Climate Change and Carbon Trade

Weather and Climate

Weather: The short-term atmospheric condition, influenced by factors like sunlight, rain, wind, temperature, and relative humidity.

Climate: The average weather condition over a long period, typically around 30 years, for a specific location.

Climate Change: The alteration in atmospheric conditions (air, water, temperature, precipitation) in a specific region of Earth. According to the United Nations Framework Convention on Climate Change (UNFCCC), climate change refers to changes in the atmosphere’s composition due to direct or indirect human activities.

Evidence of Global Climate Change

Temperature Increase:
- Global average temperature has risen by over 1.1°C since 1850 (NASA’s Climate Reports 2024).
- Current greenhouse gas (GHG) emission trends project a temperature increase of over 2.5°C by 2100, exceeding the Paris Agreement’s 1.5°C target (UNEP Emissions Gap Report 2023).
- Asia experiences faster temperature rise than the global average, posing risks to ecosystems, economies, and human life (WMO-2025).
Glacier Melting:
- Glaciers, ice sheets, and Arctic sea ice are rapidly declining.
- Greenland loses an average of 280 gigatons of ice annually (NASA).
Changes in Weather Patterns:
- Increased frequency and intensity of extreme weather events like heatwaves, floods, droughts, and storms globally.
Ocean Acidification and Sea Level Rise:
- Ocean acidity has increased by 30% since the Industrial Revolution.
- Sea levels rose by 20 cm from 1901 to 2018, threatening island nations (IPCC).
Increase in Greenhouse Gases:
- Atmospheric carbon dioxide levels have risen by 50% since the Industrial Revolution, reaching 420 PPM.
- UNFCCC (1994), COP meetings since 1995, Kyoto Protocol (1997), and Paris Agreement (2015) urge nations to reduce emissions and support climate adaptation.
- Developed nations are called to assist developing nations through climate finance and technology.
Ozone Layer Depletion:
- The Montreal Protocol (1987) emphasizes controlling ozone-depleting gases like CFCs.
Ecosystem Imbalance:
- Changes in life cycles of plants and animals, with earlier flowering and bird egg-laying, increased pest prevalence, invasive species, and epidemic risks.

Climate Change in Nepal

Despite contributing only ~0.027% to global GHG emissions, Nepal ranks fourth in climate change impacts (Maplecroft Index).
Average annual temperature increase of 0.056°C in Nepal.
Projections indicate 36% of Himalayan ice could melt by 2100 if global warming is limited to 1.5°C, or 64% under current emission trends (ICIMOD’s Hindu Kush Himalaya Assessment).
Increased frequency of floods, landslides, and droughts.
Extreme heat and droughts in the Terai and temperature rise in the Himalayas, causing biodiversity loss.
Erratic rainfall and drought affecting agriculture, fisheries, hydropower, and tourism.
Increased glacial lake outburst flood risks due to melting glaciers.
Nepal aims for net-zero emissions by 2045 (NDC).
National Climate Change Policy (2076 BS), National Adaptation Programme of Action (NAPA, 2068 BS), and Local Adaptation Plan of Action (LAPA, 2068 BS) are in implementation.
Calls for a dedicated Climate Change Act.

Causes of Climate Change

Climate change is primarily driven by human activities, with some contributions from natural phenomena:

Greenhouse gas emissions, greenhouse effect, and global warming.
Chlorofluorocarbons (CFCs).
Industrial waste and chemical emissions.
Increased use of fossil fuels.
Deforestation.
Environmental pollution.
Natural causes: floods, landslides, soil erosion, earthquakes, volcanic eruptions, extreme rainfall, droughts, global warming, and ozone layer depletion.

Impacts of Climate Change

Melting of ice reserves.
Glacial lake outbursts.
Shrinking glaciers.
Changes in monsoon timing and patterns.
Temperature rise and rising sea levels.
Altered rainfall cycles (extreme rain, droughts, irregular precipitation).
Increased natural disasters.
Epidemics.
Proliferation of invasive species.
Decline in agricultural production.
Economic losses, particularly impacting low-income communities.

