1、market:entryCDMdevofmarket.keyation,few others. These might be helpful to decision-makers in Nepal as well as to the process of re-orientingCDM and other carbon markets to better understand the bottlenecks of developing countries.(CDM)be(PointwereBrazilparticipation; Cosbeyto benefit from the global
2、 mechanisms.or-andofcommunity-based forest management practices in the pastARTICLE IN PRESSContents lists available at ScienceDirect.elsevEnergy PolicyEnergy Policy 38 (2010) 37813789their potential opportunities and bottlenecks in order to re-orient(S. Dhakal).decade, the upcoming changes in the gl
3、obal regime meanopportunities. Yet, no studies exist that quantify such prospects.Within the debate of an emerging new global climate program, itis important for developing countries like Nepal to understand0301-4215/$-see front matter fax: +81 29 850 2960.E-mail addresses: shobhakar.dhakalnies.go.j
4、p, countries, an assessment of their carbon mitigation potential isthe first step towards understanding and systematically planningConference of Parties (COP). For Nepal, which has a highdeforestation rate but has also implemented fairly successfuland the carbon market in such a way that many develo
5、pingcountries might find it a useful mechanism to contribute to theirsustainable development. This requires an assessment of thegreenhouse gas (GHG) mitigation potential and the impendingbottlenecks in developing countries. Similarly, for developingmitigate up to 1.4 million tons of CO2in the year 2
6、012. Othersectors have not been sufficiently studied. Afforestation-Refestation CDM (AR-CDM) projects have already been approved,serious discussions are taking place regarding Reducing Emissionsfrom Deforestation and Degradation (REDD) at Meetinglargely attributed to the high transaction costs to de
7、velopprojects, lack of knowledge of the carbon market, complicatedprocedures and largely un-quantified CDM prospects as well asother factors. Presently, post 2012 global climate regime andpossible instruments are being discussed. The new global regimeand its instruments have the opportunity to refor
8、mulate the CDMgies. The authors found that existing renewable technologiesavoided emissions by about 818,000 tCO2/yr in Nepal, equivalentto 21% of the annual GHG emissions from energy use for the year2003. That study also showed that renewable energy utilization,based on very optimistic trends in th
9、e country, could potentially1. IntroductionClean development mechanismfied emission reductions (CERs) canmade a total of 12 billion Euro in 20072007, 62% of CERs from CDM projectsalone. Collectively, China, Indonesia,85% of all CERs in 2007. The lowdeveloping countries (Silayan, 2005the emissions sh
10、ares of gasoline (5%), fuel oil andLPG are smaller. In 2005, the quantity of commercial energy use3This includes CO2,CH4and N2O.4Fuel wood remains one of the major energy sources in Nepal. To avoiddouble-counting, the IPCC method includes fuel wood in the land-use change andforestry sector. Pokharel
11、 (2007) considers biomass as energy in his study, butemissions were still underestimated. Perhaps that estimate does not fully accountfor methane emissions because methane is produced from energy-relatedcombustion activities, such as biomass burning, incomplete combustion of fossilfuels, and so fort
12、h. In the IPCC method, methane emissions are calculated fromcombustion of coal, gasoline, diesel and biomass. The IPCC inventory avoidsaviation.ARTICLE IN PRESSor REDD.2.4. Clean development mechanism Projects in NepalNepal, a country that lacks financial resources for developmentactivities, should
13、explore the market prospects to attract addi-tional resources in the energy or forestry sectors. This is criticalbecause more than half of the governments development budgetof the country comes from the international donor community.Nepals parliament ratified the Kyoto Protocol and thus paved theway
14、 for CDM projects in September 2005. Institutionally, thecountry has set up a Designated National Authority (DNA) forCDM projects. There are only two registered CDM projects in thecountry, both on biogas. The Community Development Carbonhectares.S. Dhakal, A.K. Raut / Energy Policy 38 (2010) 3781378
15、9 3783almost doubled compared to 1994 (1.9 times), but the structure ofenergy-consuming sectors has changed slightly. The share of theindustrial sector remains as before but the residential andtransport sectors have seen an increased share by four and threepercentage points, respectively, at the cos
16、t of other sectors (WECS,2006). In contrast, the change in the structure of fuel use is quitevisible: shares of kerosene and diesel have decreased by almostten percentage points each, while the shares of coal, LPG andelectricity increased by 10%, 7% and 3%, respectively. Althoughexisting studies hav
17、e not quantified recent GHG emissionsfollowing the IPCC framework, we expect that the trend forGHG emissions from energy combustion would follow energy usepatterns in general. Conclusions regarding other sectors could notbe made due to lack of studies and follow-up information.2.2. Energy sectorThe
18、increase in energy consumption over the last 17 years(19902007) in Nepal has been almost linear, with an annualaverage growth rate of 2.87%. Nepals energy sector is largelydominated by traditional energy sources (86%), mainly fuel wood,agriculture residue and animal dung. Commercial energy makesup o
19、nly 13% of the total primary energy supply (MOF, 2007).Within commercial energy sources, 81% are fossil fuels such aspetroleum products and coal, which collectively amounted toabout 41 million GJ of primary energy supplied in 2006 (WECS,2006). Rests are electricity from hydropower plants. In contras
20、twith the 2.87% annual growth rate of the total primary energysupply, commercial energy has grown 16% annually over the past17 years (19902007). For coal and oil collectively, energyconsumption has tripled during that period. Despite such growth,41 million GJ of energy supplied in 2006 only means 1.
