Bangladesh can earn nearly US$ 1 billion annually from the sale of carbon credits to be generated through the nationwide 250 million tree plantation programme announced by the incumbent government, according to a government report.
On 13 June last, Prime Minister Tarique Rahman formally inaugurated the nationwide programme to plant 250 million trees over the next five years aiming to strengthen environmental protection and address the adverse impacts of climate change.
The Climate Financing Budget Report says a key feature of this striving five-year initiative is its potential to generate carbon credit through large-scale afforestation.
Under international carbon credit mechanisms, designated planting areas must be registered and reported in advance to relevant international bodies and participating countries.
By contributing to carbon sequestration and reducing net greenhouse gas emissions, the initiative can attract financial returns through carbon credit trading, the report observes.
Citing the estimates of the World Bank, it says, successful implementation of the programme could enable Bangladesh to earn nearly US$ 1 billion annually from the sale of carbon credits generated through tree plantation activities alone.
Beyond its economic benefits, the initiative is expected to deliver substantial environmental gains, including lower temperatures, enhanced rainfall patterns, improved soil quality, and increased ecosystem resilience.
As a result, the programme presents a unique opportunity to advance both sustainable development and climate action while creating new avenues for green economic growth, according to the report.
In 2025, the global carbon pricing revenues reached US$ 107 billion, an increase of around two per cent from 2024 levels in real terms. The current estimated capacity of the market is US$ 250 billion, with a projected increase to US$ 1 trillion by 2050, where the main source of investment in this area will be the private sector.
Countries should demonstrably showcase the implementation of these projects to attract additional investment.
If carbon reduction programmes are correctly structured and executed, Bangladesh could generate significant annual revenue from global carbon trading, given its status as one of the world's lowest per-capita greenhouse gas emitters, the report says.
It reveals that despite this potential, Bangladesh is not yet equipped to fully participate in international carbon markets. Key gaps include limited technical knowledge of Article 6 mechanisms, an underdeveloped legal and regulatory framework for carbon credit issuance and trading, and insufficient private and public sector capacity for MRV and project certification.
Addressing these gaps through regulatory reform, capacity building, and institutional investment is a strategic priority for unlocking carbon finance as a meaningful contributor to Bangladesh's climate finance portfolio, the report mentions.
A carbon credit represents the verified reduction, removal, or avoidance of one metric tons of CO? or its greenhouse gas equivalent.
Carbon credits are generated through mitigation activities such as renewable energy, energy efficiency, afforestation, and methane capture, and can be traded in compliance or voluntary carbon markets.
They allow governments, companies, and institutions to offset their emissions by purchasing verified reductions from other entities, thereby creating financial incentives for low-carbon investment.
These mechanisms operate under international frameworks, including Article 6 of the Paris Agreement and voluntary standards that require robust monitoring, reporting, and verification (MRV) systems.
Bangladesh has early experience in carbon markets. In 2006, Infrastructure Development Company Limited (IDCOL) registered Bangladesh's first Clean Development Mechanism (CDM) project with the UNFCCC.
Since then, IDCOL has sold 2.53 million carbon credits, generating US$ 16.25 million (about Tk 1.70 billion at current exchange rates) from projects including solar home systems and improved cookstoves.
This track record demonstrates Bangladesh's technical capacity for carbon project development and establishes a credible foundation for scaling up carbon market participation.