Nepal’s ability to meet its future power needs and to curb a rapid rise in greenhouse gas emissions will hinge on the rollout of clean energy technologies which are highly cost-effective in the long run, say an Asian Development Bank (ADB) study.

“Replacing 50% of all kerosene lamps with solar powered lighting, for example, would result in a substantial reduction in emissions for relatively low cost,” said Mahfuz Ahmed, Principal Climate Change Specialist with ADB’s South Asia Department, who presented the Economics of Reducing Greenhouse Gas Emissions in South Asiareport at a dissemination seminar held in ADB Nepal Resident Mission today.  “It also has the benefit of improving the quality of lighting and reducing exposure to indoor smoke which causes respiratory problems.”

Nepal’s total greenhouse gas output remains small compared to most of its South Asian neighbors but the percentage increase in emissions from energy-using activities over the past 15 years has been the quickest in the region, due to rising oil consumption in the transport sector. At the same time, the country is endowed with huge hydropower resources which have barely been tapped, while electricity use per capita is among the lowest in the world. Finding cost-effective ways of providing power to all citizens, particularly communities who live in remote areas distant from the national grid is a challenge for the government.

Without a change in current energy use patterns, Nepal’s emissions are set to rise from around 5.4 million tons of carbon dioxide equivalent in 2005, to over 13.5 million tons in 2030, the report says, with the transport sector accounting for the bulk.

By contrast, adopting a range of ‘no regret’ clean energy options for minimal cost will trim an estimated 345,000 tons of carbon dioxide equivalent emissions in 2020 alone. Along with solar and hydro-powered lighting, options include increased use of electric stoves and heaters, more efficient industrial boilers, and the use of hybrid cars and electric buses to replace vehicles fuelled by gasoline and diesel.

Currently private sector investment in renewable energy in Nepal is minimal given perceived risks and a lack of financing options, but ADB and its development partners are actively supporting the adoption of clean power technologies and providing a mechanism for new investors to enter the sector.

For example, ADB, World Bank and International Finance Corporation have helped Nepal tap funds to start the Scaling Up Renewable Energy Program, which aims to leverage finance of up to $160 million ―including from the private sector― for investments in off-grid solar, wind and mini-hydro power facilities, which can help meet the needs of remote communities. ADB is also analyzing the feasibility of introducing electric buses in Nepal to meet fast growing urban demand for new services.

The Government of Nepal’s goal is to increase the share of renewable energy in the total supply mix from less than 1% to 10%, and to increase access to electricity from alternative energy sources from 10% to 30%.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2012, ADB assistance totaled $21.6 billion, including cofinancing of $8.3 billion.