TED Case Study (#708)

Alternative Fuel Sources in Nepal

I.  IDENTIFICATION:

1. The Issue

Nepal is faced with a double-edged sword when dealing with the issue of energy.  The amount of fuel wood is diminishing while the demand for more energy is increasing.  Eventually, there will be a time when Nepal’s resources are gone.  Alternate methods of deriving fuel and energy will be necessary in the near future.  Biogas is one of the more efficient ways of supplying energy resources to Nepal.

2. Description

There are many problems faced by Nepal in developing alternative methods of energy production. These problems are, and will continue to be, addressed with three new, alternative energy sources. However, before getting to the decision making of which system to promote or how to fund the chosen system the notion of technology transfer, specifically the advantages of vertical and horizontal transfer needs to be made clear.  Vertical transfer is the relocation of a business or industry without the use or help of local business or industry.  In the case of overhauling energy systems there would need to be a decent amount of vertical transfer because most of the technology for these systems is in the hands of developed nations.  Horizontal transfer would be the integration of new technologies through joint ventures, education, and management of the new technology to enhance the chances of adoption and success in the new location.  Technology, in these instances, would refer not only to the equipment, but the “know-how” and experience to set up and work with these new ideas. (Forsyth, 1999)

 The three main, competing renewable energy technologies presently are photovoltaic (PV) systems, wind energy systems, and biomass systems.  PV systems turn ultraviolet light into electricity.    Because PV systems are among the most advanced systems of renewable energy technology, the leaders of the United Nations Framework Convention on Climate Change (UNFCC) have stated their support for individual PV systems in homes in developing countries, so there is a big push for that in many of the Southeast Asian countries.  Although support is great, there is a very real difference between what is being said and what is being done.  The problem with PV is the difficulty the poorer nations have gaining the technology and know-how to put these systems into place.  Technology and know-how are being held back by the shortage of funding.  Funding presents a problem because the power to transfer this technology lies in the hands of private companies that own the rights to the said technology and these companies are not eager to share it without being heavily compensated.  Intelligently, the leaders of the countries in need of the technology do not want to simply serve as a market for the companies, and are holding off for better solutions.  Although any new system would involve both models of transfer, Forsyth (Forsyth, 1999) makes it clear that PV and wind turbine systems both are associated closely with vertical transfer.  

            Considering the mountainous terrain, one would think that systems connected to a wind turbine would have an advantage.  That is precisely why a growing number of people are interested in wind technology.  However, although the technology for these systems is well-developed, few countries in Southeast Asia have had success mapping the wind speed and direction well enough to install a trusted wind-turbine system. Considering the role mountains play in Nepal’s geography, one would expect this system to be a real possibility.  A problem may arise in that not much of Nepal’s population lives near the mountains but with more research on locations and costs, we may see wind technology become a real solution to the problem. 

The last option, biomass renewable energy, seems to be the most practical for the specific application. Forsyth mentions four different biomass systems; however Nepal, our country of concentration, makes use of one specifically.  The system they favor is anaerobic digestion:  

Anaerobic digestion- Biogas can be created with organic material that is allowed to ferment with water inside a digester.  The combustible gas (methane, CH4) is produced, and the remaining organic material can be used as a fertilizer.

According to the Marteen Post, the 100,000^th biogas plant has been installed in Nepal making it the world leader in alternative farm energy systems. The model most prevalent in Nepal is in the backyard of a house and connects directly to the kitchen.  Basically, the dung of a cow is mixed with water and allowed to ferment in an underground tank.  The gas collects in the dome before being forced out and sent in a pipe right to the kitchen.  The leftover “slurry” is pushed to the outlet tank and makes a great fertilizer.  This fertilizer nourishes the very plants that cows feed on creating a cyclical process.  The bacteria that break down the excrement are even naturally found in the stomach of the cow. 

The example family in the article has enough gas for five hours of cooking each day.  Without having to use firewood, the biogas has cleared up the health concern of indoor pollution as well.  Without having to spend time collecting firewood, this family has time to get other important jobs done or even take a break from the labor of farm life.  They have even connected their toilet to their biogas plant and now can use their own waste in the system.

