Stocktake of Mongolia's Green Economy 2014

stocktake of mongolia’s green economy 2014

Economic Policy and comPEtitivEnEss rEsEarch cEntEr

ÝÄÈÉÍ ÇÀÑÃÈÉÍ ÁÎÄËÎÃÎ, ªÐÑªËÄªÕ ×ÀÄÂÀÐÛÍ ÑÓÄÀËÃÀÀÍÛ ÒªÂ

Project: Partnership for Action on Green Economy (PAGE) –an initiativeby theUnitedNationsEnvironmentProgramme(UNEP),theInternationalLabourOrganization(ILO),theUnitedNationsIndustrialDevelopmentOrganization(UNIDO)andtheUnitedNationsInstituteforTrainingandResearch(UNITAR)

Report title: Stocktake of Mongolia’s Green Economy

Main author: EconomicPolicyandCompetitivenessResearchCenter(EPCRC)

Address: SanBusinessCenter,9thfloor

PrimeMinisterAmarStreet29,

Sukhbaatarduureg

Ulaanbaatar,Mongolia

Tel: (+976)11-321927

Fax: (+976)11-321926

E mail: [email protected]

Website: www.ecrc.mn

FoREWoRd

Withitshigheconomicgrowthonthebackofminingboom,Mongoliaknowsfirst-handaboutthechallengesof transitioning to a more socially inclusive and environmentally friendly economy.The Government of Mongoliarecognizestheuniqueopportunitytoliftitselftotherankofprosperouscountrieswithinagenerationwhileacceptingthechallengesassociatedwithsustainableandequitablesocio-economicdevelopment thatenablesMongolia toadaptandthriveinthe21stcentury.

Inresponse,thegovernmenthasenactedaseriesofenvironmentallawsandisdevelopingaGreenDevelopmentstrategywhichhasthepotentialtobethemostsignificantpieceofdevelopmentpolicysinceMongolia’stransitionintheearly1990s.

Whiletheworldisfacingunprecedentedpopulationgrowth,greenhousegasemissionsandsocialinequality,in2012,theRio+20Declaration–TheFutureWeWant–recognizedgreeneconomyasavehicleforachievingsustainabledevelopment and poverty eradication. Following a request from Mongolian President Tsakhiagiin Elbegdorj forsupportfromthePartnershipforActionforGreenEconomy(PAGE),Mongoliahassigned-uptothePartnershipforActiononGreenEconomy(PAGE)calleduponbyfourUNagenciestosupportinterestedcountriesintheirtransitiontogreenerandmoreinclusiveeconomies.

PAGEseekstoenableMongoliatoformulateandadoptgreeneconomypoliciesbyofferingasuiteoftechnicalassistanceservicestothegovernment,strengtheningthecapacitytofinanceandimplementinclusivegreeneconomyinitiatives, hosting knowledge sharing events and, developing and providing global access to tools and trainingprogrammesongreeneconomy.

SupportedbytheMongolianGovernment,PAGEcanbeacatalysttoenableMongoliatoformulateandadoptgreeneconomypoliciesbyofferingasuiteoftechnicalassistanceservicesandtopromoteacommonunderstandingofgreeneconomyinMongolia.Suchcooperationisalsocriticalfordeliveringnewideas,resourcesandstimulatingdiscussions on identification of initiatives and action plan to promote a socially equitable, low carbon andenvironmentallyfriendlyeconomictransformationofthecountryandscalingupthesesuccessfulinitiatives.

Thefirstof itskind, theGreeneconomystocktakingreportdeveloped inconsultationwithkey local,nationalandinternationalpartners,providesanexcellentbasisforGovernmentandcivilsocietytoreviewMongolia’sgreendevelopmentandfordevelopmentpartnerstoguideandconsolidatetheirefforts.

OYUNSanjaasuren

MinisterofEnvironmentandGreenDevelopment

Acknowledgements

ThisstudywascommissionedbythePartnership forActiononGreenEconomyat therequestof theMinistryofEnvironmentandGreenDevelopmentofMongolia.FromtheMinistryofEnvironmentandGreenDevelopment,MrChuluunTogtokhhelpedconceivethisreport,anditwasmanagedbyMrEnkhbatAltangerel,directorofCleanTechnology and Science Division. Other officials from a variety of ministries contributed to this report includingrepresentativesfromtheMinistryofEconomicDevelopment,NationalRenewableEnergyCenter,MongolianNationalChamberofCommerceandIndustryandtheWorldBankamongothers.

TheresearchteamatECPRC,collecteddata,draftedthereportandmanagedthecomprehensivestakeholderconsultations.ParticularthankstoMsLakshmiBoojoo,MsOdonchimegIkhbayarandMrNicholasPlummer.

FromPAGE,thereportwasledbytheUNEPEconomicsandTradeBranchundertheguidanceofDrStevenStone.ThereportwasconceivedanddesignedbyMrFulaiSheng,andmanagedbyRichardScotney.OscarGarciaandAchimHalpaap (UNITAR) the joint leads of PAGE’s activities in Mongolia drove the project through to completion, withinvaluable help from PAGE Mongolia coordinator Batkhuyag Choijiljav.The report also benefited from substantialcontributionsfromNaraLuvsan,AsadNaqvi,AngarEnkhthur,ZhengzhengQu(UNEP),MoustaphaKamalGueye(ILO),ClaudiaLinke-Heep(UNIDO)andAliceDauriach(UNITAR).

TheregionalofficeforAsia-Pacific,ledbyKavehZahediandwiththesupportofStefanosFotioualsoprovidedsupport,alongwiththeUNMongoliacountryteam,inparticularResidentCoordinatorMsSezinSinanoglu,DeputyResidentCoordinatorThomasErikssonandUNDPstaffmembersBunchingivBazartserenandDoljinsurenJambal.

ABBREVIATIoNS ANd ACRoNYMSADB AsianDevelopmentBankAQS AirQualityStandardASS ArtisanalandSmallScaleMiningAusAID AustralianAgencyforInternationalDevelopmentCHP CombinedHeatandPowerPlantCMTU ConfederationofMongolianTradeUnionCNDS ComprehensiveNationalDevelopmentStrategyEBRD EuropeanBankforReconstructionandDevelopmentEPCRC EconomicPolicyandCompetitivenessResearchCenterGCGF GreenCreditGuaranteeFundGDP GrossDomesticProductGDS GreenDevelopmentStrategyGGGI GlobalGreenGrowthInstituteGIZ GermanSocietyforInternationalCooperationGoM GovernmentofMongoliaHDF HumanDevelopmentFundIFC InternationalFinanceCorporationILO InternationalLabourOrganisationMAPP MongolianAirPollutionProjectMCA MillenniumChallengeAccountMDG MillenniumDevelopmentGoalsMED MinistryofEconomicDevelopmentMEGD MinistryofEnvironmentandGreenDevelopmentMIA MinistryofIndustryandAgricultureML MinistryofLabourMNCCI MongolianNationalChamberofCommerceandIndustryMONEF MongolianEmployers’FederationNDI NationalDevelopmentInstituteNGO Non-GovernmentalOrganisationNREC NationalRenewableEnergyCenterNSO NationalStatisticalOfficeОТ OyuTolgoiPAGE PartnershipforActiononGreenDevelopmentRP RepublicofKoreaSDC SwissAgencyforDevelopmentandCooperationSME SmallandMediumEnterprisesUN UnitedNationsUNDP UnitedNationsDevelopmentProgrammeUNEP UnitedNationsEnvironmentalProgrammeUSA UnitedStatesofAmericaVAT ValueAddedTaxWB WorldBankWHO WorldHealthOrganisation

CoNTENTSExecutive Summary...............................................................................7

1. Introduction..................................................................................... 12

1.1 IntroductiontoPartnershipforActionProgram......... 12

1.2 Thepurposeofthestudy.................................................... 12

1.3 Anoverviewoftheresearchapproach.......................... 12

2. Current social and economic situation and key

challenges......................................................................................... 13

2.1. Alarge,land-lockedcentralAsiancountry................... 13

2.2. Aharshclimatewithlowprecipitation.......................... 13

2.3. Asparsebutgrowingpopulation.................................... 13

2.4. Increasingurbanization....................................................... 13

2.5. Aboomingeconomy............................................................ 14

2.6. Increasingrelianceonmining........................................... 14

2.7. Economicchallenges............................................................ 15

2.8. Keyenvironmentalproblems............................................ 17

3. Tackling the challenges: Government policies

and projects for Green development................................... 20

3.1High-levelstrategiesdrivingtheGreenEconomy........ 20

3.2Socialandeconomicdevelopmentpolicies................... 22

3.3Cityplanningandtransport.................................................. 22

3.4Encouraginghomeownership............................................ 23

3.5Tacklinginflation....................................................................... 23

3.6Employmentprograms........................................................... 24

3.7Welfarepolicies.......................................................................... 24

3.8Genderequity............................................................................ 25

3.9Population&demographicsstrategy................................ 25

3.10Environmentallegislation................................................... 25

3.11Renewableenergy&energyefficiency.......................... 26

3.12Effortstocurbairpollution................................................. 26

3.13StepsforaGreenerMiningIndustry............................... 27

3.14Agriculture,livestockandlandmanagement.............. 27

3.15Forestryprograms.................................................................. 28

3.16Waterandwastemanagement......................................... 28

3.17Promotingecotourism......................................................... 28

4. Beyond the Government: current initiatives for a

Green Economy.............................................................................. 29

4.1Greenstrategiesintheprivatesector............................... 29

4.2PromotingGreenproducts................................................... 31

4.3 GreenBankingandGreenloans....................................... 31

4.4 PromotingDecentWork...................................................... 31

4.5 Energyefficiencyandcleanerbusiness......................... 32

4.6 Privatesectorinitiativestodevelopthe

renewableenergysector..................................................... 32

4.7 CombatingUlaanbaatar’sairpollution.......................... 33

4.8 Environmentalgovernance................................................ 34

4.9 Promotingsustainablemining.......................................... 35

4.10Agricultureprojects............................................................... 35

4.11Forestryprojects..................................................................... 36

4.12Watermanagementstrategies.......................................... 36

4.13Agreenertransportsector.................................................. 36

4.14Greenfinancing..................................................................... 37

5. Working together: Relevant institutions and

actors for achieving PAGE objectives.................................. 38

5.1 The“NewGovernmentforChanges”............................... 38

5.2 Employeeandemployerassociations............................ 40

5.3 Mongolia’sprivatesector:animportantdriverfor

Greendevelopment.............................................................. 40

5.4 Internationalcooperationorganisations

inMongolia.............................................................................. 41

5.5 Non-GovernmentalOrganisations................................... 43

6. A way forward: priority work streams

and actions under PAGE............................................................. 44

6.1 Knowledgegapsanddata.................................................. 44

6.2 PrioritySectors........................................................................ 45

6.3 KeyActorsandStakeholderstoEngageinthe

PAGEProcess............................................................................ 45

6.4 RecommendationsforPAGEproject............................... 45

References............................................................................................... 48

Stocktake of Mongolia’s Green Economy 2014 77

Mongoliafindsitselfonthethresholdofprosperity.Withitsvastmineralresources,includingcopper,goldandcoal,theeconomyisexpectedtocontinuegrowingquicklyinyearsahead.However,thisrapideconomicgrowthcreatesbothopportunitiesandchallenges.Ifcarefullymanaged,thisgrowthcouldsubstantiallyreducepovertyandleadtoMongolia’semergenceasoneofthewealthiestcountriesinAsia.

Executive Summary

Beforeitreachesthisstagehowever,Mongoliamustovercomeanumberofeconomic,socialandenvironmen-talchallenges.Theminingandforeigninvestmentboomhas created an overdependence on the mineral sector.Volatility in exports and foreign investment is creatingsevere economic fluctuations and instability. Inflationhasbeenpersistentandtheexchangeratecontinuestodepreciate.Thecountryalsofacesahugeinfrastructuredeficit in the critical areas of energy supply, water andtransport.These weaknesses are stunting the develop-mentofproductiveindustrialandagriculturalsectors.

While human development, incomes and wealthareimproving,manyMongoliansarebeingleftbehind.Thereisanincreasingdividebetweentheurbancentersof Ulaanbaatar and smaller towns, mining regions andthecountryside.

Mongolia facesanumberofseriousenvironmentalproblems including severe air pollution in Ulaanbaatar,mismanagementofwatersuppliesandwaterpollution,landdegradationanddesertification,partlyduetomin-ingandherdingpracticesbutalsoduetoclimatechange,anddeforestation.Mongolia’sleadershavetoactnowtoavoidfurtherlong-termharmstotheenvironment.ThesechallengesareoutlinedinChapter2ofthis‘StocktakeofMongolia’sGreenEconomy’report.

It is important that Mongolia takes steps towardssolving these environmental issues as part of its eco-nomic development. A strategy to solve the environ-mentalproblems,whiledevelopingMongolia’sindustryandcreatingjobs,willbecrucialforthecountry’sfuture.Theaimshouldbetocreatea Green economy,onethat“resultsinimprovedhumanwell-beingandsocialequity,whilesignificantlyreducingenvironmentalrisksandeco-logicalscarcities.”

Inaneffort toaddressthecountry’senvironmentalproblemsandsetMongolia’seconomyonasustainablepath, theGovernmentofMongolia (GoM) isseekingtopursueastrategyofgreendevelopment.

At the same time, the government is not the onlyarealeadingthepushtowardsgreendevelopment.Ele-mentsoftheprivatesectorrecognizetheimportanceofthegreeneconomyandarealsoseekingapathtowardgreendevelopment.Oneofthemostinfluentialbusinesslobbygroups,theMongolianNationalChamberofCom-

merce and Industry (MNCCI) is pursuing its own greenstrategy,the“5x20”goalsunderthe“MovingfromBrownto Green Economy” national program initiative. BankssuchasXacBankandGolomtbankarepursuingstrate-gies for green loans and investment because it makesgood business sense, and companies such as Newcomaredevelopinggreenenergysources.

Meanwhile, international organisations such as theWorldBank,theADBandtheEBRDareprovidingfundingforenvironmentalprojects toaddressairpollutionandwatermanagement,andlendingtosupportrenewableenergy infrastructure. NGOs such as the Global GreenGrowth Institute and the World Wide Fund for Natureare also establishing their own environmental projectsandlobbyinggovernment.Thesevariousactorsarede-scribedandcataloguedinChapter5ofthisreport.

Forthisstocktakewehaveincludedpoliciesthataredesignedtosolveacombinationofeconomic,environ-mentalandsocialbenefits,andassistwiththecausesandnot just the symptoms of problems toward the GreenEconomy.Chapters3and4ofthisreportprovideasum-mary of the programs and policies towards the Greeneconomy. Chapter 3 providing a detailed descriptionof current government initiatives, while Chapter 4 de-scribesthoseoftheprivatesector,internationalorgani-sationsandNGOs.Table1listseachprogramandpolicyunderthecategoryofhigh,mediumandlowimportancetosummarisetheimportanceandscopeofeachoftheseprograms. Detailed financial information was not avail-ableforeachpolicyorprogram,sowehavejudgedeachprogramfromourknowledgeofitsimportanceandfeed-backfromstakeholders.Generallyaprogramwithahighlevelofimportancewillhaveconsiderablefundingandalengthytime-frameofat-least5years,mediumindicatesaprogramwithamoderateleveloffundingandapro-gramlengthof1to5years,andsmall indicatesasmallprogramandasmalltime-frameoruncertainlengthoftime.

Our findings suggest that the key priority sectorsforthePAGEprojectandthedevelopmentofthegreeneconomy in Mongolia should be: agriculture, mining and renewable energy.Althoughothersectorssuchastransport,wastetreatmentandtourismwillbeimportantforMongolia’sdevelopment,agricultureandminingarethe largesteconomicsectors inMongoliawhile renew-

88 Stocktake of Mongolia’s Green Economy 2014

able energy has considerable potential for Mongolia’sfuture.

PAGE’s technical assistance will have an invaluableimportancetotheGovernmentGDSforsuccessfulpas-sage through the parliament and implementation.TheEPCRChasfoundfivekeyareastofocuswithinthePAGEproject.Theseare:

1. To support the National Green development Strategy and its implementation as a long term national program. Consequently, theactivitiesofthe current government and the subsequent gov-ernments’ action plans should be in line with thisstrategicdocument.

2. To promote joint implementation of the National Green development Strategy by various minis-tries and other relevant institutions. Thisstrategicprogram should not be implemented by only oneministry,ratheritshouldbeacooperativeeffort.Indoing so, facilitating of broad based consultationsonsettingrealisticprioritytargetsbasedontheex-istingdocumentsandstrategiesandacomprehen-sive study of existing programmes and initiativesshouldbeorganised.

3. To help assess the adequacy and appropriate-ness of the existing investments, commitments that may contribute to the selected targets and to help identify policy actions required to induce investments and enhance the effectiveness of these investments.Tohelpidentifyresourcestofillanyinvestmentgaps.

4. To help improve training and awareness on green economy aimed at tackling the knowledge gaps

5. To introduce and supporting new and advanced technologies, green initiatives and best practices from other countries


Table 1: Summary of stocktake: Current and planned Green Economy policy programmes and initiatives in Mongolia

FocusArea Importance Relevantprogrammesandinitiatives

GovernmentInitiatives PrivateSector,InternationalAgenciesandNGO’s

LawsofMongolia High

• Socio-economic, environment and infrastructure relatedlaws. In particular “Revision of Environmental Laws inMongolia2012”“ToProhibitMineralExplorationAndMiningOperations at River Headwaters, Protected Zones OfWaterReservoirsAndForestedAreas”,

• “Renewable energy law of Mongolia (2007), Relations withrespecttoestablishmentofarenewableenergyfund

• ”The Law on Social Welfare 2012”, “Law of Mongolia onPromotionofGenderEquality”(2011),

• TheTourismlawofMongolia(2000),www.legalinfo.mn)

-

High-LevelStrategies

High • NationalGreenDevelopmentStrategy -

Medium

• Millennium Development Goals (MDGs)-basedComprehensive National Development Strategy (NDS) ofMongolia

• GovernmentActionPlan(2012-2016)• PrioritiesofMongoliansocio-economicdevelopmentforthe

period2012-2016(medium-termdevelopmentplan).• The State Population Development Policy (2004-2015),

ratified by the Mongolian State Great Khural, ResolutionNo.21,2004

• TheConceptofRegionalDevelopment(2001–2020),ratifiedby the Mongolian State Great Khural, Resolution No.57,2001

• Resolutiononthe2014basicguidelinesofsocio-economicdevelopment,ratifiedbytheMongolianStateGreatKhural,ResolutionNo.39,2013

• The State Public Health Policy, ratified by the MongolianStateGreatKhural,ResolutionNo.81,2001

• The State Policy on Oil Sector until 2017, ratified by theMongolianStateGreatKhural,ResolutionNo.65,2011

• The State policy on development of high technologyindustrial sector, ratified by the Mongolian State GreatKhural,ResolutionNo.34,2010

• Government Policy on Food and Agricultural Sector(2003-2015), ratified by the Mongolian State Great Khural,ResolutionNo.29,2003

• Government Policy on Ecology (2001-2020), ratified by theMongolianStateGreatKhural,ResolutionNo.106,1997

• TheStatePolicyontheMineralsSector(2014-2025),ratifiedbytheMongolianStateGreatKhural,ResolutionNo.18,2014

• State Policy on Disaster Protection (2011-2020), ratified bytheMongolianStateGreatKhural,ResolutionNo.22,2011

• “MemorandumofUnderstanding”signedbytheUlaanbaatarcity Mayor Bat-Uul.E and the Minister of Environment andGreenDevelopmentOyun.S.

-

EconomicDevelopment,Employment

andSocialWelfare

High

• ChinggisBond($1.5billionUSD)• TradedonJapanmarket“Samurai”Bond(30billionyen)• DevelopmentBankofMongoliaInfrastructureSpending

($580millionUSD)

• PovertyEnvironmentInitiative(UNDP)

Medium

• “Joint Implementation of Medium-term Program toStabilize Prices of Key Commodities and Products”, TheGovernment of Mongolia and the Bank of Mongoliasigneda“MemorandumofUnderstanding”

• “Severalmeasuresto improvecitizen’s housing”, ratifiedbytheMongolianGovernment,ResolutionNo.2,2011

• TheEmploymentsupportprograms• Health Sector Strategic Master Plan (2006-2015), ratified

bytheMongolianGovernment,ResolutionNo.245,2005


EnvironmentalGovernance

High - • UNDP’sStrengtheningEnvironmentalGovernanceinMongolia,PhaseIandPhaseII

• StrengtheningtheprotectedareanetworkinMongolia(SPAN),(UNDP)

Medium

• NationalActionProgramonClimateChange(2011-2021),ratifiedbytheMongolianStateGreatKhural,ResolutionNo.2,2011

• NationalProgramforProtectedAreas(1998-2015),ratifiedby the Mongolian State Great Khural, Resolution No.29,1998

• “Mongol Livestock National Programme” (2010-2021),ratified by the Mongolian State Great Khural, ResolutionNo.23,2010

• The National Water Programme (2010-2021), ratified bytheMongolianStateGreatKhural,ResolutionNo.24,2010

• The National Program for Public Ecological Education(1997-2029), ratified by the Mongolian Government,ResolutionNo.255,1997

• Subprogram of forest pests and diseases (2004-2015),ratified by the Mongolian Government, Resolution No.5,2004

• National Forest Programme (2001-2015), ratified by theMongolianGovernment,ResolutionNo.248,2001

• NationalProgramonPersistentOrganicPollutants,ratifiedbytheMongolianGovernment,ResolutionNo.99,2006

• National program on protection of ozone layer (1999-2030),ratifiedbytheMongolianGovernment,ResolutionNo.129,1999

• NationalProgramforPromotionofqualityandenvironmentalmanagement,ratifiedbytheMongolianGovernment,ResolutionNo.146,2002

• Meteorological Environment Sector DevelopmentProgramuntil2015,ratifiedbytheMongolianGovernment,ResolutionNo.146,2002

• National Program on Combating Desertification (2010-2020),ratifiedbytheMongolianGovernment,ResolutionNo.90,2003

• CleanAirfoundation• Redistributionofaimagfundingbasedonecological

vulnerabilityinBayankhongor,tobereplicatedacross6otheraimagsin2014.

•

• GreenPaper2012(MNCCI• DevelopmentbyDesign

(NatureConservancy)• BiodiversityandAdaptation

ofKeyForestEcosystemstoClimateChange(GIZ)

• ChangeandRedd+certification(GIZ)

• Biodiversityoffsetprograms• UlaanbaatarCleanAirProject

(WorldBank)• UlaanbaatarCleanAir

InitiativePhaseII(Completed,EBRD)

• MongolianAirPollutionProject(MAPP)

• EngagingStakeholdersforEnvironmentalConservation(ESEC),AsiaFoundation

• Reforestationprogram(MNCCI)

• GroundwatermanagementinSouthernGobi(WorldBankandAusAid)

• Ecosystem-basedAdaptationApproachtoMaintainingWater

• SecurityinCriticalWaterCatchmentsinMongolia(UNDP)

• UNJointProgramonWaterandSanitation

TheInfrastructure

relatedprojectsandprograms

Mongolia

High • “NewConstruction”themid-termtargetprogram(2005-2020),ratifiedbytheMongolianStateGreatKhural,ResolutionNo.36,2010

• “Healthy city and the village, workplace, school”nationalprogram(2012-2016),ratifiedbytheMongolianGovernment,ResolutionNo.359,2011

• “TheNationalRenewableEnergyProgram”(2005-2020),ratifiedbytheMongolianStateGreatKhural,ResolutionNo.32,2005

• UlaanbaatarMetroProject

-

Medium - • SalkhitWindFarm(Newcomgroup)

• WorldBank’sRenewableEnergyandRuralElectricityAccessProject(REAP

Low - • Rehabilitationofthreeschools(USAIDandGIZ)

• Establishingenergyefficiency(UNDP)


Otherprojects Medium

• Program on Education (2010-2021), ratified by theMongolianGovernment,ResolutionNo.31,2010

• Thenationalinnovationdevelopmentprogram(2008-2015),ratifiedbytheMongolianGovernment,ResolutionNo.306,2007

• Agriculturalstockexchange

• SustainableArtisanalMiningProject(SDC)

• Index-basedLivestockInsuranceinMongolia(GOMwithWorldBank)

• MongoliaLivestockandAgriculturalMarketingProject(WorldBank)

• AgricultureandFoodSecurity(SDC)

• BiodiversityandAdaptationofKeyForestEcosystemstoClimateChange(GIZ)

• EstablishmentofClimate-ResilientRuralLivelihoods(WorldBank)

• “Greenecohotellabel”(managedbyMNCCI)

• Greenproductslabeling(managedbyMNNCI)

• Organicfoodpromotion(managedbyMNNCI)

• Greenloansforpromotinggreentechnologies

• GreenCreditGuaranteeFund• XacBankcarboncredits

scheme• Golomtbankloanstosupport

agreeneconomy• StrategiesforGreenPublic

TransportinMongolia(ResearchinitiativebyGGGI)


1.2 ThE PuRPoSE oF ThE STudY

Themainpurposeof this studywas to identify thekey economic, social and environmental challengesMongoliaisfacing,whatthegovernmentisdoingaboutthese,whatotheragenciesaredoingtoalleviatethese,and how the PAGE program can assist or build opentheseprogramsandpolicies.

