When Loss and Damage Meets Energy Crisis

As global scientists quantify the staggering economic toll of carbon emissions, Bangladesh finds itself trapped in a dual crisis: paying for climate harms it did not cause while struggling to keep its own energy system running.
A recent landmark study published in Nature has, for the first time, provided a comprehensive framework to measure “loss and damage” the irreversible impacts of climate change that countries cannot adapt to or recover from. The findings are alarming. One ton of carbon dioxide emitted in 1990 has already caused about $180 in global damages by 2020, and is projected to cause an additional $1,840 in damages by 2100. In other words, future damages from past emissions are over ten times greater than what has already occurred.
For Bangladesh, these figures translate into lived realities. Despite contributing less than 0.5 per cent of global historical emissions, the country remains among the most climate-vulnerable in the world. Rising sea levels, intensifying cyclones, river erosion and salinity intrusion are already affecting millions, damaging livelihoods, agriculture and infrastructure. Scientific evidence now confirms with high confidence that warming is slowing economic growth in tropical countries like Bangladesh. Yet, even as the global debate intensifies over climate justice and compensation, Bangladesh is facing an immediate and pressing energy crisis.

Energy Supplies Under Severe Pressure
Global geopolitical tensions, particularly in the Middle East, are disrupting fuel and liquefied natural gas (LNG) supply chains, placing Bangladesh’s energy security under strain. The country imports a significant share of its energy, with LNG accounting for roughly one-third of total gas supply. Currently, Bangladesh’s daily gas demand stands at around 4,000 million cubic feet (mmcf), while supply remains below 2,700 mmcf, creating a substantial deficit. As a precaution, authorities have already reduced gas supply by up to 150-200 mmcf in recent weeks.
The consequences are being felt across the economy. The ready-made garment (RMG) sector, which contributes more than 80 per cent of national export earnings, is particularly vulnerable. Gas shortages and low pressure are forcing factories to operate at just 30 to 40 per cent of their production capacity in some cases. Export performance is already declining, with shipments dropping by over 13 per cent in a single month, raising concerns about prolonged economic impacts. At the same time, rising fuel import costs are putting pressure on foreign currency reserves, prompting the government to consider austerity measures. These include extending weekends, introducing work-from-home arrangements, and enforcing stricter energy-saving protocols across institutions.

High Cost of Fossil Fuel Dependence
Bangladesh’s growing reliance on imported LNG has become a major financial burden. While domestic gas costs around Tk3 per cubic metre, imported LNG costs nearly Tk 55—about 18 times higher. This cost disparity has led to a sharp increase in government subsidies. Between 2018 and 2025, the country spent approximately Tk35,215 crore on energy subsidies. For the current fiscal year alone, subsidy requirements may rise to Tk26,000 crore, significantly higher than initial allocations. This is not the first time Bangladesh has faced such a shock. During the 2022 global energy crisis, LNG prices surged to $70 per mmBtu, forcing the country to suspend spot market purchases and resulting in widespread load shedding. These recurring crises highlight a structural vulnerability: heavy dependence on imported fossil fuels that are both expensive and volatile.

Loss and Damage Meets Energy Insecurity
The connection between climate loss and the energy crisis is deeply intertwined. The same fossil fuels driving global carbon emissions and causing climate-induced loss and damage are also at the root of Bangladesh’s current energy insecurity. This creates a paradox. Bangladesh is forced to spend billions on fossil fuel imports to sustain its economy, while simultaneously bearing the long-term costs of climate impacts driven by those very emissions.

Path toward Resilience
Amid these challenges, there is a growing consensus that Bangladesh must accelerate its transition toward renewable energy. Solar power, in particular, offers a promising pathway. Estimates suggest that Bangladesh could generate up to 50,000 megawatts of solar energy using just 1 per cent of its land. Currently, renewable energy accounts for only about 5.24 per cent of the country’s total installed capacity of over 32,000 megawatts, indicating significant untapped potential.
The economic case is also becoming stronger. Solar energy is now among the cheapest sources of electricity globally, and advancements in battery storage technology have made it increasingly reliable. With battery costs falling by nearly 90 per cent since 2010, solar-plus-storage systems are becoming competitive with gas-based power.
Scaling up renewables could reduce dependence on imported fuels, stabilise energy costs and lower carbon emissions addressing both energy security and climate vulnerability simultaneously.

Narrowing Window for Action
Bangladesh stands at a critical intersection of two converging crises: escalating climate loss and damage, and a deepening energy shortage. Short-term measures may provide temporary relief, but long-term solutions require structural transformation. Breaking the cycle of fossil fuel dependency is no longer optional; it is essential for economic stability, climate resilience and sustainable development. As global uncertainties persist, the choices made today will determine whether Bangladesh remains trapped in this cycle or emerges as a model for resilient, low-carbon development.

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The writer is an environmental advocate and ICIMOD Fellow