Nepal’s Road to Net-Zero: 7 Key Strategies for Climate Resilience and Low-Carbon Development

Nepal's comprehensive strategy for achieving its ambitious net-zero emissions goal, primarily targeting net-zero by 2045, relies on a multi-faceted approach involving aggressive mitigation interventions, significant institutional transformation, and massive conditional investment, as outlined in its Long-term Strategy (LTS).

The LTS is based on the "With Additional Measures" (WAM) scenario, which envisions bold policymaking, social transformation, and technological advancements leading to a carbon-neutral, inclusive, and climate-resilient future.

1. Ambitious Sectoral Mitigation Strategies

Nepal's strategy includes highly determined interventions across all major sectors to reduce emissions drastically, aiming for net carbon emissions to be lower than zero between 2020 and 2030 and hovering around zero until 2045, with carbon sequestration increasing thereafter.

A. Energy and Power Generation

The main strategy is to power the industrial, commercial, and agricultural sectors with renewable energy and hydrogen technologies, which Nepal possesses in abundance. All electricity must be generated from renewable sources, chiefly hydropower plants and solar PV.

• Residential Sector: Decrease the use of Liquified Petroleum Gas (LPG) and increase the use of electrical appliances, such as electric cooking, and biogas. The WAM scenario targets a 100% emission reduction in this sector by 2050 compared to the reference scenario.
• Transportation Sector: Transition to zero-emission transportation for intercity, intracity, and freight travel across public and private modes. Measures include promoting electric mass passenger transport, using electric vehicles, switching fuel to clean energy (fuel cells, synthetic fuels/biofuels in aviation), and installing and expanding charging stations. This aims for a 97% emission reduction by 2050.
• Industrial Processes (IPPU): Adopt electric tunnel kilns in the brick industry. Shift the brick sector to zig-zag and tunnel kilns technologies, moving toward full electric heating. Electrification is necessary for process heat, boilers, and motive power. Nepal must also explore the potential for Carbon Capture and Storage (CCUS) and switch to green fuels (electricity, waste, and hydrogen) for thermal processes in industries like cement.

B. AFOLU (Agriculture, Forestry, and Other Land Use)

The AFOLU sector plays a critical role, particularly LULUCF, which acts as a carbon sink in the ambitious scenarios.

• Forestry: Increase and maintain forest cover, pursue afforestation efforts, and achieve net-zero deforestation. This involves adopting measures to decrease forest fire incidents, scaling up sustainable forest management, agroforestry, and private forestry practices.
• Agriculture: Implement better cultivation practices, the rice intensification system, and improved manure management. Promote soil management practices like low soil tillage and soil organic matter enrichment. The strategy requires utilizing adaptive and resilient varieties/breeds and expanding the adoption of controlled-release fertilizers. Agri-residue burning on fields should be completely stopped by 2050.

C. Waste Management

To reduce emissions from solid waste disposal and wastewater treatments, technologies must be promoted, including methane gas recovery, incineration of waste for heat and power generation, and methane generation from anaerobic digester in wastewater treatment.

2. Strategic Economic and Sustainability Frameworks

The mitigation strategy is designed to align with broader development goals, including the transition to a circular and green economy.

• Green Economy and Circularity: Nepal must expand the circular economy to improve industrial sustainability, focusing on promoting resource-efficient technologies and circular business models. This includes waste minimization, recycling, reuse, and utilizing renewable inputs.
• Key Green Interventions: High priority sectors for green intervention include agriculture and forestry, infrastructure and energy, and tourism. Specific circular economy initiatives include e-waste collection/recycling, urban farming, organic waste management, and waste-to-energy projects.
• Sustainable Development Goals (SDGs): The net-zero ambition has clear links to achieving the SDGs by 2030, with climate action being integrated into achieving sectoral goals, providing co-benefits for socio-economic prosperity.
• Climate Resilience and Adaptation: Mitigation efforts will lead to adaptation co-benefits that are critical for building resilience. Adaptation is a priority, and Nepal incorporates the Green, Resilient, and Inclusive Development (GRID) agenda into its policies. The National Adaptation Plan (NAP) is being developed to outline medium- and long-term adaptation priorities.

3. Implementation, Finance, and Institutional Measures

Achieving the WAM scenario requires robust means of implementation, including significant financial mobilization.

A. Governance and Coordination

Implementation requires transformative policy and legal strategies, clear institutional mechanisms, and clarified roles for the federal, provincial, and local governments.

• Coordination: The LTS implementation will be coordinated through the Environment Protection and Climate Change Management National Council and the Inter-Ministerial Climate Change Coordination Committee (IMCCCC).
• Stakeholder Engagement: There must be engagement of the private sector, development partners, and enhanced stakeholder collaboration, including women, youth, indigenous people, and civil society organizations (CSOs). The principles of Gender Equality and Social Inclusion (GESI) must be incorporated to ensure equal access to benefits.

B. Finance and Investment

The ambitious targets are conditional on obtaining adequate financial resources.

• Required Investment: The WAM scenario requires estimated cumulative costs of $46.4 billion USD from 2021-2030, rising to $96.3 billion USD from 2041-2050.
• Sourcing Finance: Nepal will pursue bilateral and multilateral funding sources, including grants, private sector investments, soft loans, and bonds. Easy access to finance from multilateral climate funds, such as the Green Climate Fund (GCF) and the Adaptation Fund, is anticipated.
• Domestic Finance and Incentives: The domestic private sector and commercial banking sector must be engaged. Measures should be undertaken to provide incentives for adopting climate-friendly technologies (e.g., decreased duties and taxes, subsidies). Conversely, deterrents, such as taxes and fines on fossil fuels, should be strengthened, with the resulting income invested in climate projects.

C. Market Mechanisms and Energy Trade

Nepal seeks to utilize market mechanisms to support mitigation and gain recognition for global contributions.

• Carbon Market: The carbon market will be crucial for supporting GHG mitigation measures. Nepal has the potential to engage in market mechanisms under Internationally Transferred Mitigation Outcomes (ITMOs), referenced in Article 6 of the Paris Agreement, through cross-border energy trade.
• Clean Energy Trade Potential: Nepal has significant clean energy resources that can be exported (e.g., 37 GW – 45 GW of hydropower capacity and 7 GW – 9 GW of solar capacity by 2050) to offset emissions in neighboring countries. While not part of Nepal's current national emissions regime, if recognized under flexible mechanisms, this trade could allow Nepal to become substantially carbon-negative earlier.

D. Monitoring and Technology

A robust system for tracking progress and acquiring necessary capabilities is essential.

• MRV System: A robust Monitoring, Reporting, and Verification (MRV) mechanism must be established and improved over time to ensure the transparency and accuracy of GHG emissions data and assist in strengthening policy planning.
• Capacity Building: Capacity needs must be addressed in areas such as institutional governance, technical capacity (including sectoral expertise), and strategic capacity for systemic policy design.
• Technology Transfer: Easy access to and affordability of technology transfer will play a primary role, as many required technologies will need to be imported.