At the wake of Bangladesh’s independence in 1971, its people endured two disasters just four months apart: one man-made and the other natural. The man-made disaster was from a brutal crackdown, and subsequent genocide, at the hands of the Pakistani military. The crackdown came just four months after the natural disaster which was induced by the worst cyclone devastation in recorded history. In short, the independence movement prevailed under the extraordinary strategy of the Bengali leader Sheikh Mujibur Rahman. Mujib led the people to freedom and the protection of their local identity.

In 2021, some two generations later, today’s Bangladesh is one of the fastest growing economies in South Asia. The principal economic growth indicator, gross domestic product (GDP), grew at 8.2% in 2019 – the pre-pandemic year. In Asia, there are only a few comparable examples. South Korea and Singapore achieved more than 8% GDP growth rate from 1966 to 1990. China achieved remarkable economic progress with an average growth rate of 9.8% between 1978 and 2009. From 1961 to 1997, Malaysia experienced rapid economic growth of 7.37%.

Bangladesh’s modernisation story can be linked to its constitution of 1972. The constitution adopted four principles of nationalism, democracy, socialism and secularism. It started with visionary leadership and a rich natural resource base. A prevailing mechanism of institution building was at the heart of the new development agenda.  Indeed, national pride and people’s priorities dominated many decisions at the start of the nation building process for Bangladesh. Its founding leader Mujib put forward the inspirational image of a natural resource rich ‘Sonar Bangla’, a golden Bengal, to rebuild the nation within a modernised economic framework.

Popular discourse on Bangladesh

In development discourse, the popularly discussed success of Bangladesh is the country’s achievements in the social sector. It broke away from the myths of the last century that a social sector’s growth follows economic growth. Noteworthy achievements in the social sector have been poverty reduction rates, fertility rate reduction and infant and maternal mortality rate reductions. There are others that could be mentioned, though these are featured less in global discussions.

Bangladesh could break away from gender-blind policies. Policies such as women-focused micro credit programmes, higher rates to women-owned bank accounts and top up benefits for female students have all helped disrupt gender stereotypes. The positive outcomes of these policies can be seen in every walk of life throughout Bangladesh.

Socio-economic development has come at the cost of local environmental problems like many other countries in the past. However, these problems can be avoided with the right policy and off-the-shelf technology. Unfortunately, one of the effects of environmental damage is it pulls down the overall national energy sector sustainability index.

Jumpstarting with energy in mind

Bangladesh demonstrates what institutional capital building and targeted investing combined with keeping national priorities in sight can do for overall economic progress.

Bangladesh demonstrates what institutional capital building and targeted investing combined with keeping national priorities in sight can do for overall economic progress.  Going back to the early days of the post-independence period in 1972, the country set up its Space and Atomic Research Centre (SARC) to deliver early warning signs and map natural resources.  The SARC evolved into a more comprehensive institution called the Space Research and Remote Sensing Organisation (SPARRSO).

Bangladesh’s socio-economic transformation arguably begins with the enactment of its landmark legislative step, the Petroleum Act 1974. This law essentially nationalised the country’s underground and continental shelf energy resources. As a result, the Government of Bangladesh was able to contract with global companies for long-term investment in the exploration and production of domestic gas reserves.

Bangladesh, as a new nation, was not solely focused on short-term private objectives – as captured by the words of English economist John Keynes that ‘we all are dead in the long run.’ Rather, it followed the deeper meaning of this saying that for the long run truly matters in the public interest. Whether the long run can secure the wellbeing of everyone depends on the success of current policies and the development of strong institutions. Ultimately, building physical and institutional capital of the economy will guarantee a productive base for sustainable growth.

In fact, Mujib’s vision of ‘Sonar Bangla’ in the 1970s and the current global discourse around sustainable development are similar. The long-term growth of Bangladesh was structurally guaranteed in 1974 with the passage of the Petroleum Act. It led to the growth of the gas-based power sector, fertiliser industries and cement production. Its effects also encouraged the development of a self-sufficient agriculture sector. Among Asian countries, Bangladesh is fortunate to have a rich endowment of natural gas, a resource which became the driving force of its modernisation. By contrast, Singapore satisfied its primary energy demand from imported Chinese oil, and South Korea did so with imported coal.

