report_137923_Georgia_Sustainable heating

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<p class="doc-text shared">Energy Transition Pathways for the 2030 Agenda</p>
<p class="country-text shared">SDG 7 Roadmap for Georgia</p>
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<p class="ref-text shared">Developed using National Expert SDG 7 Tool for Energy Planning (NEXSTEP)</p>
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<h1>Executive summary</h1><p>Transitioning the energy sector to achieve the 2030 Agenda for Sustainable Development and the objectives of the Paris Agreement presents a complex and difficult task for policymakers. It needs to ensure sustained economic growth as well as respond to increasing energy demand, reduce emissions and, more importantly, consider and capitalize on the interlinkages between Sustainable Development Goal 7 (SDG 7) and other SDGs. In this connection, ESCAP has developed the National Expert SDG Tool for Energy Planning ( <a href="https://www.unescap.org/our-work/energy/nexstep">NEXSTEP</a> ). This tool enables policymakers to make informed policy decisions to support the achievement of the SDG 7 targets as well as emission reduction targets (NDCs). The initiative has been undertaken in response to the Ministerial Declaration of the Second Asian and Pacific Energy Forum (April 2018, Bangkok) and Commission Resolution 74/9, which endorsed its outcome. NEXSTEP also garnered the support of the Committee on Energy in its Second Session, with recommendations to expand the number of countries being supported by this tool.</p><p>The key objective of this SDG 7 roadmap is to assist the Government of Georgia to develop enabling policy measures to achieve the SDG 7 targets. This roadmap contains a matrix of technological options and enabling policy measures for the Government to consider. It presents several scenarios that have been developed using national data, and which consider existing energy policies and strategies, and reflection other development plans. These scenarios are expected to enable the Government to make an informed decision to develop and implement a set of policies to achieve SDG 7 by 2030, together with the NDC.</p><h2>Highlights of the roadmap</h2><p>Georgia’s progress towards achieving the SDG 7 targets is promising, but more needs to be done to achieve all SDG 7 targets by 2030 through a concerted effort and the establishment of an enabling policy framework. Georgia has successfully provided universal electricity access to its population; however, further promotion of electric cooking stoves is still required to connect the remaining 900,000 people with clean cooking technology and fuel between now and 2030. Energy efficiency improvement needs to be boosted across different sectors in order to achieve a 2.9 per cent annual improvement, reducing energy intensity to 3.8 megajoule s/US$ by 2030.</p><p>The existing trend indicates that the country will still miss the unconditional emission reduction target pledged under the Paris Agreement by a small margin. Emissions reduction can be achieved via demand side energy efficiency measures and through changing the fuel mix in the power sector. Achieving the unconditional NDC target, while at the same time meeting the SDG 7 targets, requires a 25.5 per cent share of renewable energy to be reached in the total final energy consumption (TFEC). The NEXSTEP analysis also shows that through the proposed improvement areas, Georgia’s energy security can be further strengthened as these measures will reduce its reliance on natural gas imports.</p><p>The levelized cost of electricity from renewable power technologies has experienced a steep decline, becoming economically more competitive than the conventional fossil-fuel-based technologies. Georgia may leverage its abundant renewable energy potential, specifically hydropower, to provide clean electricity for its neighbouring countries. In addition to generating revenue from electricity sales, this also permits further emission reduction for these countries.</p><h2>Achieving Georgia’s SDG 7 and NDC targets by 2030</h2><p><strong><i>Universal access to electricity</i></strong></p><p>Georgia already achieved universal access to electricity in 2010. The <i>2007 Energy Policy for Georgia</i> prioritizes improvement of service quality and the protection of consumer interests.</p><p><strong><i>Universal access to clean cooking</i></strong></p><p>Georgia’s access to clean cooking fuels and technologies was reported as 75.2 per cent in 2017. NEXSTEP analysis shows that the current rate of improvement of 2.7 per cent is not enough to achieve universal access to clean cooking ( figure ES 1 ). Access to clean cooking will increases from 75.2 per cent in 2017 to 97 per cent in 2030, which will leave 109,000 people (32,000 households) in rural areas relying on inefficient and hazardous cooking fuels and technologies. Georgia needs to increase its efforts to achieve universal access to clean cooking fuels. This analysis indicates that electric cooking stoves will be the most feasible approach to ensuring universal access to clean cooking fuel by 2030.