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Shaping Sri Lanka’s industrial recovery: Industry and government leaders convene..

Representatives from Sri Lanka’s business community, government, and the finance sector convened in Colombo to discuss the mix of policies, financial mechanisms and technologies, crucial for propelling the country’s industrial decarbonization and economic recovery. This event is the second edition of the Industry Dialogue organized by the European Union (EU)-funded Accelerating Industries’ Climate Response in Sri Lanka project.

“For Sri Lanka to emerge stronger, industrial decarbonization must be at the heart of the country’s economic recovery from the energy crisis of the past two years,” said Secretary to the Ministry of Industry Thilaka Jayasundara during one of her interventions. “This means that manufacturing processes should become greener by shifting away from fossil fuels, scaling-up renewable energy and adopting energy-efficient solutions.”

Industries employ 30 percent of the nation’s workforce and deliver the second-highest share of GDP, but they also consume large quantities of fossil fuel imports. In recent years, this has led to challenging cost rises for many businesses, with petrol shortages further disrupting operations.

To open the half-day event, Head of Cooperation for the European Union Delegation to Sri Lanka and the Maldives Dr Johann Hesse reminded more than 120 participants of the risks of climate change and the need for action at all levels: “By reducing energy waste and greenhouse gas emissions, industries will not only chart a more sustainable path to economic growth, but will also help the country meet its climate goals and energy security. We are happy to assist Sri Lanka to meet the goals it has committed to achieve.” he said.

The Sri Lankan government has pledged that 70 percent of the country’s energy will come from renewable sources by 2030. As part of this, Sri Lankan industries must reduce their fossil fuel use, aiming for a 7 percent reduction in industrial emissions.

As part of the program, international experts presented recent research by the United Nations Industrial Development Organization (UNIDO) on industrial decarbonization trends in Sri Lanka, focusing on key manufacturing sectors like textiles, food and beverages, rubber production, and cement. The research shed light on the existing policy and regulatory landscape and identified institutional needs and capacity gaps essential for advancing Sri Lanka’s climate goals.

During a panel discussion, finance experts emphasized that high costs are still a significant barrier for businesses switching to cleaner energy sources. UNIDO’s representative at the event Nicholas Dehod, pointed out the benefits for Sri Lankan businesses in moving away from expensive and polluting imported fossil fuels. However, he noted that, “many companies still find the costs of necessary technologies and expertise too high, exacerbated by a lack of accessible loans and financial incentives for decarbonization investments.” Dehod referenced a 2023 assessment exploring financing options for industrial decarbonization undertaken by UNIDO.

The industry dialogue included a roundtable discussion on the role of energy efficiency in industrial decarbonization, highlighting successes from implementing internationally recognized energy management systems training across industries. Within a year, measures adopted by 45 energy management trainees reduced energy consumption by 6.9 GWh and GHG emissions by 5,400 metric tonnes. This reduction is equivalent to removing over 1,000 petrol cars from the road for a year.

The Accelerating Industries’ Climate Response in Sri Lanka project is a five-year initiative designed to help the country’s industrial sector transition to a low-carbon future. The project was launched in mid-2022. It is led by the Ministry of Environment, Ministry of Industry, and Ministry of Power and Energy, implemented by the United Nations Industrial Development Organization, and funded by the European Union under the Global Climate Change Alliance+.

For more information about the project activities, please visit: www.industriesclimateresponse.com.



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