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Government must review policies to accelerate transition to renewable energy: experts

Government must review policies to accelerate transition to renewable energy: experts

To reduce dependence on fossil fuels and steer Bangladesh towards green energy solutions, experts say government policies must undergo significant reform.

Key recommendations include eliminating high tariffs on renewable energy equipment, introducing efficiency-based subsidies, and offering financial incentives to encourage private sector investment in energy efficiency.

These ideas were presented during a national level dialogue entitled ‘Exploring a Sustainable Pathway for Bangladesh’s Energy Transformation towards Green and Clean Energy’, organized by the South Asia Network for Economic Modeling (SANEM) at the BRAC Center in Dhaka on Saturday, 23 November. .

The event presented the results of three in-depth studies that highlighted the important policy shifts needed to promote a sustainable energy future for Bangladesh.

Macro impact of fossil fuel price fluctuations

The first study, “Macroeconomic Impact of Fuel Price Fluctuations: Context of Bangladesh,” examined how global changes in fossil fuel prices affect the economy of Bangladesh. Fluctuations in coal and LNG prices have been found to significantly impact the Consumer Price Index (CPI), leading to inflation. The study also identified energy price volatility as a key factor influencing macroeconomic instability during crises such as the 2008 financial crash, the 2020 COVID-19 pandemic, and the ongoing Russian-Ukrainian war.

The results highlighted the need for long-term policy adjustments, including a transition to renewable energy sources, to mitigate these fluctuations and ensure economic stability.

Barriers to renewable energy in Bangladesh

The second study, “Assessing the Institutional Quality and Political Economy Dynamics of the Power Sector in the Context of the Renewable Energy Transformation in Bangladesh,” examined the institutional challenges hampering the country’s transition to renewable energy. The report shows that weak coordination between government departments and a lack of policy coherence have stymied effective long-term planning. The Sustainable and Renewable Energy Development Authority (SREDA) has limited powers, while government organizations such as the Bangladesh Power Development Board (BPDB) dominate decision-making processes, limiting private sector participation.

The study also found that significant subsidies that predominantly benefit the fossil fuel sectors are further complicating the transition. In 2025, 80% of power sector subsidies (approximately TRY 32,000 crore) are expected to be allocated to pay for capacity, strengthening vested interests in coal, gas and nuclear power technologies.

The survey data showed that 38.2% of participants believe Bangladesh’s current renewable energy policies are ineffective. Despite this, many have expressed optimism about the sector’s potential to create jobs, especially through solar-powered irrigation in rural areas. However, concerns about infrastructure and barriers to private investment remained significant.

Investment strategies for a green future

The third study, “Assessing Investment Needs for the Renewable Energy Transition in Bangladesh by 2041,” outlined the significant financial investments required to achieve Bangladesh’s renewable energy goals. Considering that the current renewable energy capacity is only 4.16% of the total electricity generation, the country needs to intensify efforts to achieve future goals.

Public-private partnerships, green bonds and financing from international organizations such as the World Bank and Asian Development Bank are needed to mobilize the required capital. In addition, a dedicated renewable energy fund combining grants, loans and equity could support small and medium-sized projects, while tax incentives and risk guarantees would attract additional private investment.

The way forward

Experts emphasized the importance of strategic investments, policy reforms and removing barriers to private sector participation in building a sustainable energy future. Achieving Bangladesh’s renewable energy target by 2041 will require overcoming challenges such as land scarcity and infrastructure readiness. However, with the right policy environment and financial support, Bangladesh can pave the way to a green and prosperous future that combines economic growth with environmental sustainability.