Bangladesh's Energy Transition: Fragile Today, Renewable Tomorrow?

Few countries illustrate the challenges and opportunities of Just Transition as clearly as Bangladesh. On one hand, Bangladesh is one of the most climate-vulnerable nations in the world, as per the World Risk Index, ninth for Climate disaster risk (2023). Almost one-fifth of its land lies less than one meter above sea level. Each year, millions face the threat of cyclones, floods, saline water intrusion, and drought. So, climate change is not a distant worry for Bangladesh; it is already shaping daily life, from migration to food production. On the other hand, Bangladesh has minimal fossil resources. Apart from natural gas and a small amount of coal, the country has little of its own. Ironically, despite this scarcity, Bangladesh has built an energy system that is heavily fossil-dependent. Imported oil, coal, and LNG play a major role in power generation. This has made the country vulnerable to price shocks and created a huge fiscal burden from subsidies.

- By Abul Kalam Azad

There is another side to this story. Bangladesh has enormous renewable energy potential. The country's location gives it abundant sunshine for solar rooftops and utility-scale solar parks. Its coastal winds can power turbines. Biogas from agriculture, livestock, and waste-to-energy can be another untapped resource. If developed properly, these resources could provide a reliable, affordable, and clean energy for Bangladesh.

The irony is that Bangladesh has very little fossil fuel, yet its power sector depends heavily on imported fossil fuels. At the same time, it has enormous renewable energy potential, but very little of it is being used. The challenge is how to move from an import-dependent fossil system to a homegrown renewable energy, while making sure workers and communities are not left behind, protecting agricultural land and food security, the environment, and climate change.

A Climate-Exposed, Fossil-Fuel-Dependent Economy

Bangladesh's energy transition begins from a place of deep contradiction. According to the Bangladesh Power Development Board (BPDB), the country's total installed generation capacity stood at 31,505 MW (with captive) as of August 2025 (BPDB). Peak demand recorded 16,794 MW, exposing the inefficiencies of an overbuilt and underutilized power system.

What's more concerning is how this capacity is powered. Despite having minimal coal or oil reserves, Bangladesh relies on imported LNG, furnace oil, and coal for more than half of its electricity generation. From FY2019-20 to FY2023-24, the BPDB received a cumulative subsidy of US$10.64 billion (IEEFA), much of it directed toward covering the rising costs of fossil fuels in the global market.