An increasing number of banks around the world are going green by offering innovative green products, saving resources and supporting activities that help conserve environment. 'Conserving Environment' through operation and financing is at the centre of Green Banking (GB) activities of banks now-a-days. Alongside handling environmental risks in their day-to-day operation and financing activities, banks may contribute to attaining sustainable energy planning in an economy.
The global energy crisis, coupled with the threats of climate change, brings into focus both opportunities and challenges for developing countries. A number of stakeholders in global economies like government, international organisations, environmental NGOs (non-governmental organisations), media etc., are working towards that. As one of the stakeholders, banks can also contribute considerably I this regard. In connection with the energy issue, the 'Green Banking Policy and Strategy' framework of the central bank of Bangladesh requires banks to save energy resources and finance renewable energy sector. As a measure to handle energy problem of the Dhaka city, there is no doubt that a sustainable energy planning and implementation mechanism is the need of the hour. And in this connection, green banking might be a positive force not only to handle the growing energy demand but also to minimise environmental degradation. This write-up attempts to evaluate the relevance and potential of green banking practices for attaining energy sustainability in Dhaka city.
Dhaka is one of the world's fastest growing cities. Dhaka's population is likely to increase to over 20 million by 2025; despite the fact that now it has a declining fertility rate. The major portions of this population are migrant urban poor from rural areas for better economic opportunities due to various reasons. The electricity consumption rate has increased gradually due to the rapidly growing population. Though there was notable increase in the power supply in recent times, power shortage remained a matter of concern in Dhaka city, and power crisis is still a big issue in the country. With regard to the other sources, gas is a crucial and a secure source to make energy in Dhaka city. In Dhaka, people use gas for domestic purpose, industrial purpose and for transportation. Bangladesh spends a substantial amount of foreign currency to import petroleum every year to meet local needs. Petroleum price rise has always been a matter of concern for the country as it is integrally linked to price escalation of most essential products.
Though, Bangladesh has scope to produce renewable energy, it lacks adequate policy support and initiatives. Currently, it has been made mandatory to install solar panel to get electricity connections in new buildings in Dhaka city. Solar panel for each building might have produced notable volumes of electricity. We have also considerably large number of shopping malls in Dhaka city where it is possible to introduce renewable energy for electricity generation. Furthermore, the growing real estate companies could also use environment-friendly architectural design like solar energy capturing building where a substantial amount of electricity is locally produced for each building. Shopping malls commonly rely on non-renewable energy to meet their lavish power requirements where wastage is very common. The stock of the gas is coming down at an alarming rate in Bangladesh. One of the main causes is colossal wastage of this natural resource. The wastage happens mostly in the domestic use. Worsening road congestion is wasting plenty of time and money, especially when the rising costs of gas and petroleum are considered.
There is not enough wind speed for windmills, neither enough river current for hydroelectric power plants nor even any suitable semi-urban places for nuclear power station installation in Dhaka city. Nuclear power plant might be a suitable option for bulk power generation and also it has no carbon emission but it is considered vulnerable to earthquakes. Dhaka is situated in the solar radiation receiving zone on the earth with sunny-days almost the entire year. Hence, solar and sky pipe or day light harvesting solution might have very good potential.
For the development of sustainable energy, Bangladesh has adequate laws and policies. Some of these are directly related to environment and sustainability. A Renewable Energy Policy has been prepared in order to generate power from renewable energy sources. Various action plans have already been undertaken with the target to generate 5.0 per cent and 10 per cent of total power production by 2015 and 2020 respectively. Solar panels have already been installed in various public and private organisations including the Prime Minister's office. Government planned to install solar bulbs in some of the streets of Dhaka City Corporation area. In 2011, government initiated steps to replace 28 million incandescent bulbs with Compact Fluorescent Lamp (CFL) bulbs to ensure savings and proper use of power.
In this context, the central bank's 'Policy Guidelines for Green Banking' is a remarkable step on the way to developing GB practices in the banking sector of the country. Besides introducing internal environment management, the banks are expected to introduce environment-friendly green financing to address the environmental challenges of the country as per the policy. Some of the policy issues are directly connected with the issues of sustainable energy. Banks have been advised to finance solar energy, bio-gas plants and other environment- friendly projects. BB introduced Taka 2.0 billion refinance line in 2010 against bank loans for investments in solar energy, biogas plants and ETPs (effluent treatment plants). In 2010, BB switched over to solar-powered lighting by setting up a 20 kilowatt solar panel, as a move towards encouraging green energy in Bangladesh. According to available information, most of the banks of the country have taken some initiatives in financing environment friendly projects like solar, bio-gas, Hybrid Hoffman Kiln (HHK) and Effluent Treatment Plant (ETP) projects. Especially, success of some bio-gas plants encouraged a number of expatriates to invest in similar projects in a village adjacent to Dhaka.
Sustainable energy development and conservation programme for the Dhaka city is the need of the time. The banks have great potential to support these initiatives. There is a crucial demand of disposing the waste of densely populated Dhaka City in a systematic manner. The waste could provide a means to produce energy, particularly the highly desired electricity. Alongside mitigating environmental hazards, these could be helpful in attaining sustainable energy. Banks could finance these projects as part of their green activities. The large population of Dhaka city produces huge volumes of solid waste every day, which can be channelled into biogas systems, if established in the outskirts of Dhaka. Plants can be made in and around the dumping grounds. Currently, poultry manure is produced in two areas adjoining the Dhaka city. If approximately half of that could be utilised, then a few small to medium Clean Development Mechanism (CDM) projects can be developed. Banks may contribute in designing the CDM projects and financing the activities.
Banks should promote energy saving technology to support sustainable energy in the Dhaka city. Alongside creating opportunities to undertake these energy saving activities, banks may launch awareness development programmes for producers and consumers.
The writer is professor and director (training), BIBM (Bangladesh Institute of
Bank Management.
ahsan@bibm.org.bd