Measures to Mitigate Climate Change Impacts

Mitigation

Reducing greenhouse effects and increasing carbon storage.
Lowering greenhouse gas emissions.
Reducing air pollution.
Decreasing fossil fuel use.
Promoting alternative energy development and use.
Developing clean, eco-friendly energy.
Adopting technologies to reduce carbon emissions.
Afforestation and sustainable conservation.
Implementing green development concepts (green economy).
Building climate-resilient societies.
Enhancing public awareness.

Adaptation

Enhancing climate change adaptation capacity.
Minimizing adverse climate change impacts.
Conserving water resources.
Promoting water reuse.
Planting climate-resilient crops.
Adopting mixed cropping systems.
Preventing deforestation and promoting afforestation.
Collecting rainwater.
Controlling river erosion.
Preparing for disaster risk reduction.
Increasing investment in alternative energy.
Implementing pollution reduction programs.
Adopting sustainable development principles.
Formulating and implementing eco-friendly plans.
Conserving biodiversity.
Running environmental protection programs.
Adopting the Polluter Pays Principle (PPP).
Revising and enforcing environmental laws and regulations.
Considering climate change impacts in development activities.
Promoting clean energy.

Fifteenth Five-Year Plan and Climate Change

Climate change is a serious global issue, with Nepal’s maximum temperature rising at 0.056°C annually. Despite contributing only 0.027% to global GHG emissions, Nepal faces significant impacts due to its sensitive geophysical structure and atmospheric temperature rise.

Policy: National Climate Change Policy (2076 BS), NAPA (2068 BS), LAPA (2068 BS).
Vision: Building a climate-resilient society.
Goal: Contribute to a sustainable society by enhancing climate change adaptation capacity and minimizing adverse impacts.
Objectives:
- Reduce adverse climate change impacts in line with the Paris Agreement and enhance adaptation capacity.
- Implement eco-friendly clean energy and green development concepts for climate change mitigation.
- Ensure equitable distribution of benefits from international climate finance and technology.
Strategies:
- Improve policy and institutional frameworks and capacity building.
- Implement national, provincial, and local adaptation plans.
- Adopt green development concepts.
- Promote clean energy.
- Extend benefits to provinces, local levels, and communities.
- Conduct research, studies, and capacity-building in climate change.

Carbon Trade

Carbon trading involves buying and selling the right to emit carbon. Countries, industries, or entities emitting high carbon levels can purchase emission rights from those emitting less or storing carbon. It allows nations using clean energy to reduce carbon emissions to receive financial support from high emitters, who gain the right to emit a corresponding amount.

Greenhouse gases, particularly CO2 (76.6%), are the primary cause of climate change. The Kyoto Protocol (1997, COP3 in Kyoto) mandated industrialized nations to reduce emissions by 5.2% from 1990 levels by 2008–2012. To balance economic needs with emission reductions, carbon trading was introduced, allowing nations exceeding emission limits to buy rights from those below limits.

Carbon credits are calculated based on carbon absorbed by forests or saved through clean energy sources like hydropower, solar, wind, and biogas.
Carbon trading benefits industrialized nations by avoiding production cuts and provides financial compensation to low-emission nations, creating a win-win scenario.
Benefits:
- Reduces CO2 emission rates.
- Provides economic benefits for environmental conservation.
- Mitigates climate change impacts.
Criticisms:
- Legitimizing Emissions: Wealthy nations and companies buy carbon credits instead of reducing emissions, limiting environmental improvement.
- Greenwashing: Entities use carbon credits to appear eco-friendly without actual emission cuts.
- Inequity and Social Injustice: Wealthy nations benefit, while developing mountainous and coastal nations bear disproportionate impacts despite low emissions.
- Carbon Credit Reliability: Some projects lack long-term impact or real emission reductions, raising concerns about credibility.
- Market Instability: Fluctuating carbon prices fail to incentivize emission reductions.
- Ethical Concerns: Treating pollution as a tradable commodity is morally questionable.
- Complexity and Lack of Transparency: The complex system increases risks of misuse.
- Short-Term Solution: Carbon trading is not a long-term solution; comprehensive policy changes are needed.

Carbon Trade in Nepal

Carbon trading is a significant potential revenue source for Nepal, promoting natural resource conservation and awareness of carbon emission reduction.

