Energy Transition, Financial Development, and Load Capacity Factor in Bangladesh: Asymmetric Effects and Rapid Renewable Growth

Can renewable energy alone restore ecological balance in Bangladesh? We investigate the asymmetric and distributional effects of energy transition and financial development on the Load Capacity Factor (LCF) from 1976 to 2024. Using NARDL, quantile ARDL, Fourier breaks, and scenario forecasting, we find that fossil fuels undermine ecological sustainability in the long run, while renewable energy does not exhibit a statistically significant long-run effect due to the limited share of renewables in the energy mix rather than an absence of environmental benefits. The analysis also finds no robust evidence of credit asymmetry, and the short-run impact of renewable energy remains broadly similar across different levels of ecological deficit. Looking ahead, scenario forecasts indicate that only a swift transition to renewable energy or a Net Zero pathway can elevate the LCF above the sustainability threshold by the late 2030s. The findings highlight the importance of speeding up renewable energy deployment and directing finance towards sustainable investments. JEL Classification: Q53, Q56, Q42, Q43, C22, G21, O16, O13