Mongolia : Ulaanbaatar Air Quality Improvement Program

Energy / Energy sector development and institutional reform

Health / Health sector development and reform

Public sector management / Public administration

Transport / Transport policies and institutional development

Water and other urban infrastructure and services / Urban policy, institutional and capacity development

Ulaanbaatar is the world''s coldest capital, with temperatures regularly dropping below 20 degrees Celsius in winter (October-March). It is also one of the most polluted cities in the world. During January 2018, levels of harmful fine particulate matter in the ambient air were nearly forty times the daily limits recommended by the World Health Organization. These dangerous high levels of pollution are a seasonal fact of life for Ulaanbaatar''s residents with severe health impacts. Medical costs, lost productivity, chronic illnesses, and shorter life expectancy affect the economy and quality of life of people in Ulaanbaatar, especially poor families who cannot afford proper nutrition and medical care. Children are particularly vulnerable to pollution.

The air pollution problem in Ulaanbaatar stems from unplanned and inadequate urban development. In the past 20 years, Ulaanbaatar has witnessed rapid urban development due to the inflow of people who have looked for better lives in the capital city or have sought refuge after losing their livelihoods to more frequent and severe climate induced disasters in the countryside. The city core has expanded only marginally to accommodate the new migrants and a vast peri-urban area (named ger areas) has developed with no adequate public services such as water, sanitation, heat supply, and public transport.

In ger areas, most households rely on the combustion of raw coal (or solid waste, for the poorest) for heating and cooking. Government and private buildings mostly rely on highly polluting and inefficient coal-fired heat-only boilers. These highly polluting energy systems are the largest sources of air pollution, affecting the whole city; they contribute to an estimated 80% of ambient concentrations of inhalable particulate matter of less than 2.5 micrometers in diameter. Ulaanbaatar''s central core, where jobs and services are concentrated, has seen an increasing number of private vehicles and highly polluting public transport buses. These sources are thought to be responsible for 10% of ambient particulate matter of less than 2.5 micrometers in diameter. Coal burning in the combined heat and power plants generating electricity and heat for the city contributes to 5%-6% of ambient particulate matter of less than 2.5 micrometers in diameter, and resuspension of unpaved ger road dust and combined heat and power plant fly ash add 4%-5%. Moreover, the city''s topography and climate are conducive to poor air quality. Ulaanbaatar is surrounded by mountains which, in combination with cold, dry air in the autumn and winter months, traps the air near the surface in and around the city, preventing dispersion of the pollution.

Inadequate urban and energy planning and insufficient investment in infrastructure often result in haphazard urban development, which leads to air pollution and unlivable cities. In Ulaanbaatar, these conditions are exacerbated by declining economic growth and fiscal budget constraints that leave very few resources for the government to tackle the problem.

Mongolia''s economy is recovering from its latest budgetary crisis, triggered in 2014 by declining foreign direct investment, falling commodity prices, and growth moderation in the People's Republic of China (Mongolia''s biggest trading partner), which prompted a deceleration in gross domestic product growth from 17.3% in 2011 to 1.2% in 2016. The implementation of an International Monetary Fund program, which aims to restore debt sustainability and improve fiscal and monetary management, has had a positive impact on the economy, which has seen growth recover solidly to 5.1% in 2017.

Strengthening environmental sustainability is a pillar of Asian Development Bank's country partnership strategy for Mongolia, 2017-2020. ADB will support efforts to reduce Ulaanbaatar's air pollution and greenhouse gas emissions under the national program by helping the government prioritize and deliver its implementation action plan commitments based on cost-effective policy actions.

By developing the capacity of relevant agencies and strengthening their coordination, the program will (i) promote complementary measures, (ii) encourage consistent policy objectives through measures that are financially and economically viable and sustainable, and (iii) minimize contradictory actions. The program will also ensure timely and adequate allocation of resources for the national program implementation action plan. The program will achieve this by prioritizing and expanding public resources for air pollution reduction efforts, focusing on cost-effective actions, and catalyzing private sector finance.

Public health and living standards in Ulaanbaatar improved

Air quality in Ulaanbaatar improved

Improved implementation action plan efficiency and air pollution control regulatory framework

Key measures on air pollution reduction and health protection

Mechanisms for environmentally sound and integrated urban, energy, and transport systems

Most of the policy actions under this output have been complied with.

Pending a few policy actions, most of the commitments under the last two outputs have been completed with ADB support. The release of tranche 2 is expected to be Quarter 3 2019.

No adverse environmental impacts have been identified and, as such, the program is categorized C for the environment.

The policy-based loan adopts a systematic, multisector approach to address the air pollution problem from short-, medium-, and long-term perspectives. The provision of 80,000 tons of cleaner coal is a key short-term policy, which can significantly reduce air pollution; the longer-term development of the ger areas will reduce the urgency of this measure. The Asian Development Bank technical assistance will aid in the design and monitoring of effective, transparent, and accountable distribution of high-quality lower-emitting coal, significantly reducing pollution locally and creating both demand and supply for cleaner coal, thereby ensuring sustainability of the policy. In addition, expanding the heating network will create opportunities to connect ger households and other buildings to district heating, further reducing traditional air pollutants and greenhouse gas emissions through the retirement of heating only boilers. Positive environmental impacts also include co-beneficial climate mitigation through short-lived climate pollutants (i.e., black carbon) emission reductions.

Other policy actions, such as on upgrading air quality monitoring systems, may further reduce emissions by improving regulatory enforcement and environmental supervision, but their actual contribution is difficult to quantify. Hence, the team adopted the proportionality approach to estimate the climate finance for the program, considering two policy actions in tranche 1 and four policy actions in tranche 2 contributing towards climate mitigation.

Climate change risksdirect and indirecthave been mitigated by including policy commitment that urban and energy planning agencies take into consideration anticipated climate impacts in the rural areas on future migration patterns (i.e., increased frequency of climate-induced natural disasters) and, in the urban context, on the infrastructure (i.e., heat waves increasing peak electricity demands, or freezing temperatures compromising renewable energy supply systems).