Soaring energy prices are putting immense pressure on Bangladesh’s textile industry, leading to the closure of multiple factories and prompting a major reassessment of how to power the country’s leading export sector.
To stay afloat, textile manufacturers are exploring cost-effective and eco-friendly solutions, such as solar rooftop panels and energy-efficient boilers. Without such measures, many risk going out of business.
"While this crisis may be temporary, it highlights the need to address deep-rooted structural issues," said Amirul Amin, president of the National Garment Workers Federation (NGWF), in an interview with the Thomson Reuters Foundation.
As the world's second-largest garment exporter, Bangladesh generated approximately $38.5 billion in clothing exports last year, supplying major retailers like H&M and Zara. The country aims to increase its export revenue to $40 billion this year.
However, competition is intensifying. Vietnam, Bangladesh’s closest rival, is expected to surpass it with projected apparel exports of $44 billion in 2025. Unlike Bangladesh, Vietnam is not grappling with energy shortages and political instability.
Given that the textile sector accounts for 80% of Bangladesh’s total exports and provides jobs for over four million people, the recent crisis has resulted in widespread job losses. More than 50,000 workers have been left unemployed as numerous factories shut down, according to NGWF estimates.
Bangladesh’s slow adoption of cost-effective, renewable energy has made it increasingly dependent on expensive fossil fuel imports, further straining its 1,800 textile mills.
In January, the state-run energy supplier Petrobangla proposed doubling industrial gas prices, causing alarm among manufacturers. The government is considering this price hike to reduce its heavy spending on energy subsidies, in line with recommendations from the International Monetary Fund (IMF).
This proposed increase follows previous financial pressures, including a 150% rise in gas prices for large industries and a 56% increase in workers’ minimum wages between 2022 and 2024.
Textile production remains heavily reliant on fossil fuels, especially during the dyeing and finishing processes, which together account for 80% of the sector’s total carbon emissions. According to a report by consulting firm FSG—commissioned by the H&M Foundation and Laudes Foundation—improving energy efficiency in these processes could significantly reduce both costs and emissions.
Bangladesh has long benefited from affordable labor and energy, but both advantages are eroding, warned Abdullah Al Mamun, director of Abed Textile.
"Further increases in energy prices could put us in a critical situation," he said.
Local manufacturers are also facing greater competition from imported materials, particularly cotton yarn from India, which saw a 40% increase in imports last year.
"With production costs rising across all areas and imports growing, turning a profit has become increasingly challenging," said Monower Hossain, head of sustainability at Team Group, a Bangladeshi textile supplier.
One major factor driving up energy costs is Bangladesh’s increasing dependence on imported fossil fuels for electricity generation, as domestic natural gas reserves dwindle. Without a stronger shift toward renewable energy, these escalating costs could put even greater strain on the economy, according to environmental advocacy groups.
One potential solution for textile factories is increasing the use of solar energy. Some manufacturers, like Team Group, have already installed rooftop solar panels that can supply up to half of their electricity needs. However, these systems have limitations—solar power is unreliable during cloudy weather, and it cannot replace the large amounts of fuel needed for industrial boilers.
Most mills also operate their own captive power plants to ensure continuous electricity supply, but these generators operate at only 36% efficiency, consuming excessive amounts of gas.
To cut costs and improve efficiency, factories need to adopt smarter energy strategies, said Shafiqul Alam, lead energy analyst for Bangladesh at the Institute for Energy Economics and Financial Analysis (IEEFA).
The institute suggests that factories could reduce gas consumption by up to 31% by upgrading to more efficient gas-powered generators and implementing waste heat recovery systems. Transitioning from gas-based to electric boilers and adopting water-efficient dyeing techniques could also lower costs and emissions.
However, these improvements require substantial upfront investment, which many suppliers cannot afford on their own. According to a study by the Apparel Impact Institute (AII), the global fashion industry will need over $1 trillion in investments to reach net-zero emissions by 2050.
To finance these changes, textile manufacturers are urging major fashion brands and financial institutions to provide support.
"Brands and banks should collaborate to offer concessional loans tailored to the urgent needs of smaller textile firms, helping them invest in solar power and energy-efficient technology," said Alam from IEEFA.
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