Mongolia goes green!!!

23 February 2010 at 01:35 24 comments

By Beth Ritchey, KF10, Mongolia

Yes, it might be the dead of winter in Mongolia, with temperatures hovering around -30 degrees Fahrenheit, but the loan products here have been turning green.  Thanks to the hard work of the Eco Products Team at XacBank in Mongolia, Kiva lenders saw an introduction of 3 new types of personal consumption ‘green loans’ in December 2009:

  • Energy Efficient Stoves                                
  • Ger (yurt) covers
  • Energy efficient fuel
That's not fog!  The pollution in Ulaanbaatar

That's not fog! The pollution in Ulaanbaatar

Currently around 60% of the population of Ulaanbaatar (the capital of Mongolia) lives in gers (a yurt-like structure heated by a central stove).  Pollution is a big problem in Ulaanbaatar, especially in the winter when pollution levels increase substantially due to the extra coal and wood burned in the gers to keep warm.  The World Bank estimates that 60% of the pollution in the city during the heating season is attributed to coal burned in the Ger Districts*.
XacBank recognized this problem and its connection with poverty.  Most families spend up to 40% of their incomes, roughly a $140 per month, in the winter time on heating fuel alone.  This money most often comes from cuts in nutrition and health budgets*.  To address this relationship between pollution and poverty, XacBank started offering new loans to make eco products financially accessible to the residents of the Ger Districts.  XacBank currently offers 3 types of green loans for personal consumption:  energy efficient stoves, ger covers and energy efficient fuel.

Energy efficient stove

The energy efficient stoves were developed and tested by GTZ, an international enterprise for sustainable development run by the German Government.  The stoves are lined with a type of brick similar to that found in a pottery kiln and are designed to circulate and retain heat for longer periods than traditional stoves.  This in turn reduces fuel consumption by more than 60% each month and helps to reduce a family’s air pollution.

Ger blanket

Ger covers are essentially large insulating blankets composed of three separate layers that wrap the entire outside of the ger. The specialized insulation helps to keep heat within the ger and results in a 50% reduction in fuel burned each month.  The Ger covering was designed by the United Nations Development Program, but is produced locally in Mongolia.  As an additional note, XacBank provided start-up loans to local producers to increase production of both the stove and the ger cover.

Energy efficient fuel - sawdust briquettes

The third XacBank Eco loan is for energy efficient fuel.  Borrowers can obtain a loan to buy fuel from producers who create efficient fuels from things like compacted sawdust and gasified coal. The efficient fuels are more expensive than traditional fuels but they have less of a negative impact on the environment by burning longer and producing less carbon output.  Overall, the price difference between clean fuels and brown coal is made up through clients using less fuel to achieve the same heating results.

The majority of XacBank’s green loans are posted in the fall, as Mongolians prepare their gers for winter and stock up on fuel.  To date, XacBank has posted 22 green loans on Kiva and plans to do more in the future, so keep an eye out for new eco-loans coming soon!  In the meantime you can also check out XacBank’s carbon partnership with yurtcozy which is helping to make the program sustainable.

*Energy Efficient and Cleaner Heating in Poor, Peri-urban Areas of Ulaanbaatar, World Bank Consultant Summary Report on Activities, October 2008

Beth Ritchey is currently serving in Ulaanbaatar, Mongolia as a member of Kiva Fellows 10th class.  Make a loan on Kiva today!

Entry filed under: blogsherpa, Eastern Europe & Central Asia (EECA), KF10 (Kiva Fellows 10th Class), Mongolia, XacBank. Tags: , , , , , , , , .

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  • […] Several displays highlighted new and improved stoves (including the GTZ stove mentioned in a previous post).  Other gers exhibited hot water heaters (with a shower!), solar panels, satellite dishes and one […]

  • […] Kiva green loans – Kiva is now offering the world a chance not only to lend but change consumer consumption behavior for the better.  Click here. […]

  • 3. ioli  |  17 March 2010 at 09:04

    Great to see this up, compelling way of provoking some interesting insights and awareness.

    Thanks Beth, look forward to talking further about this soon

  • 4. Stefano  |  11 March 2010 at 05:01

    Hi Beth,
    thank you very much for the very interesting and informative post, I think that you doing a great job in Mongolia.

