Bangladesh spends nearly 80% of energy budget on fossil fuels: study
Study says fossil fuel projects continue dominating Bangladesh’s energy spending despite clean energy targets and climate risks
DHAKA, Bangladesh (MNTV) — Renewable energy projects account for only a small fraction of Bangladesh’s national energy spending, while fossil fuel infrastructure continues to dominate government allocations despite the country’s growing climate vulnerability and ambitious clean energy targets, according to a new study released Sunday.
Research by Bangladesh-based policy think tank Centre for Policy Dialogue found that renewable energy received just 5% of the revised development allocation for the country’s power and energy sector in the current fiscal year, while nearly 80% went toward fossil fuel-based projects.
The findings were presented during a policy discussion in the capital attended by Finance and Planning Adviser Rashed Al Mahmud Titumir and energy policy experts. The study warned that Bangladesh’s current budget priorities remain heavily tilted toward imported fossil fuels even as the country faces mounting pressure to expand clean energy production and reduce long-term subsidy burdens.
According to the report, renewable energy projects make up only 3% of the total power and energy project budget and received around 7.95 billion Bangladeshi taka ($64 million) in revised fiscal allocations. In contrast, fossil fuel-based infrastructure absorbed 87% of the overall project budget and 79% of actual allocations.
Bangladesh has spent more than 1.47 trillion Bangladeshi taka ($12 billion) subsidizing fossil fuel-based electricity generation between fiscal years 2020-21 and 2024-25, the study found. Subsidy costs alone surged to 620 billion Bangladeshi taka ($5 billion) in the revised estimate for fiscal year 2024-25, reflecting growing financial pressure linked to imported fuel dependency and rising global energy prices.
The report said Bangladesh currently provides one of the highest energy subsidy shares in Asia relative to its sector budget, with subsidies accounting for roughly 34 percent of overall energy spending.
Bangladesh’s installed renewable energy capacity currently stands at around 1,745 megawatts, with solar power accounting for roughly 83% of that total. Renewables make up only 5.39% of the country’s overall installed electricity generation capacity, highlighting the slow pace of energy transition in one of the world’s most climate-vulnerable nations.
Among its recommendations, the report urged Bangladesh to establish a dedicated renewable energy ministry, create a standalone renewable energy development fund, reduce fossil fuel subsidies through a phased legal mechanism, and introduce long-term budget guarantees for clean energy expansion.
The study said Bangladesh would need to install roughly 1,662 megawatts of solar capacity every year starting in 2026 to meet its target of generating 10,000 megawatts from solar energy by 2030 — a pace researchers said would require a dramatically different fiscal strategy than the current budget framework.
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