Latvia 2024

Energy Policy ReviewLatvia 2024 INTERNATIONAL ENERGYAGENCY The IEA examines thefull spectrumof energy issuesincluding oil, gas andcoal supply anddemand, renewableenergy technologies,electricity markets,energy efficiency,access to energy,demand sidemanagement andmuch more. Throughits work, the IEAadvocates policies thatwill enhance thereliability, affordabilityand sustainability ofenergy in its31member countries,13associationcountries and beyond. IEA membercountries: IEA associationcountries: AustraliaAustriaBelgiumCanadaCzech RepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyJapanKoreaLithuaniaLuxembourgMexicoNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenSwitzerlandRepublic of TürkiyeUnited KingdomUnited States ArgentinaBrazilChinaEgyptIndiaIndonesiaKenyaMoroccoSenegalSingaporeSouth AfricaThailandUkraine This publication and anymap included herein arewithout prejudice to thestatus of or sovereignty overany territory, to thedelimitation of internationalfrontiers and boundaries andto the name of any territory,city or area. The EuropeanCommission alsoparticipates in thework of the IEA Source: IEA.International Energy AgencyWebsite: www.iea.org Executive summary Latvia’s energy transition is poised for renewed momentum.The IEA peerreview of Latvia took place 18-25 September as part of Latvia’s accession to theIEA. It came at an opportune time for Latvia, which is in the process of updatingits National Energy and Climate Plan 2021-2030, in line with more ambitiousEuropean Union (EU) climate and energy transition targets. The creation of a newMinistry of Climate and Energy in January 2023 will further support Latvia’s climateand energy goals by ensuring a more dedicated and systematic governmentapproach to policy making and implementation. Moreover, given Latvia’s historicdependence on energy imports from Russia, its transition to clean energy sourcesoffers an important opportunity to bolster energy security and lower energy prices. Theelectricitysectorisdominatedbyrenewables,butmoredecarbonisation is needed in other sectors.Latvia has already made inroadson the share of renewable energy in its fuel mix, with sizeable shares of bioenergyandhydropower.Renewable energy sources dominate its electricity mix,accounting for around three-quarters of domestic generation. Othersectors,notably transport and buildings,continue to consume largeamountsof energy and rely on dated infrastructure that hinders strongerreductions in energy consumption and greenhouse gas (GHG) emissions. Thegovernment should, therefore, prioritise energy efficiency and fuel switching inthese sectors. Sectoralroadmaps would clarify pathways to meeting climate targets.Latvia’s national target is to reduce total GHG emissions (without land use, land-use change and forestry [LULUCF]) by 65% from 1990 levels by 2030. Latvia isstill on track toward this goal as emissions had fallen by 59% in 2021, though mostof this was achieved between 1990 and 1995, based on economic shifts afterindependence from the Soviet Union. Emissions in recent years have, in fact, beengrowing. Unusually for an EU country, most of Latvia’s emissions fall outside of theEU Emissions Trading Scheme (ETS). As Latvia looks toward achieving its 2050climate neutrality target, actions taken today will inform the pace and scale of thecountry’s energy transition. Notably, energy-related sectors would benefit fromdetailed sectoral roadmaps that clarify the government’s envisioned pathways toachieving2030 and 2050 climate targets,including detailing policy levers,technology penetration and financing requirements. Electricity will be the cornerstone of Latvia’s energy transition.Latvia’shydro-dominated electricity system provides a favourable starting point to useclean electricity to decarbonise other economic sectors and meet the target of57% renewables in total final consumption by 2030. To support electrification, thegovernment should ensure an enabling investment environment for additionalgrowth in renewable electricity generation, especially wind and solar. ThoughLatviadoes not offer financial support for new electricity investments,thegovernmentshould continue to streamline and remove bottlenecks in thepermitting process and eliminate regulatory hurdles for new investments. Bringingwind and solar power projects online will also help reduce Latvia’s dependence onnatural gas imports and can contribute to lower electricity prices; current efforts todevelop offshore wind will support this outcome. The government will likewiseneed to clarify the role of natural gas co-generation plants in the energy mix overthe long term, given their outsized role in ensuring system stability. Latvia could achieve considerable energy savings by renovating its buildingstock.Latvia holds considerable potential to accelerate energy efficiency outcomes in the buildings sector, which will go a long way toward meeting climatetargets and lowering energy bills