21、6 GJ/person(with a population of 25.9 million, see ADB (2007), which is farsmaller compared to other countries in the region. Therefore, theenergy sector itself is relatively small and may not be able toreduce a large volume of CO2emissions in order to generate alarge volume of carbon credits for Ne
22、pal. Unless a large amount ofhydroelectricity was developed and sold to the power-hungrynorthern states of India or used massively in the domestictransportation system, the ability of hydropower to generate alarge financial resource in terms of carbon credits would belimited. This does not mean that
23、 the carbon market is notattractive, only that it is relatively small. However, for a smallcountry such as Nepal, even modest financial resources can play acrucial role in sustainable development. Since carbon-basedcommercial fuel has an 81% share in commercial energy, anyenergy projects that substi
24、tute fossil fuel with hydroelectricity orrenewable energy sources offer the potential to reduce GHGemissions.2.3. Forestry sectorThe Kyoto Protocol does not provide incentives to reducedeforestation and degradation as in REDD. In the past few years,efforts have intensified to include it in the post-
25、Kyoto climateregime or some stand-alone mechanism. Table 1 highlights thatthe emissions from forest and grassland conversion are high.Thus, Nepal could have good market prospects by avertingdeforestation.In Nepal, a forest is defined as 10% crown coverage with trees(DFRS, 1999). While forest land is
26、 decreasing, scrubland isincreasing in Nepal. Scrubland area increased from 8% in 1990to 13% in 2005. In 2005, the forest land of Nepal was 3.6 millionhectaresa quarter of the countrys land area (FAO, 2005). Table 2shows the state of deforestation based on FAO (2000, 2005),LRMP (1986), MPFS (1988),
27、and NFI (1999). These data show thatthe countrys average annual deforestation rate from 1964 to1978 was 0.48%, which increased dramatically in later years,reaching 1.19% during 19781990 and 1.87% in 19902000. Inrecent years, this rate declined somewhat to 1.54% in 20002005.Almost half of Nepals fore
28、st land lies in hills. In 2000, themountains and southern plains represented 23% and 36% of thetotal forested areas, respectively (JAFTA, 2001). The southernplain, which contains all the tropical forests of the country, isexperiencing rapid deforestation. In the hills, however, forest areais actuall
29、y increasing (DFRS, 1999; JAFTA, 2001). Due to lesspopulation density, the per capita forested area in the mountainsand hills is almost 6 and 3 times higher, respectively, than that ofthe southern plains (JAFTA, 2001).From the carbon perspective, biomass stock is more importantthan the forest area i
30、tself. FAOs (2005) Global Forest ResourceAssessment shows that despite the shrinking forested area, thebiomass and carbon stocks of forests have increased in Nepalcompared to the 1990s (FAO, 2005). This is primarily because ofthe increase in growing stock per hectare of forest area. Thisshows that i
31、f Nepal could reduce the rate of deforestation and atthe same time marginally increase the growing stock per hectareof forest land, large amounts of carbon could be sequestered.Furthermore, better forest management could reduce emissionsfrom the degraded forests.In the last two decades, Community Fo
32、restry has emerged asone of the major forest management practices in Nepal. As of2007, 14,389 community forestry groups managed 12 millionhectares, or 28%, of Nepals forest land areas (MoF, 2008). Theseefforts are successful mostly in the mid-hills and less so in thesouthern plains. The southern pla
33、ins have less per capita forestland and a higher rate of deforestation. Given this situation, thereis potentials to conserve forest, capture carbon, reduce emissionsfrom forests and simultaneously benefit from internationalcarbon crediting mechanisms through either the Kyoto ProtocolTable 2Trends of
34、 deforestation in Nepal.Year Forest land, area in ha % of land areaaSources1964 6.0 million 41.9 FAO (2000)1978 5.6 million 39.2 LRMP (1986)1985 5.5 million 38.5 MPFS (1988)1990 4.8 million 33.6 FAO (2005)1994 4.3 million 30.0 NFI (1999)2000 3.9 million 27.3 FAO (2005)2005 3.6 million 25.2 FAO (2005
35、)aThe countrys land area is 14.3 million hectares after deducting of 418thousand hectares of water bodies from the countrys area of 14.718 millionFund of the World Bank agreed to purchase a minimumARTICLE IN PRESSof one million tons of CO2annually at the price ofdomestic sector, solar home systems a
