Green Finance Transformation in Action – Mongolia

Mongolia Country Case Study
Country:	Mongolia
Sector:	Government Policy Framework
Prerequisites:	None
Classification	Policy
Potential Impact:	High
Resource Impact:	Moderate
Timing Implications:	Short-term to long-term
Application to Armenia	Armenia’s authorities might want to consider successful experience of Mongolian Government with enhancing national capacities for green growth through establishing enabling policy framework facilitative towards creations of growth levers, building up institutions and engaging private sectors.

 

Principles of Green Development Policy

A key milestone of Mongolia’s transition towards an inclusive green economy was the adoption of the National Green Development Policy by the Parliament in 2014, which is anchored around the following strategic objectives:

Promote resource efficient, low carbon production and consumption with emphasis on waste reduction;

Maintain ecosystem balance and reduce environmental degradation while intensifying reclamation activities and environmental protection;

Promote investment in environmental protection, human development and clean technology and leverage tax, credit and incentive mechanisms to finance green economy;

Promote green jobs, reduce poverty and promote green lifestyle;

Make education, science and technology and innovation accelerators of green development by promoting environmentally adapted style and cultural values;

Plan and implement human settlement adapted to climate change, and rural resources carrying capacity.

In 2016, the Government approved the Action Plan for the implementation of the Green Development Policy. The action Plan contains 255 activities with the timeline to accomplish by 2030.

In order to successfully implement sustainable development objectives and shift Mongolia’s economic structure towards green economy the key priority has been assigned towards enhancing capacities of and strategically position the banking sector in unlocking private finance for green development. Along with endorsement of Mongolia’s Sustainable Finance Principles, the guidelines for mining, agriculture, construction and manufacturing sectors were introduced to facilitate banks’ efforts and initiatives to integrate environmental and social risk assessment practices into lending and investment operations. However, in order to effectively channel investments into green and clean projects national incentives’ mechanism was established and rigorous mapping of potential investment projects (to be funded from state budget, resources of climate funds and private sector) implemented.

Measures designed for the achievement of Strategic Objectives

Selected list of measures that are worth of considering is presented below:

Strategic Objective 1

Introducing benchmarks for energy efficiency (20% increase by 2030) and renewable energy’s share in total production (30% by 2030) through measures aimed at reducing excessive consumption and losses, and by the optimization of pricing policies;

Introducing benchmarks for reduction of building heat losses (40% by 2030), through the introduction of green building rating systems and energy audits, and the implementation of incentive and leverage mechanisms;

Creating the Sovereign Wealth Fund from mining sector revenues, and its utilization for ensuring a long-term sustainable development;

Strategic Objective 2

Introducing benchmarks for protecting fresh water reserves (at least 60%) and expanding protected areas (to 30% by 2030), as well as creating sustainable financing mechanisms for protection;

Setting up the limitation on the import and trade of genetically modified organisms by assessing the risks associated with genetically modified organisms on human health and the environment, and by building capacities in preventing the negative impacts;

Enhancing the carbon sequestration in forests by intensifying reforestation efforts and introducing benchmarks for expanding forest cover areas (to 9% of the country’s territory by 2030);

Creating sustainable financing systems by engraining the community-based natural resources management for the protection and proper utilization of forests, non-timber forest resources, animals, flora and fauna;

Promoting the introduction of technologies for threating wastewater at permissible standards and reusing the recycled water while limiting the use of ground freshwater for industrial purposes;

Promoting activities aimed at using the degraded, polluted and eroded land resulted from industrial activities by introducing benchmarks for rehabilitating of affected areas (at least 70%);

Strategic Objective 3

Increasing investments in improving the efficiency and productivity of natural resource utilization and in reducing greenhouse gas emissions per unit of production by allocating 2% of GDP annually for green development;

Introducing benchmark for increasing investments for nature conservation and rehabilitation (20%) by disseminating the benefits of, valuing and supporting ecosystem services such as its capacity of forest water containment, carbon absorption, floodplain water collection and treatment;

Establishing a green taxation system to reduce the production, services, importing goods and consumption which are harmful to the environment.

Promoting the trade of low carbon and energy efficient technologies by reflecting the green development principles in international trade agreements and contracts;

Introducing benchmarks (minimum 20%) of the public procurements for purchasing of environmentally sound, effective, and resource efficient goods, works and services;

Strategic Objective 4

Involving citizens in vocational training programs, providing job/career placement services, and increasing the labor value at the adequate level for females who take care of their children, enabling them to support their lives sufficiently;

Creating and promoting an incentive mechanism, like payment for ecosystem services for herders who take the initiative to contribute towards preventing pasture degradation by preserving water sources and springs, and by breeding livestock in accordance with its pasture capacity;

Strategic Objective 5

Establishing best practices for efficient production and consumption of products/goods by promoting the introduction of environmental management standards “MNS ISO14000” for economic entities;

Encourage the development of clean technology and innovation to support green development by increasing the share of GDP expenditure for science and technology research and experimentation by 3% by 2030, and use it as the catalysts for green development;

Increase manufacturing of green products with specified quality and exclusivity by expanding cooperation between scientific organizations and industries to apply, convey and transfer throughout industries innovations, biotechnology and nanotechnology;

Strategic Objective 6

Offering comfortable living and working environments for the locals by developing self-sufficient “green” and “smart” cities and villages that are compatible with the carrying capacity of the environment and climate change trends, in order to prevent the over-population in urban cities;

Reducing air, water, and soil pollutions by establishing a legal framework for imposing liability for, and upgrading and implementing plans for urban land use, construction zoning and infrastructure provisioning;

Introducing benchmarks for increasing the share of green space in the urban area (by 30% by 2030) through the re-development of capital and other urban settlement areas.

Introducing benchmarks for reduction of solid waste in landfills (by 40% by 2030), by recycling, reusing wastes and producing value added products, and establishing proper waste-reduction management practices through the promotion of efficient technology, provision of practical knowledge on maintaining healthy environment and lifestyles.