For a sustainable future, we must take energy efficiency seriously

If we were to stick to simple terms, energy transition denotes systematically moving away from a fossil-based energy structure to a low-carbon energy system, and this has posed a challenge to many countries around the world. This is especially because energy demand has been steadily on the rise globally due to rapid industrialisation, urbanisation, and rising living standards, driving countries to go on a quest for additional sources of energy. Bangladesh, too, has been on a similar journey, although so far, it has mainly focused on increasing generation while a lot of readily available sources of energy remain largely untapped. This is where energy efficiency, the use of less energy to do the same task or provide the same service by increasing energy productivity, comes in.

Approaches to improving such efficiency include supply-side energy efficiency (SSEE) and demand-side energy efficiency (DSEE). SSEE can improve efficiency by reducing losses along the energy supply chain, and DSEE enables consumers to use less energy to provide the same level of service. Realising the growing importance of energy efficiency, the Sustainable and Renewable Energy Development Authority (SREDA) launched the Energy Efficiency and Conservation Master Plan (EECMP) up to 2030 in May, 2016 with an implementation roadmap. The plan aimed to reduce primary energy consumption per unit of GDP (energy intensity) by 15 percent in 2021 and by 20 percent in 2030 relative to 2013 levels.

Tap here to add The Daily Star as a trusted source

The EECMP introduced a pioneering framework for energy efficiency in Bangladesh, but it gave less attention to the transport sector, efficiency on the utility side, and energy pricing reforms. This weakened the plan’s potential to reduce energy consumption across the economy, especially as transport has become one of the fastest-growing energy-consuming sectors in Bangladesh. The EECMP implementation roadmap proposed several specific programmes. However, many of these programmes, particularly mandatory energy management, appliance labelling, and energy audits, have not progressed as rapidly as envisioned due to limited institutional capacity within implementing agencies and lack of effective inter-agency coordination.                   

According to the International Energy Agency (IEA), governments—particularly in emerging and developing economies—spent approximately $620 billion on fossil-fuel consumption subsidies in 2023. The International Monetary Fund estimated Bangladesh’s energy-related budget subsidies at 0.9 percent of GDP in FY2022-23. Since then, the fiscal burden has remained substantial. In the revised FY2024-25 budget, subsidies for power and fertiliser alone rose to Tk 90,000 crore, partly because the government had to clear large arrears accumulated in the power sector. In FY2025-26, the government faced further pressure from soaring international fuel and LNG prices, with the finance minister estimating that the oil, gas, electricity and fertiliser sectors could require an additional Tk 42,600 crore in subsidies.

While the government argues that lower energy prices are beneficial for economic growth and can make products and services more affordable, prolonged energy subsidies can have unintended consequences. For instance, subsidies can be deemed as an irrational use of taxpayer money. Energy costs directly drive efficiency by making waste more expensive. When electricity or fuel prices spike, the financial incentive for both households and businesses to switch to high-efficiency technologies.   By keeping energy prices artificially low, subsidies weaken the price signals that would otherwise encourage households and businesses to conserve energy and invest in more efficient technologies.

However, it’s also true that energy efficiency needs an ecosystem of standards, incentives, labelling, enforcement, and public awareness to support it. The government should strengthen and enforce minimum energy performance standards for appliances such as 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 programmes, can make efficient appliances more affordable. Equally important is sustained public awareness to highlight the benefits of saving energy. After all, every unit of energy saved is, in effect, as good as making a new unit of energy.     

Perhaps the greatest misconception surrounding energy transition is the assumption that renewable energy alone can solve Bangladesh’s energy challenges. However, renewable generation must be complemented by demand-side management. Without energy efficiency, rising demand may continue to outpace the growth of clean energy, requiring additional investments in generation capacity and grid infrastructure. As Bangladesh charts its path toward a resilient and sustainable energy future, concerned authorities must recognise that energy efficiency is not the missing piece of the puzzle, but the foundation upon which a successful energy transition must be built.

Mohammad Alauddin is former rector at Bangladesh Power Management Institute.

Views expressed in this article are the author's own. 

Follow The Daily Star Opinion on Facebook for the latest opinions, commentaries, and analyses by experts and professionals. To contribute your article or letter to The Daily Star Opinion, see our guidelines for submission.