1.3 AN oVERVIEW oF ThE RESEARCh APPRoACh

This research was conducted between September2013andMarch2014.Indoingso,theEPCRCconductedadesktopanalysisandheldinterviewswithkeyplayersinMongoliafromarangeofGovernmentministries,privatesectororgansiationsand internationalagenciesamongothers. Inaddition,abroadbasedcrossministerialvali-dation workshop was organized in March 2014, whereabout30keyrepresentativesfromvariousministriesandotherstakeholdersparticipated.

1. Introduction1.1 INTRoduCTIoN To PARTNERShIP FoR ACTIoN PRoGRAM

In2012,theRio+20Declaration–TheFutureWeWant–recognizedgreeneconomyasavehicle forachievingsustainable development and poverty eradication. ItcalledontheUnitedNationstosupportinterestedcoun-tries in their transition to greener and more inclusiveeconomies.

ThePartnershipforActiononGreenEconomy(PAGE)isaresponsetotheRio+20Declaration.ItisaninitiativebyfourUnitedNationsorganisations:theUnitedNationsEnvironment Programme (UNEP), the International La-bour Organisation (ILO), the United Nations IndustrialDevelopment Organization (UNIDO) and the UnitedNations InstituteforTrainingandResearch(UNITAR),tosupportcountries inpursuinganinclusive,resource-ef-ficient,low-carboneconomy.TheoverallvisionofPAGEistocontributetotheequitableandsustainabletransfor-mationofnationaleconomicstructures in30countriesby2020,withtheultimateintentiontoachieveenviron-mentalsustainability,decentjobcreation,reducedpov-ertyandimprovedhumanwell-being.

Overthenextsevenyears,PAGEwhichwillsupport30 countries to generate new jobs and skills, promotecleantechnologies,andreduceenvironmentalrisksandpoverty.Morespecifically,PAGEwilldevelopandimple-mentnationalgreeneconomystrategies,andbuilden-abling conditions in participating countries by shiftinginvestment and policies towards the creation of a newgeneration of assets, such as clean technologies, re-source efficient infrastructure, well-functioning ecosys-tems,greenskilledlabourandgoodgovernance.

During the first two years of PAGE, the project willfocusonsevenpilotcountries,andscaleupthissupporttoatotalof30countriesby2020.Mongoliahasbeense-lectedtobeoneofthesevenpilotcountries.Therearethreeinitiativescrucialtotheinceptionphaseofthere-port:astocktakingreport,ananalysisofgreenjobsandagreeneconomymodeling.

TheEPCRChasconductedthisStocktakingreportoftheGreenEconomyinMongolia.Anotherresearchworkthat the EPCRC has conducted within the frameworksofthePAGEis“GreenJobsMappinginMongolia”studywhichiscloselylinkedtothisstocktakingstudy.


2.1. A lARGE, lANd-loCkEd CENTRAl ASIAN CouNTRY

WedgedbetweenRussiaandChina,Mongoliaisthesecondlargest land-lockedcountrycoveringanareaof1.564millionkm2.Averageelevationis1,580meters,and81%ofthecountryishigherthan1,000metersabovesealevel.1NorthernMongoliaiscoveredbyforestandmoun-tainranges,whilstdesert,desertsteppe,andsteppear-eascoverthesouth.TheWesternregionisdominatedbytheAltaiandKhangaimountainranges,andtheeast iscoveredbyvastplainsandwildheaths.2

Although only 0.4% of Mongolia is considered arable,muchofthecountryisusedforanimalhusbandry.3Fro-zengroundor‘permafrost’covers63%oftheland,con-centratedinthemountainousregions.4Mongoliaisrichin mineral resources with substantial deposits of coal,copper, gold, molybdenum, lead, nickel, aluminum, tinandbismuth.

2.2. A hARSh ClIMATE WITh loW PRECIPITATIoN

TheMongolianclimateconsistsoflongcoldwinters,short summers and low annual precipitation.Tempera-tures can fall to -40°C in winter and can reach 40°C insummer. Ulaanbaatar is the world’s coldest capital city,withanaveragedailytemperatureof-3.3°C.5

Despite cold temperatures, Mongolia is known asthelandofthebluesky,withanaverageof3,000hoursofsunshineannually,or8hrsperday.Averageannualpre-cipitationislow(200to220mm),rangingfrom38.4mmintheGobidesert,to389mminthenorth.RainfallpeaksbetweenJuneandAugust,whilethedriestmonthsareNovembertoMarch.Thecountryexperiencesdroughts

� Tortell et al. (2008). Institutional Structures for Environmental Management in Mongolia. p.�0

2 Ibid.� Arable land isdefinedby theFoodandAgricultureOrganizationas landcur-

rentlyusedtogrowcropsorsuitableforgrowingcrops.� Choibalsan,N.(1998).CharacteristicsofPermafrostandFoundationDesignin

Mongolia� Climatemps.com (2013) Average Temperatures in Ulan-Bator, Ulaanbaatar,

Mongolia.

2. Current social and economic situation and key challenges

Mongolia is one of the countries with the highest economic growth rate. Although many Mongolians facedeconomicdifficultiesandsocialdislocationduringthetransitionfromaplannedtoamarket-basedeconomyinthe1990’s,inrecentyearsthecountryhasbecomeincreasinglywealthyandpovertyhasdeclined.However,thisrapidgrowth,drivenparticularlybythedevelopmentoftheminingindustry,hascausedeconomic,socialandenvironmentalchallenges.DevelopingMongolia’sgreeneconomytowardssustainabledevelopmentwillhelptoresolvethesechallengesthroughlongsightedandeffectivemeasures.

onceeverytenyears,exceptintheGobidesertwhereitisestimatedtooccureveryfiveyears.6

Despite the harsh conditions, Mongolia is home toa diverse range of fauna and flora. This includes someof the last remaining populations of threatened faunaincluding the snow leopard, Bactrian camel and Gobibear.7

2.3. A SPARSE BuT GRoWING PoPulATIoN

Mongolia’spopulationwas2.87millionin2012.With1.8peoplepersquarekilometer,Mongoliaisoneofleastdenselypopulatedcountriesintheworld.However,thepopulationhasgrownquickly in recentyears, risingby1.4% per annum. Mongolia’s population is expected toreach3millionby2015.8

2.4. INCREASING uRBANIzATIoN

Mongolians are increasingly abandoning the tradi-tionalnomadicwayoflifeandmovingintourbanareas.Migrationtourbancentersbeganduringthesocialisterafrom1924to1992.In1963,60%ofMongolianslivedinrural areas and 40% in urban areas. By 1993, only 44%maintainedrurallifestyles.Thepaceofurbanizationhasincreasedconsiderablyinrecentyears-overtwo-thirdsof Mongolians or 1.9 million people now live in urbanareas.9

ThepopulationofUlaanbaatar(UB),Mongolia’scap-ital city, grew from 0.87 million in 1993 to 1.32 millionin2012,anincreaseof40%inlessthan20years(Fig2).With46%ofMongoliansnowlivinginUB,thecityisun-derenormouspressure.10Traffic,airpollutionandinad-equateinfrastructurearechronicproblems.

� Tortelletal.(2008).InstitutionalStructuresforEnvironmentalManagementinMongolia.

� Ibid,p.11.8 NationalStatisticalOffice(2013).1212Database.� NationalStatisticalOffice(2013).1212Database..�0 Ibid.


0.0

0.5

1.0

1.5

2.0

2.5

3.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1963 1973 1983 1993 2003 2013

millions millions

RuralUrbanUlaanbaatar

Fig. 2:PopulationofMongolia

Source: National Statistical Office. NB: Urban population prior to ��8� includes Ulaanbaatar.

Recent increases in urban migration are partly due topoor weather conditions. Particularly cold winters thatfollowaperiodofdroughtcanleadtoa‘dzud’,anaturaldisasterwherebythicksnowandicecoverstopanimalsfromreachingfodder,causinglivestocktodieofstarva-tion,oftenintheirmillions.Mongoliaexperiencedthreedzudsinarowin1999-2000,2000-2001and2001-2002,resultinginalossof11millionanimals.11Anotherdzudoccurred in 2009-10, forcing even more herders fromtheir land.From2009to2010theurbanpopulationin-creased7.8%injustoneyear,from1.77millionto1.91.12

Besides weather related migration, many Mongolianshadmovedtourbanareashopingtotakeadvantageofthegrowingeconomy.Howevermanyofthesemigrantscannotaffordtoliveinapartmentsorhouses,andremainlivingin“semi-nomadic”conditions.Ithasbeenestimat-ed that only 40 - 45% of Ulaanbaatar residents live inapartments.Theremainder,around175,000households,live in traditional‘gers’ on the outskirts of Ulaanbaatar.These dwellings are not connected to utilities such aswaterandheating,andmanyresidentsusepitlatrines.

2.5. A BooMING ECoNoMY

Mongolia has been one of the world’s fastest growingeconomiesinrecentyears.Mongolia’sproximitytoChina,thebiggestconsumerofmineral resources,hascausedrapid investmentparticularly in theminingsector.RealGDPgrewby17.4%in2011and12.6%in2012(Fig.3).13

The IMF is projecting real GDP to expand by 11.8% in2013 and around 8.5% on average over the next fiveyears. 14

GDPpercapitahasgrownsixfoldin10years,fromUSD$524 in 2002 to USD $3342 in 2012, while the WorldBanknowclassifiesMongoliaasalowermiddle-income

�� National Statistical Office (20��). �2�2 Database.�2 Ibid. �� International Monetary Fund (20��), World Economic Outlook, October 20�� Ibid.

economy.15AccordingtotheWorldBank,thepovertyratedroppedfrom38.7%in2010to27.4%in2012.16Further-moretherise inhouseholdconsumptionhasbeenoneof the key drivers of economic growth, besides invest-ment(Fig3).

Fig. 3:ContributionstoGDPgrowth,

12.5 7.0 8.6 -1.3

6.5

17.4

12.6

-80.0

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

-80.0

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

2006 2007 2008 2009 2010 2011 2012 2013

per cent per cent

H ouseho ld consum ptionG ovt & N G O consum ptionInvestm entExportsIm portsInventoriesR eal G D P G row th

11.8*

Source: National Statistical Office. *IMF Forecast, World Economic Outlook October 20��.

Theseincreasesinexpenditurehavebeendrivenbyrap-idincreasesinincomes.IntheyeartoMarch2013,totalwagesrosebyaround40%.Increaseshavebeenparticu-larlystrongformen,risingbyanaverageof25.2%overthepast5-years,comparedto19.9%forfemales.17

Thelevelofemploymenthasalso improvedduetothemining boom, with 90,000 jobs created from 2009 to2012.Inthefall-outoftheglobalfinancialcrisistheun-employmentratereachedapeakof12.8%inDecember2009.Sincethen,itreachedalowof6.3%inSeptember2012,beforerisingbackto7.3%inJune2013duetotherecentslowdown.However,theWorldBankisconcernedthat the official data may not accurately reflect currentlabourmarketconditions,asrecentlay-offsintheminingsector may only be absorb by temporary constructionactivitiesandpublicmaintenancework,oreveninformalsectorself-ownedbusinesses(e.g.kiosksandvendors).18

2.6. INCREASING RElIANCE oN MINING

TheMongolianeconomyhasbecomeoverlydependentonmining.AsofDecember2013,miningandquarryingaccounted for 18.5% of real GDP, while industrial andagriculturalsectorseachaccountedforaround14.4%%ofGDP.Mineralandenergycommoditiesaccountedfor81.9%ofMongolia’sexportsin2013,almostallofwhichwere exported to China (Fig 4). Government revenues

�� World Bank (20��). Country and Lending Groups�� World Bank (20��). Poverty Rate Came Down to 2�.� Percent in 20�2. The poverty

rate is based on a poverty line constructed from the 20�0 Household Socio-Eco-nomic Survey data.

�� National Statistical Office (20��). �2�2 Database.�8 WorldBank(2013).NovemberEcoUpdate,p.19


alsodependonmining,estimatedtoaccountfor40%ofgovernmentrevenues.19

The largest mining projects are the OyuTolgoi copperandgoldmineandtheTavanTolgoicoalmine,bothlo-catedintheSouthGobidesertinUmnugobiaimag.ThescaleoftheseprojectsandtheirestimatedimpactontheMongolian economy is staggering.With a constructioncost of USD $6.6 billion since 2009, modeling suggeststhatOyuTolgoiisexpectedtoincreaseMongolia’sGDPby36.4%by2020whileGDPpercapitaisprojectedtobe34%higher.20

Fig. 4:Shareoftotalexports,2012

Source: National Statistical Office, �2�2 Database.

Another prominent mining based activity is “Erdenet”miningcooperation,whichhasbeenthesinglebiggestcontributortotheMongolianeconomyformanyyears.

Inaddition, AsofSeptember2013,therewere3285min-inglicensesheldby1753companies,covering17.5mil-lion hectares. Of this, 908,900 hectares, 11.2% of landmass,isbeingactivelyexploredormined,while16.6mil-lion hectares, or 10.6%, is held under license for futureexploration.21

Ontopoftheselargescaleprojects,thereareanumberof artisanal and small scale mining (ASSM) operationsscatteredthroughoutthecountry.ThemajorityofASSMoperations (80 - 90%) mine gold, while the rest minefluorsparandcoal.Theyoftenoccupythesitesofaban-donedlarge-scaleminingoperations.

At its peak in 2003 an estimated 100,000 people wereemployed as artisanal miners sometimes referred to as‘ninja miners’, representing 20% of the rural workforce.Manyoftheseoperationsbeganfollowingthedzudsof1999–2002,whenASSMbecameanalternativeemploy-mentoptionforherderswhohad losttheir livelihoods.Asof2008thenumberofpeopleemployedinthesectorhasfallento54,000duetoclosureofASSMmillsbythegovernmentandprohibitionofmillingoperationsusingmercury.22ItisunclearhowmanyASSM’sarecurrentlyinoperation.

�� UNDP (20��). About Mongolia.20 Fisher, B. et al. (20��).2� Mineral Resources Authority (20��). Statistical News of Mining Sector, August

20��. 22 Purevjav, Bolormaa (20��). Artisanal and Small-Scale Mining, Chapter ��, ANU.

89.2

5.32.8 2.7

Mineralproducts

Textiles&textilearticles

Naturalorculturedstones,preciousmetal,jewellery

Otherexports

2.7. ECoNoMIC ChAllENGES

Excessive dependence on mining and the size of thelarge-scaleprojectsexposesMongoliatovolatileboomandbusteconomiccycles,drivenlargelybyglobalcom-moditypricefluctuations.Thishascreatedseriousmac-roeconomicimbalancesforthecountry.

Downturn in foreign direct investment and widenedtradedeficitresultedindepreciationofthenationalcur-rencytugrik(MNT)andhighinflation.

RecentmoderationintheChineseeconomyhascreateddifficultiesfortheMongolianeconomy.Exportrevenuehas fallen6% in theyear toAugust2013,withcoalex-ports fallingsharply (down44%intheyeartoAugust).Foreign investment has plummeted, dropping 43% inthe first half of 2013, while the tugrik has depreciated27%againsttheUSdollarinthepasttwoyears.23

Rapid economic expansion has also fuelled inflation.Increases in the consumer price index reached 15% in2012,andaround11%in2013.24Thesepricerisesareex-acerbatingproblemsof incomeinequalityandpoverty,asincomesforMongolia’spooresthavenotkeptupwithinflation.

TheGoM’sbudgetisalsohighlysusceptibletothevola-tility in commodity prices. Government expenditurereached a huge 44.2% of GDP in 2011 as spending onwagesandcashtransferssurged.ThenewGovernmentelectedin2012haspledgedtoreducespendingandin-dicateditscommitmenttothe2%ofGDPstructuraldefi-cit ceiling outlined in the Fiscal Stability Law. HoweversinceJune2013thebudgethasfallenbackintodeficit,andspendingisprojectedtoreach47%ofGDPin2013.This is particularly concerning given the large levels ofborrowing,includingthe$1.5billionin‘Chinggisbonds’,toinvestininfrastructureprojectsisnotincludedinof-ficialgovernmentbudgetestimates.25

The booming extractive sector is also creating a brain-drain.Miningcompaniesandbusinessescateringtothemining sector are attracting and retaining Mongolia’smostskilledworkersbyofferingsignificantlyhighersala-ries.TheEPCRC’s2012‘ExecutiveOpinionSurvey’foundthatemployeeswithgoodinformationtechnologyandfinance skills are not readily available, and that findingand hiring qualified engineers and senior managers isdifficult.26

Inaddition,adivideisemergingbetweenthreepartsofMongolia:theurbancentersofUlaanbaatarandsmallercitiessuchasErdenetandDarkhan,theresourcerichar-

2� National Statistical Office (20��). �2�2 Database.NB: Analysts blame the introduction of the 20�2 Strategic Entities Foreign Investment

Law (SEFIL) for the slump in FDI, although the suspension of the 2nd stage of the Oyu Tolgoi mine is also responsible.

2� Ibid. 2� World Bank (20��). Mongolian Economic Update.2� EPCRC (20�2), Mongolia in World Competitiveness


6 4 2 0 2 4 6

00-0405-0910-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-69

70+MaleFemale

percent

easparticularlyaroundtheOyuTolgoiandTavanTolgoimines in the southern gobi region, and the still largelyundeveloped countryside. The GINI coefficient, the ex-tentofincomedeviationfromanequaldistribution,hasincreasedfrom33.2inthe1990sto37in2008.27Further-more,povertyremainshigherinruralareaswith36%ofpeople below poverty line compared 23% in urban ar-eas.28

WhilemanyMongoliansworkinginminingandbusinessservices are becoming increasingly wealthy, many aremissing out. Despite mining’s contribution to GDP, thesector employs only 47,000 people or 4% of the work-force(Fig.5).Infactitisthoughartisanalminingmaycre-atemorejobsthanlarge-scalemininginruralareasandmayholdgreaterpotentialforreducingpoverty.

Meanwhile,35%ofallemployeesor370,000peoplere-mainemployedinthelow-productivity,low-incomeagri-culturesector.29Thedependenceonherdingispartlyduetosharpincreaseinthenumberofherdersandlivestockfollowingthedeclineofstateenterprisesinthe1990s.

Fig. 5:ShareofEmploymentbyIndustry,2012


Thereisalsosignificantgenderinequalitywithinthela-bourmarket.AccordingtotheWorldBank,genderdis-parities are prominent within the type of work womendo-mostlyunpaidininformalself-employedrolessuchascleaningandsmallshopvendors-andinthewagesthey are paid. Women also have a limited presence inhigherlevelmanagerialpositions.Thisisadespiteapro-femalegendergapinenrolmentratesforsecondaryandtertiaryeducation.30

Despiteincreasedinequality,measuresofhumandevel-opmentareimproving.Between1985and2012Mongo-lia’shumandevelopmentindex(HDI),acompositemea-sureoflifeexpectancy,education,andincome,increasedfrom0.536to0.675(up26%).However,thisHDIscoreisbelowtheregionalaverageof0.683andranksMongolia108outof187countries.31

2� ADB (20�2). Asian Development Outlook 20�2: Confronting rising inequality in Asia. p.��.

28 World Bank (20��). Database.2� National Statistical Office (20��). �2�2 Database.�0 World Bank (20��) Mongolia: Gender Disparities…�� UNDP(20��). Mongolia: HDI values and rank.

35.0

4.46.15.6

12.4

5.3

7.5

6.0

8.26.1 Agriculture,forestry,fishingandhunting-35%

Miningandquarring-4.4%Manufacturing-6.1%Construction-5.6%Wholesaleandretailtrade-12.4%Transportationandstorage-5.3%BusinessservicesandUtilities-7.5%Publicadministrationanddefence-6.0%Education-8.2%Other-6.1%

Fig 6:InfantMortalityandLifeExpectancy


Therehavebeenmanynotableimprovementsinhealthcare in the post-transition period. Infant mortality per1000birthshasfallenfrom65.4in1990to15.5in2012.Between 1980 and 2012, Mongolia’s life expectancy atbirthincreasedby11.2years,from57.3yearsto68.5(Fig6).32

Since 1990 national immunization programs havepushed infectious disease from the five leading causesofdeath.Instead,lifestyleandbehaviordiseasessuchascirculatorydisease,cancerandinjuriesarenowthelead-ingcausesofmorbidityandmortality.33

Mongolia is currently experiencing a‘sweet spot’ in itsdemographicswherebythenumberofworkingagepeo-plefarexceedsthose inornearingretirement. In2012,69%ofMongolian’swereaged15to64,and47%wereunder25(seeFig7).Thisyouthfulworkforcewillsupporteconomicdevelopmentinyearstocome.Howeverthereisconcernthesedemographicsarebeingunderutilisedbecauseofhighunemployment.

Fig 7: PopulationpyramidforMongolia2012


Educationresultshavealsobeenimproving.From1980to2012,averageschoolingyearsroseby2.6years.Adultliteracyratein2010was97.4%comparedtoworldaver-age84.1%.34

�2 National Statistical Office (20��). �2�2 Database.�� Asia Pacific Observatory on Health Systems and Policies. (20��). Mongolia Health

System Review.�� UNDP(20��). Mongolia: HDI values and rank changes in the 20�� Human Devel-

opment Report

50

55

60

65

70

75

80

0

20

40

60

80

100

1972 1982 1992 2002 2012

InfantMortalityRate-LHSLifeexpectancy,total-RHSLifeexpectancy,male-RHSLifeexpectancy,female-RHS

per cent years


OneofMongolia’sbiggestchallengesisitslackofinfra-structure, particularly in the key areas of energy, trans-portandwastemanagement.

Energy: Mongolia currently has an installed energy ca-pacity of 922 MW. The vast majority of this capacity,91.6%, is coal based produced by Mongolia’s thermalcoalcombinedheatandpowerplants(CHP),while3.1%isproducedbyhydroelectricgenerators,5.1%fromdie-sel stations, and 0.1% from renewable resources (solarandwind).35TherearefourCHP’sinUlaanbaataralone.