</p><p style="text-align:center"><strong>Figure ES 1. Access to clean cooking in Georgia</strong></p><img style="max-width: 100%;display: block;margin: auto;" src="https://nexstepenergy.org/web/sites/default/files/imagename_1521.png&qu…; title="" alt="" /><p><strong><i>Renewable energy</i></strong></p><p>The share of renewable energy in TFEC was calculated at 25.9 per cent (including traditional biomass) in 2018. Based on the current policy scenario, the share of renewable energy will decrease to 22.7 per cent by 2030, mainly due to the substitution of traditional biomass cooking stoves by other non-biomass cooking stoves. [^1] In the SDG scenario, the share of renewable energy in TFEC will need to reach 25.4 per cent (excluding traditional biomass) by 2030, which will ensure the achievement of Georgia’s unconditional NDC target.</p><p><strong><i>Energy efficiency</i></strong></p><p>Energy intensity in Georgia declined at an average annual rate of 4.9 per cent from 1990 to 2010, driven by the structural changes in Georgia’s economy due to the closure of energy-intensive industries and decline in output. Achieving the SDG 7.3 target requires an annual improvement of 9.8 per cent of primary energy intensity (figure ES 2) to achieve the SDG 7 target of 1.74 MJ/US$ by 2030 – a drop from 5.3 MJ/US$ in 2018.</p><p>The SDG 7.3 target for Georgia is not feasible; therefore, a revised target of 3.8 MJ/US$ by 2030, a 2.9 per cent annual improvement which is in line with global targets, is recommended. In the current policy scenario, energy efficiency measures, if implemented, indicate that Georgia will only achieve a 2.2 per cent annual improvement in primary energy intensity by 2030.</p><p style="text-align:center"><strong>Figure ES 2. Georgia’s energy efficiency target</strong></p><img style="max-width: 100%;display: block;margin: auto;" src="https://nexstepenergy.org/web/sites/default/files/imagename_1522.png&qu…; title="" alt="" /><p>There are ample opportunities for Georgia to achieve this target as well as even implement a higher rate of improvement. These include, for example, minimum energy efficiency standards (MEPS), rapid deployment of electric vehicles and improved energy efficiency in new commercial buildings. These opportunities are discussed in later sections of this report.</p><p><strong><i>Nationally Determined Contributions</i></strong></p><p>Georgia’s current policies in the energy sector will achieve the NDC unconditional target of 15 per cent reduction of GHG emissions compared to business-as-usual (BAU) by 2030. Energy sector emissions in the BAU scenario are modelled to reach 15.97 million tonnes CO 2 -e (MtCO 2 -e) by 2030. Emissions in the current policy scenario are projected to reach 13.58 MtCO 2 -e by 2030, which will miss the NDC unconditional target of 15 per cent reduction in GHG emissions by a small margin of 8,000 CO 2 -e.</p><p style="text-align:center"><strong>Figure ES 3. Comparison of emissions by scenario, 2000-2030</strong></p><img style="max-width: 100%;display: block;margin: auto;" src="https://nexstepenergy.org/web/sites/default/files/imagename_1523.png&qu…; title="" alt="" /><h2>C. Important policy directions</h2><p>The key policy recommendations to help Georgia accelerate the energy transition to achieve SDG 7 and NDC targets include:</p><p><strong>(i) Targeted interventions in rural areas are required to achieve universal access to clean cooking in rural areas.</strong> The electric cooking stove is the recommended technology option for Georgia to achieve this target. This option should be prioritized for the rural areas, which are grid-connected but still rely on traditional biomass cooking stoves. Implementation of this programme will cost the Government US$1.28 million to achieve universal access to clean fuels and technologies for cooking by 2030 <strong>;</strong></p><p><strong>(ii) Decarbonisation of heat is a major challenge overlooked by current policies.</strong> The NEXSTEP analysis recommends the adoption of energy-efficient heat pumps to replace old natural gas boilers in Georgian households. Such a measure not only decreases Georgia’s energy intensity, but also reduces reliance on natural gas imports <strong>;</strong></p><p><strong>(iii) Electrification of transport is a viable solution with cheap electricity from hydropower. The</strong> NEXSTEP analysis recommends a long-term electrification strategy for Georgia. Fuel-switching from oil products to electricity will enhance energy security by reducing import as well as reduce emissions and establish Georgia as a leader in sustainable transport;</p><p><strong>(iv) Investment in wind and solar power should be promoted.