Bangladesh is planning green, but acting red

Power generation accounts for 27% of global CO2 emissions, and transportation accounts for nearly 16%. 

Our government has set an ambitious target of getting 40% of its electricity from renewables by 2041 to combat climate change, as stated in the Mujib Climate Prosperity Plan 2041. However, despite past targets, only about 4% of Bangladesh's electricity currently comes from renewables.

It is essential for the government to understand that solely depending upon renewables to meet the 2041 target is difficult. Although renewable source solar has potential, the current level of adoption of solar technology in Bangladesh is still small, compared to consumer demand for power. 

Countries like Bhutan and Nepal generate around two-thirds of their power from renewables, and government officials often cite them as examples. However, Bangladesh has much higher population density, industrial growth, and power demand, making it harder to achieve similar results.

The taboo around nuclear

Given Bangladesh's small size and large population, it's more logical to look at France as an example. Despite having huge power demand, France relies heavily on nuclear power. While often considered "dangerous," nuclear power is actually the safest form of mass power generation today.

As of 2021, coal-fired power plants caused 24.6 deaths per terawatt-hour (TWh) of power generated globally, while nuclear power caused only 0.07 deaths per TWh, the lowest. Although nuclear power isn't renewable, it's arguably the cleanest form of energy. But does the government recognise this?

Despite progressing with the Rooppur Project for nuclear energy, the government hasn't officially recognised it as a clean energy source in legal documents. From BERC Act (2003) to Renewables Energy Policy (2008) and SREDA Act (2012), Bangladesh has only been able to develop a definition of "Renewables" but not "Clean Energy".

To meet the government's target of 40% solely through renewables, Bangladesh will require a consistent FDI of 1.71 billion USD per year. Considering the consistent drop of foreign reserves, the possibility of this happening is still uncertain. 

I believe it would be logical for the government to declare nuclear power as a clean form of energy to strengthen the clean energy transition that the government is undertaking. This is important because currently, nuclear energy is often seen as environmentally risky, similar to coal.

Not enough incentive to go solar

In Bangladesh, about 85% of the renewables segment relies on solar power. Because of this, the government has prioritised the development of solar energy. They even published the Net Metering Guidelines in 2018 to promote Net Metered Rooftop Solar.

Unfortunately, the push for net metered rooftop solar hasn't been as significant as expected. The Net Metering Guidelines (2018) don't offer enough benefits or incentives to end users, nor do they reduce their risks. Despite claims from companies developing net metered systems that solar panels should last around 20 years, these organisations don't face any legal liability for faulty or malfunctioning products.

A study found that by 2021, DESCO and DPDC had installed 34,000 and 47,000 rooftop solar systems in Bangladesh, respectively. Unfortunately, 87.5% of the panels set up by DESCO and 59.57% of those set up by DPDC were found either malfunctioning or out of service. 

When suppliers were asked why the equipment cost was so high, the simple response was, "Our purchase cost is high." And why wouldn't it be? The Customs Tariff (2023-24) imposes steep taxes on two key components for rooftop solar systems: Static Converters (37%) and Solar PV cells (26.2%). These taxes significantly increase the prices of these essential equipment.

So, why would someone choose renewables when the upfront investment is high, and there's no guarantee the equipment will operate as long as promoted?

The contradictions in policy

While in 2015 the government declared "Rampal" and "Maheshkhali" as two ecologically critical areas, the government is also setting up two 1300+ MW coal-fired power plants in both the locations. Such practice is perceived by people as akin to planting a single tree while destroying an entire forest.

Such action not only contradicts the government's plans but also the established legislative framework. The Environment Conservation Rules (2023) considers both Nuclear Power and Coal-Fired Power Plant (Above 50MW) as a "Red" category - the most dangerous industries. 

Interestingly, the same document declares Solar Power Plants Above 50 MW as at par with Coal Fired Power Plants (within 50MW); and considers both under the "Orange" category - a category that signifies industries having moderately high environmental impacts. 

As such, construction of 1300+ MW power plants in these locations directly contradicts the gazette documents, which prohibit any activities that may harm the environment and biodiversity. These include the Environmental Conservation Act (1995): Section 5(4), the Ecologically Critical Area Management Rules (2016): Section 18, the Bangladesh Biodiversity Act (2017): Section 33 and Legal Notice No. 22.00.0000.073.13.004.2014-136.

So why such action? Do we really need these plants so badly? If so, then why coal? We already have more capacity than needed, with many plants not operating at full capacity.

Making EVs expensive

In 2023 alone, nearly 500,000 vehicles in Bangladesh were found "unfit" in an official document, but the actual number is likely much higher. According to Section 6 of the Environment Conservation Act (1995), these unfit vehicles should not be allowed to operate on the road. However, the reality is quite the opposite at present.

The transportation sector is also making an unplanned green transition linked to the power sector. To facilitate this transition, the government issued Electronic Vehicle Charging Guidelines (2022), emphasising the need for electric vehicles (EVs) in the country. 

While the idea of EVs in Bangladesh is still developing, Sub-section 4.1.1 of the policy mandates EV owners to pay charging fees based on household retail tariff rates. This places a heavy burden on EV users because the BERC (Amendment) Act of 2023 permits the government to alter retail tariff rates whenever necessary. This lack of incentive makes it challenging for users to opt for EVs over traditional polluting cars. 

The Finance Act (2023) also imposes an equal amount of Carbon Tax on both EVs and traditional polluting cars. For instance, both a 3000-4000cc car and a 175kW capacity EV face a 500% carbon tax. What's more, this tax is only applied to additional vehicles owned by an individual, and is specific to the automotive industry, not other polluters.

Lack of integrated planning and foresight

From my perspective, the current policy environment lacks integrated planning and foresight. The contradictions between plans, regulations, and policies, along with actions like approving large coal-fired power projects in ecologically sensitive areas, are concerning. It appears that short-term economic interests are often given precedence over long-term sustainability goals.

The government should embrace new technologies that help more people adopt renewable energy. For example, MIT is looking into filament-based paper-solar cells, and the Turkish government is testing ENLIL, a roadside renewable power generator. However, instead of investing in these solutions, we're still spending a lot on idle power plants.

I strongly believe that Bangladesh has every resource to ensure a significant green power transition, but what hinders our growth is the legal bottlenecks and shortsightedness. 

Ahnaf Chowdhury Niloy. Sketch: TBS

A factory will set up a solar power plant of 200 KW to promote their ESG practices and get government incentives. But such action adds a near to zero value since the factory may have a demand of 20,000 KW of power. I think the government should only offer incentives to users, especially commercial and industrial workers, who make up 99% of renewable energy users, and who can meet a certain threshold. 

Otherwise, these superficial efforts will only increase government spending without leading to meaningful energy transition.

So, considering the current scenario, the question remains, are we really going "green"? Probably not. But, can we? I believe we can, if we stop acting red.  

Ahnaf Chowdhury Niloy is a Senior Consultant of Management Consulting at KPMG Bangladesh. 

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.