Demand constraints may limit Bangladesh’s renewable energy credit ambitions under Article 6
By Article 6 Network
A new study finds that Bangladesh has put in place the basic machinery of a Paris-aligned carbon market. But it warns that the commercial opportunity for renewable energy credits may be narrower than policymakers expect. The finding reflects a wider trend: buyers increasingly doubt whether grid-connected renewables are additional, which limits demand for this category of credit.
According to the study, Bangladesh now has the core building blocks of a carbon market under the Paris Agreement. However, demand-side limits may restrict how much value the country can earn from renewable energy credits under Article 6.
Bangladesh pre-launched its first national carbon market framework at COP30. Environment Adviser Syeda Rizwana Hasan said it would provide regulatory clarity, authorisation guidance and a predictable platform for international investors, while calling for wider consultation before it is finalised. In December 2025, Bangladesh and Japan’s Ministry of the Environment held a business forum in Dhaka on Joint Crediting Mechanism (JCM) project matchmaking. At the forum, the adviser and Japan’s JCM Office launched an Article 6 guidebook for the private sector, developed with IGES. Bangladesh and Japan were also preparing to sign a Memorandum of Cooperation on environmental initiatives.
Renewables are central to Bangladesh’s plans. The Renewable Energy Policy 2025 targets 20% renewable energy by 2030 and 30% by 2040, and an agrivoltaic JCM project concept was presented at the Dhaka forum. Bangladesh’s updated NDC commits to a 6.39% unconditional emissions reduction and an additional 13.92% conditional reduction by 2035, which leaves a large share dependent on international support.
Signals to watch
- Additionality is the binding constraint: As solar and wind become cheaper, many buyers and crediting programmes question whether grid-connected renewables need carbon finance. That limits eligibility and pricing. Bangladesh’s renewable projects will need strong evidence of additionality to compete.
- LDC status matters: Some crediting programmes and buyers restrict grid-connected renewables to least-developed countries. Bangladesh’s scheduled graduation from LDC status could narrow its access to that demand. Developers should check how graduation affects eligibility under each buyer’s and standard’s rules.
- Buyer concentration on Japan: Bangladesh’s main Article 6 channel is the JCM. Japan’s appetite for renewable projects, through technology transfer and its GX-ETS link, will largely determine the opportunity. Diversifying to Singapore, Korea, Switzerland or Norway would require meeting each buyer’s eligibility rules.
- Shift to higher-value sectors: The study’s warning suggests Bangladesh should prioritise categories with stronger additionality and buyer demand. These could include methane from waste and agriculture, clean cooking, energy efficiency, industrial decarbonisation and blue carbon such as mangrove restoration, where integrity safeguards allow.
- Conditional NDC pressure: With most of its NDC ambition conditional, Bangladesh needs Article 6 to deliver real finance. Realistic demand assessments should shape its priority-sector list and authorisation strategy, so it does not build a pipeline buyers won’t purchase.
Sources:
- UNB – Carbon trading mechanisms must function as investment channels: Rizwana Hasan
- Ministry of the Environment Japan – Outcome of JCM business forum in Dhaka
- BSS – Japan–Bangladesh cooperation boosts carbon market readiness
- The Report – Carbon trading must act as investment, technology and mitigation tool
- TBS News – Seizing the opportunities of the voluntary carbon market for Bangladesh
