Empowering Sustainable Energy Cooperation: Bangladesh-EU’s Vision for a Greener Future

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On the 25th of October 2023, President Ursula von der Leyen of the European Commission and Prime Minister Hasina jointly commenced talks on a new Partnership and Cooperation Agreement, aiming to strengthen the relationship between the European Union (EU) and Bangladesh. The United News of Bangladesh (UNB) reported this event during the Global Gateway Forum. In line with this, the EU and the European Investment Bank (EIB) sealed agreements amounting to €400 million, designated for initiatives pertaining to renewable energy. The main objective is to bolster sustainable advancements in Bangladesh’s power sector, particularly focusing on meeting the country’s climate objectives. Additionally, an extra €70 million was dedicated to various collaborative endeavors, spanning domains such as education, labor standards, sustainable construction, e-governance, and the prevention of gender-based violence.

The trade ties between the EU and Bangladesh are based on one-sided trade preferences granted by the EU since 2001 through the GSP Everything but Arms (EBA) system, ensuring duty-free and quota-free market access for the Least Developed Countries (LDCs). The EU is the primary destination for Bangladesh’s exports, constituting more than 60 percent of all exports to the EU under the EBA framework. Notably, between 2011 and 2019, Bangladeshi exports to the EU increased from €9.0 billion to over €19 billion, while EU exports to Bangladesh rose from €1.7 billion to €3.4 billion during the same period. Bangladesh’s main export items include a diverse range, with apparel making up over 90 percent, alongside footwear, frozen food, and agricultural products, among others. In contrast, the EU primarily exports machinery, transport equipment, and chemicals to Bangladesh.

This year marks the 50th anniversary of diplomatic relations between the EU and Bangladesh. Over this time, the EU has emerged as a steadfast partner in development, trade, and humanitarian assistance for Bangladesh. The relationship between the EU and Bangladesh has evolved over the past five decades, developing into a multi-faceted partnership encompassing political, trade, development, climate change, and connectivity aspects. The Global Gateway Forum serves as a platform that brings together government representatives from the EU and various countries globally, as well as key stakeholders from the private sector, civil society, thought leaders, financial institutions, and international organizations. The primary goal of the forum is to promote global investments in both physical and intellectual infrastructures, working towards the achievement of Sustainable Development Goals (SDGs) and fostering sustainable growth and resilience globally.

The Global Gateway initiative embodies the proactive approach of the EU aimed at bridging the global investment gap and promoting intelligent, clean, and secure connections within the digital, energy, and transportation sectors, while simultaneously strengthening health, education, and research systems. The strategy behind the Global Gateway adopts a Team Europe approach, amalgamating the efforts of the European Union, EU Member States, and European development finance institutions, collectively striving to mobilize up to €300 billion in both public and private investments from 2021 to 2027. This collaborative approach aims to build crucial connections rather than dependencies, effectively closing the global investment gap.

In Brussels, President Ursula von der Leyen stated, “The EU and Bangladesh have cultivated a reliable and long-standing partnership over the past 50 years. Currently, we are moving forward to deepen this collaboration, leveraging the opportunities presented by the global push towards environmental sustainability under the Global Gateway initiative. The European Commission, in collaboration with the EIB and Bangladesh, will pool resources to promote renewable energy and address the challenges posed by climate change. This investment of €400 million will have a positive impact on the people and economy of Bangladesh.”

Echoing similar sentiments, Prime Minister Sheikh Hasina emphasized the potential of such initiatives in helping developing nations like Bangladesh combat climate change, bridge infrastructure gaps, invest in renewable energy, digital innovation, healthcare, and education, among other vital sectors. The Global Gateway represents a symbol of camaraderie, partnership, trust, and interdependence, reflecting the significance of mutual collaboration.

The €400 million partnership between the EU and the EIB, specifically allocated for renewable energy projects, will be supported by an EU-guaranteed EIB loan of €350 million. This financial arrangement will be supplemented by a blending support package of €45 million, encompassing technical assistance and an investment grant. Furthermore, an additional project focusing on Green Energy Transition, valued at €12 million, will collaborate with Germany on policy formulation, legal frameworks, and investment climates to facilitate an inclusive shift towards eco-friendly energy. The intended projects are expected to improve energy accessibility and rural development in Bangladesh, primarily emphasizing utility-scale solar photovoltaic and onshore wind projects, potentially accompanied by battery energy storage systems. Anticipated outcomes include the installation of approximately 750 MWp of new renewable energy capacity in Bangladesh, along with the potential enhancement of power distribution and decentralization, ultimately strengthening national and possibly regional connectivity and resilience.

As part of its technical assistance, the EU aims to review project proposals, including the integration of energy production and agricultural activities on the same plot of land, with a focus on solar, hybrid solar/wind, and solar with battery options. The integration of solar and onshore wind projects into the national grid will be overseen by the Ministry of Power, Energy, and Mineral Resources. Moreover, the Partnership for Green Energy Transition aims to establish a conducive legal framework in Bangladesh for investment in eco-friendly energy transitions, thereby creating employment opportunities for women in the energy sector.

Simultaneously, at the Global Gateway Forum, an additional cooperative package worth €70 million was pledged to various areas of mutual cooperation between the EU and Bangladesh. These areas include strengthening the education sector with €30 million, promoting the agenda of decent work, facilitating the expansion of eco-friendly construction, fostering effective digital governance, and combating gender-based violence in public spaces within the country, with each area receiving €10 million in funding.

The partnership between the EU and Bangladesh manifested through their collaborative efforts in sustainable energy cooperation, underscores the significance of international cooperation in tackling pressing global challenges. By prioritizing sustainable energy initiatives and nurturing diplomatic ties, both entities not only strengthen their bilateral relations but also set a precedent for fostering a more interconnected and sustainable future. As they continue to prioritize sustainable energy development, the collaboration between the EU and Bangladesh sets a commendable example for effective international cooperation and underscores the potential for creating a more sustainable global energy landscape.

– Syed Raiyan Amir is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

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