Bangladesh: Industrial Energy Efficiency Finance Program (Financed by the Technical Assistance Special Funds)
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Technical Assistance Consultant’s Report Project Number: 45916 May 2014 Bangladesh: Industrial Energy Efficiency Finance Program (Financed by the Technical Assistance Special Funds) Prepared by: Tetra Tech ES India Limited Plot No 511 5Th Floor D-Mall Netaji Subhash Place, Pitampura, New Delhi – 110034, Delhi, India This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. complex world CLEAR SOLUTIONSTM Industrial Energy Efficiency Opportunities and Challenges in Bangladesh Final Report 2014 Prepared by: Tetra Tech ES, Inc. 1320 North Courthouse Road Suite 600, Arlington, VA 22201 United States Web: www.tetratech.com Confidentiality and Privacy : This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without Asian Development Bank (ADB) authorization. Acknowledgement The Tetra Tech team expresses its sincere appreciation to the Asian Development Bank (ADB) for initiating the Bangladesh Industrial Energy Efficiency Finance Program and providing guidance throughout its implementation. The team wishes to convey thanks to the executing agency, Industrial and Infrastructure Development and Finance Company (IIDFC) Bangladesh for providing local financial guidance to the project. This report has been prepared on the basis of 120 energy audits carried out in Bangladeshi industrial facilities and has benefited from the observations, comments and inputs of a cross section of knowledgeable industry experts and stakeholders. We are grateful to Mr. Martin Lemoine (Sr. Investment Specialist, Asian Development Bank) for his expert guidance in structuring the program. We would like to acknowledge the guidance and support received from Ms. Juliette Leusink (Investment Specialist, Asian Development Bank), in her assistance in framing key issues, participating in workshops in Bangladesh and providing insightful comments on this report. We express our profound thanks to the Bangladesh Resident Mission Director, Ms. Teresa Kho and Mr. Maruf Hossain (Unit Head – Finance and Administration, Bangladesh Resident Mission) and his team for extending logistics support in organizing workshops and visits by international consultants. We are especially grateful for valuable time and unique insights provided by Mr. Matiul Islam, Chairman IIDFC. We thankfully acknowledge the cooperation shown by Mr. Asaduzzaman Khan, Managing Director IIDFC and Mr. Shafiqul Alam, Deputy Manager, Carbon Finance IIDFC in arranging informational meetings and facilitating the participation of financial institutions and banks in the program’s workshops. The report benefited greatly from discussions with a wide range of financial institutions and banks, industry bodies, factory owners, utilities and manufacturers. We express our profound thanks to Kazi Akram Uddin Ahmed, President, The Federation of Bangladesh Chambers of Commerce and Industry and Md. Delwar Hossain, Member, Bangladesh Electricity Regulatory Commission, who provided their blessing and encouragement to proceed in this novel program. It was the team’s honor to obtain the knowledge and guidance of such distinguished experts. Last but not least, we thankfully acknowledge the many individuals mentioned above, as well as many more that remain unnamed, for extending the support needed to complete this task in an orderly fashion. i Final Report | TA 45916-01 BAN Industrial Energy Efficiency Finance Program. Table of Contents Executive Summary .............................................................................................................vii 1. Introduction ....................................................................................................................... 1 2. Energy Efficiency in the Industrial Sectors of Bangladesh - External and Internal Drivers . 3 2.1. The Existing Energy Scenario in Bangladesh.......................................................... 3 2.2. Energy Efficiency Challenges and Opportunities in Bangladesh ............................. 5 2.3. Key Drivers for Energy Efficiency in Bangladesh .................................................... 8 3. Sector Outlook ................................................................................................................ 12 3.1. Sector 1: Textiles, Garments, Leather and Related Industries .............................. 15 3.2. Sector 2: Iron and Steel Industries........................................................................ 24 3.3. Sector 3: Cement and Clinker Industries............................................................... 