</strong> The levelized cost of electricity analysis recommends increasing investments in wind and solar power. Georgia can achieve additional benefits by reducing natural gas imports as well as reduced vulnerability to hydropower seasonal variation and emission reductions in line with NDC targets. The additional investment needed to increase the share of wind and solar in power generation can be supported by a price on carbon. It has been estimated that a carbon price ofUS$40/tCO 2 -e would level the playing field for renewables as well as attract investors;</p><p><strong>(v) Georgia has the potential to export 10 TWh per annum of clean electricity in 2030.</strong> The NEXSTEP analysis includes the target of 10 TWh annual electricity exports as outlined in the “Ten-Year Network Development Plan” of Georgia, 2018-2029. Georgia may leverage its cheap and abundant renewable energy sources for electricity generation, boosting its electricity sales in more lucrative electricity markets in neighbouring countries.</p><p><H1 class="pb-before">CHAPTER 1: INTRODUCTION</h1></p>
<h2>Background</h2><p>Transitioning the energy sector to achieve the 2030 Agenda for Sustainable Development and the objectives of the Paris Agreement presents a complex and difficult task for policymakers. It needs to ensure sustained economic growth, respond to increasing energy demand, reduce emissions and, more importantly, consider and capitalize on the interlinkages between SDG 7 and other SDGs. In this connection, ESCAP developed NEXSTEP. This tool enables policymakers to make informed policy decisions to support the achievement of the SDG 7 targets as well as emission reduction targets (NDCs). The initiative was undertaken in response to the Ministerial Declaration of the Second Asian and Pacific Energy Forum (April 2018, Bangkok) and Commission Resolution 74/9, which endorsed its outcome. NEXSTEP also garnered the support of the Committee on Energy in its Second Session, with recommendations to expand the number of countries being supported by this tool.</p><h2>SDG 7 targets and indicators</h2><p>SDG 7 aims to ensure access to affordable, reliable, sustainable and modern energy for all. It has three key targets, which are outlined below.</p><p>• Target 7.1. “By 2030, ensure universal access to affordable, reliable and modern energy services.” Two indicators are used to measure this target: (a) the proportion of the population with access to electricity; and (b) the proportion of the population with primary reliance on clean cooking fuels and technology.</p><p>• Target 7.2. “By 2030, increase substantially the share of renewable energy in the global energy mix”. This is measured by the renewable energy share in total final energy consumption (TFEC). It is calculated by dividing the consumption of energy from all renewable sources by total energy consumption. Renewable energy consumption includes consumption of energy derived from hydropower, solid biofuels (including traditional use), wind, solar, liquid biofuels, biogas, geothermal, marine and waste. Due to the inherent complexity of accurately estimating traditional use of biomass, NEXSTEP focuses entirely on modern renewables (excluding traditional use of biomass) for meeting this target.</p><p>• Target 7.3. “By 2030, double the global rate of improvement in energy efficiency”, as measured by the energy intensity of the economy. This is the ratio of the total primary energy supply (TPES) and GDP. Energy intensity is an indication of how much energy is used to produce one unit of economic output. As defined by the IEA, TPES is made up of production plus net imports minus international marine and aviation bunkers plus stock changes. For comparison purposes, GDP is measured in constant terms at 2011 PPP.</p><h2>Nationally Determined Contribution</h2><p>The NDC represents pledges by a country to reduce national emissions and is the steppingstones to the implementation of the Paris Agreement. Since the energy sector is the largest contributor to GHG emissions in most countries, decarbonizing energy systems should be given a high priority. Key approaches to reducing emissions from the energy sector include increasing renewable energy in the generation mix and improving energy efficiency. In its NDC document, Georgia has pledged to reduce GHG emission by 15 per cent (unconditional) compared to BAU and 25 per cent (conditional) with international support compared to BAU by 2030.</p><p><H1 class="pb-before">CHAPTER 2: NEXSTEP METHODOLOGY</h1></p>
<p>The main purpose of NEXSTEP is to help in designing the type and mix of policies that will enable achievement of the SDG 7 targets and the emission reduction targets (under NDCs) through policy analysis. However, policy analysis cannot be done without: (a) modelling energy systems to forecast/backcast energy and emissions; and (b) economic analysis to assess which policies or options would be economically suitable. Based on this, a three-step approach has been proposed. Each step is discussed in the following sections.</p><h2>Key methodological steps</h2><h2>Scenario definitions</h2><p>The LEAP modelling system is designed for scenario analysis, to enable energy specialists to model energy system evolution based on current energy policies. In the NEXSTEP model for Georgia, three main scenarios have been modelled: (a) a BAU scenario; (b) the current policy scenario (CPS); and (c) Sustainable Development Goal (SDG) scenario.