CPD: Renewable Energy Still Overlooked in Budget
The proposed national budget for FY2026-27 has failed to provide adequate emphasis on the renewable energy sector, according to the Centre for Policy Dialogue (CPD). While acknowledging several positive measures in favor of renewable energy, the think tank argues that the overall fiscal and incentive structure continues to favor fossil fuels.
The assessment was presented during a media briefing titled “Proposed National Budget FY2026-27: What Did the Power and Energy Sector Receive?” held on Wednesday at the CPD office in Dhanmondi, Dhaka. The keynote paper was presented by CPD Senior Research Associate Helen Mashiat Priyoti.
According to CPD’s analysis, only 2 percent of the total allocation for power generation has been earmarked for renewable energy, while the remaining 98 percent will be spent on fossil fuel-based generation and related activities.
The organization believes this allocation pattern reflects a policy bias toward fossil fuels, posing challenges to Bangladesh’s energy transition goals and the expansion of environmentally sustainable power generation.
Under the proposed budget, the Ministry of Power, Energy and Mineral Resources has been allocated Tk 17,345 crore, representing a 2.3 percent increase compared with the revised budget of the current fiscal year. However, the sector’s share of the overall national budget has declined from 2.15 percent to 1.85 percent.
Sector-wise analysis shows that the allocation for the Power Division has decreased to Tk 14,996 crore, around 3.9 percent lower than the previous year. In contrast, the allocation for the Energy and Mineral Resources Division has increased by nearly 72 percent.
According to CPD, the increase is primarily driven by expanded efforts in gas exploration, development, and production.
The think tank, however, welcomed several renewable energy-friendly measures introduced in the budget. For the first time, solar power producers have been offered a zero percent tax rate until 2035, while consumers paying solar electricity bills will be eligible for a 5 percent tax rebate.
The government has also proposed significant reductions in duties on aluminum and steel structures used in solar power plants, as well as on various electrical conductors. Existing tax burdens ranging from 62 to 93 percent are proposed to be reduced to between 26 and 38 percent.
Similarly, the tax burden on lithium-ion batteries is proposed to be reduced from 61.8 percent to 26.3 percent, while duties on solar inverters and solar panels are set to decline substantially. The budget also proposes the complete withdrawal of taxes on electric vehicle charging stations and reductions in registration fees for EV-related infrastructure.
CPD described these initiatives as positive steps toward promoting renewable energy adoption.
However, the organization noted that significant fiscal incentives for fossil fuels remain intact. The proposed budget continues VAT exemptions on LNG imports, keeping it among the least-taxed energy sources in the country. Duty benefits for coal imports used in coal-fired power plants have also been extended until 2030.
In addition, the government has renewed emphasis on domestic coal exploration and extraction, setting a production target of 600,000 metric tons of coal during FY2026-27.
According to CPD, such measures are not fully aligned with Bangladesh’s long-term energy transition strategy and climate-friendly development objectives.
Speaking at the briefing, CPD Research Director Khandaker Golam Moazzem said the government appears to be pursuing a dual policy approach by promoting renewable energy while simultaneously maintaining extensive incentives for fossil fuel-based industries.
“The proposed budget has not fully addressed the existing imbalance within the fiscal framework,” he said. “Although there are measures to encourage renewable energy, fossil fuel sectors continue to enjoy comparatively greater benefits. To move toward a sustainable energy future, these disparities must be reduced through increased investment and incentives for environmentally friendly energy sources.”
The briefing was attended by representatives from the energy sector, including Mustafa Al Mahmud, President of the Bangladesh Sustainable and Renewable Energy Association (BSREA), Monowar Mostafa, General Secretary of the Democratic Budget Movement, and Mohammad Javed Imran, Chief Risk Officer of Infrastructure Development Company Limited (IDCOL).
//DBTech/DMO/EK/OR//
