Georgia on my mind

Georgia has had a new in-depth review of its energy efficiency policies and programmes published by the Energy Charter Secretariat.   This review follows the one in 2006 for which I was part of the team. Georgia is a country with a lot of potential for energy efficiency improvements and some very dedicated people to make it work but it has never lived up to that potential for many reasons.

What is disturbing is that there is little change in its energy efficiency policies although there have been some changes to the energy sector.  the Government abandoned writing an energy conservation law in 2008, after more than 10 years of effort and much encouragement from the wider international community. That would have given a wider remit to the government to take action. Equally important, there is now no executive agency for energy efficiency to do end-use analysis and implement projects and programmes, but there was in 2006.

At the end of 2007 the European Bank for Reconstruction and Development (EBRD) opened a $35 million credit line for energy efficiency measures to small and medium-sized industries, and to builders and home-owners (mainly insulation) from 2009 onwards. However, according to the report, only around 100 households have taken advantage of the credit line.  The report shows that the USAID-funded New Applied Technology Efficiency and Lighting Initiative (NATELI) has been running since 2009. The programme has been conducting energy audits in public areas of Tbilisi’s residential buildings. The project helps educational, hospital and residential sectors acquire an insight into possible energy saving opportunities.

The report gives some grim comments:

Anecdotal evidence from developers suggests there is little interest in energy efficiency measures on the part of those who are building new houses, with most only aware of the potential of energy efficient bulbs.

Unfortunately, the government never gave energy efficiency the priority it needed.

The executive summary states:

Transparency International has said that the government is not yet paying attention to energy efficiency and energy saving because the Georgian economy is still weak and the main part of budget revenues comes from sales of imported as well domestically produced energy in the form of various taxes: VAT, excise and others. Much of the activity that is underway is with the help of finance provided by donor countries and international finance and aid agencies.

Where the government has made progress is in liberalisation in the electricity market.  The report states:

Over the last decade, the electricity sector in Georgia has been transformed. The sector has been deregulated and unbundled into generation, transmission and distribution companies. An independent regulator sets tariffs, and the Ministry of Energy is largely confined to policy related matters. Generation assets are owned in part by the Georgian state and municipalities, but by private interests as well, with more privatisation deals in the pipeline.

Furthermore:

In practice, retail tariffs for residential customers are set close to full cost recovery but significant cross-subsidies persist and prices do not include environmental costs . . .

Given this liberalisation, one would think consumers would have a more positive attitude towards improving energy efficiency. This is a sad state of affairs for a country with few energy resources and which is so poor.