The EU is supporting Bhutan in its sustainable development, helping to maintain its carbon negative status, while promoting private sector-led green growth. This effort is part of the EU’s 2021-2027 multiannual indicative programme, which prioritises ‘Climate Change, Green Growth for Resilient Bhutan’- in line with several UN Sustainable Development Goals.

By 2027, the EU plans to make a significant contribution to Bhutan’s agri-food system, making it more sustainable with enhanced nutrition security using climate resilient practices, technology and infrastructure. The partnership also aims to reduce economic vulnerability, through economic diversification and improved mobilisation of domestic resources, with stronger accountability and improved Human Development indicators. This includes enhanced use of digital solutions for public services, including education. As an ally, the EU will continue to support the country’s pursuit of sustainable development goals, climate targets and self-reliance, while amplifying its voice in multilateral/global fora. 

Regarding climate change and the Paris Agreement, Bhutan has possibly the most ambitious Nationally Determined Contribution (NDC) worldwide as it is committed to permanent carbon neutrality. The country’s extensive forest coverage is at the cornerstone of its climate action.

Bhutan’s renewable and natural resources (RNR) sector is the second largest contributor to national GDP, accounting for approximately 60% of employment. Development of this sector is hence crucial for achieving the Sustainable Development Goals, particularly SDG 1 (no poverty), SDG 2 (zero hunger) and SDG 13 (climate change). The agriculture sector is dominated by small-scale, subsistence farming, with women making up the majority of farmers. Since 2012, the EU support to this sector has helped to reduce poverty rates; increase self-sufficiency in vegetable, dairy and poultry production; conserve natural resources through afforestation, and improve road and canal infrastructure.

The EU continues to support Bhutan’s transition to a Sustainable Agri-Food System (SAFS), promoting green growth, climate change mitigation and food security. The EU’s support encompasses measures to address conservation and sustainable utilisation of natural resources, green technology, innovative agricultural and livestock practices and climate resilient infrastructure facilities. 

The partnership between the EU and Bhutan is being significantly strengthened through a framework agreement between Bhutan and the European Investment Bank (EIB). This agreement paves the way for the EIB to offer sustainable financing for both physical and social infrastructure projects, addressing the needs identified by the Bhutanese government and its private sector counterparts. The first EIB project in Bhutan, launched in 2024, supports solar photovoltaic and hydropower schemes under the EU’s Global Gateway initiative.A 30-year loan for EUR 150 million will help unlock approximately 310 MW of new renewable energy generation, serving remote communities. This expansion of Bhutan’s solar photovoltaic capacity will help overcome hydropower challenges during the dry season.