There are some stark geographic and economic differences between Bangladesh and Iceland, not least their population sizes and density. Bangladesh has a population of over 172 million, compared to Iceland’s 375,000, which is roughly the size of Bangladesh’s sixth biggest city. Iceland and Bangladesh have roughly similar land mass and consequently their population densities differ significantly, with Iceland having 4 people per km² and Bangladesh 1,330 people per km². Iceland’s economy is predominantly sustained on its renewable energy network, tourism and fishing, which generates a GDP per capita of $70,000, while Bangladesh has a GDP per capita of $9,400, mainly driven by its garment industry.

The differences between these nations are further amplified by their climates. Bangladesh is characterised by a tropical climate, experiencing frequent monsoons. Its low-lying geography is dominated by the Ganges Delta, and flooding which poses a continual challenge to its infrastructure. In fact, this, combined with its low-lying geography, makes Bangladesh one of the most climate-vulnerable countries globally.

In contrast, Iceland has a sub-Arctic climate, with abundant geothermal and hydropower resources, and offers entirely different energy potential.

These factors all contribute to the starkly different energy systems in Bangladesh and Iceland, and consequently they face very different challenges and opportunities for their energy transition pathways.

How does Iceland harness nature’s resources?  
Iceland has established itself as a global leader in renewable energy. As much as 83% of its primary energy consumption is derived from renewable resources. This figure makes Iceland the highest-ranked country globally in the Country Transition Tracker for proportional renewable energy consumption.

Blessed by its geological location a-top the Mid-Atlantic Ridge, the Scandinavian nation has exceptional access to geothermal power, which generates 23% of its electricity. Iceland also has an abundance of glacial rivers which are leveraged for hydropower, generating 60% of its energy. The remainder is made up of a small amount of imported fossil fuels to support the transportation and fishing industry. As a result, Iceland emits around 2.5mn t/y of CO₂.

Iceland’s unique access to great sources of renewable energy has enabled it to successfully decarbonise much of its energy system. As such, the country has been able to switch focus to the decarbonisation of the hard-to-abate sectors and invest in innovative technologies in this area. Iceland is home to the largest operational direct air carbon capture (DAC) storage system, storing the CO₂ emissions from a geothermal power station in basalt rock formations, with zero carbon emissions.

Climeworks’ Mammoth direct air carbon capture plant in Olfus, south-west Iceland   
Photo: Climeworks

Iceland has become a remarkable example of how harnessing natural resources with technological innovation and strong policy commitments can enable the transition to net zero. However, a notable new development in the country’s energy transition is its emergence as a hub for data centres. As the global digital economy expands, fuelled by demand for cloud computing, artificial intelligence and cryptocurrency mining, the need for energy-intensive data centres has grown exponentially. Iceland’s cheap and renewable electricity has made it an attractive destination for companies such as Verne Global and Advania Data Centres, which have set up massive facilities in the country. For example, Verne Global’ s flagship data centre has a power consumption capacity of 140 MW, which is sourced solely from geothermal and hydroelectric power.

Although this shift brings economic benefit to Iceland, it also raises questions about sustainability. Growth in data centres has propelled Iceland to become one of the world’s largest energy consumers, relative to its population. The country’s energy consumption of 602 GJ per capita ranks second globally; while its energy intensity of 11 MJ/$GDP ranks fourth globally. In addition, the environmental impact of the infrastructure demanded by Iceland’s data centres, power plants and connectors is very significant.

Even though Iceland’s renewable energy capacity is vast, it is not endless, and the strain on its resources is increasing as demand for data processing grows. The country’s new energy challenge is ensuring that the growth of these energy-intensive industries, and the need to expand geothermal energy and hydropower, does not comprise Iceland’s sustainability goals or the needs of the local population.

Bangladesh and Iceland have ‘starkly different’ energy systems and consequently face very different challenges and opportunities for the energy transition pathways of these nations.

What are Bangladesh’s energy priorities?  
Bangladesh’s energy transition is shaped by a very different set of challenges. According to the World Bank, around 99% of the population now has access to electricity. This figure is up from only 20% in 2000, and is reflected in the Statistical Review of World Energy, which shows Bangladesh’s energy consumption has grown 273% since 2000.

