Mongolia: Improved Urban Stoves
June 20, 2000
Medium-Sized Project Brief
PROJECT SUMMARY
PROJECT IDENTIFIERS
1. Project name:
2. GEF Implementing Agency: The World Bank
Improved Household Stoves in Mongolian
Urban Centers
4. Country eligibility: Mongolia adopted the
3. Country in which the project is being
implemented: Mongolia
UNFCCC on 30 September 1993
6. Operational program: OP 5 – Removing Barriers
1. GEF focal area(s):
Climate Change
to Energy Conservation and Energy Efficiency
7. Project linkage to national priorities, action plans, and programs: As a consequence of the very
poor air quality in urban areas during the long winters, the improvement of urban household stoves was
identified as a high priority action in the 1995 National Environmental Action Plan. The Ministry of
Nature and Environment’s Program on Energy Efficiency regards the problem of inefficient urban stoves
as a major issue, and in late 1997 presented 100 stoves to urban families in order to monitor their
acceptance and performance. The improvement of urban stoves was also identified as a high priority in
the Mongolian volume of the Asian Low-cost Greenhouse Gas Abatement Strategy (1998). The reduction
of respiratory afflictions caused by air pollution is one of the two top health priorities of the Ministry of
Health and Social Welfare. The Cabinet considered a paper on the subject produced by the Ministry of
Nature and Environment (MNE) and The World Bank in December 1997 and instructed MNE to pursue
funding opportunities.
8. GEF national operational focal point and date of country endorsement: Mr. B. Ganbaatar,
Director of International Projects, MNE, issued the endorsement letter on May 18, 2000.
PROJECT OBJECTIVES AND ACTIVITIES
9. Project rationale and objectives:
Goal:
To reduce Mongolia’s emission of greenhouse
gases.
Environmental Indicators
Objectives:
1. Reduction of coal and wood consumption and
consequent steady reduction of CO2 emissions.
2. To help create a market-based energy service
industry working with household dwellers in the
improvement of indoor stoves.
3. Transfer experience to Aimag centers.
Project Impact Indicators:
1. Widespread adoption by households of improved
stoves and best practices: About 40,000 households.
2. Two or more profitable manufacturers of stove
improvements and 20-40 small service providers to
retrofit traditional stoves with improved kits.
3. Replication of improved stoves in Aimags.
10. Project outcomes:
Indicators:
1. Reduction in carbon dioxide emissions from
household stove: Total reduction of 140,000 tons of
CO2 emissions by the end of the 4th year program.
1. The availability to consumers of different cost
effective options to reduce coal consumption and
improve heating of Gers.
1.1 Householders wanting to improve their stoves by
one or more of the means available: at least 3
options available to households.
1.2 Manufacturers respond to demand by producing
2. A credible quality control system and standards equipment for improving stoves.
for improved stoves.
1.3. Self-sustaining small enterprises formed by
3. A market driven institutional and financial
qualified technicians using existing micro-credit
delivery system for improved stoves.
facilities to grow.
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11. Project activities to achieve
outcomes (including cost in US$ or
local currency of each activity):
1. Social Marketing Activities: Total
$197,500 ($190,000 requested from
GEF)
2. Quality Assurance Activities:. Total
$120,000 ($90,000 requested from
GEF)
3. Capacity building for energy service providers
Activities: Total $260,000 ($250,000 requested
from GEF)
4. New product facility Activities: Total
$750,000 ($100,000 requested from
GEF)
June 20, 2000
Medium-Sized Project Brief
The five selected activities—selected from
stakeholders’ feedback—will help create the right
environment to provide consumers with cost
effective choices and financing options, and
suppliers with a reliable market.
(a) Number of consumers reached and positively
influenced to purchase improved kits and stoves, and
having adopted best cooking practices.
(b) Attitude surveys on consumers, quality control
guidelines issued by Central laboratory.
(c) Number of active manufacturers and mobile
service providers in the market; number of trained
service providers.
(d) Number of proposed innovations reviewed.
(e) Support program to Manufacturers association.
5. Monitoring and Evaluation
Activities: Total $244,863 ($120,000
requested from GEF)
(f) Management reports; project evaluation report.
12. Estimated budget (in US$ or local currency):
GEF:
$750,000
PDF
$ 25,000
GoM:
$147,363
Private Manufacturers/JICA: $650,000
TOTAL:..... .......
$1,572,363
INFORMATION ON INSTITUTION SUBMITTING PROJECT BRIEF
Information on project proposer: Ministry of Nature and Environment.
14. Information on proposed executing agency (if different from above): N/A
15. Date of initial submission of project concept: The project concept was submitted as an
application for PDF-A funding on August 4, 1999.
INFORMATION TO BE COMPLETED BY IMPLEMENTING AGENCY:
16. Project identification number: P068108
17. Implementing Agency contact persons: A. Salvador Rivera. East Asia and Pacific Energy
Unit, The World Bank, Washington D.C., 202-473-1131, email: arivera2@worldbank.org, A.
Whitten, Environment and Social Development Unit, East Asia and Pacific Region, 202-4582253, twhitten@worldbank.org.
18. Project linkage to Implementing Agency program(s): This project is specified as a deliverable
within the Country Assistance Strategy (June 1998) and as part of the Country Work Program for FY 01.
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Medium-Sized Project Brief
Removing Barriers to the Adoption of Improved
Household Stoves in Mongolian Urban Centers
Project Description
PROJECT RATIONALE AND OBJECTIVES
Ulaanbaatar is the coldest capital in the world. Mongolians use four types of fuel to cook and
heat their gers and homes: coal, fuelwood, dung and, in the most affluent households, electricity
and/or centralized district heating. While the collection of fuelwood and dung has environmental
consequences (degradation and attrition of woody vegetation, and interruption of mineral cycling
respectively) the resources are not perceived as limiting in many areas and so there is little
incentive to adopt more efficient stoves. In urban settings, however, the coal stove predominates.
