National Energy Efficiency Strategy, 2075

4.1 Challenges Energy efficiency is a wide and interdisciplinary subject that affects various fields and stakeholders. Despite the fact that efficient use of energy can have an important contribution in the overall development of the country and can help in improvement of energy access and energy security, energy efficiency has not been able to enjoy adequate priority in Nepal. Although there exists an arrangement in Industrial Management Act, 2073 Chapter 5, Article 22 (1) “m” to exempt all tax on investment in devices or equipments that help in reducing energy consumption by increasing energy efficiency, such legal instrument is yet be implemented due to lack of necessary regulations, directories and other arrangements in place. Due to the lack of proper guidance for implementing energy efficiency program, various efforts and initiatives have not been able to maintain harmony and achieve expected successes. In the 2 1.19 tonnes of oil equivalent = 1.19 x 11,630 kilowatt hour = 13,840 kilowatt hour 2 past, as different energy efficiency initiatives and activities were implemented in isolation, holistic and sustainable results could not be achieved and energy efficiency could not be accepted as an important part of energy strategy. Due to the lack of necessary awareness, energy efficiency could not be considered as an integral part of overall energy system not only among the general consumers but also among policy makers and at the implementation level. Energy efficiency has so far remained in the shadow also because of the lack of an institutional set up with necessary resources, accountability and clear jurisdiction to address energy efficiency in Nepal. Nepal has been facing various types of challenges to implement and institutionalize energy efficiency initiatives, some of which are as follows:

4.1.1 To integrate with priority energy efficiency along with energy supply in the planning, implementation and management of the overall energy sector of the nation.

4.1.2 To establish a capable institutional structure and regulatory mechanism for implementing the energy efficiency programme by formulating appropriate policy, legal system and strategy.

4.1.3 To formulate policies related to existing finance, tax and energy tariff in order to make energy market energy efficiency friendly.

4.1.4 To increase access to financial resources for energy efficiency

4.1.5 To enhance the technology and technological capacity related to energy efficiency

4.2 Opportunities The following opportunities exist for promotion of energy efficiency:

4.2.1 Promotion of energy efficiency can give attractive financial returns even with lower investment.

4.2.2 Energy conservation is relatively cheaper and more effective compared to energy generation.

4.2.3 Energy efficiency can assist in reducing trade imbalance in the country by reducing energy import.

4.2.4 Energy efficiency can create more employment opportunities by making energy market cheaper and more competitive.

4.2.5 Energy efficiency can increase the energy access.

4.2.6 Energy efficiency can help increase energy security by reducing energy import and energy deficiency.

4.2.7 Energy efficiency can help in achieving the goals of sustainable development, in reducing carbon emission and environmental imbalance and in minimizing the negative effects of climate change. 3 5 Rationale of the Strategy As there is no arrangement of a separate strategy related to promotion energy efficiency so far, it is necessary to formulate such strategy. The present need is to include energy efficiency strategy in a comprehensive and integrated energy strategy and make the development, implementation and management of energy efficiency initiatives sustainable and effective. It is extremely necessary to have the energy efficiency strategy for establishing necessary legal and institutional structure required for implementation and monitoring energy efficiency programmes as well as for interagency coordination. Likewise, energy efficiency strategy will be required to formulate and implement strategic planning of integrated sustainable development initiatives. 6 Vision, Mission and Goals

6.1 Vision To assist in energy security by increasing the energy access through efficient use of available energy.

6.2 Mission To promote energy efficiency by effectively implementing energy efficiency programmes through establishing policy, legal and institutional frameworks.

6.3 Goals To double the average improvement rate of energy efficiency in Nepal from 0.84% per year, which existed during the period of 2000 -2015 AD to 1.68% per year in 2030 AD. 7 Objectives

7.1 Support to economic growth by reducing energy intensity and increasing productivity

7.2 Reduce existing energy shortage, increase energy access and provide important contribution to energy security by efficient use of energy.

