Mongolia
With a cumulative score of 1.5, Mongolia ranks number 51 among emerging markets and number 80 in the global ranking.
- Emerging markets
- Asia-Pacific
1.97 / 5
Power score
0.59 / 5
Transport score
1.03 / 5
Buildings score
Low-carbon strategy
Net-zero goal and strategy
Mongolia has not set a net-zero target. Mongolia aims to reach 20% renewable energy installed capacity by 2023 and 30% by 2030 – a significant leap from the 2018 share of less than 10%. The most important legal foundation was laid by the Law on Renewable Energy (2007), as well as the National Renewable Energy Program (2005-2020), which provided official targets and incentives for global investors in the sector.
Nationally Determined Contributions (NDC)
Mongolia in October 2020 submitted its revised Nationally Determined Contribution (NDC), which is a country’s plan to help achieve the goals of the Paris Agreement. It raised its target to a 27.2% reduction compared with the business-as-usual (BAU) scenario from 14% in the original NDC. This goal assumes significant international financial and technological support. The country also set an unconditional emissions reduction target of 22.7% by 2030 compared with the BAU scenario. In addition, the updated NDC included an optional component on forestry that would push total greenhouse gas reductions to 44.9% by 2030.
Fossil fuel phase-out policy
Mongolia has no phase-out strategy for fossil fuel given the country’s reliance on coal.
Power
Power policy
In 2020-21, Mongolia held its first renewable auction for a solar-plus-storage project funded by the Asian Development Bank. Due to the nascent state of the renewables sector, the vast majority of investment has come from international development banks or foreign entities. If the country is to meet its renewable energy target by 2023 and 2030, it will need an extra push for new investments in the coming years.
Power policies
Power prices and costs
Wholesale prices for general coal generators are at 80.86 tugrik ($0.02) a kilowatt-hour, while the feed-in tariff ranges for on-grid renewables are as follows: $80-95 a megawatt-hour for wind, $45-60 a megawatt-hour for small hydro, and $150-180 a megawatt-hour for solar. This level is generally more attractive than neighboring countries such as Kazakhstan and China. Energy costs for users are higher than in nearby countries due to transportation and limited know-how in the local market.
Power market
Fossil fuels still account for 90% of power generation, though the share of renewables is slowly picking up. The power market is generally state-owned and the grid is regulated without any near-term plans for liberalization.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Utility privatisation
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
Grid-connected capacity is expanding, which should reduce Mongolia’s reliance on electricity imports from Russia in its western grid and from China in its south grid (Mongolia has four grids). Thus far, almost 100% of dispatch and purchase is secured for wind and solar by the only offtaker, the National Dispatching Center.
Currency of PPAs
Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel price distortions - Subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel price distortions - Taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?
Transport
EV market
Mongolia has a very early-stage electric vehicle market with only 498 EVs on the road. The capital city of Ulaanbaatar set up its first EV charging booths in 2018 and the first EV fast-charger station in May 2020; there are now a total of five charging points.
EV policy
The government has neither proposed any policy for a clean transport target nor has it set aside funds for grant or loan incentives to assist with purchasing an EV as of 2022. However, Mongolia in May 2021 announced that it would spend at least 420 billion tugrik annually in 2022 to 2024 to reduce congestion and improve roads with some provisions for e-bus and charging infrastructure. There have been some achievements by private companies in the EV space and the mayor of Ulaanbaatar has expressed interest in pushing this sector. At this time, EV owners only enjoy the luxury of being exempt from road use fees and are allowed on the capital’s roads without any restriction.
Transport policies
Fuel economy standards
Does the country have a fuel economy standard in place?
Buildings
Buildings market
Mongolia has extremely harsh winters and high coal consumption, which has resulted in high frequency of chronic respiratory diseases, such as asthma. Heat pumps offer an opportunity to provide safer heating but there are currently no policies or incentives from the government that would aid in implementation. International development organizations seem to be pushing this sector, such as the World Bank’s low emission stove strategy, Asian Development Bank’s funding of a low emission heating project in March 2022, IRENA’s coordinated effort with the government to bring renewable energy solutions for district heating in the country and GIZ’s funding of projects under the Local Energy Efficiency Action plan.
Energy efficiency policy
Does the country have a national energy efficiency plan?
Energy efficiency policy
Are there minimum energy performance standards for buildings?
Energy efficiency incentives
Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?
Buildings policy
The country promotes energy efficiency in its state and private sector and has a Local Energy Efficiency Action Plan.
Buildings policies
Additional insights
from BNEF
Explore more detailed information on global commodity markets and the disruptive technologies driving the transition to a low-carbon economy.
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