Experts suggest urgent energy transition reforms

Bangladesh's pathway to a resilient, pro-people and climate-responsive energy future hinges on urgent fiscal reforms, faster deployment of renewable energy and the effective enforcement of industrial energy efficiency measures, experts said on Tuesday.

The call came as policymakers and researchers reviewed findings from a major year-long study at an online dissemination workshop.

The event underscored growing concerns over energy security, macroeconomic stability and social welfare, highlighting the need for coordinated policy action to manage external shocks, protect vulnerable households and steer the country towards a cleaner and more sustainable energy system.

Experts made the observations at a dissemination workshop organised by the South Asian Network on Economic Modeling (SANEM) in collaboration with the TARA Climate Foundation to share findings from its research titled "Navigating Bangladesh's Energy Transition: Economic Resilience, Green Incentives, and Industrial Efficiency."

Bringing together senior government officials, academics and energy analysts, the session examined how Bangladesh can address mounting energy security challenges while safeguarding macroeconomic stability and social welfare.

SANEM's research showed that sharp increases in international fossil fuel prices have economy-wide consequences, dampening GDP growth, fuelling inflation, weakening the exchange rate and disrupting trade balances.

The impacts, the study found, are unevenly distributed: energy-intensive sectors face sharper output contractions, while poorer and rural households -- particularly farming households -- bear a disproportionate welfare burden.

Presenting the macroeconomic analysis, SANEM researchers noted that short-term energy price shocks transmit rapidly through production costs and consumer prices, intensifying inflationary pressures and straining foreign exchange reserves.

While some segments, such as solar electricity, may expand under shifting relative prices, the overall effect remains negative in the absence of structural adjustments.

To counter these vulnerabilities, SANEM recommended coordinated fiscal and monetary responses, accelerated adoption of renewable energy to reduce external dependence, and strengthened, well-targeted social protection to cushion vulnerable households from rising energy costs.

Speaking as a panellist, Dr Md Rafiqul Islam, Member (Administration and Finance) of the Bangladesh Energy and Power Research Council (BEPRC), emphasised that energy security is inseparable from national security and must be treated as a strategic priority.

He underscored the importance of credible data in policymaking and revealed that BEPRC is working to establish an Integrated Energy Data Centre to improve national energy data governance.

The initiative, he said, has already received clearance from the Energy Division and is awaiting approval from the Power Division.

Dr Shahadat Hosan, Deputy Secretary at the Energy and Mineral Resources Division, highlighted the urgency of expanding solar power generation to reduce reliance on imported fuels and ease pressure on foreign exchange reserves.

He also stressed the need to address energy poverty as part of transition planning, arguing that policies must ensure affordable and reliable energy access for all.

Offering academic perspectives, Dr Sakib bin Amin of North South University commended SANEM's use of computable general equilibrium and data envelopment analysis methodologies, particularly its strong emphasis on welfare outcomes.

He suggested that future research could broaden welfare assessments beyond households to include other sectors, and called for a dedicated institutional mechanism to regularly review fiscal incentives and taxation policies related to the energy transition.

From an implementation standpoint, Md Shahriar Ahmed Chowdhury of United International University urged the government to focus on effective facilitation of existing energy and renewable policies.

He reiterated the case for reducing import duties on renewable energy components to improve affordability and deployment, while stressing that grid strengthening remains critical to integrating renewables at scale.

Shafiqul Alam, Lead Energy Analyst for Bangladesh at the Institute for Energy Economics and Financial Analysis (IEEFA), cautioned that although energy efficiency indicators show some improvement, fossil fuel price shocks have not delivered positive outcomes at the utility scale. 

He argued that Bangladesh needs a level playing field for utility-scale renewable energy and noted that India's Perform, Achieve and Trade (PAT) scheme may not be directly transferable to Bangladesh's industrial structure.

Instead, he recommended establishing a dedicated mega energy service company (ESCO) and a specialised government agency to more effectively channel green finance.

In her opening and closing remarks, Dr Shawkat Ara Begum, Bangladesh Programme Director at the TARA Climate Foundation, highlighted the urgency of moving towards a just, inclusive and pro-people energy transition.

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