It seems since 1992, Nepal has been dedicated primarily to the bio-gas systems.  The Biogas Support Program (BSP) started to subsidize farmers who took out loans in order to install these systems and also trained construction companies in the specifics of proper manufacturing and installation of these systems.  Looking into the future, the BSP is testing biogas plants that can operate in the colder regions of Nepal.  Building greenhouses on top of the digesters and integrating solar panels to heat underground digesters are two ideas to help deal with the problems that the colder regions present. (Post, 2003) 

In order to disperse energy to all the rural and remote areas of Nepal, a fast, easily implemented, cost efficient, small scale renewable source of alternative energy, which is technically feasible and economically viable, has to be implemented.  Biogas is the leading method right now, but none of these methods can be used exclusively.  Biogas systems simply will not be able to supply all of Nepal’s energy needs.  The Nepalese people need more than one option.   

If biomass systems are not chosen as the alternative then the model of transfer will become an important issue. For successful implementation of new systems, it is essential to foster cooperation among all parties involved.  The local people know their own needs and resources, but are not familiar with the new technology.  Private companies have the desired expertise but could not understand the area better than those that inhabit it. The system installed needs to be one that fits in the conditions of the country at the present time.  An attraction of the combined vertical/horizontal, a combination of the afore-mentioned model in any agreed upon proportion, is that you do not have to go directly through the state government.  In theory, locals would then get the profits from the electricity sales and be employed at the new buildings.  This seems to be the best way to do it, leaving us only with how to finance.

Structures for financing these plans seem to be very involved and complex.  When deciding on private versus public funding, it needs to be realized that there again has to be a balance.  Many of the case studies found in Forsyth were examples of a private, company being supported by official development assistance.  Forsyth refers to build-operate-transfer (BOT) schemes or multilateral investors as traditional models.  BOT schemes would use the vertical transfer discussed earlier.  Additionally, there is an international movement to create international pools of funding to be used for selected projects.  If the biomass system was chosen, the finances would pretty much take care of themselves.  Biomass systems release next to nothing as far as carbon dioxide and the Kyoto Protocol would make it possible for Nepal to trade CO2 emissions to countries that release too much of it.  Consider these numbers: one Nepalese model reduces CO2 by 4.7 tons per year and the trade-in for 1 ton is up to $10.  Using the stated fact that Nepal has now commissioned their 100,000^th biogas plant they would have made as much as $4,700,000 per year from the trading of reduced CO2.  Excitement continues for Nepal because the government can only use the money for the program that produced it, so the money could probably finance the whole program.  (Post, 2003)

There is a problem when it comes to this situation.  The Kyoto Protocol is an issue that is still being debated.  In order for this to go into effect, the nations that account for more than 55% of the emissions have to be approved.  As the situation now stands, the United States is at a stand still and is not concerning themselves with the subject.  Therefore, Nepal must place their hope in other countries that have high emission rates such and Russia and Japan.  These countries are not in any hurry to approve the Kyoto Protocol, but it seems that they are more ready to approve than the US.  The other option for Nepal is to gain support from EU (European Union), which have approved of such technologies in the past. A second problem that arises in the situation is that this money that Nepal would be receiving only comes from new plants.  Therefore, all the plants that are already in existence would not be eligible for funding through use of the Kyoto Protocol.

 (Official website of Kyoto Protocol: http://unfccc.int/cop6_2/documents/index.html)

 Figure 1

 Layout of a Biogas Plant

 

Figure 2

Dung Busters

(Images courtesy of Michigan State University, Dr.Mary Andrews, http://www.msue.msu.edu/intext/biogas%20article.htm)

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Kw:  Nepal, biogas, alternative energy, renewable energy.

