Benefits of low carbon development in a developing country: Case of Nepal

Energy Economics 34 (2012) S503–S512

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Benefits of low carbon development in a developing country: Case of Nepal Ram M. Shrestha ⁎, Shree Raj Shakya Asian Institute of Technology, School of Environment, Resources and Development, P.O. Box 4. Klong Luang, Pathumthani 12120, Thailand

a r t i c l e

i n f o

Article history: Received 2 June 2011 Received in revised form 1 January 2012 Accepted 16 March 2012 Available online 27 March 2012 JEL classification: O53 Q25 Q51 Q52 Q53 R49 Keywords: GHG emission reduction target Low carbon development co-benefits Electric mass transport Energy security Hydropower development Developing country

a b s t r a c t This paper analyzes the direct and indirect benefits of reducing CO2 emission during 2005 to 2100 in the case of Nepal, a low income developing country rich in hydropower resource. It discusses the effects on energy supply mix, local pollutant emissions, energy security and energy system costs of CO2 emission reduction targets in the country by using an energy system model based on the MARKAL framework. The study considers three cases of CO2 emission reduction targets and analyzes their benefits during the study period as compared to the reference scenario. The first two cases consist of a 20% cutback (Scenario ERT20) and 40% cutback (Scenario ERT40) (of CO2 emission in the reference scenario). The third case considers a 40% cutback of CO2 emission with the share of electric mass transport (EMT) in the land transport service demand increased to 30% (as compared to 20% in the reference scenario). The study shows that an implementation of Scenario ERT40 would increase the cumulative electricity generation (mainly from hydropower) by 16.5% (794 TWh), reduce the cumulative consumption of imported fuels by 42% (24,400 PJ) and increase the total energy system cost by 1.6% during 2005 to 2100 as compared to the reference scenario. Besides, there would be a reduction in the emission of local pollutants and generation of additional employment in the country. With the share of EMT increased to 30%, there would be a further reduction in local pollutant emissions, an improvement in energy security and a decrease in the energy system cost compared to that in Scenario ERT40. © 2012 Elsevier B.V. All rights reserved.

1. Introduction Recent studies have shown that the participation of developing countries is a must in order to stabilize long term greenhouse gas (GHG) concentrations at 450 ppm CO2e or lower (Blanford et al., 2009; IPCC, 2007). Climate change mitigation policies help not only to control GHG emissions but they may also result in an improvement of national energy security and reduction of local air pollutant emissions. Thus, there is a need to study the potential for GHG mitigation as well as direct and indirect benefits associated with GHG mitigation policies in a developing country context. The rising fossil fuel prices have increased the economic vulnerability of Nepal — a low income developing country. The country had to spend more than its total earnings from merchandise exports for importing fossil fuels in 2007/08 (MOF, 2009). In addition, the consumption of imported fossil fuel is rising more rapidly than the consumption of total energy demand in the country. If the current trend of fossil fuel import continues, there would be a big threat to the sustainability of the future energy supply in the country. In addition, the growing dependence on fossil fuels is the cause of the increasing air pollution (mainly ⁎ Corresponding author. E-mail addresses: [email protected], [email protected] (R.M. Shrestha), [email protected], [email protected] (S.R. Shakya). 0140-9883/$ – see front matter © 2012 Elsevier B.V. All rights reserved. doi:10.1016/j.eneco.2012.03.014

due to the vehicular emissions) and the associated acute environmental and health problems in the urban areas of the country (ADB/ICIMOD, 2006; Shrestha and Rajbhandari, 2010). Nepal possesses a huge hydropower resource with an economically feasible potential of 42,000 MW, of which only less than 2% is being exploited at present (NEA, 2008a; WECS, 2010). The Government of Nepal (GoN) has been emphasizing on extensive use of hydroelectricity to lessen the economic burden of imported fossil fuels on the country (NESS, 2003). One of the long term national strategies to reduce the dependence on fossil fuels is to diversify the energy mix through a greater use of indigenous energy resources like hydropower. In this context it would be of interest to know: How could a policy restraining CO2 emission affect the hydropower development? How significant would be the effects of such a policy on the national energy security issues, local pollutant emissions, and energy system cost? What would be the effect of increasing the role of electric mass transport on GHG emission mitigation, energy security and the local environment? There are a number of studies that assess the greenhouse gas mitigation potential of electric railway (ADB, 2004), trolley bus (Pradhan et al., 2006; PREGA, 2006) and hydrogen vehicles (Ale and Shrestha, 2009; UNEP/CES, 2005) in the case of Nepal. However, these studies were focused on the transport sector only and did not analyze the effects on the overall national energy system, energy security and local pollutants. Shrestha and Rajbhandari (2010) analyze the potential

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Nepal

Terai (Southern Plain)

Demographic Segregation

Economic Segregation

Mid Hills

Northern Mountain

Rural

Rural

Rural

Urban

Urban (Outside Kathmandu valley)

Urban

Kathmandu Valley Fig. 1. Detailed physiographic and economic disaggregation in the model.

found to result in a further reduction of local pollutant emissions, an improvement in energy supply security and a decrease in the additional total energy system cost as compared to the corresponding figures without the additional modal shift. This paper is divided into seven sections. The next section (Section 2) presents a brief overview of the hydropower development, energy and climate change policy of Nepal. Section 3 discusses the national energy system model developed for the study. The descriptions of the reference scenario and alternative scenarios of introducing different levels of CO2 emission reduction target (ERT) are presented in Section 4. This is followed by a discussion of the energy system development and GHG emissions in the reference scenario and the implications of an ERT policy. Finally, the key findings of the study are summarized along with concluding remarks.

implications of CO2 emission reduction from the Kathmandu Valley for energy mix, technology mix, energy system cost, and local pollutant emissions during 2005 to 2050. However, the study is carried out at a city level only; moreover, it did not discuss energy security implications. Likewise, Shakya and Shrestha (2011) studied the environmental, energy security and economic implications of introducing different shares of electric mass transport system and electric vehicles in the land transport service demands of Nepal. Similarly, Shakya et al. (2011) analyze the co-benefits of introducing different levels of carbon tax in the country. However, both these studies were not related to the analysis of the effects of setting a CO2 emission reduction target in the energy system of the country and the time horizon of both these studies was from 2005 to 2050 only. A distinguishing feature of the present study is that we analyze the potential implications of adopting a CO2 emission reduction target policy for indigenous resource development, energy security, emission of local pollutants, energy system cost and employment generation from a longer term integrated energy sector planning perspective covering the period of 2005 to 2100. The present study shows that an implementation of emission reduction policy promotes consumption of indigenous renewable energy resources (with their share increasing from 44% in the reference scenario up to 57.5% under 40% emission reduction target scenario), reduces consumption of imported fuels (i.e., by up to 28.2% under 40% emission reduction target scenario as compared to the reference scenario), improves efficiency of overall national energy consumption (i.e., by up to 7.6% in 40% emission reduction target scenario as compared to the reference scenario), reduces local pollutants emission, and creates new employment opportunity compared to the reference scenario during 2005 to 2100. These benefits are, however, at the cost of a nominal increase in the total energy system cost and a slight decrease in the diversity of energy resource supply. Under an emission reduction target of 40%, a 30% shift to electrified mass transport in the transport sector is