</p><h3>Basics of economic analysis</h3><p>An economic analysis of public sector investment differs from a financial analysis. A financial analysis considers the profitability of an investment in a project from the investor’s perspective. In an economic analysis the profitability of the investment also takes into consideration national welfare, including externalities. A project is financially viable only if all the monetary costs can be recovered in the project’s lifetime. Project financial viability is not enough for an economic analysis; the contribution to societal welfare should also be identified and quantified. For example, in the case of a coal power plant, the emissions from the combustion process emits particulate matter that is inhaled by the local population, causing health damage and acceleration of climate change. In an economic analysis a monetary value is assigned to the GHG emission to value its GHG emissions abatement.</p><h3>Economic analysis module</h3><p>The energy and emissions modelling section selects the appropriate technologies, and the economic analysis builds on this by selecting the least cost energy supply mix for the country. The economic analysis is used to examine economic performances of individual technical options identified and prioritize least-cost options. As such, it is important to estimate some of the key economic parameters such as net present value, internal rate of return and payback period. A ranking of selected technologies will help policymakers to identify and select economically effective projects for better allocation of resources. The economic analysis helps to present several economic parameters and indicators that would be useful for policymakers in making an informed policy decision.</p><h2>Scenario analysis</h2><p>The scenario analysis evaluates and ranks the scenarios, using the Multi Criteria Decision Analysis (MCDA) tool, with a set of criteria and weights assigned to each criterion. Ideally, the weights assigned to each criterion should be decided in a stakeholder consultation. If deemed necessary, this step can be repeated using the NEXSTEP tool in consultation with stakeholders where the participants may want to change weights of each criterion, where the total weight needs to be 100 per cent. The criteria considered in the MCDA tool can include those listed below; however, stakeholders may wish to add/remove criteria to suit the local context.</p><ul><li>Access to clean cooking fuel</li><li>Energy efficiency</li><li>Share of renewable energy</li><li>Emissions in 2030</li><li>Alignment with Paris Agreement</li><li>Fossil fuel subsidy phased out</li><li>Price on carbon</li><li>Fossil fuel phase-out</li><li>Cost of access to electricity</li><li>Cost of access to clean cooking fuel</li><li>Investment cost of the power sector</li><li>Net benefit from the power sector</li></ul><h3>Basics of economic analysis</h3><p>An economic analysis of public sector investment differs from a financial analysis. A financial analysis considers the profitability of an investment in a project from the investor’s perspective. In an economic analysis the profitability of the investment also takes into consideration national welfare, including externalities. A project is financially viable only if all the monetary costs can be recovered in the project’s lifetime. Project financial viability is not enough for an economic analysis; the contribution to societal welfare should also be identified and quantified. For example, in the case of a coal power plant, the emissions from the combustion process emits particulate matter that is inhaled by the local population, causing health damage and acceleration of climate change. In an economic analysis a monetary value is assigned to the GHG emission to value its GHG emissions abatement.</p><p><H1 class="pb-before">CHAPTER 3: OVERVIEW OF GEORGIA'S ENERGY SECTOR</h1></p>
<h2>Current situation</h2><p><i>Geography:</i> Georgia is located in the mountainous region of south Caucasus, at the crossroads between Western Asia and Eastern Europe. The country covers an area of 69,700 square kilometres, bounded in the west by the Black Sea, in the north by Russia, the south by Turkey and Armenia, and the south-east by Azerbaijan.</p><p><i>Population:</i> The population of Georgia declined from 5 million people in 1991 to 3.72 million in 2018. During 2008-2018, the population decline averaged 0.3 per cent annually due to low fertility and outmigration.</p><p><i>Economy:</i> Following the breakup of the Soviet Union in 1991 and an ensuing civil war, the Georgian economy contracted by more than 65 per cent to 1993. Georgia moved to a market-based economy system, and with deep economic and governance reforms it has achieved the status of “star reformer” and in 2019 was ranked seventh place globally for ease of doing business (World Bank, 2020b). According to the World Bank, Georgia is classified as an upper middle-income country with a gross domestic product (GDP) per capita of US$4,764 in 2019. During the decade of 2010-2019, Georgia experienced strong economic growth with an annual GDP per capita increase of 4.8 per cent (World Bank, 2020a).