4. Draft Authors and Date

Ben Smith

Biplaw Rai

Matthew Brayfield

Paul Bealor

4 December 2003

 II. LEGAL CLUSTER

5. Discourse and Status

Discourse: Agreement

Statues: In progress

Alternative Energy Promotion Center (AEPC)

The Nepali government policy regarding the development of alternative energy especially the biomass energy has been criticized for its inconsistency and irregularity. During its first five year plan (1956-1961), there have been numerous changes in its policy, mainly due to change in Nepali governments. It started off with free subsidies to promote biogas but slowly increased the interest rate which lost its customers. In its ninth year plan (1998-2003), the Alternative Energy Promotion Centre (AEPC) was set up for the purpose of policy making, and quality control. To promote the program the government had exempted VAT (Value Added Tax) on the biogas plants and its accessories for the fiscal year 1998/99 only, but soon changed its decision with the change in Nepali government.

AEPC was established in November 1996 under the Ministry of Science and Technology and reports to the Alternative Energy Promotion Development Board (AEPDB). AEPC work areas include biomass, micro-hydro, solar, wind, improved cook stoves, and geothermal energy. AEPC does not directly implement renewable energy projects but works closely with the Renewable Energy industries and NGOs to provide decentralized renewable energy services to rural as well as urban communities.

6. Forum and Scope

Forum: National

Scope: Unilateral

7. Decision Breadth

There are two issues here; one is that Nepal has the potential to export the model of biogas plant and the other is that it also has the potential in CO2 emission quotas.

The Nepali biogas has proved to be a successful project both in terms of its use and its effectiveness. Especially for a country which has both hilly areas and plains and which largely depends on agriculture for its sustainability, it has proved to be a blessing. It has saved the forest from being decreased and saved Nepal money for electric energy. Also, since it can be locally constructed, more Nepali homes are being lit up. Instead of devoting time searching for firewood, now the villagers can devote their time to constructive work like education for children. The Nepali model can thus work very efficiently in a country which has similar terrain like its neighboring countries. If small changes in its technology can be made according to the country’s need, the framework of this plant can benefit other similar programs in other countries. Since, the finished plant is hard to transfer to other places, the best option for Nepal will be to transfer its model, and knowledge.

According to Kyoto Protocol, it is possible for Nepal to trade CO2 emissions, but since the treaty is not yet ratified (and may never be), it is not a short term plan for Nepal. However, if it is ratified it can trade CO2 emissions to countries that release too much of it. Again, this can be only done in newer plants and not the older plants as the treaty does not certify the older plants to trade CO2 emissions.

8. Legal Standing:  NGO

III. GEOGRAPHIC FILTERS

 9. Geography

 Continental Domain:  Asia

 Geographic Site:  South Asia, Himalayan Mountains

 Geographic Impact:  Nepal

Figure 3

Map of Nepal Illustrating Biogas Plants.  (Districts containing plants are colored)

(Image courtesy of Nepal Net, http://www.panasia.org.sg/nepalnet/technology/biogas.htm)

10. Sub-National Factors:  No

11. Type of Habitat:  Tropical Rainy Forest

IV. TRADE FILTERS

12. Type of Measure:  Subsidy

13. Direct vs. Indirect Impacts:  Indirect [IND]

14.  Relation of Trade Measure to Environmental Impact

a. Directly Related to Product:  Yes – Biogas

b. Indirectly Related to Product:  Yes – Cow dung

c. Not Related to Product:  No

d. Related to Process:  Yes- slurry by-product

15. Trade Product Identification:  Biogas

16. Economic Data:

The following chart shows the cost of building biogas plants in the Hill and Tarai regions. Since the bio gas appliances are hard to transport to the hilly regions, the price of building a plant there is comparatively larger than in Terai region.

*Amount in Nepali Rupees; 74.00 Rs = 1 American Dollar

(Chart courtesy of Nepal Net http://www.panasia.org.sg/nepalnet/technology/biogas.htm)

 

(Source of data: AEPC Nepal, http://www.aepcnepal.org)

The graph clearly shows the number of bio gas plants increasing since its first establishment in Nepal. Several factors like its cheap cost, its substitute for firewood, and since it is locally manufactured it has been a success in Nepal.

