Responsive Use of Coal and Just Transitions

Launching on World Environment Day, June 5, 2025

1. Introduction

Nepal, a land of towering mountains and pristine rivers, is at a critical crossroads. The reliance on coal—both for energy and industry purposes—poses grave threats to our environment, public health, water security, and the Himalayas’ fragile ecology. The Nepal Coal Exit Program is our nation’s first dedicated step towards a comprehensive, responsible and sustainable transition away from coal.

Coal, though not dominant in Nepal’s power generation, plays a critical role in industries such as brick, cement, and metallurgy. With global pressure to phase out fossil fuels and rising domestic commitments under the Second NDC and the Climate Change Policy 2019, this is a critical moment for Nepal to build a just, strategic, and sustainable coal transitions pathway.

Nepal’s immense hydropower, potential plus other energy resources such as solar, wind, bio-gas, micro hydropower  including emerging hydrogen research position the country uniquely to replace coal with renewable alternatives, including green hydrogen produced from surplus hydroelectricity. This transition also supports long-term economic, environmental, and energy security goals. Energy self-reliance and the promotion of alternative energy are among the key national budget priorities. Carbon emissions will be reduced by increasing the production and consumption of alternative energy.

This program envisions a future where Nepal’s energy, industry, and transportation sectors transition from fossil fuels to renewable sources, setting a clear road-map to achieve net-zero emissions by 2045.

2. Background and Context

Globally, nations are waking up to the urgent need to abandon coal—a major contributor to climate change. Several countries including UK, Germany, South Korea, and India are formulating timeline for coal phase-out, investing heavily in renewable energy (RE) and technological innovation.

1. The UK ended coal by October 2024, advancing its net-zero emissions goal by 2050 through renewable energy.
2. European Union aims to end coal by 2030, scaling renewable infrastructure.
3. South Korea plans to terminate all coal plants by 2050, investing in green hydrogen and renewable.
4. India announced the closure of hundreds of coal plants by 2030, accelerating renewable capacity.
5. Nepal must capitalize on renewable energy for a cleaner, resilient future. The objective is to develop a comprehensive national policy by 2028, with clear targets to displace coal by 2050.

3. Vision

Achieving a fossil-free, energy-resilient Nepal by 2050 through coal phase-down and integration of other energy resources and green hydrogen into industrial, transportation, and power sectors.

4. The Need for a Policy

Nepal’s initial step towards this goal requires a well-structured policy framework—a blueprint to systematically phase out coal, promote renewable energy, and ensure economic and social justice. This policy will:

1. Set a firm timeline to decommission current coal power plants.
2. Promote responsible use of the existing coal, with emission standards.
3. Accelerate renewable energy development, focusing on dams, solar, wind, and bio-energy.
4. Ensure community involvement and employment transition.
5. Align Nepal’s climate commitments with global targets—net-zero by 2045.

5. Strategic Goals and Action Plan

1. Policy Development and Legislation
2. Formulate a “Nepal Coal Exit Policy” draft by 2028.
3. Enact laws to ban new coal projects immediately.
4. Provide incentives for renewable energy investments.
5. Phased Decommissioning of Coal Plants: Shutdown of existing coal plants by 2028.
6. Manage transitional responsibilities for affected workers and communities.
7. Massive Scale-Up of Renewable Energy
8. Prioritize investments in hydropower, solar, wind, and bioenergy.
9. Achieve 100% renewable energy capacity by 2050.
10. International Collaboration and Funding
11. Secure funding from multilateral climate funds.
12. Learn from international best practices.
13. Public Participation and Awareness
14. Engage civil society, youth, and local communities.
15. Promote awareness campaigns on clean energy benefits.

6. International Examples and Lessons

1. The UK’s coal phase-out policy:
   • A year ahead of schedule, as part of a broader strategy to net zero.
2. Germany’s Energiewende:
   • A successful decarbonization model aiming for a coal phase-out by 2038.
3. South Korea’s Green New Deal:
   • Investing in green hydrogen and renewables to end coal by 2050.
4. India’s Coal Closure Plan:
   • Closing hundreds of coal plants, expanding renewables with support for affected communities.

7. Implementation Timeline

1. 2025–2028: Policy formation, pilot identification, and stakeholder mapping.
2. 2028–2035: Implementation of pilot projects, scale-up strategy, and hydrogen infrastructure development.
3. 2035–2040: National roll-out of renewable alternatives and complete phase-out of coal.

8. Policy and Investment Incentives (2025–2026)

1. A feasibility study on green hydrogen and other sources of energy will be conducted in collaboration with universities and the private sector.
2. Domestic and foreign private investment will be attracted to green hydrogen production.
3. All taxes and duties have been removed on machinery and equipment imports for hydrogen production.
4. Industries producing green hydrogen will receive an income tax exemption for five years.

9. Conclusion and Call to Action

This Nepal Coal Exit Program concept represents the beginning of a transformative journey. It is not just an environmental imperative but a moral obligation to protect our Himalayas, water resources, and future generations.

The government, industry stakeholders, academia, and citizens must come together to develop a firm national policy by 2028. This policy will serve as the foundation of Nepal’s green revolution, setting global standards for climate responsibility and sustainable development.

Let us be the climate leaders of tomorrow.