Financing Household Clean Energy Solutions

This report presents the findings of a Climate and Clean Air Coalition (CCAC) study to assess the feasibility of a household energy finance facility to provide affordable end-user finance for residents of Ulaanbaatar’s ger districts, for purchase of low-polluting, household heating technology.

In recent years, the air quality of Ulaanbaatar has deteriorated and, during winter months, the city now ranks amongst the most polluted cities globally. In spite of continued efforts to improve the air quality, continual migration to Ulaanbaatar has caused the problem to worsen.

Much of the population growth has been in the city’s low-income ger1 (Mongolian national dwelling) districts, where coal, wood, and hazardous non-conventional fuels, such as house- hold waste, are burned for heat. This has led to significant increases in the capital city’s air pollution emissions.

Previous efforts to improve the city’s air quality have focused on stove-switching and the subsidized sale of 144,000 efficient stoves to residents of the ger district.2 While these programs had initial success, issues with stove breakage, continued migration to the city, and 40 percent of the stoves distributed being resold outside of the city have combined to undermine their initial impact.

In May 2018, a team from the CCAC led by UN Environment (UNEP) and the Frankfurt School of Finance and Management (FS), travelled to Ulaanbaatar to meet with XacBank, a Mongolian Commercial Bank, to investigate the feasibility of setting up a household, end-user finance facility to assist ger residents in the purchase of cleaner household heating alternatives in order to replace the inefficient traditional heat stoves that are presently used in the gers.

The CCAC team met with a range of stakeholders, including ger residents, local and national government, academics, engineers, and technology suppliers, in order to assess the available technological solutions and make an assessment of those that are appropriate for households in the Ulaanbaatar ger districts. To evaluate which technologies are appropriate in this context, it was necessary to consider a number of factors, as described in the report.