About Nu 2.71 billion flows out annually to import charcoal.
Bhutan imports an average of 120,000 metric tonnes of charcoal annually at an estimated cost of Nu 2.71 billion and there are concerns that this will continue to rise with the expansion of ferro-alloy industries and other energy-intensive manufacturing sectors across the country. As a measure, the government is intensifying efforts to expand domestic charcoal production and reduce import of charcoal, which currently accounts for nearly 77 percent of the country’s total wood-related imports.
In a joint response by the Ministry of Industry, Commerce and Employment (MoICE) and the Ministry of Energy and Natural Resources (MoENR) to the National Council’s (NC), the ministries stated that the government is exploring new approaches to improve raw material access, reduce transportation costs, and encourage greater private sector participation in charcoal manufacturing.
One has been the issuance of new licenses. As of December 31, 2025, the government had issued nine licenses for charcoal industries. Of these, only two are currently operational, while the remaining factories are still under establishment and have yet to commence full-scale production. The joint-response says that the current licensing system for charcoal industries is location-specific, and the government would facilitate mobile production units closer to raw material sources due to the industry’s high input-to-output ratio and the high cost of transporting raw materials over long distances.
A key proposal under consideration is the use of mobile charcoal furnaces near logging and timber harvesting areas.
“Mobile charcoal furnaces near logging sites will enhance the utilization of wood residues and allow on-site processing of raw materials, thereby reducing transportation costs,” the ministries stated.
The Department of Forests and Park Services (DoFPS) estimates that approximately 99,000 cubic metres of wood residues, mainly lops and tops left behind after logging operations, are available annually at logging sites across the country.
Although better utilization of these residues could support domestic charcoal production while also reducing waste within the forestry sector, implementing mobile charcoal production units will require changes to existing licensing regulations and coordination among relevant agencies to identify suitable logging areas for such operations.
Recognizing the increasing demand for charcoal and the need to strengthen domestic supply chains, the government has already initiated several measures aimed at supporting local industries, particularly in Samtse and Chukha Dzongkhags where charcoal and veneer industries are concentrated.
According to the ministries, scientific thinning areas within Samtse Dzongkhag have been prioritized to support long-term raw material supply for charcoal factories.
Similarly, broadleaved scientific thinning areas in Chhukha have been allocated to private sector operators to meet the needs of charcoal and veneer industries.
The government has also approved the sale of broadleaved timber extracted by the Natural Resources Development Corporation Limited (NRDCL) and Bhutan Board Products Limited (BBPL) from scientific thinning operations for use by charcoal and other wood-based industries.
In addition, timber extraction areas allocated to NRDCL in Samtse have been expanded, alongside directives to increase production capacity in order to meet rising industrial demand.
The ministries reiterated these interventions are part of broader efforts to strengthen Bhutan’s wood-based industries while reducing dependence on imports.
Additionally, the government also plans to pilot the allocation of State Reserve Forest Land (SRFL) for industrial plantations dedicated to supplying raw materials to charcoal industries.
Under the proposal, around 100 hectares of degraded SRFL in Samtse has already been identified for development through a Public-Private Partnership model.
“If successful, the initiative will be scaled up in the future,” the ministries stated.
Raw material supplies are also expected to come from expanded timber production areas in other Dzongkhags as part of the government’s broader timber and forestry development strategy.
The move reflects growing concern over Bhutan’s increasing import bill for wood-related products and the need to build stronger domestic industrial capacity.
The NC recommended that the expansion of local charcoal production could not only reduce imports but also create employment opportunities, improve utilization of forest resources, and support downstream industries such as ferro-alloy manufacturing.
At the same time, the House emphasized that future expansion of charcoal production would need to balance industrial growth with sustainable forest management and environmental safeguards.
Tashi Namgyal, Thimphu
