The Government of Mongolia (GoM) has identified improving the resilience of communities to the impacts of climate change and transitioning to a greener development pathway as priorities in its National Green Development Policy (NGDP). Mongolia’s energy sector is highly dependent on fossil fuels with over 90% of heating and electricity derived from coal. The resulting soil and air pollution is particularly acute in the peri-urban areas of Ulaanbaatar and other secondary cities, where poverty exceeds the national rate of 27%.

Mongolia has therefore made commitments to increase renewable energy generation and improve urban planning and resilience in its NGDP and Action Plan, NDCs and Sustainable Development Vision 2030. While the supporting policy environment has improved, implementation and financing to address these challenges remain well below the levels needed to transition to inclusive green growth. Additionally, green growth is not yet fully integrated into energy and urban development policy implementation and financing at the line ministry or provincial and municipal levels. Given the current impacts of weak commodities prices and low investment, a stretched government budget reduces the ability to introduce many of the intended green development measures.

The GoM therefore seeks to identify and build commitments to the steps needed to achieve its green growth ambitions through the formulation of investment plans. This project, supporting Mongolia’s transition to Green Development Phase 2, is designed to enable additional resource mobilization in the thematic areas of energy and cities. The project aims to address the problems of fossil fuel dependence, uneven urban development, and limited capacity to finance green growth in order to build resilience to climate change. GGGI’s core service offerings under this project directly support the GoM’s green development targets of 20% renewably generated electricity, 20% building heat loss reduction, and 2% of GDP for green investment by 2020.

The Mongolia WPB 2015-16 supported the development of national and sub-national green growth action plans for Mongolia’s NGDP and initiated bankable project design and preparation in education buildings, waste-to-energy, and heating systems. GGGI is also completing the first stages of the development of a Green Credit Fund, which is National Financing Vehicle (NFV) initiative being led by the Mongolian Bankers Association.

The WPB 2017-18 will build upon these results by continuing to support the implementation of the NGDP Action Plan and sub-national green development strategies, and ensuring that the NFV is fully operational. The project concepts initiated in 2016 will be advanced to bankability assessment and go-to-market, and will be included in the development of a project pipeline for the NFV.

PROJECT OUTPUTS FOR 2017-18:

• Support the development of at least 3 green energy project proposals
• Support the development of at least 3 green public building project proposals
• Prepare a project design and financing proposal for 1 green urban infrastructure project and submit to a financier
• Develop operational arrangements for a National Green Credit Fund and submit to government

PROJECT OUTCOMES FOR 2017-18:

• Government approves the green energy and green public building proposals, and the policy and guidelines and criteria used to develop them, for further implementation
• Financing is approved for at least 1 project relating to green energy, green public buildings or green urban infrastructure
• Government approves and begins operating the National Green Credit Fund

The project will drive the mobilization of resources for the delivery of Mongolia’s NGDP by delivering the following outputs:

At least 3 green energy project proposals supported. GGGI will conduct an analysis of energy conservation legal regulatory and institutional frameworks and support the development of the National Action Program for Energy Conservation. An assessment of energy needs for heating in peri-urban areas of a key city will also be conducted to identify potential low-cost energy efficiency and renewable energy solutions for incorporation into the action plan. Criteria for green energy projects based on potential funding sources and market demand will then be developed. GGGI will support government and local stakeholders to select and prepare a green energy project for at least 3 pilot sites, provide support in presenting project concepts for financing decision and conduct communications and public outreach.

At least 3 green public building project proposals supported. Building on the 2016 work, GGGI will a demonstration of green public kindergarten building and support the design and implementation of a comparative study on green and traditional public kindergarten buildings. Green education building technical guidelines will be adapted for at least one priority sector. GGGI will support government and local stakeholders to select and prepare a green public building project for at least 3 pilot sites and will support the government and private sector to present project concepts for financing decisions and conduct communications and public outreach.

Design and financing proposal for green urban infrastructure project prepared. Building on the foundational work done in 2015-16, GGGI will complete the business case for a low carbon and cost efficient public infrastructure PPP and will hold consultations with government counterparts, potential funding agencies, development partners and potential private sector partners. GGGI will then prepare and submit a funding proposal for blended finance to the potential funding entity identified through the consultations and will support the government in preparing and managing PPP procurement process. This will include the bid preparation, tendering, negotiation and contracting. GGGI will monitor the implementation of the project, simultaneously building government capacity to manage projects of this nature.

Operational arrangements for a National Green Credit Fund developed. Building on the first phases of NFV development completed in 2016, GGGI will complete final steps of design and initiate the start-up phase of the NFV in the form of a National Green Credit Fund, including an operation manual, management plan, guidelines, and communication. GGGI will also support development and origination of a projects pipeline for the Green Credit Fund. This will culminate in the launch of the operational phase of the fund, which GGGI will continue to monitor post-launch.