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Will Georgia’s energy efficiency laws concretely help to combat climate change?

Early in July, the European Bank for Reconstruction and Development (EBRD) has welcomed a set of key energy efficiency laws that are being adopted by the government of Georgia.

Earlier in May, Georgia adopted the Energy Performance of Buildings Law and the Energy Efficiency Law while preparing the Law on Energy Labelling in order to transpose the energy efficiency acquis into its legal framework.

“This is an outstanding achievement for Georgia,” commented Catarina Bjorlin Hansen, EBRD Regional Director for the Caucasus. “The legislation opens new investment opportunities with greener technologies while boosting the usage of energy from ecologically cleaner sources.”

As noted by the National Investment Promotion Agency, consumption is continuing to rise not only domestically, but in neighbouring countries as well: a great opportunity to develop new power plants to keep up with this ever-increasing demand. According to estimates, currently, only about 25 per cent of Georgia’s potential is exploited. Therefore, there is a lot of untapped potential, mostly from hydro resources, but also from wind, solar, geothermal and biomass sources as well.

The new Law on Energy Efficiency

The Law on Energy Efficiency transposes the European Union directive on Energy Efficiency and creates a framework for energy efficiency policy in Georgia, including the adoption of energy efficiency target and a national action plan for energy efficiency. It further promotes the exemplary role of the public sector and envisages secondary legislating for the design of the energy efficiency obligation scheme, energy management and energy audits scheme.

“Georgia is now preparing its National energy and climate plans (NECP), to be submitted to the Energy Community by the end of this year,” explains Murman Margvelashvili, Director of Energy Studies at local NGO World Experience for Georgia. “This follows the Energy Community recommendation and goes a bit beyond the current obligations while being in compliance with the Governance Regulation under the EU Green Deal.”

Mr Margvelashvili also reveals that there is a new project to start under the EU4climate programme and the United Nations Development Programme (UNDP) for the development of a Low Emissions Development Strategy (LEDS) which will define the country’s vision to 2050, also in compliance with the Governance regulation.

“The new legislation obviously creates a great potential which however needs to be materialised through secondary legislation and most importantly through institutional and professional capacity development which is absent now,” he tells CEENERGYNEWS. “There is a process which needs to be stirred in the right direction at an optimal pace.”

Georgia’s energy mix

The energy sector in Georgia is currently responsible for the largest share of emissions (62 per cent), followed by agriculture (19 per cent). According to the EBRD, these laws will enable the country to realise energy savings of 14 per cent by 2025, thereby helping the country to meet its international obligations in combating climate change, increase its energy security and strengthen its energy links with the EU.

So far, Georgia had developed an energy sector largely based on hydropower and fuelwood, in addition to imports of fossil fuels. The International Energy Agency (IEA) also noted that it is an important transit country for the region, with major oil and gas pipelines running across Georgian territory.

In this regard, Georgia’s carbon dioxide equivalent emissions amount to around 17.6 million tonnes per year, significantly lower than emissions in the world’s largest economies, but still higher than in some of the Eastern Partnership countries.

Still not concrete energy efficiency regulations

The newly approved legislation is part of an initiative that was conceptualised in late 2015 when the Ministry of Economy and Sustainable Development started working on a draft of the first National Energy Efficiency Action Plan (NEEAP). The NEEAP addressed challenges such as reducing the economy’s energy intensity while allowing for continued economic growth and compliance with the country’s international commitments.

“The adoption of the new energy efficiency laws is a landmark achievement for Georgia, which until now had virtually no energy efficiency regulations in place and very limited investment in energy performance,” explained Vesselina Haralampieva, Senior Counsel in the Legal Transition Programme, who led the EBRD’s work on the Energy Efficiency Law and the NEEAP. “The NEEAP, adopted in 2019, is Georgia’s signal to the world that it is prioritising energy efficiency policies and investment, which will result in better energy services for consumers, well-insulated homes with less wasted energy, and ultimately a more competitive economy.”  

For Mr Margvelashvili, Georgia still does not have concrete energy efficiency regulations as the law only creates the framework that needs to be materialised.

“The main obstacle to me is the tariff populism and heavy subsidisation which stems from political populism and weakness of energy policy capacity and strategic vision,” he underlines. “Another major obstacle is the lack of institutional and professional capacity. No additional resources have been allocated by the government for the implementation of the new legislation. On the contrary, in 2017 the Ministry of Energy was Merged with the Ministry of Economy and Sustainable development and the staff was reduced. The attempts of establishing the energy efficiency agency have failed.”

A third obstacle that Mr Margvelashvili names is the lack of awareness of energy efficiency with politicians and public and its association with additional expenses.

To him, specific incentives that could make Georgia more attractive for investments and more competitive would include getting away from tariff subsidies, the implementation of new fiscal measures, a cheap financing made available for energy efficiency investments, and clear and quality regulations for the industrial, commercial and building sectors.

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