Renewable energy sector seeks tax relief, Tk 25,000cr fund

Environmental leaders and civil society representatives have urged the government to reduce taxes on renewable energy equipment and establish a Tk 25,000 crore revolving fund to accelerate the country's transition to clean energy.

The call came at a media briefing titled "Renewable Energy for Energy Security: Policy Shifts Needed in the National Budget" held at a city hotel ahead of the national budget.

Speaking at the event, CLEAN Chief Executive Hasan Mehedi said renewable energy equipment currently faces taxes and duties ranging from 27 per cent to 61 per cent, making clean energy systems unnecessarily expensive.

He urged the government to declare the renewable energy sector an essential sector and either impose a symbolic 1 per cent tax or remove taxes and VAT altogether to encourage wider adoption.

According to the speakers, high taxation is discouraging households, farmers and small entrepreneurs from investing in solar energy, while revenue generated from such taxes accounts for less than 0.05 per cent of total government revenue.

They noted that each megawatt of solar power can save around Tk 31.1 million annually in fuel imports and prevent approximately 1,180 tonnes of carbon dioxide emissions.

The speakers warned that without major policy reforms, Bangladesh would remain dependent on costly fossil fuel imports and face rising electricity costs and long-term economic risks.

Among their key recommendations were the creation of a Tk 25,000 crore revolving fund under Bangladesh Bank to provide renewable energy financing at interest rates below 5 per cent and a subsidy of at least Tk 25,000 per kilowatt for residential rooftop solar systems. They also proposed an additional 10 per cent subsidy for women-led and indigenous community projects.

The event was jointly organised by the Coastal Livelihood and Environmental Action Network (CLEAN) and the Bangladesh Working Group on Ecology and Development (BWGED), along with several partner organisations.

Speakers said Bangladesh has significant solar and wind energy potential, but progress continues to be hindered by high taxes, inadequate financing and policy barriers.