Bhutan will develop a hydropower plant with support from Austria and Japan through the Asian Development Bank's Clean Development Mechanism (CDM) initiative.
The 114MW Dagachhu hydropower unit will enable Bhutan to export clean energy to India and has become the first cross-border initiative under CDM.
The $200m plant is expected to reduce CO2 emissions by about 500,000 tons a year, specifically through exports to India, which relies heavily on coal-fired power plants for electricity generation.
The project is expected to help prevent carbon emissions in India while creating additional revenue from the CDM to help make the project viable in Bhutan.
ADB will provide a $80m loan, the Austrian Government will provide engineering support and the project structuring has been provided by Japan.