Bangladesh's heavy dependence on imported fossil fuels is driving significant economic risks, including reduced GDP and heightened inflation, while disproportionately impacting the country's poorest households, according to a year-long research study.
The findings were disseminated on 20 January during an online workshop titled "Navigating Bangladesh's Energy Transition: Economic Resilience, Green Incentives, and Industrial Efficiency," organized by the South Asian Network on Economic Modeling (Sanem) in collaboration with the Tara Climate Foundation.
According to the study, price volatility leads to sharp output contractions in energy-intensive sectors and worsens the cost-of-living crisis for rural communities.
Shawkat Ara Begum, Bangladesh Program Director at the Tara Climate Foundation, noted that this reliance places immense pressure on foreign exchange reserves.
Sanem presented the research in three components. The first examined the economy-wide impacts of global fossil fuel price shocks, showing that price volatility reduces GDP, raises inflation, and disproportionately affects poorer and rural households.
The second component analyzed the tax burden on renewable energy equipment and found that existing tax structures significantly raise costs.
The third component focused on industrial energy efficiency, noting that industry accounts for nearly half of national energy consumption.
Sanem called for an enforceable Industrial Energy Efficiency Policy to translate commitments into action.
