Economic and Policy Analysis for Emission Reduction from the Brick Industry in Nepal

The brick industry is one of the primary sources of carbon dioxide emissions and local air pollutants in Nepal. Coal, which accounts for one-third of the current national carbon dioxide emissions from fossil fuel sources and is entirely imported, is the primary fuel in the brick industry. The brick industry accounts for 27 percent of the total carbon dioxide emissions from coal consumption. The adoption of clean technologies or fuels in the brick industry is crucial for improving air quality, enhancing energy independence, and meeting the country’s nationally determined contribution under the Paris Climate Accord and the net-zero emission target set for 2045. Substitution of imported coal with domestic energy resources in the brick industry substantially reduces the country’s import bills. This study examines the economics of various alternatives to reduce coal consumption and corresponding emissions from the brick industry. The study considers a range of carbon taxes (US$10 to US$100 per ton of carbon dioxide), an environmental fiscal policy. The US$10 per ton of carbon dioxide tax would increase brick production costs by 2 to 6 percent, depending on the energy efficiencies of the technologies. If the carbon tax were US$100 per ton of carbon dioxide, the cost of bricks would increase by 12 to 36 percent. However, implementation of the policy may not be successful without enabling lower cost, clean alternatives. For example, replacing more coal with biomass provides direct cost and environmental savings but would require relaxing strict forest protections. The study recommends various promotional policies for non-fired alternative bricks. It also argues that since using electricity for firing bricks is an ideal option for reducing emissions from the brick industry in Nepal, the government and development partners should prioritize pilot projects for electric kilns.