Agriculture in the forefront

Initially an agriculture-based economy, Bangladesh used its domestic gas supply to become self-sufficient in food and a large exporter of clothing. Its founding leader Mujib saw the country’s potential with its deltaic fertile land, agricultural labour and the availability of water and gas-based fertilisers. These factors allowed the development of food security in Bangladesh. To this end, Mujib developed publicly-funded research institutes, such as the Bangladesh Agricultural Research Council and the Bangladesh Institute on Nuclear Agricultural Research, to transform traditional agriculture.

Bangladeshi farmers who toiled on their own lands were equipped with high yielding variety seeds, indigenous production of fertiliser and power for irrigation. Food security and inclusive growth were the national priorities, Mujib’s policy prescription eventually led to self-sufficiency in food production. Moreover, the subsidisation of gas-based fertilisers and power inputs continued to be in favour of farmers, even defying the subsidy withdrawal pressure from many multilateral funding agencies like the International Monetary Fund (IMF) and the World Bank.

A farmer plucking her seasonal creeper harvest in Dohar, Dhaka, Bangladesh, June, 2019. | Photo by Mahmud Hossain Opu.

Bangladesh’s agricultural production, supplemented by its ice making industry, grew up around the abundance of gas supply. The productivity growth which supported the fish value chain not only provided nutritional value and income to local people, but also helped build Bangladesh’s export market.

Furthermore, gas-based production powered up the industries, which gave rise to many industrial resource expansions increasing the export potential of the country. Clothing production flourished with a combination of new machinery, gas-based power supply and increased international demands. It should also be noted that the growth in the clothing sector gave jobs to millions of women.

East-West dichotomy

The geography of Bangladesh has an important bearing on its development agenda. The country is a deltaic land interspersed by rivers. The big river Jamuna flowing through the middle of the country gets bigger southwards after being joined by two other rivers: Padma and Meghna. This north-south running ‘riverhood’ divides the country into places east and west of the river system.

The East is richly endowed with all the gas and mineral reserves, and it is the growth engine of the country. Gas from the East could never be transported to the West given that only link was the river-ferry service. While the East flourished with the productive use of gas, the West remained less developed. The region west of the river Padma was fueled by traditional energy and imported oil electricity generation. By contrast, the West always had to live with an energy deficit which resulted in low economic activity. The country’s first atomic power plant, currently under construction, is in the West, providing a means to finally offset the regional energy crisis.

The sustainability challenges

To grow in the next two decades Bangladesh will need more energy even if it becomes an energy efficient economy. At present, Bangladesh intends to import power from India, Bhutan, Nepal and Thailand. But these supplies will not fulfill its domestic energy demand. Meanwhile, Bangladesh’s natural gas reserves are in fast decline and coal is not a sustainable solution. With a depleting local gas reserve, Bangladesh started to import liquefied natural gas (LNG) from 2018 to meet its growing demand. This was an interim – and certainly not long-term – solution.

Based on the authors’ research findings, it is clear that Bangladesh’ energy transition cannot come solely from solar and wind. However, national energy security can be based on building a hydrogen-fueled economy. This can be supplemented by nuclear, new-tech biomass and geothermal options. To achieve this feat, the country needs to repurpose gas infrastructure and reskill energy-sector professionals. As a reason to be optimistic, that can all be done at a cheaper cost than other countries.

Visionary aims like the reconfigurement of the prominent national oil company Petro-Bangla into Hydrogen-Bangla can refashion the future energy setting in Bangladesh.

After 1974 now is the time for formulating another era-defining energy sector policy decision, one which can secure the country at least to the end of this century. Visionary aims like the reconfigurement of the prominent national oil company Petro-Bangla into Hydrogen-Bangla can refashion the future energy setting in Bangladesh. Of course, the decision-making process should be supported by enough scientific evidence, but the time to start is now.