Mongolia has one of the highest greenhouse gas (GHG) emissions per capita and GHG
emissions per $GDP in the world. During the bitterly cold and long winter, smoke sits on the
towns and is the major cause of the respiratory complaints and diseases that account for half of
the child deaths and a major part of child and adult morbidity. The primary sources of CO2
emissions and air pollution are:


the 70,000 coal-fired urban stoves concentrated in the poor ger (traditional tents)
districts in Ulaanbaatar (UB) accounting for about 300,000 of the city’s 700,000
population; and
the combined heat and power (CHP) stations.
The stoves are estimated as contributing 30-65% of Ulaanbaatar’s air pollution. It is estimated
that indoor cooking stoves consume about 350,000 tons of coal each year, with corresponding
annual emissions of about half a million tons of CO2. As a consequence, the improvement of
household stoves was identified as a high priority action in the 1995 National Environmental
Action Plan. Further, the Government has pursued rehabilitation of CHP stations with bilateral
and ADB support.
The ADB/GEF/UNDP ALGAS report (1998) identified improvements in coal stove efficiency as
one of the 14 options for GHGs mitigation in the energy sector. Such stove improvements
ranked fourth in CO2 emissions reduction potential and sixth in cost effectiveness. However,
their combined ranking placed them near the top of the options and, when assessment of
feasibility and local benefits were factored in, only three of the seven top combined-ranked
options (loss reduction in electricity and district heating systems, improvements in vehicle fuel
consumption efficiency, and improvements in coal stove efficiency) were rated ‘high’ for both.
Of these three, the first has been the subject of a major government program supported by the
World Bank and ADB, the second is a government priority and will be included as a mechanical
and emissions vehicle inspection system in the proposed World Bank-supported Transport
Development Project within the Ministry of Infrastructure to be appraised May 2000, and the
third is the subject of this proposal.
Objectives
This proposed project has three main objectives:
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(i) to reduce coal fuel consumption--and corresponding CO2 emissions and levels of air
pollution (indoor and outdoor)--in the ger area1 of Ulaanbaatar in a sustained way;
(ii) to facilitate the creation of a market-based institutional delivery system that would allow
sustainable reduction of coal consumption and corresponding CO2 emissions into the future,
through the establishment of reliable manufacturers of efficiency indoor coal stoves and
development of small energy service provider companies and other means as required;
(iii) to replicate project benefits to other areas in Mongolia, particularly in the rural (aimag)
centers.
These objectives will be achieved through the execution of five components as shown below:
Project Components
Improved Stoves
Project
Social
Marketing
Quality
Assurance
Capacity
Building
New Product
Facility
Monitoring and
Evaluation
CURRENT SITUATION
Air pollution derived from indoor cooking stoves has been identified as one of the leading causes
for respiratory diseases in the urban areas in Mongolia, in particular in Ulaanbaatar, and as a
major contributor to air pollution and CO2 emissions.
While studies--and sporadic donor support to introduce efficient stoves--have taken place there
over the last decade, there has not been a sustainable effort to introduce market based delivery
systems that would provide consumers with credible and cost effective options while lowering
perceived risks to manufacturers to expand into this market. As a consequence, the number of
efficient stoves in use is insignificant.
As a response, in 1998, World Bank/ESMAP technical assistance was requested by the
Government of Mongolia to assess the pre-feasibility of an Improved Coal Stove project in
Ulaanbaatar. A first mission carried out a small energy household survey, number of physical
tests on stove performance (emissions, power, turn-down ration, efficiency), and a preliminary
evaluation of previous stove programs, including delivery mechanisms and barriers. As a result of
the surveys’ outputs, technical improvement proposals were designed and tested under winter
conditions in UB.
That work showed that while actions directed to improving stove performance during the summer
months would have negligible impact on air pollution and fuel consumption, each winter each ger
household consumes about 5 ton of coal and 4-7 cubic meter of wood, thus making a major
contribution to overall CO2 emissions and air pollution. Further, more detailed tests done over the
1
Ger areas are found primarily around built urban areas and comprise primarily the traditional felt tents.
However, ger areas also include wooden houses in which the same types of stoves are used.
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last winter also have shown that one of the locally produced stoves, the G2 stove, is indeed an
excellent stove, and that further modifications to it can significantly reduce CO2 and other
emissions, as well as further reducing coal consumption without adding substantially to its overall
current price of about 60,000 Tg (US$ 60 equivalent). Still, this price may be unaffordable for a
large portion of the ger population.
In parallel, surveys conducted during project preparation demonstrated that about 80-85 percent
of the stoves in UB are homemade and last 5 to 10 years. It is thus unrealistic to expect air
pollution reduction through poorer elements of the population just by buying new more efficient
stoves.
Consequently, a ‘kit’ was designed which could be fitted by the project’s trained technicians
(energy service providers) in order to improve existing stoves without removing them from the
ger or house. This approach seems to have the strongest potential impact, with highest social and
environment returns.
Tests during project preparation also showed that traditional stoves equipped with the
improvement Kit including a new inclined grate, primary air inlet adjuster, secondary air inlet
adjusters, chimney collar, and reduction of the combustion chamber volume with constructionbricks can reduce CO2 emissions by 54 percent or 42 percent with more modest improvements.