Number of staff including local mason:  2000

Trained mason:  1030 (500 will be trained every year)

Present construction capacity of biogas:  More than 25000 in a year

Number of recognized biogas companies:  39

Biogas appliance supplier:  13 (including international companies)

Industry Output ($): 1.3 million

17.  Degree of Competitive Impact

Biogas has the potential to reduce the amount of conventional resources needed for energy.  It could reduce the need for fuel wood that could be used for other, practical purposes.

18. Industry Sector:  [DOTH]

19. Exporter and Importer:  Nepal and various

Until now various NGOs have been supporting the biogas program in Nepal, in which SNV/Nepal through Netherlands Development organization is the major actor in this program.

The allotment of greenhouse gas emissions can be traded with other nations in accordance with the Kyoto protocol if relevant treaties are ratified.  Nepal could trade its rations to richer countries that have problems meeting their own quotas and have ratified the Kyoto treaty.

V.  ENVIRONMENT CLUSTERS

20.    Environmental Problem Type:  Forest Depletion.

The total dependence on firewood as the source of energy in rural Nepal has resulted in the deterioration of the quality and quantity of forests and resulted in various problems like deforestation, soil degradation, erosion and landslides, expenditure of money, and time/labor.

The forest area has been seriously degraded in Nepal. Valleys which were covered with forests some decades ago have been cleared in many areas.  In fact, decrease in forests means less firewood, fodder and timber. It means the loss of soil fertility, increased soil erosion and the degradation of fragile land. It also means changes in the water supply for agriculture and energy.  Tropical moist forests represent one of the densest terrestrial ecosystems of Nepal. Only a small segment of these ecosystems remain intact. In most tropical moist deciduous forests, human interference including logging and agriculture has resulted in great damage. Increasing population and a scarcity of agricultural land has increased the pressure to convert forestland to agricultural settlements.

The eradication of malaria in the Tarai has resulted in an ever-increasing influx of the number of migrants from the Middle Mountain.  In the Middle Mountains, considerable forests were earlier converted to grazing land and then to farmland. However, in the Tarai, government resettlement schemes, as well as migrants from the Middle Mountains converted land directly from forests to farmland.  Additional increases in farmland during the past four decades have taken place in marginal middle mountain land. Such increases in farmland are likely to come from the conversion of the remaining Tarai forests to agriculture. If the present trend persists, it is likely that all of the Tarai forest will be converted to farmland in order to feed the runaway population.

Overgrazing by livestock has resulted in the continuing degradation of forest resources by eating seeds and tree seedlings and trampling both the seeds and seedlings.  While fodder consumption does not directly reduce the forest area, the destruction of the shrubs and grass layers may be the chief reason for forest degradation leading to increased soil erosion as a result of the depleted ground cover and compacted soil.  Actually, population growth and a growing demand for fodder, firewood and land, as well as institutional factors have caused deforestation.

The rate of decline of the forest cover in the Tarai still continues to remain high, largely due to the population boom across the country in general and Tarai region in particular. Since more forests were declared available for human settlement or cultivation during the second half of this century, the Charkose Jhadi reserve that was preserved during the Rana regime as a filter zone began to be depleted.  Likewise, forests in Chure hills in the eastern parts have nearly been cleared up. In the western parts, although the forests are still surviving there, they are under threat. Incidents of logging and other forms of destruction are increasing.  Another example of this destruction is flooding.  Since the forest that once covered the land is now depleting, the water is freer to run over the land and with nothing to slow it down, flooding occurs more often. 

21.    Species Information

Type:  Forest Habitat

Name: Rhinos, tigers, deer, bear (in Terai region); bear, deer, and other mammals in hilly region. Rare species include snow leopard in the mountainous region, and rhinos in Terai.

Diversity: many rare species of plants and animals.

Since deforestation affects the entire biome of the forest, it is logical to assume that all species therein would be affected by it.  A rare diversity of affected species includes mammals, vegetation, and insects that live there just to name a few.

22.    Impact and Effect

Impact:  Medium

Effect:  Structure

Since not all of Nepal is comprised of forest, the threat is of a medium magnitude. 

