Carbon Market Potential

While our farmers work their terraced fields and our forests clean the world's air, Nepal is missing out on a multi-billion-dollar opportunity. The global carbon market has become a gold rush, but Nepal stands empty-handed despite our rich natural resources. Let's talk numbers that matter to every Nepali citizen: The World Bank reports that as of 2023, carbon pricing initiatives operate in 46 national and 37 subnational jurisdictions, covering approximately 23 per cent of global greenhouse gas emissions. 

Our neighbour India's Perform, Achieve and Trade (PAT) scheme has prevented about 31 million tonnes of CO2 emissions, with trading of Energy Savings Certificates (ESCerts) in the first cycle resulting in a market worth about INR 100 crores. Meanwhile, Costa Rica – a country similar to Nepal – received $16.4 million for reducing 3.28 million tonnes of carbon emissions during 2018 and 2019. But here's what should concern every Nepali: While we've taken important first steps with forest carbon credits, our potential extends far beyond forests. 

Our 45 per cent forest cover is just one piece of the puzzle. Our 65 per cent farming population could be earning extra income from climate-smart agriculture, our renewable energy sector could tap into carbon markets, and our industries could benefit from energy efficiency trading - but these opportunities remain largely unexplored. California shows us what's possible. Their carbon programme has generated $26.97 billion since the beginning of the programme, with at least 35 per cent benefiting disadvantaged and low-income communities. Imagine what similar revenues could do for our rural communities.

The European market proves carbon's value – prices reached a record high of 100.34 euros per metric tonne of CO2 in February 2023. That's money we're leaving on the table. What Nepal needs now are as follows: a clear carbon trading policy framework, support system and incentive for farmers and private entities to enter carbon markets, technical infrastructure for verifying carbon credits, international carbon market partnerships. For sceptics wondering if we're ready, consider this: we've committed to net-zero emissions by 2045 and maintaining 45 per cent forest coverage by 2030. Without carbon market participation, these aren't just ambitious targets – they're missed economic opportunities.

Think about our potential: Every community forest could generate carbon credits. Hydropower, biogas projects could earn double: from electricity, biogas and carbon credits. Farmers could profit from both crops and climate-smart practices. The global voluntary carbon market was valued at US$ 516.2 million in 2023. The question isn't whether Nepal should participate, but how much longer can we afford to wait?

To our policymakers: We don't need more studies. We need action. Our neighbours are profiting while we deliberate. Every day of delay costs our farmers, our businesses, and our economy. Nepal has everything needed to succeed in this market: forests, farming communities, and renewable energy potential. What we lack is urgency in our policy response. The world is ready to pay for our environmental services. Are we ready to turn our natural wealth into national prosperity?