EXPLORING CARBON OFFSETTING IN MONGOLIA’S MINING SECTOR: OPPORTUNITIES AND INTEGRATION INTO GLOBAL MARKETS:

Abstract

This thesis explores the potential of carbon offsetting within Mongolia’s mining sector, focusing on two major companies: Oyu Tolgoi (OT) and Erdenes Tavan Tolgoi (ETT). As the mining sector is one of the largest sources of greenhouse gas (GHG) emissions in Mongolia, implementing carbon offsetting strategies is seen as a viable option to mitigate its environmental impact while potentially engaging with global carbon markets. This research aims to assess the feasibility of carbon offset projects, including renewable energy, methane capture, afforestation, and reforestation, for both companies. The research is based entirely on secondary data collected from published reports, company documents, government publications, and academic papers. The analysis primarily involves document analysis to extract relevant information regarding the emissions profiles of OT and ETT, as well as their current and potential carbon offset initiatives. Emissions data, such as those reported in the companies' annual environmental reports, were used to model the potential for carbon offset generation. In addition, financial viability was assessed using Marginal Abatement Cost (MAC) analysis, comparing the cost of reducing emissions to the potential revenues from carbon credits. The findings indicate that OT has a higher level of institutional readiness for carbon market integration, with ongoing renewable energy projects and established emissions reporting processes. In contrast, ETT, while having a higher potential for carbon offset generation, faces challenges such as the lack of verified emissions data and limited internal monitoring and verification (MRV) systems. Both companies, however, show significant potential for generating carbon credits through methane capture, reforestation, and renewable energy initiatives. If integrated into international carbon markets, these projects could provide both environmental and financial benefits for the companies. This study highlights the need for strengthening institutional capacity, developing robust MRV systems, and creating clear regulatory frameworks to enable Mongolia’s mining sector to effectively participate in carbon offsetting and carbon trading schemes. It also provides valuable insights into the economic feasibility of carbon offset projects and their potential role in Mongolia’s transition to a low-carbon economy