Opinion: Your $30 Jeans Are Running Out of Cheap Power

For decades, the fast fashion filling your closet has depended on a simple equation.

Bangladesh’s 4,000-odd garment factories weave, cut and assemble clothes using some of the cheapest skilled labor on the planet. Gas from domestic fields provides cheap electricity and heat for looms, dye vats and sewing machines, while exports finance growth.

There’s just one problem: The cheap gas has been running out for years, with reserves potentially going dry as soon as 2031. Rather than rapidly developing clean alternatives, Bangladesh has fallen back on LNG and coal, while putting roadblocks in the way of zero-carbon power. The Iran war has turned that slow-burning failure into an emergency. Right now, Bangladesh’s commitment to fossil fuels is giving it one of the world’s most profound energy crises. The consequences may soon be showing up on the racks of your local fashion retailer.

Almost a third of the country’s gas now comes in the form of LNG, mainly from Qatar. With the war in the Middle East choking that off, electricity has been cut for as long as 16 hours a day in places. For garment businesses, that’s making it almost impossible to uphold hard-won reputations for efficiency and just-in-time flexibility.

About 90 percent of knitwear factories had suffered electricity shortages, 60 percent were at risk of defaulting on loans, and 55 percent had experienced cancelled or reduced orders, according to a recent industry survey. More than 200 businesses say they could shut completely if current conditions persist.

Even the back-up system is struggling. In industrial areas, filling stations are selling five times their normal diesel volumes as factories scavenge for generator fuel. With global diesel prices breaking records, government-run distributor Bangladesh Petroleum Corp. warned last week it may run out of funds next month to pay for fresh imports.

The warning signs were there years in advance. When the last gas crisis hit after Russia invaded Ukraine in 2022, Pakistan faced the same problem, and pivoted aggressively to solar power. Rooftop panels provided an estimated 28 percent of Pakistan’s electricity last year, up from 10 percent two years earlier. Textile and garment businesses have been some of the earliest adopters.

Bangladesh is less blessed geographically. With 174 million people living in an area the size of England, the entire country is about as densely populated as Chicago, leaving precious little land for solar. It’s generally too low-lying for hydro, and too becalmed for wind power. Even planned electricity imports from hydro-rich Nepal have suffered after devastating floods there last month damaged power plants.

Yet it’s not entirely without space. A 2024 satellite study estimated that there was 30 GW of rooftop solar potential, assuming coverage comparable to what’s currently seen in Australia and the Netherlands. That could generate 40 terawatt-hours a year, equivalent to two-fifths of current grid supply. Covering just 10 percent of the country’s fish-farm ponds with panels, common in China and Taiwan, could produce another 29 TWh.

The problem is the thicket of baffling regulations that have deterred investment. Imported coal for power stations attracts a preferential 5 percent tax rate, while LNG gets 9.5 percent. Yet until this year, a developer financing a rooftop solar system on a garment factory faced taxes of almost 29 percent for imported equipment, plus caps on system sizes. Dhaka lowered that tax rate to 1 percent last week, but only temporarily.

Rooftop solar systems can now deliver electricity at about a third of the cost of grid electricity, but until recently that price signal was dulled by policies that make fossil power seem artificially cheap. The government sold LNG for about 20 percent less than it cost last year, and the going rate for spot cargoes has roughly doubled since the war in Iran. Energy subsidies will eat up 771 billion taka ($6.29 billion) in the 2026 fiscal year, according to a local think-tank — equivalent to roughly 8 percent of the government’s budget.

The only bright spot is that the first nuclear plant, built with Russian assistance, is due to go live within months. If all goes to plan, the Rooppur facility could provide about one-sixth of the country’s electricity — but demand keeps on growing, and a second facility is unlikely before 2040.

Clean energy can grow astonishingly quickly when the policy settings are right. The 27 gigawatts of solar that Pakistan installed in two years through 2025 would be sufficient to power almost a third of Bangladesh’s grid.

More comprehensive action is needed before it’s too late. Plenty of other emerging economies envy Bangladesh’s market share in the global fashion industry, and can match talented and cheap labor with less dysfunctional power grids. Dhaka should move fast to drop taxes on all clean energy equipment to zero, while removing red tape and building more transmission lines to its better-endowed neighbors India, Nepal and Bhutan.

Bangladesh’s garment miracle was built on its reserves of cheap gas. Keeping the magic going will require finding a way to live without it.

By David Fickling