Sustainable Energy Transition in the Sri Lankan Industrial Sector: A Critical Review

The global energy system is undergoing a crucial transition, not because fossil fuels are scarce, but because their emissions contribute to climate change, environmental degradation, and pollution. Therefore, a shift towards a sustainable energy system is essential to secure long-term environmental, economic, and societal well-being. Nevertheless, this transition faces multiple techno-economic and institutional challenges, particularly in the global south. Sri Lanka, traditionally an agriculture-based economy, is now dominated by service and industrial sectors, which together account for nearly 60% of national electricity consumption. These sectors, given their high demand profiles and investment capacity, play a critical role in driving energy efficiency and low-carbon development. However, the country faces persistent barriers—reliance on imported fossil fuels, vulnerability to supply disruptions, grid instability, inadequate capacity for generation expansion, and limited maintenance capabilities are predominant. Inconsistent policies, shifting priorities, and an uncertain regulatory environment, as well as the absence of clear renewable energy roadmaps, further constrain progress. Social challenges, such as limited public awareness, low participation, and resistance to new technologies, add another layer of complexity. Although Sri Lanka’s installed renewable energy capacity is significant—57% of total generation capacity, mainly from hydro and solar—the actual energy supply (ca. 60%) remains dominated by coal and oil due to the intermittency of renewable energy and infrastructural limitations. Achieving net-zero targets, therefore, requires concerted action across demand-side management, increasing production-level efficiency, and fuel substitution, complemented by emerging solutions such as green hydrogen and carbon capture and utilization. This chapter reviews the pathways available for Sri Lanka’s sustainable energy transition, focusing on the industrial sector’s contribution, the technical and regulatory barriers to large-scale integration of renewable energies, and the prospects for advancing a resilient, low-carbon energy system.