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 aimed to improve the existing steel production technology and optimise 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 389,747
NCF Financing: EUR 288,166
Agreement Signed: 21 March 2013
Project Classification: Mitigation
Duration: 58 Months

Project Objective

The overall objective of the project was to improve energy efficiency in the steel sector in Bangladesh. The project intended to achieve this by improving the existing steel production technology and optimising production routines. In addition, the project sought nationwide transition through developing a draft Nationally Appropriate Mitigation Action plan (NAMA), which aimed to put energy optimisation in the steel sector on the national agenda.


The project has supported the improvement of energy efficiency and working conditions in steel production. It designed, constructed and tested a simple, locally produced heat recovery system, which can capture lost heat from steel melting furnaces and reuse the energy to preheat incoming scrap. A holistic approach was applied and the project improved both the production technology and optimised the steel melting process. The optimised production methods were disseminated through training workshops for the staff involved in the daily production. The training program involved the entire production line from the incoming scrap to the outgoing end product. The installation of the heat recovery system did not take place as anticipated during the project due to changes linked to technology.

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

Relevance for Climate Change

Improved energy efficiency 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. Direct climate change impacts of the project are related to reducing the CO2 emissions at Vikrampur Steel factory where, as a result of training activities, the energy savings are estimated to be 2.5 million kWh/year, which is equivalent to a reduction of 1,500 tCO2e/year. Other positive climate impacts include reuse of oil and cleaning of combustion fumes from the furnaces. 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 has challenged traditional steel production methods and disseminated new, more efficient practices. The current steel production practises are commonly used all over Asia in hundreds of steel melting shops. The results from pilot factories can help to illustrate the possibilities of new energy efficient technology in other steel production factories in the region.

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