Why Nepal's Banks Could Become the Missing Link in Unlocking Carbon Finance
Summary
Nepal could unlock major climate investment through carbon markets, but upfront financing remains a key obstacle for project developers. The article argues that commercial banks can bridge this gap by lending against future carbon revenues under Article 6 mechanisms such as MOPAs.
Key Points
- Nepal has the potential to attract carbon revenue into renewable energy, clean cooking, biogas and electric mobility projects under Article 6 of the Paris Agreement.
- Most Mitigation Outcome Purchase Agreements (MOPAs) pay only on delivery, leaving projects short of upfront capital before carbon revenues arrive.
- The article argues that Nepal’s commercial banks could use future contracted carbon revenues as credit enhancement to finance climate projects.
- Regulatory clarity, capacity building, standardized MOPA terms and support from development partners are needed to make carbon finance bankable.
