Sustainable Manufacturing and Environmental Pollution Programme

The Electric Three-Wheeler Sector in Bangladesh: Regulating for Growth, Preventing Lead Pollution, and Unlocking Green Investment

Electric three-wheelers – EZ bikes, mishuks, and e-rickshaws are the primary mode of transport for millions in Bangladesh, with 3 to 4 million vehicles serving 112 million people every day. This growing sector, valued at US$ 871 million, is important for its role in affordable transport, reducing fossil fuel dependency, and creating local jobs and small enterprise opportunities.

Surprisingly, despite the electric three-wheeler industry’s immense size and market value, the sector is not officially recognized by the Bangladesh Road Transport Authority (BRTA) and National Electric Vehicle (EV) policy. As a result, it operates informally, escaping regulatory oversight.  In this unregulated market, the use of low-quality lead-acid batteries proliferates, and informal lead recycling practices are widespread.  The Informal lead recycling practices are lax, conducted in open pits, and pose environmental risks, but broader economic concerns relate to substantial tax revenue being lost in the informal battery markets, and the heightened energy requirements associated with low-quality batteries.

Studies on blood toxicity show that Bangladesh is the fourth most lead-polluted country globally.  Approximately 60% of children are suffering from lead poisoning. This toxic heavy metal poses severe health risks, particularly to children, resulting in detrimental consequences such as brain damage in younger children, cardiovascular disease among adults, and increased incidence of terminated pregnancies in women.

A set of EZ Bike lead-acid batteries costs over 72,000 Tk (or US$650) but lasts only 8 to 11 months. This short life causes a high recycling rate and increased lead pollution. Improving battery longevity can mitigate lead poisoning. Doubling the lifespan of lead-acid batteries from 1 year to 2 years reduces recycling frequency, halving lead and energy emissions.

The SMEP Programme is addressing these challenges head-on.  Pure Earth Bangladesh and the United Nations Conference on Trade and Development (UNCTAD) hosted a workshop in Dhaka on April 3 2024 titled ‘Unified Policies and Healthier Journeys’, to share insights from SMEP-funded research into potential solutions.  The discussions were led by Amrita Kundu from Georgetown University, Washington DC; Prof. Erica Plambeck from Stanford University; and Dr. Atiq Zaman from Curtin University, Australia. They bring years of dedicated research experience in business models, innovation, and policy reforms within the electric vehicle industry

Prof Amria Kundu of Georgetown University, and Mitali Das of Pure Earth Bangladesh
E Mobility Workshop Dhaka 2 April 2024
Prof Erica Plambeck of Stanford University engages with policymakers

The event gathered over 30 stakeholders from various sectors including government agencies, NGOs, international development organizations, financial institutions, and academics to collaborate on solutions. The workshop resulted in 8-point policy recommendations that include:

  1. Formalizing the electric three-wheeler sector, through its formal regulatory recognition;
  2. Implementation of a battery tagging system for manufacturing quality assurance
  3. Tracking and traceability technology for battery, monitoring, and enforcement of end-of-life management;
  4. The establishment of a national registry of operators for accountability;
  5. Formal recycling protocol for used lead-acid batteries;
  6. Providing incentives for local adoption, and, reducing import tariffs for quality-assured lithium batteries
  7. Financial inclusion in the e-mobility sector; and
  8. Combat electricity pilferage by using smart meters, and data tracking options.

The electric three-wheeler sector intersects with various policy areas, including waste management, environmental health, trade, energy, taxation, and labour.  Md. Atik Ullah, Assistant Director of Bangladesh Standards and Testing Institution (BSTI) stressed that formal recognition of three-wheelers by the Bangladesh Road Transport Authority (BRTA) is crucial for quality monitoring and regulation. This step would allow BSTI to oversee both vehicles and batteries, facilitating registration and battery management tracking.   Both the vehicles and this battery segment are informal and unregulated, resulting in large tax losses for the government.  Considering that only 30% of the Used Lead Acid Battery (ULAB) recycling is formal, the tax revenue loss for the government reaches US$91 million per year.

