Clean Development Mechanism in Nepal

The Clean Development Mechanism (CDM) is one of the three flexibility mechanisms of the Kyoto Protocol (Article 12). It allows an industrialised (Annex I) country to invest in an emission-reducing project in a developing (non-Annex I) country and receive Certified Emission Reductions (CERs), where 1 CER = 1 tonne of CO₂ equivalent. These credits count towards the investor's own Kyoto target.

Objectives

• Help developing countries achieve sustainable development.
• Help developed countries meet their targets at lower cost.

Project cycle (in brief)

Design (PDD) → national approval (Designated National Authority; in Nepal, the Ministry of Forests and Environment) → validation → registration with the UNFCCC CDM Executive Board → monitoring → verification → issuance of CERs.

Potential areas of CDM in Nepal

1. Renewable energy: hydropower, micro-hydro, solar, wind.
2. Biogas (the Biogas Support Programme was among the first CDM projects of Nepal) and improved cooking stoves.
3. Energy efficiency: industries, brick kilns (cleaner kilns), and lighting.
4. Forestry: afforestation and reforestation, community forestry.
5. Waste: landfill gas capture and waste-to-energy.
6. Transport: electric vehicles and mass transport.
7. Fuel switching: replacing fossil fuels with biofuels or electricity.

Note: the CDM carbon market has weakened since 2012, and under the Paris Agreement it is replaced by the Article 6.4 mechanism (Paris Agreement Crediting Mechanism). Nepal's new carbon projects are therefore moving towards the voluntary market and Article 6.