- The Nepal Climate Change conference concluded that technology should be utilized towards development.
- Many households in Nepal lack electricity and use traditional energy sources.
- Biogas is a clean, renewable, and sustainable source of energy.
September 21, 2009 - Many ideas were exchanged during the Climate Change Conference held in Kathmandu on August 31, 2008. One of the conclusions that was reached in the Final Statement was that clean technologies should be developed and transferred with a view to ensure green development. One example of this has flourished in Nepal, where access to affordable and environmentally sustainable energy in remote mountainous areas is scarce.
Most households use traditional energy sources for cooking and heating, such as firewood or agricultural residue, and only 14 percent of the population has access to electricity. The high demand for firewood has caused problems such as deforestation, soil degradation, and flooding. Firewood also takes a disproportionately long time to collect and its use results in indoor air pollution, which can diffuse across the home and affect every member of the family.
Biogas Support Program
Since the early 1990s, the Government of Nepal (GoN) with donor support has been promoting the construction of biogas plants as a way to bring cleaner, more affordable energy to rural households.
“Biogas plants convert animal and human waste into a clean source of cooking fuel – thereby removing the need to use wood, dried dung, and fossil fuel based sources of energy,” explains Karin Kemper, Sector Manager for Social, Environment and Water Resources in the South Asia Region. “The biogas byproduct can also be used as a natural fertilizer to increase agricultural yields.”
Despite a decade-long conflict and political uncertainty caused by regime change, Nepal’s Biogas Support Program has achieved impressive results. It is now in its fourth phase (BSP-IV), and has helped to construct over 200,000 biogas plants since inception.
To help scale up the program, the Global Partnership on Output-Based Aid (GPOBA), a Bank-administered global program, has provided a US$5 million grant that will subsidize construction of an additional 37,000 plants, mainly in more remote and inaccessible areas where construction costs are higher and the population is poorer.
GPOBA made its first payment of $592,200 to the Alternative Energy Promotion Centre (AEPC) on Nepal in July 2009 for successful delivery of 4,772 independently verified new biogas plants built in calendar year 2008.
This support for expanded use of biogas is consistent with the Bank’s interim strategy for Nepal, which focuses on fostering peace and economic development, including through more equitable access to services.
“The project builds on Nepal’s impressive track record with mainstreaming biogas plants as a practical and affordable solution to energy problems in rural areas,” says Susan Goldmark, Country Director for Nepal. “This is a small but important step in improving the lives of rural Nepalis.”
Innovative Financing Mechanism
The Bank is part of a unique partnership supporting the Biogas program. It involves the Government of Nepal, bilateral donors, GPOBA, and the Community Development Unit, which, through the Community Development Carbon Fund (CDCF) is purchasing carbon emissions reductions from bundles of previously constructed plants.
“This is the first program to combine carbon finance and output-based aid, both results-based mechanisms which tie payments to actual verified achievements,” explains Patricia Veevers-Carter, GPOBA Program Manager.
The scheme involves public and private partners, including AEPC, the NGO Biogas Sector Partnership Nepal (BSP-Nepal), and private biogas construction companies. GPOBA subsidizes biogas plants with a capacity up to 8m3. The subsidies are paid after independent verification that the plants are being continually used. Beneficiaries are able to receive assistance from several microfinance facilities operating in the country and are responsible for operating and maintaining the plants, built to last 20 years, thus ensuring ownership and sustainability.
Similarly, the CDCF uses carbon finance to purchase independently verified Emission Reduction Credits from the project. These “carbon credits” are generated because the plants help avoid the emission of carbon dioxide into the atmosphere which would have occurred if, for instance, kerosene had been used instead of the biogas.
In 2006, CDCF committed to purchasing US$ 7.0 million worth of carbon credits from the biogas program and has already made payments of about US$ 850,000 for verified and delivered carbon credits. It buys these credits on behalf of their Fund participants, who will use them towards their emission reduction obligations under the Kyoto protocol, an instrument known as the clean development mechanism (CDM).
Historically, the provision of subsidies was a key element in making these biogas plants accessible to poor households but revenue from the CDCF will reduce dependency on government and external donor subsidies, and will help expand biogas installations to more remote and poorer areas of Nepal.
“This project is a very good example of what the CDCF intends to achieve, namely combining community development attributes with emission reductions to create "development plus carbon" credits, and significantly improve the lives of the poor and their local environment”, says Joelle Chassard, Manager of the Carbon Finance Unit.
Benefits for the Households
For Jeremy Levin, Senior Technical Specialist in the South Asia Region and is the project leader for both the GPOBA and carbon finance projects. “This project brings many benefits to rural households, the most important of which is access to a clean, modern energy source.” He lists others, including:
- Improvements in health for women and children because of reduced exposure to indoor air pollution.
- Economic savings due to reduced household expenditure on cooking and lighting fuels.
- Time savings as less time is needed for gathering firewood, cooking, and cleaning.
- Improved sanitary conditions, as more households are connecting latrines to the biogas plants, thus increasing production.
- Improved soil fertility when bio-slurry is used as a fertilizer.
“The successful promotion of this renewable source of energy is a powerful example of how climate change mitigation projects can deliver significant on-the-ground benefits to the people who need them most,” Levin adds.