Bangladesh can cut costs by shifting from fossil fuels, report says

A new analysis by Ember, alongside the Climate Vulnerable Forum and V20 Finance Ministers, finds that Bangladesh and other emerging economies can achieve faster, more cost-effective, and secure growth by accelerating the shift to solar power, battery storage, and electrification—bypassing the traditional fossil fuel pathway.

The report, 'The Electric Fast-Track for Emerging Markets', underscores a significant global transition. Nearly half of the world's most climate-vulnerable nations are now surpassing the United States in solar adoption, challenging the conventional view that fossil fuels are indispensable for economic advancement.

For Bangladesh and other economies reliant on energy imports, the stakes remain particularly acute.

The report estimates that Bangladesh allocates approximately 59% of its trade deficit to fossil fuel imports, leaving the economy vulnerable to global price volatility. Among climate-vulnerable economies, fossil fuel imports reached $155 billion in 2024, with continued geopolitical instability threatening to drive costs up by an additional $30 billion.

With renewed volatility in global fuel markets—including heightened tensions in the Middle East—the report cautions that continued dependence on imported fossil fuels poses escalating economic risks.

"In least developed countries, the US$88 that families previously set aside for flood protection is now consumed by a 40% surge in fuel and food prices. We are not merely importing oil; we are importing a debt crisis that threatens to paralyse a generation. For Bangladesh, this translates into an additional annual burden of US$5 billion. Mobilising 50% renewable energy in vulnerable nations is now a necessity to safeguard fundamental rights, not a luxury. When families are forced to choose between immediate fuel and long-term survival, it signals a failure of the global financial system. To break this cycle, we must pursue renewable energy sovereignty, shifting from high-interest loans to grants, philanthropy, carbon taxes, debt-for-nature swaps and other innovative financial mechanisms. We cannot borrow our way out of a burning house," said M Zakir Hossain Khan, co-founder and managing director of Change Initiative.

The report highlights a rapidly emerging alternative: 'electrotech'—a system integrating solar power, battery storage and electric technologies—which is now more affordable, faster to deploy, and more resilient.

The analysis asserts that the energy transition in climate-vulnerable countries is advancing more rapidly than widely recognised.

According to the report, 46% of Climate Vulnerable Forum member states have already overtaken the United States in solar deployment. In eight out of ten countries, solar panel imports are at least triple the levels indicated by official installation data. Over the past decade, the prices of key technologies—including solar panels, batteries, and electric appliances—have declined by 30% to 95%.

This trend signals a fast-growing, decentralised clean energy boom, driven predominantly by households, businesses and small-scale investments, rather than large-scale infrastructure projects.

Unlike fossil fuel systems, which require substantial centralised infrastructure and significant upfront capital, electrotech solutions can be deployed incrementally—making them particularly suitable for Bangladesh and similar markets.

Key advantages include lower upfront costs, as solar is now less capital-intensive than fossil fuel power; accelerated access, with solar-plus-battery systems providing electricity independently of grid expansion; enhanced energy security through reduced reliance on imported fuels; and greater economic resilience by limiting exposure to global price fluctuations and foreign exchange pressures.

The report further notes that decentralised solar and battery systems are already more cost-effective than grid extension in many cases, particularly across underserved or remote communities.

"Over the past 15 years, Bangladesh has expanded its power generation capacity, predominantly by relying on fossil fuels. This approach has exposed the nation to volatility in international energy markets and a growing subsidy burden. The economics of renewables—especially solar—make a compelling case for Bangladesh to insulate itself from global fossil fuel shocks. Policymakers must now recognise that, amid frequent geopolitical crises, building resilience through renewable energy is essential for national progress.

"Encouragingly, numerous industries have already adopted rooftop solar systems, while many more are now actively considering such installations compared to previous years. The pipeline for industrial rooftop solar projects appears increasingly promising," said Shafiqul Alam, lead analyst for Bangladesh energy at the Institute for Energy Economics and Financial Analysis.

The findings indicate that Bangladesh and similar economies are not locked into the traditional fossil fuel pathway.

Instead, the report highlights a unique opportunity for these nations to leapfrog from energy scarcity to abundance by leveraging rapidly declining-cost technologies.

Beyond improved energy access, this transition could enhance industrial productivity, reduce fiscal pressures from fuel imports, create new jobs and markets in clean energy, and reinforce long-term economic stability.