23.    Urgency and Lifetime

Urgency:  Medium

Lifetime:  30-50 Years

In the next few decades South Asia will be facing a severe crisis.  There are many factors leading up to this crisis, including a post 1950 population explosion, increased demands for fuel wood and agricultural lands, massive deforestation, and catastrophic soil erosion and siltation.

 Forest depletion is calculated to be 8% every 10 years according to the Ministry of Population and Environment. (http://www.mope.gov.np/state/2001/fore.pdf)

This image displays how a degraded forest looks.

(Image courtesy of Afrol News, http://www.afrol.com/Categories/Environment/index_deforest.htm)

24.    Substitutes

 Since biogas itself is a substitute, it has already substituted firewood in Nepal. Along with the energy it has provided fertilizers too, which is a result of the slurry by product of the whole process. As Nepal is an agricultural country, using biogas as a source of energy provides fertilizers as byproducts. The major source of raw materials for biogas production is animal dung.  In villages, most of the people tend cattle to obtain meat and milk.  These cattle produce the dung that can be used for biogas and then the byproduct can still be used as fertilizer.

VI. OTHER FACTORS

25.    Culture:  No

26.    Human Rights:  Yes

The people of Nepal should definitely have a voice in the matter of new energy sources.  Some may agree to the changes, but others may want to stay grounded in their way of life and not adopt the new changes.  The issue of civil liberties is definitely a question that would be raised when implementing a new energy system in Nepal.

27.    Trans-Boundary Issues:  Yes

To assume that the problems of deforestation and the necessity for efficient energy sources were confined to Nepal would be very presumptuous and in fact, quite incorrect.  Nepal and its neighboring countries would do well to share resources to help improve their mutual quality of life.

28.    Relevant Literature

Varma CVJ, Rao ARG. “Renewable Energy – Small Hydro: 1st International Conference.”

-         Small hydropower development in Nepal- A Case study.

-         Development of traditional Himalayan watermills for sustainable village scale micro hydropower.

Atchig Michael, Tropp Shawna. “Environmental Management: Issues and solution.”

-         Village level management of natural resources: a case study from the Himalayas.

John Farrington and David J, Lewis with S. Satish and Aurea Miclat – Jenes. “NGO and state in Asia: rethinking roles in sustainable agricultural development.”

-         NGO and government interaction in Nepal.

-         Overview of NGO, agricultural activities in Nepal, major agro forestry activities.

-         United Mission to Nepal’s involvement in forestry activities.

Abdul Aziz, David D. Arnold. “Decentralized governance in Asian countries.”

-         Decentralized and local self – government in Nepal.

-         Decentralized governance and planning process: A case study of the Karnali-Bheri integrated rural development (K-BIRD) project in Nepal.

Venkata Ramana P. “Rural and renewable energy: perspectives from developing countries.”

-         Rural and renewable energy: a developing country perspective.

-         Rural energy in India.

      Solar Energy in Developing Countries: Perspectives and Prospects.

A Report of an Ad hoc advisory panel of the board on science and technology for international development.

-     Solar energy utilization in developing countries.

      Office of technology Assessment: Congress of the United States. “Renewing our energy future.”

-         Government supports and international competition.

Forsyth, Tim.  International Investment and Climate Change:  Energy Technologies for Developing Countries.  London:  Earthscan, 1999.

      Articles.

Intini, John. “Lighting up the world.” Canadian help in rural Nepal.

Post, Maarten.  “Nepal’s Future is in the Dung Heap.”  Nepal News Online.  http://www.nepalnews.com December, 2003.

Websites:

1.      www.panasia.org.sg/nepalnet/art/report.html

2.      www.rwedp.org/d_technobc.html (bio-mass energy technology)

3.      www.aascu.org/alolnews/newsbrief/nb2-2000.htm

4.      www.drokpa.org/alternative_energy.htm

5.      www.ccities.doe.gov/conference/palm/pdfs/owry_asia.pdf

6.      www.repp.org/discussiongroups/resources/stoves/countries/country.html