World Bank supports Nepal’s Clean Air and Prosperity Project to reduce air pollution from industries

The World Bank’s Board of Executive Directors has approved a $52 million credit for the Nepal Clean Air and Prosperity Project to reduce air pollution and strengthen air quality management, according to a press note issued by the multilateral lending institution.
The project will help reduce fine particulate matter (PM2.5) emissions, particularly from industrial and commercial boilers and furnaces, while strengthening national systems for air quality management. It will focus on the Kathmandu Valley, the Terai, and surrounding foothill regions where air pollution poses severe risks.
"Air pollution is not only a public health crisis but also a significant economic burden in Nepal, costing the country more than six percent of GDP each year through health costs and lost labor productivity,” said Division Director for Maldives, Nepal and Sri Lanka David Sislen. "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."
Industrial emissions are projected to become the largest source of air pollution in the coming years as the country continues to industrialise, underscoring the urgency of cleaner production technologies. 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/furnaces, modern biomass boilers/furnaces, or advanced emission control technologies, leading to substantial air quality improvements.
"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 World Bank Senior Environmental Economist, South Asia Region Martin Heger. "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."
The project will be implemented 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 serve as the handling bank for the clean technology financing facility.
The project financing from the World Bank is complemented by a $5 million grant from the World Bank’s Resilient Asia Program, funded by the United Kingdom’s Foreign, Commonwealth and Development Office and Swiss Agency for Development and Cooperation. The project is part of the World Bank’s Regional Air Quality Management Program in the Indo-Gangetic Plains and Himalayan Foothills (IGP-HF), a global air pollution hotspot.

Urgent action urged in South Asia to curb deadly air pollution

South Asia is home to 9 of the world’s 10 cities with the worst air pollution, which causes an estimated 2 million premature deaths across the region each year and incurs significant economic costs. A new World Bank report shows that there are economically feasible, cost-effective solutions to achieve clean air in the region, but this requires countries to coordinate policies and investments.

‘Striving for Clean Air: Air Pollution and Public Health in South Asia’, released today, reads concentrations of fine particulate matter such as soot and small dust (PM 2.5) in some of the region’s most densely populated and poor areas are up to 20 times higher than what WHO considers healthy (5 µg/m?). Exposure to such extreme air pollution has impacts ranging from stunting and reduced cognitive development in children, to respiratory infections and chronic and debilitating diseases. This drives up healthcare costs, lowers a country’s productive capacity, and leads to lost days worked, it adds.

Large industries, powerplants and vehicles are dominant sources of air pollution around the world, but in South Asia, other sources make substantial additional contributions. These include combustion of solid fuels for cooking and heating, emissions from small industries such as brick kilns, burning of municipal and agricultural waste, and cremation.

Air pollution travels long distances – crossing municipal, state, and national boundaries – and gets trapped in large ‘airsheds’ that are shaped by climatology and geography.

The report identifies six major airsheds in South Asia where spatial interdependence in air quality is high. Particulate matter in each airshed comes from various sources and locations, for example less than half of the air pollution in South Asia’s major cities is produced within cities. 

“Persistently hazardous levels of air pollution have caused a major public health crisis in South Asia that demands urgent action,” World Bank vice president for South Asia Martin Raiser said, adding that curbing air pollution requires not only tackling its specific sources, but also close coordination across local and national jurisdictional boundaries. “Regional cooperation can help implement cost-effective joint strategies that leverage the interdependent nature of air quality.”

Several South Asian countries have adopted policies to help improve air quality, but their focus on mitigating air pollution generated within cities is yielding insufficient results.

The report shows that current policy measures will only be partially successful in reducing PM 2.5 concentrations across South Asia even if fully implemented. To achieve greater progress, the focus of policy makers should expand into other sectors, particularly small manufacturing, agriculture, residential cooking, and waste management.

The report analyses four scenarios to reduce air pollution with varying degrees of policy implementation and cooperation among countries. The most cost-effective scenario, which calls for full coordination between airsheds, would cut the average exposure of PM 2.5 in South Asia to 30 µg/m³ at a cost of $278 million per µg/m of reduced exposure, and save more than 750,000 lives annually.

“The economic benefits of policies to reduce air pollution in South Asia exceed the economic costs by a large margin,” World Bank chief economist for South Asia Hans Timmer. “But optimal solutions depend on several factors such as better monitoring systems, more scientific capacity, greater coordination between governments, and behavioral change among farmers, small firms, and households.”

To this end, the report offers a three-phased roadmap:

Phase 1: Sets the condition for airshed wide coordination by expanding the monitoring of air pollution beyond the big cities, sharing data with the public, creating or strengthening credible scientific institutes that analyze airsheds, and taking a whole-of-government approach.

Phase 2: Abatement interventions are broadened beyond the traditional targets of powerplants, large factories and transportation. During this phase major progress can be made in reducing air pollution from agriculture, solid waste management, cookstoves, brick kilns, and other small firms. At the same time, airshed-wide standards can be introduced.

Phase 3: Economic incentives are finetuned to enable private-sector solutions, to address distributional impacts, and to exploit synergies with climate change policies. In this phase trading of emission permits can also be introduced to optimize abatement across jurisdictions and firms.