In March 2009, XacBank signed a Memorandum of Understanding with MicroEnergy Credits (MEC) for the purchase of carbon offsets. On October 15th, a formal signing ceremony was held to finalize the Carbon Purchase Agreement between the two organizations. During the ceremony, MEC presented XacBank with a check for the carbon emissions reductions achieved through the Bank's first Eco Loan disbursed at the beginning of the month, marking the first carbon revenue generated by a micro-finance institution in the Northern Hemisphere.
To support low-income communities in Mongolia, XacBank launched its Eco Products Program in September 2009, which provides affordable low-interest loans for energy products to its clients. By making energy products like highly efficient stoves and insulated gers more accessible, the program aims to reduce fuel costs for Mongolian households and improve their living conditions, especially during the long winter months.
Prior to the program, product clients spent over a third of their monthly income on coal and wood for heating and cooking. The switch to energy products provides a more efficient way to heat their homes, reducing their dependence on coal, wood, and kerosene, which in turn leads to lower greenhouse gas emissions. This enables households to save money each month for food and other necessities.
Ulaanbaatar, the capital city, experiences extremely cold temperatures during the winter, with an average of -20 Celsius. Sixty percent of the city's population lives in traditional Mongolian dwellings called "gers," which are made of wooden frames covered in layers of wool felt. During the winter heating season, pollution levels in the city are, on average, twenty times higher than those in summer. According to the World Bank, 60% of this pollution is caused by coal burned in the suburban ger-district areas, where households use an average of 5 tons of coal and 1.5 tons of wood per year. The bottom fifth socio-economic quintile spends as much as 40% of their monthly income on heating.
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