Burning for Development: A Case Study on Socioeconomic, Environmental and Climate Change Impacts of the Barapukuria Coal Plant

Bangladesh is about to embark on a major transformation of its energy system. To meet the growing energy demand, the government plans to increase coal-fired power generation from 2 percent to 50 percent of the country’s total mix by 2041. Looking towards a development future with increased coal, what will be the socioeconomic, environmental and distributional impacts of this policy? 

In a new working paper, Rohini Kamal studies Bangladesh’s sole coal plant in Barapukuria, financed by China, to assess the policy impacts and draw lessons for the future. Kamal presents initial estimates of five key aspects of power generation: financing, employment, socioeconomic impacts, environment and climate change of the Barapukuria coal plant. 

Main findings: 

• Distinguishing between the varied impacts of power plants across various groups within a country or locality helps to understand public support for or resistance to a project and can help direct policy to reduce disproportionate negative impacts on specific groups. 
• Going forward, national policies of borrowing countries need to be reevaluated and further strengthened. 
  • Bangladesh’s national policy needs to take a longer-term view with respect to mitigation, particularly greenhouse gas (GHG) emissions associated with power generation. 
• Even if Bangladesh implemented better safeguards and risk reduction measures, their government plan for 2041 would continue to face issues, such as continued water and air pollution, GHG emissions and the need for a longer repayment period, 
• Continuing its current policy would lead Bangladesh to fail in achieving, not only the very modest targets set by the Intended Nationally Determined Contributions (INDCs), but also fail in reaching the global emission target required by the Paris Agreement. 
• National policies are set to play an ever increasing role in moderating the impacts of energy investments, as multilateral development banks (MDBs) rely more on the country or client system. Private finance is set to play a larger role in infrastructure investments, including for Bangladesh. 
• Sustainable energy infrastructure development would be an opportunity for Bangladesh to succeed, instead of risking stranded assets and other losses in the future. 
• To keep the country’s emissions within the 2050 target, Bangladesh will need increased investments in renewable power generation (grid upgrades and efficient urban rail systems) and in efficiency measures (favorable tax rebate and pricing policies for renewables), particularly from emerging financing sources, such as Asian policy banks. 
  • Financiers, such as Export-Import Bank of China, have incorporated environmental and social safeguard policies for their international investments in recent years and signatories of the Equatorial Principles can help ensure sustainable financing for private investors. 
  • To ensure proper implementation on the ground, explicit requirements of third party monitoring and inclusion of grievance mechanisms that are easily accessible can help set a system of checks and balances. 

As more and more countries in the Global South expand energy production in the coming decades, countries with multiple vulnerabilities must assess the needs of their at-risk population. Kamal further argues clean energy transitions must come from within vulnerable countries, with governments and donor agencies from the Global South playing an increasingly central role in securing a sustainable energy future.