</p><p><i>Energy:</i> The key piece of legislation regulating the country's energy sector is the 1997 Georgian Law on Electricity and Natural Gas, which has been amended several times since 2006 and incorporates some European Union market economy principles.</p><p>Georgia’s energy policy, the <i>2007 Main Directions of the State Policy in Energy Sector of Georgia</i>, sets the objectives that the country is pursuing in the energy sector with focus on energy security using indigenous renewable energy. The Energy Policy for Georgia was updated in 2015, but it maintained the same key directions of the previous policy, and aims to provide Georgia with a long-term state vision. Finally, the 2013 Social-Economic Development Strategy of Georgia, “Georgia 2020”, tackles priority issues to achieve long-term inclusive growth.</p><h2>National energy profile</h2><p>Georgia achieved universal access to electricity in 2010. The <i>2007 Energy Policy for Georgia</i> prioritizes improvement of service quality and protection of consumer interests.</p><p>Access to clean cooking fuels was measured at 75.2 per cent in 2017, based on the Georgia 2017 Energy Consumption in Household Survey carried out by the National Statistics Office of Georgia (GEOSTAT, 2017). The renewable energy share in TFEC was calculated at 25.9 per cent in 2018. Figure 2 shows Georgia’s planned capacity expansion for electricity generation. The figure is based on data from the Ministry of Economy and Sustainable Development (MoESD), renewable energy capacity expansion is based on potential. Hydropower capacity expansion is planned to increase from 3,266 MW in 2019 to 6,501 MW by 2030.</p><p style="text-align:center"><strong>Figure 2. Georgia’s planned power plant capacity expansion</strong></p><img style="max-width: 100%;display: block;margin: auto;" src="https://nexstepenergy.org/web/sites/default/files/imagename_1524.png&qu…; title="" alt="" /><p>Energy efficiency is a key priority for the Government to achieve economic competitiveness in order to enhance economic growth. The rational use of energy is considered as an important means of lowering the country’s dependence on imported petroleum. One policy of ongoing significance is the 1997 Law on Electricity and Natural Gas, which focuses on efficiency improvement in electricity generation, transmission, import, export and consumption as well as natural gas supply and distribution.</p><h2>National energy policies and targets</h2><p>Scenario development in this study is based on energy policies and assumptions, as summarized in table 1, and highlighted below.</p><ul><li>The main directions of the State Policy in Energy Sector of Georgia <i>__ (Energy Policy for Georgia): address the priorities and development opportunities in the energy sector of Georgia, and it considers the main directions towards energy security </i>__ (Ministry of Energy of Georgia, 2015). The core national energy policy directions include:
- Diversification of supply sources, and optimal utilization of resources and reserves;
- Utilization of Georgia’s renewable energy resources;
- Gradual approximation of Georgia’s legislative and regulatory framework with the European Union’s energy acquisition;
- Energy market development and improvement of the energy trading mechanism;
- Strengthen Georgia’s role as a transit route in the region;
- Georgia – regional platform for generation and trade of clean energy;
- Develop and implement an integrated approach to energy efficiency in Georgia;
- Taking into consideration environmental components in the implementation of the energy projects;
- Improving service quality and protection of consumer interests.</li></ul><ul><li><strong>National Renewable Energy Action Plan (NREAP) Georgia, 2019:</strong> NREAP outlines the current situation related to renewable energy in Georgia and proposes measures to meet the target of 30 per cent of energy consumed coming from renewable energy in 2020 (MoESD, 2019b).</li><li><strong>National Energy Efficiency Action Plan (NEEAP) Georgia, 2019-2020:</strong> NEEAP establishes energy efficiency targets for 2020, 2025 and 2030. Georgia’s indicative national energy efficiency targets mentioned in the National Energy Efficiency Action Plan (NEEAP) are to reduce primary energy consumption by 17 per cent and final energy consumption by 13 per cent compared with the BAU scenario in 2030. However, the analysis is based on MARKAL model assumptions using 2014 data (MoESD, 2019a).</li><li><strong>Georgia’s Intended Nationally Determined Contribution (INDC), 2015:</strong> Georgia has committed to a voluntary, unconditional target of reducing its greenhouse gas (GHG) emissions by 15 per cent and a conditional target of 25 per cent by 2030, subject to global agreement, access to financial resources and technology transfer (MEPA, 2015).