Mongolia’scurrentenergygeneration is failingtomeetdemand.NewbuildingsinUlaanbaataroftenconnecttothegridwithoutapprovalandthereisconcernincreaseddemandwillcreatewide-spreadblack-outs.TomeetthisgapMongoliaimports7.6%ofitsenergyusageItaimstobecomeself-sufficientin2014.36Energyefficiencyisalsolowandtheenergygridisailing,withenergyrequiredforindustrialoutput7timeshigherthanworldaverage.37

Incomingyears,Mongoliawillneedtorapidlyincreaseits energy production to meet growing demand. TheMinistryofEnergyestimatesthatby2030Mongolia’sen-ergydemandwillbe3,800MW,a thirdof thisdemandcoming from the mining sector.38 Although the renew-ableenergysectorisgrowing,highlightedbytheopen-ingbytheSalkhitwindfarm inJune2013,mostof thefuturedemandwillbemetwithcoalplants,with15newcoalpowerexpectedstationswithin5to10years.ThereareplanstoexpandTPP3and4,aswellasplanstobuildTPP5inUlaanbaatar,AmgalanPowerPlant,andapowerplantatTavanTolgoimine.39

Transport:Duetoitslargegeographicareaandlowpop-ulationdensity,Mongolia’stransportsystemisbasiccon-strainingeconomicactivity.Road,railwaysandairtrans-port services are limited to major towns and regionalcenters.About92%ofroadsaredirttracks,whilepavedandgravelroadscombinedaccountfor8%.40Whileroadandraildensity ishighcomparedtootherAsiancoun-tries,spatialcoverageislow.Thisdemonstratesthechal-lengeofasmall,dispersedpopulation,yetavastarea.

Water and waste infrastructure: Waterand seweragein-frastructuredensity inMongolia isoneofthe lowest inAsia,causingwidespreadcontaminationofsoilandwa-ter. In 2011, 53% of people had access to an improvedsanitationfacility,amodest increasefrom49%in2000.There is a vast gap between access to sanitation facili-tiesinurbanandruralareas-in2011only29%ofpeoplein rural areas have access to a sanitation facility, while64%haveaccessinurbanareas.Theuseofpittoiletsisaparticularprobleminthegerdistrictswhererun-offis

�� Tovuudorj (20��). Mongolian National Energy Agenda and Policy Measures: Scope for subregion

�� Khash-Erdene, B. (20��). Mongolia to be energy self-sufficient by 20��, says min-ister. UB Post.

�� Statistical Yearbook, 20�2, NSO�8 Tovuudorj, P (20��).�� Ibid. �0 ADB (2008), Transport and Trade Facilitation.

knowntocontaminatethewatersupply.41

Access to improved drinking-water facilities has in-creasedconsiderably inrecentyears, from65%in2000to85%in2011.Howeverthereisaruralvs.urbandividewith almost all urban people having access to an im-proved water source but only 53% with access in ruralareas.Howeveronly26%ofurbandwellershaveaccesstowaterpipedonpremises.42

Solidwastemanagementisalsolimited,althoughitisdif-ficulttoestimatehowmuchwasteisnotbeingcollected.AccordingtoaWHOsurvey,inUlaanbaatar75%oftotalwasteiscollectedbycitywastetrucks,15%istransportedbyorganisationswiththeirowntrucks,while5to10%ofwasteisleftwithoutbeingcollected.Thisleavesgarbagepollutingthecity’sstreetsandwaterways.43

2.8. kEY ENVIRoNMENTAl PRoBlEMS

(1) Air pollution is amongst the world’s worst.

Mongoliahasoneoftheworld’shighestlevelsofurbanair pollution. According to the WHO’s database, PM10levels (particulatematterssmaller than10micrometersindiameter)inUlaanbaatarin2008werethethirdworstintheworldwithanaveragelevelof279,farhigherthantheglobalaverageof71.ForPM2.5,Ulaanbaatarhadthehighestconcentrationcity intheworld,withanannualaverageof63.0comparedtoglobalaverageof11.44

Levels of air pollution differ between central city areasand ger areas. Air pollution in the ger districts can be35 times higher than Mongolian Air Quality Standards(AQSs)(seeTable1).

Table 1: Ranges for yearly average PM concentrations in uB, June 08–May 09

Area PM10 µg/m3 Exceedance: Ratio to AQSs

Centralcityareas

150-250 75-150 3-6 7-15

Gerareas 350-700 200-350 7-14 17-35

Source: Replicated from World Bank (20��), p. ��

Sourcesofairpollutionincludedustfromthedesert,un-pavedroads,opensoilsurfaces,powerplants,vehicles,but particularly ger stoves and boilers. Air pollution ismuchworseinwinterduetotheemissionsfromgercoalstovesusedforheating.A2011studybytheWorldBankfoundthattoachieveMongoliaAQS’s,particulateemis-sions from ger areas (dust and boiler emissions) wouldneedtobereducedby94%.45

�� WHO and UNICEF (20��). p.2��2 Ibid. p.2�� Altantuya, D et al. (20�2).�� World Health Organisation (20��). Database: outdoor air pollution in cities. �� World Bank (20��). Air Quality Analysis of UB.


Highlevelsofparticulatesposeserioushealthrisks.Ac-cording the Public Health Institute of Ulaanbaatar, thenumber of people affected by respiratory disease in-creased45%between2004and2008.A2011studybySimonFraserUniversityinBritishColumbiareportedthatoneintendeathsinUlaanbaatarcanbeattributedtoairpollution.46 Furthermore, WHO estimates that between9%(direct)and15%(indirect)ofdeaths inUlaanbaatarcanbeconservativelylinkedtoairpollution.ThecostofthisisestimatedbytheWorldBankisroughly$US500Mor20%ofUlaanbaatar’syearlyGDP.47

(2) Climate change is an increasing threat

From1940to2008,theaveragetemperatureinMongo-liaincreasedby2.14oC,anincreasethreetimestheglob-al average increase of 0.74oC.48 As in many developingcountries carbon emissions have increased rapidly, upfrom3.1metrictonspercapitain2000to4.2metrictonspercapitain2010,anincreaseof35%inadecade.De-spitetherise,Mongoliaemittedjust0.03%ofglobalCO2emissions in2010,making it the80th largestper-capitaemitterofCO2.49

Itisthoughtclimatechangeiscontributingtodesertifi-cation,drying rivers,meltingglaciersand thawingper-mafrost.Thisisinturnaffectingagriculturalandherding.Climate change may also be contributing to increasedvariability in seasonal weather patterns and extremeweathereventssuchasdzuds.

(3) Mining operations are damaging the landscape with limited rehabilitation.

Mining has caused environmental harm to the Mon-golian countryside.This is partly due to environmentalstandards and capacity to enforce environmental lawsandregulations.Whileexplorationandminingactivitiesbylargerscaleoperationscanbehighlydamaging,ASSMminingisalsoenvironmentallydamagingduetotheun-controlleduseofchemicalssuchasmercuryandcyanideformineralprocessing.

ArecentGovernmentinspectionreportedinlocalmediafoundthatof22,752hectaresofminedland,4256hect-areshasbeendamagedbyminingactivitiesandaban-doned with no rehabilitation. Only 9100 hectares hadany remediation work undertaken to restore the landto its previous land use, and of this 4175 hectares hadbioremediation done, where biological agents such asbacteria or vegetation, are used to remove &neutralizecontaminants.50

Insomecasesherderslivinginminingareascanexperi-enceseveredust,waterpollutionandpasturedamage.

�� Kohn, M. (20��). Severely Polluted Mongolia Tries a Cleaner Power Source, New York Times, 20�2

�� Mongolian Air Pollution Project (20��).�8 MNCCI (20�2). Green paper: From Brown to Green Economy, Ulaanbaatar Mon-

golia 20��.�� World Bank (20��). Database, Mongolia.�0 - (20�2). �,2�� hectares abandoned land damaged by mining, News.mn, April

��, 20��. Unable to locate original source.

ForexamplesomeherdersintheSouthGobihavebeenforcedtoresettletoinferiorpasturesduetoOyuTolgoimine. Many of these herders have received compensa-tion,whichsomeconsiderinadequate.51

With only 25% of Mongolia geologically surveyed, andalready many huge deposits identified and in variousstages of production, the continued expansion of min-ing is likelytonegatively impactthecountry’senviron-ment.52

(4) Mongolia’s pastureland is vulnerable to land degradation and desertification.

The Mongolian steppe is one of the world’s largest re-maininggrasslandecosystems.Howeverinrecentyearsit has degraded rapidly. Recent research using satelliteimagery found that from 1988 to 2008 almost the en-tire Mongolian steppe experienced significant biomassdeclines.TheMEGDrecentlypublishedadesertificationatlas showing that 77.8% of land has been affected bydesertificationtosomedegree,while10%oflandiscon-sideredhighlyvulnerabletodegradation,anincreaseof2-3%since2006.53ThesteppeandcentralMongoliaaremostaffectedbydesertification,and inneedofurgentrehabilitation.

There is debate whether the degradation is due to cli-matechange,over-grazing,orboth.ResearchbyHilkeret al. (2008) found that despite regional differences inthe causes of degradation, about 80% of vegetationdeclinecanbeattributedtoincreasesinlivestock,espe-ciallyaroundmajorsettlements.54Althoughchanges inprecipitation explained 30% of degradation and up to50%inareaswithdenservegetationcover,temperaturechangeswerefoundtoplayonlyaminorrole.

However,morerecentresearchbyLiuet al.(2013)foundthatonlyabout40%oflanddegradationcanbeattrib-utedtohumanfactorssuchasincreasednumbersoflive-stockandgrasslandburning.Theremaining60%canbeattributedtoclimate,inparticulardecreasingprecipita-tionandincreasingtemperature.

Regardlessofthecausetheproblemislikelytogetworse.Liuet al (2013)predictthataverageairtemperatureswillincreaseandprecipitationwilldecreaseinMongoliaoverthenextthreedecades.ThereforegivenclimatechangeisdifficultforMongoliatocontrol,theyargue“thereisanurgentneedtodevelopandimplementeffectivestrate-giesforsustainablegrazingpractices,andreducethein-cidenceandseverityofburninginordertoimprovetheresilienceoftheMongoliansteppes.”55

(5) deforestation is rampant and speeding up.

�� ECSR-Net (20�2). �2 Mineral Resources Authority (20��). Statistical News of Mining Sector, August

20��.�� Zoljargal, M. (20��). Desertification affects ��% of Mongolian territory. UB Post,

September 20, 20�� The decline of state enterprise employment in the ��0s doubled the number of

herders.�� Liu et al (20��), p. �


AlthoughmuchofMongoliaisgrassland,forestcoversasignificantportionofthecountry.Asof2012,forestareaaccountsfor11.9%or18.6millionhectares.Totalforest-ed area was 12.5 million hectares or 8.0% of land area,consistingofmorethan140speciesoftreesandbushes.

Deforestationforfuelandhousinghascreateddramaticlossofforestedareas.AccordingtotheWorldBank,forestareadeclinedfrom2000to2011at0.7%peryear,muchfaster than the global rate of 0.1% per year.56 Further-moredeforestationhasspedupfromaround40,000haperyearinthe1990sto80,000haperyear.

Forest mismanagement is a key cause of the problem.Forest resources are over-used and timber harvestingpracticesarewastefulandinefficient-thetimberindus-tryusesonly60%ofharvestedtimberprofitably.57Esti-mated harvesting levels are on average four times thesustainablelevel,whilebetween36and80%ofharvest-ing is illegal. However, the industry is unable to attractfinancetomodernise.58

AccordingtotheWorldBank,theforestrysectorisrapidlyapproachingacrisisforwhichstakeholdersseemlargelyunprepared.Ifalternativesustainablesourcesoffuelarenotfound,seriousfuel-woodshortageswillemerge.

�� World Bank (20��). Database, Mongolia.�� UNEP (200�), Mongolia: State of the Environment.�8 World Bank (200�). Mongolian Forestry Review.

(6) Water sources are increasingly vulnerable.

Mongolia in general has limited water resources withhighgeographicvariation inrainfallandahighdepen-dencyongroundwater.AlthoughnorthernMongoliahaslarge networks of lakes and rivers, water resources arelimited across the southern regions and more denselypopulatedcentralregions.Availablewaterresourcesarebecomingincreasinglyvulnerableduetotheimpactsofoveruseandpollution,aswellasgrowingpressuresfromseasonalvariationandclimatechange.

Ulaanbaatar sources around 98% of its water fromgroundwater. Some estimates suggest that currentsourcesmaynotbesufficienttomeetprojecteddemandofthemunicipalityassoonas2015.59Furthermorethereareconcernsoversoilpollutionandgroundwaterpartlyduetoextensiveuseofpitlatrinesingerdistricts.

WaterresourcesintheSouthernGobiregion,avastaridareaandthelocationofsignificantmineraldeposits,arealso at risk. Mining operations require large quantitiesofwaterandtrigger increasesindevelopmentwhichislikelytocontributetoincreaseddemand.Preliminaryes-timatesshowdemand intheregionmay increase from82,000m3perday in2009to400,000 -450,000m3perdayby2020,ofwhich300,000m3 isattributedtomin-ing.60

�� Arena, A. (personal communication, January 2�, 20��)�0 World Bank (20�0). Mongolia: Groundwater Assessment of the Southern Gobi

Region, April 20�0


3. Tackling the challenges: Government policies and projects for Green development

Tocreateastocktakeofpoliciesthatcontributetowardthe green economy it is useful to consider the UNEP’sdefinitionofagreeneconomy.

Agreeneconomyisonethat“resultsinimprovedhumanwell-beingandsocialequity,whilesignificantlyreducingenvironmentalrisksandecologicalscarcities.”61

3.1 hIGh-lEVEl STRATEGIES dRIVING ThE GREEN ECoNoMY

There are two documents which determine the overallhigh-levelstrategyfortheGovernmentofMongolia:theComprehensiveNationalDevelopmentStrategyofMon-golia, which is based on the Millennium-Developmentgoals,andtheMongolianGovernmentfour-yearplan.ItisworthconsideringthesestrategiesasbackgroundtheGreenDevelopmentStrategy.

3.1.1 CoMPREhENSIVE NATIoNAl dEVEloPMENT STRATEGY oF MoNGolIA, 2008 – 2021 (2008) 62

In2008,theMongolianGovernmentadoptedtheCom-prehensive National Development Strategy (CNDS) for2008-2021. It was the first long-term policy documentand defines the Governments policy for the next four-teenyears.TheMillenniumDevelopmentGoals(MDGs)arestronglyembeddedinthishigh-leveldocument,withtheMDGsalreadyadoptedbyaParliamentResolutionin2005.The document contains 6 priority directions, 124StrategicGoalsand523Activitiestobeimplemented.

TheCNDSdefinesthevisionforMongolia’snationalde-velopmentbytheyear2021:

Mongolia is a country with vast lands, abundant natural resources, admirable history, and glorious future. We, Mon-gols, shall respect our history and culture, have our national dignity, be highly educated and confident in ourselves so as to realize our desires and aspirations, live comfortable, prosperous and contended lives in our homeland.

The CNdS is based on the following principles:

• Create conditions for every citizen to participate,contributeandleadthecountry’sdevelopment;

• Buildcapacityandstructurefortheimplementation

�� UNEP (20��). What is the green economy?�2 Government of Mongolia (2008).

AsoutlinedinChapter1,Mongoliafacesanumberofeconomic,socialandenvironmentalchallenges.Toresolvethesechallengesandbuildasustainablefuture,theGovernmentofMongolia(GoM)hasinitiatedarangeofpoli-ciestodevelopagreeneconomy.

ofdevelopmentpoliciesandstrategies;• Ensuredynamicandsustainabledevelopmentbased

ontheprinciplesofamarketeconomy;• Allocate funds in accordance with policy priori-

ties and needs, ensure transparency, monitor theirspending, evaluate outcomes and make plans forfuture;

• Promotepartnershipsofallstakeholders;• Develop the capacity to adapt to changing condi-

tions;and• Promoteaccountabilityatalllevels,ensuretranspar-

encyandrespectthelaw.ThevaluesembracedintheCNDSare:• ComplywiththeConstitutionofMongolia;• Liveandworkinjustice,keepthesocietyinharmony

andpeace;• Promote individual and social progress with ‘own

hands’incooperationwithothers;• Encouragepatriotismthatisbasedontheprinciple

ofprotectingandstrengtheningindependenceandsovereigntythroughpromotingthecountry’sdevel-opment.

Toachievethisvision,therearetwostagestothestrat-egy:• 2007to2015:AchievetheMDGsandintensiveeco-

nomicdevelopment• 2016to2021:transitiontoaknowledgebasedecon-

omy

The six priority directions of the CNdS are:

1. AchievetheMDGsandprovideforall-rounddevel-opmentofMongolianpeople;

2. Intensively develop export-oriented, private sec-tor-led,hightechnology-drivenmanufacturingandservices,withparticularfocusoninformation,com-municationdevelopment,promotingbioandnano-technology,transittransportation,logistics,financialmediationservices,deeperprocessingofagricultur-al products, and create a sustainable, knowledge-basedeconomy;

3. Exploit mineral deposits of strategic importance,generateandaccumulatesavings,ensure intensiveand high economic growth, and develop modernprocessingindustry;

4. Ensure intensive development of the country’s re-gions, their infrastructure and reduce urban-ruraldevelopmentdisparities;


5. Createasustainableenvironmentfordevelopmentby promoting capacities and measures on adapta-tion to climate change, halting imbalances in thecountry’secosystemsandprotectingthem;

6. Consolidate further political democracy, foster atransparent,accountable,justsystemfreefromcor-ruptionandredtape.

A2011evaluationoftheCNDSfoundaninsufficientun-derstanding of the CNDS as a fundamental documentfor the long-term development of Mongolia. Further,it was found the overall policy planning and reportingsystem is inadequate, and MDGs based strategic goals,arrangements and achievements are rare. Rather, thereviewconcludedvariousgoalsandactivitiesarebasedon promises and political content rather than tangibleobjectives.Althoughsomegoodprogressonpolicyre-formwasfound,theygenerallyfoundthat“policyimple-mentations on poverty alleviation and unemployment;science,technology,naturalenvironment,regionsdevel-opmentsisslow.”63

AnotherreviewofthestrategybyMarshall,NixsonandWalters(2008)concludedthattheCNDSsignalsthateco-nomicgrowthbasedonthedisengagementoftheStatecontinuestobeviewedattheprimarymeansofsecur-ing Mongolia’s development. The trickledown povertyreductionmodelattheheartofthisstrategyispremisedonminingbasedrevenueandhighmineralprices.ThissuggeststheCNDSalonewillnotbesufficienttoachieveaGreenDevelopmentpathforMongolia.

3.1.2 MoNGolIAN GoVERNMENT ACTIoN PlAN 2012-16 (2012) 64

In2012,thenew‘Governmentforchange’,composedofmembersfromtheMongolianNationalDemocraticPar-ty(DP),MongolianPeople’sRevolutionaryParty(MPRP)andtheCivilWillandGreenParty,developedafour-yearactionplan. Thisplanhasfiveobjectives:

1. A Mongolian with a job and income: The govern-mentaimstoimplementbudgetary,financialandmon-etarypolicytocreateaneconomythatsustainablymeetsthepublic’sneeds,isself-sufficientandabletocompeteontheworldmarket.TheGovernmentseekstoprovidejobs with sufficient wages and provide welfare only toneedychildren,theelderlyanddisabledpersons.Italsoseeks to increase and improve public private partner-shipsandestablishabusinessenablingenvironment.

2. A healthy and strong Mongolian: TheGovernmentaims toprovideopportunityforcitizenstoreceivemedi-cal diagnostics, treatment and services of the highestqualitybasedonfaircompetitionandselectivity.

3. An educated and knowledgeable Mongolian: TheGovernment aims to educate and prepare Mongolians

�� Darinchuluun, B. (20��).�� WorldHealthOrganisation(2012).GovernmentPlatform2012-2016,Unofficial

translation.

by providing them with an opportunity for a domesticeducationcharacterizedbyuniquefeaturesofMongolia,inlinewithinternationalstandardsandthebestchancesofversatility,tofindemploymentthatsuitstheiracquiredknowledgeandpersonalskills.EffortsshallalsobemadetoappropriatelydeveloptheMongoliantraditionalcul-ture, tradition, heritage, sports and physical training inorder to enable Mongolia to proudly stand up to theworldarena.

4. A Mongolian in a safe environment: The Govern-mentaims toofferanecologicallybalancedsafeenviron-mentforthepopulationtoliveandworkcomfortablybyintegratingtheeconomicanddevelopmentpolicywitha green development policy by living in harmony withnature, sustainably using natural resources, rehabilitat-ingthemandprotectingtheenvironment.

ImportantlyfortheGDS,oneactivityunderthisobjectiveisto“makethegreendevelopmentpolicyasoneofthefundamentaldevelopmentpoliciesofthecountry”.

5. A free Mongolian: TheGovernmentaims tomakethestateandgovernmentactivitiesopenandtransparenttothepublic,accountabilityandcontrolwillbefundamen-tal principles of state affairs, remove excessive bureau-cracy and corruption, fundamentally change the civilservicebyreorganizingthemasapublicservices,ensurethe lawof lawandenablecitizensto liveanequalandbetterlifeintheirmotherlandaswellasintheirrespec-tiveaimagsandtowns.

Yearlyimplementationplansoperateunderthefour-yearaction plan, allocating tasks to ministries, setting bud-getsandkeyperformanceindicators.TheGoMmeasuresitsperformanceagainstthesedocuments.

TheGoMiscurrentlyintheprocessofdraftingguidelinestoimplementthefour-yearplan.

3.1.3 NATIoNAl GREEN dEVEloPMENT STRATEGY

GreenDevelopmentStrategy(GDS)preparedbytheMin-istryofEnvironmentandGreenDevelopmentrespondstothe2012Rio+20conference. It isaimedatensuringGreen Development policy becomes one of Mongolia’sfundamentaldevelopmentpolicies,asprescribedunderthefourthactionprograminthe2012-2016GovernmentPlan.

Initially two high-level documents have been writtento formally establish the GDS: the Green DevelopmentConcept65andtheMid-TermProgramonGreenDevelop-ment66.Theconceptpaperdeterminesgoalsandpurpos-esforgreendevelopmentuntil2030whilethemid-termprogram designs policy and strategies to ensure thesegoalsandpurposesareimplemented.67

�� Government of Mongolia (20��). Draft, Annex � of Resolution, Green Develop-ment Concept

�� Government of Mongolia (20��). Draft, Annex 2 of Resolution, Mid-Term Green Development Program

�� Khuder (20��).


ThesedocumentsweresubmittedtotheMongolianPar-liament,theGreatStateKhural,onJuly52013.Theyarescheduledfordebateinthe2013Autumnsessionofpar-liament.

3.2 SoCIAl ANd ECoNoMIC dEVEloPMENT PolICIES

In May 2011, the Government of Mongolia establishedthe Development Bank of Mongolia (DBM) in order tosupport economic development which would lead tocreation of more jobs.The DBM is responsible for rais-ingcapitaltofinancelargeprojectsthatwillbuildinfra-structureanddevelopindustriestoproducevalueaddedexportgoods.InMarch2012,theDBMissuedUSD$580millionofbondstobeginfundingarangeofinfrastruc-tureprojects.Theseprojectsincludeconstructionofrail,roadsandhousing(seeBox1).68

One important project for economic development anddiversificationistheSainshandIndustrialComplex.Oncecomplete, the complex will host advanced processingand manufacturing technology that will increase theproduction of value-added products and help diversifytheeconomy.Thereareplanstohostacopperrefineryfactory,aswellasconstructionmaterialandcoal-chem-istryfactoriesatSainshand.

To further develop infrastructure, the Government di-rectly issued US$ 1.5 billion in bonds on 28 November2012. Known as the ‘Chinggis Bonds’, the intention ofthisborrowingwastofinancearangeof largescalein-frastructure projects to support the development ofMongolia.AsofApril2013,USD$1.253billionhadbeenallocatedtoarangeofprojects,withremaining$347un-allocated(seeBox1).69Manyoftheseprojectsareroadandrailways,butotherprojectswillsupportthemanu-facturingbase,particularlyintheagriculturalandtextileindustries.