    I am currently approaching the problem of urban pollution in UB and I am very interested in your work. I’ve just taken a look at the World Bank/ASTAE report about heating in UB, (, just to get a first idea of the situation. I have some questions regarding the economics and the possible development of alternative solutions, and I’d like to know if you can give some clarifications regarding the heating sector in UB:
    – you write that “most families spend up to 40% of their incomes, roughly a $140 per month, in the winter time on heating fuel alone”; according to ASTAE, the average spending is about 175.000 tog (roughly 125 $) for the whole winter season (Sept. to Apr); the two figures are quite different, can you confirm me that your estimates are calculated on a monthly basis?
    – the ASTAE report doesn’t give any idea about the prices of the stoves, both “traditional” or “improved”: can you give me an idea regarding the prices of the stoves, according to your experience?
    – I have some experience regarding the wood pellets business, both in pellet production and in pellet stoves production: I am trying to understand if they could fit the needs of people in UB, both from an heating/pollution side and from an economical side; as far as I know, it doesn’ seem that wood pellets and pellet stoves are present in Mongolia: can you confirm this, according to your experience? It would be interesting to understand if there is a potential market for pellets in Mongolia, and if there are resources available to establish a business there in this field, and if it would make sense, above all!

    I’d be glad to have your opinion !

    Thanks a lot for your attention and for your time,
    Milan, Italy

    p.s. just some background about me: I am an environmental engineer currently working in the renewables/cleantech sector, in the finance/consultancy area; and I am Kiva supporter, of course 🙂

  • 5. Katie Morton  |  9 March 2010 at 16:07

    It’s great to hear about XacBank’s innovative and comprehensive use of microloans– reducing pollution, heating costs, and poverty! Hope all is well in Mongolia!

  • 6. agneschu  |  9 March 2010 at 04:21

    What is the payback period of a stove or a ger cover?

  • 7. Angus Crawford  |  5 March 2010 at 06:31

    Fascinating and inspiring project. Given the terrible drought, will Xacbank be looking at loans for livestock come the spring?i

  • 8. Yurtcozy Team  |  3 March 2010 at 15:52

    This is a great overview of XacBank’s green loan programs! That picture of the fog really illustrates how much coal and wood is being burned.
    In answer to questions above about loan repayment, the efficient stoves and yurt coverings reduce the amount of fuel needed by 50%! The loan repayments plus the new fuel expenditures are actually LESS THAN their previous spending on fuel, so they can repay their loan and increase their savings!
    XacBank really depends on programs like Kiva’s in order to get the word out about their energy-saving opportunities and to keep their loans affordable. Yurtcozy is another way for people like you and me to help out. It’s a site where you can purchase carbon credits to offset your own emissions, while at the same time helping institutions like XacBank provide more clean energy loans. Check out for more information.

  • 9. Hurtz  |  3 March 2010 at 05:38

    Hi,Paul Finch, I wish successes in your noble cause
    and I respect it,

  • 10. Tom  |  2 March 2010 at 19:41

    This would be nice for the environment and the eco-businnesses, but financing these investments by loans can’t be in the financial interest of the mongolians.

    But I would love to cofinance businesses for these mongolians, to make them abel to save money for future investments.

  • 11. Jodi  |  27 February 2010 at 00:56

    Great post, and having spent a month in Mongolia in 2008, I can only say that I wish we had yurt covers then too! Man, was it cold.

    Looking forward to more dispatches in the future.

  • 12. Marlene Lewis  |  25 February 2010 at 22:15

    Hi Beth! Glad to have a new KIVA fellow in Mongolia. Jim and I are on the Mongolian Team and the XacBank Team and make all our loans to Mongolians–mostly because we know what it’s like to live in a harsh environment with limited resources (Alaska.) We are new to KIVA but are trying to make up for lost time. Wondering what the loan situation will be with the devastation of so many cattle this winter. We’re ready to go loan-crazy if necessary. Keep us posted.

    This May we’ll be in China and are taking a side trip to Mongolia since it’s so close (relatively speaking!) Do you work out of the XacBank offices in UB? If so, we’d like to stop by and say hello. What an exciting place to be!

    We look forward to more news from you. Thanks for starting out with info about the green products and loans.

    • 13. mike potts  |  2 March 2010 at 23:28

      Howdy, I spent 7 yrs. in khintii, batshireet. i’ve come into U.B. many times in the dead of winter & seen the pollusion. the stoves & such are good ideas but how are these in the Ger districts going to pay off that loan?

