Mongolia faces unique challenges from both climate
change and the global shift towards a low-carbon economy, underscoring the need
for urgent actions to enhance climate resilience while also transitioning away
from its reliance on coal as a key driver of economic activity, according to a
new World Bank Group report.
The Mongolia
Country Climate and Development Report (CCDR) details comprehensive reforms
that complement Mongolia’s current climate and development strategies, while
balancing environmental concerns with economic growth.
“While
challenging, climate action presents Mongolia with opportunities to achieve
important development benefits,” said World Bank Country Director for China and
Mongolia, and Director for Korea Mara K. Warwick. “An effective and strategic policy that balances climate concerns
with economic development objectives can help the country achieve a sustainable
path that is more diversified, inclusive, and resilient.”
Already,
natural disasters such as dzuds—extreme weather events marked by frigid
temperatures, strong winds, and heavy snow and ice—and floods are becoming more
frequent and severe, threatening livelihoods and developmental progress across
the country. Climate projections
indicate that the risks of dzuds and floods will progressively worsen by
mid-century, with these extreme weather events potentially increasing in
frequency and intensity.
At the same
time, Mongolia’s dependence on coal exports exposes the economy to economic
risks from the potential shift away from fossil fuels in other countries, which
will reduce global demand for coal.
“To achieve
Mongolia’s climate and development goals, additional investment of more than
$10 billion (in today’s money) is needed over the next 25 years,” said IFC’s
Regional Director for East Asia and the Pacific, Kim-See Lim. “Implementing the necessary fiscal and policy
reforms is crucial for mobilizing the private capital needed to accelerate the
energy transition. IFC is committed to bolstering Mongolia’s
sustainable-finance market through innovative instruments and programs.”
The report
recognizes Mongolia’s ongoing efforts towards a green transition, including its
commitment to reducing greenhouse gas (GHG) emissions by 22.7 percent by 2030,
compared to a baseline scenario, which would still represent a 122 percent
increase in GHG emissions since 2010. However, greater action is required to
further lower GHG emissions and build nature-based carbon sinks—Mongolia
currently ranks ninth in per capita emissions globally— and to strengthen the
resilience of its ecosystems, people, and economy. The report recommends a
series of short- and medium-term policy actions that balance climate concerns
with economic development objectives.
The most immediate steps include:
Increase climate resilience and reduce emissions in
rural areas by
optimizing the management of its natural capital, reforming agricultural
incentives and taxes, managing and restoring forests, and improving
agricultural water use efficiency.
Prepare for an eventual reduction in
coal demand while positioning the country as a global supplier of other
minerals and related services; the report notes that while global
decarbonization efforts are expected to reduce coal demand by the 2040s, posing
economic risks for Mongolia, they could also boost demand for Mongolia’s copper
and other minerals, thereby creating potential economic opportunities.
Implement electricity and heating tariff
reform to reduce subsidies, invest in energy efficiency measures to reduce
current energy system pressures, integrate energy storage, and improve grid
capacity and flexibility to facilitate wind and solar deployment.
Augment and recalibrate disaster
response financing, boost disaster preparedness in rural areas, and better
monitor and report adaptation and decarbonization efforts.