The country’s energy sector transformation is crucial for achieving this target, as it must reduce dependence on hydropower and fossil fuels. By adopting renewable energy sources, improving energy efficiency, and transitioning to cleaner fuels, Lao PDR aims to decrease emissions across various sectors. To assess the feasibility of achieving net-zero emissions, two primary scenarios were analysed:

1. Baseline Scenario: This scenario assumes a continuation of current practices without major policy shifts. It reflects the existing energy generation mix and consumption patterns, with little change in technological advancements or energy efficiency. In this scenario, emissions remain high, primarily from agriculture, forestry, land use, and industrial processes, such as cement production.
2. Net Zero Scenario: This scenario envisions a comprehensive transformation, involving a significant reduction in emissions across all sectors. It incorporates enhanced energy efficiency, a transition to renewable energy sources like solar and biomass, and the electrification of key sectors such as transport. The industrial sector is projected to reduce emissions through fuel transitions, including adopting hydrogen and implementing carbon capture technologies. Additionally, carbon removal technologies like direct air capture (DAC) are anticipated to play a critical role in offsetting residual emissions.

Under the Net Zero Scenario, total energy demand drops due to efficiency gains and cleaner fuel use. Solar, biomass, and electric vehicles emerge as key solutions, particularly for replacing coal and reducing transport emissions. Achieving net zero will require strong investment in energy infrastructure and skills development. Addressing financial and technical barriers, such as reliance on foreign investment and limited local expertise, will be essential.