2. Overview of the energy and climate change policy in Nepal Nepal has a population of about 27 million, of which around 17% lived in urban areas in 2008 (ADB, 2010). According to the last population census in 2001 (CBS, 2003), the urban population of the country is growing at 6% during 1991 to 2001, which is over 3.5 times that of the rural population growth rate. This has caused a high growth in the demand for modern fuels (electricity and fossil fuels). Total primary energy supply (TPES) in the country was about 400 Peta Joule (PJ) in 2009; the TPES is dominated by biomass (agricultural residues, animal waste and fuelwood), with a share of 87% (in 2005). Fossil fuels (liquid petroleum products, LPG, coal) account for around 10.2% of TPES and their consumption was growing at an annual compounding growth rate (ACGR) of 4% between 1995 and 2009, i.e., almost twice the ACGR of TPES (2.5%) for the same period. The energy consumption in the country is dominated by the residential sector (with a share of 89.1%), followed by the transport (5.2%), industry

3000 Others 2500 Hydropower Biomass 1500 LPG 1000 Petroluem products 500 Coal 2100

2095

2085

2090

2080

2075

2065

2070

2060

2050

2055

2045

2040

2035

2030

2025

2020

2015

2010

0 2005

PJ

2000

Fig. 2. Total primary energy supply in Scenario 1a in Nepal during 2005 to 2100 (PJ).

R.M. Shrestha, S.R. Shakya / Energy Economics 34 (2012) S503–S512 Table 1 Power generation in Nepal during 2005 to 2100. Power plant

Hydropower Diesel generator Coal plant without CCS Other renewables Total

Installed capacity, GW

Electricity generation, PJ

2005

2050

2100

2005

2050

2100

0.55 0.11 0.00 0.01 0.67

5.68 0.00 0.00 1.94 7.61

25.89 1.50 2.00 9.71 39.10

8.59 0.28 0.00 0.25 9.11

72.65 0.00 0.00 32.31 104.97

289.90 10.60 42.57 190.90 533.97

Note: Other renewables consist of micro-hydro, solar, biomass based combined cycle power plant, MSW based power plant, cogeneration.

(3.3%), commercial (1.3%) and the agricultural sectors. However, the transport sector has a 40% share in the consumption of non-biomass commercial energy (WECS, 2010). The transport sector alone accounted for over 60% of the imported petroleum products and the sector's energy consumption was growing at 5.2% per annum during 1995 to 2009. Nepal is endowed with substantial amount of water resources, the economical potential of which is estimated at 42,000 MW. However, the country has exploited only 636 MW of hydropower potential and had an installed thermal generation capacity of 53 MW in 2009 (WECS, 2010). The GoN has recently introduced the Climate Change Policy 2010, which states the main objectives as: (i) promotion of the use of clean and renewable energy resources in the country and (ii) adoption of climate friendly socio-economic development by following a low carbon development path (MOEV, 2010). It also envisages formulating the national low carbon development plan by 2013. The Hydropower Development Policy 2001 of Nepal states the major objective as the maximum use of hydropower to substitute fossil fuels consumption and thus to improve the energy security of the country. In line with this objective, the GoN has formulated a medium term hydropower development plan to develop 25,000 MW of hydropower capacity for domestic consumption and export by 2030 (MOE, 2010).

3. Methodology A bottom up cost minimization energy system model of Nepal based on MARKet ALlocation (MARKAL) framework (ETSAP, 2007) has been developed for the purpose of the study. The integrated national energy system model of Nepal (“Nepal-MARKAL model”) consists of four modules, i.e., primary energy supply, conversion and process technology, end-use service demand and environmental emissions. The primary energy supply module represents extraction of primary energy from indigenous energy resources (mainly hydropower and biomass (agricultural residues, animal waste and fuelwood)) and import of fossil fuels. The conversion and process technology module consists of secondary energy generation, biofuel refineries, hydrogen production, transmission and distribution to the end-use services. The end-use service demand module considers service demands from five economic sectors, i.e., agriculture, commercial, industrial, residential and transport. These sectors are further subdivided into 114 sub-sector demands representing 38 distinct types of end-use services (for details on disaggregation of end-use service demand, see Shakya and Shrestha (2011)). Emissions of GHG and local pollutants (CO, SO2, NOX, (Non-methane Volatile Organic Compound) NMVOC, and PM10) are dealt with in the environmental emissions module. The model is disaggregated into three physiographic regions (i.e., southern plain (popularly known as “Terai”), mid-hills, and northern mountains) in order to capture the differences among those regions in terms of residential energy consumption characteristics. The physiographic regions have been further disaggregated into urban and rural sub-regions to capture the effects on the energy consumption pattern in the sub-regions due to variations in the level of urbanization and development. The Kathmandu valley has been considered

