Executive Summary
Climate change is a major threat to human civilization, with two-thirds of global greenhouse gas emissions linked to burning fossil fuels for energy. The Intergovernmental Panel on Climate Change warns that any delay in global action on adaptation and mitigation could lead to missed opportunities for a habitable and sustainable future. Despite contributing less than 1% of global carbon emissions, Bangladesh is one of the most climate-vulnerable countries, and without changes, it would see annual economic costs equivalent to 2% of its GDP by 2050, widening to 9.4% by 2100. The country is currently reliant on fossil fuels for energy with gas being the primary source and with coal accounting for almost 7%. However, solar PV and onshore and offshore wind energy costs have dropped by up to 80% in the last decade, making renewable energy increasingly affordable. The government of Bangladesh has been compelled to cancel ten coal-based power facilities worth $12 billion due to adverse pressure on foreign exchange reserves and economic crises. The government has also spent almost 90 thousand crore BDT to private power companies without taking any electricity, while the Adani coal power plant will cost Bangladesh over Tk 1 lakh crore in capacity charges over the next 25 years, and power from the plant will be 56.2% more expensive than other imported power. Bangladesh is predicted to have an annual mortality of 150,000 and 55 million people impacted by climate change by 2030. Bangladesh’s reliance on imported fossil fuels is not in line with global trends, and renewable energy is essential for energy security and to combat climate change.
Bangladesh has seen a significant increase in greenhouse gas (GHG) emissions, which rose by 59% from 1990 to 2012, with a 2% increase annually. As of 2019, Bangladesh emits around 237.70 million metric tons of carbon dioxide equivalent (CO2e). The government of Bangladesh submitted its Nationally Determined Contribution (NDC) in 2021 to meet the requirements of the Paris Agreement, and set targets to cut GHG emissions by 27.56 million metric tons of CO2e (6.73%) by 2030 in the energy, agriculture, and waste sectors. The government has also aimed to meet 40% of electricity demand from renewable energy sources by 2041. Bangladesh has a potential of 150 GW of utility scale solar power plants and can install around 2 GW of rooftop solar PV systems on public buildings, railway stations, highways, industrial buildings, schools, colleges, and universities. According to a National Renewable Energy Laboratory (NREL) study, Bangladesh has a wind power gross potential of 30,000 MW, but more detailed feasibility studies are needed to determine the actual potential. China has saved $21 billion in additional coal and gas imports due to investing in solar energy. Bangladesh is expected to begin generating commercial wind power in 2023 and nuclear power by 2025.
Bangladesh needs USD 6 billion in the 15 months from April 2023 to meet the electricity demand, including an electricity import bill of USD 475 million from India this fiscal year and USD 52 million next year. Additionally, the import of furnace oil for IPP and rental power plants will require USD 890 million in the current financial year. However, the installation of 1 MW of solar power on a rooftop costs USD 0.80 million, while an IPP requires close to USD 1.4 million, and installing 1 MW of wind-powered electricity costs USD 3.66 million. If even one-third of the cost paid in imports is redirected to renewable energy, Bangladesh could have 6250 MW of rooftop solar, 3571 MW of solar IPP plant, and 1366 MW of wind power plant. Currently, Bangladesh is also facing issues with the payment of electricity import from India, with Adani electricity providing 760 MW, and the annual cost of importing electricity from India being approximately USD 659 million. PDB plans to take foreign loans to meet the obligation of forced electricity import. This is increase debt burden.
A paper on Bangladesh’s energy mix shows that the demand for energy is on the rise and that renewable energy financing is essential for sustainable energy development. According to a report by the International Trade Administration, Bangladesh’s demand for power will be 50,000 MW in 2041 compared to 8,000 MW in 2015, which will require between USD 37.2 billion to USD 100 billion in investments between 2030 and 2050 to produce 40% of power from renewable energy. A survey conducted in 2017 shows that while 70% of respondents are interested in solar electricity, 64% of them believe that the service provided along with the product makes it difficult to opt for solar, and 55% blame the difficulty on the lack of availability. Despite the positive public perception of solar energy, social acceptance is a major factor in ensuring the success of renewable energy. The cost per kilowatt-hour of combined cycle electricity with gas available under long-term contracts is currently BDT 14-22, while the cost of fuel is BDT 12, whereas it is possible to get solar power within BDT 10 per kilowatt-hour, and the levelized cost of energy for utility-scale solar PV as of 2021 was USD 54/MWh or BDT 5.67/KWh, making it a more cost-effective option than traditional fossil fuels. However, lobbying from “vested interest groups” is preventing Bangladesh from prioritizing renewable energy over fossil fuels, and a lack of a roadmap for fund access from international sources is also hindering growth in the renewable energy market.
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