Still, in spite of the potential for coal savings and reduced air pollution, efficient stoves are not
yet being adopted by consumers to any significant extent.
Several workshops and surveys have identified four major barriers to their adoption:




lack of consumer awareness of the options and benefits brought about by both the improved
stoves and less costly improvement kits;
high perception of risk by stove manufacturers on the market potential and therefore lack of
business plans to address the market, including properly trained technicians to manufacture
improved stoves and Kits;
perceived lack of certified and reliable quality by consumers on products currently sold; and
perceived high initial cost of improved stoves combined with the lack of micro-credit
facilities to overcome initial cost barrier.
The last of these is changing with the appearance of a small number of microfinance agencies, by
far the largest being the Golden Development Fund (XAC). ‘XAC’ Finance Company,
Mongolia’s first professional micro-finance institution, was set up in late 1998 within the
framework of the implementation of the Microstart-Mongolia Project, funded by UNDP. Its
primary founder was the Mongolian Women’s Federation (MWF). It has now disbursed over
5500 loans totaling over $1 million, with an average size of $140. Over 70% of loans are made to
women and the repayment rate on loans is nearly 99%. There are currently three branches in
Ulaanbaatar (various districts) and four others in sum and aimag centers, and eleven branches are
envisaged by 2001.
XAC has been part of the consultation process during project preparation, and it has also prepared
a training package for small energy service providers to be responsible for making stove
improvements in traditional stoves.
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EXPECTED PROJECT OUTCOMES WITH UNDERLYING ASSUMPTIONS AND CONTEXT
Three main outcomes will be derived from the proposed project: i) The availability to consumers
of different cost effective options to reduce coal consumption and improve heating of gers, thus
leading to a reduction in coal and fuel-wood consumption and lowered emissions of CO2 and
other forms of air pollution; ii) a credible quality control system and standards for improved
stoves; and c) by the end of the project, the establishment of a market based institutional and
financial delivery system to supply and adopt improved stoves and stove improvements in
Mongolia.
It has been estimated that, if successfully implemented, the project could cause overall coal
consumption in domestic gers and households to be reduced by 30% after four years, and up to
40% subsequently, or the equivalent of 10 percent of families’ annual income, with a payback of
4 months. It is expected that during the first three years, most of the low income consumers, or
about 2/3 of the population in the ger area, will have the improvement Kits installed in their
traditional stoves.
The key assumption is that there is a considerable latent demand for improved stoves and stove
improvements which will be met by an adequate supply of goods and services through the
activities of the project; and that households will make decisions in favor of stove improvements
goals if critical information is made available to them and if necessary services are available.
ACTIVITIES AND FINANCIAL INPUTS NEEDED TO ENABLE OUTCOMES
Component 1 – Social Marketing: Increase awareness Total $197,500 ($190,000 requested from GEF)
1.1 Produce and disseminate information on benefits of stoves and nature and size of Market
1.1.1 Use social marketing techniques to obtain a clear profile of the market for stoves and
stove improvements, of the categories of consumers and their desires, influences and
constraints related to stove improvements in order to best target the various audiences
1.1.2 Inform the private sector early on concerning the project objectives and activities in order
to mobilize partners for implementation. In particular:
a.
the present traditional stove producers who have to understand that they have to
choose between the technical assistance of the project to improve their stoves and
to have them certified or the banishment from all facilities provided by the project
(technical assistance, credit, etc.),
b.
in partnership with donor supported small and medium enterprise (SMEs)
programs, support stove manufacturers in development of business plans and
structure financing for expansion of manufacturing facilities to meet growing
demand for improved stoves and stove improvements.
1.1.3 Inform the household store selling centers in UB so they can prepare to join promotional
improved stove sales/offers. The project will provide them with advice on the choice of
the improved stoves and kits.
1.1.4 Prepare and deliver campaigns directed to different parts of the general public using TV,
radio, newspapers, etc. The types and subjects of the campaigns will differ with the
progress of the awareness, the need of the projects, target groups, etc.
1.1.5 Special activities in the sub-districts, using local NGOs, to convince traditional families
of the feasibility and financial desirability of improving their stoves, disseminating best
practices such as how to save coal and decrease the peak of air pollution in the morning
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1.1.6
1.1.7
1.1.8
1.1.9
June 20, 2000
Medium-Sized Project Brief
without changing any part of the stove but rather modifying the practice of filling the
stove, etc.
Identification and mobilization of popular sponsors including Buddhist Centre, Naadam
champions, able to popularize and give credibility to the concepts of stove improvement,
Production of communication materials such as films, articles, T-shirts, calendars, cards,
etc.
Organization of games and other activities for schools, and other groups with improved
stoves and Kits as awards.
Use of the above activities to encourage householders to take other steps to improve the
environmental conditions of their surroundings and beyond.
1.2 Credit mechanisms for facilitation of project goals
1.2.1 Inform private producers of financing opportunities to facilitate their investment in new
small equipment when they want to develop a new capacity of production, or to improve
the efficiency of a production process;
1.2.2 Inform the Energy Supports Services of financing opportunities to facilitate: i) their first
equipment such as welding machine, electrical drill or angle grinder, and ii) the first
acquisition of improved stoves, Kits, new grates with inclined supports, primary and
secondary air inlet adjusters, bricks, etc;
1.2.3 Inform families of consumer credit opportunities for the purchase of an improved stove or
a Kit;
1.2.4 Promote credit facilities related to special events such as i) ‘package credit’ in SeptemberOctober, when people buy their coal for the winter season, ii) new year feasts, etc.
