Economic prosperity through energy transition, a Nepalese perspective

‘Energy transition’ for Nepal is to reduce import of fossil fuels that amounts more than 300 billion rupees per year as shown in the latest data. That means, Nepal must promote renewable energy technologies to reduce consumption of imported fossil fuels. Fossil fuels also cause health problems and degrade air quality.

Moreover, ‘energy transition’ is a support to climate actions to reduce effects of the global climate crisis. It is worth to mention that Fossil fuels – coal, oil and gas – are by far the largest contributor to global climate change, accounting for over 75 per cent of global greenhouse gas emissions and nearly 90 per cent of all carbon dioxide emissions.

Fossil fuels consumed for transportation are identified as the main contributors while industries and household emissions are also responsible.

Thus consumption of fossil fuels must be replaced by the only solutions available so far are renewable energy technologies. Therefore, the importance of RETs are realized by the entire world.

In the COP28, ending use of fossil fuels was one of the serious agenda which later transferred to phasing out not immediately but with a logical procedure.

Thus, an energy transition is a broad shift in technologies and behaviours that are needed to replace one source of energy with another.  A prime example is the change from a pre-industrial system relying on traditional biomass, wind, water and muscle power to an industrial system characterized by pervasive mechanization, steam power and the use of coal.

The IPCC does not define energy transition in the glossary of its Sixth Assessment Report but it does define transition as: “The process of changing from one state or condition to another in a given period of time. Transition can occur in individuals, firms, cities, regions and nations, and can be based on incremental or transformative change.”

Currently, a transition to sustainable energy (mostly renewable energy) is underway to limit climate change. It is also called renewable energy transition. The current transition is driven by a recognition that global greenhouse gas emissions must be drastically reduced. This process involves phasing-down fossil fuels and re-developing whole systems to operate on low carbon electricity. A previous energy transition took place during the industrial revolution and involved an energy transition from wood and other biomass to coal, followed by oil and most recently natural gas.

As of 2019, 85% of the world’s energy needs are met by burning fossil fuels.  Energy production and consumption are responsible for 76% of annual human-caused greenhouse gas emissions as of 2018. To meet the goals of the 2015 Paris Agreement on climate change, emissions must be reduced as soon as possible and reach net-zero by mid-century. Since the late 2010s, the renewable energy transition is also driven by the rapidly increasing competitiveness of both solar and wind power. Another motivation for the transition is to limit other environment impacts of the energy industry.

Considering the contribution of energy to the economy and the overall wellbeing of our society, access to clean and affordable energy has remained to be of prime importance.

In global context, energy mix, renewable energy accounted for 7.18% and fossil fuel 86.88% in 1990 and renewable energy accounted for 14.21% and fossil fuel 81.66% in 2022. There is progress in decarbonisation but not fast enough. To achieve the necessary progress that matters for the climate we need to see the growth of renewable energy not only to meet our new energy demands each year but also start displacing existing fossil fuels in the energy mix at a much faster rate.

To ensure the global community meets the collective goal of the Paris Agreement to keep warming well below 2°C while pursuing efforts to limit warming to 1.5°C, the pace and scale of deployment of renewables and energy efficiency must increase significantly between now and 2030, propelling the global move towards energy systems free of fossil fuels well ahead of and by mid-century at the latest.

Realizing this head of states in CoP28 declared their commitment to work together to triple the world’s installed renewable energy generation capacity to at least 11,000 GW by 2030, taking into consideration different starting points and national circumstances. CoP28 has also committed to work together to collectively double the global average annual rate of energy efficiency improvements from around 2% to over 4% every year until 2030. In FY 2078/79 (2022 AD), Nepal’s total energy consumption reached 179,000 GWh, showing a slight increase compared to the previous year. Traditional energy sources still dominate the energy mix comprising 64.17% of total energy consumption. The consumption of fossil fuel is 28.35% while electricity consumption is 4.96%. The usage of renewable energy contributes to only 2.52% in Nepal.

Energy transition for economic prosperity is simply to understand that end the use of fossil fuels replacing by renewable energy. That brings a multi-stage benefits to the people, country and planet.

The benefits of economic prosperity in a community might be localized but they are also far-reaching, and they have a direct impact on the well-being of residents, our families. Economic prosperity, when mixed with smart community management, is the main driver in a better life for all the residents in and around the community.

This is why it’s essential for local governments to prioritize policies that promote economic growth. Of course, local governments must work within the confines of the state government and the federal government, so solid communication at all these levels can help set up a community for prosperity.

In Nepal, the experiences prove that renewable energy technologies can change the living style of the people including off-grid locations. The effective access to modern energy provide them healthy life, drudgery reduction, better agriculture crops due to irrigation, storage and agro-processing facilities and even access to the markets. Similarly, promotion of decarbonised transport facility is another benefit. Replacing fossil fuels for the industries is also an important benefit.

Therefore, Nepal needs to promote RETs – hydropower, microhydro, Solar PV, Solar thermal, Biogas, Windpower and even biofuels for industries.

For the better growth of RETs, the country needs to review the policies where private sector investment can play larger roles in developing commercial biogas plants, Solar PV farms, Solar Rooftop, agrivoltaic, Extended Solar Home Systems, Modern biomass energy systems, Windpower, and so on. Likewise, access to national and international financial resources and modern technologies also should be simplified and widened. Policy on ‘energy mix for energy security’ should be one other vital aspect to consider while going through the policy review in order to create conducive environment of ‘Economic prosperity through energy transition.’