Accelerating Coal Power Plant Transition: Economics and Financial Insights from Bangladesh

The purpose of this chapter is to critically discuss the financial and economic barriers, as well as policy considerations, for phasing out coal-fired power plants (CFPPs) in Bangladesh through a just transition framework. Bangladesh’s energy mix is dominated by fossil fuels, being import-dependent, which is projected to reach 90% by 2041, with annual import costs exceeding $40 billion. This has elevated the urgency to shift toward renewable energy, which is driven not only by ecological but also by economic and strategic reasons. In this context, transitioning from coal-based electricity generation to renewable energy sources is necessary to maintain macroeconomic stability, ensure energy security, and promote fiscal sustainability. To achieve this objective, the owners of Barapukuria and Rampal CFPPs were interviewed, and they shed light on stakeholder concerns, infrastructural limitations, and financial disincentives associated with early coal retirement. Despite these obstacles, the study finds that the transition from coal is possible if coherent, inclusive, and forward-looking policies support it. Furthermore, based on the policy evaluations and findings, this chapter presents several policy recommendations for ensuring an environmentally responsible and economically viable energy transition in Bangladesh.