Georgia’s State Policy of Georgia on the Effective Utilization and Preservation of Energy - საერთაშორისო გამჭვირვალობა - საქართველო

Georgia’s State Policy of Georgia on the Effective Utilization and Preservation of Energy

11 January, 2010

The share of energy in the Gross Domestic Product of Georgia is three times greater than in the developed countries of Europe. This means that energy costs per unit of product produced in Georgia are three times more than in the developed countries of Europe. The current price structure on the international energy market further aggravates this indicator since Georgia is a net importer of energy. As a result of the high prices on energy, the expenditures of Georgian enterprises increase significantly, putting them in a very uncompetitive position vis-à-vis imported products on the domestic market as well as vis-à-vis potential exports. The developed countries of Western Europe, which, like Georgia, are net importers of energy, have pursued strict energy efficiency and energy saving policies since the 1973 oil crisis. Such policies have greatly benefited European economies – these countries’ GDPs have tripled since 1973, while their energy consumption has only risen by a third. On June 7, 2006 the parliament adopted a resolution on the Main Directions of Georgia’s State Policy in the Energy Sector, which defines the essence of the state energy policy and the ways and means of its implementation. In the main part of the document, energy policy objectives are prioritized. According to this document, energy efficiency and energy saving (e.g. the economical use of energy resources) are the major priorities of Georgia’s state energy policy. The following are determined as the main goals of policy on energy efficiency and saving: 1. the reduction of energy consumption and loss in industrial and communal areas and 2. the examination and implementation of the measures necessary for creating cogeneration systems and for the utilization of the renewable energy sources. However, currently on the web page of the ministry, in the section of main directions of its activity (mission of the ministry), nothing is mentioned about the energy efficiency and saving. Omitting energy efficiency as an energy policy priority means that the ministry has not precisely ascertained what kind of energy efficiency policy should be pursued (or does not consider its implementation necessary). Seventy-one percent of the energy consumed by Georgia today is imported. Natural gas comprises 47% of this figure and oil products another 24%. The high dependence on imported energy should constitute a natural incentive for the country to implement energy efficiency and saving policy and in doing so reduce its dependence on imports. However the government is not yet paying attention to energy efficiency and energy saving, which can be explained by the fact 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. At this stage it can be assumed that both the government and private domestic distributors are satisfied with the current energy consumption rate, which provides both the state budget and distributors with anticipated income from energy sales. Such an assumption is based on another reality which was revealed as a result of this research: the main consumer of energy in Georgia is not industry, agriculture, or services, but the residential sector. Energy efficiency and energy saving is one of four main directions of the EU energy policy, which is implemented by introducing new less energy intensive technologies and energy saving measures. Georgia, as part of the EU neighborhood, is step by step already harmonizing its energy policy with the EU member countries’ energy policy. Thus the Georgian government has both foreign as well as domestic incentives to adopt and implement an energy efficiency and energy saving policy.