Bangladesh’s ready-made garment (RMG) sector could improve cost predictability and competitiveness by expanding renewable energy use, but structural “carbon lock-in” linked to machinery, financing and regulations means the transition cannot be achieved through incremental efficiency measures alone, according to a new study by the Centre for Policy Dialogue (CPD).
The findings were presented at a dialogue titled “Industrial Decarbonization in the RMG Sector: How to Take it Forward?” held at the BRAC Centre in Dhaka on Sunday as part of CPD’s National Dialogue on Industrial Decarbonization series.
CPD Programme Associate Sami Mohammad presented the study, “Renewable Energy as a Competitiveness Strategy for Industrial Decarbonization in Bangladesh’s RMG Sector.” CPD Research Director Khondaker Golam Moazzem chaired the event.
The study, based on primary data from 350 RMG factories covering 78 machine types across nine production sections, is described as the largest factory-level production and energy dataset compiled for the sector.
According to the research, the RMG sector accounts for 15.4% of Bangladesh’s total greenhouse gas emissions and has pledged to cut emissions by 30% by 2030 under the UN climate framework.
The sector is also facing increasing pressure from the European Green Deal, the European Union’s Carbon Border Adjustment Mechanism and Bangladesh’s upcoming LDC graduation, while international buyers are demanding reductions in Scope 3 emissions.
Machinery creates carbon lock-in
Econometric modelling found that capital and energy function as complements rather than substitutes in RMG production. This means that expanding machinery under existing technologies tends to increase energy consumption rather than reduce it, which researchers identified as evidence of technological lock-in.
The study also identified a group of “irreplaceable” machines, concentrated largely in the sewing category. Sewing machines account for 85.2% of installed machine capacity but offer less than 3% of the potential energy savings from substitution.
By contrast, cutting machinery represents only 5.5% of the machine stock but accounts for 27.3% of total potential energy savings.
Washing and dyeing, meanwhile, was identified as the most energy-intensive stage of production despite its relatively small share of the machinery base.
Rooftop solar offers cost benefits
The study found that rooftop solar is financially viable for RMG factories and could help protect them from volatile LNG-linked energy prices.
A Monte Carlo simulation showed that renewable-energy offsets could reduce energy-cost volatility for 96% of factories.
However, the researchers noted that solar power cannot replace gas-fired thermal processes used in washing and dyeing. As a result, part of the sector’s emissions would remain beyond the reach of current renewable-electrification solutions.
The recommended machinery reallocation would require an estimated Tk 6,604 crore to Tk 13,209 crore, with more than 70% of the total cost concentrated among the largest factories.
CPD recommendations
The study recommended directing machinery-substitution incentives toward categories with the greatest potential, particularly cutting and finishing.
It also called for scaling up renewable electrification alongside research and development into lower-energy sewing technologies, providing blended financing for smaller and capital-constrained factories, and shifting regulation from procedural compliance toward measurable, outcome-based emissions reporting.
Speakers at the dialogue said decarbonising the RMG sector would require coordinated technological, financial, institutional and behavioural measures, arguing that isolated or partial initiatives would not be enough to overcome the sector’s carbon lock-in.
