The transport sector of Nepal was responsible for 2 MtCO₂ of emissions in 2011. Vehicle ownership remains low in Nepal. However, rapid economic growth and urbanisation have led to its petroleum vehicle fleet to grow as well, at the annual rate of 14% between 1990 and 2018., This fast growth of the vehicle fleet has contributed to increasing emissions and air pollution as well as the country’s trade deficit.
In its 2020 NDC, Nepal aims to ensure that 90% of its new private and 60% of new public vehicle sales will be electric by 2030 and that transport-related emissions are expected to decline to 2.6 MtCO₂ by 2030. This target is in line with the modelled domestic emissions pathways benchmarks analysed in this project. Nepal’s LTS aims to reduce emissions from the sector to 1.04 MtCO₂ by 2050. It envisions doing so primarily through promotion of electric public and private transportation as well as electric freight transport, and introduction of clean fuels including biofuels and hydrogen fuel cell technology. The LTS also aims to increase the renewable energy capacity of the country to 53.2 GW by 2050 with the aim of electrification of major end-use sectors, including the transport sector.
While the proportion of electric vehicles in the country is currently negligible – less than 1% of the vehicle fleet – this share is expected to increase significantly as the government enacts policies in line with its NDC targets. For example, last year the government reduced customs duties for electric vehicles. As Nepal imports almost all of its vehicles and exerts heavy customs taxes, this measure is expected to boost electric vehicles sales in the country’s price-sensitive vehicle market.