The GoM is also supporting economic developmentthroughtheSmallandMediumEnterprise(SME)Devel-opment Program. Given SMEs comprise two-thirds ofbusiness entities in Mongolia and around 20% of GDP,and 738,800 people are employed in these businesses(around70%of the labourmarket), supportingsmallerbusiness will be crucial for economic development.70Theprogramis intendedtoraisetheemploymentrate,improvethequalityandsafetyofworkplaces,andspurthe creation of export-oriented and import-replacingnationalproducts.TheGoMhasdevelopedthedraft“De-velopmentProgramforSmallandMediumEnterprises”(2014-2016)withintheLawonSmallandMediumEnter-prises.Itisnowlookingforcooperationanddonorpart-

�8 Development Bank of Mongolia (20��).�� InfoMongolia (20��). As of today, �� million….�0 InfoMongolia (20��). The SME Development Program was introduced to donor

organisations…

nerstofinalizetheDevelopmentProgram.

The Ministry of Economic Development (MED) is cur-rentlyestablishingarrangementsforconcessionsonin-novationprojects.ThepassageoftheLawonInnovation(2010)openedupopportunities to implementprojectsthroughpublic-privatepartnerships,suchasthoseintheenergysector.71TheMEDiscurrentlyevaluatingalistofprojectsanddeterminingthemechanismtodelivertheseconcessions.TheMEDisalsoworkingonalistofby-lawsto improve implementation of the law and regulationsonestablishmentofstart-upcompanies.Greentechnol-ogyandthegreeneconomyisoneoftheirprioritiesandtheMEDisworkingcloselywithMEGD.

However it isdifficulttoassesshowmuchfundingandinvestmentwillbeprovidedbythegovernmenttowardstheseconcessions.

3.3 CITY PlANNING ANd TRANSPoRT

WithUlaanbaatarhometohalfofMongolia’spopulationand60%ofGDP,sustainabledevelopmentofthecapitalwill be central to developing Mongolia’s green econo-my.

An important initiative is the MoU signed by MinisterOyun.S, and the Mayor and Governor of UlaanbaatarCity,Mr.Bat-Uul.EinJanuary2013todeveloptheGreenEconomyinUlaanbaatar.TheMOUagreestoimplementanActionPlanfrom2013-2016tosecureahealthyenvi-ronmentforthecitizensofUlaanbaatarandconsidertheimportance of the environment in urban planning andconstruction.

The Action Plan proposes to establish satellite townsaround Ulaanbaatar to reduce population density, de-velop apartment buildings and infrastructure such ascentralheating,waterandelectricitysuppliesinthegerdistricts, and to improve energy efficiency. It agrees tobuild an industrial park which will be located outsideUlaanbaatar so as to decrease the pollution caused byleather, cashmere and other factories. The MoU alsoagreestocooperateonrestrictingminingandmanagingtheTuulandSelbe,ensuringproperwastemanagementandagreeingthatrecyclingplantsaregreatlyneeded.72

Thereareseveralinitiativestoimprovepublictransportanddevelop‘GreenTransport’inMongolia.ThisisdrivenbytheCNDSwhichstipulatesthattheecologicallycleanpublictransportshallbeintroducedinordertodecreasepollutioninUlaanbaatar.

TheGoMhasannouncedplanstobuildasubwaysysteminUlaanbaatar,scheduledtobecompleteby2020.Thesystemisplannedtobe17.7kmlongandestimatedto

�� Tovuudorj, P. (20��). Mongolian National Energy Agenda and Policy Measures: Scope for subregion…

�2 -(2103).MoUbetweenMinisterS.OyunandMayorE.BatUul.


Source: InfoMongolia (20��). As of today, �� million USD is left from the “Chinggis” bond, said Prime minister Altankhuyag. and Development Bank of Mongolia (20��).

Box 1: Economic development Projects Funded by the development Bank of Mongolia (dBM) and the Chinggis Bonds

KeyprojectsthattheDBMisundertakingusingits$580millioninborrowingare:• Anationwiderailwaynetworkof5600kmtobebuiltbetween2012and2015.Therailwaywillbeimplementedin3

phases.• SainshandIndustrialComplexProjecttobelocatedbetweenOyuTolgoi,TavanTolgoiandtheoilfieldslocatedineastern

provinces. Itwillbepositionedonanoperatingrailwayandonthecross-countryhighwaynetworks,andcouldbeacriticalhubfordevelopinggreenindustries;

• Expanding the housing supply, by constructing 21,600 house-hold apartments by 2012 and 53,400 house-holdapartmentsby2016inUlaanbaatarcity.

• Building112kmofnewroads,repairing150kmroadandconstructingleveledcrossroadsat3locationsin2012.Byyear2016,theDBMaimstobuildanother100kmofnewroads,repair200kmofroadsandconstructleveledcrossroadsat4locations.

• Constructinganew990kmAltanbulag-toUlaanbaatar-Zamiin-uudhighway.

ThefollowingprojectshavebeenannouncedfromtheUSD$1.5billioninChinggisbonds:• USD$200milliontofunda1,800kmrailroadprojectbasedintheTavanTolgoimineregion;• USD$200millionfortheUlaanbaatar“Streetproject”,includingtheconstructionofintersectionsandhighways;• USD$50milliontowardsthefirststageconstructionoftheTavanTolgoipowerplantwithcapacityof300MW;• 570billionMNTofinvestmentsintootherroadprojects;• USD$68.8millionUSDtorenewthecashmereindustry;• 200billionMNTforre-planningofGerdistrictsandconstructionofnewapartmentcommunitiesinUlaanbaatar;• USD$27.7milliontosupportmilkanddairyproductsmanufacturingprojects;• USD$17.7milliontoconstructgreenhousefarmsinUlaanbaatarand21Aimagscenters;• USD$45millioninvestedtoproducewoolengoods;• USD$13.5milliontosupportthetextilesindustry;and• USD$14milliontobuildahouse-constructionplant.

cost$1.5billionTheJapaneseInternationalCooperationAgency (JICA) will support the 49% of the required in-vestment with the remaining funding provided by thestate and city government budget. The design will becompletedwithin1.6yearsandconstructionwillstartinspringof2016,tobecompletedby2020.

The World Bank has been critical of the program on anumberoffronts.Firstly,theprogramistreatedasanoff-budgetmeasureandisnotincludedintheGovernment’sfiscalplan.

3.4 ENCouRAGING hoME oWNERShIP

The GoM has begun intervening in the mortgage mar-kettoencouragemiddleclasshomeownership.Startingfrom17June2013,theBankofMongoliahasbegunsub-sidisingmortgagerepaymentsto8±%interestp.acom-paredtoaregularrateofaround15%.Thenewmortgag-esrequireadownpaymentof10%to30%andmustbepaidbackin20years.Theloansarevalidforapartmentssmaller than80squaremeters (861square feet).Appli-cantsmusthaveafull-timejob,andmonthlypaymentscannotexceed45%offamilyincome.73AsofNovember2013, the highly subscribed program has issued MNT

�� Bayartogtokh, B. (20��).

470.1 billion to refinance 16,712 mortgages and MNT640.3billionfor11,058newmortgages.74

The program was hoped to help bridle inflation in thehousing rental market as well as adsorb the increasingnumberofvacantunitsoutsidetheUlaanbaatarcitycen-ter.Ifthoselivinginthegerdistrictsusetheprogramtopurchaseapartments,itwillalsohelptomovepeopleinfromthegerdistrictshelpingtoreduceairandsoilpollu-tion.Howevertherehasbeencriticismofthispolicygivenitwasnotmeanstested,andmanywealthyMongoliansare taking advantage of this by refinancing their mort-gages. As a result the program could actually increasedemandandfurtherfuelrisinghouseprices.

3.5 TACklING INFlATIoN

In support of its economic development policies, theGovernment has undertaken considerable attempts tocontrol inflation. The Bank of Mongolia conducts thisthrough its regular monetary policy, but also throughthePriceStabilizationProgram(PSP).

ThePSPbeganinOctober2012whentheGovernmentofMongoliaandtheBankofMongoliasignedaMemo-randum of Understanding on“Joint Implementation ofmedium-term program to Stabilize Prices of Key Com-

�� Bank of Mongolia (20��).


moditiesandProducts”.Overitsthreeyearhorizon,thePSPisexpectedtocost720billionMNTandconsistsoffoursubprograms:

1. Pricestabilityofstaplefood;

2. Fuelretailpricestability;

3. Reducingthecostofimportedconsumptiongoods;

4. Promotingtheconstructionsectorandachiev-ingstabilityofhousingprices.

The program is aimed at addressing structural bottle-necks by addressing supply shortages in select goodsthathavebeenviewedasdriversofseasonalpricevola-tility. It provides discounted loans to select industriesin return for theirpromises tokeeppricesstable.AsofSeptember2013,MNT642billionofcredithadbeenre-leasedtoarangeofbusinessesintheoil,meat,flourandconstructionindustries.

3.6 EMPloYMENT PRoGRAMS

To create a skilled workforce and encourage employ-ment,theGoMhasestablishedseveralemploymentandtraining programs under the Employment PromotionLaw.The lawwasfirstpassed in2001butwasupdatedin2011.TheMinistryofLabourisimplementingtheup-datestothelawbyamendingtheGovernmentsemploy-ment programs.There are currently eight employmentprograms fundedby theemploymentpromotion fund.Theseare:75

1. The employment training program, which includesthe on the job training program, whereby traineesaretrainedonoccupationsinconstruction,roadandmining, and the short-term training for job-seekers and unemployed people;

2. Employment preparation program, which involvingstudents’ employment promotion centers estab-lishedatthe3mainUniversitiesandsub-schools,

3. Employers support program

4. The Herder’s employment promotion program,aimed at enhancing skills and generating sustain-able household income, and protecting herdersfromrisks. In2010,1276herdersparticipatedin17types of trainings and developed“Family develop-mentplan”.Asaresultoftrainingsandactivities244herder’sfamiliessucceededtoprotecttheirincomesourcesfrom2010winterdisaster.

5. Self-employment program

6. Elder people and over �0s for employment

7. Employment for people with disabilitiesinvolving152small business projects of people with disabilities.

�� More detailed information was unavailable.

Thisprogramhascreated483newjobplaces.

8. Public work program.

The GoM is attempting to improve safety standards intherapidlygrowingconstructionsector.In2013theMin-isterofConstructionandUrbanDevelopment,MinisterofLabourandMinisterofPopulationDevelopmentandSocialWelfarejointlyissuedanorderNo.52.а50.а26tointroducea“Bluecard”intheconstructionsector.Quali-fyingfortheBlueCardwouldrequireatrainingprogramon safety and sanitation standards of line with the 4thProgrammeonLaboursafetyandsanitation.

3.7 WElFARE PolICIES

One of the most generous examples of social policy inMongoliawastheHumanDevelopmentFund(HDF).TheMongolian Government set up the HDF in November2009followingcompletionofnegotiationsbetweentheGoMandRioTintooverthecompletionoftheOyuTolgoi(OT)mine.TheinitialcontributiontothefundcamefromaprepaymentofOTroyalties,butwasalsofundedfromroyaltiesfromTavanTolgoimine.

The intention of the fund was to counteract rising in-equalityanddistributethebenefitsoftheminingboommorewidelythroughpaymentoftuitionfeesandothersocialbenefits.However,theHDFwasgenerallyusedtoprovide citizens with cash hand-outs. In February 2010everyMongoliancitizenreceivedacashhandoutofMNT70,000,followedbysmallerinstallmentstotalinganotherMNT50,000ayear.In2011monthlycashhandoutswereMNT 21,000, with approximately a quarter of this dis-bursedastuitionfeesupport.

Thisgeneroussystemofcash-handoutsendedinJanu-ary2012whentheSocialWelfareLawwaspassed.Thislaw,whichcameintoeffecton1July2012,replacedthecash handouts by introducing a means-tested povertybenefit.Itrepresentedamajorsteptowardsestablishingafiscallysustainablesocialprotectionsystemwhilesup-portingMongolia’spoor.

Under the law, payments of around 40,000 MNT permonthreachabout130,000pooresthouseholds,orone-fifthofallhouseholds.Theyareprovidedonthecondi-tionthatunemployedworking-agepeopleregistereveryquarter,enrollintrainingsandattendpublicworks.76

3.8 GENdER EQuITY

In 2011 Mongolia passed a Law on Promoting GenderEquality.Thisisanimportantfirststepinacountrywhichpreviously lacked any specific national law on genderequality,particularlybecauseitspellsoutresponsibilities

�� Khuder, B. (20�2).


ofspecificpublicagenciestoensuregenderequality. Itspecifiesthatatleastonequarterofallrepresentativesincentralandlocalelectedbodiesbewomen.77

3.9 PoPulATIoN & dEMoGRAPhICS STRATEGY

TheMinistryofPopulationDevelopmentandSocialPro-tection has drafted a policy on Mongolian PopulationGrowth for submission to the GoM in Spring 2014. Al-thoughMongolia’sdemographicsarecurrentlyinitsfa-vor,thepaperacknowledgestherearesomebigchangestakingplacetothepopulationagestructure,particularlythattheproportionofworkingagepeopleandchildrenis dropping, there is increasing urbanization and thatmanyMongoliansareleavingtoworkinothercountries.Mongoliaisexpectingtohaveanagedsocietyby2025to2030.Tomakeefficientuseofthedemographicchangestakingplace,theGoMaimsto:

• Increasethestandardoflivingbyprovidingworkingplaceforlaboragedpeople

• Improve the child’s medical care services and theconditionofmaternityboards

• Acculturateandeducatechildrenandyouth

• Educatepeoplewhoaretransferring intotheagedgeneration to be independent and to make theirown savings, provide a safe and pleasant environ-mentforliving

• Supportthefamilydevelopment,improvethestan-dardofliving

Consistent with the Green Development Strategy, onespecific aim of the strategy is to increase the averagelifeexpectancyto72yearsby2025andtodecreasethegapinlifeexpectancybetweenmenandwomen.OncefinishedandpassedthroughParliament,thispolicywillhelp support the development of a socially inclusivegreeneconomy.

3.10 ENVIRoNMENTAl lEGISlATIoN

Beginningwiththeconstitutionin1994,theGoMhasat-temptedtocreateastrongframeworkforenvironmentalprotection.AccordingtotheAsianDevelopmentBank78,the hierarchy of policies and legislative provisions forenvironmentalmanagementinMongoliacomprisesfivelayers:

1. TheConstitution(1994)

2. Internationaltreaties(e.g.,ConventiononInterna-

�� World Bank (20��) Mongolia: Gender Disparities…�8 ADB (200�).

tionalTradeinEndangeredSpecies,Ramsar,andothers)

3. General environmental law (e.g., Law on Environ-mentalProtection1995)

4. Laws relating to natural resources (e.g., water, for-est,air,land,fauna,hunting,strictlyprotectedareas,naturalplants,bufferzones,undergroundresources,petroleum,andmininglaws);and

5. Fee-relatedlaws(waterfees,huntingfees,forestusefees,naturalplantsconservationandrestorationofnaturalresources).

Most laws are supplemented by more detailed orders,regulations,requirements,orstandards.

The Mongolian Government has made significant re-forms to its environmental laws in recent years. On 17May 2012, the GoM enacted a series of revisions to itsenvironmental laws.Thenewenvironmental legislationreplaced 18 environmental laws with 8 laws and intro-duces2entirelynewlaws,andallweresubsequentlyrati-fiedthroughtheMongolianParliamentinMay2012.

One of the big reforms was to make polluters liable topaycompensationfordamagetotheenvironmentandnatural resources. There is also now a requirement onanyorganizationwhoactivitiesinvolvetheuseofnaturalresources tocommissionanenvironmentalassessmentauditeverytwoyears.79

These reforms demonstrate the GoM is committed torampingupenvironmentalprotectioninMongolia.Theserevisionsalsohelptoreduceduplicationinenvironmen-tallaws.However,accordingtoAldrichandMelville,“alotofthedraftingiseithervagueorlefttobedevelopedbyGovernmentagenciesatalaterdate.”80

ItisalsounclearwhethertheMongolianenvironmentalindustry, which is only just beginning to develop, willhavesufficientcapacity intermsof technicalability, in-dependenceandimpartialityofenvironmentalassessorsandinspectors.Furthermore,Aldricharguetheintroduc-tionofthesubjectiveconceptof“intrinsicenvironmentalvalue”bringsfurtheruncertaintyinrespectofcalculationoffees.

A particularly controversial law has been the “Law onProhibition of Mineral Exploration and Mining Areas inthe Headwaters of Rivers, Protected Water ReservoirZonesandForestedAreas”(knownasLawwiththeLongName).TheGovernmentadoptedthislawin2009drivenbytheconcernsofenvironmentalactivistsandherders.Underthelaw,theGoMcancelledover200miningandexplorationlicensesthatoperatewithin200metersfromwaterandforestsources.However,thissuddenmeasurecausedintenseoppositionfromminerswhileraisingpub-

�� Aldrich and Melville. (20�2). Revision of Environmental Laws in Mongolia and its impact on the mining sector, 8 October 20�2

80 Ibid.


licexpectationsforstricterenforcementandrevisionsinthemajorminingandenvironmentallegislation.

TheParliamentrecentlyconsideredamendingorrepeal-ingthislawintheAutumnsession2013.ThissparkedanattemptedattackbyprotestgroupGalUndestenonPar-liamenthouseon16September2013.Theorganisationfearsanyrepealwouldleadtoasharpincreaseinminingoperations,inflictingirreparabledamagetotheenviron-ment.81

3.11 RENEWABlE ENERGY & ENERGY EFFICIENCY

Mongolia has made considerable strides in its renew-ableenergypolicyinrecentyears.ThefirstinitiativewastheGoM’s“100,000solarhomes”program.Theprogrambeganin1999tosupplyger’swithfreesolarpanelsandbatteriestoattachtotheirhomes.TheinitiativeprovidedGerfamilieswithafree,cleansourceofelectricitywhilereducing the migration from the countryside to urbanareas.Theprogramwasimplementedduring2000–2010andasaresult70to90%ofherderhouseholdsnowhaveaccesstosolarandwindpower.82

Attention moved to developing the renewable energysectorforlargescalepowergenerationin2005.Mongo-lia’s“National Renewable Energy Program (2005-2020),”passedbytheParliamentofMongolia inJune2005setrenewable energy targets of 3 to 5% by 2010, and 20-25%by2020.Theprogramplans to improvethestruc-tureoftheenergysupplyandutilizerenewableenergytechnologiesinruralareas.Thisprogramalsourgesthedevelopment and implementation of a Master Plan tousetherenewableenergysources.

The Mongolian Law on Renewable Energy was passedbytheparliamentin2007.Thepurposeofthelawistopromote,incentivize,andsupporttheproductionofen-ergy fromrenewablesourcesbyregulatinggeneration,transmission, and pricing of green energy.The Law es-tablishedarenewableenergyfund,andsetfeed-intariffsforrenewableenergypowersources.Thetariffsaresetwithinthefollowinglimits:

• Forelectricitygeneratedbywindpower:0.08-0.095USDperkWh.

• Forelectricitygeneratedbyahydropowerplantwithacapacityoflessthan5,000kWh:0.045-0.06USDperkWh.

• Forelectricitygeneratedbysolarpower:0.15-0.18USDperkWh.

These feed-in tariffs arrangements were crucial for thedevelopment of the Salkhit wind farm, which openedinJune2013.TheGoMsignedapowerpurchaseagree-

8� InfoMongolia (20��). 82 UNDP (20�2).

ment with Clean Energy, Mongolia’s first wind energycompany,agreeingtopay9.5centsperKWh.

TheGoMalsoprovidesimportdutyandvalue-addedtaxexemptions for the importofequipmentandmaterialsfor renewable power plants by small and medium en-terprises.Theexemptionswerefirst introduced inApril2011. As of 22 December 2012, there were 33 compo-nentslistedforexemptions,specificallyforwindandso-larplants.83

Whiletheserenewablepowerplantswillhelptoensurea sufficient energy supply for Mongolia, the GoM alsoaimsforMongoliatobecomeanexporterofrenewableenergy.TheMinistryofEnergyestimatesthatMongoliahasenormouswindpowerresources,with‘good-to-ex-cellent’windresourcesequivalentto1,100GWofelectricpotential.84

Itaimstobuildmorewindparksandaverylarge-scalePVpowergenerationsystemintheGobiregion.TheGoMisalsotryingtopromotebuildingahigh-voltage,directcurrent (HVDC) electric power transmission system be-tween Russia & China through Mongolia. As PresidentElbegdorjrecentlytoldreporters,“MongoliacanbeAsia’ssuper grid for wind power and solar power, and otherrenewableenergies.”85However,buildingtheseprojectswillinvolvesignificantcooperationwiththeprivatesec-tor,discussedfurtherinChapter3.

Mongoliahasrichcoalreservesandmostofthecurrentlyinstalledpowerplantsarecoalburningplants.Inconsis-tentwiththis,theuseofcoalisexpectedtobeexistent.Therefore, it is also important to study advanced fossilfuel technologies and lower carbon emission alterna-tivesaswellasrenewableenergytechnologies.

3.12 EFFoRTS To CuRB AIR PolluTIoN

OntopoftheGoM’seffortstopromoterenewableener-gy,theGoMhasrecentlyestablishedtheCleanAirFund,aspecialgovernmentfundtocombatairpollution.Thisfundwasallocated92.5billionMNTbytheGoMbudgetfrom2011to2013.Itisparticularlyfocusedonsubsidiz-ingcleanercoalfuelforthegerdistrictstouseinstovesandwithsubsidizedairfilters.AsofOctober12013,theinitiativehasspent67billionMNTof itsallocatedfund.In conjunction with other projects and the worseningair pollution, it is difficult to assess the efficacy of thisfund.86

3.13 STEPS FoR A GREENER MINING INduSTRY

TheGoMhastakenanumberofstepstowardscleaningupMongolia’sminingindustryandreducingtheimpact8� Government of Mongolia (20�2).8� Tovuudorj, P. (20��). 8� Edwards, T. (20��). 8� UBPost (20��).


ontheenvironmentandlocalcommunities.TheMinistryof Mining drafted a green mining policy to reduce thedetrimentaleffects.

Therehavealsobeensomemoredirectactions.InJune2013,theMEGDshutdowntheTsagaanKhadCustomsstockyard which effectively closed a key route for coaltransport to China citing environmental damage. Fur-thermoretheMinistryofMiningiscurrentlyconsideringhavingtheabandonedanddamagedminingareasreha-bilitatedbyaqualifiedremediationcompanybyraising1billionMNTfromtheGovernmentbudget.87

The Mongolian government has taken steps to legiti-mize,regulateandreformtheASSMsector.InApril2010ASSMwas formalised throughavote in theMongolianParliament.CallstobanASSMduetoenvironmentalandhealthconcernshavefailedtogainsupportbecauseofthe largenumbersofpeopleworking inASSM. InsteadtheGovernmenthasalsoreformedthesectorbyofferingskills training and increasing the capacity of ASSM col-lectives.

3.14 AGRICulTuRE, lIVESToCk ANd lANd MANAGEMENT

The GoM is taking steps to ensure the sustainability ofagriculture and herding. To improve the prosperity ofherder households in June 2009 the GoM passed the“Government policy towards herders”.Thepolicyaimsto increase herder’s employment, improve their healthandincludetheminthesocial insurancesystembyen-hancingtheirknowledgeandskillsandencouragetheirco-operation and business organization.88 There are anumberofmeasureswithinthepolicyincludingprovid-inglandtenuresforherdinghouseholdsandexemptingherdinghouseholdsfromindividualincometax.

