Carbon trade and Nepal: Making opportunities through trust and rules
Countries, businesses, or communities can make money through carbon trade by cutting down on greenhouse gas emissions or by conserving the environment. Things like protecting forests, making clean energy, improving farming methods, and better waste management can all help cut emissions. When a project effectively cuts down on carbon emissions, it can earn carbon credits, which are proof that the emissions have been cut down. Companies or nations who need to cut their emissions to realise climate goals can then acquire these credits. In basic terms, carbon trade lets Nepal make money from other countries while conserving the environment. Nepal has a lot of forests, hydroelectric resources, farmland, and community-based conservation systems. Carbon trade is a big chance for the economy and the environment in this country.
The Government of Nepal created the Carbon Trade Regulation 2082 to handle this chance in a way that is organized and trustworthy. This rule sets up a nationwide framework for selling carbon and explains how carbon projects get approved, measured, reported, and validated. It also defines standards for issuing and keeping track of carbon credits, makes sure that the government is involved and that everything is open and honest, and safeguards national interests while participating in international carbon markets. In brief, Carbon Trade Regulation 2082 gives Nepal the legal right to take part in global carbon markets. This legal clarity is very important since foreign buyers only trust carbon credits that come from countries with clear laws, trustworthy institutions, and systems that work.
Carbon trading is not just good for the environment; it is also a way for countries to do business with each other. Carbon credits are like Nepal’s traditional exports, like tea, cardamom, carpets, or hydropower, in that they can be traded. Like any other export item, carbon credits must meet international standards, follow technical rules, and go through accepted verification and certification procedures. If people in other countries don't trust or accept Nepal’s carbon credits, they can’t be sold, no matter how good they are for the environment. Because of this, carbon trade should be seen as part of Nepal’s export strategy and trade facilitation objective, not just as an environmental policy concern.
Accreditation is a key idea in carbon trading. It basically decides who you can trust. Accreditation determines who may check carbon projects, what methods are acceptable for measuring emissions, whether Nepal’s procedures meet international standards, and whether international buyers would accept approvals given in Nepal. If certification mechanisms aren’t strong, transparent, or consistent, international buyers might not want Nepal’s carbon credits, ask foreign organizations to verify them again at a high expense, provide lower rates, or not buy from Nepal at all. These problems are like Non-Tariff Measures and Technical Barriers to Trade in that they make it harder for businesses to compete and get into the market.
Right now, Nepal can’t fully participate in international carbon markets because of some shortcomings in its accreditation system. There isn’t a strong national certification agency that focuses on carbon verification, and the Measurement, Reporting, and Verification requirements don’t yet match up with how things are done in the global carbon market. There aren’t many ways to verify and audit things in the country, and there aren’t any agreements with significant international carbon standards or registers to recognize each other’s work. Also, project developers and investors are unsure about what to do because procedures and timetables are not clear. These gaps make transactions more expensive, slow down approvals, and lower worldwide trust in Nepal’s carbon credits.
Carbon Trade Regulation 2082 needs to work well with international systems for Nepal to be successful around the world. One important step is to set up or choose a robust National Accreditation Body that can accredit carbon verifiers and validators in line with international standards. The regulation must make it clear that this kind of organization must work independently and openly. This would make Nepal less reliant on foreign verification organizations, lower the costs of domestic projects, and give the country more control over the carbon trading process.
It is also very crucial that Nepal’s Measurement, Reporting and Verification system is in line with worldwide standards. MRV methods must be scientifically valid, transparent, and aligned with international standards, including ISO-based frameworks and prominent voluntary carbon market methodologies. Nepal doesn’t need to come up with new ways to keep track of carbon; instead, it can modify and combine current worldwide methods to fit its own needs. This alignment makes sure that Nepali carbon credits are acknowledged around the world without any problems or extra checks.
Strong quality assurance and quality control methods are also needed to keep carbon trading honest and of high quality. Regular audits, defined standard operating procedures, protections against mistakes or manipulation, and professional certification of verifiers are all very important. These systems help keep Nepal’s good name and create trust over time with international buyers, investors, and registries.