While household batteries are covered by the national hazardous e-waste policy, used lead-acid batteries (ULABs) from electric three-wheeler transportation are not included. Despite the ULAB industry falling under multiple regulatory bodies, there is a lack of harmonization among ministries. The legalization of electric three-wheelers is still undecided, with various authorities, including the Ministry of Home Affairs, Ministry of Road Transport and Bridges, Ministry of Environment, Forest and Climate Change, and Ministry of Industries, yet to determine jurisdiction.

Many informal battery recyclers have upgraded to motorized factories and claim these facilities as formal. Although they have secured environmental clearance certificates, they still operate outside proper recycling standards, polluting the environment and resulting in high levels of human exposure. Protocols for identifying and certifying the most environmentally responsible battery recycling facilities should be developed, ensuring they recover over 95% of lead from batteries; equivalently, emitting less than 5% of the lead into the environment.

Dr. Mahfuzar Rahman, Country Director, Pure Earth Bangladesh explains, “Pure Earth has identified and assessed over 300 toxic sites, particularly abandoned ULAB recycling sites, which pose significant environmental and health risks to local communities. With population growth, rising demand, and increased connectivity and electrification, the situation of lead pollution could escalate if left unchecked. A multi-sectoral approach is needed to bring impactful solutions.”

Workshop Participants in Dhaka 3 April 2024: Rapid E-Mobility Transition, Lead Poisoning, and Market and Policy Innovation Opportunities

Henrique Pacini, Economic Affairs Officer, United Nations Conference on Trade and Development (UNCTAD) joined the workshop activities.  Pacini believes that the work is well-timed to bring regulatory solutions to bear, to improve the sector’s efficiency.  “The legal formalization of the sector, coupled with lower import tariffs for higher quality and less polluting batteries, can help promote responsible manufacturers and recyclers, reducing pollution.”

Introducing high-quality lithium (Li) batteries offers several advantages, including five times the lifespan and no lead poisoning, along with a 30% reduction in electricity consumption. Reducing the current high import tax on Li can support the development of the local Li battery assembling industry. Financing facilities are essential to promote the adoption of these batteries, providing options such as loans, leases, and swaps for manufacturers and end users alike.

Bidyut K. Saha, the Senior Investment Officer of The Asian Development Bank (ADB) expressed that the ADB views transportation as a key investment area. Formalization and registration of electric three-wheelers as well as the quality and safety of the batteries are essential to unlock green investment potential. He expressed support for providing the necessary assistance to develop these systems to drive progress in the sector.

The participants recommended that all batteries in the market must have a tag, this can be done by implementing tracing technology and establishing a national database of cell importers, battery assemblers, and electric vehicles. Data from the tag confirms payment of a fixed fee/tax per battery. The tag can be tracked using readily available technology. Enforcement at stands would scan batteries and vehicles to ensure they are registered.

The workshop facilitators Amrita Kundu from Georgetown University, Washington DC, and Prof. Erica Plambeck from Stanford University said, “It was clear from the workshop that there is a lot of interest from national and international investors in the massive e-mobility sector in Bangladesh. Formalization and registration of electric three-wheelers and quality and safety assurance of the batteries are primary bottlenecks at the moment. The formalization will also unveil more tax revenues and less energy consumption for the Government.”     

The workshop concluded with a call from Chair Md. Solaiman Haider, Director of the Department of Environment, for a joint dialogue between government and private sectors to reform policies. User awareness is also crucial for identifying noncompliant batteries and vehicles. Participants highlighted the need for continued discussion and awareness during this transitional phase.

Several Senior officers of different institutions attended the workshop including the Deputy Secretary of the Ministry of Environment, Forest and Climate Change, Director of the Department of Environment, Deputy Commissioner of Taxes of the National Board of Revenue (NBR), Director of SREDA, Senior Officer of IDCOL, Director of IESD, BUET; Senior General Manager of SAJIDA Foundation, Director of BSTI, Director-Advanced Energy Technology of USAID-BADGE, Director-Training of BREB, Senior Manager of BRAC Bank PLC, Health Officer of UNICEF, Additional Secretary of IWM, Assistant Director of Shakti Foundation. Senior Investment Officer of ADB, Executive Director of BYEI, and many more.

This SMEP event was co-hosted by UNCTAD, and organized in collaboration with Pure Earth Bangladesh, Georgetown University, Washington D.C., and Stanford University, California, U.S.A.

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