Nepal Transport and Climate Profile 2026

Outline

NEPAL

TRANSPORT AND CLIMATE PROFILE

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Background

Nepal, a lower-middle-income economy in South Asia with a population of 29.7 million and a GDP (PPP) of $170.1 billion, faces a dual challenge: rapid motorization and escalating climate risks. As of 2024, the transport sector is a significant contributor to the national carbon footprint, emitting 5.1 million tonnes of greenhouse gases (GHG), representing approximately 12% of total economy-wide emissions. Critically, the pace of these emissions has accelerated; while transport-related CO2 grew at 5.3% annually prior to the Paris Agreement and SDGs, this rate more than doubled to 12.0% annually since 2015. This trajectory is reflected in the sector's carbon intensity, which rose to 30.3 gCO2e per USD in 2024—surpassing the Asia-Pacific average (29.0) and significantly exceeding the South Asian subregional average (20.9).

The emissions profile is overwhelmingly dominated by road transport, which accounts for 98% of total transport emissions and 12% of the country's total GHG output. Domestic aviation contributes a marginal 2%, while rail and domestic navigation remain negligible. This concentration is mirrored in energy consumption patterns: in 2023, the sector consumed 56,784 terajoules, with 98% attributed to road transport. Alarmingly, Nepal remains 100% dependent on oil products for its transport energy, with biofuels and electricity recording <1% shares as of 2023. This total reliance on fossil fuels is further complicated by petroleum subsidies that incur high external costs, primarily through road crashes (86%), congestion (10%), and road damage (4%).

Nepal's geographical and climatic profile places its transport infrastructure at extreme risk. Since 2000, the country has endured 75 recorded natural disasters—dominated by floods (51%) and landslides (23%)—affecting 13.8 million people and resulting in $8 billion in damages. The transport network faces potential average annual losses of $13.9 million, with 96% of these losses concentrated in the road sector. Ranking 153rd globally in National Road Vulnerability, the nation faces a precarious future under a 4.5-degree warming scenario, where over 34% of road and rail assets would be exposed to frequent and extreme precipitation.

Despite these challenges, there is a visible shift toward electric mobility and systemic reform. While motorization reached 228 vehicles per thousand population in 2024, the composition of vehicle imports is changing. Between 2017 and 2024, the value of electric vehicle (EV) imports reached $610 million, accounting for 53% of total road vehicle imports by 2024. This transition is particularly evident in the bus sector, where 21.8% of trade since 2017 has been electric. However, urban accessibility remains a bottleneck; in 67% of Nepal's nine major urban agglomerations, 80% of residents lack convenient access to public transport, highlighting a critical gap in service delivery despite the import of $128.8 million worth of bicycles over the last decade.

The policy landscape is evolving, anchored by the Nationally Determined Contribution (NDC) 3.0 published in 2025. While the NDC lacks a net-zero target or transport-specific GHG limits, it sets an economy-wide mitigation target to reduce emissions by 17.12% in 2030 and 26.79% in 2035 against a Business-As-Usual scenario. Out of 17 relevant policy documents, 6 are climate-specific, emphasizing EV mandates, public transport improvements, and railway electrification. However, a significant misalignment persists: only 33% of policy measures address climate adaptation, despite the high physical vulnerability of the network. Financing for this transition has scaled significantly; official development assistance (ODA) rose from $336.8 million (2002–2010) to $1.1 billion (2011–2023), and public-private partnerships (PPP) emerged for the first time in the last decade, totaling $350 million—all currently directed toward the road sector.

Avoid: To mitigate the demand for carbon-intensive mobility, Nepal is leveraging integrated land-use and transport planning to reduce unnecessary travel and trip distances. The National Sustainable Transport Strategy (NSTS) for Nepal (2015-2040) emphasizes "high-density and compact city development" and the coordination of production and consumption centers to minimize freight and passenger travel. This structural approach is complemented by demand-side measures such as the introduction of "staggered working and school hours" and "congestion pricing schemes" to relieve urban pressure, as outlined in the Nepal Road Safety Action Plan (2021-2030). Furthermore, the National Energy Strategy of Nepal proposes using fiscal levers, including increased fuel prices, to limit discretionary vehicle use.

Shift in Nepal emphasizes a strong transition from private cars to high-capacity public transportation and non-motorized options. The Fifteenth Plan (2019/20–2023/24) highlights Bus Rapid Transit (BRT) and mass transit systems in key urban areas. This aligns with NDC 3.0, which aims to develop 100 km of electric bus, trolley, and light rail systems in the Kathmandu Valley by 2035. Rail infrastructure is also a key focus, with plans to build a 300 km electric rail network by 2035 for passenger and freight transport. For non-motorized transport, NDC 3.0 calls for a dedicated NMT and mobility policy by 2030, including the creation of cycle lanes in all metropolitan areas and bicycle-sharing schemes.

The "Improve" pillar centers on a strong push for electrification and strict efficiency standards. The Second Nationally Determined Contribution (NDC) and NDC 3.0 set ambitious sales targets, aiming for battery electric vehicles (BEVs) to make up 95% of private and 90% of public passenger car sales by 2035. These goals are supported by the National Action Plan for Electric Mobility, which outlines plans for charging infrastructure expansion and phasing out old fossil-fuel vehicles. System efficiency is further improved through the Nepal Urban Road Standard - 2076 and the creation of "Vehicle Fitness Test Centers" (VFTC) across all provinces to ensure vehicles are roadworthy and meet emission standards. Additionally, Nepal's National Energy Strategy encourages blending bio-fuels such as E10 ethanol and B05 biodiesel to reduce the carbon footprint of the fleet.