Bangladesh’s sustained push to improve energy efficiency is beginning to deliver measurable economic benefits, including lower fossil fuel imports, reduced pressure on foreign exchange reserves and long-term cost advantages for energy-intensive industries such as textiles and apparel.
According to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA), Bangladesh improved its energy efficiency by 13.64% in less than a decade, averaging annual gains of 1.52%. These improvements have helped cut fossil fuel import costs by an estimated US $ 3.3 billion, underscoring the growing role of efficiency as a central pillar of the country’s energy security strategy.
The report, authored by Shafiqul Alam, lead energy analyst for IEEFA South Asia, said Bangladesh is now on track to meet its 2030 energy efficiency target a year ahead of schedule, provided the current pace of progress is maintained.
Bangladesh’s energy efficiency efforts were formally structured with the launch of the Energy Efficiency and Conservation Master Plan in 2016, which established the policy and institutional framework for efficiency standards, labelling systems and industrial optimisation. However, the report noted that momentum slowed after early gains in FY17, with progress remaining uneven until FY ’21.
A turning point came in FY ’22, when global energy price shocks and domestic supply disruptions brought efficiency to the forefront of national policy priorities. Higher tariffs exposed inefficiencies across households and industrial operations, prompting a sharper focus on reducing energy waste.
According to IEEFA estimates, by FY ’23–24 efficiency gains helped Bangladesh avoid fossil fuel consumption equivalent to 7.02 million tonnes of oil equivalent, translating into US $ 3.34 billion in avoided import costs.
For the textile and apparel sector—one of Bangladesh’s largest energy consumers—the gains are strategically significant. Energy accounts for a substantial share of production costs, particularly in spinning, dyeing, finishing and captive power generation. The report highlighted electric motor upgrades, variable speed drives, improved captive power efficiency and a shift towards electric boilers as key measures capable of delivering meaningful savings in industrial settings.
IEEFA also identified passive building design, energy-efficient machinery and robust standards and labelling regimes as critical tools for reducing long-term energy demand without compromising output. These measures are seen as particularly relevant as factories expand and modernise across Bangladesh’s industrial zones.
Beyond environmental benefits, the report framed energy efficiency as a form of economic insulation for the country, reducing exposure to volatile global fuel markets, easing balance-of-payments pressures and strengthening industrial competitiveness.
With average annual efficiency improvements holding at around 1.52%, Bangladesh is approaching a point where efficiency gains could structurally reshape energy demand growth rather than merely offset short-term shocks. As global buyers increasingly scrutinise energy use and carbon intensity across supply chains, the report suggested that Bangladesh’s progress on efficiency could also enhance its appeal in sustainability-focused export markets, especially for textiles and apparel.
