Nepal needs additional climate finance for clean air, but financing the vision alone will not solve the problem. Policies particularly for climate vulnerable sectors, industries, and financial institutions also need to move towards the common goal
Clean air will not be delivered by climate finance alone in Nepal. Rather, the question is not only whether it can attract investment, but also whether this financial support can match with the required policy coherence and sectoral reforms required within the country. In a sector already torn by tectonic political and economic shifts, struggling to attract stable funding, it seems counterintuitive to argue that a secure budget is only half the battle won.
It becomes especially relevant as Nepal seeks to mobilise an estimated $73 billion to meet its mitigation targets set for 2035, as envisioned in its Third Nationally Determined Contribution (NDC). This target intends to help reduce Nepal's net greenhouse gas emissions wihtin the decade, by 26%.
While clean air is not framed as a standalone target in its NDC, many of Nepal's mitigation priorities, including clean transport, clean cooking, and industry transitions, can also play a critical role in reducing air pollution. These are nevertheless recognised for the key co-benefits that the country will derive as a part of its mitigation pathway.
And therein lies the challenge. Nepal's clean air issue comprises multiple sectors including transport, industry, agriculture, energy, waste, and public health. While the growth trajectories for these sectors are separate, their compounded impacts affect the air that millions of people across Nepal breathe.
This presents a unique opportunity for the country to look inwards and develop cohesion among its sectors, different actors, and multiple mandates to address pollutants including short-lived climate pollutants, through its National Air Quality Management Action Plan (NAQMAP). Its success will decide if it can move beyond a plan to a framework.
It has the potential to create a national framework of action by mapping data, creating evidence, building evidence-based policies, securing finances, building institutional strength for implementation along with a continuous oversight through a robust and layered monitoring and evaluation framework, and, more importantly, bringing together stakeholders. The Decision Support System that are user-friendly at the front end and use robust scientific data and knowledge on the back end will facilitate the evidence-based cost-effective policies under the NAQMAP framework.
Each of these sectors also requires regulated growth and well thought out investments that factor in for Nepal's 2035 roadmap. Consultations with industry leaders, for example, has shown that there are shortfalls in the current industrial infrastructure for companies to effectively adopt cleaner technologies at scale.
It would be unfair to say that industries are unwilling to transition. Rather, the cost of transition, including affordability of technology along with financial instruments, stable regulatory environment, and incentives also need to be addressed.
From such consultations, Nepal's climate financing goals can be further developed to match sectoral realities, reflecting the differentiated financing needs to enable faster transition and adoption. In order for this transition to be made financially viable, Nepal will need to leverage the domestic funding through green budget tagging of all the schemes along with a mix of green credit, blended financing, domestic banking products, along with targeted incentives to distribute the risks that come along with this transition.
Green budget, or climate budget tagging, can significantly bolster efforts to contribute to clean air outcomes. Nepal will not be starting from scratch in this endeavour as its 2012 Climate Change Budget Code Framework and 2017 Climate Change Financing Framework also allow for climate-oriented budgeting to be mainstreamed in national development planning.
The role of the National Planning Commission (NPC) becomes crucial here, with an ability to cut across ministries and mandates for stronger planning alignment where clean air can be embedded into the country's national development agenda. Much like the country's NDC, the NPC can further help in embedding clean air goals into climate finance strategies, transition wok plans, and public investment decisions.
Rallying the support of development partners and other financial institutions would also be crucial. Nepal currently needs a mixture of finance and technical capabilities for the implementation of the NAQMAP. While a number of research and development partners have varied air pollution monitoring and solutioning expertise in this regard, channelising this expertise into national emission inventories, monitoring capabilities, policy enablement, and financing mechanism is a critical next step of this initiative.
The possibilities are endless, that is, NAQMAP has the vital bridging capability that has been missing from the country's adaptation ambition. A key opportunity is to integrate the issue of mitigating short-lived climate pollutant or super pollutants with clean air actions in view of commonality of sources so that the NAQMAP responds to a triple whammy of air pollution, glacial impacts of black carbon, and global warming coupled with water security in downstream countries. Here, climate ambition can match clean air goals, but it requires the discipline to attract, measure and track the appropriate finance and cross-cutting discipline that is required in making clean air a reality for the country.
Clean air will not be made available by finance alone. But it will become a part of our everyday life when finance, data, institutions, and policy work together.
Acharya is Member, National Planning Commission and Tiwari is Air Lead, International Centre for Integrated Mountain Development (ICIMOD)