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Air pollution in the Mongolian capital, Ulaanbaatar, has spurred citizens and the government to take action to clear the air. In January 2017, air pollution reached disastrous levels sparking protests and the National Security Council of Mongolia to acknowledge that air pollution had reached “disaster levels”.
Mongolian winters are bitterly cold, with winter temperatures in the capital falling to minus 25 degrees Celsius (-25⁰C) in January. Increased urban migration and high demand for heating is putting increased stress on the city’s electricity grid. As a consequence electric heaters are not an option and most households use coal and wood for heating.
Smoke from coal and wood burning is major contributor to air pollution in Mongolia. The United Nations Children’s Fund (UNICEF) warned of an impending crisis if the smoke levels are not reduced, calling children under five and those still in the womb the most vulnerable.
According to a 2016 UNICEF report on the impact of air pollution on children in Mongolia, Air pollution in Ulaanbaatar is caused by a combination of high emissions and its unique geography and climate. The city, which lies in a valley surrounded by mountains, has grown rapidly, with an influx of people from rural areas looking for better opportunities for themselves and their families. They settle on the outskirts, often bringing their gers (traditional circular felted tents) covering the hills surrounding Ulaanbaatar.
The government has put in place incentives to increase the uptake of electric heaters and solar technologies by reduce tariffs and import duties but the cost of electric heaters and other alternative technologies is a barrier for many ger area households.
To help tackle this issue, the Climate and Clean Air Coalition is working with Mongolian bank XacBank to investigate affordable improved technologies, like electric and solar systems, for heating. The Frankfurt School of Finance & Management is conducting a feasibility study that will help XacBank design a financial product to help ger families purchase clean heating options.
Tuul Galzagd, Head of Eco Banking at XacBank, said the bank has experience in bringing clean energy and energy efficient products to the ger districts, through a five-year pilot with the Millennium Challenge Association that launched in 2010.
XacBank reached 70 percent of all households but continued rural-urban migration has caused the population of the ger district to swell from 189,000 to 230,000 households, undermining the gains achieved by the programme.
“We want to continue this kind of project to decrease air pollution in Ulaanbaatar city and are working together with the CCAC and Frankfurt School research team to select the eligible products to finance,” Ms Galzagd said. “XacBank would like to continue their lending programme by exploring a range of non-coal fired heating technology and insulation solutions that are in line the policy on coal-fired combustion.”
Anand Batsukh, Senior Project Development Manager, Eco-banking Department said the bank currently provides loans to consumers and businesses to reduce air pollution.
“The consumer loan is mainly for financing hybrid car loans and another is for businesses that install, use or purchase energy efficiency or renewable energy products,” Mr Batsukh said.
“The number one benefit would be to improve people’s health by reducing air pollution caused by high emissions and inefficient energy generation. About 10 percent of all health-related deaths in Mongolia are caused by lung disease.”
XacBank serves over 700,000 active clients and was an early pioneer of social responsibility. Half of all of Xacbank’s clients are women and the average monthly household income a XacBank client is 300,000 tugriks (USD $220 per month, or $7 per day).
The Climate and Clean Air Coalition is supporting XacBank design a pilot financial facility that will provide attractive end-user financing for efficient heating technologies and efficient fuels for households in ger areas. This involves a systematic investigation on the potential technology options, the supply-demand scenario and analysis of the various financing options.
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