Despite Mongolia’s rich renewable energy resources, some hard-to-abate sectors are technically challenging to electrify, and other decarbonization options needs to be considered. The climatic conditions in Mongolia, particularly in the South Gobi region, provides the country with favorable conditions for green hydrogen production.

Green hydrogen could be produced relatively affordably, at 3.3-4.7 USD/kg of hydrogen – compared to a global average of 4.8 USD/kg in 2020. The most optimal location for green hydrogen production with respect to the cost effectiveness is in the South Gobi region. However, its production potential is limited by the local availability of water resources which is already scarce in the southern region of the country.

Shifting to a fuel cell-based truck fleet in 2020 would only be 12% more expensive compared to purchasing and operating new diesel trucks, in terms of energy delivered to the wheel. Shifting to fuel cell trucks in the complete copper and half of the iron ore production in the country could mitigate about 1.2 Mt CO2e annually, corresponding to about 3.5% of national emissions in 2014, at an estimated abatement cost of only 10 USD/tCO2e.

As most mining activities are located in the South Gobi area, green hydrogen can be produced at lowest cost close to the end-use site and therefore has the advantage of not having to develop any transportation infrastructure for the green hydrogen, which otherwise could significantly impact the cost-effectiveness.

A shift to fuel cell public transportation buses in Ulaanbaatar is considered, comparing to the purchasing of new diesel buses. Such shift would be only 15% more expensive than purchasing and operating new diesel buses. As the bus fleet is relatively small, and since there are few other urban areas in the country with a significant public bus fleet, the scalability and mitigation potential is limited, amounting to about 39 ktCO2e annually, at an estimated abatement cost of above 100 USD/tCO2e.

At present, green hydrogen is not cost competitive as it would be 148% more expensive than LPG and is therefore not considered a feasible option in the near term. Nevertheless, Mongolia’s heating sector remains highly emissions intensive and is likely to require some form of seasonal energy storage to fully decarbonise in the long term. Green hydrogen should thus not be completely ruled out as a long-term option but should be part of future potential technology portfolios.