Strategic interventions in Bangladesh’s small and medium-sized enterprise (SME) sector could reduce more than 14.09 million tons of carbon emissions annually, according to a new study by the private development research organization Change Initiative.
The study highlighted that, alongside environmental benefits, SMEs could generate around $0.4 million in revenue per year through carbon credit mechanisms. Drawing lessons from China, India, and Vietnam, the report noted that decentralized rooftop solar adoption could cut operational costs by 30–50%, boosting the sector’s global export competitiveness while maintaining environmental standards.
Presented at a press briefing in Dhaka, the research offered a detailed, factory-level assessment of energy use and emissions across SME clusters. Currently, over 90% of Bangladesh’s industrial units fall under the SME category, employing about 85% of the industrial workforce and contributing 25–30% to GDP. Despite this, the sector relies heavily on a fossil fuel–based electricity system, exposing it to market volatility and risk.
Bangladesh’s NDC 3.0 target aim to cut 69.84 million tons of CO₂ emissions from the energy sector by 2035, making industrial energy transition urgent. The study identifies four high-impact SME clusters—leather, plastic manufacturing, plastic packaging, and light engineering—responsible for a combined 46.99 million tons of CO₂ emissions annually. Of this, 14.097 million tons could be mitigated through sector-specific interventions:
- Leather: 19–33% reduction potential
- Light engineering: 19–31%
- Plastic manufacturing: 33–49%
- Packaging: 15–28%
The research underscored the transformative potential of solar energy in industrial parks. Utilizing just 10% of available vacant land in BSCIC industrial zones could generate 57 MW of solar power, producing 82,968.88 MWh per year and cutting 51,440.71 tons of CO₂ emissions. Expanding usage to 20% of land could raise generation to 114 MW, reducing emissions by 102,881.41 tons annually.
Change Initiative’s chief researcher, M Zakir Hossain Khan, emphasized the financial viability of rooftop solar systems. A standard 20 kW rooftop installation could produce around 79 units of electricity daily, paying back its cost in just 4.2 years and offering a 23% internal rate of return under a CAPEX model. SMEs can also adopt solar under OPEX models without upfront investment, achieving immediate electricity cost savings.
“Achieving energy sovereignty requires more than paper targets for renewable energy,” Khan said. “Reducing import dependency and ensuring reliable, affordable electricity for SMEs is crucial for Bangladesh’s economy and employment. Countries like China, India, and Vietnam have protected their small businesses from grid instability and rising fossil fuel costs through renewable energy, without losing jobs or productivity.”
The study also identifies structural barriers, including limited access to low-interest financing, high upfront costs, lack of technical knowledge among stakeholders, and the absence of standardized energy audits. To address these, the researchers propose a cluster-based decarbonization pathway, focusing on:
- Partnership-driven renewable energy systems at industrial parks
- Innovative financial models such as OPEX and low-interest renewable financing
- Institutional coordination through BSCIC and other relevant agencies
The findings frame SME decarbonization not merely as an energy policy issue but as a high-impact economic priority—reducing production costs, boosting profitability, enhancing industrial capacity, and supporting employment and climate goals.