</li></ul><p><strong>Tabl</strong> <strong>e</strong> <strong>1. Important factors, targets and assumptions used in modelling</strong></p><table><tr><th><strong>Parameters</strong></th><th><strong>BAU</strong></th><th><strong>Current policy scenario</strong></th><th><strong>Sustainable Development Goal</strong></th></tr><tr><td>Economic growth</td><td>4.8%</td><td></td><td></td></tr><tr><td>Population growth</td><td>-0.2%</td><td></td><td></td></tr><tr><td>Commercial floor space</td><td>9,380,823 m2 (data used in National Energy Efficiency Action Plan)</td><td></td><td></td></tr><tr><td>Transport activity</td><td>12.25 billion vehicle km (based on own calculation using registered vehicle data provided by MoESD)</td><td></td><td></td></tr><tr><td>Residential urbanisation</td><td>63.9 % in 2030 (United Nations Population Statistics)</td><td></td><td></td></tr><tr><td>Access to electricity</td><td>100 per cent</td><td>100 per cent</td><td>100 per cent</td></tr><tr><td>Access to clean cooking fuels</td><td>Based on historical improvement</td><td>Based on historical improvement and current policies</td><td>100 per cent access to clean cooking fuels and technologies by 2030</td></tr><tr><td>Energy efficiency</td><td>Remains constant</td><td>Based on implementation of current policies</td><td>2.9 per cent annual improvement in primary energy intensity</td></tr><tr><td>Power plant</td><td>Based on 2018 share</td><td>Based on MoESD data</td><td>Based on least – cost optimization</td></tr></table><style>
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</style><h2>National energy resources</h2><p>Georgia has abundant renewable energy resource potential in hydro, wind, solar, geothermal and biomass energy resources. According to NREAP, the estimated hydropower resource potential is 15,000 MW with a potential for electricity generation of 50 TWh per year, of which 22 per cent is currently being utilized in the country. Solar energy potential is high with annual solar irradiation varying from 1,250 to 1,800 kWh/m2. Estimated solar potential for power generation is approximately 500 MW, as estimated by the Government. Wind energy potential is estimated at 1,500 MW, with an electricity generation potential of 4TWh per year. The frequency of strong winds in Georgia is observed on mountain peaks and passes, for example the Mta-sabueti region where the average annual wind speed is measured at 9.2 m/s. Georgia has significant untapped geothermal energy reserves and according to preliminary estimates the geothermal energy potential is 420 MW and thermal energy of 2.7 TWh per year. A study by Iceland’s Viirkir – Orkint estimated geothermal resources to be in the range of 600 MW-12,000 MW (thermal). Geothermal energy could be used to supply clean energy to satisfy space heating demand and hot water for 500,000 to 1 million people, according to the Enery Sector Management Assistance Program (ESMAP, 2005).</p><h2>National energy balance</h2><p>The national energy balance of Georgia 2018 from the GEOSTAT is the starting point of the NEXSTEP analysis. The Total Primary Energy Supply (TPES) is dominated by natural gas and oil products, which are largely imported.</p><p>Figure 3 shows that the TPES of Georgia is 4,819,000 tonnes (ktoe) of oil equivalent. Georgia’s TPES by fuel share is natural gas 2,013 ktoe (42 per cent), oil products 1,246 ktoe (26 per cent), hydropower 856 ktoe (18 per cent), coal 303 ktoe (6 per cent), biomass 271 ktoe (6 per cent), electricity 79 ktoe (2 per cent), other renewables (solar, wind) 28 ktoe (1 per cent) and crude oil 25 ktoe (0.5 per cent).</p><p style="text-align:center"><strong>Figure 3 Total Primary Energy Supply in 2018</strong></p><img style="max-width: 100%;display: block;margin: auto;" src="https://nexstepenergy.org/web/sites/default/files/imagename_1525.png&qu…; title="" alt="" /><p>Georgia’s total final energy consumption (TFEC) in 2018 was 4,390 ktoe (figure 4) <strong>.</strong> TFEC by fuel: natural gas 1,512 ktoe (34 per cent), oil products 1,267 ktoe (29 per cent), electricity 1,026 ktoe (23 per cent), coal 294 ktoe (7 per cent), biomass 271 ktoe (7 per cent) and other renewables 19 ktoe (0.4 per cent).</p><p style="text-align:center"><strong>Figure 4 Total final energy consumption in 2018</strong></p><img style="max-width: 100%;display: block;margin: auto;" src="https://nexstepenergy.org/web/sites/default/files/imagename_1526.png&qu…; title="" alt="" /><p><H1 class="pb-before">CHAPTER 4: SUMMARY OF SUSTAINABLE HEATING</h1></p>
