<figure><img width="1400" height="1052" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636bae3a9c7e80680e077fdfjpeg.jpg" alt=""/><figcaption>Photo: KUNDA DIXIT</figcaption></figure>Although the Nepal budget this year <a href="https://www.nepalitimes.com/latest/nepal-takes-3-steps-back-on-e-cars/">cut tax breaks for electric vehicles</a> and did not acknowledge a green path to post-COVID economic recovery, Nepal has an opportunity to tap into next-door China’s rapid strides in green financing.  China was first mover among developing countries to put itself on a low carbon trajectory, using <a href="https://www.bloomberg.com/graphics/2019-green-finance/">green finance</a> as one of the main tools, and it has now become the world’s <a href="https://www.cnbc.com/2017/12/26/climate-change-china-is-the-worlds-biggest-green-bond-issuer.html">largest market</a> for carbon credit, green bond markets and investments in a sustainable economy.Being right next door, Nepal could tap into this potential and use its international goodwill in restructuring the country’s economy towards a green transition.<a href="https://www.nepalitimes.com/latest/nepals-chance-to-green-its-budget/">Nepal’s chance to green its budget</a>, Kaustubh DhitalAfter the 2014 <a href="https://obamawhitehouse.archives.gov/the-press-office/2014/11/11/us-china-joint-announcement-climate-change">climate agreement</a> between President Xi Jinping and President Barack Obama alongside the consequent ratification of the Paris Agreement, China has taken a leadership role in global climate governance. Beijing went against the commonly held ‘Common but Differentiated Responsibility (CBDR) framework’, which protected developing countries from taking costly and ambitious climate action that allowed them to opt for voluntary incentives to reduce greenhouse gas emissions. There has been public pressure on the Chinese government to act on worsening air pollution, and China was shamed at the Copenhagen climate summit in 2009 for rising carbon emissions. Since then, there has been strong political will from President Xi Jinping himself that led to China’s U-turn on environmental and climate policies. China also benefited from technocrats and advocacy coalitions to realise the benefits of a green economy. Nepal can learn from <a href="https://unepinquiry.org/publication/establishing-chinas-green-financial-system/">China’s Green Finance Task Group</a> made up of experts from ministries, financial regulators, academics, banks and other financial institutions, complemented by international experts. It was set up in 2014 to help the central government identify barriers and opportunities in green finance.Its recommendations formed a key part of the 2016 ‘Guidelines for Establishing the Green Financial System’ policy document, which sparked rapid development of green finance in China. It makes sense for Nepal to similarly bring together experts from across the industry to design a green financial system appropriate for Nepal. It is equally important for Nepal to step up its climate and green investment reporting alongside the measurement of environmental benefits and climate risk exposure. Presently, Nepal requires financial institutions (FIs) to report on climate/green finance flows and activities. However, the framework does not require FIs to report on climate risk exposure on the portfolio level. Nor does it make environmental and social policies externally verified through independent reviews. Nepal also does not require FIs to calculate the environmental benefits of their investments and any climate risk exposure assessment. <a href="https://www.nepalitimes.com/banner/build-back-greener/">Build back greener</a>, Bishwa Nath Oli, Maheshwar Dhakal and Rudriksha Rai ParajuliAlong with a systematic update of Nepal’s framework, there is much space for capacity building within the country’s banking sector in climate risk exposure methodologies. This is because banks <a href="http://unepinquiry.org/wp-content/uploads/2016/08/Green_Finance_for_Developing_Countries.pdf">play a key role</a> in ‘assessing risks, originating loans, and underwriting the issuance of equities and debts’.Nepal’s membership of the Sustainable Banking Network gives hope for the future of Nepal’s green finance regime. However, international agencies, financial and academic institutions, banks and lobby groups should also facilitate bilateral channels to allow China to play a key role in knowledge transfer and capacity building in Nepal. For example, the Green Finance Leadership Program led by Tsinghua University, focused on technical assistance on green finance to developing country financial regulators could be a starting point. All these ideas could lay the groundwork for Nepal to continue greening its financial system, acknowledging that it is a long and complex process and requires specialised investment vehicles, fiscal and financial support, financial and legal infrastructure moving forward.  