Transitioning the energy sector towards achieving the goals of the 2030 Agenda for Sustainable Development and the objectives of the Paris Agreement presents a complex and difficult task for policymakers. It needs to ensure sustained economic growth, as well as respond to increasing energy demand, reduce emissions, and consider and capitalize on the interlinkages between Sustainable Development Goal (SDG) 7 and the other SDGs. To address this challenge, ESCAP has developed the National Expert SDG Tool for Energy Planning (NEXSTEP).[1] This tool enables policymakers to make informed policy decisions to support the achievement of the targets of SDG 7 as well as those in their Nationally Determined Contributions (NDCs). The initiative has been undertaken in response to the Ministerial Declaration of the Second Asian and Pacific Energy Forum (April 2018, Bangkok), and Commission Resolution 74/9, which endorsed its outcome. NEXSTEP also garnered the support of the Committee on Energy in its second session, with recommendations to expand the number of countries being supported by this tool (ESCAP/CE/2019/4).
The key objective of this SDG 7 Road Map[2] is to assist the Government of Mongolia in assessing whether the existing policies and strategies are well aligned for achieving the SDG 7 and NDCs targets by 2030, and to present a series of options to bridge these gaps. This Road Map presents three core scenarios (business-as-usual (BAU), current policy and Sustainable Development Goal scenarios) that have been developed using national data, which consider existing energy policies and strategies and reflect on other development plans. This Road Map also investigates two ambitious scenarios; the Sustainable Heating by 2030 scenario examines the pathways for Mongolia to transition to a heating system with increased use of sustainable energy sources, as well as to achieve its conditional NDC targets; and the Toward Net Zero Emissions by 2050 scenario offers policymakers a strategic viewpoint on how Mongolia could plan for a carbon-free energy sector in alignment with the global race to net zero carbon.
Mongolia depends heavily on coal for its energy supply and has a low share of renewable energy in the system. In the current policy scenario, renewable energy capacity is expected to be 23.3 per cent, by 2030, falling short of the 30 per cent renewable capacity target, since a significant amount of coal-fired generation will be in operation in Mongolia, whereas the renewable energy share in the total final energy consumption (TFEC) will reach only 1.9 per cent in 2030. Mongolia also needs to strengthen its energy efficiency measures. Following the SDG 7.3 energy efficiency definition, Mongolia’s energy intensity is expected to be 5.8 MJ/US$2017[1] in 2030, which corresponds to an annual improvement of 1 per cent under the current policy scenario. NEXSTEP analysis identifies that by following the SDG scenario, Mongolia can even further lower its energy intensity to 4.5 MJ/US$2017 by 2030, which corresponds to an annual improvement of 3.6 per cent, thereby aligning with the global energy efficiency improvement rate of 3.4 per cent per annum.
In addition to a highly efficient energy system, a faster transition towards cleaner energy sources, especially renewables in both electricity and heat generation, will help Mongolia to reach net zero greenhouse gas emissions by 2050. This, however, requires an ambitious effort to switch fossil fuel-based energy systems to renewables. Electrification of existing technologies, such as the transport system and cookstoves, will be critical. A deeper analysis indicates that phasing out coal-fired power plants by 2050 is feasible, since the lifecycle cost of renewables-based power generation is already cheaper than coal-fired energy system.
1. Universal access to electricity
Only 0.5 per cent of Mongolia’s population lacked access to electricity in 2021. Based on the current trend, it is expected that Mongolia will close the electricity access gap by 2024. This small proportion of unelectrified households or gers can be connected by mini/off-grid systems technologies (i.e., solar mini-grid and solar home systems) to allow faster electrification compared to grid extension.
2. Universal access to clean cooking technology
Under the current policy settings, access to clean cooking is projected to increase from 53.2 per cent, in 2021, to only 64.8 per cent, in 2030 (Figure I), leaving 370,000 households still relying on polluting solid fuel stoves (biomass and charcoal as the primary fuel) in 2030. This will expose a significant population to the negative health impacts arising from indoor air pollution, including non-communicable diseases, such as stroke, ischaemic heart disease, chronic obstructive pulmonary disease, and lung cancer, particularly among women and children (World Health Organization, 2022).
This Road Map suggests using electric cook stoves to close the gap, since this option may provide a better long-term alternative compared to liquified petroleum gas (LPG) stoves. In areas with insufficient electricity supply, improved cook stoves (ICS) can be promoted. With these measures in place under the SDG scenario, the share of electric cook stoves in 2030 will be 75.6 per cent, LPG cookstoves will be 2.6 per cent and ICS will be 21.8 per cent.
Figure I. Mongolia’s access to clean cooking under the current policy scenarios (CPS)
Source: Historical trend projection based on the year 2000 access rate data obtained from United Nations Economic and Social Commission of Asia and the Pacific (ESCAP), “Energy Information for the Asia-Pacific Region”, Asia Pacific Energy Portal. Available at https://asiapacificenergy.org. The 2021 access rate has been provided by the national consultant (Bright Management Consulting).
