PRESS RELEASE: Energy Reduction Microfinance Loans Earn XacBank Carbon Credits from Micro Energy Credits (MEC)

Source: XacBank.

Original press release available online.

ULAANBAATAR, Mongolia, October 15, 2009 – XacBank, through its partnership with Micro Energy Credits (MEC), has become the first micro-finance bank in the Northern Hemisphere to sell its carbon offsets and access financing through the carbon markets. “MEC is proud to work side by side with another pioneering financial institution that is finding innovative ways to offer better and cleaner energy choices to underserved markets in developing regions” said MEC CEO, April Allderdice.

Ulaanbaatar city is the coldest capital in the world. Temperatures average -20 Celsius in the winter months. 60 percent of the city’s population live in Mongolian traditional dwelling called a ‘ger’, with wooden frames covered by layers of wool felt. Pollution levels in the city during the winter heating season are, on average, twenty times those of summer of levels. The World Bank attributes 60 of this pollution to coal burned in the sub-urban ger-district areas. On average, households located in the ger-districts use 5 tons of coal and 1.5 tons of wood per year. The bottom fifth socio-economic quintile spends as much as 40 percent of their monthly winter income on heating fuels.

In September, XacBank launched its Eco Products Program, offering low interest loans for energy products to poor clients in Mongolia. “XacBank has a successful history of serving low-income communities throughout the country. Through the Eco Products Program we are providing an affordable means for Mongolian households to lower their fuel costs, breathe cleaner air, and stay warm in the depths of the long winter months” said the Bank’s Deputy CEO, Tur-Od Lkhagvajav. Previously, product clients spent over a third of their monthly income on coal and wood for cooking and heating fuel in the winter. Switching to energy products like a highly efficient stove, or an extremely insulated ger provides these families with a far more efficient way to heat their home leaving more money each month to spend on food and family needs. Additionally, each household reduces their emissions of green house gases through reduced dependence on fuels such as coal, wood and kerosene.

XacBank signed its carbon purchase Memorandum of Understanding with MEC in March of this year. On October 15th, XacBank and MEC finalized their Carbon Purchase Agreement in a formal signing ceremony. On this signing occasion, MEC presented a check for the carbon emissions reductions derived from the Bank’s first Eco Loan disbursed at the beginning of this month. The check represented the first carbon revenue generated by a micro-finance institution in the Northern Hemisphere.

About MicroEnergy Credits Corp.

MicroEnergy Credits is a social enterprise which links microfinance institutions to the carbon markets when they lend for clean energy. MEC sells the carbon credits earned by replacing dirty fuels like kerosene, wood, coal and dung on the voluntary carbon markets and passes the carbon revenues along to its partner institutions. The institutions can then use the revenues to offset their costs of running the clean energy program or can pass the savings along to the client in the form of reduced interest rates, free battery replacements or other benefits. In 2008, MEC won the Global Social Venture Business Plan Competition for its innovative business model which makes accessing the carbon markets easy for MFIs.

About XacBank

XacBank is the fourth largest bank in Mongolia providing inclusive and innovative financial products and services throughout the country with a nation-wide network of 77 branches. Its clientele represents not only the lower-income segment of the market but also a growing number of small and medium size enterprises.

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