Nepal ratified the protocol on September 16, 2005 and became the signatory of the protocol on 14 December, 2005. Nepal is categorized as non annex countries. Hence the country is not obliged to set a reduction target like the Annex I countries and it can only participate in the Clean Development Mechanism (CDM) of the protocol. However Nepal can raise its voice to receive resources for adaptation and mitigation through the Conference of Parties, as individual country or via group of countries.

To channelize the procedure and to gain maximum benefits from CDM, Government of Nepal had appointed the then Ministry of Population and environment (now Ministry of Science, Technology and Environment (MOSTE)) to function as Designated National Authority (DNA) with the set of functions and responsibilities (MOEST, 2013).        

Benefits of Kyoto for Nepal

Being authorized to participate and reap benefit from CDM only it is vital to understand the functioning of CDM. CDM allows emission reduction project to earn certified emission reduction (CER) credits. Each CER equivalents to one ton of carbon dioxide and can be traded, sold, like a market commodity. Any projects where the uses of unsustainable firewood or fossil fuels are replaced with clean energy will qualify for the CDM (Pandey, 2004). The emission reduction credits are purchased by the Annex-I countries allowing developing countries like Nepal to earn dollars (Dhungana, Oli & Mandal, 2007). Also it helps facilitates in institutional capacity building ad technological transfer from Annex-I countries to developing countries (Sijm et al., 2000 as cited in Sharma et al., 2004).

As a country Nepal has tremendous opportunity to cash the practices under the CDM. Anil Chitrakar indicating towards biogas and bio-fuels once said, ?Nepalese practices are green by default and emit low carbon.? There are numerous projects that are eligible for the CDM. Nepal?s community forests are exemplary initiatives along with biogas both qualify for the CDM. ?Community forest rehabilitated and regenerated after 1990 may meet CDM criteria and could provide financial gain.? (Sharma, Karky, Dahal, Chapagain & Basnet, 2004). Along with forest rehabilitation the community forest has contributed in sustainable rural livelihood and sustainable maintenance of environmental services (Sharma et al., 2004).

Financially, as reported by Sigdel Nepal receives $500,000 a year from CDM (2013). According to MOEST (2013), ?out of 17 approved CDM projects, 6 have received Carbon Emission Reduction (CER): four bio gas projects, one improved stove project and one micro-hydro project as for April 15, 2013.? Besides Afforestation and reforestation (A/R) being a major component of Kyoto, ?the economic potential of A/R projects in Nepal under CDM is very high as there is the large scale of plantation? (Dhungana et al., 2007).  The A/R projects alone is capable of generating $0.4 million to 0.8 million annually considering the annual sequestration of six metric tons per hectare from the existing plantation area. (Dhungana et al., 2007).  These generated funds can then be utilized for the adaptation and mitigation purposes.

Meanwhile as a regular process of Kyoto Protocol, Conference of the Parties (COP) is organized annually to review the progress and decide the way ahead for Kyoto. In the conference the different nations can lobby for the commitment from the Annex countries to curb the emission and contribute for adaptation and mitigation of climate change. Nepal being 4^th most vulnerable country to impacts of climate change has been participating in the COPs and raising it voice for more resources to adapt the impacts of climate change. Moreover it lobbies as a part of the Least Developed Countries (LDC) and G-77 and China. From the lobby Nepal along with the group can lobby for more resource (financial and technological) for the adaptation and mitigation.

Challenges of Nepal

Despite having huge potential to reap benefit from the CDM, Nepal has not been able to do so. Research and policies stand as a major reason for the situation. Despite having DNA, ICIMOD is the pioneer organization that has contributed in formulating, monitoring and evaluating projects for CDM (Parbat Dhungana, Personal communication). It clearly shows the technology and expertise also pose challenge for Nepal for measuring carbon sequestered in CDM project. Successful implementation of carbon sequestration projects requires having adequate national institutional capacity. But Designated National Authority (DNA) of Nepal that acts as a mediator between investor and local service provider lacks institutional capacity to promote viable carbon projects (Dev, n.d.).

            Apart from it the community people lack knowledge regarding the carbon trading and measuring amount of carbon sequestrated. Besides, the scope of forestry has been limited to reforestration and afforestration while neglecting the existing forest which accounts for 20% of the total green house emissions (Karky & Banskota, 2009).

Similarly, Climate Change Policy of Nepal (Ministry of environment [MoE], 2011) have vision to develop the low carbon technology and provide financial and technical incentives to the people, however it has not adequately been translated into action. Besides, despite receiving huge amount of fund there is less transparency on where the fund has been spent. Nepal had aimed to promulgate strategy for CDM by 2012 however it has not come to existence as yet. This indicates the weak governmental commitment and lack of government stability. Along with this, due to no enough manpower and technology Nepal is lagging behind the standardized methodology to measure the actual amount of carbon sequestrated.