Energy efficiency is key to Bangladesh’s clean energy transition

For some countries, climate risks present an immediate clear and present danger. Bangladesh, for example, ranks seventh in the world as an extremely disaster risk-prone country, according to the 2021 Global Climate Risk Index.

Bangladesh is vulnerable to floods, droughts, and other extreme climate events. In 2022, record-breaking floods affected over 7 million people in the Northeastern region of the country.

Yet, Bangladesh has achieved remarkable economic progress and has emerged as a leading country for climate change adaptation and disaster risk preparedness.

The government of Bangladesh aims to achieve upper-middle income status by 2031. Reaching these goals will require protecting the country's economic and human development from increasingly severe climate impacts.

In recent years, Bangladesh has focused more on increasing the use of renewable energy and facilitating the country's transition to cleaner forms of energy. While the transition to renewable energy is important, it is also important to improve energy efficiency for clean energy transitions.

The International Energy Agency (IEA) dubbed energy efficiency "the 'first fuel' in clean energy transitions" because "it provides some of the quickest and most cost-effective CO2 mitigation options while lowering energy bills and strengthening energy security." In fact, energy efficiency is the second largest contributor to emission reductions in IEA's "Net Zero by 2050" scenario for the global energy transition.

The IEA also estimated "the global energy sector was responsible for nearly 135 million tons (Mt) of methane emissions in 2022." Of this amount, coal, oil and natural gas operations are each responsible for around 40 Mt of emissions and nearly 5 Mt of leaks from end-use equipment.

Currently available technologies can address most of these problems.

The country's 2021 Nationally Determined Contributions (NDCs) commit to reducing Greenhouse Gas emissions by 21.8 per cent by 2030, primarily from actions in the energy sector.

To achieve these NDCs target, it will be important to improve energy efficiency in the industrial sector and reduce fugitive methane emissions in gas pipelines, which is often caused by leaks from gas production, processing, transmission, and distribution. These actions are expected to contribute significantly to achieving Bangladesh's NDCs.

The GoB's climate strategy further targets reducing downstream gas and electricity demand by households, the fourth largest source of the country's GHG emissions. Increasing demand efficiency also benefits the country's economic and fiscal position by reducing gas imports, thus relieving the country's energy import dependence.

Bangladesh will need several investments in the gas sector to help achieve these objectives. For example, the government made it a priority to rollout prepaid gas metres to unmetered residential customers that are being charged a flat regulated tariff regardless of their consumption.

Aside from disincentivising gas use efficiency, flat tariffs particularly impact the poor and vulnerable whose actual consumption is likely to be far less than these rates.

Installation of Supervisory Control and Data Acquisition (SCADA) systems, which enable automated gas network monitoring and control, will also be needed to improve monitoring of gas flows and reducing methane leaks. It is difficult, if not impossible, to identify and remedy these leaks when residential customers are unmetered and gas distribution companies do not have monitoring systems that provide better visibility on gas flows within their networks.

Lastly, the government will need to assess and prioritise carbon abatement opportunities in the oil and gas value chain.

Oil and gas operations are the largest source of methane emissions in the energy sector, which is collectively the second-largest global source of anthropogenic methane emissions after agriculture. In Bangladesh, these emissions were estimated at 408 kilotons in 2020, equivalent to approximately 12.2 million tons of CO2.

Curbing CO2 and methane emissions from oil and gas operations presents an opportunity for carbon abatement in energy supply as the pathways and technologies for it are both clear and cost-effective.

The government's proactive analytical effort in this area should enable subsequent private sector investments in these opportunities, primarily by prioritising carbon abatement action for carbon financing and other similar mechanisms to help reduce the sector's CO2 and methane emissions and their associated economic and environmental costs.

Energy efficiency and carbon abatement present win-win solutions. For Bangladesh, they strongly contribute to the country's climate ambitions while, at the same time, address some of the fiscal stressors caused by its energy import dependency.

Sameh Mobarek is a senior energy and public private partnership expert. Carlos Lopez is a senior oil and gas specialist at the World Bank.