World Bank approves $52m credit for Nepal clean air project to cut industrial pollution

WASHINGTON: The World Bank’s Board of Executive Directors has approved a $52 million credit for the Nepal Clean Air and Prosperity Project, aimed at cutting industrial air pollution and strengthening the country’s air quality management systems.

The project will target reductions in fine particulate matter (PM2.5) emissions from industrial and commercial boilers and furnaces, with a focus on the Kathmandu Valley, the Tarai and surrounding foothill regions where air pollution poses severe health and economic risks. It will combine clean-technology financing, incentives and technical assistance to help enterprises adopt cleaner production methods.

Through a combination of clean technology financing, incentives and technical assistance, the project will support around 400 industrial and commercial enterprises to adopt electric boilers and furnaces, modern biomass boilers and furnaces, or advanced emission-control technologies, measures the World Bank says will yield substantial air quality improvements.

“Air pollution is not only a public health crisis but also a significant economic burden in Nepal, costing the country more than six per cent of GDP each year through health costs and lost labour productivity,” said David Sislen, Division Director for Maldives, Nepal and Sri Lanka. “This project aims to protect millions of people from harmful pollution by helping Nepali enterprises adopt cleaner and more efficient technologies that at the same time also lower operating costs, improve competitiveness, and support sustainable industrial growth.”

“As Nepal continues to industrialise, industrial emissions are expected to become the largest source of air pollution,” the World Bank said. “The adoption of clean technology is limited in Nepal due to a combination of high upfront investment costs, constrained access to long-term financing, and low technical capacity among enterprises,” said Martin Heger, World Bank Senior Environmental Economist, South Asia Region. “This project addresses these barriers by pairing long-tenor financing and targeted capital incentives with hands-on technical assistance, helping industries to transition to cleaner production.”

Implementation will be led by the Department of Industry under the Ministry of Industry, Commerce and Supplies and the Department of Environment under the Ministry of Forests and Environment. Rastriya Banijya Bank will act as the handling bank for the clean-technology financing facility.

The World Bank financing is complemented by a $5 million grant from the bank’s Resilient Asia Program, funded by the United Kingdom’s Foreign, Commonwealth and Development Office and the Swiss Agency for Development and Cooperation. The project forms part of the World Bank’s Regional Air Quality Management Program in the Indo-Gangetic Plains and Himalayan Foothills, a region identified as a global air pollution hotspot.