Civil society groups lambast ADB for $17b fossil fuel investment in Bangladesh

The Asian Development Bank (ADB) is facing sharp criticism from civil society organisations over its $17.34 billion investment in Bangladesh's energy sector, the vast majority of which will go to fossil fuel-based projects.

An analysis in this regard was presented by the NGO Forum on ADB and the Coastal Livelihood and Environmental Action Network (CLEAN) at a press conference, titled "Unpacking the Risks in ADB's Investments in Bangladesh", at Banglamotor in the capital today (22 April), in the lead-up to the ADB's 58th Annual General Meeting in Italy, according to a press release.

Speakers at the briefing highlighted that the multilateral lender is deepening Bangladesh's energy and environmental crises by maintaining a one-sided investment model that prioritises fossil fuels over renewable alternatives.

According to the analysis by the NGO Forum on ADB, the global lender has supported 106 energy projects in Bangladesh since 1973. A significant portion of this funding has been directed toward fossil fuel-based power generation, oil and gas distribution, and related transmission infrastructure.

Sixty-seven of these projects — worth $9.84 billion — have already been closed, raising concerns about the bank's project planning, sustainability, and long-term strategy.

The analysis further revealed that 65% of ADB's energy investments in the country, amounting to $11.36 billion, lack any safeguard classification, underscoring serious transparency and accountability issues.

Only 7.95% of project funds are allocated to high-risk environmental considerations, and a mere 0.35% ($60.58 million) has been earmarked for resettlement and community safeguards.

"These figures cast serious doubt on ADB's commitment to sustainable development," said Sharmin Bristy, fossil fuel campaigner at NGO Forum on ADB.

Rayyan Hassan, executive director of the NGO Forum on ADB, also highlighted the disparity in funding between fossil fuel and renewable energy projects.

"Of the $4.88 billion ADB has invested in electricity generation in Bangladesh, 82.9% went to fossil fuel-based projects. In contrast, just 2.55% was invested in solar energy, and not a single dollar in wind power. The cost per megawatt is also telling: fossil fuel projects receive $2.04 million per MW, while solar gets only $0.51 million," he said.

He urged, "ADB must undergo an urgent policy overhaul to embed a proactive fossil fuel phase-out strategy, champion a just and equitable energy transition, align financing with the Paris Agreement to prevent carbon lock-in, prioritise regionally viable clean energy solutions, and decisively shift away from fossil fuel dependency to uphold environmental integrity and meet global climate goals."

Analysing ADB's energy financing in Bangladesh, CLEAN Chief Executive Hasan Mehedi said that ADB invested in a 165-kilometre-long gas pipeline project from Bheramara to Khulna — even though it was well aware that Bangladesh lacks sufficient gas supply. Relying on imaginary gas, it further invested in two gas-based power plants in Khulna with capacities of 225 MW and 800 MW.

However, due to the shortage of gas, these projects have remained idle for years, becoming a burden on the people. As a multilateral development bank, ADB should not be engaging in such actions, he said.

He emphasised, "Bangladesh is on the frontlines of the climate crisis, yet ADB continues to finance fossil fuel projects that increase our vulnerability and rob us of a liveable future. Therefore, ADB must change its energy policy and move entirely toward renewable energy sources."

CLEAN and NGO Forum on ADB outlined three key demands to ADB at the event: End all fossil fuel financing and support a just energy transition; implement robust safeguards that include Free, Prior, and Informed Consent (FPIC) and respect for human rights; and reject carbon markets, greenwashing practices, and corporate-led pseudo climate solutions.

ADB issues clarification

In a clarification, the ADB said, it "supports universal access to reliable and affordable energy services while promoting low-carbon transition in the region. Since Bangladesh became a member of ADB in 1973, ADB has been supporting the country's projects and programs to expand energy access, reliability, and sustainability. ADB's investments in energy have always been aligned with Bangladesh's national development priorities and ADB's energy policy at the time of project approval." 

An ADB spokesperson said past investments in gas-based infrastructure aimed to address critical energy shortfalls at the time and thereby support the economy's development. 

"Over the decades, ADB-supported projects have contributed substantially to the expansion and modernisation of Bangladesh's power and gas systems, resulting in near-universal electricity access, elimination of blackouts due to generation shortages, and improved power quality and reliability.

"ADB's investments in Bangladesh are guided by its Country Partnership Strategy 2020-2025, which commits to improving the reliability and quality of electricity supply, supporting expansion of renewable energy generation, strengthening the power transmission and distribution network, deepening energy efficiency measures, and promoting regional energy trade. ADB prioritizes energy sector reforms and helps strengthen energy sector institutions to improve their planning capacity.  Transmission and distribution system strengthening has been identified as a prerequisite for the mass deployment of renewable energy in the power system. ADB has been prioritizing its sovereign operations in Bangladesh for the development of transmission and distribution facilities since 2020.

"Contrary to recent media reports, ADB applies rigorous environmental and social safeguards to all projects. Every investment undergoes classification, due diligence, and public disclosure in accordance with the ADB Safeguard Policy Statement (2009). No project is approved without meeting these standards. 

"ADB appreciates constructive engagement with stakeholders, including civil society organizations, and welcomes dialogue on how to enhance the impact, sustainability, and inclusivity of ADB's operations. ADB remains committed to working closely with all stakeholders—including governments, development partners, the private sector, and civil society— to deliver a low-carbon, sustainable, and resilient energy future."