Another important task is to set up mutual recognition agreements with major buyer countries and worldwide carbon standards. Nepal’s accredited verifiers and certified credits can be used internationally without having to be verified twice, thanks to mutual recognition. This lowers costs, speeds up transactions, and makes Nepal’s carbon credits more competitive. These kinds of agreements are common instruments for making international trade easier, and they can be used directly in carbon markets.
The national carbon registry is also very important for developing trust. A trustworthy registry must keep track of the generation, transfer, and retirement of carbon credits in a safe way, stop double counting, and make public information clear. It also has to work with foreign registries so that transactions can happen smoothly across borders. Carbon credits lose their worth and credibility in the market if there isn’t a reliable and interoperable registry.
For effective implementation, both transparency and predictability are crucial. People should be able to easily find out about and understand all of the regulations, procedures, fees, and deadlines that Carbon Trade Regulation 2082 sets. Processes should be digitized whenever possible to cut down on choice, delays, and uncertainty in administration. These concepts are very important for good trade governance and for investors to feel safe.
Finally, for carbon trading to be successful in the long run, there needs to be a lot of investment in increasing capacity. People in the government, verifiers, auditors, project developers, and local communities all need to learn how to do things and get technical training. Building local expertise means that Nepal can run its own carbon market and keep more of its economic value in the country. It also gives communities that safeguard natural resources more influence.
When accreditation and regulatory systems aren’t strong, carbon trading has high verification costs, long approval delays, and low trust from other countries. When these processes are made stronger, approvals happen faster, transaction costs go down, trust in Nepal goes up, and Nepal can charge more for its carbon credits. Fixing accreditation gaps is no longer merely a technical or administrative change; it is now a sort of trade facilitation reform.
Regulation 2082 of the carbon trade is a big step forward for Nepal, but it’s not enough on its own. For carbon trade to work well, accreditation needs to be reliable, standards need to be in line with international norms, systems need to be open, and organizations need to gain the trust of people around the world. If Nepal can create this base, carbon trade can bring in money from other countries, help local populations, protect forests, and make Nepal a stronger player in international commerce. Carbon is traded on confidence in global carbon markets. This trust is generated through strong accreditation, trustworthy processes, and institutional legitimacy, not promises.
The author is a trade and trade facilitation expert
Landlocked to land-linked: Nepal’s industrial and logistics transformation
Nepal’s landlocked position between India and China, two of the world’s fastest-growing economies, presents both challenges and opportunities. On one hand, Nepal’s dependence on external gateways for international trade increases shipping costs, extends delivery times, and exposes exporters to monopolistic practices by shipping lines and intermediaries at transit or transshipment ports. These inefficiencies, coupled with risks of fraud in the supply chain, have reduced Nepal’s competitiveness in the global market.
Logistics costs in Nepal are estimated to account for about 25–30 percent of the total value of products, factoring in documentation time, bank and customs procedures, and transit delays. This high cost base hinders exports and slows industrial growth.
Yet, Nepal also holds distinct advantages. Its strategic location at the crossroads of South and East Asia, the potential to expand its manufacturing base, and a strong private sector active in freight forwarding for exports all position the country for growth. However, import handling, customs brokerage, warehousing, and distribution services remain underdeveloped.
In the absence of an integrated Industrial and Logistics Master Plan (ILMP), Nepal has been unable to fully leverage these strengths. The ILMP seeks to bridge this gap by integrating trade facilitation, industrial development, and logistics modernization into a unified national strategy. It recognizes logistics as the fourth pillar of competitiveness—alongside policy, infrastructure, and skills—and envisions transforming logistics into a sector that drives industrial diversification, export growth, and regional integration.
Why industrial–logistics synergy matters
For a landlocked economy like Nepal, efficient logistics are crucial for reducing trade costs, improving reliability, and connecting businesses to regional and global value chains. Fragmented logistics systems impose high transaction costs, cause unpredictable delivery schedules, and undermine confidence in international trade.
Integrating industrial and logistics planning means ensuring that dry ports, ICDs, logistics parks, cold chains, and customs points are physically and operationally linked to industrial zones, SEZs, and trade corridors. It also requires aligning industrial investment policies with those promoting logistics service providers (LSPs), enabling both sectors to grow in tandem and attract greater foreign direct investment (FDI).
