On 1 January 2023, Latvia’s new Climate and Energy Ministry was officially launched, with Raimonds Cudars appointed as Minister of Climate and Energy.
The Ministry is taking over energy-related matters (excluding the accumulation and supervision of oil reserves) from the Ministry of Economy, while climate-related matters were taken from the Ministry of Environmental Protection and Regional Development.
CEENERGYNEWS spoke with Minister Cudars about the current challenges to address, the Ministry’s vision in the short- and long-term, the concrete possibility to build the country’s first LNG terminal and what we can expect to see in terms of climate policies.
Indeed, the new Ministry comes at a time that can be defined as unprecedented, if we consider the record-high energy prices, geopolitical turmoils, supply disruptions and climate change-induced events. According to Minister Cudars, the immediate priority of the Ministry is the stabilisation of energy prices.
“We have to make some important decisions regarding our energy sector, that’s why the Ministry of Climate and Energy is focusing on effective law-making and on research,” he explains. “Also we are focusing on attracting investments to increase wind and solar power generation, as well as strengthening power transmission and distribution systems; it is also important to boost the capacity of Latvian interconnections on a European scale.”
In the long term, Minister Cudars mentions the importance of developing the country’s renewable energy sources.
“Latvia is one of the European leaders in the use of renewable sources of energy – especially wind energy,” he underlines. “The capacities of the hydropower plants of the Daugava River cascade, as well as the use of biomass in the production of thermal energy, have enabled the number of our renewable energy resources as the proportion of total energy consumption to exceed 40 per cent and in the production of electricity, 50 per cent.”
According to him, we are in the midst of an energy revolution. “Our common goals of climate neutrality can be achieved by significantly increasing the share of RES and becoming a green energy exporting country,” he points out.
For that to become a reality, Latvia needs to address major challenges to unlock the country’s large wind potential (especially from a regulatory point of view), while upgrading its transmission system and synchronising its grid with the continental one, which is connected to one of the main priorities, at the EU level: the electricity market reform.
“The challenges caused by the criminal war against Ukraine, are still here,” Minister Cudars says, adding that Latvia is on the same page with the EU. “This leads us to the topic of power synchronisation. Baltic state grids are still synchronised with Russia and Belarus under the BRELL agreement. In 2018 we agreed on a target date – 2025, to become a part of the continental European energy system. We are in the middle of this process.”
At the beginning of February, power synchronisation with continental European grids was indeed defined as one of the main priorities by all the Ministers of Energy of the Baltic States (Estonia, Latvia and Lithuania). The synchronisation of the electric power system with the synchronous grid of Continental Europe is a strategic energy project that will ultimately ensure independent management of the electric power system in accordance with European system management standards.
At the same time, Latvia must keep working on its carbon neutrality goals, which can be achieved not only through renewables.
“In addition to the energy sector, transport and agriculture play an equally important role in reducing greenhouse gas (GHG) emissions,” reminds Minister Cudars. “Eliminating the use of internal combustion engines, as well as the introduction of environmentally friendly agricultural technologies is a prerequisite on our way to climate neutrality. This is our short- medium-term and long-term goal.”
Finally, Latvia is joining its neighbouring countries in the race to become energy independent by ensuring a more diverse supply of energy, especially when it comes to gas. Currently, the only operational liquefied natural gas (LNG) terminal in the Baltics, is the one in Klaipeda (if we don’t consider Finland’s floating LNG terminal in Fortum’s Inkoo port), operated by Lithuania’s KN. Other projects are being born in the other Baltic States, like the Tallinn and Paldiski terminals, very similar to Klaipeda in terms of investment and economic evaluation.
On the other hand, Latvia is evaluating the need for the Skulte LNG Terminal. The benefits of this terminal include that it’s the only one which does not require investment in an expensive LNG cold storage facility as it uses a unique geographical location near the third largest European underground gas storage at Inčukalns.
“Regarding the law About the Skulte liquefied natural gas terminal, which is made based on our Saeima decision, we are searching for ways how to enforce this law,” says Mr Cudars.
He mentions that on 13 January 2023, the Latvian cabinet received a project proposed by the developer of the terminal and its strategic investor. In February, after receiving additional information, which provided more detailed information on the infrastructure, capacity and costs of this specific project, the Ministry of Climate and Energy made an analysis. The Latvian cabinet, based on this analysis, rejected the terms of the project, mainly due to the extent of their regulatory advantages and guarantees.