Project Brief INVESTMENT CLiMATE | WORLD BANK GROUP 90715 Bangladesh Champions Low- Carbon Growth Project At A Glance Results and Impacts Country/Region BANGLADESH/SOUTH ASIA • The project has generated more than Product IndustRY-SPeCiFiC InVestMent CliMate/ $170 million in private investments CLIMATE EFFICIENT INDUSTRIES towards improving energy efficiency. A low-carbon industry project in Bangladesh is aiming to reduce • Three firms in the EPZ have adopted the carbon footprint of the country’s export processing zones five recommendations from low- (EPZs). The goal is to assist the government in establishing carbon zone guidelines. guidelines and policies that encourage firms within EPZs to • The first co-generation project, which consume less energy and reduce up to 15 percent of carbon has potential for transformative dioxide equivalent, a standard unit for measuring carbon changes in power production across footprints. Improved efficiency will also contribute to the the country, has been launched. competitiveness of industries applying these measures. Context Rising fuel and utility costs are putting a strain on investments in the textile and ready-made garment sectors, which have a large presence in EPZs. In addition, global brands such as Adidas, Puma, and Levi’s are introducing stringent criteria for supply chain partners and demanding greater compliance, as well as more climate-friendly and greener operations. Though Bangladesh is not a major contributor IN PartNerSHip WitH The RePubliC oF KoRea, EuRoPean Union, the United KingdoM World Bank Group to greenhouse gas emissions, there is symbolic value in The energy use analysis identified a number of EPZ-wide lowering emissions through energy efficiency measures, reforms that could be implemented by a majority of firms which have become an important element in cutting costs in a cost-effective way as well as larger capital expenditure and helping producers maintain their competitiveness. projects. The “low-hanging fruit” were simple changes The Bangladesh EPZ Authority has partnered with IFC’s that had an average payback period of one to three years Bangladesh Investment Climate Fund, the World Bank, and a majority of which firms could finance internally. the United Kingdom’s Department for International These included improving specific measures such as boiler Development, the European Union, and the government efficiency, steam condensate recovery, and steam trap of Korea to develop and implement a low-carbon green management. Larger capital expenditure projects included zone initiative. steam generation from the heat waste of exhaust gases, which eventually led to the country’s first co-generation project. Our Role The government of Bangladesh requested help from Findings from the energy use analysis were fed into investment climate teams of the World Bank Group to regulatory analysis to support implementation of identified reduce the use of energy and lower greenhouse gas opportunities through low-carbon zone guidelines and emissions in traditional EPZs. roadmaps. These guidelines and roadmap will be used by the EPZ authority and firms in order to promote targeted Project activities, designed to ensure that reform options low-carbon processes within their manufacturing sectors were profitable for the private sector, benefitted from and infrastructure services. a bottom-up approach. The team initially analyzed greenhouse gas emissions and energy-use by conducting energy audits of a representative sample of firms in the zones to set baselines and reduction targets. Once energy- saving opportunities were identified, they were screened to ensure financial viability and a short pay-back period. “We are thankful for the work IFC has carried out in the low-carbon zones initiative in Bangladesh. One of the key opportunities that was identified… was co-generation for generating steam to be used in industrial processes. Certain firms have already shown interest in using this method ... It is a nation-wide opportunity that would greatly improve the currently poor efficiency of power To date, the project has successfully assisted the producers.” government in adopting these guidelines. This proactive step showed how developing countries with weak EMDADUL HAQUE infrastructures such as Bangladesh can address climate Chairman Bangladesh Energy Regulatory Commission change cost-effectively by combining “green” and “growth” for the benefit of the private sector. Contact Han-Koo Yeo | Senior Investment Policy Officer | Investment Climate Email: HYeo@worldbank.org | TEL: +1-202-458-2880 | www.wbginvestmentclimate.org