Energy Transition for a Resilient and Low-Carbon Economy

1. Energy Transition, Energy Resilience, and Low-Carbon Economy

Energy Transition refers to the major structural change in energy supply, consumption, and emissions. It is a global shift from high carbon-intensive, fossil fuel-based energy systems to cleaner, more sustainable, and low carbon-intensive renewable resources. This transformation, also called energy system transformation, aims to reduce emissions during the processes of energy production and consumption. It involves adopting energy efficiency measures, electrifying various sectors such as residential, transportation, and industry, and integrating innovative technologies like battery storage and hydrogen energy. Energy transition plays a crucial role in achieving both economic resilience and carbon reduction measures.

Energy Resilience is the ability of an energy system to continue functioning during disruptions. It anticipates, adapts to, and recovers quickly from disturbances while ensuring a reliable and sustainable energy supply. This is vital to minimize the impact of natural disasters, cyberattacks, supply chain disruptions, and energy crises. By investing in innovative technologies, diversifying energy sources, and strengthening infrastructure, societies can ensure a reliable, adaptable, and disaster-resistant energy system.

Low-Carbon Economy is an economic system designed to reduce the consumption of high-carbon-emission fossil fuels and associated greenhouse gas emissions. It ensures long-term sustainability by integrating clean energy, efficient resource use, and climate adaptation strategies. It includes:

a) Expanding renewable energy.

b) Improving energy efficiency in buildings, industries, and appliances.

c) Electrifying transportation and industrial sectors using clean energy.

d) Implementing carbon pricing and regulations to reduce emissi

e) Promoting sustainable agriculture and forestry to enhance carbon sequestration.

Energy transition for a resilient and low-carbon economy shifts energy production and consumption from fossil fuels to clean, renewable resources. This shift reduces carbon emissions, mitigates health and environmental impacts, minimizes reliance on fossil fuel imports, and develops coping capacity during energy supply disruptions. Simultaneously, it fosters innovation in renewable energy technologies, adapts infrastructure to climate-related risks, and ensures a sustainable and resilient economy.

A Resilient Economy ensures economic stability amid environmental and economic uncertainties such as downturns, climate disasters, and energy crises. It integrates risk management and sustainability through:

a) Energy Security – reducing dependence on imported fossil fuels and ensuring stable energy supply.

b) Climate Adaptation – strengthening infrastructure to withstand climate-associated risks.

c) Diversified Economic Growth – reducing reliance on fossil fuel industries and investing in sustainable sectors.

d) Disaster Preparedness – developing early warning systems and emergency response mechanisms.

e) Social Inclusion – ensuring fair access to clean energy, jobs, and economic opportunities.

2. Why Energy Transition?

Energy transition helps maintain a resilient and low-carbon economy by strengthening renewable energy systems and reducing carbon emissions. Decentralized energy systems, such as microgrids, reduce reliance on centralized power grids, making communities more self-sufficient. Subsidized renewable energy systems stabilize energy prices and lower dependency on volatile fossil fuel markets. Additionally, energy transition creates green job opportunities by shifting to clean energy industries and investing in technological innovation, driving economic competitiveness and sustainable growth.

Adopting clean energy across various sectors achieves significant carbon reductions:

a) Replacing excessive biomass use in the domestic sector.

b) Expanding electric vehicles in transportation.

c) Reducing energy loss in industrial transformation processes.

d) Implementing energy-efficient processes and circular economy models.

3. How Can Nepal Be a Favorable Platform?

3.1 Catalyst Factors

3.1.1 Nepal’s Current Consumption Status

In FY 2022/23, Nepal's total energy consumption was 532.41 Petajoules, reflecting a 16.81% decline from the previous year. This reduction was driven by decreased reliance on traditional fuels and fossil fuels. Traditional biomass sources (fuelwood, agricultural residue, and animal waste) still dominate Nepal’s energy consumption, accounting for 64.17% of the total, though their overall consumption has declined by 17.2%. Electricity consumption grew by 21.18%, while petroleum product use dropped by 16.14%, indicating a shift toward renewable resources.

Renewable energy sources are gradually gaining importance in Nepal’s energy mix. In 2021, renewable energy accounted for 74% of the country’s total final energy consumption, highlighting Nepal’s strong dependence on hydropower and other renewables.

3.1.2 Energy Consumption Capacity of Users

In 2022/23, Nepal's per capita primary energy consumption was about 1,610 kWh, and per capita electricity consumption was 380 kWh, significantly lower than the global averages of 19,836 kWh and 3,204 kWh, respectively.

The Energy Ladder model describes how households shift from traditional, inefficient energy sources to modern clean energy sources as their socioeconomic status improves. According to the EPA’s fuel tier system:

Tier 1 Fuels: Traditional biomass fuels (firewood, crop residues, dung) used in inefficient, polluting systems.

Tier 2 Fuels: Transitional fuels (kerosene, coal) that are more efficient but still have risks.

Tier 3 Fuels: Modern, cleaner fuels (electricity, LPG, renewables like solar and biogas).