In 2007, Nepal earned $2.1 million through biogas projects reducing carbon emissions. In 2012, it earned $5.4 million at $7 per ton, with international prices ranging from $2–10 per ton.
The Nepal Biogas Project (NBP) was the first to engage in carbon trading in Nepal.
The REDD+ program under the Ministry of Forests operates initiatives like the Green Forest Program, multi-stakeholder forests, and community forests, calculating carbon stored in forests and preventing emissions from deforestation and degradation.
With 46.08% forest cover (6.6 million hectares, storing 176.95 metric tons of carbon per hectare), Nepal can leverage carbon trading for economic transformation and prosperity.

Provisions in Environment Protection Regulations, 2077 BS (Rule 28):

The Government of Nepal can sell reduced carbon emissions or increased carbon storage from sustainable forest management in national or international markets.
Emissions reduced through social or economic activities by government, institutions, or private sectors can be sold by the government or through authorized entities.
Emissions reduced via Clean Development Mechanism (CDM) projects can be sold internationally.
Prior to carbon trading, entities must obtain free, prior, and informed consent from affected local communities.
The per-unit price of emission reductions or carbon storage is determined through mutual negotiations with buyers.
Private forest owners can participate in carbon trading under ministry-approved plans.

International Efforts on Climate Change and Carbon Trading

1988: Establishment of the Intergovernmental Panel on Climate Change (IPCC) by UNEP.
1992: UNFCCC issued at the Rio Conference.
1995: Start of COP meetings.
1997: Kyoto Protocol issued, effective from 2005.
Kyoto Protocol Key Provisions:
- Clean Development Mechanism (CDM).
- Developed nations support low-emission technologies in developing nations.
- Joint Implementation: Collaborative projects to reduce emissions.
- Emission Trading or Carbon Trading.
- Carbon ownership, emission rights, and trading.
- 2007 Bali Conference introduced REDD (Reducing Emissions from Deforestation and Forest Degradation).
- 42 industrialized nations + European Union participate.

Climate Change and Nepal

Climate change is a severe global issue, disproportionately affecting poor and developing nations compared to wealthy ones. Despite contributing only 0.027% to global GHG emissions, Nepal is among the most vulnerable to adverse climate impacts due to:

Geographical diversity and fragile geophysical structure.
Sensitive ecosystems and diverse microclimates.
Poverty, illiteracy, social inequality, and reliance on natural resources for livelihoods.

Rapid temperature rises, erratic rainfall, droughts, and climate-induced disasters negatively impact the Himalayas, glaciers, and dependent ecosystems, increasing glacial lake outburst risks. Climate change affects forests, biodiversity, energy, health, tourism, settlements, infrastructure, livelihoods, and increases disasters like floods, landslides, storms, and wildfires. Building a resilient society is essential.

Past and Present Efforts to Mitigate Climate Change Impacts

Since becoming a party to the UNFCCC in 1994, Nepal has actively engaged in national and international climate change management.
National Adaptation Programme of Action (NAPA, 2068 BS) has made significant progress in reducing risks for vulnerable households and communities.
National Climate Change Policy (2076 BS) is under implementation.
Community forestry, agroforestry, and private forest programs significantly contribute to GHG emission reduction, carbon storage, and climate adaptation.
National REDD+ Strategy implemented to reduce emissions from deforestation and forest degradation.
Climate Change Council, chaired by the Prime Minister, and a multi-stakeholder Climate Change Coordination Committee coordinate climate policies and programs.
The Climate Change Management Division under the Ministry of Forests and Environment serves as the UNFCCC focal point.
The National Planning Commission uses a Climate Change Budget Code.
The Alternative Energy Promotion Centre established a Climate and Carbon Unit (CCU) to advance CDM-related activities.
Millennium Development Goals and Sustainable Development Goals address climate change directly and indirectly.
Local Adaptation Plan of Action (LAPA, 2068 BS) framework is implemented.
Community-based adaptation plans are implemented with support from community organizations, civil society, and the private sector.
National Adaptation Plan (NAP) targets high-risk areas and communities with adaptation programs.
Nepal, as a party to the Kyoto Protocol, Paris Agreement, Sendai Framework, and SDGs, utilizes international opportunities while fulfilling obligations.
Efforts are underway to accredit government, non-government, and private institutions for direct access to international climate finance.

Challenges and Issues

Climate change significantly impacts Nepal’s economy and livelihoods, with future impacts expected to intensify.

