John Kerry’s short visit to leave long-term effects

John Kerry, the special presidential envoy for climate of the United States, is coming to Dhaka tomorrow. Though his visit will be of short duration, it has long and important implications for Bangladesh's effort to address the climate vulnerabilities and seek support for sustainable solutions at global levels.

As the president of the Climate Vulnerable Forum (CVF), Bangladesh has been raising its voice for energy transition, net-zero carbon emissions by 2050, climate justice and climate-related adaptation and mitigation on different global platforms.

In continuation of this, the prime minister of Bangladesh has been invited to the Leaders Summit to be held on April 22-23, 2021. The Summit will be hosted by the president of the United States, and Kerry's visit is in connection with the event.  

There are six issues the government should take into account to engage with the US-led initiatives on the climate crisis closely.

Issue 1: Bangladesh needs to raise its climate ambition and revise its interim NDC targets on reduction of GHG emissions

Bangladesh has submitted (interim) Nationally Determined Contributions (NDCs) 2020 to the United Nations Framework Convention on Climate Change (UNFCC) in December 2020. Likewise in the first NDC (2017), it has reiterated its commitment to reduce GHG emission below 5 per cent level of the business as usual (BAU) emission by 2030 in three critically important sectors such as power, transport and industry, and would reduce 15 per cent below the BAU emission contingent to necessary international funding and technological support.

Given the urgency against climatic vulnerabilities, Bangladesh needs to raise its ambition level to reduce GHG emissions (for example, 30 per cent below the BAU emission) and make a substantive effort to reach that ambition level.

Issue 2: Bangladesh needs to demonstrate its policy implementation capacities and visible progress in attaining policy commitments through effective actions

Lack of proper implementation of development policies is a major institutional weakness of the government. This is reflected in a different medium to long term policy documents. For example, the Power and Energy System Master Plan (PSMP) 2016, which is operational now, almost failed to ensure increasing the share of the renewable energy (RE) in power generation as per target (only 0.07 per cent against the target of 10 per cent in FY2020).

The National Priority Targets (NPT) under the SDGs set 'NPT 20' to increase renewable energy share in the total final energy consumption to 10 per cent by 2030. Unless a significant change is undertaken in the generation, transmission and distribution plan, the target would hardly be reached.

Being the chair of the CVF for 2019-2021, the Mujib Climate Prosperity Plan up to 2030 is being prepared for the CVF, which will develop a strategic framework to mobilise financing, especially through international cooperation for implementing renewable energy and climate resilience initiatives. The government could take the opportunity to align its national and international commitments along with major global initiatives.

Issue 3: Over-reliance on fossil fuel in power generation is seriously hampering a fuel mix transitioning towards clean energy

The energy mix in power generation in Bangladesh is overwhelmingly fossil fuel-based: an aggregate of 89 per cent of total electricity generation capacity is dependent on fossil fuel. According to the PSMP 2016, the projected power generation by 2041 would be 60,000 MW, where the share of different fossil fuels would be: natural gas/LNG (35 per cent), coal (35 per cent) and oil (5 per cent). Only 3 per cent of total generation were kept for renewable energy-based power generation.

The Centre for Policy Dialogue (CPD) projected that a positive decision of the government towards renewable energy-based power generation at the abandoned sites of coal-fired power plants would help raise the share of renewable energy to 10.6 per cent by 2041, from less than 3 per cent in FY2020.

In contrast, if the government decides to go for LNG-based power generation in those abandoned sites, the energy mix would be completely skewed towards Gas/LNG (70 per cent by 2041), and the overall share of fossil fuel would rise to 97 per cent. Thus, the government should not encourage new investment in LNG/gas-based power plants in the country. Similarly, the countries that export LNG should discourage their exporters from exporting dirty energy to developing countries such as Bangladesh.

Issue 4: Over-generation capacity based on fossil fuel squeezes the opportunity to develop power generation based on renewable energy

Bangladesh power sector is overburdened with an excess capacity of 44.2 per cent as of June 2020. This overcapacity has been accumulating over the years: from 26.9 per cent in FY2016 to 32 per cent in FY2019. Faulty demand projection for power under the successive PSMPs and, thereby, promoting power generation has been found one of the major reasons behind this excess capacity. Such excess capacity based on imported fossil fuel has already caused a major financial burden for the government.

The government should immediately start exiting from fossil fuel-based power plants. They include the plants that have been contracted for short-term (quick rental/rental power plants), plants using costly energy, plants that operate at an efficiency level of less than 20 per cent, and plants that are dated (aged more than 25 years). Hence, exiting a sizable number of such plants could create scope for renewable energy-based power generation in the country.

Issue 5: Limited fiscal space for renewable energy-based power generation, transmission, distribution and storage

The power ministry is one of the top ten priority sectors in the government's medium-term budgetary framework. Over the years, the power division's budget has been fully used for the development of fossil fuel-based power generation, transmission and distribution system.

In contrast, the budget for the Sustainable and Renewable Energy Development Authority has a meagre share (0.12 per cent of the total budget of the power and energy ministry) in FY2021. Such a predominant structure of the national budget for developing and strengthening fossil fuel-based energy infrastructure has been leaving almost no space for developing renewable energy-based infrastructure. Hence, the government needs a major policy shift for scaling down fossil fuel-based power generation, transmission, and distribution to create space for scaling up the renewable energy-based power infrastructure.

The support from development partners, international financial institutions and multilateral development banks will be highly required to undertake comprehensive changes in the structure of the budget of the power and energy division.

Issue 6: Significant rise in investment will be required for developing renewable energy-based infrastructure in the country

Public investment for the development of renewable energy-based infrastructure was only 0.07 per cent of the total public investment of the power and energy ministry in FY2021. Such small-scale investment would hardly contribute towards energy transition, let alone help build RE-based power infrastructure in the country in the next one or two decades.

In order to reach the climate ambition, substantial investment is required for grid-based RE power generation, smart grid development, and energy storage facilities. Since a large part of investment in the power sector (46.7 per cent of total investment in FY2021) is based on concessional credit from development partners, multilateral development banks, international financial institutions and international organisations, these international partners need to commit to gradually shifting a part of their financial support towards renewable energy-based infrastructure development in the next one or two decades. 

The author is the research director of the Centre for Policy Dialogue