<h4>Sustainable heating</h4><h5>Scenario description</h5><p>Same as the SDG scenario, SDG and NDC targets are achieved in this scenario. This scenario further analyses the deployment possibilities of heat pumps to replace natural gas boilers as well as the use of solar water heaters in replacing natural gas water heater consumption in households. This scenario also analyses the impact of a US$40/tCO 2 -e carbon price on electricity generation. Other energy efficiency measures applied in the SDG scenario are similarly considered in this scenario.</p><h5>SDG 7.1.1. Universal access to electricity</h5><p>Georgia achieved universal access to electricity in 2010. The SDG indicator is achieved across all scenarios.</p><h5>SDG 7.1.2. Universal access to clean cooking</h5><p>Access to clean cooking fuels by using electric cooking stove technology is evaluated in this scenario. The intervention will substitute traditional biomass cooking stoves and cost US$40 per household, with an annualized cost of US$87 per household.</p><p>The implementation of this programme will cost the Government of Georgia US$1.28 million to achieve universal access to clean fuels and technologies for cooking. The technology is classed as Level 5 in the World Bank MTF for Indoor Air Quality Measurement. The capital cost of the technology varies between US$40 and US$100, and it has high efficiency (solid plate, 74 per cent and induction, 84 per cent).</p><p>Georgia has surplus clean electricity generation potential and a shift towards electric cooking stoves is a feasible solution.</p><h5>SDG 7.2. Renewable energy</h5><p>The share of renewable energy in total final energy consumption will be 30.4 per cent by 2030.</p><h5>SDG 7.3. Energy efficiency</h5><p>This scenario considers the implementation of the following energy efficiency measures, achieving beyond the SDG 7.3 target. The energy intensity in 2030 is 3.62 MJ/$.</p><p><strong>Residential Sector: Energy efficiency measures</strong></p><ol><li>Replacing natural gas boilers with heat pumps in 60 per cent of households in Georgia to save 164 ktoe annually in 2030.</li><li>Replacing natural gas water heaters with solar water heaters in 30 per cent of Georgia households.</li><li>Introduce MEPS for all new lights from 2022 onwards, to replace existing incandescent bulbs (75W) and CFL bulbs (20W)with LED bulbs (12W), saving 47 ktoe annually in 2030.</li><li>Introduce MEPS for all new televisions from 2022 onwards, saving 14 ktoe annually in 2030.</li><li>Introduce MEPS for all new refrigerators from 2022 onwards, saving 9 ktoe annually in 2030.</li><li>Introduce MEPS for all new washing machines from 2022 onwards, saving 2 ktoe annually in 2030.</li><li>Switch from traditional cooking to clean cooking (electric cooking stoves) saving 3 ktoe annually in 2030.</li></ol><p><strong>Transport Sector: Energy efficiency measures</strong></p><p>Change 100 per cent of passenger buses to electric buses by 2030, saving 93 ktoe annually in 2030.</p><p><strong>Industrial Sector Energy efficiency measures</strong></p><p>(i) Change the wet process of clinker production in the cement industry to pre-heated processing using pre-calciner kilns, saving 34 ktoe annually in 2030.</p><ol><li>LED lighting across all industrial sectors, saving 25 ktoe annually in 2030.</li><li>Improved boilers and steam/tot water distribution systems in the pulp and paper, food and beverage and chemical industries, saving 31 ktoe annually in 2030.</li><li>Energy efficient motors, pumps, fans and compressors across all industries, saving 24 ktoe annually in 2030.</li></ol><p><strong>Commercial Sector: Energy efficiency measures</strong></p><ol><li>Plastic double-glazed windows and roof insulation across all government buildings in Georgia to reduce thermal energy consumption by 39 per cent, saving 39 ktoe annually in 2030.</li><li>Plastic double-glazed windows in private buildings to reduce thermal energy consumption by 15 per cent, saving 25 ktoe annually in 2030.</li></ol><h5>NDC conditional target</h5><p>Georgia has committed to reducing GHG emissions in the energy sector to 25 per cent conditionally (with international aid) below the BAU scenario. Achievement of the conditional target will require the 2030 emissions to drop to 11,975,000 tCO 2 -e compared to the 2030 BAU emissions of 15,966,000 tCO 2 -e.</p><p>Based on emission constraints and NEMO-based optimization for least-cost electric generation, the overall emission from this scenario is 11,114,000 tCO 2 -e, a drop of 4,852,000 tCO 2 -e compared to the baseline. This will be achieved by:</p><ol><li>Reducing the consumption emissions by 3,378,000 tCO 2 -e. This is largely achieved by implementing energy efficiency measures and fuel switching in the transport sector.</li><li>Reducing the electricity generation emissions by 1,473,000 tCO 2 -e. This is achieved by changing the fuel mix in the power sector.</li></ol><h5>Price on carbon</h5><p>The scenario analyses the implementation of a price on carbon policy of US$40 per ton of CO 2 emissions from the power sector. This will provide the Government with carbon revenue of US$541 million by 2030.</p><h5>Investment required: US$13.4 billion</h5><p>The total cost of this scenario is US$13.4 billion by 2030. This includes a cost of:</p><ol><li>US$ 1.28 million to achieve access to clean cooking fuel.</li><li>US$ 13.4 billion to change the fuel mix in the power sector.</li></ol><h5>Total net benefits from the power sector</h5><p>The total net benefits from the power sector will be US$3.3 billion, more than US$2.5 billion higher compared to the current policy scenario. This is because of the higher operating fuel and O&M costs of fossil fuel-based power plant lifetime costs.</p><h5>Energy balance</h5><p><H1 class="pb-before">CHAPTER 5: POLICY RECOMMENDATIONS</h1><h2>Levelised Cost of Electricity</h2>
