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4.63. In 2014, Mongolia adopted the Green Development Policy (Parliamentary Resolution No. 43), whose objective is to promote a sustainable consumption and production pattern with efficient use of natural resources, and reduced greenhouse gas emissions and waste generation. It aims to reduce greenhouse gas emissions, through increased energy efficiency, by 20% by 2030, and to ensure that the share of renewables used in total energy production reaches 20% by 2020, and 30% by 2030. This goal could be achieved by investing in greener energy production processes and in other industrial technologies, reducing excessive consumption and losses, and optimizing pricing policies.

4.64. Mongolia ratified the Paris Agreement in 2016, confirming its intended Nationally Determined Contribution (NDC) of 2015, to reduce greenhouse gas emissions by 14% below the business-as-usual scenario in 2030, equivalent to an annual reduction of approximately 7.3 Mt CO2 of economy-wide emissions in 2030. On 19 November 2019, the Government approved an update with an increased NDC to reduce greenhouse gas emissions by 2030 to 22.7%, compared with the business-as-usual scenario of 2015. This revised NDC was submitted to the United Nations Framework Convention on Climate Change (UNFCCC) on 13 October 2020.

4.66. The main use of non-exported coal and, in particular, of lignite is the generation of electricity and heating in Combined Heat Power (CHP) plants. This practice started in the 1960s, and creates significant environmental challenges for Mongolia. The Government has not set detailed targets to reduce coal dependency.

4.83. (...) Because of Mongolia's harsh climate, the provision of heat and electricity to the population, even below cost, is seen as an absolute political priority by the Government. (...) Another illustration of this priority was the Solar Home System (SHS), a government-subsidized programme from 2008 to 2012, that provided virtually all herder families with access to electricity for lights, televisions, and mobile phones.

4.85. (...) The share of oil also decreased slightly [from 93.5% in 2012 to 88.5% in 2018], while wind energy [5.2%] achieved a remarkable breakthrough due to a massive investment programme. Hydro and solar energy [1.8% in 2018compared to 1.3% in 2012] also shows an increase, but not a significant one.

4.86. Mongolia has 19 generation facilities (9 combined heat and power plants (CHPPs), 3 wind power plants, 2 hydroelectric power plants (HPPs), and 5 solar power plants) with a total installed capacity in 2020 of 1,407 MW, of which 275 MW (i.e. 19.3%) is from renewable sources. (...)

4.89. From an operational point of view, the sector is unbundled. The ownership and the management of renewable energy power plants are partially privatized and open to foreign investment; the remainder of the sector is, for the time being, state-owned and publicly managed.

4.92. Renewable energy facilities are mostly funded by foreign investments. The Renewable Energy Law provides for competitive bidding for renewable energy sources.

4.95. The electricity system faces several challenges, in addition to its economic viability: the constant growth in consumption; (...) the obsolescence and environmental footprint of the existing CHP plants; the large energy losses incurred during the generation, transmission, and distribution processes; the decarbonization of the industry (...)

4.96. To address these challenges, during the review period, Mongolia reorganized its legislative and strategic framework for electricity. It adopted two major policies that define renewable expansion plans, targets, and measures for improved efficiency in the energy supply sector, e.g. the reduction of transmission and distribution losses: the State Policy on Energy (2015-30) of 2015 (Parliamentary Resolution No. 63); and the Mid-Term National Programme to Develop the State Policy on Energy (2018-23), of 2018 (Parliamentary Resolution No. 325).