Nepal’s logistics and industrial ecosystem
Over the past decade, Nepal’s logistics landscape has evolved significantly. The country now has dry ports and inland container depots (ICDs) in Birgunj, Bhairahawa, Nepalgunj, Biratnagar, Chobhar, and Tatopani, among others. The private sector, especially members of the Nepal Freight Forwarders Association (NEFFA), has played a key role in linking customs operations, transportation, and storage along major supply chains.
Despite these gains, challenges persist: limited multimodal connectivity, long border wait times, a complex policy environment, inadequate infrastructure for cold chain and e-commerce logistics, and limited adoption of digital systems for supply chain management and risk mitigation.
The ILMP aims to address these issues by ensuring that logistics are treated not as an afterthought but as a core component of industrial policy, fostering closer coordination between production hubs and logistics nodes.
Regional context: Corridors for connectivity
Nepal’s unique location between India and China makes it an ideal candidate to evolve from a landlocked to a land-linked nation, a vital transit bridge in South and East Asia. The South Corridor (India–Nepal) remains Nepal’s primary trade route through Indian ports, while the North Corridor (China–Nepal) and the East–West domestic corridor present new opportunities for balanced industrial growth and regional integration.
However, high costs, lengthy procedures, and repetitive documentation requirements across borders continue to constrain trade. Strengthening regional connectivity therefore requires proactive diplomatic and technical negotiations with transit countries—supported by a robust logistics master plan that builds confidence among neighbors to use Nepal’s territory as a transit or transshipment route.
Responding to global megatrends
Global supply chains are being reshaped by three major forces: digitalization, decarbonization, and resilience. To stay competitive, Nepal must embrace these trends by developing digital trade systems, promoting green logistics infrastructure, and building resilient, shock-absorbing supply chains that can adapt to global disruptions.
Vision for the future
Nepal’s vision should be to transform itself from a landlocked country into a land-linked, competitive, and sustainable industrial and logistics hub connecting South and East Asia. This vision centers on empowering small and medium enterprises (SMEs), integrating into global supply chains, and boosting national competitiveness.
Strategic priorities include: developing industrial-logistics corridors; strengthening private sector participation; accelerating digitalization; ensuring environmental sustainability, and building human capital to drive logistics innovation
The way forward
Freight forwarders and logistics service providers identify five key strategies outlined in the ILMP to realize this transformation: integrated planning, infrastructure modernization, policy coherence, governance and skills development, and regional integration
The Industrial and Logistics Master Plan (ILMP) is more than a blueprint for infrastructure; it is a roadmap for Nepal’s transformation. By positioning logistics as a catalyst for competitiveness, openness, and resilience, the ILMP represents a shared vision between policymakers and freight forwarders to turn Nepal’s geography from a constraint into an advantage. It marks a strategic shift from being landlocked to becoming land-linked, unlocking Nepal’s potential as a dynamic connector between the world’s fastest-growing regions.
Importance of digitizing Nepal’s supply chain
Nepal’s logistic sector needs to work towards transforming supply chains through digital platforms and technologies. Despite the rapid advancement of the global supply chain, we continue to rely on traditional methods. The World Bank has been suggesting the government on the agenda of digitalization, but a lack of coordination among government stakeholders has been obstructing the move. The integrated border management system (IBMS) from the World Bank will help streamline the border issues as well as help proper planning from the transit point until the logistic centers and electrical cargo tracking (ETCS) system of ADB with some amendments would help in the transit and domestic flow of goods. The trade facilitation and cross-border paperless trade agendas have been pending for a very long time with little to no activities. Further, involving freight forwarders in the Nepal National Single Window (NNAW) is pending .
The bilateral and regional agreements are all being executed in a very traditional manner, without incorporating modern automation and digitalization mechanisms to ease business and increase traceability, predictability, and accountability to facilitate and meet global supply chain demands.
