Positive Development for Environment and Economy

At a time the world leaders, environmental and climate change scientists assemble in the Azerbaijani capital of Baku for a significant global event focused on addressing climate change, Nepal has a small piece of good news to share: The country's determined effort to further reduce carbon footprint by transitioning toward electric vehicles is showing visible signs of progress. According to the latest data released by the Department of Customs (DOC), petrol consumption in the Kathmandu Valley dropped by 8.25 percent in the first quarter of the current Fiscal Year (FY) 2024/25 despite overall rise in the country’s imports of fossil fuel. The federal capital consumed 51,590 kiloliters of petrol in the review period, down from 56,231 kiloliters during the corresponding period of the previous FY. Major outlets selling petrol, diesel and kerosene in Kathmandu, Lalitpur and Bhaktapur districts, have reported a decline in the sale of petrol. The Ripu Mardini Petrol Station operated by the Nepal Army, for example, saw a sharp drop in the sales of petrol by over 26 percent – from 1.9 million liters last year to 1.4 million liters this year. Elated experts attribute this to an increasing trend among new vehicle buyers opting for electric vehicles in recent years. This is a positive development, and the relevant government authorities must take proactive measures to further increase EV adoption, given the advantages they offer over non-EVs.

The uptake of EVs in Nepal seems to be increasing gradually. During the fiscal year 2020/21, Nepal imported a total of 249 EVs. The numbers increased manifold to 1,807 during 2021/22 with the government unveiling proactive policy measures to promote EVs and discourage ICE – internal combustible engine – vehicles. Nepal imported over 10,000 EVs last FY, of which more than 60 percent were sold in the capital valley. It is likely that the number of EVs will continue to grow this year, and in the years to come. The surge in the import of EVs is expected to have a significant positive impact on the environment and the economy. The use of fossil fuels for transportation is a major contributor to air pollution and climate change. By reducing the import of fossil fuels through the adoption of EVs, Nepal can not only reduce its carbon footprint but also improve its balance of payments and reduce the trade deficit with India. The economic benefits of EVs extend beyond reducing the import bills for fossil fuels. EVs have proved to be cheaper to operate and maintain compared to their fossil fuel counterparts. They have lower fuel and maintenance costs, which can significantly reduce the overall cost of transportation. This makes EVs a more cost-effective solution, especially for low-income households and small businesses. Moreover, the increased demand for EVs will create new opportunities for local businesses and entrepreneurs, leading to job creation and economic growth.

Nepal's installed electricity generation capacity is over 3,100 megawatts, and the net production stands somewhere around 2200 MW, which already is much higher than the average daily demand estimated to be somewhere between 1,600 and 1,800 MW. Nepal has started exporting the surplus energy to India and preparations are underway to export at least 40 MW to Bangladesh. In the next couple of years, the country will be generating electricity way above its national demand. When the supply far exceeds the demand, the production – in this case, the clean energy – tends to go to waste. It is therefore necessary that the government comes up with proper business strategy to better manage the surplus domestic consumption; or else we'll see it practically wasted. We may be forced to sell the clean energy at throwaway prices, which is not a good idea. Nepal has the potential to become a hub for EV manufacturing and assembly. The country has a pool of skilled and semi-skilled workers, which can be trained for EV production. Moreover, Nepal has access to abundant renewable energy resources, such as hydroelectricity, which can be used for EV charging. This presents an opportunity for Nepal to not only reduce its dependence on fossil fuels but also become a supplier of EVs and EV components to other countries in the region.