Carbon finance can be a lifeline for pollution-plagued Dhaka

"Dhaka tops the list of most polluted cities in the world" - a headline unfortunately etched into the minds of many this month, serving as a grim reminder of the Bangladeshi capital's ongoing struggle with air quality. But amidst the toxic cocktail of smog, a thick, acrid blanket that stings the eyes and constricts the lungs, carbon finance might emerge as a saving grace. This innovative financial mechanism, channelling funds towards projects that reduce emissions, could be the very breath of fresh air Dhaka desperately needs.
Since the issue of environmental pollution gained prominence, numerous steps have been taken and rules established to address it, yet many have failed. A common issue among these failed initiatives was the lack of financial benefit associated with compliance, leading to negligence of those rules. Carbon finance aims to solve this exact problem. Carbon finance introduces financial mechanisms and incentives designed to encourage and reward emission reduction efforts and sustainable practices. Concepts like carbon credits, which limit emissions, and financial incentives for successfully staying within these limits and trading remaining credits in carbon markets to finance green projects, can benefit the environment immensely.
Although Bangladesh is engaging in carbon finance in several ways, it has yet to participate in formal compliance carbon markets. The Bangladesh Climate Change Strategy and Action Plan 2018 outlines plans for a domestic carbon market. Draft regulations are under development, but a final framework is yet to be established. While the draft regulations lay the foundation, details such as robust monitoring, market infrastructure, and international compatibility are still under construction. Challenges such as securing funding and expertise pose significant obstacles, but fostering partnerships and enhancing capacity can mitigate these barriers. If Bangladesh successfully navigates these challenges, its vision of a carbon market could materialise, paving the way for reduced emissions, sustainable investments, and a greener future.

Arafat Mahmud
Student of North South University
[email protected]