32 3.4. Sector 4: Ceramics and Glass Industries .............................................................. 40 3.5. Sector 5: Chemical, Fertilizer, Pulp and Paper, Plastics Industries ....................... 49 3.6. Sector 6: Agro-industries, Including Sugar and Jute Industries ............................. 60 4. Policy Support................................................................................................................. 70 4.1. India...................................................................................................................... 71 4.2. Japan.................................................................................................................... 72 4.3. The Netherlands ................................................................................................... 73 4.4. United Kingdom .................................................................................................... 74 4.5. United States ........................................................................................................ 74 4.6. Bangladesh........................................................................................................... 75 4.7. Proposed Policy Package for Bangladesh ............................................................ 76 5. Capacity Building for Promoting Energy Efficiency in Bangladesh................................... 80 5.1. A Need for Capacity Building ................................................................................ 80 5.2. Project Findings .................................................................................................... 80 5.3. Top-Down Approach............................................................................................. 81 5.4. Industrial Energy Efficiency Finance Program....................................................... 82 5.5. Program Findings.................................................................................................. 83 5.6. Priorities for Capacity Building .............................................................................. 84 6. Conclusion ......................................................................................................................85 ii Final Report | TA 45916-01 BAN Industrial Energy Efficiency Finance Program. Consultant Team Name Designation Asian Development Bank (ADB) Martin Lemoine Sr. Investment Specialist Juliette Leusink Investment Specialist Industrial and Infrastructure Development Finance Company Limited ( IIDFC) Matiul Islam Chairman, IIDFC Asaduzzaman Khan Managing Director, IIDFC Shafiqul Alam Deputy Manager, Carbon Credit, IIDFC Tetra Tech Consultant Team Rakesh Kumar Goyal Team Leader Sumedh Agarwal Deputy Team Leader (International) Md. Allauddin Al Azad Deputy Team Leader (National) Zafrul Siddique Deputy Team Leader (National) David Jones Technical Editor and Graphics Expert T. Shankar Narayanan International Sector Expert – Textile, Garment and Leather R. Virendra International Sector Expert – Cement and Clinker Dr. Gurpreet Grewal International Sector Expert – Iron and Steel Anjan Kumar Sinha International Sector Expert – Agro-Industries International Sector Expert – Chemical and Fertilizer, Pulp B. P Bhandary and Paper Nagesh Kumar Jayaramulu International Sector Expert – Ceramics and Glass Hamidul Haq National Sector Expert – Textile, Garment and Leather Md. Sarwar Jan National Sector Expert – Textile, Garment and Leather Mafizul Haque National Sector Expert – Cement and Clinker Md. Asraf Hussain National Sector Expert – Cement and Clinker Fazlul Haque National Sector Expert – Ceramics and Glass Mazharul Islam National Sector Expert – Ceramics and Glass Md. Kaikobad National Sector Expert – Iron and Steel Md. Zane Alam National Sector Expert – Iron and Steel National Sector Expert – Chemical and Fertilizer, Pulp and M. Rahman Paper National Sector Expert – Chemical and Fertilizer, Pulp and Rageb Ahsan Paper J Charagee National Sector Expert – Agro-Industries Md. A Hamid National Sector Expert – Agro-Industries iii Final Report | TA 45916-01 BAN Industrial Energy Efficiency Finance Program. Glossary Abbreviation Term 3G Global Growth Generator ADB Asian Development Bank ASM American Standard Method BACT Best Available Control Technology BCIC Bangladesh Chemical Industries Corporation BCMA Bangladesh Cement Manufacturer’s Association BCWMA Bangladesh Ceramic Ware Manufacturers Association BDT Bangladeshi Taka BEE Bureau of Energy Efficiency BERC Bangladesh Energy Regulatory Commission BFA Bangladesh Fertilizer Association BGMEA Bangladesh Garment Manufacturers and Exporters Association BIEEFP Bangladesh