Turning waste into power in Bangladesh: Why ambition outpaces readiness

Following the 13th National Election, a new government led by the Bangladesh Nationalist Party (BNP) was formed and assumed office. While governance and economic stability remain at the forefront of the national conversation, environmental protection has emerged as a key pillar of the BNP's election pledges. Among its initiatives is the introduction of waste-to-energy projects. The government plans to launch these projects to meet the energy demands of cities and reduce environmental pollution. This is a timely initiative, as urban areas in Bangladesh are facing growing environmental pollution due to inefficient waste management systems.

Per capita waste generation is projected to increase to 1.19kg by 2041, from 0.52kg currently. The average daily urban waste generation is currently estimated at 33,574 tonnes. While environmental degradation caused by unmanaged waste is a growing concern, an efficient waste management system can transform waste into a valuable resource, enabling energy generation and supporting growing electricity demand.

Waste-to-energy is therefore an intervention that aligns with circular economy principles and long-term environmental sustainability goals. Waste can serve as a feedstock for energy production, reduce dependence on conventional energy sources and ease pressure on landfills when properly managed. However, while the vision is strong, the success of this initiative will depend heavily on whether Bangladesh can build the institutional, behavioural and operational capacity required for implementation.

Despite several policy-level initiatives, such as the National 3R Strategy for Waste Management (2010) and the emission reduction target outlined in Bangladesh's Third Nationally Determined Contribution (NDC), waste management in Bangladesh remains structurally weak and operationally inefficient.

Unplanned urbanisation and a growing urban population have pushed waste generation upward, yet the dominant response remains collection and dumping, with limited treatment, recycling or energy recovery. The most serious weakness is the absence of segregation at source. Around 82% of households dispose of mixed waste, combining organic, recyclable and hazardous materials in a single stream. This severely reduces the value of waste as a resource because mixed waste is harder to process, costlier to sort and less suitable for either recycling or energy recovery.

The problem is reinforced by weak infrastructure. More than 70% of collection vehicles are outdated, while existing garbage station facilities in cities are insufficient.

This structural failure matters for both environmental and economic reasons. When waste is not separated properly, cities bear higher collection and landfill costs, while contamination of recyclable and combustible materials reduces the potential for waste-to-energy (WtE) generation. Poor segregation raises transaction costs throughout the waste value chain, lowers combustion efficiency and increases the cost per unit of electricity generated.

As a result, WtE in Bangladesh cannot be treated only as a power-sector intervention. It is first a transformation from a traditional waste management system to a modern and efficient one, and only then an energy project. Without better collection, sorting and institutional coordination, the expected gains from WtE will remain limited.

Bangladesh already has a WtE project that is expected to be implemented soon. The planned Aminbazar WtE project in Dhaka is designed to process 3,000 tonnes of solid waste per day and generate 42.5MW of electricity, at an estimated cost of $457 million. This scale is significant, but it also raises questions about why financial and institutional design matter.

A project of this size can succeed only if the incoming waste stream is predictable, the tariff structure is credible, and the city can supply waste in sufficient quantity and quality.

Bangladesh's interest in WtE is rational because municipal waste has usable calorific value. In principle, WtE can reduce pressure on landfills, lower methane emissions and create a more circular urban economy. Yet the economic case is more complex than the appeal of the project from a theoretical perspective.

The cost of generating electricity from waste is shaped by plant technology, waste composition, transport logistics, financing terms and the availability of non-electricity revenue streams. Among the factors to consider is Bangladesh's current electricity generation cost structure.

In FY2023, the Bangladesh Power Development Board reported generation costs of Tk3.55/kWh for hydro, Tk5.13/kWh for natural gas, Tk11.51/kWh for coal, Tk22.64/kWh for solar, Tk39.72/kWh for diesel and Tk55.65/kWh for wind, against an overall average of Tk7.63/kWh. Meanwhile, the average feed-in tariff (FiT) for electricity generated from WtE in Bangladesh ranges from Tk9.45/kWh to Tk17.85/kWh. This comparison suggests that WtE is unlikely to be the cheapest source of electricity.

The real assessment should therefore be whether the combined value of waste disposal, environmental improvement and electricity generation outweighs the project cost. In this context, the Levelised Cost of Electricity (LCOE) is important. LCOE captures the average lifetime cost of generating one kilowatt-hour after accounting for capital expenditure, operations and maintenance, and other system costs.

International evidence shows that WtE LCOE varies significantly across technologies. Rotary kiln incineration and anaerobic digestion are generally cheaper options, while plasma gasification and some advanced systems are substantially more expensive. The same evidence shows that many WtE plants depend on subsidies, gate fees and by-product sales rather than electricity revenue alone.

This is a crucial point for Bangladesh because electricity sales alone may not recover the full investment cost.

Given this context, Bangladesh does not yet have all the supporting conditions required to implement WtE effectively. This does not mean WtE should be rejected. It means the country should approach it as a system-reform project, not as a standalone power project.

The optimal strategy is to build the waste chain first and scale up energy recovery only when the feedstock, institutions and pricing framework are credible.

First, modernising the waste management system is essential. Waste in Bangladesh can be broadly categorised into organic waste, including food remains and green waste; recyclable waste, including plastic, glass and cardboard; hazardous waste, including batteries, chemicals and heavy metals; and industrial waste.

Bangladesh also needs a simple, nationwide segregation model that households and businesses can realistically follow. A three-bin system could be a practical option: green bins for organic waste, blue bins for recyclables and red bins for hazardous waste. This should be supported by sustained public communication through television, radio, schools, local government campaigns and social media.

Second, capacity building at the collection level is essential. Waste collectors and municipal workers are critical links in the system, yet they often have limited technical knowledge of waste types, separation protocols and safe handling practices. City corporations therefore need regular training modules, practical workshops and standard operating procedures for sorting, transport and storage.

Effective waste management also requires strong coordination between households and collection systems. Municipalities must ensure that collection methods and handling procedures are fully compatible with segregated waste streams. Overall system efficiency will remain low without this alignment, and solutions such as recycling and WtE cannot operate effectively.

Third, a FiT policy for WtE should be considered, as plants often need additional revenue to recover their costs. Vietnam's experience illustrates this clearly. The calculated LCOE of WtE technologies there exceeded the existing FiT of 10.05 US cents/kWh, suggesting that a tariff closer to 20 US cents/kWh would be needed to attract investment.

Thailand provides a similar lesson. WtE became feasible there only when policy incentives and tariff support were available, even though waste-based electricity was not the lowest-cost source in the electricity generation mix.

WtE in Bangladesh has real potential, but the initiative will succeed only if it is built on strong waste management fundamentals. The country's urban waste problem is large enough to justify action, and the energy dimension adds further policy value.

Yet the evidence suggests that WtE is not straightforwardly profitable and may not yet be a low-cost source of electricity. Its viability depends on a modern waste management system, institutional coordination and policy support, including appropriate tariffs, tipping fees and complementary revenue streams.

The best way forward is therefore to improve the waste system first, test smaller and more adaptable recovery models, and only then scale up the technologies that fit Bangladesh's economic and institutional conditions, drawing lessons from international best practices.

If managed this way, waste can shift from being an urban burden to becoming a strategic national asset.

Foqoruddin Al Kabir is a Senior Research Associate at the Centre for Policy Dialogue (CPD). Sumiya Rahman and Tazneen Tanha are Research Associates at CPD. 

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