The LNG Trap: Is the US-Bangladesh Trade Deal Dimming the Future of Renewables?

 

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On the surface, the reciprocal trade agreement signed between Dhaka and Washington on February 9 seemed like a long-awaited lifeline for Bangladesh’s export-heavy economy. With the United States slashing reciprocal tariffs on Bangladeshi goods to 19%, the ready-made garment (RMG) sector—the backbone of the nation’s foreign earnings—breathed a collective sigh of relief.

But as the ink dries on the deal, a far more complex and potentially restrictive reality is emerging. Beneath the promises of market access lies a series of "non-tariff provisions" that critics argue could mortgage Bangladesh’s energy sovereignty for the next decade and a half, locking the nation into a high-cost fossil fuel dependency while strangling its nascent renewable energy dreams.

The $15 Billion Golden Handcuffs

The centerpiece of the controversy is a mandate requiring Bangladesh to purchase $15 billion worth of American Liquefied Natural Gas (LNG) over the next 15 years. While the deal secures a steady supply of energy, it arrives at a staggering cost—both financial and strategic.

Since 2018, Bangladesh has transitioned from gas self-sufficiency to a deep reliance on the global market. The country has already spent $20 billion on 36.43 million tonnes of LNG to keep its national grid alive. Experts warn that this new agreement doesn’t just continue that trend; it cements it.

"Compliance with this condition will leave Bangladesh locked into volatile and expensive LNG dependency," warns Moshahida Sultana, Associate Professor at the University of Dhaka. The concern is simple: by committing to such a massive volume of American gas, Bangladesh may be building a "gas-first" infrastructure that leaves no room—or budget—for anything else.

The Shadow of US Dominance

The American footprint on Bangladesh’s energy sector is already massive, but the new trade deal threatens to turn influence into total dominance.

Currently, US energy giant Chevron controls 58% of Bangladesh’s domestic daily gas production. Meanwhile, Excelerate Energy, another US firm, not only constructed the country's critical regasification terminals but also holds long-term supply contracts. With the new trade provisions, the United States is positioned to gain near-total control over the entire value chain of Bangladesh's gas sector, from the wells to the storage tanks.

A Death Knell for Green Energy?

Perhaps the most alarming consequence of the deal is the "anti-competitive" clause regarding non-market-based countries—specifically China and Russia.

Bangladesh’s path to a green revolution has, until now, been paved with Chinese technology. Of the country’s 1,743 MW of renewable capacity, the vast majority of solar infrastructure relies on Chinese-made panels, batteries, and inverters. Under the new agreement, the US could restrict Bangladesh from importing these affordable components.

"The money that could have been spent on renewable energy will go to LNG," Sultana notes. "Renewables would not expand much if investment is interrupted."

If Bangladesh is forced to choose between fulfilling a mandatory $15 billion LNG quota and investing in solar farms, the math for the environment looks grim. Furthermore, by restricting trade with "non-market" entities, Bangladesh loses the leverage to shop for the cheapest energy alternatives.

The Sovereignty Squeeze

The geopolitical ramifications are equally stark. In an era of extreme global volatility—exemplified by the recent closure of the Strait of Hormuz—Bangladesh now finds its hands tied. While the country once had the freedom to seek cheaper fuel from Russia or elsewhere, it now requires a formal waiver from Washington to look outside the approved list of partners.

Economist Debapriya Bhattacharya of the Center for Policy Dialogue points out that these clauses are effectively "limiting the cheaper energy sources for Bangladesh at a time of global price volatility."

A High-Stakes Gamble

For the garment workers in Gazipur and the factory owners in Narayanganj, the trade deal is a victory of lower tariffs and market stability. But for the nation’s energy future, it represents a high-stakes gamble.

By trading tariff concessions for long-term gas mandates, Bangladesh may have escaped one economic hurdle only to run headlong into an "LNG trap." As the world races toward a net-zero future, Bangladesh finds itself tethered to a 15-year contract with the past—a deal that ensures the lights stay on, but perhaps at the cost of the very sun and wind that were supposed to power its tomorrow.

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