To address longstanding energy challenges, Nepal has embraced biogas, a clean power source derived from organic waste. The Extended Biogas Project, implemented by the World Bank, started in 2014 as part of the Scaling Up Renewable Energy Program (SREP) of the Climate Investment Funds (CIF). For this project, CIF provided USD 4.2 million in grant funding that generated investments of USD 3.6 million from the government and of at least USD 10.68 million from the private sector.
Almost 200 large-scale biodigesters had been installed when the project closed in 2021, and 11 massive new plants were on the verge of completion in the country. Six of these 11 new facilities were commercially run. The project broke down barriers to private sector participation in the sector, jumpstarting what could become a biogas boom in Nepal as developers benefit from investing in this low-cost energy source. This is consistent with the objectives of SREP, which was created to pilot and demonstrate the economic viability of renewable energy projects in developing countries.
Biogas is often used by households to replace kerosene, a fossil fuel with a higher carbon footprint. It uses natural anaerobic digestion to turn manure from livestock into energy and prevents harmful methane from spreading into the atmosphere. Overall, SREP-funded biogas projects have avoided an estimated 90,754 tCO2e annually, translating to 1.815 MtCO2e over a 20-year lifetime of the biogas plants.
Beyond these climate gains, several benefits of the Extended Biogas Project have recently been documented in The Evaluation of the Development Impacts from CIF’s Investments, an independent report.
First, the project enhanced Nepal’s energy security, with an estimated 600,000 liquefied petroleum gas cylinders replaced, equivalent to more than USD 5 million worth of avoided imports. “The project also supported the production of more than 88,000 tons of organic fertilizer that farmers can use instead of chemical fertilizers, improving soil quality and yields and reducing fertilizer import bills by up to USD 34 million,” explains the report.
Livelihood benefits were also uncovered by the authors. The reliable energy output of biogas means more affordable heating and electricity, with estimated cost savings of 25-30 percent for households. The construction and management of the plants created jobs for Nepalis. And new sources of income are now available to local farmers who sell animal waste to the plants.
Biogas can also be a game changer for Nepali women, who are often tasked with securing wood energy supply. “The project saved each family about three hours per day by reducing time spent collecting fuel wood, cooking, and cleaning,” says the independent evaluation.
More generally, biogas mainstreaming brings about better quality of life in Nepal. Biogas replaces harmful cooking fuels, enhancing indoor air quality and health. The biogas value chain also means less land, air, and water pollutants, with landfill waste reduced onsite by at least 50 to 60 percent.
So, what next for biogas development in Nepal? The independent evaluation highlights the success of the pilot in opening up a sustainable market: “The project received strong interest from developers, and chances appear high that there will be a follow-up program for similar projects. Most of the interviewed project developers are willing and have taken the steps to invest again in similar projects.”