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as a separate sub-region within the Mid Hills due to the large concentration of the economic activities and urban population in the valley. Details of physiographic and economic disaggregation in the model are shown in Fig. 1. The model is formulated with an objective to minimize the total net present value of the energy system cost during the study period. The energy system cost comprises of energy supply technology investment cost, energy demand technology investment cost, net fuel import cost, domestic fuel cost, and other supply and demand costs. The model includes constraints on fulfillment of each type of service demand, availability of energy resources, and limits on power supply capacity (see Loulou et al., 2004). It can also include a CO2 emission constraint. Demands for energy-using services for the base year 2005 are estimated by using data obtained from various sources. Major sources used for primary energy resource potential in Nepal are ADB/ ICIMOD (2006) and WECS (1995, 2010). The service demands and technology stocks for the base year are estimated using the information from Central Bureau of Statistics (CBS) (2008) and WECS (1999, 2000, 2001, 2005b, 2006). The demands for different sectoral end-use services are projected using econometric approaches following Shrestha and Rajbhandari (2010). 1 The projection of end-use service demand in the residential and passenger transport sectors was estimated based on population and GDP (Gross Domestic Production). The freight transport demand was projected based on GDP. Similarly, the service demands for other sectors were estimated based on the value added in the relevant sectors (see Shrestha and Rajbhandari (2010) for more details). The cost and technology characteristics data are based on various sources (IEA, 2008; MOE, 2010; MOWR, 2009; NEA, 2005, 2008a,b; NIES, 2007; Nexant SARI/Energy, 2002; Shiwakoti, 2006; TERI, 2006). Emission factors for CO2 emission are based on IPCC (2006), while that for local pollutants i.e., SO2, NOX, CO, PM10 and NMVOC are based on various sources (Dhakal, 2006; EEA, 2009; EMEP/CORINAIR, 2007; Smith et al., 2000). A 10% real discount rate was used in the present study (World Bank, 2003). All the costs used in the model are expressed at constant prices of year 2005. 4. Description of scenarios This study analyses four scenarios: a reference scenario and three alternative CO2 reduction target scenarios. The reference scenario (hereafter “Scenario 1a” as mentioned in Calvin (2012-this Issue)) considers the energy system development to meet future service demands at the minimum cost without any restriction on CO2 emission. In this case, the real GDP (at constant 2000/2001 prices) is assumed to grow at an ACGR of 5.5% during 2010 to 2015; the growth rate would gradually increase to reach 7% during 2060 to 2070 and would thereafter gradually decline to reach 4% during 2090 to 2100. 2 The projection of future population till 2020 is based on CBS (2003) and follows the medium variant growth scenario of UNPD (2009) thereafter. The electrification rate would increase from 40% in 2005 to 100% by 2030 following WECS (2005a). Data on available energy resource stocks of biomass (agricultural residue, animal waste and fuelwood), lignite, hydropower and solar 1 The general equation used for end-use service demand projection in the study can be represented as follows:

ESDi;t ¼ ðX t =X 0 Þ

α1i

α 2i

ðY t =Y 0 Þ

ESDi;0

where, ESDi,t = level of service demand type i in year t for every sectors or sub-regions. Xt, Yt = independent variables (population, GDP) in year t. α1i = elasticity of service demand of type i with respect to the independent variable. 2 A GDP growth rate of 6% is considered in the low growth scenario in the Ten-Year Hydropower Development Plan (2010–2020) (MOWR, 2009). In the recent TwentyYear Hydropower Development Plan the average growth rate of GDP during 2005 to 2030 has been considered as 5.6% (MOE, 2010).

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100% 90%

Agriculture

80% 70%

Commercial

60% 50%

Residential

40% 30%

Industrial

20% 10%

Transport

0% 2005 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Fig. 3. Sectoral share of final energy consumption in Nepal during 2005 to 2100 (%).

180 160

Power Sector

140

Agriculture

MtCO2

120 Commercial

100 80

Residential

60 Industrial

40 20

Transport 2095

2100

2090

2085

2075

2080

2065

2070

2060

2050

2055

2045

2040

2030

2035

2025

2020

2015

2010

2005

0

Fig. 4. Sectoral CO2 emission in Scenario 1a during 2005 to 2100 (million ton).

are based on WECS (1995, 2010). The maximum annual domestic availability of fuelwood is estimated to be 7.15 Mtoe from 2020 onwards (ADB/ICIMOD, 2006; WECS, 2010). Similarly, the maximum annual domestic supply of agricultural residues and animal waste is estimated to be 6.95 Mtoe and 2.28 Mtoe respectively (WECS, 2010). It is assumed here that the biomass is produced on a sustainable basis so there is no net emission of CO2 involved in its use. The maximum availability of lignite is estimated to be 0.548 Mtoe (WECS, 1995). The prices of biomass in 2005 are adopted from WECS (2010) and the price escalation rates for the biomass price during 2005 to 2100 are based on EREC/GREENPEACE (2008). 3 Prices of the imported petroleum products, lignite and coal for 2005 are based on MOF (2009) and TERI (2006). Future prices of the petroleum products are projected using the ACGR mentioned in EIA (2009a). 4 In the case of lignite and coal, the ACGR value of 0.9% is used after 2010 (EIA, 2009b). The import of electricity from India to Nepal is limited to 150 MW 5 (657 GWh) from 2020 onwards, while the export of electricity to India is set to increase up to 2091 MW (12,378 GWh) after the completion of export oriented projects, i.e., West Seti, Arun III and Upper Karnali in 2017 as mentioned in the Twenty-Year Hydropower Development Plan 2010–2030 (MOE, 2010). Total hydropower plant capacity installation in the country would be limited to of 42,000 MW; this would include 70 individual candidate hydropower plants (with a combined generation capacity of 23,602 MW). Other candidate electricity generation technologies include diesel-fired power plants, integrated coal-gasification combined cycle (IGCC) plants both with and without 3

EREC/GREENPEACE (2008) has assumed price of solid biomass to increase from 2.5 US$/GJ in 2005 to 4.9 US$/GJ in 2050 for ‘other regions’. 4 EIA (2009a) has assumed the average world oil price to rise from $61 per barrel in 2009 to $110 per barrel in 2015 and $130 per barrel in 2030 at real price in 2007 US$ term in the reference case. 5 Power exchange capacity between Nepal and India is expected to increase from 50 MW in 2004/05 to 300 MW in 2019/20 under cooperative scenario of the Sector Study of Power Sector in the Kingdom of Nepal (JBIC, 2004).

the carbon capture and storage (CCS) technology, pressurized fluidized bed combustion (PFBC) system coal power plants (with and without CCS technology), wood based gasification combined cycle power plants, municipal solid waste (MSW) land fill gas based power plants and solar PV electricity generation plants. Besides, micro-hydro plants and solar home systems are considered for the remote areas of the country. Biodiesel from Jatropha and ethanol from molasses (i.e., first generation biofuels) are considered in the model. In addition, biofuels based on lignocellulosic conversion technology using fuelwood and agricultural residues (i.e., the second generation biofuels) (IEA, 2008) are considered in the model. Furthermore, the model includes hydrogen generation based on electrolysis process (IEA, 2008). In the transport sector, non-fossil fuel based technology options considered include full electric, hybrid (electric and gasoline/diesel) and hydrogen fuel cell based options. In addition, biodiesel and ethanol are considered as alternative transport fuel options. Recently, the government has considered the option of introducing an electric railway system in the country (RITES/SILT, 2010). The study by RITES/SILT (2010) considers the option of electric surface rail mass rapid transit (MRT) for the Kathmandu valley and electric train for the rest of Nepal from 2020. In the present study, the railway option is assumed to serve 10% of land transport demand in 2020; its share would gradually increase to 20% by 2050; the share would be maintained at that level thereafter to reflect the recent government plan on electric railway development. 6 Besides Scenario 1a, the following three greenhouse gas emission reduction target (ERT) scenarios are considered in the study: (i) A cumulative CO2 emission reduction target of 20% during 2005 to 2100 as compared to the cumulative emission in the

6 The share of rail mode in passenger transport was 23% and freight transport was 37% in India in 2001 (TERI, 2006). Our assumption of up to 20% model shift to electric mass transport can be considered as a realistic option under these facts.

