While climate change undoubtedly presents challenges, it also brings forth fresh opportunities for our country

In recent years, the world has experienced significant changes in weather patterns and an uptick in natural disasters attributed to global warming. Coastal nations are grappling with severe storms, the United States faces sudden temperature fluctuations, and England contends with increased summer hailstorms that disrupt crop harvesting. Our own country, Mongolia, has witnessed numerous flood disasters this summer, leading to substantial economic losses. Global warming and climate change have reached a point where traditional energy production methods are no longer sustainable. Whether we embrace it or not, the global trajectory is shifting toward renewable and environmentally friendly energy sources. For a country like Mongolia, which boasts abundant coal reserves, this transition presents a challenge. Financing and attracting investment for coal-fired power plants have become increasingly difficult. In 2021, Chinese leader Xi Jinping declared that China would cease investing in coal-fired power plants abroad, marking a significant shift, as China had been a major investor in Mongolia's coal-fired power projects. While renewable energy has been perceived as costly, its costs have plummeted by 4-5 times compared to a decade ago. Constructing a new coal-fired power station today would be just as expensive as opting for renewable energy, not to mention the health-related concerns associated with coal.

Over the next 15 years, China's energy demand is projected to double, focusing heavily on clean energy sources. Despite this growth, China's per capita energy consumption remains below the global average. They are consistently adding over 100 GW of new installed capacity annually, equivalent to the entire United Kingdom's total capacity. Furthermore, China is committed to reaching its carbon emissions peak by 2030 and is striving for net-zero carbon emissions by 2060. While climate change poses significant challenges worldwide, we cannot disregard the fact that it also presents new opportunities for our country.

Internationally, there is a growing movement to reject products that contribute to greenhouse gas emissions. Most notably, the Carbon Border Adjustment Mechanism (CBAM), the world's first greenhouse gas tax system, was approved last year and is set to be implemented in Europe in 2026. This standard is poised to expand globally. Consequently, products linked to greenhouse gas emissions during production may experience declining competitiveness. For nations with limited land areas like Europe, Korea, and Japan, the deployment of renewable energy can pose a significant challenge due to space constraints. However, Mongolia stands in a favorable position, as previously highlighted. Renewable energy not only offers export opportunities but also catalyzes our country's industrialization. Mongolia's renewable energy resources are characterized by high-quality wind and solar energy. The vast and sparsely populated expanse of the country holds substantial potential for renewable energy deployment. Solar power plants operate efficiently due to the clear and clean air, while the wind capacity averages around 40 percent, surpassing most regions in China. For instance, if a 1,000 MW wind park is constructed, and wind power accounts for 40 percent, it would generate 400 MW of energy, outperforming many areas in China. Hence, investing in Mongolia presents distinct advantages, with few countries worldwide offering such opportunities.

The progress in renewable energy development in Mongolia is heavily contingent on government policies. Unfortunately, renewable energy has not been adequately incorporated into Mongolia's energy policy. There is a clear need for a comprehensive policy outlining energy purchase agreements and mechanisms for absorbing the energy generated by these projects. The primary reason renewable projects struggle to take off is the absence of infrastructure to accommodate the increasing number of proposed projects. Insufficient water storage and battery storage systems present substantial challenges to the advancement of renewable energy. Furthermore, a crucial aspect that has been largely overlooked is the untapped potential to supply renewable energy to industrial facilities. As an example, there was an opportunity to provide renewable energy to Oyu Tolgoi. Our company raised this prospect in 2018 and conducted successful research on a renewable energy supply project for the site. If such initiatives were implemented at Oyu Tolgoi, it would nearly triple the wind power capacity of our country. Missing out on these opportunities hampers the growth of the renewable energy sector.

Our country is believed to have guaranteed energy reserves of 2,000 GW, with the potential to increase to 3,000 GW upon further investigation. To put this into perspective, it is essential to consider the vastness of these resources compared to the current installed capacity of 1.5 GW, indicating resources that are 2,000 times greater than what we currently have. The founders of our company recognized this opportunity two decades ago. We understood the imperative need for clean energy due to global warming and climate change, conducted extensive research, and aimed to transform it into a viable business. When we initially discussed renewable energy, numerous skeptics questioned the feasibility of solar and wind energy in a country abundant in coal, primarily due to perceived costliness. One of the major challenges we faced was changing these deeply ingrained stereotypes. Altering perceptions encompassed a broad spectrum of issues, including disseminating information, gaining governmental understanding, building rapport with local communities, and instilling confidence in foreign investors. Without government comprehension and sound policies, foreign investors are unlikely to be attracted. Especially in the renewable energy sector, where returns on investment take a considerable amount of time, garnering investors' trust is no small feat. At the project's outset, numerous operational hurdles had to be overcome. One significant challenge was transporting wind turbines imported from China on unpaved roads, resulting in lengthy journeys along dirt roads. Additionally, installing wind turbines during the winter required pioneering methods not previously employed anywhere in the world. However, perhaps the most formidable issue to address was policy instability, which demanded a substantial investment of time and effort. Since energy projects span extended periods, policy stability is paramount. Unfortunately, our government undergoes frequent changes, with policy alterations accompanying each transition. Previous agreements are sometimes halted due to a lack of understanding, closing off prospects for the future.