7.3 Create employment opportunities by creation, expansion and commercialization of energy efficiency market

7.4 Maintain environmental balance and bring positive improvements in health by efficient use of energy. 8 Strategy

8.1 Generate awareness on energy efficiency from the consumers’ level to policy makers’ level. (7.2; 7.3)

8.2 Establish policy, legal and institutional frameworks for resources management, resources mobilization, infrastructure development and human resources development required 4 for energy efficiency. (7.4)

8.3 Develop national standards for energy efficiency based on established international and regional standards as well as to develop equipments and means for measuring energy efficiency. (7.4)

8.4 Make services and production cost effective and competitive by reducing energy consumption needed for production of goods and services. (7.1)

8.5 Reduce energy import by energy conservation. (7.1; 7.2) 9 Working Principles The following action plans will be considered for the implementation of aforementioned strategies (the Strategy implementation action plan is included in the Schedule) :

9.1 Generate awareness on energy efficiency from the consumers’ level to policy makers’ level.

9.1.1 Conduct public awareness campaigns related to energy efficiency by targeting household sector.

9.1.2 Conduct energy efficiency initiatives by targeting consumers of industrial, commercial and transport sectors.

9.1.3 Conduct energy efficiency initiatives for farmers about energy efficient equipments in agriculture and their uses.

9.1.4 Include subject materials related to energy efficiency into the curriculum of educational institutions and conduct activities related to energy efficiency.

9.1.5 Conduct activities related to energy efficiency in public and community organizations.

9.2 Establish policy, legal and institutional frameworks for resources management, resources mobilization, infrastructure development and human resources development required for energy efficiency.

9.2.1 Establish an energy efficiency entity for promotion, development and implementation of energy efficiency.

9.2.2 Strengthen the existing energy efficiency cell in the Ministry of Energy, Water Resources and Irrigation as well as formulate and implement various activities related to energy efficiency.

9.2.3 Carry out research and study on energy efficiency and demand side management as well as promote and develop energy efficient technologies also in collaboration with relevant ongoing projects. 5

9.2.4 Develop an appropriate system for commercialization and market expansion of energy efficient technologies. Ensure energy efficiency during production, import or sales of technology and equipments.

9.3 Develop national standards for energy efficiency based on established international and regional standards as well as to develop equipments and means for measuring energy efficiency.

9.3.1 Carry out detailed study and energy audits of electrical and mechanical appliances in energy consuming various sectors and identify energy saving measures by developing energy performance standards.

9.3.2 Conduct activities that promote the use of energy efficient equipments in transport and industrial sectors and reduce air pollution and greenhouse gas emission.

9.3.3 Determine energy efficiency standards and label of equipments being used in energy consuming different sectors and ensure their compliance.

9.3.4 Ensure the human resources development and capacity enhancement needed for the production, commercialization and technology transfer of energy efficiency related goods and services through the use of energy efficient technologies.

9.4 Make services and production cost effective and competitive by reducing energy consumption needed for production of goods and services.

9.4.1 Institutionalize energy efficiency in Nepal through the development of National Energy Efficiency Action Plan.

9.4.2 Identify large-scale electricity consumers and conduct their energy audit.

9.4.3 Prepare necessary human resources for energy audits by conducting energy auditors’ training as required for various fields and by establishing an accreditation system of energy auditors.

9.4.4 Develop minimum energy performance standards for electrical and mechanical equipments being used in various sectors.

9.4.5 Conduct various activities related to energy audits in industrial, commercial and public sectors.

9.5 Reduce energy import by energy conservation.

9.5.1 Reduce energy imports by utilizing the energy saved through energy efficiency

9.5.2 Carry out study and research on reducing peak demand and implement various programmes on demand side management of energy. 6 10 Implementation of Strategy According to the arrangement provided by the constitution of Nepal, the implementation of this strategy will be done through the participation of local, provincial and federal level stakeholders for the rational use of energy and for the promotion of energy efficiency as follows:

10.1 Sector-wise Implementation and Management For the implementation of energy efficiency programmes, sectors will be identified in local, provincial and federal level based on energy consumption and appropriate energy efficiency measures for each sector will be implemented. Necessary framework conditions will be established in order to implement, regulate and monitor these measures. Energy efficiency standards and label of the equipment to be used in various energy-consuming sectors will be determined. Use of energy efficient machines, equipment, tools or goods will be encouraged. In order to ensure the quality assurance of such equipments as per the prescribed standards, they will be checked at the entry point in case of imported goods and at the very production point in case domestically produced machines, equipment, tools or goods will be checked for being as per the fixed quality criteria at the import point in case of imported goods and at production point for domestically produced machines, equipments, tools or goods.

10.2 Time-bound Implementation For the implementation of energy efficiency, short-term, mid-term and long-term measures will be adopted in local, provincial and federal level. In order to address the current transitional phase of energy shortage, awareness raising measures on use of energy saving equipment and technology as a short-term measure will be encouraged. As a mid-term measure, in order to increase the use of energy efficient appliance and technology, appropriate arrangements of development, implementation, monitoring and evaluation of a fiscal incentive mechanism will be established. As the long-term measures, necessary energy efficiency initiatives will be adopted in all energy consuming sector for the sustainable, reliable, efficient and quality use of available energy.