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The following presents the results of Levelised Cost of Electricity (LCOE) for the power plant technologies applicable for Georgia. It can generally be concluded that some renewable power technologies have become cheaper than the conventional fossil-fuel-based technologies.<br />
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<h3>Raising Ambitions</h3><h4>Carbon pricing</h4><p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
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286.2pt"><b><i><span style="font-family:"Arial",sans-serif;color:#4472C4">Putting a price on carbon to help reduce the investment gap and encourage low-carbon transition</span></i></b><p></p></p>

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286.2pt"><span style="font-family:"Arial",sans-serif">Carbon pricing is recognized around the world as an effective policy tool to facilitate sustainable energy transition. The external cost of carbon emissions such as health damage, climate impact and social costs paid by society should be shifted to the producers and consumers responsible for producing pollution. There are two main mechanisms for carbon pricing – emission trading schemes (cap and trade) and carbon taxation.<p></p></span></p>

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286.2pt"><span style="font-family:"Arial",sans-serif">In this analysis, a carbon price of US$ 40/tCO2-e has been considered as a mechanism for limiting emissions and levelling the playing field for low-carbon technologies, currently limited to the power sector. Carbon pricing mechanisms can be similarly applied to other sectors such as the industry sector. The fuel consumption of Georgia’s industry sector is still currently dominated by fossil fuels, such as natural gas and solid fuels (i.e., coal). The resultant emissions are at around 2,086 ktCO2-e in 2030, across the SDG and the ambitious scenarios. Consideration of a carbon price is likely to lead to process innovation or uptake of cleaner technologies.</span><span style="font-size:12.0pt;line-height:115%"><p></p></span></p>

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286.2pt"><i><span style="font-size:10.0pt;line-height:115%;font-family:"Arial",sans-serif">*this recommendation is applicable for all ambitious scenarios, with the exception of clean electricity export scenario</span></i><span style="font-size:12.0pt;
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<h4>Enhancing energy efficiency </h4><p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
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286.2pt"><b><i><span style="font-family:"Arial",sans-serif;mso-fareast-font-family:
"Times New Roman";color:#4472C4;mso-themecolor:accent1">Improving energy efficiency beyond the SDG 7 target<p></p></span></i></b></p>

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mso-fareast-font-family:"Times New Roman"">Georgia has the technical potential to further accelerate energy efficiency beyond the SDG 7.3 target. This can be achieved through demand side energy efficiency measures in the residential and transport sectors. Additional demand-side energy efficiency measures further reduces the TFEC by 353 ktoe, compared to the SDG scenario. <p></p></span></p>
<h4>Green financing</h4><p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
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286.2pt"><b><i><span style="font-family:"Arial",sans-serif;color:#4472C4">Green financing<p></p></span></i></b></p>

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mso-fareast-font-family:"Times New Roman"">Based on the “Ten-Year Network Development Plan” of Georgia developed for 2018-2029, it is projected that by 2029 electricity production will exceed 30 TWh and consumption will reach 22 TWh, allowing 8 TWh to be exported to neighbouring countries. Georgia’s high renewable energy potential, particularly in hydropower, allows such a target to be met with clean energy, while reducing GHG emissions. Furthermore, adoption of energy efficiency measures reduces the electricity needs in Georgia, requiring less electricity production capacity to be built to fulfil such targets. The comparatively low LCOE of renewable electricity creates a lucrative economic opportunity when the surplus electricity is sold to countries with higher generation costs (i.e., Turkey).</span><span style="font-size:16.0pt;
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286.2pt"><i><span style="font-size:10.0pt;font-family:"Arial",sans-serif;
mso-fareast-font-family:"Times New Roman"">*this recommendation is applicable for all ambitious scenarios<p></p></span></i></p>