Fuels substitution possibilities, environment and the technological progress in Bangladesh’s transport sector

The transport sector is a key engine of Bangladesh’s quick oil demand growth. It accounted for 64.4% of overall Bangladesh oil consumption in 2019 and is, therefore, a third contributor to CO(2) emissions and related pollutants. The substitutability of energy and non-energy factors is the key issue in framing and planning energy policies. Therefore, we determine a translog production function for the transport sector, including inputs labor, capital and energy. The research analyzes factor output and substitution possibilities from 1990 to 2019. Outcomes show (a) labor output elasticity is higher, followed by energy and capital. (b) All the substituting factors are rising return to scale, with relatively high substitution (around 1.63–2.05, 1.05–1.06, 0.77–0.92) between capital-labor, capital-energy and labor-energy, which proposes that the substitution between capital-labor and capital-energy could be attained through updating technology. Therefore, by giving maximum capital to the transport sector, appropriate energy-conserving technology could be maximally encouraged, and capital-energy substitutability would have better results in the future. (c) Though, technical progress is calculated to be between 0.009 and 0.14 between the various inputs. The input labor-energy is quicker substitutes with their relative difference in technological progress, while capital also presents proof of convergence. By assigning additional capital to the transport sector, energy-saving technologies could be enhanced and CO(2) emissions reduction could be achieved. Finally, advancement in capital and skilled labor and, thus, substitution between energy-labor and the transition of labor-capital can be achieved.