10.3 Stakeholders Participation As per the arrangement of the Schedule (8) of the constitution of Nepal, electrical services fall under the shared jurisdiction of local, province and federal levels. Likewise, as per the Local Government Operation Act 2074 Article (11) Sub-Article (4) (c) (1), the electricity distribution service and electricity system management fall under the jurisdiction of local bodies. While implementing energy efficiency programmes or adopting energy efficiency measures, enabling environment for participation of and support from relevant stakeholders of all three levels created. In energy efficiency activities, proper coordination will be made among the government authority; the consumers; and the agency, firm or company that produce or import technology, goods or equipments. 7 11 Legal Aspect For the meantime, the implementation of energy efficiency will be made effective and result oriented through the issue of an executive order or directive. Additionally, existing energy related acts, rules and legal arrangements will be reviewed, necessary amendments will be made and required legal arrangements will be established. 12 Institutional Structure An energy efficiency entity will be designated for the promotion, development and implementation of energy efficiency. Such entity will ensure the coordination among the relevant stakeholders; implement this strategy; develop a National Energy Efficiency Action Plan; implement the Plan; monitor and evaluate the implementation of the Plan as a regulatory body. In coordination and under the leadership of energy efficiency entity, separate energy efficiency strategy implementation and monitoring units will be established in all designated implementing agencies. 13 Financial Aspect The Government of Nepal will arrange necessary financial resources from local and national private, cooperative and public sector stakeholders to ensure additional financial and technical capabilities required for successful and effective implementation of this strategy. In addition to that, necessary financial resources will be managed by mobilizing financial and technical assistance available from national and international investors and international development partners3. 14 Research and Development Emphasis will be given to necessary study, research, technology development and expansion as well as technology transfer for making energy efficiency programmes successful, affordable, effective, result-oriented and accessible to all. Cooperation and collaboration for applied research will be developed among the authorities implementing energy efficiency programmes, educational institutions and research agencies. 15 Monitoring and Evaluation The main responsibility of monitoring and evaluation of the implementation of this strategy will stay with the Ministry of Water Resources, Energy and Irrigation. However, while doing so, the participation of the other concerned ministries, departments and all relevant stakeholders will 3 According to the preliminary estimates of the study carried out during the formulation of this strategy, an annual investment of about 670 million US dollar (in 2001 price level) would be required by 2030 AD in order to achieve the target set for energy efficiency. 8 be ensured. Arrangements will be made to annually publish the progress achieved and results obtained regarding the status of the set targets and implementation of this strategy. Apart from this, necessary arrangements will be made to annually publish the statistics including the investments made in energy efficiency; the savings made through these investments; and achieved returns on investments; etc. This strategy will be periodically reviewed and amended as per the necessity. The following indicators for monitoring and evaluation of the implementation of this strategy: a) Annual records of energy efficiency improvements will be established and the progress in achieving the set goals will be monitored and evaluated by measuring the energy intensity b) Periodic monitoring and evaluation of the indicators related to the achievements of the Nepal’s sustainable development goal 7.3 related to the energy efficiency will be done c) In order to implement the 5-working principles as determined by this strategy, a National Energy Efficiency Action Plan will be formulated and regular monitoring and evaluation of the implementation status of the sectoral action plans based on the defined indicators 9 Schedule : Energy Efficiency Strategy Implementation Action Plan Strategic Sector Activities Present Situation (2018) Goal (2030) Main Responsible Supporting Agency / Time Period Agency / Agencies Agencies 1. Generate 1.1 Conduct public Limited knowledge Every household made Ministry of Energy, Nepal Television/ Continuous awareness awareness campaigns about energy efficiency aware about energy Water Resources Gorkhapatra from 2018 on energy related to energy and energy efficient efficiency and energy and Irrigation/ Nepal Sansthan/ Radio Nepal A.D efficiency from efficiency by targeting appliances, limited efficient appliances Electricity Authority the consumers’ residential sector. knowledge on required through various media level to policy investment and benefits makers’ level of energy efficient appliances

1.2 Conduct programs Limited knowledge Industrial, commercial Ministry of Industry, Department of Continuous related to energy on energy efficient and transport sectors Commerce and Industry/ Department from 2018 efficiency by targeting equipment and fuel made aware about the Supplies/ Nepal of Transport A.D consumers of efficient transport, lack use of energy efficient Electricity Authority Management industrial, commercial of clear policy on energy equipment and and transport sectors. efficiency in commercial technology sector

1.3 Conduct No programs conducted Conduct programs to Ministry of Energy, Department of Continuous 10 programmes related about energy efficiency in encourage farmers to Water Resources and Agriculture from 2020 to energy efficiency agriculture sector use energy efficient Irrigation/ Ministry A.D for farmers on energy equipment of Agricultural, Land efficient equipment Management and and their uses in Cooperatives agriculture.

