This paper explores the potential for ethanol production and fuel substitution in Nepal based on established sugarcane production, installed capacity for sugar and ethanol production, economic opportunities for the national economy and the potential to reduce greenhouse gas emissions.  It is based on extensive research on the change in fossil fuel sales from 1996 to 2007, patterns of passenger transport in the Kathmandu valley, the huge ethanol production potential in Nepal, and cost versus benefits of substituting gasoline with E10 and E20. Nepal does not have fossil fuel reserves and energy security for transport is a significant problem. The transport sector is the country’s largest consumer of petroleum products and vehicle emissions are major sources of ambient air pollution in the Kathmandu Valley. The authors note the country’s huge potential to generate electricity from hydropower, but focus on the potential for ethanol production based on molasses. They discuss the role that ethanol production could play in saving foreign currency while also releasing the country from accumulating debts for oil imports and promoting sustainable development. Other positive impacts for Nepal include:

an incentive for improved sugarcane yields
a surge in income and job creation in the rural areas
significant positive effects in the agricultural and transport sectors