1.3 Extension to other cities
1.3.1 Preparatory surveys to i) ascertain the initial situation, ii) determine whether the practices
for promoting improved stoves and stoves improvements in UB are appropriate;
1.3.2 Training of the future local manager responsible for the implementation of the project.
Component 2 - Quality Assurance: Increase consumer’s trust. Total $120,000 ($90,000 requested from GEF)
2.1 Certification process for stove manufacturers and stove improvements
2.1.1 Training of staff responsible for certification process on main technical characteristics of
improved stoves and stove improvements.
2.1.2 Development, adoption and monitoring adoption of logo certifying efficient stoves and
stove improvements.
2.1.3 Development of random annual field surveys to monitor performance of certified stoves,
quality of manufacturers and small energy service providers.
2.2 Upgrading of existing equipment to test improved stoves and stove improvements
2.2.1 Acquisition of testing laboratory equipment for use by the Central Laboratory (CLEM) and
training of its staff on its proper use.
2.2.1 Acquisition of equipment to monitor pollution emissions in the ger areas, particularly CO2
emissions, and training of staff on its use and interpretation and analysis of data.
Component 3 - Capacity building: Train technicians Total $260,000 ($250,000 requested from GEF)
3.1 Provision of technical assistance
3.1.1 Assisting new improved stoves producers: to develop business plans and facilitate
financing with existing SME programs, and to design and test their new improved stoves,
3.1.2 Assisting the training activities of the project (see below),
3.1.3 Assisting the extension to other cities (preparatory surveys and [if necessary] tests).
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3.2 Provision of skills for evaluation new stove improvements
3.2.1 Assisting quality control through the provision of technical specialists to stove
manufacturers and service providers to improve manufacturing quality, the PIU to
monitor and assess market response through statistical analysis and market assessment,
and local NGOs in design of social marketing campaigns.
3.3 Skills training
3.3.1 Skills training targeted at medium-sized commercial producers of improved stoves, such
as the informal producers from the markets in UB;
3.3.2 Skills training targeted at small-scale producers of stoves, who currently supply the
majority of ger area families with traditional stoves,
3.3.3 Skills training targeted at Energy Services technicians able to sell their knowledge
directly to the families in the ger areas on a commercial basis (ESCO concept),
3.3.4 Skills training targeted at people living in the ger districts, to improve their traditional
stoves by themselves using simple and cheap means,
3.3.5 Skills training targeted at those to be made responsible for the implementation of such
programs in other cities.
Component 4 - New product facility: Reduce high initial costs Total $750,000 ($100,000 requested from GEF)
4.1 Evaluation and dissemination of new technical and institutional options
4.1.1. As shown successfully under the ESMAP program, support the evaluation, testing and
dissemination of improved stoves and institutional delivery systems for its dissemination,
including improved cheap summer woodstoves for cooking, use of briquettes (PNUD), and new
improved stoves, kits and best practices for saving coal and fuelwood.
4.1.2 Support to stove manufacturers in the preparation of business plans to finance, through
local Small and Medium financial facilities, the expansion of workshop facilities to expand
production capacity of both improved stoves and stove improvements. Already two
manufacturers are in discussions with local SME facilities to finance (US$ 150,000) the
expansion of their workshops.
4.1.3 support follow-up surveys to measure acceptability by consumers of new products.
4.2 Assist in lowering high initial transaction cost to consumers
4.2.1 Support to Stove Manufacturing Association in organization of exhibits and development
of Open Market Centers at main store selling centers in Ulaanbaatar,
4.2.2. Training and support in launching of Open Market Centers as initial retailing delivery
system, including organization of initial centers.
4.2.3 Facilitating the JICA-supported TA (US$ 500,000) to supply steel for stove manufacturers
at competitive market prices.
Component 5 - Monitoring and evaluation
Total $244,863 ($120,000 requested from GEF)
5.1 Project impact M&E
5.1.1 Regular measurements of coal and fuelwood consumption measurements in ger areas
5.1.2 Regular assessment of adequacy of distribution channels for both coal and fuelwood in
ger areas, including impact on main supply sources and means to improve efficiency on
those distribution systems.
5.1.3 Regular measurements of air pollution in ger areas, within gers, and in UB in general
5.1.4 Regular measurements of consumer penetration
5.1.5 Regular measurements of consumer satisfaction
5.1.6 Regular measurements of improved stove logo recognition
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5.1.7
5.1.8
Regular measurements of consumer expenditure accounts
Regular measurements of use of credit (for stove purchase and stove-related
entrepreneurial activities)
5.1.9 Regular measurements of development of new products
5.1.10 Three measurements of local forest cover
5.2 Project execution M&E
5.2.1 Quarterly reporting of activities, disbursements (relative to cost tables and project
implementation plan) etc. by the PIU to the UB Municipality and the MNE,
5.2.2 Annual activity report from the PIU to the Steering Committee,
5.2.3 Mid-term review
5.2.4 Impact study
By the end of the project the following outputs are expected:
By the end of the
first full winter
By the end of the
second full winter
By the end of the
third full winter
By the end of the
fourth year
Totals
Number of
commercial
improved
stoves
Number of
home-made
improved
stoves
Number of
stoves in use
in ger
districts
Combined total of stoves
improved in use in UB
(number and %)
1,400–2,100
Number of
traditional stoves
improved with
inserts and best
practices
7,500–11,000
1,000–1,500
68,000
9,900–14,800
14–21
2,000–2,500
2,300–3,000
15,000–17,500
71,000
29,200–37,800
41-53
4,000–5,000
3,000–4,000
20,000–25,000
75,000
56,200–71,800
75–95
56,200–71,800
75–95
80,000
7,000–9,000
6,700–9,100
42,500–53,500
SUSTAINABILITY ANALYSIS AND RISK ASSESSMENT
Sustainability of the project is closely correlated with two main aspects: a) acceptance and
satisfaction by consumers on the quality and price of the products offered; and b) the ability of
manufacturers and small service providers to supply good quality products at competitive prices.