One of the most significant hindrances to attracting investment in new projects is the failure to adhere to initial contracts. It's been reported that our partner investment companies have entered into sales and purchase agreements for two wind stations, Salkhit and Tsetsii, but they aren't adhering to these agreements, and payments aren't being made under the contract. However, there's a prevailing misconception among our authorities that the private sector is reaping substantial profits. In reality, we must prioritize paying off bank loans before realizing returns on our investments. Given such circumstances, it becomes challenging to embark on the next project without being able to secure funds for the preceding one. As long as the industry remains profitable and investment proves lucrative for both domestic and foreign firms, there will be opportunities to reinvest those profits into subsequent projects. On another note, our energy sector has received limited attention and suffers from a lack of coordinated policies. Few people understand the energy sector at the national and government levels. Furthermore, the sector continually incurs losses due to its lack of liberalization and market entry, discouraging forward-looking investments in the energy sector.

I believe that three critical issues should be simultaneously addressed. Firstly, we need to liberalize the domestic energy system and align it with market standards. Currently, there's minimal private sector involvement in the sector, and we must overhaul and restructure the system to attract investments. Mongolia boasts the world's lowest electricity tariff, but to encourage investment, we must adjust pricing to cover costs and sustainably attract investors. Without investment, there can be no development, and liberalizing prices is a necessary step to facilitate this. It applies equally to renewable energy. Secondly, there's an opportunity to supply large mines and factories with renewable energy without the need for them to be connected to the integrated energy grid. Especially in the Gobi region, such an opportunity exists, contingent on technological regulations and energy storage solutions. Renewable energy is inherently intermittent, and proper storage technology is essential to make it a dependable source. With effective storage, renewable energy can become more affordable and help increase our overall energy capacity. Lastly, connecting with China and exporting electricity could be highly beneficial. China's energy demands are substantial, and supplying even 10 GW of electricity to China will require 6 times higher production from Mongolia, but it will still be less than 0.1% of their network. By starting production at this scale, we can lower unit costs for renewable energy, making it more cost-effective. Returning excess energy to the central grid can lead to the provision of low-cost, clean energy to the domestic system, positioning Mongolia as a global standard-bearer for sustainable energy practices.

Perhaps a gradual release of prices could be considered, taking steps to ensure proper public awareness and education. Engaging the public in this process could be beneficial. For instance, energy companies could offer shares to the public, encouraging investments and potentially expediting the liberalization process. Another approach could involve companies issuing shares or establishing an energy fund that receives contributions from the public, government, and businesses. This would provide ownership to the previously ownerless energy sector. Finding a middle ground might be challenging, but if pursued, it should be approached with determination and consistency.

Currently, there are no specific plans for an IPO. However, in the future, if large projects require collaboration and resources, the possibility of exploring options like public, private, or community-funded companies is not ruled out.

Indeed, there are differing perspectives on the choice between traditional coal-based energy and renewable energy, and both viewpoints have their merits. For Mongolia, completely phasing out coal-fired power plants is challenging due to the country's extreme and cold climate, which necessitates thermal energy from coal. However, it's crucial to address the aging infrastructure of existing power stations, which pose reliability and safety concerns. While using renewable energy for heat and electricity generation from an economic standpoint may not yet be fully efficient, investment opportunities in renewables are readily available. Despite the perception that renewable energy may not be entirely sustainable, evolving solutions and improving technologies are making it increasingly viable. One promising solution globally is the development of storage hydropower plants. Battery storage technology, supported by projects like the one funded by the Asian Development Bank in Mongolia, is another avenue for scaling up renewable energy. Furthermore, creating a more flexible energy usage system, including time-of-use tariffs and smart meters, can enhance the adaptability of renewable energy. This shift towards a market-oriented approach, where energy prices fluctuate based on supply and demand, is gaining traction and can promote efficiency. Considering the possibility of localizing renewable energy by connecting to the energy grid in the south and potentially unifying systems with neighboring countries like China, there's potential for Mongolia to access more affordable energy through market mechanisms.

Instead of maintaining a separation between the two neighboring countries, what if they compete with each other to reduce energy dependency? If we initiate electricity sales, a trading system could emerge, with selling prevailing over buying. This approach could facilitate substantial renewable energy development and lead to self-sufficiency.

We have clear plans for coal and hydropower, but when it comes to renewable energy, the plans are not as well-defined. This is partly because our energy industry cannot integrate new renewable energy sources into our system. Additionally, the sector is unable to generate sufficient revenue to fund maintenance and upgrades, which further hinders its ability to accommodate new renewable energy. Without a proper energy storage system in place, it becomes challenging to effectively absorb the newly generated renewable energy.

