Renewable Energy Transition: The New Trade Imperative For Bangladesh

ESPR makes sustainability and traceability mandatory, CBAM introduces a border carbon price for selected goods, and buyers are demanding renewable-backed supply chains. Decarbonizing the grid and scaling renewables is therefore inevitable if Bangladesh is to protect

- Brig. Gen. Engr. Ali Ahmed Khan and Marine Engineer Md. Golam Kibria

Bangladesh's export growth now depends as much on watts as it does on wages. Mature economies—the European Union, foremost, followed by the United States, Japan, and Australia—are tightening market access through climate-linked product rules. Two EU pillars are of particular importance: the Ecodesign for Sustainable Products Regulation (ESPR), which has been in force since July 2024, and the Carbon Border Adjustment Mechanism (CBAM), which has been in its transitional phase since October 2023 and is expected to be fully operational from 2026. These measures make the energy behind exported goods a compliance and price issue.

According to the Sustainable and Renewable Energy Development Authority (SREDA, 2025), renewables now provide about 5.22% of Bangladesh’s power mix, with an installed renewable capacity of approximately 1,634.6MW. Fossils still supply roughly 94.8% of electricity, dominated by natural gas, heavy fuel oil, and coal, alongside about 3.7% imported power. Solar is the largest renewable source, with hydro and wind contributing smaller shares.

While this is a marked improvement over previous years, the share remains below what is needed to future-proof exports and ensure energy security. Transitioning to a renewable-powered grid is therefore not optional but inevitable for Bangladesh's export-oriented economy.

The New Trade Reality: Low-Carbon is a Market-Access Requirement

The EU’s ESPR makes sustainability and energy transparency central to product design. Digital Product Passports (DPPs) will require exporters to provide verifiable data on energy sources and embedded emissions. This is particularly relevant for Bangladesh’s textiles and garments sector, one of the first industries covered by the ESPR work plan.