R.M. Shrestha, S.R. Shakya / Energy Economics 34 (2012) S503–S512

Scenario 1a; all other things remain the same as in Scenario 1a (hereafter “Scenario ERT20”). (ii) Likewise, a cumulative CO2 emission reduction target of 40% (hereafter “Scenario ERT40”), and (iii) A cumulative CO2 emission reduction target of 40% with the share of electric mass transport (EMT) in the total land transport demand increasing from 10% in 2020 to 30% by 2050 and maintained at that level thereafter (hereafter called “Scenario ERT40 + EMT30”). An analysis of CO2 emission from Nepal under the Asian Modeling Exercise (AME) CO2 price path scenarios (see Calvin (2012-this Issue) for definition of the scenarios) has shown a cumulative CO2 emission reduction of 0.9% under Scenario 2a, 5.8% under Scenario 2b and 13.5% under Scenario 2c during 2005 to 2100 (see Fig. 5). Therefore the present study has set two different targets for cumulative CO2 emission reduction of 20% and 40% with a view to analyze the effects of reducing CO2 emission beyond the emission reduction target achievable under the AME carbon price scenarios. 5. Analyses of the reference scenario results The evolution of energy supply mix, final energy consumption and CO2 emission in the reference case (Scenario 1a) is discussed in the next subsections. 5.1. Primary energy supply and power generation mix The total primary energy supply (TPES) is estimated to grow at an ACGR of 2.2% (i.e., from 374 PJ in 2005 to 2862 PJ in 2100) as shown in Fig. 2. The imported energy consisting of petroleum products and coal would increase at a much higher ACGR of 4.3% during the study period. The share of biomass energy resources (agricultural residue, animal waste and fuelwood) would decrease from 87% in 2005 to 16% in 2100, while the shares of petroleum products would increase from 7% to 26%. There would also be an increase in the shares of hydropower (from 2% to 10%), LPG (from 1% to 13%), coal (from 2% to 32%), and others (from 1% to 3%) during the study period. The power generation capacity in Nepal is estimated to increase by 57 times from 0.7 GW to 39.1 GW during the study period and is dominated by hydropower as shown in Table 1. By 2100, hydropower plants would account for 66.2% of the total installed power generation capacity. The share of the other renewable sources (consisting of micro-hydro, solar, biomass based combined cycle power plant, MSW based power plant, cogeneration) constitutes 24.8% in 2100. Diesel and coal based generation capacities would have the share of 3.8% and 5.1% respectively. Annual electricity generation in Nepal is estimated to increase by over 57-fold during the study period as shown in Table 1. The share of other renewables, diesel and coal

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based generation in the annual electricity generation would increase gradually during 2005 to 2100, while that of hydropower (excluding micro-hydro) would decrease. 5.2. Final energy consumption The annual final energy consumption (FEC) in the country is estimated to increase at the ACGR of 2.1% (i.e., from 365 PJ in 2005 to 2652 PJ in 2100). However, the FEC excluding traditional biomass (agriculture residue, animal waste and fuelwood) would grow at the ACGR of 4.3%. The residential sector dominates the FEC with over 90% share in 2005, followed by the transport and industrial sectors with a share of 3% each (Fig. 3). In 2100, the industrial sector would account for 45% of FEC, followed by the transport and residential sectors each with a share of 20%. The annual end-use electricity consumption would increase at the ACGR of 5.5% (from 6.6 PJ in 2005 to 72.9 PJ in 2050) and then at the ACGR of 3.8% (reaching 466.1 by 2100). In the residential sector, electricity consumption would grow at the ACGR of 5.8% during 2005 to 2050 and 1.9% during 2050 to 2100. The faster growth of electricity consumption in the residential sector during the first half as compared to the second half of the study period is also in line with the target set in the “National Water Plan 2005” to electrify 100% households by 2030 (WECS, 2005a). 5.3. CO2 emission In Scenario1a, CO2 emission would increase at the ACGR of 4.4% (from 2.8 million tons in 2005 to 163 million tons in 2100) as shown in Fig. 4. In terms of sectoral contributions to the CO2 emission, the transport sector accounted for 32% of CO2 emission in 2005, while the industry and residential sectors had the shares of 26% and 24% respectively. There would be a substantial change in the sectoral composition of the CO2 emission by 2100: The industry sector would account for 49% of the emission in that year, while the transport, commercial and residential sectors would have the shares of 21%, 13%, and 8% respectively. The share of the power sector in CO2 emission would more than double during 2005–2100, i.e., from 3% in 2005 to 7% in 2100. The per capita energy related CO2 emission in Nepal is estimated to rise from 0.11 ton CO2/capita in 2005 to 2.48 ton CO2/capita by 2100. It should be noted here that although the estimated per capita CO2 emission of Nepal would increase by over 20 fold during 2005 to 2100, the estimated value of CO2 emission per capita in 2100 would still be lower than the per capita CO2 values in 2007 of several Asian countries like Malaysia, Thailand, China and South Korea (ADB, 2010). During the study period, CO2 emission per unit of TPES would increase from 7.4 kg/GJ in 2005 to 57.0 kg/GJ by 2100. 6. Implications of CO2 reduction targets 6.1. Effect on CO2 emission

MtCO2

180 160 140 120 100 80 60 40

1a ERT20

The estimated annual CO2 emission during the study period in the reference and CO2 emission reduction target (ERT) scenarios are shown

ERT40 ERT40+EMT30 2a 2b 2c

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085 2090 2095 2100

20 -

Fig. 5. Annual CO2 emissions under different scenarios. Note: Scenario 1a = “Reference”, Scenario 2a = “CO2 Price $10 (5% p.a.)”, Scenario 2b = “CO2 Price $30 (5% p.a.)”, Scenario 2c = “CO2 Price $50 (5% p.a.)” (Calvin, 2012-this Issue).