36、nd micro-hydro projectspotential), if the total potential of 2.8 million ICSs could beinstalled and if it is assumed that the fuel wood saved were fromunsustainable sources, the total amount of GHG emissionsavoided would be 2.5 million tCO2e per year.3.1.3. Bio-fuelThe Government of Nepal already ha
37、s a policy to blend 10%ethanol into the gasoline sold in Nepal. However, this has notTable 3Emission factors for cooking stoves (g/kg).CO2CH4N2O Total CO2equivalent6Personal communication with Alternative Energy Promotion Center. Seealso, /http:/www.aepcnepal.org/gen/ics.phpS7Based on a CDM PIN Docu
38、ment submitted to the Asian DevelopmentBank, see /http:/www.adb.org/Clean-Energy/documents/NEP-PIN-Improved-Cook-S. Dhakal, A.K. Raut / Energy Policy 38 (2010) 378137893784could provide alternative energy sources for rural households, andthese could be attractive to the carbon market. The othersecto
39、rsindustry, forestry, waste management and agriculture,are also likely to attract carbon market as well. A detailedquantitative assessment of these possibilities is presented in thenext section.3. Assessment of CO2mitigation potential and challengesIn this section, we analyze key sectoral activities
40、 that have thepotential to reduce carbon emissions in Nepal. These activities arebroadly divided into the renewable energy sector, the industrialsector, the agriculture sector and the land-use change and forestry(LUCF) sector. We describe the status of each sector, quantita-tively assess their carbo
41、n reduction potential, and illustrate keychallenges and obstacles.3.1. Renewable energy sector3.1.1. BiogasTwo activities of the Nepal Biogas Project were registered assmall-scale CDM projects on December 27, 2005, which accountfor 19,396 biogas plants (BSP-Nepal, 2006). Biogas reduces GHGemissions
42、by replacing fuel wood and kerosene for cooking andlighting purposes in rural households. On average, each biogasplant saves 7 tCO2e/yr, but the Nepal Biogas Project claimed only4.99 tons in order to fit within the requirements of the small-scaleCDM project category. However, the monitoring report c
43、alculatedthe actual GHG emission reduction to be 8.99 tCO2e per biogasplant (BSP-Nepal, 2006).As of June 2008, there were 174,591 biogas plants constructedin the country. The full potential is estimated to 1.937 millionunits (BSP, 2008). Assuming a 97% performance rate, as mentioned7 US$ per ton of
44、CO2e from biogas (MoF, 2008; WB, 2009). Thetwo registered projects would generate about 94 thousand tCO2eper year.5Another CDM project submitted for registration inNepal is developed by the Alternative Energy Promotion Center. Inthis, a total installed capacity of 15 MW is supplied by around 750micr
45、o-hydro plants varying in capacity from 10 to 500 kW. Theplants are to be installed in a phased manner until 2011. Thissmall-scale CDM project would generate 343 thousand tCO2e,which would almost all be purchased by the same fund at 10.25US$/CERS over the period of 20072012.The majority of commercia
46、l energy use in Nepal comes fromfossil fuels such as coal and petroleum, which are imported intothe country. This helps make a clear case for potential CDMprojects related to decentralized renewable energy and fuel mixchange. There are a number of end-use energy devices for thereduction of emissions
47、 at the household level (Begg et al., 2000)that are useful in Nepal. Presently, the small share of renewableenergy in Nepal could open the door for more CERs and thevoluntary market to fill the financing gap and promote renewableenergy. The residential sector consumes most of the energy inNepal, whi
48、ch is supplied by a mix of biomass, electricity andkerosene. In rural areas kerosene is used for lighting while it isused for cooking in many urban households. Also unsustainableuse of biomass could be reduced by hydroelectric or solar waterheating. Thus, the carbon market may have an important role
49、 inpromoting clean energy and energy efficient devices for domesticend-uses such as cooking and lighting (Singh, 2006). In the5Registered PDD available at http:/cdm.unfccc.int/in the approved Project Design Document, we estimate a potentialsavings of 16.9 million tons of CO2e per year from biogas plantsif their full potential is harnessed. However, the Biogas SupportProgram has determined that 600,000 biogas plants would beeconomically feasible (ADB, 2004). Based on this figure,economically attractive biogas plants could potentially reduceemi