3.1.3 Global Commitments

There are specific pressure-driven international policies set for energy transition and minimizing climate change impact. More specifically, the Sustainable Development Goals (SDGs) 2015 - for peace and prosperity for people and the planet- the commitment of all United Nations member countries to be achieved by 2030 (UN, 2017); Paris Agreement (COP21), 2015 to limit global warming well below 2°C above pre-industrial levels; Carbon Neutrality Goal (COP26), 2021 for net-zero emissions by 2050, as well as UAE Declaration (COP28), 2023 for climate change, health and sustainable development; EU Green Deal, 2020 for modern resource efficient and competitive economy for achieving carbon neutrality by 2050; US Inflation Reduction Act, 2022 for major investments in clean energy and emissions reductions, etc.

Likewise, the National Transport Policy (2001); Environment-Friendly Vehicle and Transport Policy (2014); National Environmentally Sustainable Transport (EST) Strategy (2015); and Promotion of Electric Vehicles (EVs) (2016) are the main transport policies and initiatives in Nepal that reflect Nepal's commitment to building sustainable and resilient transport systems. Likewise, the Hydropower Development Policy (2001); Nepal Renewable Energy Subsidy Policy (2016); National Energy Efficiency Strategy (2018); Renewable Energy Efficiency Strategy Plan of Nepal (2018); Alternative Energy Subsidy Policy Nepal (2021); and Nepal Energy Efficiency Program (NEEP) are the main energy sector policies in Nepal through which the Governments set emissions reduction targets and regulations for .carbon pricing; green finance and investments to promote low-carbon innovations.

4. Solution

The better solution options for energy transition for a resilient and low carbon economy will be:

1) Demand Side Management

2) Energy Efficiency

3) Use of Alternative Energy Resources

Demand Side Management is a strategy used to control electricity demand by incentivizing customers to modify their energy consumption patterns during peak hours or reduce their overall energy consumption as much as they can but without compromising minimal requirements.

Demand-side management can be materialized through using five different technologies, namely:

a)- Carbon Technology which includes the use of renewable energy sources such as solar, wind, hydro, and bioenergy

b) Energy Efficiency Technology which involves the application of LED lighting, smart grids and meters, and energy-efficient appliances

c) Electrification Technology refers to the use of electric vehicles (EVs) and heat pumps.

d) Hydrogen and Energy Storage Technology which includes the use of green hydrogen and battery storage systems

e) Carbon Capture and Storage (CCS) Technology Captures CO₂ Emissions from Industrial Processes and stores them underground to prevent entering the atmosphere.

Energy efficiency means using less energy to perform the same task either by using highly efficient fuel, or/and by eliminating energy loss during the transformation process. Production and use of renewable energy resources at the local level like- biogas, micro-hydro, improved cook stoves, wind, solar, and heat pumps require intermediate technology but produce clean and efficient renewable resources. Energy efficiency brings a variety of benefits: reducing greenhouse gas emissions, reducing demand for energy imports, and lowering costs for a household.

Alternative energy refers to energy sources other than fossil fuels, like Wind, Solar, Hydrogen Fuel Cells, Biomass, and Biofuels. Alternative energy is a broader category that encompasses all non-fossil-fuel-based energy sources and processes, of which renewable energies are only a part. Hence, by combining all of those low-carbon and resilient technologies, a future-proof energy system can be created that supports a sustainable, secure, and economically stable world.

5. Major Challenges and Opportunities

Shifting to a resilient and low-carbon economy poses many economic, technological and policy difficulties.  Fossil fuel shares major energy consumption in Nepal and 3/4th part in global energy consumption. The transportation and Industrial sectors heavily depend on fossil fuels which cannot go long if the production and use of alternative energy resources like bioenergy are inadequate to replace them. High investment in imported fossil fuels not only impacts on national economy but also creates an energy crisis during its short supply.  It needs alternative options for demand-side management and energy efficiency. 

Nevertheless, there is a positive silver lining already raised for it which makes us optimistic to adopt this module. Electricity production and consumption rates are increasing while the use of fossil fuel and biomass fuel are in decreasing trend. The use of electric vehicles and hydrogen fuel cells is taking a wider share and has created an optimistic environment for Nepal.

If all conditions go in an improved scenario (rather than business as usual scenario), it creates significant opportunities for sustainable development, employment generation, and energy stability directly and indirectly. For instance, if Biogas is produced to its optimal potentiality (of 0.3 million in Nepal) and full production capacity of the digester, it will replace the use of biomass in the domestic sector. Research showed that one biogas plant can reduce 19.3 tCO2e per year which benefits on environment, health, and economy through carbon credits (Subedi, 2015). Advancing the energy transition, embracing clean technologies, and enforcing robust policies through investing in a green economy today will enable Nepal and the global community to be sustainable both from environmental and economic perspectives that ensure long-term prosperity, health, and resilience for future generations.

6. Conclusion

Energy transition is essential for Nepal’s sustainable, resilient, and low-carbon future. By adopting renewable energy, improving energy efficiency, and investing in innovative technologies, Nepal can address environmental, economic, and social challenges. With strong policies and global collaboration, Nepal can secure long-term prosperity and sustainability for future generations.

References:

WECS (2024). Energy Synopsis Report 2024.

Sustainable Development Goals (SDGs).

National Energy Efficiency Strategy, 2075 BS.

Renewable Energy Subsidy Policy, 2073 BS.

NEA (2024). World Energy Outlook 2024.

Subedi, S.K.A. (2015). Domestic Biogas Production and Use in Nepal.

Dr. Subedi is the Chairperson of Krishnam Smart Engineering Solutions Pvt. Ltd., Nepal, and the Research and Innovation Department Head at Himalaya College of Engineering, Nepal.

Email: [email protected]