Electricity Sector Needs More Low Carbon FDI
Mongolian energy sector is mostly driven
by aged thermal power plants, built during the soviet era, which
contributes to increased environmental pollution. As the Mongolian
economy grows more rapidly, the need for more investment in energy
sector and creating new capacity are essential. For that reason,
Economic Policy and Competitiveness Research Center (EPCRC) conducted a
research titled ‘Baseline Paper for Low Carbon FDI into the Electricity
Sector of Mongolia’. The research was carried out between October and
December of 2011 within the UNECE and UNCTAD development project on
‘Mitigating Climate Change through attracting FDI in Advanced Fossil
Fuel Technologies’.
The data and interviews demonstrate a
number of interesting findings related to current situation in the
country`s energy sector and its development trends. Even though Ministry
of Mineral Resources and Energy is aiming to provide financial and
economic opportunities to develop energy sector, there may be more
barriers to FDI into the sector than opportunities, as the research
findings suggest. Lack of flexibility, lack of skills and experience,
uncertainty in the regulations are major problems which directly affect
the development of the sector.
Mongolia needs to develop its consensus between state and business, to
create national low carbon energy model in line with successful
international benchmarks, as foreign investment is one of the main
drivers to establish efficient energy supply.