Context
The transport sector accounts for 36% of annual total greenhouse gas (GHG) emissions from Nepal’s energy sector. Widespread adoption of electric vehicles (EVs) has been recognised by the Government of Nepal as an important priority and Nepal’s updated Nationally Determined Contributions (NDC 3.0) sets targets to electrify the transport sector. Its NDC 3.0 aims for a 95 % share of EV sales among private two- and four-wheelers and 90% among commercial public transport vehicles by 2035. Nepal has also a growing surplus of electricity generated from hydropower.
However, 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, and
(4) unstable policy, regulation and permitting.
Goals and approach to transformational change
The “Sustainable Electric Transport for Nepal” (“Nepal – Eletric Transport”, SET4NPL) project is working towards systematically removing the above-mentioned barriers holding back the electrification of the public transport sector. Overall, the project wants to create green jobs, foster clean transport entrepreneurship, and support accessible and non-discriminatory commuting options, which are critical for economic recovery after the COVID pandemic.
As a result of the project, an estimated 85% of all new micro- and minibuses purchased in Nepal will be electric by 2030. The project will directly leverage EUR 299 million for e-mobility.
Components and support mechanisms
The project will deliver a blend of business models, financial mechanisms, and technical assistance with a focus on the micro- and minibus segment in Nepal. Nationwide, public transport operators will be supported to deploy 3,500 electric micro- and minibuses (EMBs) and public charging infrastructure will be expanded and digitalised. To make public transport more accessible and convenient, a digital ticketing system and an app for route planning for passengers will be introduced. SET4NPL will promote and strengthen widespread adoption of EVs with a focus on public transport through reforms in policy, regulation, and capacity development. To support this endeavour, a dedicated Electric Mobility Unit will be established at the national government level.
Long-term impact
The project is expected to deliver emission reductions of approximately 1 Mt CO₂e over the project lifetime and 1.65 Mt CO₂e over the operational lifetime of the vehicles. In addition to these environmental impacts, it has the potential to embed climate mitigation objectives within public transport financing frameworks at national and subnational level, thereby moving beyond isolated pilots towards a more institutionalised approach to EMB electrification. Through its financial cooperation, the project is intended to strengthen the market for EMBs that supports viable conditions for private investment in this segment beyond the project lifetime.
Image: © GIZ