The National Mongolian livestock Program alsoaimsto support the agricultural sector. This program whichwilloperateintwophasesfrom2010-2015to2016-2021.It has five aims, including to establish legal, economicandinstitutionalenvironment,improveveterinaryprac-ticesandanimalbreeding,developclimaticandecologi-cally adaptable livestock production, and developingtargetedmarketsforlivestockandlivestockproducts.89

The GoM has also recently established an agriculturalcommodityexchange,launchingitsfirsttradeonFriday5March2013.Theexchangeisdesignedtohelpherdersrealizehighervalueandprotectthemfrommarketpricefluctuation. Cashmere was the main material tradedwhenthemarketfirstopened.

Toprotectagainst‘dzud’eventsdevastatinglivestock,the

8� - (20�2). �,2�� hectares abandoned land damaged by mining, News.mn, April ��, 20��.

88 Ministry of Foreign Affairs, Mongolia (20�0).8� Ministry of Foreign Affairs, Mongolia (200�).

GoMwiththeassistanceoftheWorldBankhashelpedsetupanIndex-basedlivestockinsurancesystem.Thepro-gramme operates through a public-private partnershipwith domestic insurance companies to offer affordableandcost-effective insurancecoveragetoherders,whileprotectingdomesticinsurersagainstmajorlosses.

Under the policy, herders bear the cost of small losses(less than 6% livestock mortality rate). Larger losses (6to 30%) are transferred to the private insurance indus-try,whileanythingabove30%lossesarecoveredbytheGoM.The2009-2010winterdzudresultedinthelargestpaymentsoftheprogramshistory,whenexcessof$1.3millionwaspaidoutafter22%ofthecountry’slivestockdied.

Inaddition,beekeepingfarmingisimportantgreenag-riculturalsectormakingarevivalinMongolia.Followingthetransitionfromaplannedeconomytoamarketori-ented economy, bee-keeping faced a sharp downturn.HoweverduetoeffortsofWorldVision,WWFandotherstherearemanypositivechanges.In2012,intotaltherewere 89 bee-keeping farms in Mongolia.They are esti-matedtocreateabout500jobplaces.

The GoM is acting to ensure food safety and securityunderthe“NationalProgrammeforFoodSecurity(2009-2016)” program. Under this program, the GoM aims torevivetheagricultureand intensivefarming inWesternandEasternregions.90 Inparticular theGoMhas imple-mented the“Khalkh Gol” project with the objective ofusingtheoldandnewcropfieldsinKhalkhgoleasternregion.

One initiative introduced in agriculture supporting thegreeneconomyisanationalprogramon“Greenjobplace–Seabuckthorn”.SeabuckthornisaberryyieldingplantnativetoMongolia.Withinthisprogramseedlingswereplantedon620hectares,while215.6hectarefieldswereprotected against sand movement, and rehabilitatedmining exploration sites. Green label was given to sea-buckthornoilandseabuckthorn juicebyMNCCIwithin“MadeinOrganicMongolia”initiative.Itisestimatedthatthisprogramcreated4,591greenjobs.

Thereareseveralstudiesonregionaldevelopmentandcurrent status.The EPCRC’s“Provincial CompetitivenessIndex”studyisoneofthemostcomprehensivestudies,first time measuring the competitiveness of Mongoliaat a provincial level. In this research all 21 aimags areassessedaccordingto180criteriaunder fourmaincat-egories: infrastructure,businessenvironment,economyandgovernance.Amongthesecriteriaaresomecriteriadirectlyrelatedtogreeneconomy.

Inadditiontothis,theMongolianDevelopmentInstitute(MDI)hasassessedthesensitivityofBayankhongoraimagtoclimatechangebyanalyzingthesocialandecologicalvulnerabilityofeachsoum.theGovernment’s2013Bud-

�0 National Programme for Food Security (200�)


getlawallocatedfundingwithintheaimagtothemostvulnerablesoumsasaresultofthisstudy.Allocationoffunding was based on five areas: environmental, eco-nomic,social,infrastructure,andpovertyreduction.

Based on their assessments, the MDI is calling for in-creasedcooperationforpovertyreductionandlivestockmanagement, training of herders and climate adapta-tion.In2014theMDIwillfocusonafurthersixaimags,withtheintensionofusingthetoolnation-wide.

3.15 FoRESTRY PRoGRAMS

Beginning in 2001, the GoM established the NationalProgramonForestry.Undertheprogram,therearemajorsub-programsfor:Institutionalstrengthening,reforesta-tion,sustainablemanagementofnatural forests,Forestwasteutilization,Forestfiremanagement,Rehabilitationandmodernizationofforestbasedindustries,Nonwoodforestproducts,Biodiversityconservationandprotectedarea system, Desertification control, Forestry researchand technology development, Education, training andpublicinformation.

Theprogramisnowinits3rdstage,whichwillrunfrom2011to2015.Theobjectiveoftheprogramistoidentifystatepoliciesandthedirectionofactivitiesonimprovingthecapacitiesofprotection,properuseofresourcesandrehabilitations of forest in accordance with ecologicalbalanceandsustainabledevelopmentrequirements.

In 2011, Mongolia became a partner country for UNREDD program. There are four parts to the program:1. Adjustment, including determining governance forREDD+,howparticipatingpartswillcontribute,2.Prepa-rationoftheNationalREDD+strategysuchasreducingtheforestinsufficiency,protectionfromecologicaldisas-ters,3.Controlofthegasesthatgreen-housesproduce,and4.Createanestimation,control,confirmation(ECC)system.

3.16 WATER ANd WASTE MANAGEMENT

TheGovernmenthasestablishedthe“NationalProgramonWater”.Theprogramincludesestablishingwaterba-sinadministrationunitstheProgramhasanobjectivetosetupwaterbasinadministrationunits,re-useusedwa-tersinminesandwaterafterthetreatment.Asaresult,EnergyResourcesLLChasstartedtore-use95%oftheirwastewater,andputarequirementtoOyuTolgoiLLCtore-useatleast80%oftheirwastewater.

Ulaanbaatar City Municipality recently started distrib-uting15garbagebagsamonthtohouseholdsinordertoteachcitizenstoclassifygarbageandnottothrowitawayunsorted.Thisisthoughttobeasteptowardscol-lectingseparatedgarbageforrecycling,apublicaware-ness campaign for garbage separation, however, is stillmissing.ThecityspendsMNT5.0billiontoproducetheseplasticbags.However,currentlyall thegarbagebags isdepositedtogetherwiththeunsortedgarbage.Ifthisini-tiativeisnotsupportedbyrecyclingprogramsthenitwillbenegativefortheenvironmentgivenplasticbagshavealongbiodegradationperiod.

3.17 PRoMoTING ECoTouRISM

Mongolia needs to promote and develop tourism as aprioritysectortogenerateincomeandemployment,de-velop rural areas, and diversify the economy. However,indevelopingtourismthereisaneedtoprotecttheen-vironmentandMongoliancultureandtherebycreateagreen tourism industry.The Green Development Strat-egyacknowledgesthisbydefiningoneofitsactivitiesasto“Maketourismsectoraleadingsectoroftheeconomicdevelopment, and improve natural cultural and eco-tourismproductsandservices”.

Supporting this strategy, the Ministry of Culture, SportandTourismiscurrentlydraftinganewtheTourismLawof Mongolia. Once the law passes the Ministry is plan-ning to be very active in promoting tourism, and par-ticularlyecotourism,byensuringeco-friendlywasteandwatermanagement.


4.1 GREEN STRATEGIES IN ThE PRIVATE SECToR

TheprivatesectorinMongoliaisactivelyengagedinde-velopingthegreeneconomy,evendevelopingtheirowngreenstrategies.

Furthermore,theMongolianNationalChamberofCom-merce and Industry (MNCCI), an important representa-tiveofthebusinesscommunityproducesitsown‘Green paper”.91

There are six strategic objectives in the MNCCI’s“Mov-ing from Brown to Green Economy” national programinitiative.Thedocumentincludesthe“5x20”goalswhichlistsfivetargetsfortheMongolianEconomytoreachby2020:

• Decreasegreenhousegasemissionsby20%perunitofGDP;

• Increaseenergyefficientby20%;

• Increaserenewableenergysourcesupto20%ofto-talinstalledcapacity;

• Increaseinvestmentinnaturalcapitalby20%;and

• Increase“Greenprocurement”upto20%ofgovern-mentandlocalgovernment’procurement

�� MNCCI (20�2).

4. Beyond the Government: current initiatives for a Green Economy

BeyondtheactivitiesoftheGovernmentandtheirGreenDevelopmentStrategy,thereareanumberofongoingandplannedinitiativesrelevantforPAGEbeingconductedbytheprivatesector,domesticNGO’sandinterna-tionalagencies.Thesearebeingconductedthroughspecificprogramssupportinggreenindustries,programstacklingairpollution,deforestationandpromotingbetterwatermanagement.

Thestrategycalls fornot lessthan2%ofGDPinGreeninvestment every year. The first three years from 2013to2015shouldbe the transitionperiod frombrowntogreen economy, while 2016-2020 will be the stage forsustaining and developing a low-carbon green growthmodel.

The MNCCI’s targets for green development are not asambitious or broad-ranging as the Government’s GDS,asTable1shows.Forexample,theGDSseekstoreduceGHG emissions by twofold by 2020 against the 2006baseline,whiletheMNCCI’stargetistoreduceinby20%againstthe2010level.ThatistheGDSseeks4.885kgCO2eq/USDby2020,whiletheMNCCI’sstrategyistoreducecarbonemissionsto6tonsCO2/$millionGDPby2020.Therenewableenergytargetforbothstrategies is20%by 2020, although that is largely due to the renewableenergylawalreadyinplace.

TheMNCCI’sgreenstrategyisnarrowlytargetedandverymuchdirectedatGHGemissionsandenergyproduction.Itdoesnotonbroaderaspectssuchaslifeexpectancyorlandmanagement.

Despitethelimitedscope,thestrategystilldemonstratesa leadershipandambitionbytheMNCCI indevelopingtheGreenEconomy.


TABlE 2: CoMPARISoN oF GdS GoAlS ANd MNCII GREEN PAPER 2012 GoAlS

GdS Goals MNCCI Green Paper 2012 Goals Baseline

Green House Gas EmissionsReduceGHGemissionsperunitofGDPtwofoldby2020againstthe2006levelof9.77kgCO2eq/USD,thatisto4.885kgCO2eq/USD.

DecreaseGHGemissionby20%orupto6tonsCO2/$millionGDPincomparisonwith2010levelBy2020.

Greenhousegasemissionsarecurrently7.5tСО2-eq/ml.$GDP,whichis10timeshigherthantheworldaverage.

Renewable EnergyIncreasetheshareofrenewableenergyinthetotalinstalledenergycapacityupto20%by2020.

Increaserenewableenergyproductionupto20%oftotalinstalledenergycapacityBy2020.

Renewableenergysourcesaccountforonly4.5%oftotalinstalledenergycapacity,while95.5%isfromcoalburningpowerstations.

Energy EfficiencyNotspecified. Increaseenergyefficiencyby5%,by

2015,andby20%by2020incomparisonwith2010level.

Energyintensityis7timeshigherthanworldaverage(3.04kg.coaleq./$vs0.39kgc.e./$),(UNIDO2011)

Green ProcurementUtilizeatleast20%ofpurchasesofgoodsandserviceswithcentralandlocalbudgetsforgreenprocurementby2020.

Increasegreenprocurementupto5%by2015andupto20%oftotalprocurementby2020

Nodataavailable.

Natural capitalNotspecified. Increaseinvestmentinnaturalcapitalby

10%incomparisonby2015,andby20%by2020incomparisonwith2010level.

Nodataavailable.

Water ManagementSupply at least 90% of the population withhealthypotablewater, increasetheaccesstoimprovedsanitation facilitiesbyat least80%andrecycledomesticwasteandgreywater.

Introduce technologies for industrial wastewaterpurificationuptothestandardlevelandreuseatleast60%oftheusedwater.

Reachtheratioofgroundwatertosurface-waterconsumptionto30:70,by2015,andreachtheratioofgroundwatertosurface-waterconsumptionto50:50.

Asof2011,85%ofMongolianshaveaccesstoanimproveddrinkingwatersource.Thishasrisenfrom67%in2001.

Green Investment

Spendatleast2%oftheGDPannuallyforgreendevelopment.

Disbursenotlessthan2%ofGDPinGreeninvestmentyearly.

Nodataavailable.

Life Expectancy

Increasethelifeexpectancyupto72yearsby2020.

Notspecified. Asof2011,lifeexpectancyatbirthwas68.5years,anincreasefrom63.7in2001.Iftheaveragerateofanadditional0.5yearsoflifeexpectancyincreaseeachyear,lifeexpectancyshouldreach72.8yearsin2020.

Land Management

Includeatleast25%ofthetotallandmassinnationalparksby2020andenhancetheirprotection.Networkofthenationalspecialprotectedareasshouldinclude:atleast70%ofthehabitatofrareandextremelyrareanimalsandplantspecies,atleast60%offorestareasandheadstreamterritoriesofmajorrivers.

Rehabilitate10,000hectaresofforestlandannuallywithsupportofstatebudget.

Notspecified. AccordingtotheWorldBank,currently13.4%ofMongolianlandmassisincludedasaprotectedarea.

Economic Development/Restructuring

Achievea40%shareintheindustrialsectorby2020.

Creategreeneconomyincentivesandleverages.

IntheyeartoJune2013,theindustrialsectoraccountedfor6.2%oftotalGDP


4.2 PRoMoTING GREEN PRoduCTS

OneoftheinitiativeswithingreenlabelingistheMNCCI’stheGreen hotel eco label initiative.Thisvoluntarylabel-inginitiativewasestablishedin2012tocertifyhotelswithenvironmentally friendly management activities. Greenhotel eco label has 14 criteria relative to water conser-vation,energyefficiency,wastereduction,managementandinformationtoguestsandstaffs.

Intermsofconsumergoods, theMNCCI iscooperationwith the MEGD to establish internationally recognizedrules and procedures for labeling green products. TheMNCCI in cooperation with the IVAM institute on con-sultancyonsustainabilityatAmsterdamUniversityandAustrian GrAT Ltd. conducted“Green product develop-mentandlabeling”projectonintroducingECexpertiseand experience on promoting green products throughecolabelingofproducts.Thereare22factoriesinvolvedintheprojectactivitiesacrossMongoliainvolvedinecodesigningofgreenproductsandgreenfeasibilitystudy.TheMNCCIiscurrentlyworkingontheestablishmentofanewlabelinginstitute.

TheMNCCIisalsopromotinganorganicfoodpromotionprogram, known as “Organic Mongolia”. This includesrunningexhibitionsandfairsinorganicfoods,awardinggreenproducts,andcreatingagreenproductscounterin shops. There is a “made in organic Mongolia” labelawardedtoaround23products,aswellasa“greenbarcode”.

4.3 GREEN BANkING ANd GREEN loANS

TheMNCCIhasestablishedtheGreenCreditGuaranteeFund(GCGF),aNetherlands-fundedprojecttopromoteESCOswithagrantfromTheRoyalNetherlandsEmbassyinBeijing.

Thepurposeofthefundistoprovideacollateralguar-anteeforenergyefficiencyimprovements,greeninvest-ments,andcleanerproductionprojects.ItishopedthattheGCGFwillhelpaddressoneoftheprimarybarrierstofinancingofenergyefficiencyandotherenvironmentalimprovementprojects,inadequatecollateral.Inaddition,itisanticipatedthatloansguaranteedbythefundwillbegivenatratesbelowmarket,reflectingthereducedriskprovidedbytheguarantee.

The Green Credit Guarantee Fund has issued a total of415.5millionTugrikinloansto8businessentitiesintheareas of fuel and energy efficiency, water purification,wastereduction,andrecyclingforathree-yearperiodto2012.Oftheseloans,20-80%wereofferedthroughcol-lateralguaranteesofthefund’sownassets.

Inaddition,theGCGFobtained1billionTugrik in loansfromtheGovernmentofMongoliaatadiscountedloanrate in2007,andhas issuedthe loans to13SMEsonapreferentialbasiswithaparticularlylowloanrepaymentrate.

MongolianbanksXacBankandGolomtbankarealsoarealsoprovidingsubsidizedloansforgreenbusinessesandhouseholds.

XacBank, with its international partner Micro EnergyCredits,playsaninnovativerolebyofferinggreenprod-uctsasbothbusinessandpersonalloans.HomeownerscanapplyforamicrofinanceproductthroughXacBank,topurchasehomeinsulationandefficientheatingstoves.XacBankcurrentlyoffers3typesofgreenloansforper-sonal consumption: energy efficient stoves, ger coversandenergyefficientfuel.Theycanalsobenefitfromcar-bon funding and government subsidies to ensure thattheproductisaffordable.Mosthouseholdssavemoneythefirstmonththeytransitiontocleanenergy. Inaddi-tionthesehouseholdsenjoywarmerhomesandcleanerair.

XacBankalsoprovidesstart-uploanstolocalproducersto increase production of both the stove and the gercover.

Golomt bank also provides a system of environmentalcredit evaluation, whereby an assessment of the envi-ronmental impact constitutes an integral element oftheir credit evaluation process. Through their lendingpolicy, they support businesses which implement en-ergy-efficient and environmentally friendly operationalprocedures.Theyclaimnottosupportanyprojectwhichisperceivedtobedeleterioustotheenvironment.

Furthermore,Golomtbank is theonly institutiontoex-tendEnvironmentalProtectionLoanstoitsclientsamongcommercialbanksimplementingPhase2ofTSLProjectLoan Programme supported by Japanese InternationalCooperationAgency(JICA)incooperationwiththeMin-istryofFinance.

4.4 PRoMoTING dECENT WoRk

There have been several initiatives to promote decentwork inMongolia. In2005theGoM, theConfederationofMongolianTradeUnions (CMTU)andtheMongolianEmployers’ Federation (MONEF) supported by the ILOadoptedtheNational Plan of Action for decent Work (NPA-dW) 2005-2008 followed by the decent Work Country Program 2006-2010. According to this pro-gram,decentworkcriteriaconsistsofcompliancewith:

• rulesandregulationsonminimumwage,• the freedom of association and right to collective

bargaining,• occupationalsafetyandhealth,and


• noforcedorcompulsorylabour,• theabsenceorabolitionofchildlabour,and• theeliminationofdiscriminationwithrespecttoem-

ploymentandoccupation.

Decentworkandgreenjobsaremorebroadlydefinedinthe“GreenJobsMapping”studyalsodonebytheEPCRCwithinthePAGEproject.

4.5 ENERGY EFFICIENCY ANd ClEANER BuSINESS

An example in this field would be the MNCCI’s worksaimedatpromotingthedevelopmentofenvironmental-lyfriendlyandeconomicallyefficientindustriesandser-vicesbyimplementingCleanerProductionprinciples.

MNCCIs Sustainable Production and Consumption de-partmentisworkingwiththesupportofthegovernmentand international organizations to create a NationalCleanerProductionProgram.Thisprogramincludes:

• conductingcleanerproductionassessmentauditsatfactoriestoidentifypotentialenergysavingsfollow-ing the UNEP developed“Cleaner production andenergyefficiencyManual”;

• undertakingspecializedtrainingonenergyefficien-cy and Energy Service Company (ESCO) services inpartnershipwiththeUniversityofAmsterdam,

• introducing energy management systems to com-panies;

• developingand implementingprojects focusedonincreasingenergyefficiencies;

• raisingawarenessofESCOservices;• developmentonagreen-officeguide;and• Producing a series of “green business and green

economyCD’s”.

Thereareanumberofprogramsfundedbyinternationalorganizationsthatareaimtoimproveenergyefficiencydirectly.TheUNDPhasestablishedtheBuildingEnergyEfficiency Project (BEEP) in Ulaanbaatar. BEEP will con-tribute to the transformation of Mongolia’s buildingsmarkettowardsmoreenergy-efficientbuildingtechnol-ogiesandservices,sustainableprivatehouseinsulationand energy efficiency financing mechanisms.The proj-ectistargetedatnewbuildingsaswellasimprovingtheenergy efficiency existing in gers and private houses inurbanareas. TheprojectisrunningfromFebruary2009to2013withabudgetof$3,815,000USD.92

A project between USAID and GIZ, also recently com-pleted a thermo-technical retrofitting project on threeschools in Ulaanbaatar. The schools selected for reha-bilitation were School No. 63, No. 79-1 and No. 79-2.Thisprojectusescleanenergy,throughsolarpowerandthermal insulation,to increaseheat levels intheschool

�2 Badraa M., Sanjaasuren M. and Munkhgerel A (20�2). Mid-term evaluation of Building Energy Efficiency Project, Ulaanbaatar 20�2.

buildings.Inaddition,theprojectutilisedlocalcontrac-tors, engineers, and architects will receive on-the-jobtraining on the application of environmentally-friendlytechniques; learningmodulesoncleanenergywillalsobe provided to teachers and students. Funding for this13-month projectis$1,517,000USD.93

4.6 PRIVATE SECToR INITIATIVES To dEVEloP ThE RENEWABlE ENERGY SECToR

Mongolia’s renewableenergysector isoneof themostpromisingsectorsforthegreeneconomy.Therearecur-rently12companiesand1institutethatareengagedinintroducing, testing and production of renewable en-ergy.

Therearecurrently2windpowerstations inMongolia.ThefirstisinKhatanbulagsoum,Dornogoviaimag.Theother is the Salkhit wind farm in Sergelen soum, Tuvaimag,around70kmfromUlaanbaatar.TheSalkhitwindfarmisthefirstsignificantrenewableenergygeneratorin Mongolia. Completed on 20 June 2013, it is a land-markprojectthatcameasaresultofclosecooperationbetween the private sector, international developmentinstitutions,andtheGoM.Thewindfarmconsistsof31wind turbines producing 50MW,equivalent to over �%ofthegrid’sentirecapacity.94

ConstructionoftheSalkhitwindfarmbeganin2011.95ItwasfundedwithdebtandequityfinancingofUS$47.5million from the EBRD and the same amount from the Netherlands DevelopmentFinanceCompany(FMO),theDutch development bank. The project is implementedbyCleanEnergyLLC,ajoint-venture51%ownedbyMon-goliantechnologycompanyNewcom,14%ownedeachtheEuropeanBankforReconstructionandDevelopment(EBRD)andNetherlandsDevelopmentBank(FMO),and21%byGeneralElectric.96

Thewindfarmwilloffset180thousandtonsofCO2emis-sions,enablingMongoliatosellcarboncredits,save1.6milliontonsoffreshwater,andreducecoalusageby122thousandtonnesannually.Theprojecthasalsoprovidedgreenjobs.Atthepeakofconstructionactivity,theproj-ectemployed500workers,94%ofwhichwereMongo-lia. With construction complete, there will be 25 to 30employees employed at the wind farm on an ongoingbasis.

The implementation of Salkhit has awakened interestinMongolia’srenewablessector.Beyondthewindfarm,othercleansourcesofenergyincludeeightsolarpowerstationswithatotalcapacityofproducingupto100kWof energy in the following aimags Umnugobi (1), Govi-Altai (3),Bayankhongor (1)andBayanUlgiiaimags(3)),

�� Embassy of the United States, Mongolia (20�2).�� EBRD (20��). �� Bekhbayar, D. (20��), p. �� EBRD (20��).


aswellasandthreecombinedsolarandwindpowersta-tionswithaninstalledcapacityof150-200kW.

Therearealso11hydropowerstationswithinstalledca-pacityof11kWto2000kW.However,theexistinghydro-power plants only produce low output levels becausetheycannotoperateinwinterduetoiceformation.TheWorldWildFundforNature(WWF)hasraisedconcernsthattheoutputgeneratedisnotworththeenvironmen-taldamagecauses.

Therearealsoplanstobuildanewsolarandwindfarmin Umnugobi aimag. Newcom Group in collaborationwithJapan’sSoftBankisconductingafeasibilitystudyonbuildinga300-megawattpowerstationthere,thiswouldbesixtimesbiggerthantheSalkhitwindfarm.

