Green hydrogen in Nepal’s energy transition

Nepal, a country with diverse climates and geography, faces significant climate change impacts, from melting glaciers in the Himalayas to erratic lowland monsoon patterns. To mitigate these impacts, Nepal is investing in renewable energy sources like hydroelectric power, promoting reforestation, and encouraging sustainable agricultural practices to reduce carbon emissions. Nepal’s contribution is insignificant globally, but its commitment to reducing carbon emissions is promising. After the government’s commitment to reducing carbon emissions and exploring renewable energy sources, efforts toward hydropower development, harnessing of solar energy and other green energy sources have gained momentum. For a couple of years, as green hydrogen has been considered the most efficient and sustainable green energy, its potential in Nepal has become of interest to researchers, developers and the government. It represents a promising solution in the nation's transition toward a low-carbon economy. This innovative energy source, derived from renewable electricity, can significantly achieve climate goals while promoting economic growth and energy security. 

Green hydrogen is generated through electrolysis, wherein water is split into hydrogen and oxygen using electricity derived from renewable sources. This contrasts with gray hydrogen, produced using fossil fuels and resulting in significant carbon emissions. Since green hydrogen is created using renewable energy like hydroelectricity, it does not contribute to greenhouse gas emissions, making it a green alternative and becoming the choice of most countries that plan to achieve net zero emissions in the near future.

Nepal’s abundant hydroelectric resources position it as an ideal candidate for green hydrogen production. With over 40,000 megawatts (MW) of hydroelectric potential, the country can leverage this clean energy to generate hydrogen. Till now, Nepal has produced 2,800 MW of electricity from hydropower and is expected to produce 15,000 MW by 2030 and 30,000 MW by 2035. This opens the door to various applications, including the production of green hydrogen, which contributes to reducing Nepal’s carbon footprint while supporting its energy needs and economy.

Green hydrogen can serve as energy storage, capturing surplus electricity during high hydropower generation. This stored energy can then be used during periods of low water flow or peak demand, enhancing grid stability and reliability. As most of Nepal’s hydropower plants are runoff river types, significant energy is expected to be surplus during the monsoon season, where about 80 percent of precipitation occurs. Once more than 30,000 MW of hydroelectricity is generated, it is expected to have significant surplus energy during the monsoon season, which can be transformed into green hydrogen either used during the dry season or in any other form. It can power vehicles, emitting only water vapor as a byproduct. This can significantly reduce emissions in the transport sector and is one of the most significant contributors to air pollution and carbon emissions. Adopting green hydrogen technology can set a precedent for sustainable transport for a country like Nepal, where transportation infrastructure is rapidly developing. The industrial sector can also benefit from green hydrogen. It can replace natural gas and other fossil fuels in various industrial processes, reducing carbon emissions and supporting the country’s climate goal of reaching net zero carbon emissions by 2050. Nepal can benefit from reducing carbon emissions by participating in international carbon trading and offset programs, which allow developed countries to invest in carbon-reduction projects and provide funding and technology. This will promote economic growth, job creation and sustainable practices while enhancing environmental and public health outcomes.

Moreover, green hydrogen presents export opportunities for Nepal. If the country can produce excess green hydrogen, it can become a valuable resource for neighboring countries seeking clean energy solutions. The sale and export of green hydrogen can be easily expanded to several countries, in addition to India and Bangladesh, which are considered hydropower markets only. This could provide an economic boost and position Nepal as a regional leader in green hydrogen production and technology.

Despite the numerous benefits of green hydrogen, several challenges must be addressed for its widespread adoption in Nepal. Infrastructure development is one of the primary hurdles. Establishing hydrogen production, storage and distribution facilities requires significant investment and technical expertise. The cost of building this infrastructure can be high. The cost of green hydrogen will be high due to being more expensive to produce than gray hydrogen, mainly due to the high costs associated with renewable energy and electrolysis technology. However, these costs are expected to decrease as technology advances and economies of scale are achieved.

Government policies and regulations play a crucial role in promoting green hydrogen. Clear guidelines and incentives are needed to encourage private sector investment and drive the development of green hydrogen technologies. Without a supportive regulatory framework, it will be challenging to attract the investment required to build necessary infrastructure. Nepal can form international partnerships to access technology and funding for green hydrogen projects. Collaborating with countries and organizations experienced in hydrogen technology can provide valuable insights and resources to accelerate Nepal’s green hydrogen development. By focusing on advancing green hydrogen technology, Nepal can reduce production costs and improve efficiency. This can lead to broader adoption of green hydrogen across various sectors, fostering economic growth and job creation. An Indian investor is reported to have expressed interest in investing in Nepal’s green hydrogen production and promised to commit Rs 2trn to the project if the Nepal government establishes a supportive policy framework for green hydrogen. Also, other investors, especially from developed countries, might be interested in investing in green hydrogen for their responsibility of combating carbon emissions.

So, green hydrogen can potentially be a game-changer for Nepal as it seeks to combat climate change and transition to a low-carbon economy. By leveraging its abundant hydroelectric resources, Nepal can produce green hydrogen to meet its energy needs and reduce its carbon footprint. The applications of green hydrogen in energy storage, transportation and industrial processes are vast, offering a cleaner alternative to fossil fuels. Despite infrastructure development and cost challenges, Nepal can overcome these hurdles through strategic planning, international partnerships and a supportive regulatory framework. By focusing on innovation and embracing green hydrogen technology, Nepal can position itself as a leader in the region, making way for a rapid economic growth and contributing to global efforts to combat climate change.

The power of ‘middle powers’

In the Lowy Institute's Asia Power Index 2023, 15 countries, including Japan, Russia, Australia and South Korea, are classified as middle powers, while Nepal along with nine other countries are categorized as 'minor powers.' The foreign policy discourse in Kathmandu is dominated by the three major powers—India, China, and the United States. There is a lack of deliberation about Nepal's engagement with these middle powers which have been our long-standing development partners. 

Unlike the major powers, middle powers seemingly have fewer strategic interests in Nepal, making it easier to attract more investment and development assistance from them. Of late, these countries have shown a greater interest in engaging with Nepal across multiple areas. It is, therefore, time to explore how Nepal can maximize benefits from them. 

Many middle powers are increasing their partnership with Nepal, and they do not want to be seen as aligning with major powers, at least publicly. However, there is a convergence between the US and other middle powers on issues like democracy, human rights, and, more importantly, containing China's influence in the Indo-Pacific region. These middle powers often work through loose networks on several issues, and the US is working to empower their capacity while seeking their support to counter China.

In Nepal, these middle powers are trying to distance themselves from geopolitical ambitions but they are also concerned about Nepal’s position on key regional and international issues. 

For instance, during Japanese Foreign Minister Kamikawa Yoko's recent visit to South Asia, including Nepal and Sri Lanka, discussions focused on global and regional issues like the situation in the Middle East, the Russia-Ukraine war, and other South Asian regional matters.

Over the past few years, Japan has been investing in infrastructure development in South Asia in close collaboration with India. Its main priority is enhancing connectivity between South Asia and Southeast Asia, and for this purpose, Japan is investing in infrastructure in Northeast India. In this context, Japan considers Nepal an important position and is already investing in Nepal's infrastructure development. Japan is also concerned about the growing Chinese loans in South Asian countries, which could be a reason for the Japanese foreign minister’s visit to Nepal and Sri Lanka. Kamikawa conveyed the message that Japan is ready to step up its cooperation with Nepal, and to work closely with South Asian countries on regional and global issues.

The United Kingdom is also one of Nepal's oldest friends. The two countries established diplomatic ties in 1816. The Treaty of Friendship that the two countries signed in 1923 further formalized bilateral relations and helped Nepal claim UN membership, and reiterate its independence, sovereignty and territorial integrity. The UK has consistently been one of Nepal's top development partners. Still, there is a perception in Nepal that the UK has maintained a low profile or has been quieter about its diplomatic engagement over the past decade.

Recently, the UK has shown a greater interest in Nepal, with increased grants and a keenness to bring foreign direct investment (FDI) to the country. In February 2023, UK Minister of State (Development and Africa) Andrew Mitchell launched a new £400m UK-Nepal development portfolio, aimed at mobilizing vital private sector funding for development and creating 13,500 jobs in Nepal.

Let’s talk about South Korea now. Seoul is gradually enhancing its cooperation and engagement with Nepal. Last year, South Korea sent President Yoon Suk-Yeol's special envoy Jang Sung Min to Nepal for discussions on bilateral and other issues. The two countries are currently discussing a wide range of bilateral issues, and high-level visits are on the agenda. Prime Minister Pushpa Kamal Dahal is preparing for an official visit to South Korea soon.

The trade volume between South Korea and Nepal has significantly increased from $100,000 in 1970 to $37m in 2023. Between 1987 and 2022, South Korea provided Nepal with $282.4m in Official Development Assistance (ODA) in areas like health, water, sanitation, education, rural development and energy. The private sector of South Korea has also shown interest in investing in various sectors in Nepal. This week, South Korea’s Ambassador to Nepal Park Tae-Young said they are willing to step up cooperation with Nepal. 

All these three countries—Japan, the UK and South Korea—have strong ties with the US and are often taken as junior partners of the superpower. The Indo-Pacific outlook unveiled by these countries are very similar in content to the US’ Indo-Pacific Strategy. All of these countries have stepped up strategic partnerships with India, which has a huge influence in Nepal. Along with these, other countries like Australia and France are also increasing their engagement with Nepal. Europe’s major power Germany is also keen to invest more in Nepal. 

While Nepal is preoccupied with dealing with the three major powers, the time has come to comprehensively engage with these middle powers to bridge the investment gap that the country is currently facing. These countries have clearly shown their interest in investing in Nepal if a conducive investment climate is created. It is easier to deal with these powers because they are publicly stating that their support for Nepal is guided by deep people-to-people relations and geopolitical factors do not prominently figure into their engagement. In a recent interaction, a diplomat said: Our support in Nepal is guided by a long history of people-to-people connections and we do not have much geopolitical interests in Nepal, although there is a lot of geopolitics in Nepal.

One immediate opportunity is the high chance of attracting foreign direct investment (FDI). After the 2024 Nepal Investment Summit, these middle powers are encouraged by the government's amendments to laws as demanded by international investors and the all-party consensus on these issues. If some of their remaining issues are resolved, Nepal can attract more investment. For instance, during the investment summit, the UK conveyed that many UK investors are ready to invest in Nepal if issues related to tax and the safe repatriation of profits are eased.

Therefore, the government, think tanks and civil society should pay greater attention to stepping up engagement with these middle powers, along with the major powers vying for influence in Kathmandu. It is time for Nepal to seize this opportunity and tap into the potential of these middle powers for its development.

How to make Upper House strong, inclusive?

During the drafting of the Constitution of Nepal, there was a comprehensive debate about what should be the substance and structure of the National Assembly of the Federal Parliament. That time, there were two schools of thought. One opinion was that the National Assembly should be the subsidiary or subordinate to the House of Representative (Lower House). But the second opinion was fundamentally different. The second opinion was that the National Assembly must be powerful, inclusive and of good quality. But numerically, the first opinion had the majority. So finally, the National Assembly was created in line with the first opinion. Hence our National Assembly was constitutionally made weak and subordinate to the Lower House. Same people have/had the control and influence in Lower House right after Constitution promulgation in two big parties in Nepal. So, they made the National Assembly deliberately weak legally too and made it subordinate to the Lower House while drafting the House Regulations.

When we look upon the content and structure of the Upper House in India, UK and other bi-cameral Houses, we see that the making and breaking of the government is the sole right and responsibility of the Lower House. Presentation of fiscal budget (Finance Bill) is also always done in the Lower House. These two rights, everywhere, are exclusively always reserved for the Lower House. But except these two, all other rights and responsibilities are almost equally divided between the two Houses. This world standard, though, does not comply or match in the context of Nepal. Our Federal Parliament was exclusively made with the main focus on the Lower House and it was deliberate and intentional.

In India, legislative, executive, judicial, electoral, amendment rights and even some special powers were constitutionally given to the Upper House. India is a model of how the Upper House is functioning in a parliamentary democratic country.  In the UK, the Upper House scrutinizes legislation, holds the government to account, and considers and reports upon public policy. Peers may also seek to introduce legislation or propose amendments to Bills.

Where are the faults and weaknesses?

 In Constitution:  Article 111 of the present Constitution creates discrimination and inequality between the two Houses with regard to passing the Bills.

Basically, sub-article (2), (4), (5) and (10) are discriminatory. Sub-article (2) only gives 15 days’ mandatory time to the National Assembly for discussion and sending it back to the Lower House with regard to the Finance Bill.

Sub-article (4) gives the discretionary right to the Lower House and says if the National Assembly does not send it back to the Lower House within 15 days, the Lower House can send this Bill to the Head of State for authentication.

Sub-article (5) gives mandatory two months to the National Assembly to send it back to the Lower House in case of all other normal Bills passed by the Lower House. But it is not vice-versa. Here, the Lower House has the monopoly. The Lower House does not have a time limit. It is an extremely discriminatory provision for the National Assembly.

Sub-article (10) also gives the upper hand to the Lower House. It says if any Bill is under consideration in any House and the Lower House has dissolved or ended its tenure, the Bill will be passive. These are the discriminatory provisions in the Constitution, which need immediate amendment.

Faults and discrimination in the regulation: Clause (6) of the Joint Regulation of the Federal Parliament says that the Speaker will preside over the meetings of the joint House. The Chairman of the National Assembly can only preside over the session if the Speaker is absent. This is not respectful and just to the National Assembly’s Chair. It has to be turn by turn.

Clause (25) of the Joint Regulation is also extremely discriminatory and unjust. It is about the Parliamentary Hearing Committee. There is the provision of a 15-member Committee. There are 12 members from the Lower House and only 3 members from the National Assembly. This is not fair, not representative, not inclusive and undermines the respect, dignity and image of the National Assembly. There has to be at least 5 members from the National Assembly.

 There are two Joint Committees in the Federal Parliament. One is the Parliamentary Hearing Committee and the other is the State’s Directive Principles, Policies and Liability Implementation, Supervision and Evaluation Committee. In eight years of Constitution implementation, members of the National Assembly never got a chance to become the Chair of either committee. This is also a discrimination and domination of the Lower House.

Sub-clause 33(4) of the same regulation is also not fair. It states about the number-ratio of other Joint Committees. The ratio is 1:5—one from the National Assembly but five from the Lower House. The point is that the ratio is unjust.

Sub-clause (44) of the same regulation is also unfair and dominating. It says that, whatever mentioned in the Joint Regulation, all activities take place accordingly. But whatever is not mentioned, will be done as per the provision of Lower House’s Regulation. This has established the supremacy of the Lower House over the National Assembly.

First and foremost, the mindset of political leadership, government and media should be changed in regard to the National Assembly. They do not pay much attention and importance to the National Assembly. The reason is that it has no role in making or breaking a government. They have only a little knowledge about the role and responsibilities of the Upper Houses of other countries. Parties are also sending cadres to the National Assembly, who are less qualified and less competent.

In conclusion, Nepal's National Assembly faces challenges rooted in its constitutional framework and parliamentary regulations, leading to a subordinate status compared to the Lower House. Discriminatory provisions in the Constitution and Joint Regulation undermine the role and representation of the National Assembly. To address these issues, there's a need for constitutional amendments to ensure equality between the two houses and a shift in mindset among political leaders, government, and media to recognize and respect the importance of the National Assembly in the country's governance. This would promote a more balanced and effective bicameral system in Nepal. Hence to make our National Assembly more powerful, inclusive, democratic, effective and of better quality and of world standards, we have to amend the Constitution, change the House Regulations as well as the mindset. 

Nepal from the perspective of Beijing

 

A research recently published by Christopher K Colley for the Stimson Center, an American think tank, nudged me to contemplate doing something I have never done before: Write a piece on foreign policy centered on Nepal from the perspective of Beijing. 

The paper, The Emerging Great Game Chinese, Indian and American Engagement in South Asia, is interesting, though not much in terms of its quite narrow and limited recommendations on how the USA can better counter the existing regional dynamics over the region. 

Instead, it is of great value for its fairly balanced analysis of what China, India and the USA have been doing (or not doing) in order to assert their positions in Kathmandu and Dhaka. 

Colley, an assistant professor of International Security Studies at the United States Air War College, highlights how ably China has been capable of outpowering its two big rivals in Nepal.

At the same time, the author, quite correctly, underscores that it has not been entirely all smooth sailing for Beijing. 

China has been overtly perceived to favor the leftist parties, which recently formed a new coalition, a tactic that can often backfire.

Indeed, the political instability in Kathmandu and the overall volatility of national politics is at least partially induced by the same game that Beijing learned so ably from other foreign powers jockeying for influence in Nepal. 

And it is a sort of chain reaction: As China steps up its game, more push backs and initiatives are put in place by its rivals to offset its increasingly more vocal foreign policy in Nepal. 

But connectivity and infrastructure are the elements that have been so central to Beijing’s approach to both Nepal and Bangladesh (and by extension to the entire world) and that have been distinguishing it from other big players. 

We need to give credit to Beijing that the Belt and Road Initiative is certainly very ambitious, perhaps even too much. 

Symbolically speaking, the BRI has been extremely important because it offered a clear vision of a future based on connectivity and with it comes a very clear and eye-catching narrative. 

No matter the confusion attached to the BRI, what really counts is that the Chinese were able to portray it as a game-changer initiative that is still unmatched by other geopolitical rivals. 

At the same time, though, concrete results and benefits on this front, as Colley explains, are mostly still to be seen on the ground in both nations. 

In this regard, it is still remarkable that Kathmandu and Beijing have not signed the implementation framework of the BRI as yet.  

India has been trying with its Look East Policy but, beyond the fact that it has never been focused on Nepal, the initiative is more like a strategy rather than a concrete, tangible initiative like the BRI.

The EU Global Gateway Initiative not only was designed very lately and it is still in its infancy, it’s still very far from being relevant and certainly did not make a mark in Nepal 

The USA does not have any infrastructure programs in the region. Unless we consider the highly complex and possibly impractical India-Middle East-Europe-Economic Corridor (IMEC) signed last year during the India G20, it is a joint venture with the European Union and seven other countries. 

Considering the unrivaled level of connectivity projects China aims to build in Nepal, Beijing should do a much better job in terms of outreach. 

Students, civil society and think tanks in Nepal should be engaged to better explain not only the BRI but also the more recently launched Global Civilization Initiative that still remains a mystery for many observers. 

This public outreach will probably be met with similar attempts by the USA and India while I am not entirely confident that the EU can be up to playing this game. 

China could also get out of its comfort zone and explain its human rights approach.

It knows, in advance, that the primacy of economic rights, a cornerstone of China’s official policies, can be relatively well received here but with some caveats. 

On the one hand, the Chinese model of top-down governance centered on effectiveness of policies and quick delivery of results can easily find admirers in Nepal, a country plagued by ineffective governance. 

On the other hand, in a nation that fought tooth and tooth for its freedoms in its decades-long quest for democracy, not once but multiple times, the same argument of the primacy of economic rights over political and civil liberties won’t go very far nor persuade the majority. 

Even a much more proactive PR and public engagement with the citizenry of the country won’t be enough. 

Such activities should also be matched by what really matters: A change in substance in China’s overall approach to Nepal and by extension, in the way it traditionally deals with developing nations around the world. 

It is now crystal clear that the Nepali side has been quite skillful at pushing back in terms of terms and conditions that Beijing has been offering for the BRI projects.

A country like Nepal, often portrayed as a weak nation, has been doing a masterful job at asserting its own strategic interest in its relationships with China.

So, if China really wants a breakthrough with Kathmandu, it has to show a much higher level of flexibility on how the BRI can be rolled out. 

It needs to accept the key terms, quite reasonable if you think about it, that Nepal is demanding: Grants and very nominal interest rates on the loans that it needs to take. 

Beijing should be much more effective and persuasive at explaining how it can really be transformative for Nepal to have a direct railways connection with its southern borders.  

Considering the staggering sums involved and the sheer complexity of the undertaking, it is obvious that Kathmandu does not want to incur huge debts.

Could Nepal offer China a new template on how to deal with the world, a much less rigid one and more attuned to the needs of the recipient nations? 

The Dragon Boat race on the occasion of the Chinese New Year was a big boost for the image of China in the country.

Yet it is not nearly enough to dispel some of the concerns that many harbor toward Beijing. 

It would not be surprising if an increasing number of people in Nepal start showing some annoyance toward China using the same heavy-handed approach that New Delhi has been, for so long, accused of. 

For sure, Nepal does not need neither big brothers nor big sisters. 

It needs reliable partners that, while overtly and covertly pursuing their strategic interests, also allow Nepal to play the same game by maximizing its own national priorities.

This means to be okay with the fact that Kathmandu might also and, very respectfully, say “no” to them as they do not align with its core interests . 

Accepting this new reality means that Nepal is growing and moving steadfastly toward becoming a developed nation, a country that is not afraid of exerting its own sovereign interests. 

It will also imply that its core partners have been effective at fulfilling what should be their primary mission in Nepal: Helping the nation to stand more confidently and more ambitiously on its own feet. 

The author writes about politics, human rights and development in Nepal and the Asia-Pacific