Small rural communities throughout Nepal will reap the benefits of the carbon market with the signing today of an emission reductions purchase agreement (ERPA) for the Nepal Biogas Project.  This is the first greenhouse gas emission (GHG) reductions project in Nepal under the Clean Development Mechanism (CDM) of the Kyoto Protocol.

Taking into account that human-induced climate change is a global environmental problem, the CDM allows OECD countries to fulfill some of their GHG-reduction commitments through climate friendly projects in the developing world.

The project promotes the use of biogas as a commercially viable industry in Nepal by expanding its use for cooking and lighting in rural households. The biogas units will be sold at a non-commercial price to poor households and displace fuel sources traditionally used for cooking - fuel wood, kerosene and agricultural waste - with gas from the treatment of animal and human waste.  Each household biogas unit can reduce almost five tons of carbon dioxide equivalent annually.

"This project is a major breakthrough," says Ken Ohashi, the World Bank Country Director for Nepal.  "It is the result of years of painstaking work by visionary Nepalis who saw that clean environmental practices would eventually bring economic and social payoffs.  Hundreds of thousands of rural Nepalis now stand to benefit not only from renewable energy sources for their homes and communities, but a wide range of associated benefits in the areas of health, sanitation, and agriculture as well."

Along with the global benefits from GHG reductions, the involved communities are benefiting immediately as a result of the reduction of workload for women and children who will no longer have to collect firewood for cooking.  In Nepal only 15 percent of the rural population has access to electricity.  The dependence on fuel wood has contributed greatly to deforestation in the country. Switching to biogas will help lessen the pressure on forests.

The project will also attach latrines to biogas plants, providing better sanitation to rural households. Potential employment will add more than 15,000 people years for skilled people in the construction, maintenance, marketing, and financing of biogas plants. The use of biogas for cooking will also mean little smoke, resulting in better family health. In addition, the residual biological slurry from the biogas plants can be used as a superior organic fertilizer.

The project developer Alternative Energy Promotion Centre, Nepal (AEPC) will sell a total of one million tons of greenhouse gas emission reductions to the World Bank managed Community Development Carbon Fund (CDCF). Dr. Madan Bahadur Basnyat, Executive Director of AEPC, said, "The Nepal Biogas is the first CDM project in Nepal. We take pride in participating in the global efforts to reduce GHG through this project.  The revenues from the carbon credit sale will help us expand biogas plant installations to provide affordable energy to more remote households of rural Nepal without depending much on donor assistance."

The Biogas Project fits into Nepal's energy plans. The Nepali government has a five year plan to improve energy access for the rural poor and to reduce rural poverty by providing high-quality biogas plants to poor households at an affordable price.  The expectation is that under Nepal's Biogas Support Program, about 200,000 of these plants will be installed over 8 years.

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