3. Renewable energy
The share of modern renewable energy (excluding traditional biomass usage in residential cooking) in TFEC (including non-energy use) was 1.7 per cent in 2021. Based on current policies, the share of renewable energy is projected to increase to 2.8 per cent by 2030. The increase is due to the projected increase in renewable electricity as per the current expansion plan. In the SDG scenario, the share of renewable energy is projected to increase to 5.9 per cent of TFEC in 2030. The additional 3.1 percentage point increase can be attributed to phasing out traditional biomass usage as well as further energy efficiency improvements to reach a lower energy intensity. While the share of renewable energy is increasing, fossil fuels will continue to dominate the energy system in Mongolia. Further measures, such as those discussed in the Sustainable Heating by 2030 scenario, will help increase the renewables share in TFEC significantly.
4. Energy efficiency
SDG 7.3 defines energy intensity as the total primary energy supply (TPES) in megajoules per US$ of gross domestic product (GDP) in terms of purchasing power parity (PPP) in 2017. Energy intensity in Mongolia declined at an average annual rate of 2.4 per cent between 1990 and 2010. A doubling of the 1990-2010 improvement rate is required to achieve the SDG 7.3 target, which requires an average annual rate increase of 4.8 per cent between 2010 and 2030. However, between 2010 and 2021, the annual improvement rate of energy intensity was only around 2.1 per cent. To reach the required 2030 intensity, the annual improvement rate between 2021 and 2030 needs to be around 7.8 per cent, which is quite challenging. Therefore, NEXSTEP analysis suggests that Mongolia’s energy intensity target be aligned with the global target of 3.4 per cent annual improvement (IEA, and others, 2023). This corresponds to a 2030 energy intensity target of 4.6 MJ/US$2017.
Under CPS, energy intensity is projected to drop to 5.8 MJ/US$2017. This translates to a 1 per cent annual improvement rate. Mongolia can further reach an energy intensity of 4.5 MJ/US$2017, aligning with the global energy efficiency improvement rate of 3.4 per cent per annum, by implementing some global best practices, such as minimum energy performance standard (MEPS), energy management standards, and green building codes. In addition to this, more efficient end-use technologies, such as electric vehicles and electric cook stoves, would enable additional demand reduction in Mongolia’s energy system.
5. Nationally determined contributions
Mongolia’s updated Nationally Determined Contributions (NDC) set ambitious targets to reduce greenhouse gas (GHG) emissions by 30 per cent unconditionally by 2030
Mongolia will be able to achieve unconditional NDC targets by 2030 under the current policy setting. Emissions will reach 34 MtCO2-e (metric tons of carbon dioxide equivalent) in 2030, which is a 10.4 MtCO2-e (23.4 per cent) reduction compared to the BAU scenario. The decrease in GHG emissions, relative to BAU, is due to the increase in renewable share in electricity supply as per the existing capacity expansion plan. Increasing the implementation of energy saving measures in order to align with the global improvement target of 3.4 per cent will further reduce a significant amount of emissions. In the SDG scenario, total emissions will reach 25.6 MtCO2-e by 2030, corresponding to an 18.8 MtCO2-e (or a 42.3 per cent) reduction compared to the BAU scenario (Figure II).
Figure II. Comparison of emissions, by scenario, 2021-2030
Source: ESCAP.
- Address the gap in clean cooking by 2030 through strong policy measures. Achieving access to clean cooking fuels and technologies seem to be one of the major challenges. Adoption of electric cook stoves and ICS will significantly help improve clean cooking access. The cumulative deployment cost of both technologies would require US$ 30.9 million by 2030. In the long run, the deployment of electric cook stoves will also help Mongolia achieve its net zero emissions target.
- Accelerate the efficiency of energy use in all economic sectors. Mongolia needs to enhance and strengthen its energy saving measures to align it with the 3.4 per cent global energy efficiency improvement pathway. These can be done by implementing best practices, such as energy management standard, building energy codes, transport mode shifting, and fuel economy improvement, in the years to 2030. Energy management standards, for example, will help organizations to develop a standard operating procedure for more efficient energy use using plan-do-check-act systems. Further efforts can be undertaken to eliminate inefficient and polluting heating technologies while simultaneously improving thermal insulation. These measures will require international assistance since they will deliver a more ambitious target compared to the unconditional commitment.
- Implement fuel switching strategies, including electrification, to accelerate SDG 7 progress and provide multi-fold benefits in the long run. The electrification of end uses would be critical to decarbonize the entire economy by 2050. Since electrical equipment is more efficient compared to fossil fuel-based equipment, this will significantly reduce fossil fuel demand. Rapid adoption of electric vehicles, for instance, reduces the demand for oil products, hence reducing Mongolia’s reliance on imported petroleum fuels. The Government should start setting electric vehicle targets for passenger cars, buses, and freight trucks by 2030. Switching over to electric appliances must be supported by investment in clean energy systems. The need for additional investment in clean energy systems can be limited by an increased adoption of energy efficient measures.
- Decarbonize the power and heating sectors to provide the highest potential in GHG emissions reduction as well as improve energy security. In both the ambitious scenarios, the projected decrease in grid emissions can realize a substantial overall national GHG emissions reduction. Investments in coal-fired power and heat generation are no longer cost-effective compared with renewables and should be discontinued to avoid emissions lock-in. NEXSTEP analysis suggests that lifecycle costs of renewables, such as hydropower, solar, and wind, are cheaper than coal-fired technologies. The underlying financial risks of investment in coal-fired power plants should not be ignored. Fulfilling the required capacities for net zero scenarios could be challenging technically and economically, yet these investments will help improve energy security through the utilization of indigenous resources.