Under the project proposed project design, by the close of the project the majority of people
owning stoves in Ulaanbaatar and some other cities will be well aware of the benefits of the
improved stoves and will have improved their stove by at least one of the promoted means.
Manufacturers, in combination with ongoing SMEs programs would have assessed the strength of
the market and therefore the range of investments required. All the activities are expected to be
sustainable once established and proven by the project, because they will be driven and modified
over time by market forces and increased involvement in personal environmental action. Still,
given the dynamic nature of the transition to a market system in Mongolia, it is expected that the
mid-term review process will reveal any realignments that may be required to achieve the
outlined objectives.
Risks and responses
The primary risks for the project have been identified as: i) lack of demand for the new
improvement kits and stoves and hence for the associated services, ii) householders in ger
districts will not make decisions in favor of stove improvements goals, iii) lack of manufacturing
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capacity to supply a steady demand of improved stoves; and iv) lags in implementation, generally
caused by inexperience or management difficulties in the Mongolian implementing agencies.
Regarding the first two risks, the consultations and the household surveys have indicated that a
latent demand does indeed exist. Through the social marketing component of the project this
demand will increase through the dissemination of critical information to the target groups
through the most appropriate channels which will facilitate decisions in favor of the stoves to be
made. Most important, coal savings are about 30-40 % when compared to use of traditional
stoves, this is a feature that will be widely disseminated.
Regarding manufacturing capacity, two actions have been taken: i) active participation and
training of one of the stove manufacturers in project preparation activities, and ii) linkages to
other donor funded SME programs to assist all manufacturers in development of business plans
and creation of the stove manufacturing association. Under the project, association members will
receive technical support to improve quality of products and assist them to structure financing
required for expansion of facilities. Further, private stove manufacturers are in the process of
preparation of business plans to expand workshop facilities, one of the manufacturers is already in
discussions with local private banks to expand its facilities. The main obstacle to create a
dynamic market as perceived by the manufacturers is the lack of credible information among
consumers on the options and benefits of stove improvements. The GEF project will contribute to
facilitate market creation activities through its marketing component and certification process of
improved stoves and service providers.
Institutional arrangements for project implementation have been kept as simple as possible, by (i)
focusing on one primary beneficiary, the Minister of Environment and Natural Resources, and (ii)
early development of a PIU in this beneficiary as the focal point for project activities, from
project inception, through preparation and implementation, with training and technical assistance
support during the ESMAP and GEF-PDF preparation phase. Training of PIU staff in
procurement processing, disbursement and project implementation has already begun. Firmly
identified procurement packages will begin immediately following project approval, so that a
number of key contracts may be executed upon project approval.
STAKEHOLDER INVOLVEMENT AND SOCIAL ASSESSMENT
The Mongolian Women’s Federation2 (MWF) has been involved with most of the aspects of
project preparation both under the ESMAP-funded activities and the GEF PDF A funded ones.
They have assisted the stove manufacturer in conducting in situ trials of the stoves through their
good contacts with khoroo (sub-district) chairmen. They have also used teams of students and
unemployed persons to conduct the various household surveys:
 Households and fuel consumption (451 households): This survey concerned household
size and income, employment status, consumption of and price paid for coal and
fuelwood, the types of stoves used in summer and winter, expenditure on electricity,
The Mongolian Women’s Federation was established in 1924. It is an umbrella organization for
(currently) 48 women’s groups which join voluntarily to further the causes of protecting women’s rights
and to improve their social status regardless of their ideology, social status, religion, nationality, wealth or
position in society. The MWF coordinates efforts by member organizations in order to form unified
women’s and public opinion on government policy concerning gender issues. The MWF also implements
relevant projects which establish democratic society, improve women’s working and living conditions,
provide adequate health care, and to improve women’s access to information. Projects have been
implemented with various international organizations such as UNIFEM, UNFPA, TACIS, UNICEF and
UNDP.
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Medium-Sized Project Brief
feelings about the opportunity to improve the stove, and their evaluation of living
standards.
Traditional stove types (256 households): These households were visited in order to
collect information about the types of stoves used.
G2 stove satisfaction (19 households): These households represented all those who could
be located of the 49 households given G2 stoves by MNE in 1997.
Comparative coal and wood consumption tests (40 households): With the help of 24
households with traditional stoves and 16 households with G2 stoves, a range of
improvements were made and the subsequent stove efficiency changes measured.
Comparative air pollution tests (10 households): Measurement of CO, NOx, SO2, CO2
and dust on traditional and G2 stoves with a range of improvements (performed by the
MNE’s Central Laboratory for Environmental Monitoring).
In February 2000 a Preliminary Stakeholders’ Workshop was held in MNE followed up by a full
stakeholders Workshop in April 2000, attended by three stove manufacturing companies, the
inventor of the G2 stove, a number of sub-district chairmen, air pollution monitoring scientists, an
independent local consultant on public awareness and environmental education, as well as MNE
staff and other government officials. Given the significant symbol of the fire in gers among
Buddhist followers, project preparation activities have also involved consultations with the head
of the Buddhist temple in Ulaanbaatar and a fire offering ceremony will take place at the
beginning of the project.
The UB Municipality has been supportive of any effort to assist with the improvement of the coal
burning stoves, and it has been agreed that MNE (as project executing agency) will sign a formal
Memorandum of Understanding with the Municipality regarding activities and responsibilities of
the Municipality’s staff.