Therehavebeenanumberofprojects toprovidesolarelectricity forger families.TheWorldBank’sRenewableEnergyandRuralElectricityAccessProject(REAP)helpedthe Government of Mongolia complete its National100,000solargersprogram.Theprojectalsohelpedfundimprovementsinsoum(district)electrification,includingrehabilitatingmini-gridsandinstallingrenewableenergytechnologyhybridsystemstopowerthem.97

TheGlobalGreenGrowthInitiativeaimstodevelopstrat-egiesforpromotingtheimplementationofgreenenergysystems in Mongolia through its green energy project.The project is assessing the current status of the Mon-golianenergysectorincludingtheidentification,elabo-ration, and evaluation of three key energy scenarios,anddevelopingproposalsforkeygreenenergy&greengrowthinitiativesforMongolia.Theprojectisbeingcon-ducted with the Stockholm Environment Institute USCenter,andateamofMongolianlocalconsultants.98

4.7 CoMBATING ulAANBAATAR’S AIR PolluTIoN

Therehavebeenanumberofinternationallyfundedpro-gramstocombatairpollutioninUlaanbaatar.Asmuchofthepollutioniscausedbyemissionsfromgerstoves,thebiggest projects are those providing reduced pollutionandfuelefficientgerstovesandgerblankets99

OneofthebiggestprogramswastheEnergyandEnvi-ronmentProjectfundedbytheUSMillenniumChallengeCorporation. This program provided USD $31.3 million

�� World Bank (20��). Mongolia: Portable Solar Power for Nomadic Herders�8 Kang, J. (20��) GGGI Mongolia Country Program, GGGI Presentation to PAGE

Workshops. �� One of the key Ger stove models was developed by the German Technical Coop-

eration (GTZ) in 200�. The stove includes insulating bricks to retain heat, and thus uses less fuel, and two air intake channels to raise the combustion temperature and cut emissions. The stoves can burn all types of fuel, even high quality semi-coke coal. The energy efficient stoves subsidized by the project use 20% to �0% less fuel, and emit �0% to �0% less pollution than traditional stoves. Ger blankets were designed by the United Nations Development Program but are produced lo-cally in Mongolia. They are essentially large insulating covers composed of three separate layers that wrap the entire outside of the ger. The specialized insulation helps to keep heat within the ger and results in a �0% reduction in fuel burned each month.

to fundconsumersubsidies for thepurchaseofenergyefficientandloweremissionsproductsincludingstovesand ger blankets. At its largest point, the program had42 sales centers and 150 dedicated staff. The programfunded a 90% subsidy of the Ger stoves, reducing thecostofthecheapeststovemodelstoabout$20,atenthof their price. MCC financed $47 million (about 80% ofthe project) while the Mongolian government fundedtheremaining20%.

The EPP was closed in November 2012. During thecourse of the project, the program sold nearly 100,000improved stoves, 20,000 ger insulation kits, 4500 vesti-bules, and 100 energy efficient homes, helping nearly100,000householdsofUlaanbaatar’sgerdistrictstosavemoneyandhelpcontributetoacleanerenvironment.

SincetheEPPfinished,theWorldBankhascontinuedtheGerstovesubsidiesprogramthroughthe ulaanbaatar Clean Air Project.There are three components to thisproject:

1. Gerareaparticulatemattermitigation.

2. ParticulatemattermitigationinCentralUlaanbaatar.Thiscomponenthasfoursub-components:(1)miti-gationoffugitivedustfromlackofcitygreening;(2)mitigationofdustfrompowerplantemissionsandash ponds; (3) district heating feasibility study andknowledgebuilding;and(4)affordablehousingpol-icytechnicalassistance.

3. Publicawarenessraising,programcoordinationandprojectmanagement.

TheWorldBankissharingthecostsoftheGersubsidiesequallywiththeMongoliangovernment.Withthesup-port of theWorld Bank, the GoM has mobilized about$45millionindonorassistance.TheBankalsoapprovedan additional US$15 million credit for the UlaanbaatarClean Air Project, which is implemented by the Ulaan-baatarMunicipality.

Theprojectofsubsidiesisexpectedtocontinueforan-other2to3years,andtaperdowngradually.Tocontinueofferingthe90%subsidy,XacBankisplanningonusingfundingforthecarboncreditsitoffersforstovesalesonthevoluntarycarbonoffsetmarket.XacBankhasteamedupwithAmericancompanycalledMicroEnergyCredits,who handle the accreditation including‘Gold standardcredits system certification’. The social impact throughthereductioninpollutionaswellasreductionincarbon-dioxideisveryattractivetoXacBank’sclients.

FromAugust2011toFebruary2013,theEuropeanBankof Reconstruction and Development (EBRD) provided€750,000fortheUlaanbaatarCleanAirInitiativePhaseII.TheprogramsupportedtheuseofcleanerfuelsandthestrengtheningoftheGoM’sCleanAirFund(CAF)byre-viewingandstrengthenitsprocedures,legalframeworkandbudgeting.Theprojectreviewedairqualityrelated


legislationandassistedinthedevelopmentofadditionallegislation.Italsoreviewedtheproductionanddistribu-tionsystemsofcleanerfuelsandassistedinthedevelop-ment of improved distribution systems, thereby takingintoaccountaffordabilityandpublicawareness.

There is some dispute as to the effectiveness of theseprograms.The National Air Quality Monitoring Agency,agovernmentbody,claimeda20%reductioninparticu-latematterfrom2010to2011.However,meteorologicalconditionsmayhaveinfluencedthisresult.100

Despite the improvements, air pollution levels remainextremelyhazardousandmuchbiggerreductionsinairpollutionarerequiredtotrulyresolvetheproblem.Onerecentstudyfindsthat toachieveMongoliaAirQualityStandards, particulate emissions would need to be re-ducedby94%fromgerareas,suspendedsoilsandboil-erscombined.

Todatetherehavebeenfewprojectstoassistwiththesymptomsofairpollutionratherthanthecauses.AsmallprojecttomanagetheeffectsofairpollutioninUBistheMongolian Air Pollution Project (MAPP), a collabora-tionoftheMongolianRedCrossSocietyandtheHealthSciencesUniversityofMongolia.

MAPPisfocusingitscampaignonchildreninanumberofschoolsingerdistrictswiththeaimtolinkinwiththeirfamilies and the community more broadly.The projectlooks to empower these communities through educa-tionandawarenessaroundairpollution,it’seffectsandprevention. Students will have the opportunity to par-ticipateinanumberofactivitiesthataimtomakemask-wearinglessofachoreandmoreachanceforsomefun.

The MAPP project seeks to: (1) introduce appropriatemasks for protection from PM Air Pollution to the GerDistrictsinUlaanbaatar,(2)deliveranAirPollutionedu-cationalprograminschoolsthroughtrainedyouthvol-unteer,(3)acquiredataonhealthimpactsandconsumerinteresttobeusedtocreatemarketdemandfortheap-propriatemasksinUlaanbaatar.101

4.8 ENVIRoNMENTAl GoVERNANCE

The critical project in this area has been the uNdP’s Strengthening Environmental Governance in Mongolia, Phase I and Phase II.Theaimoftheprojectis to improve systematic capacity for sustainablemanagementofresourcesenhancedatthecentralandlocallevels,whilefacilitatingastrongerenforcementoflegislationandawiderparticipationofprimaryresourceusers.The first phase of the project ran from February2011 to 31 December 2013, while the second phase isjustbeginning.

�00 Jacob P (20��). Mongolia: New Heating…�0� Mongolian Air Pollution Project (20��).

Therearethreeobjectivestotheproject:

(1) Streamlining and strengthening of Mongolia’s en-vironmental legislative framework; (2) Strengtheningenvironmental mainstreaming mechanisms; and (3)StrengtheningcapacityofNGOs/CSOstoengageinen-vironmentalgovernanceprocesses.

The first stage of the project carried out a review ofMongolia’s many environmental legislative documents,an assessment of the implementation mechanisms ofMongolia’senvironmentalmanagementsystem,andanassessment of the institutionalization of Strategic Envi-ronmental Assessment (SEA) and Environmental Audit-ing(EA).

StageIIoftheprojecthasthreeobjectives:

1. DevelopingRoadmaptoharmoniseMongolia’sen-vironmentallegislativeframework.

2. Environmental mainstreaming mechanisms devel-oped for adoption by Government; including Cli-mate change library in aimags, Developing a cost-benefitanalysisformininginMongolia

3. Develop a resource mobilization strategy for envi-ronmentalNGO’s/COS’s

An additional UNDP project for Environmental Gover-nance is strengthening the protected area network in Mongolia (SPAN).TheprojectbeguninAugust2010andaimstoimprovethemanagementeffectivenessandfinancialsustainabilityofMongolia’sprotectedareassys-tem.ItalsoseekstostrengthenpartnershipsbetweenPAauthorities,localcommunities,localgovernment,NGOsandtheprivatesectortoachievethelong-termsustain-ability of PA financing to allow Mongolia to cover thefinancing gap.The budget is $2.0 million USD and it isscheduledforcompletioninJune2015.

A project only just beginning in Mongolia is the Pov-erty Environment Initiative (PEI). The PEI is a UNDPandUNEPprogramthatsupportscountry-ledeffortstobuild linkages between poverty and the environmentinto national development and sub-national develop-ment planning, from policymaking to budgeting, toimplementationandmonitoring.Theprojectintendstoimprove the livelihoods of poor people dependent onnaturalresourcesandimprovetheirresiliencetoclimatechangeandotherexternalshocks.

Theprogramprovidesfinancialandtechnicalsupporttocountriestointegrateenvironmentandclimateconcernsinto national, subnational and sectoral planning andeconomicdecision-makingprocesses.ThePEIlaunchedin 2013 – 2017 program in June 2013, and announcedthattheprogramislikelytoincludeMongolia.Throughthe program, the UNDP plans on building on nationalpriorities of growth, poverty and decentralisation, andmanaging environment outcomes that matter to poorwomenandmen.


The Nature Conservancy is supporting environmentalgovernance in Mongolia, particularly through its De-velopmentbyDesign(DbD)strategy.Parliament’s2012passage of the environmental impacts mitigation actsignaledMongolia’sacceptanceoftheDbDphilosophy.Atthegovernment’sinvitation,theConservancyispro-vidingtechnicalinputonthedesignofregulationsandguidelinesthatwillenablethelawtobeimplemented.

4.9 PRoMoTING SuSTAINABlE MINING

TheAsiaFoundation’sEngaging Stakeholders for Envi-ronmental Conservation (ESEC)projectwasinitiatedinAugust2010tohelpMongolian’sprotectnaturalresourc-es from the adverse effects of mining. Funded by theEmbassyof theKingdomof theNetherlands, theSwissAgencyforDevelopmentandCooperation(SDC)andtheAsiaFoundation, ESEChasbeenworkingwithgovern-mentagencies,citizens,NGOsandminingcompaniestopromoteresponsibleminingpractices,mitigatenegativeenvironmental impacts, and reduce conflicts betweenstakeholders.

TheESECprogramhasestablished localenvironmentalmonitoringgroupsin39soumsacross14aimagstoim-provecitizens’awarenessofresponsibleresourceuseandencourageactiveparticipationinenvironmentalconser-vation,andhasalsoestablishedmulti-stakeholdercoun-cils(LMCs) in17soumshelpingtoreduceconflictsandtensions. The program has also published 16 manualsandguidebookstoincreasepublicunderstandingofre-sponsiblemining,stakeholderengagement,andtrainedenvironmentalinspectors,waterengineers,andsecond-aryschoolteachersinwaterandsoilqualitymonitoringandtohelpimproveenvironmentalprotection.

With the first phase now complete, a second phase oftheprogram(ESECII)waslaunchedinJune2013toad-dresstheenvironmentalimpactsofartisanalandsmall-scalemining(ASSM).TheprojectisdesignedtoimproveMongolia’sartisanalminingsector,includingpromotingrespectfordecentworkandtherighttoahealthyenvi-ronment.Amongitsactivities,theprojectwillintroduceamodelASSMrehabilitationtechniquedevelopedinUy-angaSoumofUvurkhangaiaimag.102

The SDC is also directly supporting small-scale min-ing through its Sustainable Artisanal Mining Project (SAM). Beginning in 2005, the project is now in its 3rdphaseandisscheduledtofinishin2014.CHF4,980,000has been budgeted for phase 3. In its first and secondphases,theprojectenabledmoreefficientandenviron-mentally mining by introducing chemical-fee ore pro-cessing,communitydevelopmentandtheimprovementofworkingconditions.TheprojectalsoassistedtheGoM

�02 Asia Foundation (2013). Environment Programs inMongolia Factsheet, No-vember2013.

in the development of an Artisanal Small-Scale MiningLaw,which ledtotheformalizationoftheASSMsectorinApril2010.However,despiteprogressintheASSMle-galframework,theformalisationprocesshasbeenslow,leavingmanyartisanalminersunorganised,trappedinaviciouspovertycycleandengaginginhazardousminingpractices.

SAMalsosponsoredtheestablishmentofamercury-freegold-processing plant in Bornuur soum, Tuv aimag, in2008.TheplantisnowownedbyHAMOLLCandhasbe-comethesoum’slargestemployer,providingmorethan60permanentjobs.Asaresultofprojectssuchasthese,artisanalmining isnowrecognizedasaviableemploy-mentoptioninMongolia.103

4.10 AGRICulTuRE PRoJECTS

There are a number of programs aiming to promote amore sustainable and productive agricultural sector inMongolia.InJune2013theWorldBankcommencedtheMongolia livestock and Agricultural Marketing Proj-ect.ThisprojectisbeingimplementedbytheMinistryofFood,AgricultureandLightIndustryatatotalcostofUS$11.5million.Theobjectiveoftheprojectistoimproverural livelihoods and food security in selected areasthroughinvestmentsinenhancingproductivity,marketaccessanddiversificationinlivestock-basedproductionsystems.

The project has 3 components. (1) Create productivepartnerships by linking producers of livestock prod-uctstomarketsanddiversifyingsourcesofincomeandhouseholdnutrition.(2)Increasinglivestockproductivityandquality.Supportwillbeprovidedforanimalhealth,nutrition,breedimprovementandfeeding.(3)AssistancewithprojectmanagementthroughestablishingaProjectImplementationUnit(PIU)attheMinistryofAgricultureandLightIndustry.104

The Asian Development Bank is also managing the Es-tablishment of Climate-Resilient Rural livelihoodsproject,with$2.5millionUSDinfundingfromtheJapanFundforPovertyReduction.Theprojectwhichwasap-provedinJune2012hasbeenoperatinginBayankhon-gor aimag and will help herders to (i) strengthen theirpreparedness for recurrent dzud, and (ii) rehabilitateand/orimprovetheirlivelihoods.Theprojectaimstopro-mote sustainable herding including collective pasturemanagement,watermanagement,haypreparation,andmanagementofherdsizesthrougheffectivemarketing.TheprojectisscheduledtocloseinDecember2013.

The SDC is also working towards increasing the liveli-hoodsofherdersthroughitsAgriculture and Food Se-curity Initiative,particularlyintheruralWesternareasof

�0� SDC (20��). Sustainable Artisinal Mining Project. �0� World Bank (20��). Livestock and Agricultural Marketing Project


Mongolia.This includesworkingtowards improving lo-calresources,servicesandskillstoproducegoodmarketquality goods, support of regional and local economicdevelopment initiatives,andstrengtheningof livestockmanagement,production,andsupportservicesforherd-ers.

4.11 FoRESTRY PRoJECTS

AsdiscussedinChapter2,UNREDDprogramhasbeenoperatinginMongoliasince2011.Ithasbegunitssup-portbydesigningaframeworkforstrengtheningbothfunctional and technical capacities of relevant nationalinstitutionstoestablishastrongfoundationfortheim-plementationoftheRoadmap.

TheGIZisfurtherpromotingsustainableforestrythroughitsBiodiversity and Adaptation of key Forest Ecosys-tems to Climate Changeproject,includingsupportingREDD+.Theprojectwillrunfrom2012to2015andaimsto conserve biodiversity by protecting important eco-logicalareasandmanagetheseinasustainablemanner.Managementmethodsareadaptedtomeettheneedsofclimate change, while ensuring an improvement in liv-ingconditions for ruralpopulations.PilotprogramsareoperatinginSelengeandKhuvsgulAimags,andwillbeexpandedtotheBulganregion.

Therearefourelementsoftheproject:

�. Climate Change Adaptation Policy: Implemented inagriculture policy, livestock management and forestryconsideringtheroleofpeopleandensuringthefinanc-ingofrelevantmeasures.

2. Forest Certification and REDD+: Developing guide-lines, certification of forest enterprises, forest use andcarbon amount according to UN Reducing Emissionsfrom Deforestation and Forest Degradation (REDD+)standards.

�. Vocational Education of Forest and Environmental Technicians: developing curricula and training manualsto educate qualified technicians for forest eco systemsmanagement.

�. Sustainable Pasture Management inProtectedAreas:Sustainable pasture management will be implementedinprotectedareasinKhangaiaimag.

The MNCCI has initiated a project aimed at plantingsaxaul trees in the gobi desert to stop desertificationandsavewaterresources. Theprojectaimsatplanting500,000treesatacostofMNT330million.

4.12 WATER MANAGEMENT STRATEGIESThereareanumberofinitiativestoimprovewaterman-agement. The UNDP is undertaking the Ecosystem-

based Adaptation Approach to Maintaining Water Security in Critical Water Catchmentsprogram,whichbeganinJanuary2013andisscheduledtobecomplet-edin2017.TheBudgetis$10.6millionconsistingofUS$5.6millionincashandUS$5millionofinkindservicesbygovernment.Theprojectaimstomaintainmountainand steppe water ecosystems by internalizing climatechange risks within land and water resource manage-ment regimes. It also seeks to alleviate vulnerabilitiesanddismantleidentifiedbarriers.105

The Korean International cooperation agency’s (KOICA)supportedtherenovation of ulaanbaatar’s water and heat pipeline systemfrom2007-2009.Theprojectsup-portedtheredevelopmentof44centers,withagrant$5millionUSdollars.A2010survey foundthatasa resultof the project water and electricity consumption wentdownby20%.KOICAhasagreedtoimplementasecondprojecttorenovateanadditional42centerscostinganadditionalUSD$5millionupto2013.106

AusAIDandtheWorldBankareteamingontheGround-water management in Southern Gobiprojectwhichisprovidingsupporttostrengthengroundwatermanage-mentinMongolia’ssouththroughapartnershipwiththeWorldBank.DeliveredaspartoftheWorldBank’sMiningInfrastructure InvestmentSupportProject,the initiativewill strengthen the capacity of Mongolian authoritiestomanagenon-renewablegroundwaterresources.Thiswillbeachievedbypilotingnewinstitutionalstructuresfor groundwater management in three provincial capi-tals and strengthening the Ministry’s ability to monitorgroundwater.

4.13 A GREENER TRANSPoRT SECToR

Insignsofagreenertransportsector,MongoliaopenedavehiclefactoryinJanuary2014toproducegreen buses,the countries’ first vehicle factory.The Ecobus LLC fac-torybeganproducingEuroIVstandard,environmentallyfriendlybusespoweredbyJ-800dieselengines.Thefac-torywasfundedbyNominHolding.107

TheGGGIisconductingagreen public transport studyin conjunction with the Korea Transport Institute, andDEBUHDECo.,Ltd.(aMongolianLocalConsultingFirm).The initiative aims to promote green (i.e. low carbon)publictransportinUlaanbaatarCityandtherebyreduceGHGemissionsandimproveairquality.Theprojectisde-veloping a technical and economic assessment of con-verting diesel buses to eco-friendly buses and examin-inghowtoenhanceinspectionrulesandregulationsforvehicleemissioncontrol,effectivemanagementandop-

�0� UNDP(2013)Ecosystem-basedAdaptation...�0� InfoMongolia(2011).KoicatoreinstallthewaterpipelinesysteminUlaanbaatar,

November32011�0� Dari(2014).Mongolianfirstvehiclemanufactureropens,UBPost,16January

2014.


This project credit line was issued through local com-mercialbanks.Theamountof loanavailabletoasinglecustomer is between 10,000- 600,000 US dollars or itsequivalent.Thepaymenttermis1-3yearsandtheinitial1-3yearswillbeexemptfromprincipalpayment.Thein-terestrate isdiscountat7%(floatingrate).Thegeneralrequirementsarethattheborrowermustfinanceatleast20%oftheprojectthemselves,theprojectmustbefea-sibleandmeetshealthandenvironmentalstandards,theinvestmentyieldmustnotbelessthan13%e.g.

Due to the success of the phase 1 of the project andthe high demand, the GoM made a request to extendtheproject.TheJapanesesideaffirmedtherequestandtheParliamentsanctionedthe2ndphaseoftheprojectduringitsregularmeetingonJanuary27,2011.The2ndphaseintroduces5billionJapaneseYen,whichisroughlyequalto80billiontugrik.

ThefirstphaseoftheprojectstartedinMarch2007.Thecredit was issued through Capitron, Golomt,Trade andDevelopment,Khan,XacandStatebanks.A totalof25millionUSdollarsofcreditwasgrantedto108businessentities in Ulaanbaatar, Darkhan, Erdenet and 18 otheraimags.ThesecondphasestartedinJune2011andthecredit was issued through Capital, Golomt, Khan, Xac,TradeandDevelopmentandUlaanbaatarcitybanks.AsofDecember31,2013,atotalof225projectloansweregranted.

erationstrategiesforthepublictransportsystemandthefuture extension to eco-station development for greentransport.

Theirfindingssuggestsimplestrategiessuchasamoreefficientbusrouteandbusesdrivingmorequicklywoulddramaticallyreduceemissions.

4.14 GREEN FINANCING

Currently there are a number of investment projectsaimedatcontributingtogreendevelopment.Anotice-ableexamplewouldbe“Thetwo-steploanproject”(TSLloanproject)fundedbyJICAinaccordancewiththeloanagreementsignedbetweentheJapanBankforInterna-tionalCooperation(JICA)andtheMinistryofFinance,theGovernmentofMongolia.Thisprojectwasintroducedin2006,withthepurposeofpromotingsustainablegrowthandpovertyreductioninMongoliathroughtheprovisionoflong-termfinancingtoSMEsintheareasoftheprivatesectordevelopmentandenvironmentalprotection.

The main purpose of the TSL project was to supportMongolia’seconomicdevelopment,topromotejobcre-ation,tostrengthenthebankingandfinancialsectorandtoencourageenvironmentallyfriendlyactivities.Withinthispurpose,theprojectprovidescreditlineswithfavor-ableconditionsthatareaimedatfinancingqualifiedpri-vate sector projects. Furthermore,TSL project supportslocalcommercialbanksbyreinforcingtheircreditevalu-ationcapacityinthelongterm.Asforthebusinessown-ers, they also benefit from the project as they improvetheir project writing skills, get consulting services andreceivefinancing.


Intheprivatesector,recognitionofandincentivesaimedatgreenactivitiesaswellasgeneralstandardsandregu-lationswouldbeeffectiveinpromotinggreenactivities.Indoingso,organizations likeMNCCIandtheBusinessCouncilofMongolia(BCM)wouldactaseffectivemedi-ums.

Ontopofthis,internationalagenciesanddonororgani-sationsareworkingonanumberofGreenEconomyre-lated projects. NGOs such as the WWF and the GlobalGreenGrowthInstitutewillalsobecriticalpartners.

5.1 ThE “NEW GoVERNMENT FoR ChANGES”

Electedin2012,theGovernmentofMongoliaisknownasthe“NewGovernmentforChanges”.ItiscomprisedofacoalitionincludingmembersfromtheDemocraticParty,theMongolianPeople’sRevolutionaryParty,theMongo-lianNationalDemocraticParty,andtheCivilWill-Greenparty. TheGovernmenthas19ministers, includingthePrimeMinister,DeputyPrimeMinisterandtheMinisteroftheCabinetOffice.

