Current Policy Projections
Current policies overview
Due to limited data availability the CAT does not have a current policy scenario for Bhutan. Instead as an approximation we continue to use a reference scenario based on an ADB reference scenario (Shreshta, Ahmed, Suphachalasai, & Lasco, 2013); for more information on the methodology see “Assumptions”) in which absolute emission levels excluding LULUCF will reach 5.2 MtCO2e by 2025 and 6.4 MtCO2e by 2030, increases of 265% and 348% relative to 1990 levels (1.4 MtCO2e), respectively. Compared to 2009 (1.9 MtCO2e excl. LULUCF), emissions in 2025 and 2030 will be 182% and 245% higher, respectively.
A number of measures adopted by the government cause a deviation from BAU. These measures include the National Environment Protection Act (Royal Government of Bhutan, 2007), the National Strategy and Action Plan for Low Carbon Development (Ea Energy Analyses & COWI, 2012), Bhutan Transport 2040 (ADB, 2013), and the 2010 Economic Development Policy (Royal Government of Bhutan (RGoB), 2010).
Bhutan’s Draft Energy Efficiency Roadmap defines the rationale for energy efficiency and its purpose of enhancing the country’s energy security through the potential energy savings from the energy consuming sectors. The identified interventions are first to be preceded “by a proper feasibility study, clear institutional roles and responsibilities of the agencies, budget requirement, identification of financial source and international collaboration” (Department of Renewable Energy, 2018). For this reason, they are shown as additional policy in our analysis, expected to reduce emissions compared to the reference scenario to 5.7 MtCO2e in 2030.
Bhutan is set to graduate from the Least Developed Country (LDC) category by 2023. The export of hydroelectricity to India accounts for 20% of Bhutan's GDP and has played a large role in this achievement (Gyelmo, 2018a). About 77% of Bhutan’s external debt is due to hydropower projects, which raises questions about the sustainability of these projects (World Bank Group, 2017). This is crucial, given that Bhutan will lose its access to concessional financing when it graduates from its status as a Least Developed Country.
Bhutan’s projected increase in emissions results to a large degree from increasing consumption of energy per capita. Emissions from the electricity sector are projected to reach 2.2 MtCO2 in 2020 (Royal Government of Bhutan, 2011). In 2005 Bhutan’s government adopted ‘Rural Electrification Master Plan,’ which aimed at achieving a 100% electrification rate in 2013 (IMF, 2010). Bhutan reached this goal in 2014 (The World Bank, 2017). The impact on the emissions was negligible, as almost all the electricity generated in Bhutan currently comes from hydro power plants. In 2016 the combined installed capacity in those power plants amounted to 1614 MW. Over 99% of this capacity are large hydropower plants with an installed capacity above 10 MW (IRENA, 2017). A significant share of this capacity—1542 MW—is used for electricity exports to India (IndiaTimes, 2016). According to the NDC, by 2025, the exported clean electricity avoids 22 MtCO2e emissions a year in India. Despite surplus power generation, ensuring universal access to energy domestically has been challenging for Bhutan. This is largely due to the rugged terrain, sparsely populated demography and the high cost of grid extension to remote areas (Dorji, 2007).
The cement industry is another important driver of GHG emissions, and its sectoral emissions could reach 1.4 MtCO2 in 2020, if no additional policies are put in place in this sector (Second National Communication, 2011).
Bhutan's government is placing a lot of emphasis on capacity building measures to promote energy efficiency in the industry sector. By 2030, Bhutan aims to develop and implement energy efficiency codes, energy audit, and reporting guidelines. These measures are estimated to reduce cumulative emissions by 1.7 MtCO2e by 2030 (Department of Renewable Energy., 2018).
Buildings account for the highest energy consumption in Bhutan. The government aims to develop standards and labelling schemes to promote energy efficiency. Further work is necessary to formulate energy audit and reporting guidelines. The implementation of these measures will lead to a 2.3 MtCO2e reduction in emissions by 2030, according to government estimates (Department of Renewable Energy., 2018).
The government also released voluntary guidelines for sustainable buildings in 2013 (Department of Engineering Services., 2013). The IFC estimates an investment opportunity of 390 million USD to achieve a 15% penetration in residential buildings and a 20% penetration in commercial buildings by 2030 (IFC, 2018).
Rising demand for vehicles has driven an increase in Bhutan's demand for diesel and petrol. Bhutan is estimated to have 125 cars per 1000 inhabitants and this is set to grow given Bhutan’s increasingly lenient outlook towards vehicle imports (Gyelmo, 2018b).To tackle this, and associated pollution concerns, the UNDP has identified a few priority interventions (UNDP, 2016). These include expansion of mass transit options, promotion of electric and hybrid vehicles and development and enforcement of fuel efficiency standards.
The government has offered a 20% subsidy for electric taxis and is considering a host of other financial incentives to promote green vehicles (Kuensel, 2018). Strong international support for these initiatives is evident. For instance, the Global Environment Facility has earmarked over USD 18 million to assist the development of sustainable, low-emission urban transport systems in Bhutan (Global Environment Facility, 2017). The aims of this programme include policy support for the promotion of low emission transport systems, raising awareness about electric vehicles, and institutional capacity and infrastructure development.
In light of the growing demand from the citizens, and looser restrictions by the government, these measures will need to be implemented rapidly to keep transport emissions in check.
Bhutan's growth in the recent past will see it graduate from Least Developed Country (LDC) status. However, economic growth comes with higher rates of waste generation. The government of Bhutan recognises this and notes that rapid urbanisation, increasing affluence, and population growth will increase the amount of waste generated (National Environment Commission, 2016).
Bhutan is currently receiving support to develop sustainable public-private partnership models, in an attempt to de-risk private sector investment in municipal waste (UNDP, 2018). However, some municipalities report relatively poor experiences with private companies (Gyelmo, 2018b).