Using depleted and well-explored gas wells in Bangladesh, where majority of the wells are drilled onshore, the cost of geothermal energy will be much cheaper than the global average. As most of Bangladesh’s land is fertile, providing food security through agriculture, unused non-agricultural land is difficult to find in such a densely populated country. Consequently, any potential for space-based solar and wind projects in a disaster-exposed country like Bangladesh is not something to be hopeful for.

Use of ‘char lands’ (strips of land surrounded by rivers) for solar energy has gained traction as a quick fix solution in some circles. This would be a problem because of the fragility and disaster-proneness of these lands and would result in putting energy infrastructure at the high-risk level. Moreover, poor households use these lands for high-yield farming. Solar panels are a new form of energy infrastructure with a lifetime of several decades, so their installation needs to be disaster-proof for a country like Bangladesh which unfortunately has learned to live with frequent disasters. Climate mitigation discussion cannot be separated from the adaptation and development contexts. Ultimately though, we need triple-win solutions to support economic, social and environmental progress all at the same time.

The opportunities

For Bangladesh, a careful socio-technical and economic-environmental approach is required to evaluate energy production and storage capability. These approaches call for reusing existing gas wells and infrastructure. Since the gas sector is still government-controlled, however, it would be easier for Bangladesh to overcome wells-related ownership and deal-closure issues compared to many other countries.

A country like Bangladesh has to be aware of demand-side interventions. Demand-side policy actions will essentially reduce waste in energy use at the consumer end. Hence, energy efficiency, together with a clean energy supply, can be a long-term solution to sustain high economic growth for the next two decades. Bangladesh’s gas-phase out might be delayed until the mid-century. Increased efficiency can reduce the depletion pace.

There is also enormous opportunity to generate jobs in energy-sector linked services. Jobs in the financial sector such as energy auditing, benchmarking, R&D and enterprise development for local manufacturing can all be encouraged through coordinated programmes and collaborative efforts between research and academic institutions. In addition, collaboration with international institutes can accelerate skill building and knowledge transfer to shape the growth of the domestic economy.

Some fixes

Gaps in information is a barrier to accelerate targeted access to clean energy at an affordable cost. There is a lack of publicly available data on key supply topics like resource potential, solar radiation, wind speed and good wind maps as well as a shortage of data on demand-side topics like consumer satisfaction and cultural characteristics. Absence of a centralised, publicly available database creates barrier for evidence-based research around policy actions. Other barriers, like improper battery disposal, slow revisions in subsidy allocation, donor influenced financial and policy arrangement and limited non-crop land area also create bespoke challenges. Despite all of that, there remains considerable scope for innovative opportunities.

The challenges in Bangladesh’s energy sector can indeed be addressed. Making room for new institutional arrangements and the strategic role of local experts, including businesses and consumers, can overcome existing barriers. Other means of revitalising the energy sector include rolling out programmes to train up energy sector professionals and creating a comprehensive database to track energy supply and demand.

 

Photo ©️ Mahmud Hossain Opu

Joyashree Roy
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Joyashree Roy is Bangabandhu Chair Professor at the Asian Institute of Technology (AIT), Thailand. She is an economist. She was a National Fellow at Indian Council of Social Sciences Research and a Postdoctoral Fellow at Lawrence Berkeley National Laboratory, Berkeley, USA. She specialises in energy economics, environmental economics and econometrics. Her works focus on climate change, water pricing, and economy-wide modeling exercises for policy. She pursued her doctoral studies in economics from Jadavpur University, India.
Hasan Mahmud
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Hasan Mahmud is Bangabandhu Chair Researcher at Asian Institute of Technology (AIT), Thailand. He is an engineer. He was Deputy Manager at Sylhet Gas Fields Limited, Bangladesh. His research focuses on energy sector development and sustainable energy solutions. He pursued his doctoral studies in energy economics at the School of Environment, Resources and Development, AIT.