The customers demand and expect faster, more transparent, and personalized service. To meet their expectations, we need to utilize digital platforms to enhance the customer experience through better tracking, faster delivery, and improved communication to ensure seamless integration of data across different systems and platforms associated with government and private sector service providers. This demands developing data formats and communication between actors in trade facilitation. Another significant challenge is adopting new technologies, scaling them throughout the supply chain through pilot projects in controlled environments before scaling, and making sure these components are simple to integrate and adapt.Protecting sensitive supply chain data from cyber threats is another important and burning issue. Implementing cybersecurity measures, such as encryption, multi-factor authentication, and regular audits, can overcome this by ensuring the accuracy, consistency, and timeliness of data across the supply chain. Data governance policies, as well as the use of data validation tools to maintain high data quality and implement digital signatures, could be useful methods.
The cost factor associated with implementing new digital technologies is high. Still, there is a need to do a cost-benefit analysis and seek cost-effective solutions or phased implementation approaches to manage cost factors. Implementing automation through digitalization has proven successful in many countries, as it helps monitor the flow of goods, documents, money, data, and information among all those associated with the supply chain.
It is essential to change the mindset and adapt to change management by motivating the workforce through proper training, enhancing their digital knowledge, and addressing cultural and operational changes within organizations such as the Departments of Customs and Commerce, as well as both private and government logistic service providers.
Therefore, developing comprehensive training programs and change management strategies to help employees adapt to new technologies is a must, as is setting fixed regulations and standards across different actors and government support agencies to ensure compliance through regular audits. Another challenge is balancing digital transformation with sustainable practices to lessen environmental impacts through monitoring and evaluation. Other precautions include integrating new digital technologies with existing systems using middleware solutions and gradual transition strategies to avoid disrupting operations.
The transition to digitalization in the supply chain requires many issues to be addressed. Some issues require a strategic approach, leveraging the latest digital tools and technologies while ensuring alignment with overall business objectives and maintaining flexibility to adapt to future changes. Implementing IoT devices, real-time tracking, and advanced analytics to monitor and optimize supply chain performance will enable real-time visibility for analytics purposes while also easing the process of doing domestic and international trade.
Controlling supply chain fraud
The cases of fraud have been rising since the emergence of the Covid-19 pandemic. Law enforcement agencies and regulatory bodies worldwide are grappling with financial crimes. In this situation, there is also a need to be cautious and think of possible fraud risks associated with supply chain disruption, which has surrounded the global economy for the last three years. It has become important for the government and agencies concerned to pay attention to the unforeseen consequences of such crimes with the right set of priorities for supply chain and resource control. Past lessons on business resilience have shown that supply chains need to be planned tactfully to stay effective within the current business context, but there is also a need to effectively manage the risks. It is important to understand handling the challenges in order to avoid significant financial impacts as well as hassles due to supply chain disputes. Nepal has a very unique transit mechanism and proper trading terms set by the International Chamber of Commerce (ICC) are not followed here. Further, the custodian right of goods produced in Nepal is in the hands of Indian clearing agents authorized by exporters and importers with the power of attorney by the importers' respective banks, be it for letters of credit (LC) or the Telegraphic Transfer (TT) based exports and imports. More importantly, there is no liability transfer law nor there is a provision to cover multimodal insurance. Random LC terms are used which are beyond normal practice in international trade and the provision of control of import and export at Kolkata are for Nepalis only. The chances of goods being diverted within India and only documents arriving at the border could be one of the cases. All formalities at border points are carried out with the arrival and exit of trucks recorded and taxes paid, but there are some cases of goods being diverted elsewhere than the destinations that we have been hearing recently. Supply chains are inherently susceptible to fraud due to several factors mentioned below:
- There are several actors and several activities within and beyond borders with different legal provisions. Various means of transport are used, and each has different responsibilities, liabilities, and standards that need to be complied with.
- The complexity of the operating environment, including the mandatory involvement of third-party logistics service providers, is beyond control due to provisions set in the bilateral agreements and treaty between Nepal and India.
- The volume and scale of transactions vary from less than a container to huge volumes in containerized or bulk and break-bulk movements and rotating L/C are in use. Additionally, the present volatility in supply and demand for goods and services arising from the Covid-19 pandemic are constraints in mobility. The situation pushes for scaling back costs as businesses are faced with unprecedented challenges of shipment delays with a monopoly in the hands of shipping liners.
