I know where there is guaranteed funding for coal…24 Jun 2025 21:25
Https://today.thefinancialexpress.com.bd/editorial/decarbonisation-is-prerequisite-for-foreign-funding-1750778940
Decarbonisation is prerequisite for foreign funding
Wasi Ahmed | June 25, 2025 00:00:00
There is growing concern about the likely scarcity of foreign funding for non-green development projects in the immediate future. Reports from various sources, including leading multinational financiers, confirm a marked shift in the global project funding landscape, prompted by international treaties aimed at mitigating the impacts of climate change. Foreign funding -- a crucial driver of development in countries like Bangladesh -- is now aligning more closely with climate commitments under agreements such as the Paris Accord.
Key institutions such as the Asian Development Bank (ADB), the World Bank Group (WBG), and the European Investment Bank (EIB) have already pledged to follow the 'Direct Investment Lending Operation' (DILO) framework consistent with the Paris Agreement. This commitment signals a definitive preference for investments that are environmentally sustainable, pushing countries to restructure their development strategies around green objectives.
Infrastructure specialists warn that financing for coal, oil, and other fossil-fuel-based projects may soon disappear altogether. Although Bangladesh is not a significant emitter of greenhouse gases (GHGs), it nonetheless faces pressure to decarbonise its economy. This entails adopting expensive technologies like carbon capture and storage -- an investment challenge for a developing country. Multilateral lenders are reportedly maintaining updated lists of activities they consider compatible or incompatible with a low-carbon trajectory. As a result, any project that does not prioritise emissions reduction or energy efficiency will likely find it difficult to secure international financing.
This raises an urgent question: what does this new financing climate mean for Bangladesh's development ambitions? Fully grasping the implications of the Paris Agreement's guidelines on foreign investment will take time. Bangladesh, despite contributing minimally to global emissions, is among the most vulnerable countries to climate change. Recognising this, the government has already laid out emission reduction targets across multiple sectors, signalling a proactive stance towards transitioning to a low-carbon economy.
According to Bangladesh's revised Nationally Determined Contributions (NDCs), submitted in August 2021, the country intends to cut GHG emissions by 27.56 million tonnes of carbon dioxide by 2030 through unconditional measures, with an additional 61.9 million tonnes to be reduced conditionally -- subject to foreign support. Realising these ambitious targets requires an estimated $175 billion in investment. More broadly, Bangladesh needs roughly $10 billion annually to finance development initiatives in energy, transport, urban infrastructure and more.
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