Nepal cabinet clears long-awaited carbon trading regulation

Nepal’s cabinet on Monday approved a Carbon Trading Regulation under the country’s Environmental Protection Act, paving the way for participation in international carbon markets.

Maheshwar Dhakal, chief at the climate change management division, Ministry of Forests and Environment, took to social media to make the announcement, saying that the cabinet decision brings to a close a long-running formulation process during which “diverse views and opinions” had created delays before the government ultimately reached consensus.

“And finally the government reached to a consensus … to approve this decision,” Dhakal posted on LinkedIn.

The regulations will facilitate both government agencies and private companies to engage in Article 6.2, 6.4, as well as 6.8 of the Paris Agreement, Dhakal added.

The government has encouraged stakeholders to participate actively “and take benefits”, emphasising the need to strengthen capacity building across the public and private sectors.

Dhakal also underscored the importance of coordinated facilitation from a wide range of institutions, including the Ministry of Forests and Environment; the REDD Implementation Centre; the Ministry of Energy, Water Resources, and Irrigation; the Ministry of Finance; and other relevant ministries.

The regulations will allow private sector involvement, simplify approvals, set up a national registry, and ensure high quality monitoring, reporting, and verification.

Earlier in October, Nepal launched a series of tenders with the UNDP for technical assistance to implement a national carbon registry, design a carbon pricing policy, and develop a carbon finance handbook.

Market participants welcomed the government’s decision, with some describing the approval as a long-awaited move that brings clarity and momentum to Nepal’s emerging carbon market.

“Nepal’s approval of the much-awaited Carbon Trading Regulation, is a decisive signal that the country is ready to operationalise high-integrity carbon markets under the Paris Agreement,” said Kavin Kumar Kandasamy, founder and CEO of Singapore-headquartered ProClime, which has active carbon offset projects in the country.

“It creates the clarity at a project and trade level. [We] look forward to working with various stakeholders to bring the benefits of the carbon markets to climate action in Nepal.”

Meanwhile, Ineej Manandhar, carbon finance lead at UN Development Programme Nepal, termed the approval “an important milestone in the country’s climate and development trajectory”.

“It is a policy framework that has been long in the making, shaped by extensive discussions and diverse perspectives, and its endorsement reflects a strong national commitment to advancing market-based climate solutions,” Manandhar told Carbon Pulse.

Around 45% of the land in Nepal is covered in forest. The country has received $9.4 mln from the World Bank’s Forest Carbon Partnership Facility after reducing around 1.88 MtCO2e in its Terai Arc Landscape REDD+ programme, marking the country’s first payment under its Emission Reductions Payment Agreement.

Nepal was also one of the first few countries to submit its Nationally Determined Contribution, where it said it will pursue net zero GHG emissions five years earlier than previously planned, by 2045.

The country intends to tap into a wide range of financial instruments, from green bonds and diaspora remittances, to carbon markets under Article 6 of the Paris Agreement, in order to raise the funds necessary to reach net zero emissions.

The country has a carbon trading deal with Sweden, and talks ongoing with Japan, South Korea, and Singapore.

Read the story on Carbon Pulse here: https://carbon-pulse.com/463558/?site=cpp