Bangladesh has the potential to earn up to $1 billion annually from the global carbon market, but vague and underdeveloped national policies continue to deter both domestic and international investment in the sector. This concern was raised by climate finance experts, private sector leaders, and policymakers during a high-level discussion held in Dhaka.
Despite modest progress in recent years — including earnings of approximately $17 million since 2006 from carbon reduction projects such as the distribution of improved cooking stoves and solar home systems — stakeholders argued that the country is still far from tapping into the full benefits of carbon financing. Without a clear, streamlined regulatory framework and greater policy direction, Bangladesh risks falling behind other developing nations already mobilizing carbon credits as a tool for sustainable development.
The event, titled “Catalysing Carbon Financing in Bangladesh: Private Sector Pathways and Policy Readiness,” was organized by international consultancy firm Light Castle Partners. It brought together representatives from the financial sector, environmental organizations, and the energy industry to explore how Bangladesh can strengthen its readiness to participate in the global carbon credit market under Article 6 of the Paris Agreement, which enables countries to cooperate in achieving their emission reduction targets through carbon trading.
In a keynote presentation, Lincoln Teo, Managing Director of global climate platform ZERO13, praised Bangladesh for its climate ambitions but warned that targets must be backed by action. He outlined the country’s key goals, including a commitment to generate 16% of total energy from renewable sources by 2030 and to reduce carbon emissions by 89.47 million tonnes of CO₂ equivalent annually.
“These are bold targets,” said Teo, “but reaching them will require robust infrastructure, private sector participation, and transparent mechanisms to track and trade emissions.” He added that success in carbon financing could also support broader goals such as sustainable agriculture, improved water management, and resilient rural livelihoods.
Ahmed Zubaer Mahmud, Additional Director of the Sustainable Finance Department at Bangladesh Bank, noted that the central bank has already introduced several green financing initiatives, including refinancing schemes for renewable energy and energy efficiency projects. However, he acknowledged that current efforts are not enough.
“While we’ve laid the foundation through green finance policies, we now need stronger collaboration between public institutions, banks, and private enterprises,” he said. “The financial sector must adapt to international standards and develop mechanisms that facilitate carbon project financing and monitoring.”
Bijon Islam, CEO of LightCastle Partners, echoed this sentiment and called for the development of innovative and inclusive financing models that are not only environmentally responsible but also socially impactful.
“Carbon finance presents an opportunity to diversify our investment landscape,” Islam said. “But to attract global capital and build a low-carbon, resilient economy, we must rethink how capital is mobilized, especially in sectors like energy, agriculture, and transportation.”
He further emphasized the need for policy certainty, digital MRV (Monitoring, Reporting, and Verification) systems, and capacity-building initiatives that prepare local institutions and businesses to engage with international carbon markets.
Participants also pointed to the urgency of building a transparent carbon registry, aligning Bangladesh’s climate financing strategy with global climate goals, and ensuring that local communities benefit directly from carbon credit revenues.
The discussion concluded with a strong message: Bangladesh is well-positioned to benefit from carbon financing, but time is of the essence. With the right policies, governance, and institutional support, the country could become a regional leader in climate finance, driving both economic development and environmental sustainability.
As global demand for carbon credits continues to rise, Bangladesh must act swiftly to position itself as a credible, competitive player in this growing market.
