Heat Challenging the City of Ash and Steam - Ulaanbaatar ESCO Improvement Project (2006-2007)

Heat Challenging the City of Ash and Steam - Ulaanbaatar ESCO Improvement Project (2006-2007)

Ulaanbaatar, the capital of Mongolia, is a city that suffers from extremely cold winters and serious air pollution caused by coal heating. With more than half of the country's population concentrated in the city, and with winters cooling to nearly -40°C, the demand for heating was growing, and old, inefficient boiler facilities were emitting large amounts of flue gas and CO₂.

In response to these challenges, an ESCO project was proposed to repair and replace the heat supply boilers in Ulaanbaatar, with Japanese firm Mitsubishi Securities acting as consultant. The design was to replace the existing inefficient boilers (efficiency of approximately 40-60%) with high-efficiency models, which would significantly improve efficiency and reduce emissions of greenhouse gases as well as air pollutants (NOx, CO, etc.).

Under the CDM (Clean Development Mechanism) framework, the project was approved by the Board of Directors and was expected to obtain over 140,000 tons of CO₂ credits. Anu Servis, a local ESCO company, was also involved in the implementation of the project, and a collaboration of local technology and international funds was deployed.

The project faced several technical and institutional hurdles, including verification of boiler efficiency to international standards and additionality. The aging urban heating network and heat transfer losses were also challenges, and overall infrastructure improvements were required.

This initiative was a typical example of an international environmental economy that integrates technology transfer, financial cooperation, and institutional design, and was noted as a model for energy efficiency and environmental improvements faced by cold-weather cities. Subsequently, Ulaanbaatar has been planning to renovate its buildings with a view to introducing renewable heat sources, and this ESCO project is recognized as having played a leading role in this effort.