Issues:

Lack of uniform understanding and coordination among cross-sectoral agencies on climate change as a multi-dimensional issue.
Insufficient research, studies, and baseline data on climate change impacts and disaster losses.
Failure to mainstream climate change into overall development processes.
Lack of institutional capacity, financial resources, technology, and knowledge to address the issue.

Challenges:

Geographical challenges as a mountainous, landlocked, and least developed country.
Balancing rapid development, environmental sustainability, and climate change issues.
Establishing Nepal’s climate-specific issues as a collective voice of high-risk nations in international forums to enhance climate finance access.

Improvement Measures

Enhance climate change adaptation capacity for vulnerable individuals, households, groups, and communities.
Develop resilience in ecosystems at risk from climate change impacts.
Promote a green economy through low-carbon development.
Ensure equitable mobilization of national and international climate finance.
Strengthen climate change research, technology development, and information services.
Mainstream climate change into policies, strategies, plans, and programs at all levels.
Emphasize gender and social inclusion in mitigation and adaptation programs.

Sectoral Strategies

Agriculture and Food Security

Implement adaptation programs targeting poor, marginalized, landless, indigenous, vulnerable households, women, and persons with disabilities.
Identify and promote crops suitable for drought-prone and waterlogged areas.
Develop and expand technologies to protect crops from climate-induced disasters like droughts and cold waves.
Promote water-efficient irrigation technologies.
Encourage crop diversification, agricultural biodiversity conservation, and organic farming.
Develop diversified kitchen gardens and home gardens in rural areas.
Promote agroforestry with multipurpose tree species on fallow agricultural land.
Analyze climate change risks in agricultural land-use planning.
Document and promote traditional knowledge, skills, and modern technologies for climate-friendly farming.
Provide weather forecasting services to farmers through agricultural extension programs.
Promote low-carbon and energy-efficient technologies in agriculture and livestock production, collection, processing, and storage.
Introduce insurance for climate-induced disaster risks in agriculture and livestock.

Forests, Biodiversity, and Watershed Conservation

Adopt sustainable forest management to increase carbon storage.
Develop agroforestry in vulnerable forest areas and river-encroached lands.
Create and implement management plans for wetlands at risk from climate change.
Develop and implement plans to conserve rare, endangered wildlife, plants, and sensitive ecosystems.
Mainstream climate adaptation programs in integrated watershed management.
Incorporate best practices in watershed and landscape management to enhance community adaptation capacity.
Implement integrated watershed management programs in vulnerable areas like Chure.
Minimize and manage forest diseases, pests, droughts, wildfires, and invasive species.
Ensure equitable distribution of economic benefits from REDD+ and CDM carbon storage.
Develop and expand Payment for Ecosystem Services for community-based conservation efforts.

Water Resources and Energy

Develop and promote methods for water storage, multi-purpose use, and efficient use in high-risk areas.
Construct ponds for rainwater harvesting to recharge and multi-use groundwater.
Establish and enforce standards for sustainable groundwater use in urban areas.
Promote renewable energy production, use, and energy-efficient technologies.
Select eco-friendly locations and climate-resilient technologies for hydropower, drinking water, and irrigation infrastructure.
Adopt measures to minimize adverse impacts on river ecosystems during hydropower production.
Reduce glacial lake outburst risks by lowering water levels and ensuring safe drainage.
Expand and enhance weather monitoring stations and streamline weather information dissemination.

Disaster Risk Reduction and Management

Develop disaster risk reduction and management systems at federal, provincial, and local levels.
Enhance monitoring, forecasting, and early warning systems for floods, landslides, erosion, droughts, lightning, storms, heatwaves, cold waves, wildfires, and epidemics.
Strengthen and expand climate-induced disaster information collection systems.
Ensure access to early warning systems for all communities and sectors.
Integrate disaster risk reduction with climate change adaptation plans.
Guarantee social security for vulnerable individuals and households for post-disaster recovery.
Implement planned programs for post-disaster rescue, rehabilitation, and reconstruction.
Mobilize community organizations and the private sector in disaster management.
Develop safety culture standards for resilient societies.
Promote bilateral and multilateral cooperation to reduce cross-border climate risks and enhance adaptation.

4.3 Climate Change and Carbon Trade