World Bank Approves $52 Million Credit to Help Nepal Combat Air Pollution

The World Bank's Board of Executive Directors has approved a $52 million credit for the Nepal Clean Air and Prosperity Project, aimed at reducing air pollution and strengthening the country's air quality management systems.

The initiative will focus on reducing emissions of fine particulate matter (PM2.5)—one of the most harmful forms of air pollution—particularly from industrial and commercial boilers and furnaces.

Targeting Major Pollution Hotspots

The project will concentrate on regions where air pollution poses the greatest health risks, including:

• Kathmandu Valley

• The Terai region

• Surrounding Himalayan foothill areas

These areas are among the most affected by air pollution in Nepal, where industrial activity and urban growth have intensified environmental pressures.

Air Pollution's Economic and Health Costs

According to the World Bank, air pollution represents both a major public health crisis and an economic challenge for Nepal.

"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 David Sislen, Division Director for Maldives, Nepal and Sri Lanka at the World Bank.

The project aims to protect millions of people by helping industries adopt cleaner technologies that also reduce operating costs and improve competitiveness.

Supporting Clean Industrial Technologies

As Nepal continues to industrialize, emissions from factories are expected to become the largest source of air pollution in the country.

To address this challenge, the project will support approximately 400 industrial and commercial enterprises in adopting cleaner technologies.

These include:

• Electric boilers and furnaces

• Modern biomass boilers

• Advanced emission control technologies

The initiative combines financing, incentives, and technical assistance to accelerate the transition to cleaner production systems.

Overcoming Barriers to Clean Technology Adoption

Despite the benefits of cleaner technologies, many Nepali industries have struggled to adopt them due to financial and technical constraints.

"Adoption of clean technology is limited in Nepal due to high upfront investment costs, limited access to long-term financing, and low technical capacity among enterprises," said Martin Heger, World Bank Senior Environmental Economist for South Asia.

The project aims to address these challenges by offering:

• Long-term financing

• Targeted capital incentives

• Hands-on technical assistance

These measures are designed to help businesses transition toward environmentally sustainable production practices.

Project Implementation and Financing Partners

The project will be implemented through collaboration between several government institutions.

Key implementing agencies include:

• Department of Industry under the Ministry of Industry, Commerce and Supplies

• Department of Environment under the Ministry of Forests and Environment

Rastriya Banijya Bank will act as the handling bank for the project's clean technology financing facility.

Additional Grant Support

The World Bank credit will be complemented by a $5 million grant from the Resilient Asia Program, which is funded by:

• The United Kingdom's Foreign, Commonwealth and Development Office

• The Swiss Agency for Development and Cooperation

Part of a Regional Air Quality Initiative

The Nepal Clean Air and Prosperity Project forms part of the World Bank's Regional Air Quality Management Program in the Indo-Gangetic Plains and Himalayan Foothills (IGP-HF).

This region is widely recognized as a global hotspot for air pollution, making coordinated regional action essential for improving environmental and public health outcomes.