Green Finance in Bangladesh: Policies, Institutions, and Challenges
Hossain, Monzur | November 2018
Abstract
This paper provides an overview of Bangladesh’s green financing status, with a particular focus on the renewable energy (RE) sector. Despite having great potential of renewable energy sources, the sector currently consists of a meager 1% share of the energy portfolio. The poor performance of the renewable energy sector is attributable to factors such as the lack of the required technology, a regulatory and institutional framework, and proper policies and incentives. This paper discusses both the potential for and the impediments to expanding renewable energy projects. Though the Bangladesh Bank has formulated green banking guidelines, the lack of capacities of banks and financial institutions, the lack of a proper understanding of the risks and returns of green projects, and the underdeveloped equity and bond markets hamper the expected growth of green projects in Bangladesh. As a case study, the paper analyzes various aspects of a successful Solar Home System program, which the Infrastructure Development Company Limited (IDCOL) implemented, to understand the risks and potential of a renewable energy project. The IDCOL’s solar homes program in Bangladesh, which has installed 4.13 million solar home systems so far, almost 90% of the total, is a good example of a public–private partnership in green financing. However, this successful program is now on the brink of abandonment due to huge amount remaining default with the customers which is attributed to several reasons such as uncoordinated grid electricity expansion, a lack of coordination among the respective agencies, the failure of the program’s commercialization, poor financial governance, and the absence of a national policy oversight body. Therefore, the capacity building of banks and financial institutions, the development of bond and equity markets, a well-coordinated policy oversight body, and mainstreaming green finance are some of the key policy issues that Bangladesh needs to address to promote green financing and achieve sustainable development.
Citation
Hossain, Monzur. 2018. Green Finance in Bangladesh: Policies, Institutions, and Challenges. © Asian Development Bank Institute. http://hdl.handle.net/11540/9362.Keywords
Alternative energy
Alternative energy development
Photovoltaic Energy
Geothermal Energy
Urban Development Finance
Trade Finance
Small Business Finance
Rural Finance
Roundtable on International Trade and Finance
Regional Development Finance
Public Service Finance
Public Finance
Project Finance
Private Finance
Nonbank Financing
Non-Bank Financial Institutions
Municipal Finance
Local Government Finance
Local Currency Financing
Limited Resource Financing
International Financial Institutions
Infrastructure Financing
Industrial Finance
Government Financial Institutions
Government Finance
Financing of Infrastructure
Financial Sector Development
Financial Regulation
Alternative energy program
Alternative energy technology
Energy Demand
Energy planning
Energy Resources
Energy Resources Development
Primary Energy Production
Primary Energy Supply
Taxation
Public Accounting
National Budget
Municipal Bonds
Local Government
Local Taxes
International Monetary Relations
International Financial Market
International Banking
Central Banks
Business Financing
Capital Resources
Budgetary Policy
Capital Needs
Corporate Divestiture
Capital Instruments
Pension Funds
Insurance Companies
Banks
Portfolio Management
Fiscal Administration
Economics of Education
Development Banks
Green technology
Energy conversion
Electric power consumption
Cost effectiveness
Inventions
Sun
Solar heating
Solar energy
Renewable energy source
Power resource
Natural resource
Energy harvesting
Energy development
Energy facility
Power supply
Solar activity
Solar constant
Earth
Weather
Renewable energy resource
Energy security
Energy tax credit
Energy assistance
Solar energy policy
Conservation of natural resources
Use tax
Taxing power
State of taxation
Tax-sales
Tax revenue estimating
Tax planning
Spendings tax
Special assessments
Tax administration and procedure
Sales tax
Real property and taxation
Progressive taxation
Effect of taxation on land use
Effect of taxation on labor supply
Intergovernmental tax relations
Inheritance and transfer tax
Energy tax
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