New energy policy, same challenges: Why Bangladesh needs an inclusive approach

To ensure energy security and boost economic growth while reducing emissions by 2050, the Bangladesh government devised an Integrated Energy and Power Master Plan in 2023 (IEPMP 2023). The IEPMP 2023 immediately drew criticism for its inflated power demand projections, a highly import-dependent fossil fuel pathway and a limited role for renewable energy. Stakeholders also raised concerns over the government’s significant reliance on foreign consultants in drafting the IEPMP 2023 rather than incorporating the suggestions of local experts. Previous power master plans approved between 2010 and 2018 have received similar criticism and ultimately contributed to persistent structural weaknesses in the country’s energy and power sectors. 

The interim government of Bangladesh, factoring in these concerns, decided to revisit the IEPMP 2023 and draft a blueprint for the energy and power sectors to place them on a more sustainable path. However, the announcement of the draft Energy and Power System Master Plan 2026 (EPSMP 2026) on 7 January 2026, with limited consultations, confused stakeholders and experts. While the draft EPSMP 2026 seeks to significantly increase renewable energy capacity, its challenges remain largely similar to those of previous master plans, which prioritised liquefied natural gas (LNG) and coal. The reliance on carbon capture and storage (CCS) also poses significant technological and financial risks.  

The interim government organised a meeting with selected stakeholders to discuss the draft EPSMP 2026 on 8 February 2026. However, this does not guarantee that all key experts’ and important stakeholders’ suggestions will be reflected in the final version. A hasty approval of the plan risks the need for a revision in a few years, delaying the country’s energy transition. Accordingly, the next government should draw upon local technical expertise and key stakeholder inputs through an inclusive consultation process before finalising the EPSMP 2026.  

A decade and a half of costly dependence on imported fossil fuels 

Bangladesh’s high demand for natural gas, combined with a perceived decline in local supply, pushed the government to approve a new Power System Master Plan 2010 (PSMP 2010), with the objective of diversifying fuels in its energy mix. While the PSMP 2010 was built on three core objectives — economic development, energy security and environmental safeguards — it ultimately set the course for a fragile, import-dependent and carbon-intensive power system through 2030 (coal: 50% [import 20%], gas: 25%, oil: 5%, nuclear, renewable energy and cross-border import: 20%). The PSMP 2010 also laid the foundation for an accelerated power system capacity expansion (Table 3-4). 

Subsequent master plans, such as PSMP 2016, the revised PSMP 2016, and the IEPMP 2023, again failed to meet expectations. A closer inspection shows that these master plans, also formulated without sufficient consultations, raised the power sector’s import dependence from about 5% in fiscal year (FY) 2009–10 to around 65% in FY2024–25 (based on shares of imported electricity, coal, LNG and fuel oil). At the same time, the power generation cost increased more than fourfold. Amid the persistent framing of renewable energy as an expensive option in master plans, the country only added renewable energy capacity of 1,694.5 megawatts (MW), including off-grid systems (note: most of the solar home systems are now non-functional). 

The EPSMP 2026 mirrors previous patterns

While the draft EPSMP 2026 projects renewables to comprise about 47% of the installed power generation capacity of 89.1 gigawatts (GW) in 2050, the country’s growing dependence on LNG as a primary energy source could lock Bangladesh into decades of supply volatility, leading to energy security concerns. The draft EPSMP 2026’s target of keeping LNG’s contribution below 40% in total gas consumption in 2050, as opposed to 28.8% in FY2024–25, will keep annual LNG imports within 730 billion cubic feet (Bcf) in 2050. Even so, LNG imports would more than double from FY2024–25 levels, based on projected daily LNG demand of up to 40% of the total gas consumption of 5,000 million cubic feet per day in 2050. However, with the EPSMP 2026 estimating more than double the investment in LNG infrastructure compared to local gas exploration, Bangladesh is likely to build LNG terminal capacity well beyond 730Bcf per annum, raising energy security and financial risks.

The EPSMP 2026 envisages that the country’s primary fuel imports will fall below 50%, based on the assumption that Bangladesh will produce around 24 million tonnes of domestic coal in 2050, ramping up current local production of around 0.6 million tonnes per annum by 40 times. Given the limited availability of global financing for coal mining, setting up new power plants reliant on local coal could increase import dependence. 

The draft EPSMP 2026, like the IEPMP 2023, plans to deploy CCS as an advanced decarbonisation technology that, despite demonstration efforts across the globe, is yet to reach maturity. IEEFA’s detailed assessment shows that CCS projects consistently underperform, intensifying financial risks. IEEFA also concludes that the International Energy Agency has downgraded the role of carbon capture in its net zero emissions 2050 scenario as renewables, energy efficiency, electrification, and fuel switching are likely to reduce emissions by more than 82%. This indicates that Bangladesh should avoid financially risky technologies like CCS and advance renewables and energy efficiency instead.

Inclusive policymaking is the need of the hour

Given the limited success of previous master plans in improving energy security and accelerating renewable energy, it is imperative for Bangladesh to design an inclusive policy formulation process. This should involve local experts and key stakeholders to bring forth solution-centric and effective ideas. For instance, the government should engage with industries that struggle to operate at optimal capacity due to energy supply shortages and come up with sustainable solutions. In addition, industries and corporates face the pressure of decarbonisation, which requires strategic policy attention. Likewise, people affected by climate change, for example in the southern districts of Bangladesh, or women burdened with the responsibility of arranging firewood for cooking, have different types of energy needs.  

Unless Bangladesh incorporates rigorous consultations with stakeholders and draws on expert input throughout the formulation of its energy master plan, a lack of ownership and consensus will slow the energy transition. The next government must reform the policy-making process to avoid the high social and economic costs of delay in the energy transition.  

This article was first published in The Daily Star.