Despite this huge increase, in the league tables of the Country Transition Tracker, Bangladesh still has the lowest energy consumption per capita, at 11 GJ, and consumes only 1.8 MJ/$GDP, the third lowest energy intensity globally. As such, the government’s primary goal has been, and continues to be, ensuring widespread, affordable and reliable energy to its citizens.

Currently, Bangladesh relies heavily on fossil fuels, with 28% of primary energy consumption sourced from oil, 55% from natural gas and 15% from coal, making up 98% of the total energy mix. Domestic gas supplies are depleting, and the government has turned to imported LNG and coal to make up for this shortfall as it navigates solutions to its citizens’ increasing energy demand. Even though emissions of CO₂ have increased 25% from 2017 to 2024, the raw figure of 125mn t/y of CO₂ emissions ranks Bangladesh within the lower two quartiles of nations, among the lower half of countries which is reflective of their relatively low rates of energy consumption.

Renewables   
Despite the current low renewable energy consumption of only 1.8% of its total primary energy consumption, Bangladesh is making efforts to embrace renewable energy. Partly that comes from awareness of the vulnerability of its population to the consequences of climate change, in terms of flooding and sea level rises. As one of the most climate-vulnerable countries in the world, the Bangladeshi government is hyperaware of the consequences of climate change and sea level rise on the nation.

Bangladesh’s energy transition is underpinned by the government’s Vision 2041, which envisages significant advancements in the energy sector, including a target of generating 10% of the country’s electricity from renewable sources by 2025.

International collaborations, such as those with the Asian Development Bank and World Bank, have been instrumental in funding renewable energy projects and modernising the grid infrastructure.

The government’s Solar Home Systems programme has been a groundbreaking initiative. It is the world’s largest off-grid solar programme, and provides electricity to around 20 million rural households. The project highlights the success of Bangladesh’s mission to supply electricity access across the population.

Having done so without needing to connect the whole population to the grid, this scheme is a model of insights into how developing off-grid electricity systems in developing nations can supply electricity access to remote, underserved areas where traditional grid expansion is logistically challenging and costly. These decentralised energy systems also offer greater resilience, helping communities recover faster from natural disasters such as the monsoons and flooding common in Bangladesh.

Additionally, Bangladesh has invested in energy efficiency improvements and also explored the potential of other renewable energy sources such as wind and biomass, with some pilot projects underway. For example, construction has begun of a two-unit civil nuclear power plant in Rooppur, 160 km north-west of capital Dhaka.

Although progress is slow when compared to other nations, Bangladesh’s initiatives and ambitions to address its complex energy challenges sustainably, indicates a growing recognition of the need for a diversified and sustainable energy mix.

What does the contrast between Iceland and Bangladesh tell us about the global energy transition?  
While Iceland is frequently portrayed as the benchmark in the transition to net zero, its unique circumstances make it somewhat of an ‘outlier’. The more archetypal situation of Bangladesh, looking to provide for a large population, with a low budget and without the benefit of a sophisticated energy infrastructure, offers valuable lessons that are better shared with other nations as they strive to achieve universal energy access.

Divergent paths, shared goals  
The energy transitions of Iceland and Bangladesh highlight how geography, resources, and economic and social conditions shape national energy policies and priorities. Iceland has been successful in harnessing its abundant renewable resources, but is now challenged as the home of energy-intensive industry. Meanwhile, Bangladesh is striving to provide energy access to millions who still lack reliable and safe power.

Both countries’ transitions underscore the importance of balancing development with environmental sustainability and the ambition to reach net zero. They are navigating their respective paths through the global energy transition, each dealing with unique challenges and opportunities. However, they also share a common goal: to secure a more reliable, sustainable energy future for their citizens.

• Further reading: ‘Bangladesh leaning towards coal-based power’. Bangladesh is set to increase its coal-based power generation capacity to ensure supply security as challenges remain for renewables development, including inadequate grid infrastructure and a lack of robust policies, incentives or subsidies, according to a new report from GlobalData.
• Bangladesh is exploring offshore wind power as a key solution for a country seeking energy diversification, but whose dense population restricts the land availability for renewable power.