Nepal needs to green its economy for several reasons. The financial system is <a href="https://thediplomat.com/2020/04/greening-the-nepali-financial-sector-strike-while-the-iron-is-hot/">dominated by banks</a> with most of their assets invested in the brown sectors such as agriculture, construction, and real estate, all with environmental hazards and high climate risk. According to the <a href="https://germanwatch.org/sites/germanwatch.org/files/20-2-01e%20Global%20Climate%20Risk%20Index%202020_10.pdf">2020 Global Climate Vulnerability Index</a>, Nepal is ranked as the 9th most vulnerable country in the world to the climate crisis. Nepal’s banks have limited knowledge on environmental risk calculations making their investments highly risky – for example in infrastructure downstream from expanding glacial lakes.<a href="https://www.nepalitimes.com/banner/saving-gokyo-from-itself/">Saving Gokyo from itself</a>, Ang Rita SherpaNepal therefore needs to increase the resilience of its economic and financial system not just by incorporating long-term environmental and climate risks, but also safeguarding current investments through green insurance schemes. Presently, the Nepal government has a <a href="https://www.np.undp.org/content/nepal/en/home/library/environment_energy/climate-change-financing-framework.html">framework</a> to catalyse public financing into climate change in the broader context of economic development and government fiscal planning process. However, greening the financial system would provide much-needed incentives for increased private sector investments in sectors such as renewable energy. This would also diversify the portfolio of banks and reduce risks accordingly. An International Finance Corporation (IFC) <a href="https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/climate+business/resources/final+climate+investment+opportunities+in+south+asia+-+an+ifc+analysis">study</a> shows that this would open up investment potential of $46.1 billion by 2030, which the private sector, including multilateral development banks, local and regional financial institutions can tap into (see chart).  <figure><img width="928" height="870" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636bae3d9c7e80680e077fe0jpeg.jpg" alt=""><figcaption>Nepal's Climate Investment Potential broken down by Sectors. Source: IFC 2017</figcaption></figure><a href="https://www.nepalitimes.com/banner/nepal-lockdown-proves-air-quality-can-be-improved/">Nepal lockdown proves air quality can be improved</a>, Sonia AwaleThe 2015 earthquake followed by the <a href="https://scroll.in/article/802653/is-india-really-behind-nepals-economic-blockade">Indian Blockade</a> highlighted the need for Nepal to reduce its energy dependency. In 2017, Kathmandu was <a href="https://thehimalayantimes.com/kathmandu/kathmandu-listed-as-7th-most-polluted-city-in-world/">listed</a> as the 7th most polluted city in the world, resulting in poor health, and increased <a href="https://www.hindawi.com/journals/jeph/2018/1504591/">socio-economic cost</a>. This means Nepal needs to think long-term, realise its potential in hydropower and renewable energy, and demonstrate the financial benefits of investing in green projects. The Rastra Bank has made significant efforts in this transition. The <a href="https://www.sustainablebankingnetwork.org/country/Nepal.html">Sustainable Banking Network</a> reports that Nepal is making progress in developing its green finance system and has evolved from the ‘Preparation’ to ‘Implementation’ stage in recent years (see chart). The guiding force behind this has been the <a href="https://www.ifc.org/wps/wcm/connect/45b458ae-0866-4e37-9a56-23bd672e221f/NEPAL+NRB+ESRM+Guidelines+May2018.pdf?MOD=AJPERES&amp;CVID=mfwNzvB">adoption</a> of the ‘Guidelines on Environmental and Social Risk Management for Banks and Financial Institutions’ by Nepal Rastra Bank in 2018.  <figure><img width="1275" height="655" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636bae409c7e80680e077fe1jpeg.jpg" alt=""><figcaption>SBN Progression Matrix with Assessment Results for Nepal. Source: Sustainable Banking Network, 2019</figcaption></figure>Although Nepal has made significant progress in integrating environmental and social governance, there is much more left to do on climate and green finance. Nepal’s current framework involves inter-agency collaboration between financial supervisors/regulators, industry associations and financial institutions. However, this does not include environmental agencies and ministries, civil society and the media. Reliance on public financing to adapt to climate change is not enough. Because of its climate vulnerability, Nepal needs to urgently green its financial system and leverage private sector financing. Bilateral support and knowledge transfer between China and Nepal could be a good place to start. <a href="https://www.nepalitimes.com/here-now/the-climate-connection-to-covid-19/">Rastraraj Bhandari </a>is pursuing a Masters in Economics and China Studies at the Yenching Academy of Peking University in Beijing.

