Mongolia – Building Retrofitting
Project highlight 2025
Improving comfort, reducing emissions: Mongolia’s path to energy-efficient housing
Context
Ulaanbaatar, the world’s coldest capital, is home to nearly half of Mongolia’s population, and about 20% of residents live in prefabricated panel apartment blocks that are typically poorly insulated. In winter, when temperatures can fall to –40 °C, indoor comfort often remains a challenge. Mongolia’s energy system is heavily dependent on coal, with coal-fired power plants supplying approximately 90% electricity and heat, contributing to high emissions and very poor air quality, especially in winter. Improving the energy performance of these aging buildings has therefore become a priority for the construction sector and is reflected in Mongolia’s Nationally Determined Contributions.
However, progress is constrained by structural barriers. Energy tariffs remain heavily subsidised, and heating costs are calculated based on floor area rather than actual consumption. This weakens incentives for energy efficient retrofits and limits investment in building upgrades. As a result, Mongolia’s transition toward a low-carbon development pathway continues to face technical, financial, political, and institutional hurdles.
“After the mineral wool insulation was installed, our apartment felt much warmer and cozier. Last winter was very comfortable for all the residents. I’m really happy that, along with the improved comfort, we’re also contributing to reducing Mongolia’s emissions. We’re proud to be part of this change.”
Highlights from 2025
In 2025, the Mongolia – Building Retrofitting project completed the thermo-technical retrofit of a pilot building, demonstrating a practical and scalable model for upgrading Mongolia’s prefabricated panel housing stock. Building on this success, tenders were launched for 45 additional building blocks, with implementation now underway.
The project introduced an innovative retrofit blueprint using mineral wool insulation combined with an adapted façade design suitable for different panel building types. Following presentation of the results to Ulaanbaatar’s Citizens’ Representative Khural in March 2025, the government decided that this approach will be applied to all future retrofits starting in 2026.
Compared to previously used EPS technology, the new retrofit system improves fire safety, enhances building aesthetics and can extend building lifespans by around 30 years. At the same time, it is expected to reduce household energy use by approximately 40–50%.
Alongside technical progress, the project also supported broader policy and capacity development in Mongolia’s building sector. A major stakeholder consultation workshop helped kick-start the transition from floor-area-based to consumption-based heating billing. In parallel, more than 350 public and private sector experts were trained in 2025 to strengthen professional capacities for energy efficiency and sustainable retrofitting.
A major additional highlight of the reporting period was the project’s pilot activity designed to support vulnerable households in Ulaanbaatar’s panel housing districts. Since residents are required to contribute financially to retrofit investments, low-income households can face significant barriers to participation, despite retrofitting requiring full building-level consent.
“We were a bit skeptical at first, but now I can really feel the difference. The temperature inside is more stable, and our home stays warm always. I hope more buildings can be retrofitted like this. It not only improves our living conditions but also helps Mongolia reach its climate goals. Especially now, when energy is in short supply, it feels good to know we’re using less.”
To address this challenge, the project implemented a targeted inclusion pilot between November 2024 and April 2025. The activity combined training, mentoring and support for improved access to social welfare programmes, grants and interest-free loans. A total of 35 participants joined the training sessions, while 9 participants received tailored mentoring to support home-based business development and small project proposals.
An evaluation carried out in late 2025 confirmed that the pilot was highly relevant and well aligned with the needs of vulnerable households. The findings highlighted that lack of information — rather than lack of support schemes — often represents the main barrier to participation. The pilot therefore demonstrated the importance of embedding inclusive support mechanisms within existing institutions and social services to ensure equal participation in the energy transition.
Why this matters
The project demonstrates how climate mitigation and energy-efficiency measures can be implemented in a socially inclusive and scalable way. Beyond introducing advanced retrofit technologies and financing mechanisms, the project highlights the importance of ensuring that vulnerable households are not excluded from the benefits of the energy transition.
By combining technical innovation, institutional reform and targeted social support, the initiative contributes to a more inclusive and socially sustainable pathway for decarbonising Mongolia’s residential building sector. The project also supports the enabling conditions needed for long-term transformation, including policy reform, financing structures and strengthened institutional capacities.
Its strong monitoring and evaluation approach further provides valuable lessons for scaling socially inclusive retrofit models in Mongolia and beyond.