  • 14. Anna  |  24 February 2010 at 05:18

    Awesome. Love the idea of the Ger cover. A really interesting read Beth. Good to hear about some issues that the aren’t so prevalent in the Philippines. Keep it up!

  • 15. Kiva Yurts « Yurtastic!  |  23 February 2010 at 20:09

    […] Read Beth Ritchey’s blog post to learn more about Kiva and yurts! […]

  • 16. Tamara  |  23 February 2010 at 19:01

    Awesome to read about! Hope you are enjoying Mongolia

  • 17. Patricia  |  23 February 2010 at 10:23

    Hello Beth, and greetings from San Francisco, California (United States).

    This is a wonderful first blog! Thank you. I look forward to reading more of your blogs from Mongolia.

    Mongolia is one of my favorite countries to lend to and XaxBank is one of my favorite MFIs. I always had a good impression of XacBank. I can tell they truly care about their fellow citizens as human beings.

    I’m a lender to several of the Mongolian eco-loans. So far, I have one Mongolian eco-loan for solar panels. Hopefully, there will be more eco-loans for solar panels in the coming months.

    Happy Tsagaan Sar!!! And again, welcome and keep warm!!!

    (Also a member of the Mongolian lending team.)

    Side note: There was talk of Kiva partnering with two more MFIs in Mongolia. Do you know if this is still on track? Thank you.

  • 18. Luki  |  23 February 2010 at 08:24

    Very interesting read. Well done. Keep warm!

  • 19. Beth  |  23 February 2010 at 07:08

    Nothing like snuggling up under a warm ger to stay cozy on a cold Mongolian night. Congrats on a great first blog, Beth… keep them coming!

  • 20. Jeff  |  23 February 2010 at 06:08

    Thanks for the report, Beth. You are welcome to the -20C temperatures!

    I can see that the energy-efficient stoves and the ger blankets require a loan since they are capital outlays that pay back the borrower in savings over a period.

    I don’t see why a loan is needed to buy fuel. They are going to buy fuel anyway. With the new fuel, they buy less fuel at a higher price and so their costs are essentially unchanged. If they could afford to heat their gers using soft coal, why do they need a loan to heat with the new fuel?

    Secondly, the new fuel cuts down significantly on pollution which is of great benefit to the residents and needs to be encouraged. However, I don’t see that this makes the fuel “energy-efficient”. They were burning wood and now they burn compacted sawdust. They were burning soft coal and now they are burning the same fuel but after it has been processed in a plant. What is the justification for saying it is energy-efficient?

    I am not maintaining that it is not energy-efficient, I am asking what justifies the label.

    • 21. Beth  |  23 February 2010 at 20:16

      Jeff, great points. I spoke to the Eco Products team and here is what they said:
      1.Fuel prices are not stable and vary dramatically over the winter. When fuel prices become too high, households start to burn trash, old tires and other combustible materials that are often toxic when burned. Fuel loans allow families to purchase all of their fuel at once for a set price, and if they wish, they can also amortize the costs over the entire year, instead of just the eight month heating period. The Xacbank fuel loans provide interest rates that are 10% below market rate, with loan amounts and terms set to fit the customers needs. According to the World Bank, ger district residents, on average, spend 40% of their income on fuel in the winter months. This is a dramatic financial burden, and the bank launched fuel loans at the urge of its customers. To maintain the Bank’s commitment to pollution reduction, the bank provides Eco Fuel loans (with reduced interests rates) for energy efficient fuel only.
      2.Energy Efficiency is determined by the product’s caloric value. Currently lignite, also known as brown coal, is mined and distributed for heating purposes in Mongolia and is the lowest grade coal in the world by caloric value. The saw dust briquettes and gasified coal both have higher caloric values and are 30 to 40% more efficient then lignite coal. At the moment, these are the mostly locally efficient and market available alternatives to lignite. The title “energy efficient” was applied by the city’s Air Quality Control Agency to these fuels. The agency, in conjunction with the European Bank for Reconstruction and Development oversaw all fuel testing

  • 22. arturo  |  23 February 2010 at 05:17

    great first blog, thanks for the inside look!

  • 23. Vishnu  |  23 February 2010 at 04:25

    Really interesting read…and well done braving it out there trooper!

  • 24. charmaine  |  23 February 2010 at 03:46

    One more reason XacBank is one of my favorite MFI’s. If only they hadn’t decided to share currency risk with lenders. But I love these green loans.

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