Background: The transport sector accounts for 36% of annual total greenhouse gas (GHG) emissions from the energy sector in Nepal. Widespread adoption of electric vehicles (EVs) has been recognised by the Government of Nepal (GON) as an important priority for the transport sector and Nepal’s second enhanced Nationally Determined Contributions (NDCs) targets 20% of public transport vehicles being electric by 2025. The GON estimates that by 2022, the country will achieve a net annual surplus of hydropower.
There has been little progress in the public transport sector due to the following barriers hindering the adoption of EVs: 1) new EV technology is perceived as unknown and risky by public transport operators and banks; 2) higher upfront cost of EVs and the need for charging stations; 3) high cost of capital and challenged creditworthiness of public transport operators; 4) low capacity of public transport operators; and 5) mixed policy, regulation and permitting.
Approach to Transformational Change: The “Nepal – Electric Transportation” project aims to systematically remove the abovementioned barriers holding back the electrification of the transport sector and promote electric transport technologies. The project will deliver a blend of financial mechanisms and technical assistance with a focus on the minibus segment in the Kathmandu Valley and beyond. The project will support public transport operators to finance and deploy 3,020 electric minibuses (EMB) and charging stations nationally, as well as promote and strengthen widespread adoption of EVs through reforms to policy, regulation and permitting and an improvement of capacity. A dedicated Electric Mobility Unit will also be established and operationalised within the national government. Overall, the project supports green recovery by creating green jobs, fostering clean transport entrepreneurship and supporting broader commuting, which are critical for economic recovery.
As a result of the project, a projected 85% of all new minibuses purchased in Nepal will be electric by 2030. The project will directly leverage EUR 299 million for e-mobility.
Mitigation potential: The project will directly mitigate 1.78 million tons CO2e over the lifetime of the vehicles.
