Energy Consumption and Low-Carbon Technology Adoption in Bangladesh: A Behavioural Economics Perspective

Lamia Mohsin

The Blog Series on a Just Climate Transition by the University of Oxford Climate Alumni Network (OxCAN) delves into the complexities and challenges of the issue, while proffering tangible solutions and pathways. In this post, Development Professional and Researcher Lamia Mohsin, recommends a multifaceted strategy, grounded in changing behavioural and consumer patterns, to reduce Bangladesh’s climate vulnerability while advancing the country’s goals for economic prosperity.

Bangladesh is widely recognised as one of the most climate-vulnerable countries in the world, frequently impacted by sea-level rise, storm surges, flooding, and salinity intrusion. These risks are compounded by the country’s rapid industrialisation and urbanisation, which have significantly increased energy demand and environmental stress. The ready-made garments sector, growing construction activities, and expanding transport networks contribute heavily to rising carbon emissions. Despite national commitments to renewable energy and sustainability, the country continues to depend predominantly on fossil fuels, particularly natural gas and imported coal. This reliance not only undermines low-carbon transition goals but also exposes Bangladesh to global energy price volatility. Renewable energy sources in Bangladesh, despite ambitious targets, have yet to make significant inroads. In 2022, Bangladesh's primary energy consumption per capita was 3,025.794 kWh, reflecting an increase from 2,907.366 kWh in 2021. Despite this growth, the country's energy consumption per capita remains low compared to global standards. The energy mix is dominated by natural gas, accounting for 49% of consumption, followed by oil (27%), biomass (15%), and coal (7%). Renewable energy sources have yet to make significant contributions, with only 168 MW of solar capacity added since 2016 and no wind capacity installed. Given this reality, it is essential to assess Bangladesh’s climate policies through the lens of energy consumption, low-carbon technology adoption, and behavioural economics. Bangladesh’s energy sector is characterised by ‘carbon lock-in,’ a systemic reliance on fossil fuel-intensive infrastructure that inhibits the transition to renewable alternatives. This lock-in is reinforced by decades of investment in gas-fired power plants, subsidies for fossil fuels, and a lack of long-term policy incentives for clean energy. The country's reliance on fossil fuels is further highlighted by its importation of 1.4 million metric tons of oil in 2022, over five times its domestic production of 0.3 million metric tons. This dependence underscores the urgency for Bangladesh to diversify its energy sources and invest in low-carbon technologies. Policy tools such as carbon pricing are often proposed as key levers for emission reduction. However, their effectiveness in Bangladesh remains limited due to the absence of a strong regulatory framework. In the absence of robust carbon pricing mechanisms, the country has made some efforts to promote renewable energy through subsidies for solar power and biogas; however, these remain marginal compared to entrenched fossil fuel subsidies and infrastructure investments, thereby reinforcing the broader carbon lock-in. This approach has faced challenges due to high upfront costs, limited access to financing, and inadequate infrastructure to support widespread deployment. These constraints have directly affected the adoption and scaling of low-carbon technologies, particularly in rural and off-grid areas. Studies suggest that carbon pricing alone is insufficient to drive low-carbon innovation; rather, a balanced approach that includes both demand-side incentives (subsidies, tax credits for renewables) and supply-side support (investment in R&D, infrastructure for clean energy technologies) is needed to catalyse the transition. Without aligning fiscal tools directly with renewable energy development and technology diffusion, Bangladesh risks missing its low-carbon development goals. For a successful energy transition, Bangladesh must address both demand-pull and supply-push factors. Demand-side measures, such as making renewable energy more affordable through subsidies and incentives, can encourage adoption. However, supply-side interventions, including investments in research, development, and localised clean technology manufacturing, are crucial to ensuring the sustainability of the transition. A dual-pronged focus ensures that progress on adoption is not derailed by supply constraints, especially in a context where Bangladesh still relies on imported technologies. Without domestic production capabilities, Bangladesh will remain dependent on costly imports of renewable energy technology. To overcome this technological and institutional