of energy efficiency, the Sustainable and Renewable Energy Development Authority (SREDA) introduced the Energy Efficiency and Conservation Master Plan (EECMP) up to 2030 in May 2016, with a roadmap for implementation. The plan set targets to decrease primary energy consumption per unit of GDP by 15 percent in 2021 and by 20 percent in 2030 compared to 2013 levels.
Although the EECMP established a pioneering framework for energy efficiency in Bangladesh, it lacked focus on the transport sector, utility-side efficiency, and energy pricing reforms. This oversight limited the plan’s effectiveness in curbing energy consumption across the economy, especially as the transport sector emerged as a significant energy consumer in Bangladesh. While the EECMP implementation roadmap proposed various specific programs, challenges such as limited institutional capacity within implementing agencies and inadequate inter-agency coordination hindered the progress of initiatives like mandatory energy management, appliance labeling, and energy audits.
According to the International Energy Agency (IEA), governments worldwide, particularly in emerging economies, spent approximately $620 billion on fossil fuel consumption subsidies in 2023. Bangladesh’s energy-related budget subsidies were estimated at 0.9 percent of GDP in FY2022-23 by the International Monetary Fund. Subsequently, the fiscal burden remained substantial, with the revised FY2024-25 budget allocating Tk 90,000 crore for power and fertilizer subsidies due to clearing arrears in the power sector. The government faced additional pressure in FY2025-26 from soaring international fuel and LNG prices, with the finance minister projecting a potential need for an extra Tk 42,600 crore in subsidies for the oil, gas, electricity, and fertilizer sectors.
While lower energy prices are advocated by the government for economic growth and affordability of products and services, prolonged energy subsidies can have unintended repercussions. Subsidies may be seen as an inefficient use of taxpayer funds, as they diminish the financial incentive for households and businesses to adopt high-efficiency technologies. Maintaining artificially low energy prices through subsidies weakens price signals that could encourage energy conservation and investment in efficient technologies.
Creating an ecosystem comprising standards, incentives, labeling, enforcement, and public awareness is crucial for promoting energy efficiency. The government should enforce minimum energy performance standards for appliances like motors, boilers, air conditioners, refrigerators, fans, and lighting products. Additionally, fiscal incentives such as reduced import duties, tax rebates, concessional financing, or utility-sponsored rebate programs can enhance the affordability of efficient appliances. Public awareness campaigns are equally essential to highlight the benefits of energy conservation, as every unit of energy saved contributes to energy preservation.
Contrary to common belief, renewable energy alone cannot address Bangladesh’s energy challenges; it must be coupled with demand-side management. Without energy efficiency measures, the escalating energy demand may outstrip the growth of clean energy, necessitating increased investments in generation capacity and grid infrastructure. As Bangladesh strives for a resilient and sustainable energy future, stakeholders must acknowledge that energy efficiency forms the foundation of a successful energy transition rather than being an optional component.
Mohammad Alauddin is a former rector at Bangladesh Power Management Institute.
Opinions expressed in this article are solely those of the author.
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