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  • Closed Compact Report:  Closed Compact Report: Mongolia Compact
  • October 2015

Energy and Environment Project

  • $47,200,000Amount at Project Inception
  • $40,420,819Total Disbursed

Estimated Benefits

Estimated Benefits for the Energy and Environment Project (EEP)
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 60 percent 338,425 $38,200,000

Estimated benefits corresponds to $36.9 million of project funds, where cost-benefit analysis was conducted.

Project Description

Mongolia has an extremely harsh winter climate, and mid-winter temperatures in Ulaanbaatar, the capital, can drop to as low as minus-40 degrees. Nearly half of all Mongolians live there, the coldest capital city in the world and the world’s second-most air polluted city. At levels of up to 10 times the international standards for particulate matter, air pollution is a major cause of serious respiratory problems among urban residents, contributing to increased health disability of the working population and decreased life expectancy. The primary source of the pollution comes from inefficient coal-burning stoves used to heat poorly insulated homes in the city’s vast ger districts. These homes, typically constructed of traditional felt, are not connected to the city’s heating grid. The Energy and Environment Project was designed to increase economic growth by reducing urban air pollution in the capital, decreasing related health costs, and lowering energy costs through more efficient fuel consumption. The project provided financial incentives for ger district residents to adopt energy-efficient and lower-emission technologies, and funded the upgrade of the electrical network. The project’s Wind Activity supported the development and production of the first commercial wind-powered electricity generation facility in Mongolia, funding an upgrade to the Nalaikh substation and the installation of a training simulator for dispatchers in Ulaanbaatar’s National Dispatching Center.

Additional funds were made available after the Rail Project was withdrawn from the compact.

Evaluation Findings

The Energy and Environment (Stove Subsidies component) Final Evaluation Report was released in December 2014 on the MCC Evaluation Catalog. A summary of key results includes:

  • Participants in the EEP stove subsidy had 65 percent lower average nighttime household emissions of PM2.5 compared to traditional stove owners and a .9ppm lower concentration of carbon monoxide emissions compared to baseline.
  • Through data modeling, this is estimated to have resulted in 47 avoided deaths and 1,643 disability-adjusted life years (DALYs).
  • There was no significant reduction in fuel consumption or expenditures, however.
  • There was a significant increase in indoor temperature from 60.3 degrees to 63.6 degrees, suggesting household utilized the energy-efficient stoves to keep their homes warmer, rather than reduce fuel consumption.

Key performance indicators and outputs at compact end date

Key performance indicators and outputs at compact end date
Activity/Outcome Key Performance Indicator Baseline End of Compact Target Quarter 1 through Quarter 20 Actuals (as of Dec 2013) Percent Compact Target Satisfied (as of Dec 2013)
Millennium Challenge Energy Efficiency Innovation Facility Activity Heat Only Boilers (HOBs) sites upgraded 0 10 10 100%
Subsidized stoves sold 0 No Target 103,255 No Target
Wind Activity Power dispatched from substation (Million Kilowatt Hours)
  • Due to construction delays and incomplete works at compact end, power generation from the Wind Farm Activity did not meet the indicator target.
0 112 12.1 11%