Table 2 Sectoral shares in cumulative CO2 emission reduction during 2005 to 2100, %. Sector

Scenario 1a

ERT20

ERT40

ERT40 + EMT30

Transport Industrial Residential Commercial Agriculture Power supply Total

27 42 9 13 3 7 100

6 76 * * * 18 100

9 53 10 15 0.1 14 100

15 52 9 11 0.2 13 100

*No contribution in CO2 emission reduction.

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Table 3 Fuelwise distribution of cumulative primary energy supply during 2005 to 2100 (PJ). Scenario

Petroleum products

LPG

Coal

Biomass

Hydropower

Electricity import

Other renewable

Total

1a ERT20 ERT40 ERT40 + EMT30

27,575 34,817 29,324 28,522

9603 10,057 7473 8021

20,005 6328 3468 3617

33,395 34,910 38,684 38,529

8799 8005 11,539 11,106

317 437 693 604

3124 3166 3525 3536

102,818 97,722 94,706 93,933

Note: Biomass includes agriculture residue, animal waste and fuelwood. Other renewable includes micro-hydro, solar, ethanol, biodiesel, municipal solid waste, and bagasse.

in Fig. 5. Under Scenario ERT20 the major reduction in CO2 would take place after 2065, whereas in case of other emission reduction target scenarios, CO2 reduction would take place from 2015 as shown in Fig. 5. The structures of sectoral CO2 emission reduction under different scenarios are shown in Table 2. The industrial sector dominates the cumulative CO2 emission reduction under the ERT scenarios with its share being mostly above 50% due to the substitution of coal by fuelwood in the thermal applications and efficiency improvement in production processes (discussed in Section 6.2.3). The additional supply of fuelwood in the industrial sector is made possible due to the declining trend of fuelwood use in the residential sector with urbanization. In the case of other sectors, CO2 emission is reduced mostly due to fuel switching (from fossil fuels to electricity) and also due to an efficiency improvement in the end use devices (see Section 6.2.3). In the transport sector, the partial substitution of diesel by biodiesel would reduce the CO2 emission to some extent under the ERT scenarios. It may be interesting to ask how would a shift in the land transport toward electric mass transport (EMT) affect the maximum feasible cumulative CO2 emission reduction potential. Model simulation shows that if the share of EMT in total land transport services is increased gradually from 10% in 2020 to 20% by 2050 and maintained at that level thereafter, other things remaining the same as in Scenario 1a, it would be possible to attain a cumulative CO2 emission reduction of up to 58% during the study period. Similarly, if the share of EMT is increased gradually from 10% in 2020 to 30% by 2050 and maintained at that level thereafter, it was found that the cumulative emission reduction potential could be increased up to 61%. 6.2. Analyzing benefits of emission reduction targets An implementation of CO2 reduction target would help reduce emissions of GHGs as well as local air pollutants, improve national energy security, increase energy efficiency and generate employment opportunities. These will be discussed next. 6.2.1. Increase in the use of renewable energy resources The present study shows that an ERT policy would result in a reduction of TPES by 5% under ERT20, 7.9% under ERT40 and 8.6% under ERT40 + EMT30, it would also promote the use of renewable energy resources (biomass, hydro and other renewable). The share of renewable energy sources in the cumulative TPES during 2005 to 2100 would increase from 44.4% in Scenario 1a to 47.6%, 57.5% and 57.2% under 35

GW

1a

30

ERT20

25

ERT40

20

ERT40+EMT30

15 10 5

Scenario ERT20, Scenario ERT40 and Scenario ERT40+ EMT30 respectively (Table 3). The additional deployment of EMT under Scenario ERT40+EMT30 would decrease the consumption of liquid petroleum products and slightly increase the consumption of LPG and coal as compared to that in Scenario ERT40. The increase in LPG consumption in Scenario ERT40+ EMT30 as compared to Scenario ERT40 is mostly due to the rise in LPG consumption in the commercial sector. Similarly, the increase in coal consumption would occur as a result of a nominal increase in coal use in the power sector (coal power plants with CCS technology) and boiler application in the Other Industry sub-sector. 6.2.2. Increased use of electricity based on renewable energy resources and cleaner supply technology Under Scenario ERT20, the cumulative electricity generation requirement would decrease by 2.8% (492 PJ) as compared to Scenario 1a mostly due to the partial replacement of electricity by LPG in cooking and penetration of energy efficient electrical devices in the residential and commercial sectors. However, under Scenarios ERT40 and ERT40+EMT30, the cumulative electricity generation would increase by 16.5% (2858 PJ) and 16% (2770 PJ) respectively during 2005 to 2100.7 As a result, the additional hydropower capacity needed (over and above the installed hydropower capacity under Scenario 1a) by 2100 would be 6357 MW under ERT40 and 6177 MW under ERT40+EMT30 (Fig. 6). The pressurized fluidized bed combustion (PFBC) type of coal fired power plants with carbon capture and storage (CCS) technology would replace 2000 MW of conventional coal plants under ERT20 and ERT40+EMT30, while they would substitute 1960 MW of conventional coal plants under ERT40 (Fig. 7). Interestingly, the additional electrification in the transport sector under ERT40+EMT30 would result in an increase in decentralized electricity generation by 276 PJ (especially from biomass based power plants) and a decrease in the centralized generation (mainly hydropower) by 364 PJ compared to ERT40. Thus the study shows that when transport electrification and GHG emission reduction policies are considered simultaneously, it is not necessary that they would promote a higher level of hydropower development than when only an emission reduction policy is considered. 6.2.3. End use energy efficiency improvement and use of cleaner technologies The cumulative final energy consumption (FEC) would decrease in all ERT scenarios as compared to Scenario 1a indicating an improvement in the efficiency of overall energy use in the country. The decrease in the cumulative FEC under ERT is mostly due to an additional penetration of nontraditional fuels and more efficient end use devices (see Section 6.2.3). The FEC would be reduced by 4.3%% under Scenario ERT20 and by 7.6% under Scenario ERT40. The increase in the share of EMT is expected to reduce FEC by 8.6% under Scenario ERT40 + EMT30 as compared to Scenario 1a (Table 4). As a result of ERT, there would be a significant improvement in energy efficiency, mostly in the industrial, transport and commercial sectors. The decrease in the FEC in the industrial sector would range from 13% under Scenario ERT40 to 14% under Scenario ERT40 + EMT30 and

2100

2095

2090

2080

2085

2075

2065

2070

2060

2050

2055

2045

2040

2030

2035

2025

2020

2015

2010

0

Fig. 6. Annual hydropower generation capacity requirement during 2010 to 2100.