Thereare16GovernmentMinistries,anincreasefromthepreviousGovernment’s11Ministries.This includes fourcentral“generaldirection”ministries:theMinistryofEn-vironmentandGreenDevelopment,MinistryofForeignAffairs,MinistryofFinanceandMinistryofJusticeand12“outerdirectional”ministries.108Themostsignificantmin-istryforenvironmentalmanagementandpromotionofthegreeneconomyis theMinistryofEnvironmentandGreenEconomy.Butthereareanumberofotherminis-trieswithimportantfunctionsformanagingtheenviron-ment.

The Ministry of Environment and Green Development (MEGD) is the leading Mongolian Government agencyfor environmental management. It has responsibilities

�08 The outer ministries are: the Ministry of Construction and Urban Development, Ministry of Defense, Ministry of Education and Science, Ministry of Roads and Transport, Ministry of Culture, Sport and Tourism, Ministry of Mining, Ministry of Industry and Agriculture, Ministry of Labour, Ministry of Human Development and Social Welfare, Ministry of Economic Development, Ministry of Energy and the Ministry of Health.

5. Working together: Relevant institutions and actors for achieving PAGE objectives

Collaborationandinvolvementofthegovernment,privatesector,civilsociety,researchers,academiaandin-ternationaldevelopmentorganizationsareallcentral insuccessful implementationofthePAGEproject.Theresultsoftheprojectcanbedefinedthroughthelongtermgoals,objectivesaswellaswillingnesstosupportgreendevelopmentofthekeyministries(MinistryofEnvironmentandGreenDevelopmentandtheMinistryofEconomicDevelopment)andotherrelevantactors.Furthermore,theimplementationofthisprojectshouldnotbelimitedonlywithinthetermsofthecurrentgovernment.

spanningabroadrangeofenvironmentalareas includ-ing:natureandenvironmentconservation,appropriateresourceusage,rehabilitationandecologypolicies;com-batingdesertificationandforestation issues, improvingand protecting water resources, biodiversity, protectedareasandenvironmentalimpactassessments.

The MEGD was established in 1987, being previouslyknownastheMinistryofNatureandEnvironmentpriorto2012election.Followingthis theMinistrywastrans-formed into one ofMongolia’s fourcentral‘generalori-entation’ministries,whilethenameoftheMinistrywaschanged to include Green Development to reflect thenewgovernmentsfocus.

The Ministry’s mission statement is:“To ensure humanrightstoliveinhealthyandsoundenvironmentbypro-moting social and economic development taking intoconsiderationofecologicalbalance,promotingthesus-tainable use of natural resources, and facilitating thenatural rehabilitation and restoration of environmentaldegradationtosupportgreendevelopment,andtode-velopcooperationandparticipationoftheGovernment,citizens,privateentitiesandorganizationsonsupportingsustainabledevelopment.”

TheMinistryhasfourkeyfunctions:

1. To plan and implement environmental and greendevelopment policies and strategies in consistencywiththeobjectivesofsustainabledevelopment,na-tionaleconomy,budget,financialresourcesandwithstrongtiesofinternationalcooperation;

2. Tosupportprivateentities,localadministrativeunits,non-governmentalorganizations,citizensinitiativesand their cooperation on protecting the environ-ment and supporting green development, and todirect their activities in compliance with relevantpolicies;

3. TosupportMEGDstafftointroducescientificachieve-ments and globally leading practices on environ-mental protection and green development, and toimprovetheirprofessionalskills;


4. To study and research the state of natural environ-ment,itsevolutionandtrends,tointroduceandap-plyscientificachievementsandgreentechnologiesinproductionandserviceofenvironmentalprotec-tionandecologicalbalanceconsideration.

TheMEGDiscomposedof6Departmentsand9Divisions.

The Ministry of Economic Development (MED) wasestablished in 2012 following the election of the newGovernment.The role of the Ministry of Economic De-velopment is to formulate,developandcoordinatetheGovernment’seconomicpolicies.TheMinistryisrespon-sible for: investment policies, consolidated policy onstateeconomicandsocialdevelopment,loanandgrantaid,tradepolicy,advancedtechnologyandnational in-novationsystems.

TheMEDisresponsibleforsigningoffanydistributionofgrantsorloansfromtheinternationalorganisationssuchastheWorldBankandAsianDevelopmentBank

WithintheMinistry,the Department of Foreign Invest-ment Regulations and Registration is responsible forthe promotion and facilitation of foreign direct invest-mentinMongolia.Itholdsthefollowingfunctions:

• To promote Mongolia as an investment attractivedestination;

• To implement policies and legislation with respecttoforeigndirectinvestment,

• Toobtainthestatisticaldatafromstateadministra-tivebodyinchargeoflabour,taxation,custom,so-cialinsuranceandforeigncitizens

• To registerbusinessentitywith foreign investmentandrepresentativeoffice,

• Reviewing foreign direct investment policies andregulations;and

• Analyzing foreign direct investment situation andmakingforecasts.

The Ministry of Mining (MoM) provides guidance onpolicyongeologyandmineralresources,oilissues,fuelsupply and reservoir, transparent and responsible min-ingdevelopment.

The Mineral Resources Authority (MRA) is a regulatoryagency within the Ministry. The goal of the MRA is tosupport developing the government policy on mineralresourcessectorandtoprovideinvestors,customersandotherinterestedpublicswithquick,convenientandcus-tomer-oriented services.The Agency has the followingstrategicobjectives:

• Support the central administration of the mineralresources and energy in formulating developmentpolicies,providerequiredinformationandcreateev-ery favorable environment in implementing policyguidelinesandincreasinginvestmentinthissector.

• Provide services related to exploration and miningspecialpermitsinordertoimplementthegoverningmineralslaw.

• Provide leadership and human resource manage-mentofpublicadministration.

ThePetroleum AuthorityisanotherauthorityundertheMoM,responsiblefortheimportandpricingofpetro-leuminMongolia.

The Ministry of Energy is responsible for the consoli-datedpolicyonEnergy,aswellastherenewableenergydevelopment.

Within the Ministry of Energy, the National Renewable Energy Center (NREC) is responsible for Mongolia’s Na-tional Renewable Energy Program, government by theLawofMongoliaonRenewableEnergy(2007).TheNRECisastateownedenterprisewhichconductsresearchonrenewable energy resources and utilisation.The centeremploysaround49staff.

TheCenter’smainactivitiesareto:

• introduce sustainable development principles toMongolia;

• achievethegoalsoftheRenewableEnergyNationalProgram;

• completedetailedstudiesonrenewableenergyre-sourcesandutilization;

• introduce new renewable energy technologies toMongolia;

• undertakeresearchonintroducingnewtechnologysuitable to the special features of Mongolia’s cli-mate;

• implementprojects,programsandsurveysthrough-out the country; and develop Mongolia’s technicalcapacity

Thecenterissplitintotwomaindivisions:theResearch&BusinessDevelopmentdivisionandProduction&Tech-nologydivision.TheResearchandBusinessDevelopment(R&BD) division conductsresearch into the production,testing and consumption of renewable energy.This in-cludessolar,wind,geothermal,newenergysourcesandcleandevelopmentmechanisms.TheCenter’sProduction&Technologydivisionincludesthephoto-voltaicfactory,andthetechnicaldrawingandcontrollinggroup.

The Ministry of Industry and Agriculture is responsibleforheavyandlightindustrypolicy,industrialparks,andpopulationfoodsupply,policyonanimalhusbandryandagriculture,livestock,wildanimalsandplantquarantine,export/importissuesonlivestockandplantproducts..

The Ministry of Labor (MoL) isresponsibleforlaboren-gagement and poverty reduction, working conditions,salaryandlivingcostissues,issuesonforeignnationalsemployment within Mongolia, and labor force exports.TheMinistrywillbeacriticalpartner todevelopGreenjobsstrategies.

MoLismadeupof6departments.Theseare:VocationalEducation,Employment,LaborandEmploymentPolicy,SmalltoMediumEnterprise,MonitoringandInternalAu-ditingandAdministration.


TheMoLalsohassixMinistriesunder itscontrol:LaborExchange Central Office; Employment Services, whichdeterminessocialinsurancepolicies,theSmallandMe-diumEnterpriseFund,OHSStudyCenter,InstituteofLa-borStudies,andForeign.

The Ministry of Population Development and Social Welfare focusesonpopulationdevelopmentandplan-ningissues,issuesonchildren,youth,womenandelders’development, gender issues, social welfare and socialinsurance.

The Ministry of Health TheMinistryofhealthmanagestheconsolidatedpolicyonpopulationhealth.

These ministries are defined as the main stakeholderswithin this stocktake study. In addition to this, the re-search team interviewed representatives of several keyagenciesandinstitutions.Theseare:

State Specialised Inspection Agency (SSIA) is respon-sibleforimplementingsome200lawsandotherregula-tions,over400legalinstrumentsinall.TheSSIAisattheforefront of implementation of environmental policiesandlawsinMongolia.

TheMongolian Development Institute (MDI)isagovern-mentfundedresearchorganizationoperatingundertheOfficeof thePresidentofMongoliaandtheMongolianAcademyofScienceswithastaffofaround30research-ers.Therearethreepillarstotheirorganization:econo-my, society and environment. For the past three years,the MDI has focused on vulnerability assessments ofclimatechangesandadaptationpolicies.Theirresearchhasfocusedonassessingthesensitivityofsocio-ecologi-calconditionsonpasturelandinBayankhongoraimag.Theirnextresearchfocuswillbeongreendevelopment.Theyhavechosensixaimagstoconductthisresearchonandwillparticularly focusonvulnerabilityassessmentsfortheaimags,andbasingaimagbudgetsonlandvul-nerability.

Standing Committee on Environment, Food and Agri-culture of Mongolian Parliament for Supporting Green Development in Mongolia

TheMongolianParliamenthassevenstandingcommit-tees. The Standing Committee on Environment, FoodandAgricultureofMongolianParliamentforSupportingGreen Development in Mongolia in one of these com-mittees,andhasbetween17and21members.

ThescopeoftheCommitteeisbroadcoveringallareasof agricultural and environmental policies in Mongolia.Thecommitteehasamajorroletoplayinenvironmentalprotection and management through its considerationand review of draft laws and other draft resolutions ofParliamentsubmittedbylawdraftersandmakepriorrec-ommendationsandconclusions.TheCommittee isalsochargedtomakeproposalstoimprovestatepolicyandparliamentary initiatives and to implement parliamen-tarycontrolwithinitsmandate.

Withsuchabroadmandateandsuchaprominentposi-tion, theCommittee is inanexcellentpositionto influ-enceenvironmentalprotectionandthedevelopmentoftheGreenEconomyinMongolia.

5.2 EMPloYEE ANd EMPloYER ASSoCIATIoNS

TheMongolian Employers’ Federation (MoNEF) isanindependent and non-government organization thatadvocates the interested employers and promotes theprivate sector. Established in 1990 by 35 private com-panyowners,MONEFisnowanationwideorganizationembracing21regionalemployers’associations,agenciesin60soums,41professionalassociations,12sectorasso-ciationsandrepresentingcollectivelyaround8100busi-nessinthemanufacturing,construction,transportation,banking,insuranceandservicesectors.MONEFworksincollaborationwiththeGoMaswellastheConfederationofMongolianTradeUnions,andisamemberoftheInter-nationalEmployersOrganisation.

The Confederation of Mongolian Trade unions(CMTU)isanationaltradeunionfoundedin1927.Until1991theCMTUwasaffiliatedwiththeWorldFederationofTradeUnions,aSovietfrontorganization,buthassincejoinedtheInternationalTradeUnionConfederation.CMTUwaspreviouslytiedtotheMongolianPeople’sRevolutionaryParty,butin1990thelinkbetweenthepartyandtradeunionwasbroken.

5.3 MoNGolIA’S PRIVATE SECToR: AN IMPoRTANT dRIVER FoR GREEN dEVEloPMENT

Theresearchteammetwithseveralrepresentativesfromtheprivatesectorwhohasgreenactivities.Theseare:

The Mongolian National Chamber of Commerce and Industry (MNCCI) promotesthedevelopmentofinterna-tionaltradeandinvestmentinMongolia’sbusinesscom-munity.Theorganizationwasfoundedin1960,andsincethe end of the socialist system in 1990 has establisheditselfasoneofMongolia’sleadingnon-governmentalin-stitutions.

TodaytheMNCCIhasover2,700memberswith23sub-sidiarybranchesinalloftheaimags.Theorganisationac-tivelycooperateswithmorethan40internationalCham-bersofCommerceandTradePromotionOrganizations.In addition, the MNCCI houses the Mongolian NationalArbitrationCenter.

TheMNCCIhascloseworkingrelationshipswithGovern-ment Ministries, Ulaanbaatar city mayor and local gov-ernments.


In 2010, the MNCCI established the Council of Water Policy Support. Thepurposeof theCouncil is to: saverivers, lakes of Mongolia, develop Mongolian law onwater,tomakeacontributionforincreaseofwaterstan-dard,tochangeorengrainmassknowledgeormindsetonwater,andtobuilduplegal,economicconditionsforintroduction of latest technologies cleaning householdorindustrywater,tosavewater,todevelopgovernmentandprivatesector’spartnershipinwatersector.

In2009,theMNCCIestablishedthe Council for Renew-able Energy Promotionwiththeaimtopromoteinvest-ment,exchangeideas,experiencesfordevelopingrenew-ableenergysectorinMongolia.ActivitiesoftheCouncilinclude:supportingsustainableactionsofenergyindus-try,organizeadiscussionbetweenmembersandtotakemeasures,researchandintroducenewtechnologiesonrenewableenergy,developrecommendationstopolicymakers,andconductinganenergylegislationsurvey.

Anotherorganisationwhichisoftenconsideredapromi-nentrepresentativeofbusinesscommunityistheBusi-ness Council of Mongolia.Amongitspermanentwork-inggroupsisthe“Environmentalworkinggroup”.

Newcom GroupLLCisaMongoliantelecommunications,airline and renewable energy conglomerate. NewcomintroducedcellphonestoMongoliain1996byinvestinginandestablishingMobicom,thecountry’spremiermo-biletelecomoperator.NewcomlaunchedEznisAirwaysin 2006. Newcom was also responsible for Mongolia’sfirstwindfarmcompletedinJune2013.Newcomwillbeawarded“The 2014 Global Green Award” by the OtherWaysManagementandConsultingAssociation.

Banking and financial sector:

MajorityofMongolia’sfinancialservicesarecarriedoutthroughcommercialbanksandtheircreditservices.Asof today, there are 13 commercial banks operating inMongolia. The research team met with the MongolianBankers’Association,GolomtandXacBankas represen-tativesofthebankingsector.ForexampleXacBankcur-rently carries out several activities that support green-ingtheeconomysuchasUlaanbaatarcleanairproject,ecohouseholdloan,ecoSMEloanandmortgageloansaimedatlesseninggreenhousegasemission.

Itoperatesinall21provincesandthecapitalcityservingmorethan500thousandcustomersthroughits98retailand business branches. It also has specialized bankingoutletswhichinclude400AMARmobilebankingagentsand 70 Savings and Credit Cooperatives. XacBank isalsoMongolia’slargestmicrofinanceinstitution,serving21,000microfinanceclients.

Golomt Bank is also active in the development of theGreeneconomy.

5.4 INTERNATIoNAl CooPERATIoN oRGANISATIoNS IN MoNGolIA

MongoliabecameamemberoftheWorld BankGroupinFebruary1991.Todate,theBankhasprovidedUS$578.7milliontoMongolia.Mongoliaalsohasreceivedanaddi-tionalUS$101.3millionfromtheglobaltrustfunds.

AsofNovember2012,therewere13activeBank-support-edinvestmentandTechnicalAssistanceoperationswithUS$ 211.1 million in commitments, and 41 activeTrustFunds in the portfolio with a total donor commitmentofUS$67.4million.Themajorityoftheprojectssupportinfrastructuredevelopment,economicgovernance andinstitutionalstrengtheningoftheminingsector.

Inadditiontothelendingandgrantoperations,theBankalsoprovidesanalyticalandadvisoryworktoMongoliatosupportitsmediumandlongtermdevelopmentob-jectives and capacity building for government’s reformstrategyinkeystrategicdirections.

The World Bank Group’s Country Partnership Strategy(CPS) for Mongolia is aligned with the ComprehensiveNationalDevelopmentStrategyforMongolia.Ittherebyidentifies three areas which theWorld Bank Group willsupportoverthenextfiveyears:

1. EnhanceMongolia’scapacitytomanagetheminingeconomysustainablyandtransparently.

2. Buildasustainedanddiversifiedbasisforeconomicgrowthandemploymentinurbanandruralareas.

3. Addressvulnerabilitiesthroughimprovedaccesstoservicesandbetterservicedelivery,safetynetprovi-sion,andimproveddisasterriskmanagement.

Within the World Bank group, the International Fi-nance Corporation (IFC) seeks to provide equity andloanfinancingtoprivateenterprisesacrossallsectorsinMongolia,particularly inconsumergoodsandservices,transportationandlogistics,financialservices,realestateandpropertymanagement,andconstructionmaterials.IFCsupports thedevelopment ofMongolian industriesbydirectlyinvestingincompanieswithhighgrowthpo-tential,helpingcreatejobsandraiseincomes.WithintheGreeneconomyspace,theIFCinvestsinsectorssuchastransportation,cleanandrenewableenergy,andcementmanufacturing.Theseprojectsimprovecommunitywel-fareandcreatejobswhileyieldingprofitsforinvestors.

The Asian development Bank (AdB) hasbeenthegov-ernment’s single largest source of official developmentfinancing. Between 1991 and 2011, Mongolia receivedloans for45projects fromtheADBtotaling$825.5mil-lion. In addition, since 2007 when Mongolia becameeligibleforADFgrantfinancing,Mongoliahasreceivedgrantprojectstotaling$172.2million.


Basedonitscountrypartnershipstrategy(CPS)forMon-golia,2012-2016,theADBwillsupportthegovernmenttoachieveinclusiveandsustainablegrowth.TheADBwillassisttheGovernmenttogenerateandsustainemploy-mentbyaddressingpriorityinfrastructuregaps,regionaleconomicintegration,andaccesstobasicurbanservices.Second,thestrategywillemphasizesocialdevelopment,particularly access to education aimed at addressing askillsmismatchandefficiencydeliveredhealthservices.Underlyingthestrategywillbeanemphasisoncapacitydevelopment, policy reform, and creating an enablingenvironmentforPPPs.

Theunited Nations development Programme(uNdP)opened its representativeoffice inUlaanbaatar in1973aftermorethanadecadeofsuccessfulcooperationwithMongolia. Ever since, UNDP has worked for equitableandsustainabledevelopmentforthebenefitofallMon-golians.UNDPiscommittedtohelpingtheGovernmentandthepeopleofMongoliaachieveitsninenationalMil-lenniumDevelopmentGoalsaswellasothernationalde-velopmentpriorities.ThegoalofUNDPistoimprovethelives of the people of Mongolia, especially the poorestandmostvulnerable,andtoworktowardsafuturethatoffersequality,dignityandopportunityforall.

TheUNDPhasthreefocusareasinMongolia:

• Povertyreduction• Democraticgovernance• Environmentandenergy.

The European Bank for Reconstruction and Develop-ment (EBRD) isveryactiveinMongolia, havingconduct-ed55projectsfrom2008to2012,anetbusinessvolumeof€732millionandatotalprojectvalue€2.3billion.Alltheseprojectshavebeenlocatedwithintheprivatesec-tor. The EBRDs projects in Mongolia have focused onfinancial institutions, property, retail, beverage produc-tionandmining.TheEBRDprovidedfundingforthede-velopment of the first successfully financed renewableenergyprojectandthefirstprivatelyownedgeneratorinMongolia,theSalkhitwindfarm.

TheBankseekstoalignitsoperationswiththeprioritiesoftheMongolianGovernmentandwillcooperatecloselywithotherinternationalfinancialinstitutionsandmulti-lateral and bilateral partners, including the EuropeanUnion.Thekeychallengesandstrategicorientationsforthestrategyare:

• Promotingdiversificationthroughsupportfornon-resourcesectors;

• Promotingsustainablegrowththroughbroadeningaccesstofinance;

• Promoting responsible mining and strengtheninggovernanceinstitutions;and

• Modernizing infrastructureandbringinginthepri-vatesector.109

�0� http://www.ebrd.com/downloads/country/strategy/mongolia.pdf

The Global Green Growth Institute (GGGI) isalsohighlyactiveinMongolia.InNovember2011the GGGIandtheMinistryof EnvironmentandGreenDevelopmentsignedan MOU for the cooperative pursuit of green growth.ThenonJune9,2013 Mongoliasignedthe“AgreementontheEstablishmentoftheGlobalGreenGrowth Insti-tute” and became the 19th Member State of the GGGI. The GGGI aims to assist the Mongolian government indeveloping and implementing national green growthplan,withatop-downstrategicapproach,whilealsopro-motingsectoralgreengrowthstrategiesthataretailoredtospecificneedsof Mongolia,withabottom-uppracticalapproach.Mongolia’srepresentativetotheGGGIisMin-isterOyun.S.

As mentioned in Chapter 3, the GGGI has completedtwo research projects since 2012 that relate to theGreeneconomyinMongolia:StrategiesforGreenPublicTransport in Mongolia and Strategies for DevelopmentofGreenEnergySystemsinMongolia.TheGGGIisalsoplanning research into green initiatives in the mining,constructionandagriculturesectors.TheGGGIwillbeanimportantpartnerforthePAGEinitiativeinMongolia.

The GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeithas) hasbeenrepresentedinMongoliasince1991andestablisheditsownofficeinUlaanbaatar1998.Theiraimistoimprovetheeconomicenvironmentandthusindirectlyhelpreducepoverty.GIZisworkinginfourkeypolicyareas,withsevenprogramsintotal,allofwhichareeitherdirectlyorrelevanttoPAGEobjectives.Thesepolicyareasandprogramsare:

• Sustainableinfrastructure:Efficiencyofgrid-basedenergysupplyschemes,andsocialdevelopment

• Reformofthehealthinsurancesystem:Environ-mentandclimatechange,andbiodiversityandtheadaptationofkeyforestecosystemstoclimatechangeIntegratedurbandevelopment

• Economicdevelopmentandemployment:consoli-datingthelegalframeworkforsustainableeconom-icdevelopment,theIntegratedMineralResourcesInitiative,andRegionaleconomicdevelopment

The u.S. Agency for International development (uSAId)playsaleadroleinprovidingbilateralAmericanassistance to Mongolia. The program emphasizes twomainthemes:

• IncreasedOpportunitiesforInclusiveGrowth;and

• MoreEffectiveandAccountableGovernance.

Total USAID assistance provided from 1991 through2010hasexceeded$200millioningrants.Theprogramis managed by a nine-person USAID Mission based attheAmericanEmbassyinUlaanbaatar.Specificprojectsareimplementedthroughanetworkofcontractorsandgrantees in cooperation with both public and privatesectorMongolianpartners.


TheUSalsoprovidesaidtoMongoliathroughitsMillen-nium Challenge Account (MCA), a compact to provideaid through grants. The MCA for Mongolia was estab-lishedinOctober2007byanagreementwassignedbe-tweentheMongolianandUSgovernments. ItprovidesafiveyearcontributionofaroundUSD$285millionforMongoliatoreducepovertythrougheconomicgrowth.This program targets six-sectors of society: propertyrights, urban rangeland, vocational education, health,road,andenergyefficiency.

