Bangladesh's reliance on LNG increases financial, energy and climate risks

Bangladesh has significantly increased its reliance on imported LNG to meet rising electricity demand as domestic gas reserves decline, but this has left the country vulnerable to global price volatility and supply shocks. This reliance has led to widespread power cuts, industrial losses, and increased electricity costs, while renewable energy growth has stagnated, accounting for only 2% of electricity generation by 2022. The report warns that continued investment in gas infrastructure risks creating stranded assets and exacerbating climate change, to which Bangladesh is highly vulnerable. Specifically, heat stress is projected to cause significant GDP losses and labour productivity declines by 2030. The document argues that scaling up solar and wind power is a cheaper, more reliable alternative that would reduce financial risk and climate vulnerability.

• Bangladesh's shift toward imported LNG has created extreme vulnerability to global energy market shocks. By 2022, LNG imports met 22% of total gas demand, but the country failed to meet renewable energy targets, with renewables providing only 2% of electricity and 3.75% of installed capacity by 2022.
• The 2021-2022 energy crisis, driven by a surge in Asian LNG prices and supply reductions from Qatar, caused severe domestic disruptions. In October 2022, blackouts affected 75%-80% of the country, leaving 130 million people without power and causing industrial production in sectors like garments to drop by 25%-50%.
• Despite recent price dips, LNG costs are forecast to remain high through the late 2020s, threatening economic stability. The government increased gas prices for commercial users by 14% to 179% in January 2023, and power sector subsidies reached BDT 297 billion (USD 2.74 billion) in the 2021-22 financial year.
• Bangladesh faces significant financial risks from a USD 16.5 billion investment plan for new gas infrastructure, including terminals and pipelines. These investments risk becoming stranded assets as renewable energy costs fall, contributing to a debt burden that already includes a USD 2 billion annual bill from power sector mega projects.
• Climate change, accelerated by global LNG expansion, poses an existential threat to Bangladesh. By 2050, the World Bank projects up to 19.9 million internal climate migrants. Currently, 56% of the population lives in areas with high exposure to climate change.
• Heat stress is projected to severely impact the economy and public health. By 2030, Bangladesh is projected to lose approximately 4.9% of its GDP to heat stress, representing a potential loss of USD 95.75 billion. Labour losses are expected to rise from 254 hours per person annually to 573 hours if temperatures increase by 2°C.
• Renewable energy is a more cost-effective and reliable alternative to gas. In late 2022, rooftop and utility-scale solar costs (BDT 5.5 and BDT 7.6 respectively) were lower than the average electricity generation cost of BDT 10. Following the Mujib Climate Prosperity Plan's ambitious pathway could have saved USD 2.7 billion by reducing spot LNG imports by 25% between 2022 and 2024.

APA

Team, Z. (2023). Bangladesh's reliance on LNG increases financial, energy and climate risks. Zero Carbon Analytics. https://zerocarbon-analytics.org/energy/bangladeshs-reliance-on-lng-increases-financial-energy-and-climate-risks/

Chicago

Team, ZCA. Bangladesh's reliance on LNG increases financial, energy and climate risks. Zero Carbon Analytics, 2023. https://zerocarbon-analytics.org/energy/bangladeshs-reliance-on-lng-increases-financial-energy-and-climate-risks/.

Wikipedia

{{cite report |last1=Team |first1=ZCA |title=Bangladesh's reliance on LNG increases financial, energy and climate risks |publisher=Zero Carbon Analytics |date=9 May 2023 |url=https://zerocarbon-analytics.org/energy/bangladeshs-reliance-on-lng-increases-financial-energy-and-climate-risks/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{team2023bangladeshs, author = {Team, ZCA}, title = {{Bangladesh's reliance on LNG increases financial, energy and climate risks}}, institution = {Zero Carbon Analytics}, year = {2023}, month = may, url = {https://zerocarbon-analytics.org/energy/bangladeshs-reliance-on-lng-increases-financial-energy-and-climate-risks/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }