Nepal receiving Rs 1.6bn from carbon trade

Nepal is set to receive Rs 1.6bn from carbon trade within a month. 

According to REDD (Reducing Emissions from Deforestation and Forest Degradation) Implementation Center under the Ministry of Forest and Environment, Nepal is receiving the amount for reducing carbon dioxide through forests in 13 Tarai districts between 2018 and 2024. The country is receiving this amount for sequestering 2.4m tons of carbon over six years in the 13 districts from the Bagmati river to the Mahakali river under the Tarai Arc Landscape Program. According to the unit, the ministry will receive the amount within October. Nepal is receiving $5 for every ton of carbon sequestered.

Badri Raj Dhungana, spokesperson for the Forest Ministry, said the initial agreement with the World Bank stipulated that the funds would come through the Forest Development Fund. However, the Finance Ministry insisted that such funds should come through the Consolidated Fund as per the country’s legal provisions and then be transferred to the Forest Development Fund. As per the agreement with the World Bank, 80 percent of the funds received from carbon trading must be spent on local  indigenous communities. “The government has already prepared and approved a plan for this,” said Dhungana.

The government brought National REDD+ Strategy and National Forest Reference Level in 2018 for carbon trading. Subsequently, a benefit-sharing plan for carbon trading was prepared for the 13 Tarai districts under the Emission Reduction Program from 2019 to 2024. 

Chief of the center, Navaraj Pudasaini, said the program has been implemented in 1.7m hectares across 13 districts. On an average, 167 tons of carbon is sequestered per hectare in Nepal’s forest areas. “The goal is to reduce carbon dioxide emissions by about 34.2m tons by 2028 through the Emission Reduction Program in 13 Tarai districts,” he added.

According to some conservative estimates, forests in Nepal reduced carbon emissions by 2.3m tons in 2023.

Another LEAF deal

A market-oriented and results-based public partnership mechanism of 25 major corporations and 26 forest governments, the LEAF Coalition has received funding commitments from four governments.

Ghana, Brazil and Costa Rica have already signed agreements under the LEAF Coalition and determined carbon prices. The Forest Ministry has announced that Nepal is preparing to sign such an agreement during the 29th International Conference on Climate Change to be held in Baku, Azerbaijan, from Nov 11 to 22. Pudasaini said preparations were underway for carbon sale from forests in Bagmati, Gandaki and Lumbini provinces.

According to this agreement, which lasts until 2028, Nepal will sequester 7m tons of carbon in 3.2m hectares of forestland in these three provinces and will receive $100m for this in return. The rate for carbon sequestration is $25 per ton for corporations and $10 per ton for sovereign nations.

Carbon trading expert and former joint-secretary at the Forest Ministry, Purushottam Ghimire, said that the success of carbon trading can only be achieved if the forest ministry moves forward with the private sector. “Carbon trading is not possible without involving the private sector. After allowing the private sector, they should be regulated within the legal framework. Main thing is, they need to be given freedom in the rest of the work. The ministry should not interfere in every aspect,” he added.