Beyond lofty targets: The structural roots of Bangladesh’s tax mobilisation crisis

When the world speaks of climate change, Bangladesh is too often portrayed as a victim — the nation battered by cyclones, floods, and the looming threat of sea-level rise. That narrative is not wrong, but it is incomplete. 

Alongside the risks lies an extraordinary, largely untapped opportunity: the international carbon market under Article 6 of the Paris Agreement. Managed well, this could shift Bangladesh's position from climate vulnerability to one of resilience, prosperity, and even leadership.

Carbon markets are no longer experimental. In 2023 alone, governments raised more than $104 billion through carbon pricing instruments covering nearly 28% of global emissions. The European Union's Emissions Trading System generated €7.6 billion for Germany. 

China's national scheme already spans billions of tonnes of CO₂ across heavy industry. Even Brazil's voluntary carbon market is booming, valued at an estimated $2.1 billion through forest and agriculture-based credits. 

Elsewhere, Viet Nam earned $51.5 million from verified REDD+ credits through the World Bank's Forest Carbon Partnership Facility. Zimbabwe's Kariba REDD+ project, covering 785,000 hectares, has generated more than $110 million since 2011.

Bangladesh, by contrast, has barely entered the game. Since 2006, it has sold only 2.53 million credits, worth just $16.25 million, mostly from cookstoves and solar home systems. This is a drop in the ocean compared to its potential. Analysts estimate that with the right policies, Bangladesh could earn up to $1 billion annually from carbon trading. That scale of revenue could transform investments in renewable energy, community forestry, and blue carbon projects while helping to meet the country's conditional target of cutting up to 89 million tonnes of CO₂ by 2030.

The moment is ripe. Article 6 of the Paris Agreement allows countries to sell internationally transferred mitigation outcomes (ITMOs) to buyers seeking credible emission reductions. Unlike the old Clean Development Mechanism, Article 6 includes safeguards against double-counting and requires transparent accounting. Early movers such as Chile, Ghana, and Singapore are piloting bilateral agreements. 

Seven African countries have already adopted comprehensive legal frameworks covering registries, monitoring, and verification systems. Thailand is actively shaping its own market framework to align with national climate goals. If Bangladesh hesitates, it risks falling behind.

The benefits extend far beyond revenue. High-quality carbon credits from Bangladesh could finance off-grid solar expansion, capture methane from city landfills, or support climate-smart forestry. Mangrove restoration in the Sundarbans and coastal afforestation could unlock premium-priced blue carbon credits — often selling for $8–20 per tonne, much higher than conventional forest credits. 

These projects would not only reduce emissions but also shield millions from cyclones, storm surges, and salinity intrusion. Done right, carbon markets can be a genuine win-win: adaptation and mitigation reinforcing each other, financed by international buyers.

But success will not come automatically. Carbon markets are complex, with project development costs often ranging from $200,000 to $500,000. International verification standards are rigorous. Land tenure in coastal and hill regions is still unsettled, complicating guarantees of permanence. And while Bangladesh has an operational monitoring platform, it still lacks a full Article 6 registry, clear authorisation rules, and a transparent system for sharing benefits.

These hurdles are real but not insurmountable. What Bangladesh needs most is political will. A robust Carbon Market Readiness Framework should include several immediate steps. 

First, the government must publish a clear Article 6 strategy and appoint a national focal point to coordinate across ministries. 

Second, the monitoring, reporting, and verification (MRV) system must be upgraded to international standards, ideally with support from development partners such as the Green Climate Fund, multilateral development banks, and UN agencies. 

Third, Bangladesh should launch a handful of demonstration projects in areas where it holds a natural advantage — mangroves, solar mini-grids, cookstoves, energy efficiency in industry, and REDD+ in hill forests. These early successes would prove credibility and attract buyers. 

Fourth, key industries such as textiles, steel, and manufacturing must be encouraged to adopt renewable technologies with the support of carbon credits, enabling large-scale emission cuts. 

Finally, investment in capacity is essential: from training the government and private sector in carbon accounting and negotiation skills to building a pipeline of bankable Article 6 projects.

Equally critical is ensuring inclusiveness so that revenues flow to the people on the ground. Villagers who restore mangroves, adopt efficient cookstoves, or install mini-grids must see tangible benefits. Transparent benefit-sharing will build trust and permanence, making Bangladesh an attractive seller in a market increasingly focused on integrity.

The global carbon market is at a turning point. After years of weak demand and questionable offsets, buyers are now seeking high-integrity projects with clear social and climate benefits. Bangladesh has the assets, the expertise, and the technical base to meet this demand — but only if it acts decisively.

Delay would mean reinforcing the old story of Bangladesh as a perpetual climate victim. Action, on the other hand, offers the chance to tell a new story: one of a delta nation leading the world in resilience and innovation, funded not by aid or charity, but by a fair market that rewards protecting people and the planet.

Arif M Faisal is a Programme Specialist (Environment, Sustainability and Energy) at UNDP

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