TNA project in Mongolia – Local bank aids in providing environmentally sustainable solutions

July 21, 2017

In Mongolia, micro-, small- and medium-sized enterprises make up 90% of all businesses. A majority of these enterprises use out-dated and inefficient technologies. The potential emission reduction achievable by using more efficient technologies is significant, but high investment costs challenge access to such technologies by the enterprises. Action in this area would contribute directly to the country’s Intended Nationally Determined Contributions goal of a 14% reduction in total national greenhouse gas emissions by increasing renewable electricity generation capacity and increasing the use of energy efficient products.

As part of the Technology Needs Assessment process, the high cost of capital was identified as a barrier to growth in the Mongolian energy efficiency and renewable energy market.
Based on the recommendations from the Technology Needs Assessment, XacBank — a large local commercial bank – took the initiative to address this barrier to technology uptake. XacBank has experience in providing environmentally sustainable solutions for businesses, and operating loan programs in partnership with international financial institutions. In the past, Xacbank has submitted a proposal to the Green Climate Fund to support investments by micro-, small- and medium-sizes enterprises in energy efficient and renewable energy technologies. Thus, it has become the first private sector entity in the developing world to receive accreditation and funding from the Green Climate Fund. The Green Climate Fund contributed USD 20 million to extend XacBank’s existing USD 60 million Business Loan Program. This contribution allows XacBank to lower its interest rates on loans to businesses looking to invest in renewable energy and energy efficient technologies. The expected impact from this loan program is an average greenhouse gas emission reduction of 149,290 tonnes CO2 per year.