7 The lower level of electricity generation under ERT40 + EMT30 is partly due to partial substitution of electric vehicles by EMT and partly due to higher energy efficiency of EMT.

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Other Renewables Coal plant with CC Coal plant without CC Diesel generator

2050

ERT40+EMT30

ERT40

ERT20

1a

ERT40+EMT30

ERT20

2005

ERT40

Hydropower 1a

50 45 40 35 30 25 20 15 10 5 0

1a

GW

R.M. Shrestha, S.R. Shakya / Energy Economics 34 (2012) S503–S512

2100

Fig. 7. Annual power generation capacity requirement in 2100.

that in the transport sector would range from 3% under Scenario ERT20 to 17% under Scenario ERT40 + EMT30 as compared to Scenario 1a. The present study indicates that an increase in the EMT share would result in a further decrease in FEC in the industrial sector and a further increase in FEC in the residential, commercial and agriculture sectors. In the residential sector, there would be an increased use of electricity for cooking to replace kerosene, LPG, fuelwood under Scenario ERT40 and Scenario ERT40 + EMT30. There would also be an increase in the penetration level of electric and solar water heaters under ERT scenarios as compared to Scenario 1a. In addition, efficient household devices like efficient LED televisions, efficient refrigerators, efficient space coolers and LED lamps become more cost effective under ERT constraints. Similarly, in the commercial sector, there would be a higher level of electricity use (than that in Scenario 1a) in cooking and water heating applications under Scenarios ERT40 and ERT40 + EMT30. However, electric cooking is partly replaced by LPG cooking under Scenario ERT20. There would also be a higher penetration of efficient air conditioners and LED lamps under the ERT scenarios. In the transport sector, there would be a larger use of biodiesel in place of diesel under the ERT scenarios. Under ERT20 and ERT40, there would be an additional transport electrification taking place with increased shares of diesel-hybrid pickup truck, electric bus, electric personal car and electric taxi as compared to that in Scenario 1a. Furthermore, electric motorcycles would become cost effective under all ERT scenarios and electric microbus would be cost effective under ERT40 and ERT40+ EMT30. Under the ERT scenarios, higher level of efficient technologies would be adopted in the industrial sector. Under the ERT policy, efficient pulp processing technology would partly replace the conventional technology in the pulp and paper industry; similarly, efficient technologies for juice extraction, sugar evaporation and crystallization would substitute conventional technologies in sugar industry; while vertical shaft brick kiln (VSBK) would replace traditional brick kilns. In the boiler application, there would be an increase in the share of wood based boilers and efficient diesel boilers under ERT scenarios. In the agriculture Table 4 Sectoral cumulative final energy consumption during 2005 to 2100 (PJ).

Transport Industrial Residential Commercial Agriculture Total

FEC in Scenario 1a, PJ

Reduction in FEC under ERT20

ERT40

ERT40 + EMT30

18,547 27,510 35,988 10,078 1705 93,829

559 3703 (220) 10 (5) 4048

1563 3554 569 1437 29 7152

3092 3780 73 1064 25 8033

Note: Figures inside parentheses indicate an increase in final energy consumption (FEC).

sector, there would be higher shares of electric and efficient diesel pumps under ERT40 and ERT40 + EMT30 as compared to Scenario 1a. 6.2.4. Reduction of local environmental pollutants Fig. 8 shows the annual emission of short lived local pollutants (SO2, NOX, NMVOC, CO and PM10) during 2005 to 2100. As can be seen, the emission of the pollutants would decrease in all ERT scenarios as compared to that in Scenario 1a in 2100. Interestingly, an increase in the share of EMT and a reduction in the share of road transport (i.e., in ERT40 + EMT30) would result in a further decrease in emissions of the local pollutants as compared to that under ERT40. The industrial and power sectors dominate the total SO2 emission reduction with their combined share being 97.4% under ERT20, 91.6% under ERT40 and 88% under ERT40 + EMT30. The industrial and transport sectors together hold a major share in NOX emission reduction, i.e., 75.9% under ERT20, 65.4% under ERT40 and 76.8% under ERT40 + EMT30. The reduction in CO emission is dominated by the industrial and transport sectors with their combined share of 100% under ERT20, 92.7% under ERT40 and 93.3% under ERT40 + EMT30. Similarly, the industrial and power sectors together account for almost 100% of the reduction in emission of NMVOC under ERT20, 54.4% under ERT40 and 68.6% under ERT40 + EMT30. The industrial and transport sectors would be responsible for almost all of the PM10 emission reduction under all the ERT scenarios. The reduction in the emission of local pollutants in the industrial and power sectors is associated with a decrease in the consumption of coal in these sectors as compared to Scenario 1a, while the reduction in the emission of local pollutants from the transport sector comes mainly from the increased role of electric transport services in the ERT scenarios. 6.2.5. Energy security co-benefit Two types of energy security indicators, i.e., Shannon–Wiener Index (SWI)8 and net energy import ratio (NEIR) (Grubb et al., 2006; Kruyt et al., 2009) are used for the cumulative TPES during the study period. They are shown in Table 5. The SWI measures the level of diversification of energy resources with its higher value indicating a more diversified energy resource mix.9 NEIR measures the level of dependence of the energy supply system on imported fuels with their higher value signifying increased level of import dependence. This study finds that there would be a reduction in energy import dependency of the country under all the 8 Shannon–Wiener Index (SWI) is defined as: SWI ¼ − ∑i si lnsi where, si = the share of fuel i. 9 With, six types of energy resources (petroleum products, LPG, coal, biomass, hydropower and others) considered for calculation of SWI, the maximum possible value of SWI is 1.79 (i.e., when equal amount of energy is supplied by each energy resource) and minimum possible value is zero (i.e., when only one type of energy resource is used for energy supply).