INCREMENTAL COST ANALYSIS
BASELINE SCENARIO
The Government of Mongolia has identified the improvement of urban household stoves as a high
priority action since 1991, when the State Committee for environmental monitoring and the
Ulaanbaatar municipality stated their support to the design, testing and manufacturing of
improved household stoves.
In 1997, the Ministry of Nature and Environment’s Program on Energy Efficiency presented 100
stoves to urban families in order to monitor their acceptance and performance. The Cabinet
considered a paper on the subject produced by the Ministry of Nature and Environment (MNE)
and The World Bank in December 1997 and instructed MNE to pursue funding opportunities.
Overall, these efforts have led to raising the awareness level of Government officials, it allowed
construction and operation of 100 improved stoves (R&D aspect) but it has not translated into the
commercialization and dissemination of improved stoves through market-based delivery systems.
In the absence of an alternative, Mongolia’s efforts to introduce improved stoves will probably
remain at its current state, or given the transition to market economy in tandem with the lack of
credible marketing efforts it may lose focus and the stop-and-go funding currently available may
start to decline. Under the baseline case, it would probable take longer to advance the sustained
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introduction of improved stoves, as it has been shown to be the case in the last 10 years, and the
funding available--provided mainly by donors--would most likely remain in Government hands.
The estimated cost of the baseline scenario is US$ 577,700 over a period of 4 years. The
estimated cost by main activities is as follows:
Dissemination activities Under the baseline scenario the Government, through the Ministry of
Natural resource and Environment (MNE), would continue to encourage donor agencies to
provide assistance to donate improved stoves to low-income consumers, particularly the elder
under the Social welfare law. The MNE will disseminate the results of the ESMAP financed
activities showing the benefits of improved stoves, stove improvements and best practices that
could lead to coal savings. It is envisioned that the dissemination will be made through the
municipality-sponsored TV programs. Under the baseline scenario, total cost for dissemination
activities is estimated at about US$ 7,500.
Products Facility-Market Development Under the baseline scenario, donor and government
driven efforts will most likely continue focused in the sporadic production of new improved
stoves, not improvement kits, to try to boost the market and encourage stove manufacturers to
expand their workshops. Currently JICA, Japanese aid agency, and the MNE are under
discussions to arrange a grant package to supply steel to stove manufacturers. Under the baseline
scenario, total cost for stove production activities is estimated at about US$ 500,000.
Capacity building for Energy Service Providers Following on ESMAP assistance during the last
year, the MNE has recognized the importance of training technicians which will be responsible
for making improvements to traditional stoves at a lower price, while achieving similar saving
results as in the case of new stoves. Under the baseline scenario, total costs for capacity building
is estimated at about US$ 10,000.
The baseline case does not envision quality assurance activities like certification of stove
manufacturers and service providers, or the creation of new product facilities to serve as an
incubator of proposed stove improvements for heating purposes in gers i.e. wall heating facilities,
or stove using briquettes.
Monitoring and evaluation activities Under the baseline case, coordination and monitoring
activities will continue under the arm of the MNE, with little participation from other entities, and
lack of market assessments to measure the impact of the donor driven programs. Total cost under
the baseline scenario is estimated at about $ 60,200.
All the above actions taken together will most likely lead, in the long-term, to the adoption of
improved stoves by some families in the ger district, even if not in significant numbers, bringing
with it local benefits such as reduced respiratory afflictions caused by indoor and outdoor air
pollution and lower global benefits.
GEF ALTERNATIVE
The proposed alternative will expand global benefits by scaling-up preparatory work under
ESMAP and GEF-PDF funds, while focusing on those activities that would allow the creation of
a market oriented supply and financing of improved stoves, kits to improve traditional stoves, and
a credible social marketing program. The selected activities are the result of a process of targeted
consultation with the main stakeholders, workshops and surveys with consumers. The estimated
cost of the GEF alternative to introduce market based delivery systems and market assessments is
US$ 1.57 million(including PDF-A funds), of which $ 750,000 is being requested from GEF, and
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the balance will be contributed by the GOM, JICA and private sector manufacturers of improved
stoves and stove improvement kits.
The different participants to the workshops and satisfaction surveys have identified four main
barriers hampering the adoption of improved stoves and/or improvements on traditional stoves:

Lack of awareness on availability of stoves/improvement kits and size of savings. GEF will
help finance those incremental costs associated to a Marketing and social behavior
component to reach and influence buyers, manufacturers and financial institutions concerning
the different options, size and nature of the market, and ways to have improvements made to
existing stoves, either through the use of a ‘kit’, or through minor modifications. The total
cost of the GEF alternative is $197,500.

Lack of quality control and strengthening of certification procedures. While alternative
stoves and improvements could be made available, the participants agreed on the need to
provide consumers with informed and credible information on the quality of stoves and
improvement kits, not by manufacturers themselves, but by an independent laboratory.
Consequently, the project will have a component to improve quality control issues related to
the manufacturing of the stoves and improvements, as well as with certification of qualified
technicians and energy service providers. The total cost of the GEF alternative is $ 120,000.

Lack of readily available qualified energy service providers and technicians to assist users in
implementing and financing improved stoves and/or improved kits. One of the most
revealing aspects of project preparation was the need to have a qualified cadre of technicians
and energy service providers that can assist users in making improvements to the use of
current stoves, install improvement kits, and guide them in the process of acquiring new
stoves when required. Hence, the project will include a component to help establish energy
service providers at a micro-enterprise level and to facilitate their access to micro-finance
providers. The total cost of the GEF alternative is $260,000.