original

674x448

610x380

500x500

400x266

400x240

400x203

301x200

1250x600

1084x550

Turning green policies into greenbacks

<figure><img width="1100" height="549" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108141116/636a57359c7e80680e0547cbjpeg.jpg" alt=""/><figcaption>CARBON NEUTRAL: Yeti Airlines has a policy to cut carbon use with more fuel-efficient ATR-72 aircraft, and battery-powered vans.</figcaption></figure>Last month, young climate change activist Greta Thunberg sailed across the Atlantic Ocean for 15 days on a zero-carbon yacht. After the UN <a href="https://www.un.org/en/climatechange/" target="_blank" rel="noopener">Climate Action Summit</a>, she will sail on to Chile for another climate meeting. Thunberg is trying to show people around the world that reducing one’s carbon footprint may be difficult, but it is possible. But for the 2 million tourists expected to arrive in Nepal next year, sailing is not an option. Road travel is not feasible. Their only mode of entry into Nepal? Flying.With growing global awareness about the climate emergency, many air travellers have started thinking about cutting down on travel. Those who do take to the skies can shop on Google for carbon credits to offset the fossil fuel they burn.A roundtrip flight on a modern wide body airliner from Europe to Kathmandu emits nearly 3 tons of carbon dioxide per passenger. With Nepal expecting 2 million tourists arriving in <a href="https://www.nepalitimes.com/business/yetis-electric-future/" target="_blank" rel="noopener">Visit Nepal Year 2020</a>, passengers could be emitting a total of more than 4 million tons of carbon next year. Read Also:<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=32892&amp;preview=true" target="_blank" rel="noopener">Tree-mendous,</a> Peter Gill<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=32877&amp;preview=true" target="_blank" rel="noopener">It's a jungle out there,</a> Ajaya Dixit<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=32887&amp;preview_nonce=fd922bf38d&amp;preview=true" target="_blank" rel="noopener">Trees, politics and greed,</a> Mukesh Pokharel <img width="200" height="200" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108141116/636a57379c7e80680e0547ccjpeg.jpg" alt="">Although civil aviation contributes only 3% of the carbon dioxide that is blamed for the greenhouse effect heating the planet, the proportion is growing at 5-10% a year. Airlines like Emirates, Jetstar, Qantas and Delta are at the forefront of offsetting carbon emissions with bio-fuels or by buying carbon credits to offset their emissions. Qantas claims it has been carbon neutral since 2007 by offseting 2.5 million tons of carbon.However, many environmentalists say <a href="http://archive.nepalitimes.com/news.php?id=19901#.XXoaQS4zbIU" target="_blank" rel="noopener">carbon offsetting</a> does not go to the heart of the problem: cutting consumption, and being less wasteful. Besides, they question carbon offsetting itself, which has become a big business.In Nepal, <a href="http://archive.nepalitimes.com/blogs/thebrief/2018/01/28/yeti-reduces-carbon-footprint/" target="_blank" rel="noopener">Yeti Airlines has made an effort to offset its carbon emission</a> by fulfilling the <a href="http://archive.nepalitimes.com/blogs/thebrief/2017/05/19/yeti-pushes-global-goals/">UN’s Sustainable Development Goal #8</a>, which targets climate action to reduce carbon emissions.With help from the UN Development Programme, Yeti conducted a carbon audit, then implemented CO2 reduction measures with help from Impacti Solutions, which designs