1.4 Incorporate Lack of sufficient inclusion Emphasize energy Ministry of Department of Continuous energy efficiency of energy efficiency, audit and energy Education, Science Education / TU / other from 2018 in the curricula energy audit and energy conservation by and Technology/ universities / schools A.D of educational management in the including energy Ministry of Energy, institutions and curricula efficiency along with Water Resources and conduct energy renewable energy in Irrigation efficiency programmes the curricula

1.5 Conduct programs No programs conducted Conduct programs Ministry of Department of Continuous related to energy about energy efficiency about energy Education, Science Education/ Ministry from 2018 efficiency in public in public and community efficiency in public and Technology of Energy, Water A.D and community organizations and community Resources and organizations. organizations Irrigation/ Nepal Electricity Authority Strategic Sector Activities Present Situation (2018) Goal (2030) Main Responsible Supporting Agency / Time Period Agency / Agencies Agencies 2. Establish 2.1 Designate an Institutional, policy Designate an energy Ministry of Energy, Ministry of Industry, 2018 A.D to policy, legal and energy efficiency and legal framework efficiency entity to Water Resources and Commerce and 2020 A.D institutional entity for promotion, for promotion and adopt and implement Irrigation Supplies /Department frameworks development and development of energy energy conservation of Electricity for resources implementation of efficiency not yet and energy efficiency Development management, energy efficiency. established in Nepal measures resources

2.2 Strengthen Energy efficiency cells Establish energy Ministry of Energy, Nepal Electricity Every year mobilization, the existing energy have been formed in the efficiency cells in all Water Resources and Authority/ Department 2018 A.D infrastructure efficiency cell in the Ministry of Energy, Water relevant ministries, Irrigation of Electricity development Ministry of Energy, Resources and Irrigation government Development/ and human Water Resources and as well as in Nepal departments and other Water and Energy resources and Irrigation as well Electricity Authority agencies Commission development as formulate and Secretariat required implement various for energy activities related to efficiency. energy efficiency

2.3 Carry out research Lack of sufficient Provide financial and Ministry of Energy, Nepal Academy Continuous 11 and study on energy incentives and financial technical support for Water Resources and of Science and from 2020 efficiency and demand assistance for research in study, research and Irrigation/ Ministry Technology/ Nepal A.D side management energy efficiency promotion in the field of Finance Electricity Authority as well as promote of energy efficiency and develop energy efficient technologies also in collaboration with relevant ongoing projects

2.4 Develop a system Lack of sufficient Provide energy Ministry of Energy, Nepal Academy From 2019 for commercialization infrastructure audit services by Water Resources and of Science and A.D to 2022 & market expansion development for commercialization Irrigation/ Nepal Technology/ Nepal A.D of energy efficient commercialization and and market expansion Electricity Authority/ Bureau of Standards technologies. Ensure market expansion of of energy efficient Ministry of Finance and Metrology/ energy efficiency energy efficient service technologies Tribhuvan University during production, providers and energy import or sales of efficient equipments technology and equipment Strategic Sector Activities Present Situation (2018) Goal (2030) Main Responsible Supporting Agency / Time Period Agency / Agencies Agencies 3. Develop 3.1 Carry out detailed No national standards Develop national Ministry of Industry, Department of Continuous national study and energy on minimum energy standards on minimum Commerce and Industry/ Nepal from 2020 standards audits of electrical and performance energy performance Supplies/ Ministry Bureau of Standards A.D for energy mechanical appliances of Energy, Water and Metrology/ Nepal efficiency based in energy consuming Resources and Electricity Authority on established various sectors and Irrigation international identify energy and regional saving measures standards by developing as well as energy performance to develop standards equipments

3.2 Conduct activities Limited programs on Reduce air pollution Ministry of Industry, Department of Continuous and means that promote the reduction of air pollution by developing an Commerce and Industry/ Department from 2018 for measuring use of energy and greenhouse gas integrated energy Supplies/ Ministry of Transportation A.D energy efficient equipments emissions through energy efficiency strategy of Forest and Management/ efficiency in transport and efficiency Environment Department of industrial sectors and Environment 12 reduce air pollution and greenhouse gas emissions