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(a) SO2

(b) NOx 700 1a

500 400

ERT20 (-33.2%)

300

ERT40 (-45.2%)

200 100

thousand tons

ERT40+EMT30 (-46.2%)

1a

500 ERT20 (-9.7%)

400 300

ERT40 (-16.5%)

200

ERT40+EMT30 (-18.9%)

100

-

15 20 25 20 35 20 45 20 55 20 65 20 75 20 85 20 95

05 20

85

95 20

75

65

20

20

55

20

45

20

35

20

25

20

15

20

20

20

05

-

(c) NMVOC

(d) CO

700

6,000

600

1a

500 ERT20 (-3.5%)

400 300

ERT40 (-8.7%)

200

ERT40+EMT30 (-10.4%)

100 -

thousand tons

thousand tons

600

20

thousand tons

600

1a

5,000 4,000

ERT20 (-6.0%)

3,000

ERT40 (-8.4%)

2,000 1,000

ERT40+EMT30 (-13.0%)

05 20 15 20 25 20 35 20 45 20 55 20 65 20 75 20 85 20 95

95

20

85

20

75

20

65

20

55

20

45

20

35

20

25

20

15

20

20

20

05

-

(e) PM10 thousand tons

250 1a

200 150

ERT20 (-12.6%)

100

ERT40 (-3.7%)

50

ERT40+EMT30 (-7.2%)

95

85

20

65

75

20

20

45

55

20

20

35

20

25

20

15

20

20

20

05

-

Fig. 8. Annual emission of selected local pollutants during 2005 to 2100. Note: Figure in parenthesis indicates cumulative change during 2005 to 2100. Note: Figure in parenthesis indicates cumulative change during 2005 to 2100.

ERT scenarios considered (see the NEIR values in Table 5). The cumulative total imported energy during 2005 to 2100 is estimated to decrease by 10.2% (5859 PJ) in ERT20, 28.2% (16,540 PJ) in ERT40 and 29.1% (16,673 PJ) in ERT40+ EMT30 as compared to Scenario 1a (Fig. 9). There would be a slight decrease in the diversity of energy supply resources used under ERT scenarios compared to Scenario 1a (mostly due to an increase in biomass (agricultural residues, animal waste and fuelwood) and hydropower). This study indicates that the ERT policy would result in a decrease in the import dependence as well as diversity of energy resource use in the country. The increase in the share of electric mass transport under ERT40 + EMT30 shows slight improvements in terms of dependence on imported energy (Fig. 9) and energy resource diversification as compared to ERT40 (Table 5). 6.2.6. Reduction in net energy import cost The discounted total energy system cost (TESC) during 2005 to 2100 in Scenario 1a is estimated to be 132.4 billion US$. The discounted TESC would increase by 0.3% under ERT20, 1.6% under ERT40 and 0.9% under ERT40 + EMT30 as compared to that in Scenario 1a. The discounted net

fuel import cost would account for 10.2% of the discounted TESC in Scenario 1a (Table 6). This study shows that the discounted net fuel import cost would decrease by 1.4% under ERT20, by 6.7% under ERT40 and by 9.9% under ERT40 + EMT30 as compared to that in Scenario 1a. 6.2.7. Employment co-benefit Assuming that each mega-Watt of hydropower development would generate, on an average, 30.3 man-years of employment each year during construction phase (MOWR, 2009) and 3.0 man-years of employment each year during the operation phase (Jha et al., 2007), there would be an additional employment generation of 1314 million man-years under Table 5 Energy security indicators for cumulative primary energy supply during 2005 to 2100. Scenario

Net energy import ratio (%) Shannon–Wiener Index

1a

ERT20

ERT40

ERT40 + EMT30

55.82 1.58

52.73 1.47

43.13 1.44

43.35 1.45

R.M. Shrestha, S.R. Shakya / Energy Economics 34 (2012) S503–S512

S511

70,000 60,000

57,389

Imported Electriciy

51,530

50,000

40,849

40,716

LPG

PJ

40,000 30,000

Coal

20,000 Petroleum Products

10,000 1a

ERT20

ERT40

ERT40+EMT30

Fig. 9. Cumulative total imported energy during 2005 to 2100.

ERT40 and 867 million man-years under ERT40+EMT30 during 2015 to 2100 associated with the additional hydropower development under these scenarios as compared to that in Scenario 1a. Note that the additional employment generation from hydropower development under ERT40+EMT30 is less than that under ERT40; this is because of the reduced electricity generation from centralized hydropower options and increased level of decentralized power generation from biomass sources under ERT40+EMT30. Under ERT scenarios there would be an additional employment generation related to the establishment and operation of recharging stations for electric vehicles. Assuming one recharging station serves 80 electric vehicles per day and employs one person (Morrow et al., 2008), there would be new employment generation in the transport sector of the order of 803 thousand man-year under ERT20, 2645 thousand man-year under ERT40 and 1618 thousand man-year under ERT40 + EMT30 during 2015 to 2100. 10 7. Conclusion This study has examined the implications of three different CO2 emission reduction target (ERT) scenarios for energy supply mix, local pollutant emissions, energy security and energy system costs. The study has also estimated the co-benefits of carbon emission reduction in terms of domestic employment generation and local pollutant emission reduction. In the reference scenario (i.e., Scenario 1a), the total primary energy supply is estimated to grow at ACGR of 2.2% during 2005 to 2100. At the same time, energy imports (liquid petroleum products, LPG and coal) would increase at a higher rate of 4.3% raising a serious concern as to the sustainability of the future energy supply. The CO2 emission per unit TPES in the reference scenario would increase from 7.4 kg/GJ in 2005 to 57 kg/GJ by 2100, while the energy related CO2 emission per capita in Nepal is estimated to rise from 0.11 ton CO2/capita in 2005 to 2.48 ton CO2/capita by 2100. The study shows that an introduction of ERT policy would promote the use of renewable energy resources, in that its share in the cumulative TPES supply would increase from 44.4% under the reference scenario to as high as 57.5% under ERT40 during 2005 to 2100. Several cleaner technology options would have to be adopted under ERT scenarios. As a result, there would be an improvement in the national energy security through reduction of energy import dependency under ERT scenarios. Under ERT40 + EMT30, the level of imported energy would fall by as much as 29.1% as compared to the reference scenario. In the power sector, there would be additional hydropower capacity additions of 6357 MW and 6177 MW under ERT40 and 10 In addition, there could also be new employment generated (during production, installation, operation and maintenance) associated with energy efficiency improvement and clean energy technologies, which have not been addressed in the present study due to requirement of macroeconomic model that considers the effects on different factors of production including labor.

