Mongolian Member Commitee/WEC

Energy in Mongolia

Mongolia, critical uncertainties, action priorities

Mongolia relies heavily on agriculture, mining copper and coal for economic growth, but is trying to diversify its economy. In the past few years, Mongolia has experienced an economic slowdown due to corruption, commodity prices and foreign direct investment.

In terms of Climate Change, Mongolia is a low emitter of greenhouse gases, but it is disproportionately affected by climate change. Over the past two decades, temperatures rose at more than twice the average annual global rate, leading to hotter summers, droughts, advancing desertification and melting permafrost. These changes have contributed to the degradation of forests and grassland ecosystems on which traditional nomadic livelihoods depend.

The power system of Mongolia consists of the three unconnected energy systems (Central, Western and Eastern Energy System), diesel generators and heat-only boilers in off-grid areas.

Mongolia aims to complete a railway from its Tavan Tolgoi coal project to the Chinese border by 2021. The rail link would have the capacity to deliver 30 million tons of coal a year to China.

In the past two years, several wind and solar power plants have been installed. New challenge emerge as these new resources are integrated. These include regulation for excess renewable energy management, grid stabilisation and night time electricity supply.

At the national level, private and public actions are needed on innovative transport, smart grid, electrical vehicles and learning of best practices.

Corruption is a critical uncertainty in Mongolia which affects especially private companies. Key anticorruption legislation includes the Criminal Code and the Anti-Corruption Law, which prohibit active and passive bribery and the abuse of functions. Investors question the ability of the state to deal with the conflict of interest which arises from its role as both a regulator and an owner-operator.

Mongolia’s growing dependence on neighbouring Russia and China for fuel and power poses a major risk to its booming mining sector. Specifically, Russia is a critical uncertainty according to the Mongolian survey respondents, as reliance on essential energy supplies makes Mongolia vulnerable to supply shocks and price increases. This is especially relevant given Russia’s past actions to turn off supply taps, for example during price disputes with Ukraine.

Sustainable Cities is a key critical uncertainty, as Mongolia is disproportionately impacted by Climate Change. In January 2018, all cities in Mongolia joined the “Making Cities Resilient Campaign”. In April 2018, Ulaanbaatar City conducted the Disaster Resilient Scorecard with all its 9 districts and in August 2018 and Ulaanbaatar City developed its local disaster risk reduction plan. More recently, the Western provinces reunited in Ulaangom to attend the training on MCR Campaign tools.

Even though climate change has substantially impacted Mongolia, coal is perceived by energy leaders as an action priority. The volume of raw coal production increased by 63.1 percent from 2017 to 2018. Mongolia is working on a railway infrastructure to connect with Southern China to deliver 30 million tons of coal a year.

Extreme weather risk is another action priority as climate change increases the risk of natural disasters, including droughts and the extreme winter weather known as “dzud” in Mongolia. As a result, rural-to-urban migration in Mongolia are causing other problems such us over population of the capital city. City planners must find solutions to ensure living conditions are not compromised.

China is considered an action priority on multiple fronts. A key issue is Russia’s intentions to build a pipeline through Mongolia to deliver energy supplies to China. China is also Mongolia’s biggest trading partner, a relationship that is likely to maintain China an action priority in the long term

Mongolia has adopted a national air pollution mitigation plan in March 2017 in response to its severe air pollution. The plan aims to reduce the current levels of air pollution by 80 percent by 2025. However, the Mongolian government is also planning more than six new coal power plants over the next decade in the absence of a coherent national energy strategy. The dominance of coal in the Mongolian energy plans for new power facilities in Ulaanbaatar, together with the country’s ageing power plants, transmission and distribution networks, have contributed to the creation of a highly inefficient energy sector.

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