The current crisis in the global economy resulting from inflation triggered by the Ukraine crisis, high fuel prices and food shortages justifies the adoption of renewable energy (RE) more than ever. But the poor investment climate today is proving to be a challenge as countries have to make difficult decisions regarding allocating funds in thecrucial energy sector.
In July, it was reported that Bangladesh sought US$4.5 billion from the International Monetary Fund to shore up its foreign exchange reserves which is feeling the strain due to higher prices of fuel. The news came as a shock as Bangladesh is among the top 20 growing countries in recent years.
Last year, Dhaka spent 230 per cent more, around $360 million in October for fuel imports. The energy demand is going to rise for the South Asian country whose economy is growing fast including the population. To address the issue, Dhaka is looking to shore up its domestic gas production to mitigate the short-term crisis.
In the long-run, renewable energy is not only attractive; it is a dire requirement for Bangladesh. Geologically located in an area of extensive annual flooding and prone to climate disasters, Dhaka has more incentive to start a broad transformation of its economy. Cutting dependency on fossil fuels will not only reduce carbon emissions, but it will also save the much-needed foreign exchange reserves.
Bangladesh first adopted its Energy Policy in 2008. In the 7th Five-Year plan, Bangladesh set the target of 10 per cent of total energy from renewable energy (RE) sources by 2020. Unfortunately, it was able to generate only 3% of the energy from RE sources by the end of the last decade. By 2025, the Bangladeshi government has set the ambitious target to produce 20 per cent of the total power produced from renewable sources.
Apart from government targets, let’s talk about the potential to generate RE. Bangladesh is estimated to have the capability to generate 30 Giga Watts of onshore and offshore wind energy, apart from 30 GW of solar energy potential by 2041, as per the Sustainable and Renewable Energy Development Authority (SREDA) based in Dhaka.
Threatened by serious climate – induced disasters and rising sea-level, Bangladesh is planning to curtail its greenhouse gas emission by 15 per cent from the Business-as-Usual level by 2030. This is the right time for Dhaka to start investing heavily in RE sources. Although prices from RE sources are higher, mass adoption actually reduces the price of solar below the prices of thermal power, as seen in India.
Second, the long-term impact of RE is multi-fold. Unlike non-renewable sources, RE setups have very low operating costs which will a boon for the economy. The reduction in greenhouse gas emissions will not help the climate cause; it will help in meeting Bangladesh’s 2030 UN Sustainable Development Goals.
Another boon of switching to renewable energy is the principle of ‘first come first serve.’ Green finance is picking up but it is still costly. Cheap finance usually comes from developed countries’ baskets, NGOs and initiatives of multilateral institutions. Bangladesh must utilize this opportunity to attract cheaper green finance.
The potential for increasing renewable energy generation in Bangladesh is significant. Resource assessments indicate a potential additional 3,666 MW of renewable energy capacity. To exploit this, the government of Bangladesh set a number of targets for adding renewable energy capacity: the 2008 National Renewable Energy Policy (2,000 MW by 2020), the 2016 Renewable Energy Development Targets (2,458 MW by 2021), and the 2016 PSMP which emphasized increasing renewable energy. Bangladesh’s Nationally Determined Contribution (NDC) under the Paris Agreement on climate change sets a somewhat more conservative objective of adding 1,000 MW of solar PV and 400 MW of wind power generation by 2030.
Economic transformation in Bangladesh was a result of the influx of foreign businesses for processing textiles. But as the world shifts towards a green model of development, Corporates will be forced to innovate too. Clean sources of energy will be sought by these Corporates and their consumers too. Bangladesh has a brilliant opportunity lying in front of it, and it must choose to reform its energy sector to adopt RE on a priority basis.
Photo Credit : https://www.flickr.com/photos/worldbank/30203626612
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