Latvia’s transition to clean energy increases security and lowers prices

Actions taken today to reduce emissions will impact the pace and scale of Latvia’s energy transition and the achievement of its ambitious goal of climate neutrality by 2050, according to a new in-depth policy review by the International Energy Agency (IEA).

The review published today marks a key milestone in Latvia’s accession to the IEA and comes after ministers from IEA member countries invited Latvia to become the 32nd member of the Agency in February.

Latvia continues to increase the share of renewable energy in its energy mix, which accounts for around three-quarters of electricity generation, with the majority of current production coming from hydroelectricity and biomass. This provides a solid basis for the country to further reduce emissions across the economy and meet its renewable energy targets, including its recently updated intention to meet almost 60% of its final energy consumption from renewables alone by 2030.

However, other sectors – especially transport and construction – still consume large amounts of energy and rely on outdated infrastructure. According to the report, this makes it difficult to make greater efforts to reduce overall energy use and greenhouse gas emissions. It therefore calls on the government to prioritize energy efficiency and fuel switching in these sectors.

To continue electrification in the energy sector, which is crucial to Latvia’s broader climate goals, policymakers must create an enabling environment for investors to support new renewable energy projects, especially wind and solar. The report indicates that streamlining permitting procedures and eliminating regulatory bottlenecks can help unlock new investments.

The 2024 review of Latvia’s energy policy will be announced today at an event in Riga, hosted by IEA Deputy Executive Director Mary Warlick together with Latvian Minister of Climate and Energy Kaspars Melnis.

“Latvia has taken impressive steps to reduce its energy dependence on Russia in such a short period of time, ending imports of both electricity and natural gas,” said IEA Deputy Executive Director Mary Burce Warlick. “We also encourage Latvia to accelerate efforts to synchronize with European electricity grids, use a greater share of renewable energy and diversify imports to ensure energy security. We look forward to continuing the IEA’s cooperation with Latvia as it takes significant steps to accelerate its energy transition. “

The report indicated that the creation of a new Ministry of Climate and Energy in January 2023 was an important step towards achieving many of the country’s energy and climate goals. As Latvia moves to the next stage of its energy transition, the report makes a number of recommendations. This includes developing a detailed roadmap for the electricity sector that reflects the growing share of renewable energy sources to increase electrification and provide greater certainty for potential investors.

“The recommendations of the International Energy Agency are equally consistent with Latvia’s priorities, which are at the forefront of ‘today’ energy policy,” said Minister Melnis. “We have been actively working to introduce regulations by mid-June that will make wind farms increasingly attractive to citizens and municipalities. Energy is produced cheapest at home, so we plan to maximize the potential of wind energy to ensure cheaper energy production for the population of Latvia, support the state budget with additional investments, promote energy security and reduce emissions that are not environmentally friendly. Several support programs have also been developed or modified to promote both the installation of renewable energy equipment among households and the replacement of our old fleet with clean and environmentally friendly vehicles.”

The report highlights that Latvia has the opportunity to significantly improve the energy efficiency of the country’s existing building stock, which would require consistent financial support for renovation and modernization projects. Incentives to switch vehicle fleets to newer, more efficient models, including electric vehicles, can also help significantly reduce emissions in the transport sector.

The report notes that Latvia’s energy system is closely interconnected with its neighbors, which means energy transition strategies will need to be well coordinated across the Baltic states. Latvia’s large underground natural gas storage facility at Inčukalns has played a key role in strengthening regional security of supply across the region following the introduction of a ban on Russian gas imports in 2022. Similarly, the expected closure of a thermal power plant in the region will increase the need for strong interconnections to support energy security and avoid price spikes in future.