Frameworks for green transition in Bangladesh
Saleemul Huq and Mizan Khan in the first part of the three-part article on Just and Green Transition in Bangladesh
With its geographical location sandwiched between the Himalayas in the North and the Bay of Bengal in the South, Bangladesh can be regarded as the ground zero of vulnerability to the increasing impacts of climate change. Recurring climate disasters like floods, cyclones, sea level rise, and salinity intrusion cause huge losses and damages every year in Bangladesh. A country with an area 66 times smaller than the United States (US) houses exactly half of the US population.
Bangladesh has been and continues to be regarded as a test case for sustainable development, particularly when looked at through the lens of environmental sustainability. As a war-torn and devastated country that emerged as an independent nation 50 years ago, Bangladesh has made commendable strides in economic growth and agricultural production. Now it has one of the highest Gross Domestic Product (GDP) growth rates in the world. However, both poverty and biotic pressure arising from rapid economic growth are pressuring natural resource systems. The influx of more than a million Rohingya refugees has added huge economic, social, and environmental strains.
However, with no climate disasters in the past year, Bangladesh can feed itself without much dependence on imports of basic food items. Globally, the average per capita emissions is 4.5 Mt of CO2 per year. Compared to that, Bangladesh's 166.3 million people only emit under 1 Mt each; however, total and per capita emissions are rising. In terms of energy, Bangladesh has an adequate capacity for power generation, which continues to be generated mostly with natural gas, a relatively less polluting fossil fuel, but one with limited reserves. In recent years, the government has scrapped its plan to build coal-fired power plants. The share of renewables is still less than 5 per cent of the total energy mix, although Bangladesh has the highest number of solar home systems in the world, numbering around 6 million; however, the amount of grid-connected solar power is still tiny.
Following a downturn caused by Covid-19, Bangladesh has engineered a strong recovery, with growth in 2022 and 2023 expected to average 6 per cent, a commendable record among developing countries. In terms of disaster management and adaptation, Bangladesh is regarded as a model. Still, given the basic geophysical, social, economic, and environmental parameters, a green and just transition is a gigantic challenge.
In a few years, Bangladesh is set to graduate out of Least Developed Country (LDC) status. It will have to face development challenges, including Covid-19 recovery and Ukraine-war-induced inflation, with less access to concessional international assistance. Although the Government of Bangladesh (GoB) has already initiated a plethora of policies, including a second round of the Nationally Determined Contribution, a National Adaptation Plan, and the 10-year Mujib Climate Prosperity Plan Decade 2030, the targets for emission reduction are not very ambitious. In Bangladesh, policymakers have to think of a green economy that includes both brown and green issues and a socially just transition. How can Bangladesh have such a transition? This article outlines such a challenge with an approach of realism and practicality.
CONCEPTUAL FRAMEWORK: A green transition in Bangladesh should mean tackling both brown and green issues with an approach of equity, addressing both pollution and natural resource degradation in a manner that is socially equitable. We call this a just transition (JT) in Bangladesh.
The global need for a climate-resilient, low-carbon economy brought the issue of JT to the fore-from high-emitting industries to cleaner energy and green sectors, the creation of green jobs, and training/retraining of workers in all workplaces and industries. These were meant to address the impacts of mitigation strategies in the process of decarbonisation. However, JT must also take care of adaptation responses to climate change. As Bangladesh is not yet a big user of coal or oil, the concept of JT here must be broader than its original version. In Bangladesh, JT relates more to strengthening the resilience and adaptive capacity of climate-impacted communities and rehabilitating displaced people, ensuring support for their livelihoods and income opportunities, rather than to the transition away from fossil fuels in the energy mix.
Dealing with environmental issues is also a part of JT. Environmental problems can arise from market failures, manifesting as negative externalities, or the side effects of economic activities not factored into the pricing of products and services. Taxes/charges can be used for internalising the externality costs of polluting and resource-depleting activities, so these are also part of the JT.
There are at least three schools of thought on the relationship between economic growth and pollution.
The first is called the environmental Kuznets curve (EKC)-an inverted U-shaped curve showing that, at the initial stage of growth, pollution and degradation levels go up, but with rising income, demand for better environmental quality grows, and the market responds to clean up the mess. The industrial countries travelled this path. The 1987 Brundtland Report "Our Common Future" represents this school of thought, with some modifications, such as less material and less energy-intensive growth, with a focus on the needs of the poor.
The second school argues that ignoring the environmental soundness of growth-even if this leads to short-term gains-will undermine long-term growth and the quality of citizens' lives. This thinking is led by the World Bank and other development agencies.
The third school embraces a new way of thinking under Ecological Economics, which emphasises the finite realities of nature. According to this thinking, the "part"-the economic sub-system-cannot continue to grow when the "whole" (the global ecosystem) remains non-growing. This school draws a distinction between growth, meaning the physical expansion of a system, and development, which is viewed as an improvement in the quality of the system. According to this third school of thought, when policymakers talk of "sustainable growth," there is a contradiction in terms. Growth in a finite system, as in a limited, bounded space or in the global ecological system, cannot continue ad infinitum.
However, "green or sustainable growth" is sometimes used as shorthand for a process that maintains a balance of economic progress with nature and its resources. In this sense, sustainable development appears to be the right concept, although difficult to operationalise. For example, can we really say that the double-digit growth in Dhaka, the capital city of Bangladesh, has led to an improvement in the quality of life of its citizens? In the yearly Global Liveability Index, Dhaka fares poorly year after year. The challenge, then, is how to achieve nationwide growth in a greener and socially equitable way.
