Bangladesh’s ambition to earn up to $1 billion annually from carbon credit trading has sparked intense debate among economists, climate scientists and financial experts, many of whom caution that institutional readiness and market realities may not yet support such expectations.
The discussion has gained momentum as policymakers explore large-scale afforestation initiatives, including plans to plant 2.5 billion trees over five years, with a strong focus on mangrove restoration across coastal char lands stretching from the Meghna basin to Cox’s Bazar.
Globally, carbon markets remain highly volatile. Prices in voluntary carbon markets typically range from below $1 to more than $10 per tonne of CO₂ equivalent, depending on certification quality and buyer demand, making long-term revenue projections uncertain.
Bangladesh’s previous experience in carbon markets has been modest. Under the Clean Development Mechanism (CDM), the country reduced approximately 12.5 million tonnes of CO₂ equivalent, accounting for only 0.53% of global reductions—highlighting the scale of effort required to achieve billion-dollar revenue targets.
From the private sector, carbon market expert Shaymal Barman said Bangladesh is gradually positioning itself as a potential seller in global carbon markets.
“Bangladesh is positioning itself as a carbon credit seller, but success depends on establishing a national registry and strong verification systems,” he said.
“Mangroves offer significant sequestration potential, yet carbon pricing must avoid burdening domestic consumers and maintain investor confidence.”
Policy advisers involved in the planning process said the afforestation programme is being designed through phased implementation strategies.
“The programme includes species selection, geographic zoning and phased plantation systems,” a policy adviser said.
“The first phase targets 15 million mangrove trees to support coastal protection and carbon capture, but international certification will ultimately determine whether credits can generate revenue.”
Roufa Khanum, deputy director at the Centre for Climate Change and Environmental Research (C3ER) at BRAC University, said governance readiness remains one of Bangladesh’s biggest challenges.
“Carbon markets rely on transparent governance and strong measurement, reporting and verification (MRV) systems,” she said.
“Without skilled professionals, digital monitoring and standardized methodologies, Bangladesh risks failing to secure certification, even if projects are technically sound.”
Karimul Islam Tuhin, a sustainable finance professional, warned that certification and pricing volatility remain major uncertainties.
“Carbon credits require accredited verification under standards such as Verra or Gold Standard,” he said.
“Bangladesh lacks local certified auditors, increasing dependence on foreign intermediaries and raising costs. Price volatility—from under $1 to several dollars—makes revenue forecasting difficult.”
From a volunteer perspective, Sk Mashrur Ishrak, Volunteer for Environment, highlighted the role of local communities in ensuring equitable outcomes.
“Community-based solar projects and coastal forests can generate credits while improving livelihoods,” he said.
“However, revenues must be reinvested in vulnerable communities to ensure fairness and strengthen climate resilience.”
Saidur Rahman, director of Brighters, said carbon credit initiatives should complement—not replace—adaptation financing.
“Carbon revenue presents economic opportunities, but adaptation funding must remain separate,” he said.
“Disaster resilience through flood control and cyclone preparedness requires dedicated financial strategies beyond carbon markets.”
Earlier, on the issue of carbon credits, Keisuke Iyadomi, senior climate change specialist at the World Bank, noted that carbon pricing has gained global momentum.
“More than 80 jurisdictions worldwide use carbon pricing mechanisms,” he said.
“Bangladesh can benefit from aligning with Paris Agreement Article 6 frameworks, but institutional transparency and governance readiness remain essential.”
Dr Sakib Bin Amin, professor of economics at North South University, emphasized the importance of policy alignment.
“Carbon markets require correcting fiscal distortions and improving regulatory coordination,” he said.
“Without strong institutions and public awareness, pricing systems risk inefficiency and limited public acceptance.”
Shafiqul Alam of the Institute for Energy Economics and Financial Analysis (IEEFA) suggested that Bangladesh may benefit from a simpler pricing mechanism.
“A carbon tax could suit Bangladesh better than emissions trading in the initial phase,” he said.
“Starting with high-emission sectors such as brick manufacturing would allow policymakers to test systems while ensuring transparency in revenue management.”
From the banking sector, sustainable finance professionals noted that investor confidence remains closely tied to regulatory clarity.
“Banks view carbon projects as emerging opportunities but remain cautious due to price volatility,” said Karimul Tuhin, a sustainable finance professional.
“Investors require predictable regulations and credible certification systems before committing large-scale financing.”
Prof M Shaukat Anwar of Tufts University stressed that environmental initiatives must also consider public health outcomes.
“Afforestation projects offer environmental benefits but must integrate health assessments,” he said.
“Poorly planned interventions may affect water systems, ecosystems and disease risks in vulnerable coastal communities.”
A UNDP climate specialist in Bangladesh identified institutional development as the country’s most urgent need.
“Bangladesh has strong potential in renewable energy and forestry-based credits,” the specialist said.
“However, developing national registries, standardized methodologies and trained verification professionals is essential for meaningful participation in global carbon markets.”
Energy sector analysts identified methane reduction as one of the most promising opportunities.
“Methane reduction projects, especially those involving gas leakage control, can generate large credit volumes due to methane’s high warming potential,” analysts said.
“Achieving $100 million annually would require selling roughly 10 million tonnes of CO₂ equivalent per year, highlighting the scale of the required effort.”
Experts broadly agree that Bangladesh holds long-term carbon market potential in:
- renewable energy
- energy efficiency
- waste management
- forestry and ecosystem restoration
However, achieving meaningful financial returns will require:
- developing national carbon registries
- strengthening MRV systems
- training certified auditors
- ensuring transparent governance
- conducting national feasibility assessments
With global demand for credible carbon credits rising, Bangladesh now faces a pivotal decision: whether to pursue ambitious targets driven by optimism or build a resilient carbon market grounded in verified data, institutional readiness and disciplined policy planning.