As Nepal advances its commitment to transitioning toward clean energy, challenges remain over how to ensure that the shift is equitable for workers and communities dependent on traditional fossil fuel-based industries. The government has pledged to achieve net-zero carbon emissions by 2045, positioning the country as one of the few least developed nations taking an ambitious path toward sustainability. However, concerns persist about protecting workers whose livelihoods are directly tied to oil and petrol sectors.

At the heart of the issue are thousands of Nepali workers such as welders who have spent years employed in Gulf oil and gas fields, and local mechanics who maintain petrol-powered vehicles. These individuals have contributed little to global climate change but may be among the first to face job losses as demand for fossil fuels declines. Nepal’s latest climate plan includes a mandate to study the workforce impact and design supportive measures, with the Ministry of Youth, Labour and Employment charged with overseeing this effort.

Financing remains a critical obstacle. Nepal estimates it requires nearly $74 billion to implement its clean energy transition, with approximately 85% expected to come from external sources. Much of this funding could take the form of loans, raising questions about debt sustainability for a country that has historically contributed minimally to global emissions. While richer nations industrialized using fossil fuels without constraints, some economists argue that developing countries should be permitted to follow a similar trajectory. Nepal’s situation differs, however, as nearly all its electricity already comes from hydropower, making a clean energy expansion potentially less costly and more accessible.

The country’s energy landscape is distinctive. Nepal imports significant quantities of petroleum, amounting to roughly Rs. 223 billion in the first ten months of fiscal year 2024/25, while earning tax revenues that make up about Rs. 92.5 billion. Reducing fossil fuel imports would conserve foreign currency but also lead to diminished government revenue. Meanwhile, the vehicle fleet is transitioning rapidly: over 70% of private cars imported are electric, placing Nepal second globally behind Norway. Yet motorcycles, which mostly run on petrol, still comprise over 80% of total vehicles, limiting electric mobility benefits mainly to wealthier urban populations.

Labor conditions for workers in sectors such as cement factories, brick kilns, and transport are often informal and precarious, lacking contracts, pensions, or insurance. The International Labour Organisation has warned that climate change–driven extreme heat is exacerbating health risks, particularly in outdoor workplaces. Moreover, large hydropower projects have sparked displacement of indigenous communities and raised sustainability concerns amid rapidly melting glaciers threatening dam safety and water availability.

Adding complexity, the Nepali economy relies heavily on remittances from migrant workers overseas, especially in Gulf countries and Asia—regions that remain dependent on oil and gas. Many Nepali laborers abroad face uncertain futures as energy market shifts unfold, highlighting the need for government plans to support returning workers through health insurance, pensions, and unemployment benefits, which are currently scarce for casual and migrant laborers.

Experts emphasize that any transition must prioritize inclusive decision-making, ensuring the voices of affected workers, indigenous peoples, women, and migrants are heard. They advocate for strategies that create clean energy enterprises domestically, such as electric vehicle assembly, battery maintenance and recycling, and the development of small-scale solar and hydro projects. Encouraging the adoption of electric machinery in factories and promoting electric cooking stoves for households could reduce emissions while alleviating burdens on women traditionally responsible for fuel collection.

Officials are also urged to focus on decentralized energy generation—like rooftop solar and village-level hydropower—instead of large-scale dams, and to expand power transmission infrastructure while viewing electricity exports as supplementary income. Financing models favoring development grants over loans could lessen economic strains on Nepal.

Ultimately, Nepal’s transition to a low-carbon economy hinges on balancing environmental goals with social justice, aiming to provide decent work and livelihoods amid rapid change. By placing workers and communities at the center of policymaking, Nepal seeks to demonstrate that clean energy development can be pursued fairly, avoiding the exclusion of those most vulnerable to the disruption of traditional industries.