POLICY FRAMEWORK: Over the last decades, Bangladesh has developed quite an elaborate set of policies, plans, and strategies. Bangladesh works with a system of five-year plans (FYPs). Currently, in the midst of the eighth FYP (2021?2025), the country will soon start developing the ninth FYP for 2026?2030. There are also long-term plans, such as the Perspective Plan 2041, Mujib Climate Prosperity Plan (2021?2030), and Delta Plan 2100.
In its first Nationally Determined Contribution (NDC), submitted in 2015, Bangladesh had an unconditional commitment to reduce 5 percent of emissions from the business as usual (BAU) scenario by 2030, having 2012 as the base year, but, conditional on international support, it pledged to reduce another 10 percent of its emissions. This NDC covered three sectors-Power, Industry, and Transport. Under the BAU scenario, total greenhouse gas (GHG) emissions were expected to more than double, from 169 Mt CO2e in 2012 to 409 Mt CO2e in 2030. Bangladesh has already submitted an updated NDC in 2021. This NDC covers five sectors and, in the unconditional scenario, GHG emissions would be reduced by 28 Mt CO2e (6.73 percent) below BAU in 2030 in the five sectors covered: 26 Mt CO2e (95.4 per cent) of this emission reduction will be from the Energy sector, while 0.6 (2.3 per cent) and 0.6 (2.2 per cent) Mt CO2e reductions will be from AFOLU (agriculture) and the waste sector, respectively.
However, in the conditional scenario (with international support), GHG emissions would be reduced by 62 Mt CO2e (15.1 per cent) below BAU in 2030 in these sectors. This is in addition to the proposed reductions in the unconditional scenario. The conditional mitigation measures will be implemented by Bangladesh only if there is external financial and technology support.
Under the eighth FYP (2021?2025) and the Climate Fiscal Framework (2020), the Government has plans to impose an environmental and carbon tax by 2025 on a limited scale. This eighth FYP is perceived as a game changer in reducing poverty linked to natural hazards and will prioritise the implementation of the first phase of the Bangladesh Delta Plan (BDP) 2100.
The Mujib Climate Prosperity Plan (MCPP) has five key themes: (1) Supplementing and accelerating existing climate change policies, initially exploring the possibility of offshore wind energy and developing project feasibility studies; (2) enabling Bangladesh to become a technological and economic leader, through mobilization of support from global investors; (3) converting the sources of power to high-tech green hydrogen production and similar facilities; (4) attracting global green investment funds for promoting the programs related to domestic green energy; and (5) building the capacity of the youth by making them technical professionals.
The key initiatives taken under the MCPP emphasise renewable energy, modernisation of the power grid, and emissions trading. The MCPP also reflects the perspective plan of Bangladesh to work on developing climate-resilient, nature-based agriculture and fisheries, consuming less fuel, and developing environmentally friendly transportation and other climate-resilient environmental programs. Under the MCPP, the Government has an ambitious plan to expand renewables by up to 30 percent by 2030 through massive offshore wind energy and solar power.
Bangladesh also has an Energy Efficiency and Conservation Master Plan for promoting energy conservation and energy efficiency, which is planned to be implemented in phases.
The Perspective Plan 2021?2041 (PP2041), under its green growth strategy and institutional reforms, covered (a) integrating environmental costs into the macroeconomic framework; (b) implementing the Delta Plan to build resilience and reduce vulnerability to climate change; (c) reducing air and water pollution; (d) removing fuel subsidies; (e) adopting a green tax on fossil fuel consumption; (f) taxing of emissions from industrial units; and (g) preventing surface water pollution.
INSTITUTIONAL FRAMEWORK: It is evident that Bangladesh has worked out an elaborate set of policies, plans, and strategies over the last decades to address natural disasters, environmental protection, and climate change. This structure extends from national to local levels. There is a National Environment Council (NEC) headed by the Prime Minister herself. The Executive Committee of the NEC is headed by the Minister of Environment, Forest and Climate Change (MoEFCC), who also acts as the focal point for the UN Framework Convention on Climate Change (UNFCCC). Then there is an elaborate institutional infrastructure for disaster management, stretching down from the national level to sub-district level committees. Apart from government executives, representatives from civil society are also members of all the committees.
There is another important institution-the Sustainable and Renewable Energy Development Authority (SREDA), established a decade ago to promote renewable energy sources. For environmental and climate change management, the Government has established the Bangladesh Climate Change Trust Fund (BCCTF) under a Parliamentary Act of 2010, which is capitalised only with domestic resources.
In addition, there is the Bangladesh Climate Change Resilience Fund (BCCRF), which was supported by donor funding. However, the BCCRF has not functioned since 2016 because of disagreements over its joint management by the MoEFCC and the World Bank.
Dr Saleemul Huq is Director and Mizan Khan is Deputy Director, International Centre for Climate Change and Development, The Brookings Institution. www.brookings.edu
[The full paper originally published as a part of the working paper titled "Keys to Climate Action: How developing countries could drive global success and local prosperity," edited by Amar Bhattacharya, Homi Kharas, and John W McArthur and published by The Brookings Institution based in Washington, DC.]