Green Mongolia - frontier.mn Mongolia.pdf · Green Mongolia ----What Japan Can Offer to the Most Promising Industry in the ... potential areas of cooperation between Japan and Mongolia

Green Mongolia

----What Japan Can Offer to the Most Promising Industry in the

Fast Growing Frontier Economies in the World------

Although media has not reported yet, we believe one of the key

potential areas of cooperation between Japan and Mongolia will be on

technology and technical assistance from Japan related to green

growth of Mongolia in the context of sustainable development of

Mongolian economy.

Below are the studies on initiatives taken by Mongolian government

and business opportunities for both countries.

First of all, let me explain about global trends of Green Economy. The

“RIO +20”and its primary agenda in 2012 has set tones and

determined the concept of Green Economy and framework for the

development of the sustainable growth. As you see the agenda below,

the Green Economy and sustainable development have become globally

recognized concepts that each country must work together after a long

history of sacrificing environment in exchange for economic growth in

developed economies.

Now, what are the critical factors for Green Growth?

As the table below shows, according to OECD, there are several

important factors for Green Growth.

As Mongolia is growing at such a high speed in the next 10-20 years,

harmonizing growth and environment is critically important. Therefore,

these issues need to be addressed as well.

Regarding measurement framework for Green Growth indicators, the

OECD proposed the set of monitoring indicators which consist of

four groups (see “Assessing the Green Growth System”). Those are

(1) the level of productivity and efficiency. (2) the level of natural

resource that remain unused. (3) the possibility of socioeconomic

activities having a negative impact on human health and the

environment. And, (4) the implementation of effective policies to

support Green Growth. So, there are lots of tasks that Mongolia needs

to tackle to achieve the growth in a future.

Now, let me explain about initiatives taken by the Government on

green development.

Mongolia’s national strategy on Green Growth has just started 8

months ago after the Government has structured the Ministry of

Environment and Green Development as one of the core ministries

in order to fulfill its commitment to achieve the sustainable

development by GREEN CONCEPT.

According to the presentation by Dr. S. Oyun,

Minister in charge of the Development, Mongolia is far from “GREEN”.

In fact, the economy is totally “BROWN”. For instance, CO2 emission

per 2000$ of GDP in Mongolia is 8.5 times higher than world average.

In addition, GHG emission per capita is 2 times higher than world

average.

In case no measures are taken by government to improve productivity

and to get rid of negative impact on human health and the environment,

the situation will be worse in 5-10 years as mining industry is

emerging rapidly.

Therefore, the Parliament of Mongolia has approved the set of

environmental law in 2012 with consideration of following principles.

1. Polluter pay mechanism

2. Consumer pay mechanism

3. Increase the natural resource evaluation and management

At the same time, the government has made action plan 2012-2016

and targeted to

1. Build green models such as green city

2. Promote environmental friendly technology, clean production and

green consumption.

3. Develop new green financial mechanism collaborating with

financial sector for the major mining and other projects

4. Apply the recycling technology of household and industrial waste.

And,

5. Apply 3R principles (Reduce, Reuse and Recycle)

We admire the commitment of Mongolia because it is not easy for

developing countries like Mongolia to adopt policies to prevent

economic growth. China, knowing the impact of air pollution in big

cities, has neglected the impact and has not done any effective policies

to improve the problem until very recently. Therefore, the pollution has

reached to such a critical level that the economic and social burdens in

a future will be huge. By the way, below are the lists of Green

Innovation initiatives by countries. The noteworthy characteristics

are (1) Each country has quantitative targets to reduce the impact (2)

Many of them are targeting to create new jobs and industries.

Renewable energy and automobile industry are typical examples of the

favored industries for them to take measures.

Now, I would like to explain why Japan can help Mongolia a great

deal in environmental issues for Mongolia. Below are some reasons.

1. Japan has gone through huge environmental problems between

1960-80 when economy has grown rapidly at 8-10%. Therefore, as

you see below (Japan’s Experience with Environmental Pollution

and Innovation), through various initiatives taken by residents,

Government (both Local and Central) and private sector, the

environmental pollution has improved substantially in recent years.

2. Japan has accumulated the technology through innovation of the

products and process. And, they have created new industries.

Those include cutting-edge Low-Carbon Technology, Technology to

generate clean electricity etc. And, some of those technology has

been transformed to developing countries through Aid by JICA (See

below Aid to Developing countries by JICA). So, similar efforts can

be done for Mongolia as well.

3. Japan has various systems to make sure the initiatives work. Those

include (1) Legal framework (2) tax incentives (3) Green Financing

in areas of ecological cars etc. It is always good for Mongolia to hear

expert’s opinion and professional advice based on experience.

Areas on Japan can help Mongolia on Environmental Issues

So, I would like to point out several areas that Mongolia can learn

from Japan.

1. Cooperation on Joint Crediting Mechanism (JCM)

JCM is a program in which Japan’s contribution to reduction and

absorption of greenhouse gas emissions in partner countries

through transferring Japan’s low-carbon technology and products

are calculated and evaluated as credits for contribution. This

Japan-Mongolia partnership was signed in the beginning of this

year as the first partnership by Japan for this purpose. And, we

expect technology and service to promote investment in this area

should increase in a near future.

2. Recycling Business

As you see the flow of Recycling of major products prepared by

Japanese Government, Japan has a very good system of recycling

products. Through the flows of the recycling, lots of service and

manufacturing industries have flourished in Japan. And, through

the process, Japan has become a leading country for the rate of

recycling in the world.

Some other thoughts……

Mongolian Government can also consider followings

(1) Green Taxation to reduce global warming and to promote

environmentally friendly cars

(2) Legal framework to formulate cyclical social system. One of

the ideas is to introduce Green purchase law from Japan

(3) Green Financing for environmentally friendly products and

services

(4) However, the most important thing is to heighten each

individual’s ethical standard to keep the environment clean.

We believe this is the biggest reason for the success of Japan.

Lastly, needless to say, the direction to the Green Economy in Mongolia

are challenge and opportunity for business in Mongolia. But, it is the

direction that Mongolia will never return. So, companies who will

follow the direction will win and companies who will neglect the

direction will lose. As you see the above chart (World Market of

Environmental Businesses by Region), the market is growing rapidly

globally and this trend will likely continue.

And, in Mongolia, as I said earlier, the Government has just realized the

importance and started to implement the policies.

So, this industry should be one of the fastest growing industries in

the fastest growing economies in the world in the next 10 years. So,

any investors who like the growth story in Frontier Markets should

watch the industry.

Regarding the sub-sectors in the Environment industry which will

benefit most in Mongolia, please take a look at “Overview of Green

Markets” which came from the study group on Green Markets. The

sub-sectors will be very broad ranging from service to manufacturing

industries. And, in Mongolia, the theory also applies.