As Bangladesh’s Textile Sector Makes Green Switch, Lessons For India’s Export Giants Too

Bangladesh has been a laggard when it comes to Grid-scale solar adaptation, historically. The country, which also imports power from India, faces a challenge when it comes to energy, with a reliance on natural gas besides thermal power from India.

However, there have been clear signs of acceleration in its solar installation drive recently. At the forefront is the country’s textile sector, responsible for a significant part of its growth story, and the largest contributor to its exports.  The adaptation of clean and renewable energy by the textile sector is setting an example to other sectors of the economy, besides helping develop the market for solar services in Bangladesh.

As of April 2023, the country had the capacity to generate 787 MW of renewable energy, of which 553 MW came from solar. However, the growth of the sector has faced obstacles due to various bottlenecks, including the scarcity of available land suitable for constructing large-scale solar plants. Of course, Bangladesh’s location in a cyclone prone region has also been a challenge to overcome. That was one reason why the biggest solar success story in the country until recently were small solar home systems.

Roof-mounted solar panels have emerged as an ideal solution to diversify the energy mix, especially in light of the prevalent reliance on natural gas.

Textile Sector Leading the Way

Several textile firms have come up with green projects, diversifying their business. For instance, a Bangladeshi fabrics maker, Paramount Textile Ltd (PTL), recently decided to diversify its portfolio with an investment acquiring a 49 per cent stake in Dynamic Sun Energy Private Ltd, in the Pabna district in northwestern Bangladesh. Dynamic Sun Energy has signed a 20-year power purchase agreement with the Bangladesh Power Development Board (BPDB) to supply electricity to the national grid.

This isn’t the first case of PTL, a textile firm, getting interested in the renewable energy sector. For Paramount, the investment is aligned with its strategy to diversify its business interests. It is already invested in a JV for a 30 MW solar power plant, along with a 200 MW furnace oil-based power plant in the country.

In another instance, a Swedish solar energy company Midsummer received an order for a solar roof from Pioneer Knitwears, one of the leading textile companies in Bangladesh. Midsummer will install a PV system consisting of nearly 500 square meters of solar panels at a textile factory in the city of Mymensingh, Bangladesh. This corresponds to 54.7 kWp with an estimated annual electricity production of approximately 60,000 kWh. Pioneer Knitwears has one of the world’s largest clothing retail chains as a customer, and this customer is financing the installation of the solar roof.

Similarly, there has been a surge of green factories in the country with a record-breaking 27 factories receiving certification in 2022 alone, from the US Green Building Council (USGBC) for Leadership in Energy and Environmental Design (Leed). As per Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a total of 180 factories in the country’s apparel sector currently hold the Leed certification. The RMG sector of Bangladesh has consolidated its position in green manufacturing units with 58 in the platinum category, 108 in gold, 10 in silver and another four Leed-certified factory buildings as of December 13, 2022.

Why Sudden Surge of Green Factories?

Bangladesh is aiming to generate at least 40 per cent of its total electricity from renewable sources by 2041, with solar being viewed as having the highest potential. Further, the rising fossil fuel costs have also made it crucial for the export-based country to substitute its reliance on expensive and highly volatile imported liquefied natural gas (LNG), coal and oil, with renewable energy. For instance, amid the high fossil fuel costs, the government raised the price of electricity twice by 5 per cent in 20 days in January 2023, as reported by IEEFA. Between these electricity price hikes, the government increased gas prices from 14 per cent to 179 per cent for different sectors.

In addition to these apparent reasons, the pressure is also piling in from the biggest customers of textile exports in the West to clean up supply chains. This prompted the top textile exporters to lead the way in pushing for solar and other avenues to reduce emissions.

Lessons for Indian IT Sector

In some ways, there might be lessons for Indian IT giants from Bangladesh’s textile transformation. Like the textile sector in Bangladesh, India’s IT giants also earn most of their revenues from exports. That means, they have every reason to follow norms in their customer markets, instead of trying to take advantage of relaxed norms in India. Especially when going truly green could actually become a selling point soon.

Consider how Facebook owner Meta has committed to reaching net zero emissions across its value chain in 2030 and is aiming to reduce its Scope 1 and Scope 2 emissions in line with climate science by increasing the efficiency of its operations and maintaining 100 per cent renewable energy. Similarly, Microsoft is also pushing heavily on the net zero emission front. The multinational mammoth has set a goal to become carbon negative by 2030, while by 2050 the company says it will have removed its historical emissions since its founding in 1975. Google has one of the most, if not the most, ambitious goal of operating all of its data centres and office campuses on 24/7 carbon-free energy by 2030. The firm is heavily investing in research and development on this front. The firm started purchasing renewable energy in as early as 2010, and in 2017 became the first major company to match 100 per cent of its annual electricity use with renewable energy purchases.

Indian IT firms’ targets, while good, pale in comparison to the aggressive stance of these foreign multinationals. For example, WIPRO aims to achieve carbon neutrality by 2040. On the way, it aims to reduce Scope 1 and 2 emissions by 59 per cent by 2030 from the 2017 baseline and Scope 3 emissions in 3 categories (contributing to 80 per cent of emissions) by 55 per cent by 2030 from the 2020 baseline. Further, the firm aims to source 100 per cent of renewable energy for purchased electricity by 2030. Another Indian IT leader Infosys aims to decrease carbon emissions by 12.5 per cent by 2025 from a baseline of 2020, on its way to achieving carbon neutrality by 2040. We believe there is a strong case for India’s IT firms to shift completely to renewable energy by 2025, for starters. There is a compelling economic and marketing case for it, and for once, the local rules also enable it.