inertia, Bangladesh can benefit from ‘Strategic Niche Management’ (SNM), which promotes targeted policy support for emerging clean technologies. This approach directly addresses supply-side constraints by enabling the development and scaling of low-carbon solutions through supportive ecosystems. It involves creating experimental pilot projects, fostering collaboration between government, private sector, and research institutions, and building the infrastructure and innovation capacity necessary for domestic clean technology. Moreover, transition management strategies that involve long-term visioning, stakeholder engagement, and adaptive policymaking can support the gradual dismantling of fossil fuel dependency while strengthening the supply chain for renewable alternatives. At the same time, human behaviour plays a critical role in shaping energy consumption patterns and technology adoption. Despite economic incentives, individuals and businesses often resist change due to habitual practices, risk aversion, and lack of information. Behavioural interventions, such as ‘green nudges,’ can encourage pro-environmental choices. Examples include eco-labelling for energy-efficient appliances, social campaigns promoting rooftop solar adoption, and community-based programmes that foster collective action for sustainable energy use. In 2023, per capita electricity consumption slightly decreased to 464.13 kWh from 464.20 kWh in 2022, despite an 11% increase in installed generation capacity. This decline indicates challenges in scaling up power generation to meet the needs of a growing population, which reached 171 million in 2023. Beyond individual choices, deeper psychological and social barriers need to be acknowledged and addressed. Status quo bias, for instance, leads many consumers to prefer conventional energy sources due to familiarity and convenience. Targeted awareness campaigns and incentives can help make renewable energy more attractive. Loss aversion also plays a role, as people are often more sensitive to potential losses than gains. Clean energy investments must be framed as long-term benefits rather than immediate costs. A lack of trust in new technologies and scepticism about their effectiveness—rooted in pessimism and inertia—can further hinder adoption. Government-led demonstration projects and endorsements from trusted community figures can help build confidence. Moreover, social proof and peer influence matter: consumers are more likely to adopt low-carbon technologies if they see others doing the same. Thus, leveraging social networks and community-based initiatives can accelerate behavioural shifts. To successfully transition to a low-carbon future, Bangladesh must adopt a multifaceted strategy that brings together institutional reform, investment, and behavioural shifts. First, strengthening policy frameworks to dismantle the carbon lock-in is essential. This includes implementing robust carbon pricing mechanisms, systematically phasing out of fossil fuel subsidies, and re-aligning long-term infrastructure and investment strategies to prioritise renewables over gas and coal. Clear institutional mandates and cross-sectoral coordination will also be critical to avoid further entrenchment of high-emission systems. Second, investing in innovation and infrastructure by supporting R&D in clean energy technologies and strengthening the enabling ecosystem for local deployment—as discussed through Strategic Niche Management—will build long-term capacity. Third, influencing consumer behaviour through tools from behavioural economics can make sustainable choices easier and more appealing for both individuals and businesses. In conclusion, Bangladesh’s path to a sustainable energy future requires a holistic approach that combines policy innovation, technological advancement, and behavioural change. While economic incentives and subsidies play a role, understanding consumer psychology and addressing systemic barriers are equally critical. By integrating behavioural insights into climate policy, Bangladesh can accelerate its transition to a low-carbon economy while ensuring energy security and resilience against climate change.

Lamia Mohsin is a young Bangladeshi development professional and researcher working on climate change, governance and public policy. A former Chevening Scholar, she currently works as an adjunct lecturer at the Department of Environment and Development Studies of United International University (UIU). She has also worked extensively across international organisations such as UNDP Bangladesh and the Global Center on Adaptation, along with the Bangladesh Presidency of the Climate Vulnerable Forum (CVF) from 2020 to 2022, during which she worked on key areas of climate change including adaptation and resilience. Blogs are the opinions of their authors and do not represent the official views of OxCAN.