sustainability solutions for businesses.Yeti Airlines had to offset 19,655 metric tons of CO2 emitted by its aircraft, ground vehicles and buildings. The company created a three-fold <a href="https://www.nepalitimes.com/business/carbon-neutral-yeti/" target="_blank" rel="noopener">carbon neutrality plan</a>, which includes buying carbon credits, reducing fuel consumption for vehicles and replacing its fuel-guzzling BAe Jetstream 41s with <a href="https://www.nepalitimes.com/business/yeti-adds-atr-72/" target="_blank" rel="noopener">ATR-72-500s</a>, cutting emissions per flight by 20%. Yeti bought carbon credits from a hydropower company in Sikkim and Himachal Pradesh in India at 50 cents per metric ton of carbon. Both companies used the funds to plant trees around their project site and improve their operational efficiency.While Yeti says it would have preferred to purchase UN certified credits locally, the ones available in Nepal have hefty price tags and are limited.“Buying carbon credit at $15 per metric ton of carbon from REDD at $5 per metric ton of carbon from the Alternative Energy Promotion Centre (AEPC) was not viable for us,” explained Yeti Airlines CEO Umesh Rai.One problem with carbon credits is that there is no guarantee funds will be used for the activities they are designed for. The credits may go to credible companies, but planting trees and commitments to energy efficiency need to be monitored.Read Also:<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/here-now/the-third-pole-is-warming-faster-than-expected/" target="_blank" rel="noopener">The Third Pole is warming faster than expected</a>, Kunda Dixit<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/here-now/protecting-kathmandus-historic-roofscape/" target="_blank" rel="noopener">Protecting Kathmandu’s historic roofscape</a>, Anne FeenstraYeti Airlines is also moving to reduce plastic use, and has replaced half a million plastic cups with paper ones and donated its tyres to Shanti Sewa Griha, a non-profit group that that recycles and upcycles them. It is also trying out <a href="https://www.nepalitimes.com/business/yetis-electric-future/" data-wplink-edit="true">Mahindra electric vans</a> to replace its petrol ones.Adds Rai: “Each of our vans travels 150km a day and emit 5 tons of greenhouse gases a year. If we convert all our vans into electric, we will not just save money but reduce our carbon footprint as well.”While these efforts are admirable and set a precedent for other airlines in Nepal, environmental activists say offsetting carbon emissions offer only a band-aid solution. However, Yeti’s Rai says: “Once you start the journey to go green, you gain momentum. There is a shift to a greener mindset in the company, but real change will only come with greater public awareness.”  This story is part of <a style="background-color: #ffffff; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/latest/world-joins-to-cover-climate/" target="_blank" rel="noopener">Covering Climate Now</a>, a global collaboration of more than 250 news outlets to strengthen coverage of the climate story.  Read Also:<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=32805&amp;preview=true" target="_blank" rel="noopener">Climate-health emergency,</a> Sonia Awale<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=32856&amp;preview=true" target="_blank" rel="noopener">Climate Summit leads packed UN agenda,</a> Thalif Deen<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=32868&amp;preview=true" target="_blank" rel="noopener">Mosquitoes move up mountains as the earth warms,</a> Sonia Awale

