China the ‘biggest player’ in Bangladesh’s energy transition

Black_cats · Sep 23, 2022

China the ‘biggest player’ in Bangladesh’s energy transition

Bangladesh needs USD 80-100 billion to meet its renewable energy pledge. With a new energy master plan in the works, the government is looking abroad for finance, with China key.

By Shahnaj Begum, thethirdpole.net
6 minute readSept. 22, 2022

Ahead of the UN climate summit in Glasgow last year, Bangladesh pledged to produce 40 per cent of its electricity from renewables by 2041. To meet this target, the country is shifting investments away from coal, oil and gas. The role of Chinese investments in Bangladesh in driving this transition will be key, experts have told The Third Pole.

The energy sector currently accounts for about 55 per cent of Bangladesh’s greenhouse gas emissions, followed by agriculture, forest and land use, waste and industrial processes. By 2030, the UN expects energy to account for more than 76 per cent of Bangladesh’s emissions.

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Nasrul Hamid, minister for power, energy and mineral resources, told The Third Pole: “To produce 40 per cent of [electricity] from renewable sources, we need huge investment. We need USD 80 to 100 billion [between 2030 and 2050]. We have started negotiating with China, Japan, the Asian Development Bank and the World Bank.”

Siddique Zobayer, a sustainable energy expert at the Asian Development Bank, told The Third Pole: “China, currently Bangladesh’s largest trading partner, is investing in most of the renewable projects.”

New master plan to put Bangladesh on a clean energy path

To put Bangladesh on the path to a low-carbon future while ensuring energy security, Hamid said, the government is finalising an Integrated Energy-Power Sector Master Plan (IEPSMP) to replace its Power Sector Master Plan (PSMP). The government aims to finalise the plan by the end of this year, according to an official at the energy ministry who spoke on condition of anonymity.

Bangladesh currently has an installed power generation capacity of 22,482 MW. Gas accounts for 51 per cent of this, followed by heavy fuel oil (28 per cent), coal (8 per cent), and high-speed diesel (6 per cent). Hydropower and solar account for only 1 per cent each.

Almost 90 per cent of the energy projects in the pipeline are funded by China. If they turn their big coal power projects to renewables, then we can be in a better position to achieve our 2041 target.
Siddique Zobayer, sustainable energy expert, Asian Development Bank

Bangladesh’s plan to generate 40 per cent of its electricity from renewables by 2050 is divided into three phases: 2023 to 2030, 2030 to 2040, and 2040 to 2050. Mohammad Hossain, director-general of Power Cell (the part of the Ministry of Power, Energy and Mineral Resources responsible for reforming the power sector), told The Third Pole that in the first phase the proportion of electricity generated from gas will be 35 per cent – a fall from the 70 per cent target for 2020 set by the 2010 and 2016 PSMPs. Renewables will increase from about 2 per cent to 10 per cent.

The plan is a significant departure from the 2010 iteration of the Power Sector Master Plan, which planned for coal to provide 50 per cent of Bangladesh’s energy by 2030. Instead, under the new plan, coal will rise from 5 per cent in 2020 to 10 per cent by 2030.

The country has had iterations of the PSMP over the last four decades, always with cost of energy as the main consideration. Now, says Hossain, the IEPSMP will focus on energy security, economic efficiency, the environment, and safety. An official who spoke on the condition of anonymity described it as the “3E+S approach”.

The 2016 PSMP had a target of generating 33,250 MW by 2030 from imported coal – 35 per cent of the total generation planned. To achieve this, the government launched 13 coal-based power projects that increased the use of coal in power production by 63 times, compared with the previous PSMP.

Environmentalists warned that if the government were to generate power from all 13 plants, Bangladesh would emit an additional 115 million tonnes of carbon dioxide every year.

Marking the first major departure in energy policy, in June 2021 the government scrapped 10 coal-fired power plant projects with a production capacity of 8,451 MW.

On the new energy plan, minister Hamid said: “We are reviewing the PSMP for two reasons. First, we need to keep our promise made at the UN [climate conference]. Second, we need fuel diversification as the indigenous sources of fuel [gas] are depleting.”