Atiur: Bangladesh has achieved a lot in energy conservation despite being a most vulnerable country, but this cannot be raised at the main negotiation. Civil society organisations should highlight these achievements. I am not sure how much of this can be done this year.
The prime minister is not joining the conference due to the changed situation in Paris. What should the country’s position be there?
Atiur: Our forest and environment minister will lead the Bangladesh delegation, which will highlight the country’s achievements. The country will not lag behind others in the global effort to limit temperature rise by two degrees Celsius (2C). However, the conference will have a political direction and there are apprehensions about whether a universal agreement could be reached due to the present situation in France.
What factors prompted you to encourage banks and financial institutions to go for alternative energy development and energy conservation?
Atiur: I am an economist as well as an environment activist, you could say. That means something is within me to do something for the general people. I tried to implement my desire for the people from the beginning of my joining Bangladesh Bank. As part of the effort, a green banking initiative was taken to protect the environment by ensuring energy efficiency and conservation.
A green fund of US$200 million was established at the central bank thanks to World Bank assistance. Bangladesh Bank is planning to add US$300 million more form its own funds. The industries are utilising the fund to contribute to protecting the environment. Renewable energy initiatives are also being financed from the fund.
How much have local banks financed so far under the green banking initiative? What’s your future plan in this regard?
Atiur: The green banking initiative was a pilot project, but the success in a short period of time is significant. Many banks have already started this type of banking while others are expected to join soon. Bank of England is looking deep at our model as its chief, in a recent meeting, informed me about their willingness to follow the Bangladesh Bank model. The chief of the People’s Bank of China is also interested in our model.
Local banks have made a very small contribution to local energy sector investment due to their high rates of interest and lack of capacity to provide long-term loans. Do you have any plan to help strengthen the local banks so they can contribute to the energy sector?
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Atiur: Most banks’ fund mobilisation sources are short term, incapacitating them from going for long-term investment in big volume. If they target such investment, they will have to have long-term funding sources too.
One of the sources can be pension funds, which is now only limited to the public sector. This should be expanded to the private sector too. Proceeds from the pension funds could be utilised for infrastructure projects.
Sustainable Renewable Energy Development Authority (SREDA) is considering introducing an opportunity for Energy Services Companies (ESCO) like operating in India and other countries so they can investment in energy efficient projects in Bangladesh. Is there any such plan of Bangladesh Bank?
Atiur: ESCOs invest in energy efficient projects in industries and other sectors, and get back their investment with profit from the proceeds that come through energy savings of the particular industry. The SREDA initiative is praiseworthy. This type of ESCO can avail of the financing support from the green fund of Bangladesh Bank.
NRBs are interested in investing in the energy sector and seeking government support to introduce Energy Investment Bonds. Is there any chance Bangladesh Bank will take such plan?
Atiur: The government has already approved IFC, a US$1bn bond. Obviously, such bond can also be introduced for energy sector investment subject to approval by the government. A proposal in this regard is at the discussion stage. Bangladesh Bank is considering appointing a consultant in this regard to examine how it can be introduced.
Is there any plan to take a special financing programme to give a further push to the country’s renewable energy initiatives?
Atiur: Many factors are related to it. First, the government will have to gradually withdraw the subsidy on fossil fuel to indirectly encourage using green energy and efficient use of energy. But at the same time, it will have to keep in mind that it will require increased investment. At the same time, the industries will have to go for branding of the green factory and green products. It will help return the increased investment. Few industries in Bangladesh have already invested under the green fund, which yielded them higher price for the products. The initiatives deserve incentives so more industries become encouraged.
There is an initiative to replace 1.5 million diesel-driven irrigation pumps with solar-driven ones. How Bangladesh Bank can contribute to the initiative?
Atiur: There is no doubt that it is a good initiative. But we have not received any request yet to support the initiative. Whatever the case may be, the banks can obviously take part in the project. The government will have to facilitate the banks with policy instruction if the loans should be given without collateral. If it is the case that the loan will be interest free, the banks will not be able to do that. What the government can do is to subsidise the amount against the interest.
How hopeful are you about the conference?
Atiur: The lifestyle and production processes should go through a massive reform if we have to limit the temperature rise within the 2C degrees while political will and investment is a must to achieve the goal. I think the world leaders now have the good intention to act on the issue. But the main question is where will the money come from and how. The conference starts with the meeting of global leaders, but concerns spread across the globe about the expected outcome, following the unfortunate incident in Paris just before the conference. I am sceptical about how much it could be focused on the target.
Prime Minister Sheikh Hasina has already cancelled her attendance at the conference after the Paris incident while leaders from many other countries will also not attend, which would likely to affect the desired political will.
Despite all of the concerns, I hope a political indication will emerge from the leaders meeting, prompting the negotiators to take forward the technical negotiation and come out with legally binding commitments.
We should keep in mind that people are now thinking much about sustainable development goals –the world leaders are more concerned about sustainable finance. However, what was discussed about financial scheme in Addis Ababa is encouraging.
Now people understand that they need to reform their lifestyle – I think it would not be a hard work in Paris as the sustainable development package is ready. There has been a lot of homework done in an effort to reach an agreement. Even if it is not possible to make it successful in Paris, an alternative initiative would be taken to sit again elsewhere.