3.3 Determine Lack of national energy Develop national Ministry of Industry, Nepal Bureau of Continuous energy efficiency efficiency standards and energy efficiency Commerce and Standards and from 2019 standards and label no system of verification standards, establish a Supplies/ Ministry Metrology/ Nepal A.D of equipments being of equipments with the system of verification of Energy, Water Electricity Authority used in energy label of regional and of equipments with the Resources and consuming different international standards labels of regional and Irrigation sectors and ensure international standards their compliance Strategic Sector Activities Present Situation (2018) Goal (2030) Main Responsible Supporting Agency / Time Period Agency / Agencies Agencies

3.4 Ensure Lack of necessary Develop necessary Ministry of Department of Continuous human resources infrastructure for energy infrastructure and Education, Science Education/ Council for from 2018 development efficiency and energy skilled human and Technology/ Technical Education A.D and capacity audits; lack of enough resources for Ministry of Energy, and Vocational enhancement needed skilled human resources promotion of energy Water Resources and Training for production, efficiency and energy Irrigation/ Ministry of commercialization and audits Industry, Commerce technology transfer and Supplies of energy efficiency related goods and services through use of energy efficient technologies 4. Make 4.1 Institutionalize No institutional Establish institutional Ministry of Energy, Department From 2018 services and energy efficiency mechanism for mechanism in Nepal Water Resources and of Electricity A.D to 2020 production cost in Nepal through monitoring of energy by development Irrigation Development/ Nepal A.D effective and the development efficiency activities and of National Energy Electricity Authority 13 competitive by of National Energy energy audits in the Efficiency Action Plan reducing energy Efficiency Action Plan country consumption needed for 4.2 Identify large-scale Large electrical energy Develop a system for Ministry of Energy, Department of regular from production electricity consumers consumers identified regular energy audits Water Resources Industry/ Federation 2018 A.D of goods and and conduct their but not formally of for large electricity and Irrigation / of Nepalese Chamber (Semiannu- services energy audits institutionalized consumers Ministry of Industry, of Commerce ally) Commerce and and Industries/ Supplies Confederation of Nepalese Industries

4.3 Prepare necessary Limited trainings Make arrangements Ministry of Energy, Nepal Bureau of Continuous human resources conducted on energy for regional and Water Resources Standards and from 2020 for energy audits by audits and energy international level and Irrigation/ Metrology / Council A.D conducting energy management but no trainings on energy Ministry of Industry, for Technical Education auditors’ training system for accreditation audits and energy Commerce and and Vocational as required for of these trainings management and their Supplies Training various fields and accreditation by establishing an accreditation system of energy auditors Strategic Sector Activities Present Situation (2018) Goal (2030) Main Responsible Supporting Agency / Time Period Agency / Agencies Agencies

4.4 Develop minimum No national standards Develop quality Ministry of Energy, Nepal Bureau of From 2019 energy performance on energy performance standards and Water Resources Standards and A.D to 2022 standards for electrical indicators of energy minimum energy and Irrigation/ Metrology / A.D and mechanical efficient equipments performance indicators Ministry of Industry, equipments being of equipments used Commerce and Nepal Academy used in various sectors in different energy Supplies of Science and consuming sectors Technology

4.5 Conduct various Lack of policy and Conduct various Ministry of Energy, Department of From 2019 programmes for programmes for programmes for energy Water Resources and Industry/ Department A.D to 2022 energy audits in systematic and regular audits in relevant areas Irrigation/ Ministry of of Electricity A.D industrial, commercial energy audits, though including industrial, Industry, Commerce Development and public sectors limited number of commercial and public and Supplies energy audits have been sectors conducted 5. Reduce 5.1 Reduce energy The condition of energy Develop necessary Ministry of Energy, Nepal Electricity From 2019 energy import imports by utilizing the shortages to exits to some mechanism and reduce Water Resources and Authority / A.D to 2022 by energy energy saved through extent; lack of energy energy import through Irrigation Department A.D 14 conservation energy efficiency efficiency and energy energy efficiency and of Electricity conservation assurances; energy conservation Development lack of energy sufficiency

5.2 Carry out study Limited studies and Conduct study and Ministry of Energy, Nepal Academy Semiannually and research on research on energy research on energy Water Resources and of Science and regular from reducing peak demand efficiency and demand efficiency and demand Irrigation/ Nepal Technology/ 2019 A.D and implement side management side management Electricity Authority Water and Energy various programmes / Department Commission on demand side of Electricity Secretariat/ Tribhuvan management of Development University energy Government of Nepal Ministry of Energy, Water Resources and Irrigation