Renewable energy business: A Promising Sector in Bangladesh
Recently, the government has given the highest priority to the improvement of the energy business. In this context, the government has shifted its concentration from commercial sources of energy i.e., fossil fuel, to renewable energy, in order to speed up the use of renewable energy (RE) sources such as solar, wind, biomass, biogas, biofuels, hydro, geothermal, tidal wave, etc. Therefore, Bangladesh adopted Renewable Energy Policy 2008 to offer lower operating costs and show its commitment to the direction of climate change improvement by encouraging more production of RE in the country. Besides, this policy offers to provide subsidies and tax incentives to attract more investment in this sector. Strong legal and policy frameworks, institutional capacity, technological development, financial strength, and skilled human resources are required to ensure an appropriate business environment in this sector.
It is pertinent to mention here that Bangladesh has limited scale power to run the current huge-scale development projects in accordance with the national development scheme. Production expenses of renewables in Bangladesh are usually higher compared to the cost of fossil fuels. In the 7th Five Year Plan, the government set targets for developing RE resources to meet 10% of the total power demand by 2020 but it achieved only around 3% of the total energy. The government has also set the ambitious target of 20% of total power demand by 2025 in the 8th Five-year plan. To achieve the target, there are legal, technological, institutional, and economic challenges with regard to renewables in Bangladesh, such as excessive cost to set up RE plants, and grid constraints (overcapacity in some regions). The government is working hard to mitigate the challenges through effective institutional coordination and comprehensive policy initiatives on and about economic, social, and environmental sustainability in the RE business context.
In the recent world, the overall CO2 emissions soared from 22.7 bn tons to 30.0 bn tons due to the economic growth of developing countries. While the ratio of emissions from developed countries (U.S., EU, and Japan) dropped from about 50% to 30%, emissions from newly emerging countries have an apparent tendency to rise. To reduce global emissions, it is necessary to reduce emissions from emerging countries such as China, India, and Bangladesh whose energy demand is significantly rising. The Renewable Energy Policy aspires Bangladesh's transformation into a green country and latches onto the prospects of practical improvement to keep its international promises to promote a green environment.
It is encouraging to note that the government shall continue to seriously emphasise economic growth, social inclusion, and environmental sustainability in both domestic and foreign investment in this sector to shape the energy improvement pathway of the country for at least the next two decades. It will help to create investors' confidence to invest in the RE sector.
It is hoped that the Government of Bangladesh has introduced policy support and attractive incentives in RE sectors to create an investment-friendly environment for improving more stable sources of RE and establishing an effective regulatory platform for the country's energy development.
The writer is an MBA Candidate in Hitotsubashi ICS (Hitotsubashi University Business School), Japan, and Liaison Officer in Japan for Bangladesh Investment Development Authority (BIDA) under the Prime Minister's Office.