Market Development: New products facility While current models will help achieve
substantial savings, there is a richness of experience and innovative approaches in Mongolia
and elsewhere in the world on new technical and policy options to increase the efficiency
levels of indoor stoves and heating systems in the ger type of households. Consequently, the
project will help support the evaluation and dissemination of these options through the
establishment of a ‘new product’ facility. Private sector stove manufacturers are willing to
expand their workshops through capital investments provided there is in place a quality
control system and a robust marketing campaign, both elements of GEF support. The total
cost of the alternative is $ 750,000.

Finally, GEF support is requested to finance the incremental costs associated to a more
structured monitoring and evaluation of the program activities, including monitoring of
emissions reductions, periodic market assessments, and evaluation of the program activities.
The total cost of the alternative is US$ 244,863.
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Incremental Cost Matrix (US$)
Baseline
Alternative
Increment
(Alternative –
Baseline)
- Less CO2 emissions
by Mongolia.
- Best Practice case for
other countries.
Global
environmental
benefits
Lower CO2 emission
reduction, about 7,500 tons of
CO2 in four years.
Domestic benefits
Un-sustainable reduction in
respiratory infections caused
by indoor pollution
Sustained CO2 emissions
reductions from improved
household stoves: 140,000
tons of CO2 by end of 4
year program.
Sustained reduction in
respiratory infections caused
by indoor pollution
Costs (US$)
Baseline Costs
Alternative Costs
Reduced air pollution
in main cities from
indoor household
stoves
Incremental Costs
1. Social &
marketing
activities
2. Quality
Assurance and
standards
3. Capacity
building and
service providers
4. New Product
Facility-Market
Development
5. Monitoring and
Evaluation
TOTAL
7,500
197,500
190,000
0
120,000
120,000
10,000
260,000
250,000
500,000
750,000
250,000
60,200
244,863
184,663
577,700
1,572,363
994,663
Out of a total of US$ 994,663 required as incremental costs, a total of US$ 750,000 is
requested from GEF, the balance to be covered by private sector investments to expand
manufacturing capacity.
BUDGET
Total budget for the alternative GEF scenario is US$ 1.57 million, GEF is asked to
provide US$ 750,000 funding ( 48 percent) for the four-year project period. The
Government has signed an agreement with the Japanese aid agency, JICA, to provide
up to $ 500,000 in steel supplies to re-sell them to stove manufacturers, additionally two
of the private stove manufacturers are developing business plans to be presented to
SME lending facilities, to expand their workshops during the second year of the
program to produce improved stoves. While current expected lending to stove
manufacturers under discussion is about US$ 250,000, this proposal has taken a
conservative case of US$ 150,000.
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GEF
GOVERNMENT
94,000
78,200
172,200
Subcontracts
410,000
7,500
417,500
Training
180,000
Equipment
50,000
Travel
16,000
4,460
Office Rent/sundries
-----
36,400
Production Capacity:
-----
----
25,000
20,803
775,000
147,363
Personnel: Evaluation &
Co-financing
TOTAL
Monitoring
180,000
50,000
20,460
36,400
650,000
650,000
Private Sector/JICA
PDF-A
45,803
(Received)
TOTAL
650,000
1,572,262
Monitoring & Evaluation includes salaries for PIU staff, subcontracts to local NGOs in order to carry out
socio-economic assessments, to international consultants to do market assessments, and to equipment to
monitor CO2 emissions in the targeted areas in the ger districts.
IMPLEMENTATION PLAN
Project implementation will take four years. The Ministry of Nature and Environment (MNE) is
the project executing agency. The MNE will implement the project in partnership with the
Ulaanbaatar City Municipality (UCM). The MNE will sign a formal Memorandum of
Understanding with the Ulaanbaatar City Municipality regarding activities and responsibilities of
the Municipality’s staff. A part-time project coordinator will be assigned by MNE from within its
staff to coordinate project activities. The project coordinator will report to a steering committee
chaired by the State Secretary at the MNE and comprising representatives of the different
stakeholders, including the Municipal Government. MNE will also appoint and house a projectfunded full-time project manager, together with a part-time accountant, to deal with day-to-day
management. Ideally, the project manager would be someone involved with the preparation
activities. It is envisioned that project execution will be carried out, to a large extent, under
contract to a local NGOs with extensive experience and track record in implementing
development projects in the ger areas.
Following identification of the project manager and accountant, training will be arranged on
World Bank disbursement and procurement procedures.
First year activities will involve setting up training programs for stove manufacturers and mobile
service providers, marketing activities to disseminate results of PDF and ESMAP pilot programs,
assisting stove manufacturers in laying out their business plans and securing financing for
expansion and working with retailers in setting-up their open market centers where improved
stoves will be shown. Hence, first year activities will lay the ground for the rest of the program.
Second and third year activities will focus on making available to consumers the various products
to improve cooking practices and reduce coal consumption, working with the micro-credit
agencies as financial delivery system for consumers, and, based on market assessments,
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realigning the program as needed to ensure achievement of the outlined objectives. The last year
will focus on conducting market assessments and a scale-up program to move the program to
other cities and the Aimag centers under a more market based delivery system, with the
Government playing a role of coordinator and quality control.
PUBLIC INVOLVEMENT PLAN
Stakeholder identification
Stakeholders involved in project execution
1.
Ministry of Nature and Environment. The project executing agency and originator of the
project.
2.
Ulaanbaatar Municipality. Major supporter and facilitator of the project.
3.
Other municipalities. To be decided.
4.
Mongolian Women’s Federation – Active and well-established group with credibility in
promoting development and poverty-alleviation activities.
