NDF - Financing for climate change and development projects

NCF: NAMA and Innovative Energy Optimisation in the Steel Sector in Bangladesh [NDF C3 D1]

Photo: Fridolin Müller Holm
Photo: Fridolin Müller Holm
The project aims at improving the existing steel production technology and optimising production routines in order to improve the overall energy efficiency in the steel sector in Bangladesh

NAMA and Innovative Energy Optimisation in the Steel Sector in Bangladesh
Ref: NDF C3 D1

Nordic Partner: Viegand & Maagøe A/S
Local Partner: Modern Erection Ltd and Vikrampur Steel Ltd
Other Partners: NIRAS A/S and Royal Danish Embassy
Total Project Cost: EUR 461,650
NCF Financing: EUR 299,340
Agreement Signed: 21 March 2013
Project Classification: Mitigation
Duration: 24 Months

Project Objective

The overall objective of the project is to improve energy efficiency in the steel sector in Bangladesh. The project intends to achieve the objective by improving the existing steel production technology and optimising production routines. Nationwide transition will be sought through developing a draft Nationally Appropriate Mitigation Action plan (NAMA), which aims to put energy optimisation in the steel sector on the national agenda.


The project will support the improvement of energy efficiency and working conditions in steel production. It plans to pilot simple, locally produced heat recovery systems at two steel factories, which will capture lost heat from steel melting furnaces and reuse the energy to preheat incoming scrap. A holistic approach will be taken and the project will improve both the production technology and optimise the steel melting process. The optimised production methods will be disseminated through training workshops for the staff involved in the daily production. The training program will involve the entire production line from the incoming scrap to the outgoing end product. The installation of the heat recovery system and streamlined production process is estimated to cut the production cost of the participating steel companies significantly. The process optimization part is expected to be finished in 2014.

The project will also develop a draft NAMA proposal for implementation in the steel sector in Bangladesh and establishing specific Measuring, Reporting and Verification (MRV) standards for the sector, which can attract financing for up-scaling the mitigation action. The NAMA proposal will be prepared in close cooperation with the Government of Bangladesh, represented by the Department of the Environment. The NAMA proposal will elaborate on the most appropriate and least costly low-carbon initiatives in the steel sector and propose suitable up-scaling actions to improve the environmental sustainability and cost-effectiveness in the sector.

Relevance for Climate Change

The project has a direct greenhouse gas reduction impact by helping highly energy-intensive steel factories to reduce their energy demand. As the current energy generation at steel factories relies heavily on fossil fuels, improved energy efficiency can reduce their GHG emissions. The NAMA proposal could indirectly lead to considerable environmental effects if the mitigation measures would be up-scaled in the entire steel industry of Bangladesh.

Innovation and Knowledge Transfer

The pre-heat systems have been already installed in large furnaces in Europe and the United States, but the small-scale adoption of the technology is still limited. The innovative technology in the local context allows waste heat to be utilised by introducing very simple upgrades to the existing technology, which can be constructed and maintained locally. The training part will challenge traditional steel production methods and disseminate new efficient practices. The current steel production practises are commonly used all over Asia in hundreds of steel melting shops. The results from pilot factories will help to illustrate the possibilities of the new energy efficient technology in other steel production factories in the region.

Key recent milestones achieved as of June 2016

  • The heat recovery system ready for installation next to the steel furnace - not yet installed.
  • The training program completed
  • NAMA component completed

More information