ERT40 + EMT30 respectively. Coal fired power plants with carbon capture and storage technology would replace 2000 MW of conventional coal plants under ERT40 + EMT30, while they would substitute 1960 MW of conventional coal plants under ERT40 as compared to the reference scenario. The additional electrification in the transport sector under ERT40 + EMT30 would result in an increase in decentralized electricity generation by 276 PJ (especially from biomass based power plants) and a decrease in the centralized generation (mainly hydropower plants) by 364 PJ as compared to ERT40. Thus the study shows that when transport electrification and GHG emission reduction policies are considered simultaneously, it is not necessary that they would promote a higher level of hydropower development in the country than when only an emission reduction policy is considered. The industrial sector would dominate in the CO2 emission reduction with the sector's contribution in the CO2 reduction being over 50% under all the ERT scenarios. These reductions are mostly due to the fuel switching (i.e., from coal to fuelwood in boiler application) and use of energy efficient technology options in different industrial processes under the ERT cases. The shares of transport, residential, commercial and power sectors in the reduction of CO2 emission lie between 6% and 18% under different ERT scenarios. The agriculture sector contributes nominally (i.e., 0.1% to 0.2%) in attaining the CO2 emission reduction target. Under the ERT scenarios, there would be a decrease in the emission of short lived local pollutants: e.g., by 2100, SO2 emission would be reduced by up to 56%, NOX emission would be reduced by up to 28.1% and NMVOC by up to 22% under ERT40 + EMT30 as compared to that under the reference scenario. Similarly, there would be a reduction in the CO emission by 22.1% and the PM10 emission by up to 35% under ERT40 + EMT30. With the ERT, the discounted total energy system cost during 2005 to 2100 would increase by 0.3% under ERT20 and 1.6% under ERT40 as compared to the reference scenario. There would be a reduction in the discounted net energy import cost during the study period in the range of 1.4% under ERT20 to 9.9% under ERT40 + EMT30 as compared to the reference scenario. The study also analyzed the issue of the maximum feasible potential for cumulative CO2 emission reduction during 2005 to 2100. It Table 6 Discounted energy system costs (109 US$ at 2005 prices). Scenario

Supply technology investment

Demand technology investment

Net fuel import cost

Domestic fuel cost

O&M and others

Total energy system cost including the carbon tax

1a ERT20 ERT40 ERT40 + EMT30

10.0 10.2 10.5 10.4

95.2 95.3 95.4 95.0

13.6 13.4 12.7 12.2

9.6 9.9 11.9 11.9

4.0 4.1 4.2 4.0

132.4 132.8 134.6 133.6

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shows that it would be possible to attain a cumulative CO2 emission reduction of up to 58% during the period with the share of electric mass transport in total land transport services increasing gradually from 10% in 2020 to 20% by 2050 and maintained at that level thereafter. If the share of electric mass transport is increased from 10% in 2020 to 30% by 2050 and maintained at that level thereafter, it is found that the cumulative emission reduction potential could be increased up to 61%. Acknowledgment The authors would like to thank the valuable comments of two anonymous referees on an earlier version of the paper. However, the authors only are responsible for any remaining errors. References Ale, B.B., Shrestha, S.O. Bade, 2009. Introduction of hydrogen vehicles in Kathmandu Valley: a clean and sustainable way of transportation. Renewable Energy 34, 1432–1437. Asian Development Bank (ADB), 2004. Trolley bus development in Ring Road of the Kathmandu Valley, pre-feasibility study report. Prepared by Winrock International Nepal, Kathmandu. Asian Development Bank (ADB), 2010. Asian Development Bank — Key Indicators for Asia and the Pacific 2010, 41st edn. Manila. Asian Development Bank/International Centre for Integrated Mountain Development (ADB/ICIMOD), 2006. Environment Assessment of Nepal, Emerging Issues and Challenges. Blanford, G.J., Richels, R.G., Rutherford, T.F., 2009. Feasible climate targets: the roles of economic growth, coalition development and expectations. Energy Econ. 31 (Supplement 2), S82–S93. Calvin, K., et al., 2012. The role of Asia in mitigating climate change: results from the Asia modeling exercise. Energy Econ. 34 (Supplement 3), S251–S260 (this issue). Central Bureau of Statistics (CBS), 2003. Population Projections for Nepal 2001–2021. National Planning Commission Secretariats, GoN, Kathmandu. Central Bureau of Statistics (CBS), 2008. Census of Manufacturing Establishments 2006/07. National Level. National Planning Commission Secretariats, GoN, Kathmandu. Dhakal, S., 2006. Urban Transportation and the Environment in Kathmandu Valley, Nepal. Institute for Global Environmental Strategies (IGES), Japan. EEA (European Environment Agency), 2009. EMEP/EEA air pollutant emission inventory guidebook — 2009. Technical Report No 6/2009 (Tier 1 Default Emission Factors). EMEP/CORINAIR, 2007. EMEP/CORINAIR Emission Inventory Guidebook — 2007. EEA (European Environment Agency). Energy Information Administration (EIA), 2009a. International Energy Outlook 2009, Washington DC. Energy Information Administration (EIA), 2009b. Annual Energy Outlook 2009. With Projections to 2030, Washington DC. ETSAP, 2007. Models and Applications: Global Energy Technology Systems Analysis Programme (ETSAP),USA. http://www.estap.org2007(downloaded on 18th Nov 2009). European Renewable Energy Council (EREC)/ GREENPEACE, 2008. Energy Revolution: A Sustainable Global Energy Outlook. Grubb, M., Butlerb, L., Twomeyb, P., 2006. Diversity and security in UK electricity generation: the influence of low-carbon objectives. Energy Policy 34, 4050–4062. Intergovernmental Panel on Climate Change (IPCC), 2006. 2006 IPCC Guidelines for National Greenhouse Gas Inventories. Institute for Global Environmental Strategies, Japan. Intergovernmental Panel on Climate Change (IPCC), 2007. Climate Change 2007: mitigation. Contribution of working group III to the fourth assessment report of the intergovernmental panel on change (2007). In: Metz, B., Davidson, O.R., Bosch, P.R., Dave, R., Meyer, L.A. (Eds.), Climate. Cambridge University Press. International Energy Agency (IEA), 2008. Energy technology perspectives 2008. Scenarios and Strategies to 2050. Paris. Japan Bank for International Cooperation (JBIC), 2004. Sector study for power sector in the Kingdom of Nepal, Final Report. Jha, D.K., Yorino, N., Zoka, Y., 2007. A modified DEA model for benchmarking of hydropower plants. Power Tech 2007 IEEE Lausanne:1374–1379. doi:10.1109/PCT.2007.4538516. Kruyt, B., Vuuren, D.P., de Vries, H.J.M., Groenenberg, H., 2009. Indicators for energy security. Energy Policy 37, 2166–2181. Loulou, R., Goldstein, G., Noble, K., 2004. Energy technology systems analysis programme. Documentation for the MARKAL Family of Models.

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