The Swiss Agency for Development and Cooperation (SDC) has provided support to Mongolia through hu-manitarian aid since 2002. The SDC’s programme hasshiftedtosupportlong-termdevelopmentcooperation.Accordingtothecooperationstrategyfor2007-2012,thespecificSDCcontributionsarealignedwith the respec-tivecountryoutcomes.Theprioritiesare:

1. Improvedlegalframeworkandimplementationca-pacitiesformanagementandmonitoringofnaturalresourcesattheherdersandatthenationallevel;

2. Strengthenedresilienceofherderstovulnerabilitiesin the livestock sector and improved disaster pre-parednessandenvironmentalstewardship;

3. Increased incomeofherdersandex-herders in tar-getsareasbasedonimprovedproductivityoftheirlivestockandincomediversification;and

4. DeepenedSwiss-Mongolianrelations.

Thissupport isparticularly located in the ruralareasofWestern Mongolia. The SDC’s program in Mongolia isscheduledforaround10years,withafinancialcontribu-tionof5-10millionCHF/year.SwitzerlandiscommittedtosupportMongoliawithaboutCHF40millionoverthenext5years.

The Japanese International Cooperation Agency (JICA)hasbeensupportingMongoliasince1990,andtheJICAMongoliaofficewasestablishedin1997.JICAhasthreepriorityareasforMongolia:

• Sustainabledevelopmentoftheminingsectorandenhancementofgovernmentincluding:Sustainablemineralresourcesdevelopment,andEnhancementofgovernanceforappropriatemanagementofmin-eralsrevenueandmacro-economy

• Assisting inclusive growth: including expansion ofjob opportunities and diversification of industries,andimprovementofbasicsocialservices

• EnhancementofthecapacityandfunctionofUlaanbaatarasanurbancenter

• Improvementofinfrastructure,urbanplanningandmanagement

TheKorean International Cooperation Agency (KOICA) also provides development grants in Mongolia, includ-ing for water infrastructure development. Its countrystrategyandobjectiveshowever,arenotastransparent

asotheraidAgenciespresentinthecountry.

The Australian Agency for International develop-ment (AusAId)alsohasastrongpresenceinMongolia.Australia’sassistanceaimstopromoteawellgoverned,economicallyresilientandequitableMongolia.

Australia’sassistancetoMongoliaisfocusedonthreepri-oritythemes:

1. humanresourcedevelopment:buildingtheleader-shipbaseofthepublicandprivatesectorsthroughAustraliaAwards

2. miningfordevelopment:strengtheninggovernanceintheminingsectortohelpensureminingrevenuesareequitablydistributed,andthesocialandenviron-mentalimpactsofminingareeffectivelymanaged

3. Supporting vulnerable communities: improvingwater,sanitationandhygienefacilitiesfordisadvan-taged rural children to prevent illness among stu-dents,teachersandthecommunitymorebroadly.

Australiahasinvested$29.6millioninMongoliaoverthepreviousthreeyears,andexpectstoprovide$14.6mil-lionindevelopmentassistancetoMongoliain2012–13.

In2012-13,AusAID:

• support 38 masters-level students to study in Aus-traliain2012–13throughAustraliaAwardsinMon-goliatomeetcriticalhumanresourceneeds

• partner with UNICEF to improve water and sanita-tionfacilitiesfor7,800disadvantagedruralchildreninnorthwestMongolia,improvinghealthoutcomesand contributing to increased school attendancerates

• support local authorities to manage groundwaterresourcesintheSouthernGobiregion,akeyminingarea that is also home to communities of pastoralnomads

• designaprogramtosupportsustainableminingde-velopmenttoboostoveralleconomicdevelopment.

5.5 NoN-GoVERNMENTAl oRGANISATIoNS

Sinceitsfoundingin1951,theNature Conservancyhasbecometheleadingconservationorganizationworkingaroundtheworldtoprotectecologicallyimportantlandsandwatersfornatureandpeople.Theorganizationhasaround1millionmembers.Theconservancy isveryac-tiveinMongolia.

The World Wide Fund (WWF) for Nature is also activeinMongolia.Itworksinthefollowingareas:Targetspe-cies conservation, Freshwater ecosystem conservation,EducationforSustainableDevelopment,ProtectedAreaManagementandResponsibleMining.


Although the Government, non-government organi-sations and international organisations are funding arangeofprojectsthatwillassistindevelopingtheGreeneconomy,theseprojectsarenotcoordinatedbyanover-archingstrategy.TheGovernment’sGDSprovidessuchastrategythat ifexecutedsuccessfullywillputthecoun-tryonapathofsustainabledevelopmentunderspecificpre-determinedgoals.

ThePAGEprojectprovidesanopportunityforassistancefrom the international community to implement theGDS.HoweverexactlyhowthePAGEpartnerswillassistinthisdevelopmentremainsunclear.Thischapterhelpstoaddressthisuncertaintybyoutliningcurrentknowl-edgegaps,prioritysectorsforPAGEpartnerstofocuson,key actors to engage in the PAGE process and our rec-ommendationsregardingawayforwardfortheGDSinMongolia.

6.1 kNoWlEdGE GAPS ANd dATA

There are a number of knowledge gaps regarding thekey economic, social and environmental challenges inMongolia,aswellastheprogramsandpoliciesdesignedto tackle thesechallenges, that thePAGEprojectcouldassistinresolving.

Forinstance,therearedifferencesinthelevelofknowl-edge and understanding of green economy amongthe government, business community and the generalpublic. Due to lack of knowledge and understanding,utilizing efficient usage of resources, recycling and en-vironmentally friendly activities are often neglected.Therefore it would be useful to promote new percep-tions and knowledge. Another example would be thatenvironmentalchallengesareoftencitedinassociationwith mining only. Therefore a more broader activitiesandefficientmethodologieswouldbeuseful.

Businesses usually aim to minimize marginal costs andincreasetheirprofitwithinshorttime.Atthesametime,divertingthisperceptionintomorelongtermsustainabledevelopmentgoals throughmoreefficientwayswouldhelpincreasecorporatesocialresponsibility.Thereforeitshouldbeacollaborativeeffortwithparticipationfromthegovernment,businessandotherstakeholdersalike.

6. A way forward: priority work streams and actions under PAGE

Mongoliawouldbenefitgreatlyfromalongtermstrategicpolicydocumentasobservedduringthestudy.ThepreviouschaptersoutlinedwhyitisimportantforMongoliatopursueanambitiousGreendevelopmentstrat-egy.Insummary,Mongoliahasarangeofeconomic,socialandenvironmentalproblems,andfindingabalancebetweeneconomicdevelopmentandsustainabilitywillalleviatethesepressures.

Someofthebiggestknowledgegapsrelatetoenviron-mental research. There has been significant researchconducted on the state of Mongolia’s environmentalproblems, with one report on Mongolia’s environmentconcludingthat“theinformationbaseforeffectiveenvi-ronmental protection and management in Mongolia isadequate.”110However,anumberofstakeholderswein-terviewed felt that critical information in many areas isstilllacking.

Knowledgegapsareparticularlyevidentforthesustain-ability of Mongolia’s water supply, particularly ground-water.ArepresentativefromtheWorldBankstatedinaninterviewthattherearesomeuncertaintiesoverthecon-cernswhethergroundwatercansustainlongertermwa-terneeds invulnerableareas,andfurtherresourceanddemandassessmentsneedstobeconductedtobuildasophisticatedknowledgeandachieveeffectivewaterre-sourcemanagementandplanning.111

Therearealsoconsiderableknowledgegapsforthedam-agecausedbymining.althoughtheMineralsAuthorityrecords how much land has been affected by mining,therearelimitedrecordsregardingtheextentofdamageandwhatlevelsofrehabilitationarerequired.Moreovertheresearchanddatathathasbeencollectedinregardstotheseproblemsisoftenincompleteanddifficulttolo-cateorunavailable.

Otherexpertsvoicedconcernoverknowledgegapsre-garding the impact of unsustainable animal herdingpracticesandwhataffectclimatechangeislikelytohaveonMongolia.

ThePAGEprojectwillneedtosupportthegovernmentandresearchinstitutionsintheirresearchanddatacol-lection,andinmakingtheirresearchanddatapublicallyavailable.AccuratedatawillbeimportantformonitoringthegoalsspecifiedundertheGoM’sgreendevelopmentstrategy.

Inaddition,thereareconsiderableknowledgegapsastotheeffectivenessofcurrentprogramsandpoliciesonre-solvingthechallenges.Forinstancelittleisknownaboutmany new Government intiatives and strategies, suchas the green mining strategy or the government’s new

��0 Tortell et al. (2008). �� Arena, A. (personal communication, January 2�, 20��)


ecotourismstrategy.Hopefullythesewillbecomecleareroncetheseinitiativesarepublicallyreleased.Also,moni-toringandevaluationofexistingprograms,particularlythoseoftheGoM,isofteninadequateandopaque.Forinstance,detailedinformationontheexpenditureoftheGoM’sCleanAirFundwasunavailable,andmanyques-tionisefficacy.

The investments required for developing the Greeneconomy in Mongolia is also unclear. For example therenewable energy sector has great potential. But therearefewfeasibilitystudiesthathavebeenconductedforspecificprojects.Moreworkisneededintowhatlevelofinvestmentisrequiredtodevelopthegreeneconomy.

6.2 PRIoRITY SECToRS

Thekeyprioritysectorsof thegreeneconomy inMon-goliaare:agriculture and renewable energy.Althoughother sectors such as transport, waste treatment andtourismwillbeimportantforMongolia’sgreendevelop-ment,agricultureisthelargesteconomicsectorsinMon-goliawhilerenewableenergyhasconsiderablepotentialforMongolia’sfuture.

The agricultural sector is critical for Mongolia’s futuregivenitprovidesemploymentfor35%ofMongoliaandholds major cultural significance. Sustainably manag-ingagriculturalinlightoflanddegradation,increasinglyvolatilewatersupplyandclimatechangewillbecriticalforagreeneconomy.Althoughtherearealotofexist-inginitiativesintheagriculturalsector,bettercoordina-tionofcurrentprogramsandimprovedmonitoringandevaluationisneeded.

There is considerable potential in developing the re-newable energy sector in Mongolia, particularly windand solar. As companies and countries search for lowcarbon electricity, renewable energy could become animportexport for thecountry.TheSalkhitwind farm isanimportantdemonstrationthatlarge-scalerenewableenergyprojectsinMongoliacansucceed.Withfurtherin-vestmentandsupportfrominternationalpartnersitwillgrowintoanimportantsectorforMongolia.

Due to economic development and cold winters, de-mandforenergyisexpectedtoincreasesignificantlyinthefuture.Therefore,itisimportanttoincreasethecon-tributionofrenewableenergyandlowcarbonemissiontechnologies.Diversificationintheenergysectorpolicyisimportant.

6.3 kEY ACToRS ANd STAkEholdERS To ENGAGE IN ThE PAGE PRoCESS

TheGoMhasalreadydevelopedsomeofthenecessarylaws and programs to steer Mongolia in a green path.Therehavebeenstepstowardsdevelopingalessdamag-ingminingsectorandamoreenvironmentally friendly

andproductiveagriculturalsector.The100,000SolarGerprojectwasabigsuccess,whileTheLawonRenewableEnergy(2007)createdthenecessaryincentivesfordevel-opmentofthewind-farm,andthepossibilityoffurtherrenewableenergy.

Whilethegovernment’smeasuressofarwillimprovethecounty’sgreencredentialsininvestors’eyesandcontrib-utetoreducingcarbonemissions,itneedstodevelopawide-rangingsetofsubsidiesandincentivestogetbusi-nessleadersandthepubliconboard.

The government action plans sometimes turn out tobe“dreamgoals”whicharenotfullyachievable.Ontheotherhand,incentivesandpenaltyfordamagescausedbybusinessesshouldbeclearlystatedandtold.Similartothesuccessof“formalizing”smallscaleartisanalmin-ing activities, introducing of initiatives in other sectorsshouldbeefficient.

Inanefforttoaddressthecountry’senvironmentalprob-lems,fulfillitsRio+20commitmentsandsetMongolia’seconomy on a sustainable path, the GoM is seeking topursueagreendevelopmentstrategy.TheGDSwascon-sidered by Parliament in the 2013 autumn session buthas not yet been passed into law. If passed, this docu-ment will provide goals and benchmarks for Mongoliato progress towards green development.Therefore theGovernment and particularly the Ministry of Environ-mentandGreenDevelopmentwillbeacrucialpartnerforthePAGEproject.

However, the government is not the only area leadingthepushtowardsGreenDevelopment.Elementsoftheprivate sector recognize the importance of the greeneconomyandarealsoseekingapathtowardgreende-velopment.

Animportantbusiness lobbygrouptheMongolianNa-tionalChamberofCommerceandIndustryispursuingitsowngreenstrategy,the“5x20”goals,whiletheBusinessCouncilofMongoliahas itsown“”Environmentalwork-inggroup”asoneofitsfivepermanentworkinggroups.Banks such as XacBank and Golomt bank are pursuingstrategies for green loans and investment because itmakes good business sense. Companies such as New-comaredevelopinggreenenergysources.

Meanwhile,internationalorganisationssuchastheWorldBank, theADBand theEBRDareproviding funding forenvironmentalprojectstoaddressairpollutionandwa-termanagement,andlendingtosupportrenewableen-ergyinfrastructure.NGOssuchastheNatureConservan-cyandtheWorldWildlifeFundarealsoestablishingtheirownenvironmentalprojectsandlobbyinggovernment.

6.4 RECoMMENdATIoNS FoR PAGE PRoJECT

PAGE’s technical assistance will have an invaluable im-portancetothesuccessfulpassageandimplementationof theGovernmentGDS.TheEPCRChas foundfivekey


areastofocuswithinthePAGEproject.Theseare:

1. To support the National Green Development Strat-egyanditsimplementationasalongtermnationalprogram.Consequently,theactivitiesofthecurrentgovernment and the subsequent governments’ ac-tionplanshouldbeinlinewiththisstrategicdocu-ment.

2. Thisstrategicprogramshouldnotbeimplementedbyonlyoneministry,ratheritshouldbeacoopera-tive effort. In doing so, facilitating of broad basedconsultations on setting realistic priority targetsbasedontheexistingdocumentsandstrategiesandacomprehensivestudyofexistingprogrammesandinitiativesshouldbeorganised.

3. To help assess the adequacy and appropriatenessoftheexistinginvestments,commitmentsthatmaycontributetotheselectedtargetsandtohelpidenti-fypolicyactionsrequiredtoinduceinvestmentsandenhance the effectiveness of these investments.Tohelpidentifyresourcestofillanyinvestmentgaps.

4. To help improve training and awareness on greeneconomyaimedattacklingtheknowledgegaps

5. Tointroduceandsupportingnewandadvancedtechnologies,greeninitiativesandbestpracticesfromothercountries

Inordertoachievethesegoals,therearefiveareasofac-tionstheEPCRCrecommendsthePAGEpartnersshouldpursue.Theseare:

1. To facilitate broad based consultations on set-ting realistic priority targets based on the exist-ing documents and strategies;

ThereisariskthattheMEGD’sGreendevelopmentstrat-egy will not lead to any fundamental change for Mon-golia,evenifthestrategyisapprovedbyParliament.Forexample,MongoliansLawonLawonScienceandTech-nology(2006)mandatedthat1.5%ofGDPbespentonresearchanddevelopment.However,itissuspectedthatMongolia is currently nowhere near that target.This isbecause seems to be no mechanism for monitoring orenforcingtheactionplan.

Thereseems tohave been little consultation regardingthe Governments GDS.The MEGD has not undertakenthenecessaryconsultationwithotherkeyministriesthatwillprovidethestrategywith‘teeth’.

ItisimportantfortheMEGDandthePAGEpartnersbuildconsensusamongsttheothercrucialministries.Thisin-cludestheMinistryofMining,theMinistryofEnergyandthe Ministry of Industry and Agriculture, about how topursuethisstrategy forGreendevelopment.Eachmin-istrymusthavearealisticactionplantoimplementtheGreendevelopmentstrategy.IftherearegoalsortargetsinthestrategythatcertainMinistriesdonotagreewith,

thesewillneedtobedevelopedthroughcompromise.

Furthermore,itisimportantthatthetargetsincludedintheplanarerealisticandfocusonthedaytodayissuesofMongolians,notjustfocusedonreducingGreenhousegases. In other words, it should not be pursuing a waywhereit’sGreenonlyifit’sawindorsolarpower.

Aswellassettinggoals,thePAGEprojectneedstofocuson strategies that will support Mongolian industries todevelop their own technologies within its manufactur-ingbasesothattheprivatesectorcanusetheminde-velopingdemand-drivensolutionstotheenvironmentalproblems.

2. Providing coordination and focus for domestic and internationally funded environmental, so-cial and economic development projects

ThereneedstobeimprovedcoordinationofprojectsinMongolia for the development of the green economy.This includes projects that promote green investment,green jobs and environmental projects. For Mongolia’ssize,thereareincrediblenumberofdevelopmentagen-ciesandactivedevelopmentandenvironmentalprojectsinMongolia.Theseprojectsareofteninlinewiththeob-jectivesof theCNDSandtheMongolia’s four-yeargov-ernmentplan.However,whileindividuallytheseprojectsalign with various goal, increased coordination couldprovide a mutually beneficial impact for environmentprojectsandincreasetheirimpact.

Therealsoneedstobeanincreasedfocusonaddressingsymptomsofgreendevelopmentproblemsratherthancauses. For example efforts to move people from gersinto apartments, or to develop regional areas of Mon-goliasothatpeoplearenotforcedtomoveintourbanareas,willbefarmoreeffectiveinthelongtermthansim-plyreducingpollutionfromgerstoves.

However,itisrecognizedthatthisisnotalwayseasy.Forexamplelanddegradationhasbeenatleastpartlyduetoanincreasingnumberoflivestockandherding,afacetofMongoliancultureforthousandsofyears.Tortell(2008)notes that“Addressing the cause is not always easy orstraightforward because or root causes that mitigateagainsttheseprojects’success.Iftherootcausescanberemoved, the solutions are more likely to survive on asustainablebasis.”112

Anincreasedefforttosteerprojectsfundedbyinterna-tionaldonorstowardsGreendevelopmentwouldhelptoaddressthisfocusonaddressingsymptoms.Thiscoordi-nationroleseemslikeacriticaljobforthenewMinistryof Economic Development.The MED has already beengiven oversight of all the international developmentlendingandgrantsforMongolia.

Generally speaking, the current and the past govern-mentsofMongoliacollectivelylackcontinuityofactions

��2 Tortell.


andpolicies.Ontheotherhand,decisionsaremadewith-outbeingresearchedsufficientlyandcoherencyamongvariousstudiesispoor.Thesemaybeindicatorsofpoorgovernance.

3. To help assess the adequacy, appropriateness of the existing investments and commitments that may contribute to the selected targets;

There are a number of development projects that theGovernmentofMongoliaplanningthatmaycontributetowardsfurtherenvironmentalproblems.ThePAGEproj-ectneedstoassistwithassessingthedirectionoftheseprojectsandhelptomodifythemifnecessary.

Forexample,theSainshandIndustrialProjectisdesignedtointroduceadvancedprocessingtechnologyandindus-try-leading techniques that will increase the competi-tivenessofMongolianindustry.Howevermanyofthede-velopmentsattheparkarelargelyfossilfuelproducing.Assisting to change the direction of the industrial parkto include more green focused industries such as solarpanel production would be an important step towardsGreendevelopment.

4. To help identify resources to fill any investment gaps

There has been significant research conducted on thestateofMongolia’senvironmentproblems.Tortelletal.(2008)concludedthat“theinformationbasedforeffec-tiveenvironmentalprotectionandManagementinMon-goliaisadequate.”

However,anumberofstakeholderswespoketoforthisreportfeltthatcriticalinformationaboutMongolia’swa-tersupply, theactual impactofminingandthe impactofgrazingwerestillunclearinMongolia.Initsdevelop-mentofthegreeneconomy,thePAGEprojectmayneedtofundadditionalresearchintotheseareas.

Supportingtechnicalassistanceandadvisorytodevelopenvironmentally friendly energy efficient technologieswillalsobeanimportantaspectofthePAGEproject.Forexample,theMNCCI’sprogramsforactionofthegreeneconomyareworthyofsupportbythePAGEproject.TheMNCCI has business connections across all the aimagsofMongoliaandwillbeacrucialpartner inpromotinggreenbusiness.

PAGEcouldalsosupporttheMNCCIintranslatingmanu-alsandmaterialonenergyefficiency,aswellassupport-ingtheMNCCI’seffortstotrainthegovernmentagenciesandthepubliconclimatechangeissuesandinternationalcommitments.

PAGE may also be able to support technical assistanceandadvisorystudies.Inthefuture,Mongolianbusiness-eswillseethattheycandothingsandsaveenergy.Butthegapformanybusinesseswillbebeingabletofinanceitandbeingabletodevelopit.

StakeholdersalsosuggestedtheimportanceofthePAGEprojectsupportingfeasibilitystudies forenvironmentalandenergyefficientinfrastructure.Althoughtherehavebeenalotoffeasibilitystudiesintogreenenergydevel-opments,stakeholdersexpressedthatfewofthemhavebeengoodenoughtoraisemoneywith.

5. To assess policies required to induce the invest-ments and enhance the effectiveness of these in-vestments.

It isunclearwhethertheGoM’sproposedGreenDevel-opmentStrategy,itsregimeofGreendevelopmentpoli-ciesandnewpolicieswillbeeffectivetowardsdevelop-ingtheGreeneconomy.ThePAGEpartnerswillneedtoassisttheGoMinassessingthesepoliciestoensuretheyareeffectiveandachievetheirintendedgoals.

6. To support promotion and awareness aimed at reducing adverse effects of climate change and mining based economic activities, which would lead to easing unbalanced migration to urban ar-eas

Harshweatherconditionssuchasdesertification,waterscarcity,dzudleadstolossof livestockandtheherders’migrationtothecapitalcity.Ontheotherhand,theherd-ersfacehealthandenvironmentalproblemssuchasairpollution, water pollution and ever shrinking pasture-land.

Theadverseeffectsofminingactivitiesvaryconsiderablyamongbusinessesduetothescaleoftheproject,socialresponsibility practices and their operations. Generalregulationandmonitoringisoftennotveryefficientdueto unclear legislation and uncertainty.Therefore, greendevelopmentguidelinesforbusinessesoperatinginthecountrysidemaybenefitfromincluding:

• Guidelines to take preventive actions against pos-siblenaturalhazards

• Recommendations and information to alleviatedamagesandadverseeffects

• Policiesandregulationsrelatedtorehabilitation

Furthermore,manyMongoliansaremigratingtotheur-banareaslookingformoreeconomicopportunities.Asmentioned earlier, there exists a significant inequalitybetween the urban and rural areas. For example whilealmostallpeoplelivinginthecitieshaveaccesstocleanwater,whileonly53%oftheruralpopulationhasaccesstocleanwaterfromproperresources.Therefore,forMon-goliaitisimportanttofocuson:

• Equalopportunitiesforeverybodyregardlessofthegeographicallocation

• Better opportunities for decent work for targetedgroups

• Special policies and programmes aimed at aidingthemigrationpopulation

• Cityplanningandurbanisation


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This report has been prepared as part of the PAGE inception phase. This stocktaking study will contribute to a broader study meant to provide a blueprint for coordinated actions and outline future activities where PAGE can have the highest impact.

Whilst every effort has been made to ensure accuracy, this report is not an exhaustive treatment of the area of law discussed and no responsibility for any loss occasioned to any person acting or refraining from action as a result of material in this report.

The findings of this report does not necessarily reflect the views or policies of the Ministry of Environment and Green Development and the United Nations Environmental Programme. The designations employed in this publication and the presentation of data there in do not imply the expression of any opinion whatsoever on the part of the MEGD and UNEP concerning the legal status of any country, area or territory or of its authori-ties, or concerning the delimitation of its frontiers.

2014 Economic Policy and Competitiveness Research Center

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Stocktake of Mongolia's Green Economy 2014

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