Bangladesh can cut energy import risks through electrification: IEA

Bangladesh could reduce its dependence on imported fuels by using more electricity in transport, industries and agriculture, according to a new report by the International Energy Agency (IEA).

The shift could help lower fuel import costs and reduce the country's exposure to global energy price shocks and supply disruptions.

The IEA's Special Report on Electrification says developing countries that depend heavily on imported fuels have much to gain by replacing the direct use of oil and other fossil fuels with electricity.

The benefits would be even greater if the additional electricity comes from domestic and low-emission sources. The report does not estimate how much Bangladesh alone could save.

However, the IEA says emerging and developing economies outside China could collectively cut their annual fuel import bills by more than $100 billion by 2035 under its High Electrification Scenario.

That would be equivalent to more than a quarter of their fuel import bills in 2025. The findings are particularly relevant for Bangladesh, which imports petroleum products, liquefied natural gas (LNG) and coal.

As a result, higher global fuel prices or supply disruptions can put pressure on the country's energy sector and foreign currency reserves.

The IEA identifies transport, textiles, food processing and agriculture as some of the sectors with strong electrification potential in developing economies.

Electric vehicles offer major opportunity

Transport could be one of the biggest areas of opportunity. The IEA says people in developing economies generally travel shorter distances each day, while cities are often densely populated. This makes electric motorcycles and three-wheelers particularly suitable.

Popular electric two- and three-wheelers can already travel around 10 times the average daily distance travelled by people in emerging and developing economies on a single charge.

Although electric vehicles can cost more to buy, their running costs are lower. According to the IEA, the additional upfront cost of electric two- and three-wheelers can often be recovered within three to six years.

This could be important for South Asia, where several countries are net oil importers. Wider use of electric vehicles could therefore help reduce petroleum imports and pressure on foreign currency reserves.

Globally, faster electrification could avoid 18 million barrels per day of oil demand by 2035 under the IEA's High Electrification Scenario. Around 80% of the reduction would come from fuel-importing regions.

Opportunity for textiles and food processing

Bangladesh could also benefit from electrifying parts of its textile and food-processing industries.

Unlike steel and cement, industries such as textiles, food processing, dairy, pharmaceuticals and beverages often need lower-temperature heat for hot water, steam and drying.

These processes can be electrified more easily with technologies such as electric boilers and industrial heat pumps.

The IEA estimates that around 40% of energy used for low- and medium-temperature industrial applications globally could already be electrified cost-effectively.

It identifies textiles and food processing among the industries with significant near-term potential.

This is particularly relevant for Bangladesh because textiles and ready-made garments are central to the country's export economy.

The shift could also help exporters respond to changing global market requirements, as international buyers and multinational companies increasingly focus on reducing emissions across their supply chains.

Solar irrigation could replace diesel

Agriculture is another area with considerable potential. The IEA says agriculture accounts for around 17-19% of GDP in South Asia and sub-Saharan Africa, compared with only 1-2% in Europe and North America. Electrifying agriculture could therefore have a greater impact in South Asian economies.

Irrigation is one of the key opportunities. Solar-powered irrigation pumps could replace diesel pumps, particularly in areas where grid electricity is unavailable or unreliable. Electricity could also be used more widely for cold storage and refrigeration of agricultural products.

Weak grid remains a challenge

However, greater electrification would also increase Bangladesh's electricity demand. The IEA says unreliable or expensive grid electricity remains a major barrier to electrification in developing economies. Industries may continue using diesel- or gas-powered equipment even when electric alternatives are more efficient if they cannot get reliable electricity.

Bangladesh would therefore need to strengthen its power system alongside electrification. This would require investment in electricity generation, transmission and distribution networks, battery storage, modern grids and demand management.

The IEA estimates that the pace of global grid expansion and modernisation would need to be around 40% faster through 2035 than over the past decade to support rapid electrification.

Source of electricity also matters

However, simply using more electricity will not automatically reduce Bangladesh's dependence on imported energy. How that electricity is generated will be important.

The IEA says the energy-security benefits are greater when additional electricity comes from domestic and low-emission sources. Renewable energy, supported by stronger grids and storage, could increase those benefits.

For Bangladesh, replacing petrol, diesel or industrial gas with electricity produced from additional imported LNG or oil could simply shift some of the country's import dependence from one fuel to another.

The bigger opportunity would therefore come from expanding electrification alongside domestic and renewable power generation.

Electricity currently accounts for around 23% of global final energy consumption. The IEA says existing technologies could cost-effectively increase the share to around 33%, bringing a proposed global target of 35% by 2035 within reach.

However, the agency says there is no single path for every country. The pace of electrification will depend on each country's economy, energy prices, infrastructure and access to finance.