Bangladesh at the Crossroads: Renewables or Imported Fuel Chaos

The energy crisis is hitting Bangladesh's 177 million people hard. Experts have been urging the government to end dependence on imported coal and gas in favor of reliable renewables.

The Strait of Hormuz is all anyone is talking about, and safe passage of energy tankers is at the epicenter of the biggest global oil and gas shock in history. The world is on tenterhooks as the United States and Israel's war on Iran has sent the oil and gas market spiraling into orbit toward the unknown.

Emerging economies such as Bangladesh are paying the biggest price. Bangladesh relies on imported coal and liquefied natural gas (LNG) for at least 60 percent of its energy needs, according to the Institute for Energy Economics and Financial Analysis.

This energy crisis feels like déjà vu for Bangladeshi daily wage earners, who suffered immeasurable pain and suffering when oil and gas prices soared and supplies were severed following the onset of the Russia-Ukraine war.

In recent weeks, millions of families have been struggling to put food on the table. Around 1 million drivers of rideshare cars, motorbikes, and gas-powered autorickshaws are lining up for hours in the hope of refueling their tanks.

Farmers are unable to irrigate, threatening almost half of the country's workforce and a food security catastrophe. For many families, eating dinner depends on money earned that day.

But this energy crisis was avoidable. Bangladeshi civil society leaders. as well as energy and climate researchers, have been ringing alarm bells to secure energy sovereignty by avoiding heavy reliance on imported coal and LNG.

These warnings have been hushed by, among others, the Japan International Cooperation Agency (JICA), and the former Hasina-led government, which devised a fossil fuel-heavy energy plan for the country at the expense of a more stable economy and safer climate.

First and foremost, the plan served large Japanese companies. Sumitomo Corporation built the controversial Matarbari coal power plant in Southeast Bangladesh, which is at the center of ongoing corruption allegations. JERA, Japan's largest power generation company and major global LNG trader, owns a floating gas import terminal and often sells LNG to Bangladesh.

Bangladesh's economy is buckling under the weight of mounting energy import bills, seeking a $2 billion loan to manage this LNG crisis on top of a debilitating $2.75 billion borrowed last year.

These billion-dollar band-aids will do little as annual fuel import costs are estimated to soar by $4.8 billion, a 40 percent increase from 2025 levels. LNG prices remain volatile, underscoring the need to urgently boost investment in household and industrial renewables.

While ramping up coal power is meant to help electricity shortfalls, it's yet another temporary solution to a long-term problem created by dependence on fossil fuels. Coal prices have also shot up by 20 percent since the U.S. and Israel bombardment of Iran began. Import bills keep piling up. Coal imports are being interrupted, forcing at least one major coal plant to halt power generation.

Any sensible economy would avoid a toxic cycle of borrowing billions for power projects that deepen debt with little long-term benefit.

Prime Minister Tarique Rahman's newly elected government has much to reconsider, including Japan's JICA-backed Moheshkhali-Matarbari Integrated Development Initiative (MIDI). The MIDI proposed major industrial hub would build up to 13 gigawatts (GW) of new LNG power projects and import terminals, which would worsen Bangladesh's financial woes and fail to align with commitments to global climate goals.

The sensible option for Bangladesh is to back renewable energy, battery storage, and a modern transmission system.

Pakistan has been partially insulated from recent energy shocks by its solar energy boom, avoiding more than $12 billion in oil and gas imports. Vietnam has scrapped its largest LNG power project, opting for a renewable energy and battery storage system. The Philippines is fast-tracking nearly 1.5 gigawatts of new renewables after the Middle East war created a national emergency due to reliance on imported coal and gas.

For a swift energy transition, Bangladesh doesn't have to look far. China has been installing more than twice as much solar as the rest of the world combined, according to global energy think tank Ember. And China is committed to supporting Bangladesh's long-term growth and development of renewable energy, including large-scale solar and wind power.

One of the world's leading wind turbine producers, GE Vernova, could be supporting Bangladesh's transition to clean energy, but instead has been pushing unnecessary new gas power stations. Japan's Hitachi and Toshiba have a history of developing fossil fuel power projects, yet ought to be investing more in their top-notch businesses in solar and wind power generation, energy storage, and smart grids in Bangladesh.

Despite Japan's heavy influence in promoting fossil fuels across Asia, energy giant Mitsui & Co and Japan's megabank MUFG have seen the writing on the wall, withdrawing from a proposed 600 megawatt LNG power project.

Bangladesh has plenty of room for renewable energy. A site has recently been identified for 6 GW of utility-scale solar, along with another 5 GW of rooftop solar potential.

Bangladesh has set the record straight before with mass cancellation of coal power plants. This energy crisis is yet another prompt for Bangladesh to correct its course, by opting for renewable energy that's best for its people, future-proofing its economy and avoiding the financial pain, pollution and health hazards that come with coal and LNG.