Tourism, aviation and carbon

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a218d9c7e80680e041748jpeg.jpg" alt="" width="1400" height="1052"/><figcaption>Photo: KUNDA DIXIT</figcaption></figure>After degraded forests were leased out to local communities to protect and manage 40 years ago, <a href="http://archive.nepalitimes.com/news.php?id=7116#.XC7zVFUzaUk" target="_blank" rel="noopener">Nepal’s community forestry program</a> has won international praise for restoring the country’s tree cover.Barren hillsides have been replaced by thick forests, wildlife has returned, and farmers have prospered because of ample fuelwood and fodder. The 2015 Forest Resource Assessment showed that Nepal’s canopy cover increased from 29% in the 1990s to 45%, representing more than 1 billion tons of carbon stock.Although depopulation of rural Nepal due to migration played a part in reducing the pressure on forests, much of the credit goes to the 22,000 or more Community Forest User Groups across the country.“Community forestry under the 1993 Forest Act was an exemplary participatory model and a highly democratic exercise that gave villagers a clear mandate to protect, manage and utilise their forests,” says Bharat Gotame of WWF Nepal. “This gave local communities a sense of ownership, and they put in a lot of effort to protect and expand Nepal’s forest cover.”Read also: <a href="https://www.nepalitimes.com/?p=19200&amp;preview=true" target="_blank" rel="noopener">Fixing what ain't broke</a>, Editorial<a href="https://www.nepalitimes.com/?p=19252&amp;preview=true" target="_blank" rel="noopener">Nepal's silent emergency: springs going dry</a>, Ajay DixitNow, as the trees mature into commercially valuable timber, the emphasis has shifted from forest protection to its management. The question is: who should manage the forests in Nepal’s federal structure?<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a21909c7e80680e041749jpeg.jpg" alt="" width="2544" height="1222"><figcaption> </figcaption></figure>Some forestry experts believe not enough was done to train local communities in the scientific management of trees to prevent degradation and fires, and picking suitable tree species.“We focused solely on preservation, and as a result forest coverage increased without contributing to the economy,” says Krishna Acharya, joint secretary at the Ministry of Forests and Environment. “Our next step should be to see how natural resources can yield economic benefit for local communities.”However, environmentalists argue that nature should be protected for its own sake, and to look for narrow economic returns from conservation is myopic. If the contribution of new growth forests to eco-system services for water supply, tourism and as a carbon sink are calculated, they say the economic contribution of Nepal’s community forestry is vast.Read also: <a href="https://www.nepalitimes.com/banner/municipalities-want-to-manage-annapurna/" target="_blank" rel="noopener">Municipalities want to manage Annapurna</a>, Yuvaraj Shrestha<a href="https://www.nepalitimes.com/?p=19229&amp;preview=true" target="_blank" rel="noopener">Hiking up the benefits of tourism</a>, Sangmin KimThey also add that forest management works well in countries with greater transparency. Given the level of corruption in Nepal, especially after many <a href="https://archive.nepalitimes.com/article/from-nepali-press/Elected-contractors,4182" target="_blank" rel="noopener">contractors got themselves elected</a> mayors, rural municipalities have been exploiting natural resources. Allowing community forests to be ‘managed’ would destroy the forests.The 2015 Constitution placed national forests under the authority of the provincial governments, but it also listed national forests as the common right of federal, provincial and local governments. Then the Local Government Operation Act of 2017 provided rural municipalities the right to protect, use, manage, monitor, regulate as well as formulate and implement laws. These contradictory provisions have created confusion about who now owns forests.To make matters worse, the recently drafted Forest Bill curtails the rights of Community Forest User Groups, the very elected local committees that were responsible for protecting the forests under the 1993 Forest Act.For example, the new bill purposes that local user groups cannot sell extra forest products without permission of the government, unlike in the past when they could independently fix prices, sell timber and other products from their protected forests.“Greater accountability at the local level helped us save the forests, but the new bill attempts to undermine that very foundation of our success,” says Bharati Pathak, chair of the Federation of Community Forestry Users Nepal (FECOFUN). She warns that the bill will result in widespread deforestation, with negative impact on the environment, biodiversity, tourism and local livelihoods.Community forests have been threatened ever since local and provincial elections last year. Many contractors, loggers and quarry owners got themselves elected to local councils, and cases of poaching, <a href="http://archive.nepalitimes.com/news.php?id=17226#.XC7zVlUzaUk" target="_blank" rel="noopener">illegal logging</a> and encroachment into community forests have shot up.Back in Singha Darbar, joint secretary Krishna Acharya says forests will actually thrive under federalism because elected governments will be closer to community forests, and thus have better oversight over its protection.In theory, that makes sense. But activists argue that stricter laws have never translated into conservation. Federalism has decentralised corruption, and the forests do not stand a chance.The reason Nepal’s community forestry program worked was because of local user committees. Transferring ownership and management to municipal or provincial councils, or interference from Kathmandu, will invite corruption and destruction of forests.Activists say such confusion over jurisdiction could wreck Nepal’s achievements in community-based forest conservation, and add that some things ought to be left alone.“Whoever ends up managing the forests, the functional modality of the community forestry program that transcended political and administrative boundaries should not be dismantled,” states the former Director General of the Department of Forests, Bijaya Paudel. “If we do, all our efforts and investment will come to naught, and the very thing we take pride in, our green forests, will be lost once again.”Paudel recommends that the government include local communities for consultation in decision making, because without user groups there will be no preservation, let alone sustainable management for economic benefits.The advice of the WWF’s Bharat Gotame is similar: “Give credit to local people for the protection of forests for the last four decades, and build on that with better management and ensure communities are accountable.”Read also: <a href="http://archive.nepalitimes.com/article/editorial/climate-climax,3651" target="_blank" rel="noopener">Climate climax</a>, Editorial<a href="https://www.nepalitimes.com/opinion/climate-for-change/the-great-himalayan-thaw/" target="_blank" rel="noopener">The great Himalayan thaw</a>, Ajay Dixit

carbon-credits

Turning green policies into greenbacks

Tourism, aviation and carbon

Who now owns Nepal's forests?