From a personal perspective, it's disheartening to contemplate the construction of a coal-fired power plant in Tavantolgoi to meet Oyu Tolgoi's energy needs. This is especially troubling because there is ample potential to fulfill this demand with renewable energy sources. By investing in renewable energy infrastructure, we could swiftly achieve the goal of providing 30 percent of our total energy consumption from renewables. Our current energy production capacity stands at 1,500 MW, and if a renewable energy facility were added to supply Oyu Tolgoi, it would mean that 25 percent of our total energy would come from clean sources. In contrast, the construction of a coal power plant in Tavantolgoi would only push us further from our 2030 targets, without a clear timeline for the next significant project. It's crucial to meet our commitments promptly, as countries that lag in progressing toward "net-zero" emissions goals may struggle to attract investments. Additionally, if the CBAM is implemented and expanded in Europe, our goods could face challenges in markets that prioritize low-carbon production. Therefore, it's essential to make forward-looking decisions that consider the long-term implications rather than being solely bound by current circumstances. While coal may seem necessary today, we must also contemplate the problems it could pose in the coming 5 or 10 years.

We do possess abundant coal reserves, which makes it evident that we will utilize these resources. There's a clear resource and a demand for it. However, the crucial factor here is the need for a well-defined policy to guide the construction of stations like Tavantolgoi, Buuruljuut, and Thermal Power Station V. From the perspective of foreign investors, they are unlikely to support the construction of coal plants exclusively. To attract investment, we need to develop a smart policy that clearly outlines when we will utilize coal and when we will rely on renewable energy sources. There may be opportunities for investments, including from countries like Japan, under specific conditions where alternative energy sources are not readily available, including our own. However, this requires a clear policy framework. If we can communicate to people that coal plants are a necessary part of the energy transition and that our policy is geared towards implementing technologies that emit fewer greenhouse gases, then we might have a chance. But at present, the key issue is the absence of such a policy, which prevents us from tapping into global opportunities.

While the Newcom Group is predominantly associated with renewable energy, it did secure funding for the Thermal Power Plant V (TPP V) project. Mining Insight Magazine 93 Unfortunately, the venture faced multiple challenges, including the slow decision-making process involving foreign partners, which ultimately led to most partners withdrawing from the project, leaving Newcom as the sole remaining entity. From our perspective, the plan for the TPP V has not been abandoned, and we are open to reviving it if the opportunity arises. The concession contract for the project is still valid. If the government expresses interest and offers support for the TPP V project, we are prepared to either bring in new partners or work with the existing ones. Newcom's primary objective is to achieve the goal of net-zero carbon emissions, rather than exclusively focusing on renewable energy. Even in the case of coalfired power plants, we believe it's possible to minimize emissions by utilizing evolving emission-cleaning technologies. The TPP V project was designed with cleanliness in mind, and as emission-reduction technologies continue to advance, we anticipate that securing reasonable financing for the project may become more feasible.

Renewable energy is readily accessible, offering a promising alternative. In many mining operations, diesel serves as the primary energy source. Consider a scenario where renewable energy replaces diesel in a small-scale mine. The cost per kWh for diesel energy is approximately MNT 500-600. However, when solar is combined with diesel, the cost is reduced to MNT 400. Further cost savings can be achieved by incorporating wind power. Notably, wind farms are best suited for larger mining operations. To address power fluctuations, an effective solution is to integrate a battery system. What prevents mining projects from adopting this solution? Some companies might lack a clear understanding of how to integrate renewable energy into their operations. There's a need for a mutual understanding between the mining and energy sectors. Miners should grasp the characteristics, conditions, and demands of renewable energy. It's worth noting that renewable energy is a relatively new concept in this context. Historically, the focus has been primarily on conventional energy sources and centralized grids. However, recent advancements in small-scale renewable technologies and cost reductions have led to proposals for renewable energy adoption in the mining industry.

Only the residents of Tsetsii, who have lived near the wind power plant for many years, can provide a more accurate assessment of its environmental impact. Solar stations can cast shadows that are more than three meters high. However, these shadows can have positive effects as they create suitable conditions for plant growth, offer shelter for livestock and animals, and, in some countries, are placed over lakes to reduce evaporation, which is considered environmentally friendly. Therefore, the project developers must work on educating the local community about these potential benefits. It's important to note that any project can have negative environmental impacts if not well-planned. To mitigate such effects, careful consideration is given to the project's location and other choices based on preliminary research to minimize harm.

For us, we see the potential to supply Oyu Tolgoi and other large industries with renewable energy. Secondly, during the Prime Minister's visit, discussions arose about China obtaining energy from us, which opens up new opportunities. There is an opportunity to accelerate industrialization by combining renewable energy with mining. For instance, external research indicates that if the capacity of a single wind turbine exceeds 2 GW, it is more efficient to produce it in Mongolia than to import it. Even our partners in Japan recognize Mongolia's advantages in terms of abundant land and renewable energy, and they express interest in cooperation if our government provides support. Renewable energy is still in its early stages of development, and there is significant growth potential with clear policies and support for companies. As we've mentioned previously, our goal is to prioritize the development of renewable energy while maintaining a commitment to achieving net-zero carbon emissions. It is also believed that coal-fired power plants can coexist with renewable energy to keep greenhouse gas emissions low. By working in this field, we aim to expand Mongolia's exports and contribute to the growth of the industry.