5.
Ministry of Health and Social Welfare. Alleviation of respiratory diseases and conditions
is one of the Ministry’s primary aims and their local staff will work with the project to
disseminate information
6.
Municipality media. The involvement of the media (newspaper, radio and TV) owned by
the UB Municipality in information dissemination is available as part of the GoM contribution.
Other media channels are fully expected to become involved also.
7.
Stove Manufacturers
8.
Micro-credit facilities.
All the above will have representation on the Project Steering Committee to be chaired by the
MNE State Secretary.
Beneficiary groups
1.
The population of ger areas in of Ulaanbaatar and other urban centers. Benefiting
through cash savings on fuel purchases, improved air quality inside and outside their homes.
2.
The remaining population of the urban areas. Benefiting through improved air quality.
3.
Energy Service Providers. Trained by the project with skills and business training into jobs
with demand.
Local groups likely to be affected by project outcomes
The project will facilitate the creation of a new type of service, and consequent employment, in
the market, that is the mobile energy service provider, a small business run by technicians whose
line of business will be to install the improvement kits to the more than 50,000 traditional stoves
in the ger district. Coal suppliers will be affected by reduced coal purchases from poor
households in the ger district, which account for about 8 percent of coal sales. However, as part
of the IDA supported Coal rehabilitation project, the Baganuur coal mine is taking steps to
optimize coal production levels. There may be a minor effect on fuel-wood traders, which exploit
the scarce forest resources around Ulaanbaatar, however, this may be marginal since most of the
fuel used for cooking and heating purposes is coal.
Other civil society groups with an interest in the project
Buddhist beliefs run deep among the inhabitants of the ger district. The concept of fire and
handling of ashes is very important in Buddhist belief, consequently, as part of the consultation
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process during project preparation, the project team has been benefited by the participation of the
Supreme Lama, as advisor on those aspects related to the handling of fire and ashes by
technicians. The Supreme Lama of Mongolia will participate in the launching of the project by
leading a fire ceremony.
Information dissemination and consultation
Information dissemination and consultation are at the heart of this project and indeed depends on
it. There will be exchange of information both from the project to the stakeholders about
innovations and improvements, but also through the constant interactions between householder
and householder, householders with the Energy Service providers and khoroo chairmen, khoroo
chairmen with the Municipality and the municipality, etc. The media will serve the project
objectives by both receiving and disseminating information . The types of household surveys
already conducted during preparation will be refined and continued through the project, and
information so obtained will be transferred to the Project Office. However, there are other
channels by which information will flow and both the market and the project will be attentive to
this.
Stakeholder participation
Just as stakeholder participation has been central in the design of the project, that will continue to
be the case through the execution of the project itself, with the primary forum for action being the
Steering Committee.
Social and participation issues
As outlined above, a socio-cultural issue which has received attention during preparation is the
impact of the widely-held belief concerning the golomt – the hearth/fire spirit. The stove
occupies the center of the ger whose construction begins with its mounting. Apart from its
important utilitarian purposes of heat and cooking, the stove symbolizes ties with the family's
ancestors. One is not allowed to stretch one's legs towards the stove, throw trash into it, or bring
sharp pointed objects close to it. Desecration of the stove is a sin and an insult to the master of the
house. The golomt is the highest being in the household and it dwells within stoves, bringing
peace and good luck to those within the ger or house. The fire spirit can be passed from parent to
‘best’ child at the discretion of the parents, and the decision to change to a new stove requires a
consideration of the golomt. When a new stove is installed, a lama or priest takes ash from the old
one to place in the new one and prays that the golomt will reside in the new stove and bring
blessings on the family as before. The reason there is no significant market for second-hand
stoves is because a buyer would not know about the golomt of the previous owner. The work of
the team preparing the project’s Social Marketing Component included consideration of the
golomt and the component will both build and be sensitive to the constraints (‘desecration’ of the
stove during installation of kits) and opportunities (having the project activities seen as beneficial
and respectful to the golomt).
Other socio-cultural issues have been brought to the attention of the stove testers/designers during
the survey work, such as the householders’ need to be able to see the fire, to be able to feel the
heat of the stove directly from the side of the stove, etc. and these have been incorporated into
design.
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MONITORING AND EVALUATION PLAN
Monitoring of the project will be done through the steering committee to be chaired by the State
Secretary at the MNE. The PIU, to be housed at the MNE, will work in close cooperation with
the Ministry of Health/WHO, particularly on measuring the impact, and local benefits, of reduced
air pollution.
Together with the municipality, the PIU will operate three sets of field monitoring equipment for
NO2, fine and coarse particulates, and CO2 for use within ger communities in UB. The PIU will
set-up a monitoring system in place to have ex-ante, during and ex-post information on the main
indicators, including:
 number of consumers reached and influenced to purchase improved stoves and/or
improvement kits,
 quality guidelines issued by central laboratory on quality standards,
 number of active manufacturers and working service providers and number of proposed
innovations reviewed,
 random samples of improved stoves in operation and their respective specific CO2 emissions,
 attitude surveys on consumers; and
 refined base map of forest cover around the Ulaanbaatar Municipality area.
There are no government plans to have more forest cover maps produced within the period of the
project and so within the project it is intended to use GPS technology to produce a refined base
map and to repeat the mapping at mid-term and before the final Impact Study. In this way the
extent of forest areas will be monitored to measure impacts of the improved stoves on local
fuelwood gathering, jointly with household surveys throughout the project to monitor the quantity
of fuelwood and coal purchased.
With the above information at hand, the PIU will produce an evaluation report prior to project
completion.
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