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In a move aimed at accelerating climate action, the government has allowed private sector-run renewable energy and environment-friendly projects to access and mobilize climate funds received by the state.

The government has opened the door for private sector-led green energy projects to mobilize climate finance received by the state for the first time by enforcing the Climate Finance Mobilisation Guidelines 2026 on Monday.

The Ministry of Finance (MoF) issued the guidelines, introducing a policy that permits private sector-led projects to utilize prescribed amounts of climate funds received by the government. The provision aims to encourage private firms to take greater responsibility in addressing the impacts of climate change.

Nepal ranks 69th in the Climate Risk Index (CRI) 2025 published by Germanwatch, which assesses countries most affected by extreme weather events over the past three decades. According to the report, climate-related disasters kill an average of 249.7 people annually in Nepal. These disasters also cause an estimated annual economic loss of US $221.3 million, equivalent to 0.258 percent of Nepal’s Gross Domestic Product (GDP).

Citing the country’s vulnerability to climate-induced disasters, the government has repeatedly stressed the need to implement risk-reduction measures. However, it has acknowledged that implementing such programmes requires substantial financial resources.

Nepal receives millions of dollars each year in carbon credits and grants to mitigate climate risks. In the past seven months alone, the country received around US $100 million in international climate finance. A senior MoF official said the new initiative aims to connect the private sector with climate funds provided by international organizations.

The MoF will publicly call for proposals from private firms seeking to mobilize the funds in their projects. “Entrepreneurs operating renewable energy, electric transport and environment-friendly agricultural projects, among others, will be eligible to apply for grants and concessional loans received by the government,” the guidelines state.

Under the guidelines, recipient firms must allocate 80 percent of the funds to project implementation and to support communities affected by climate-related incidents. However, the firms must assume the risks and liabilities arising from the mobilization of government funds.