Georgia’s move towards a green economy: possibilities, drawbacks and structural challenges

Enguri hydroelectric power station in Georgia. Photo: Saksa / Shutterstock

The best way to determine a country’s economic and political priorities is to examine what is stated in its key strategic documents. The Association Agreement and the Deep and Comprehensive Free Trade Area Agreement between Georgia and the European Union are the most significant legal agreements in the country’s recent history. Georgia and the European Union signed these treaties in June 2014, an ambitious move that lays the groundwork for Tbilisi’s future political and economic integration with the EU. The Association Agreement between the two parties entered into force two years after it was signed.

These documents are of the utmost importance, but the role of other critical documents focusing on Georgia’s economic and political development should not be overlooked. It is worth highlighting that Georgia also signed another vital document: “Accession of Georgia to the Treaty Establishing the Energy community”. The country underlined its ambition and political goal to transform energy security and advance the development of renewable energy by signing this document. These agreements exhorted Georgia to fulfill all its obligations and actively transform its energy security system. In order to establish short, medium, and long-term goals for energy development with a focus on the use of the nation’s renewable energy resources, a new energy policy went into effect in 2015. Self-sufficiency and meeting customer demand for electricity were Tbilisi’s top priorities. The government decided to reduce imports and use locally available renewable energy sources to achieve this goal.

A wealth of challenges

To begin with, Georgia has great potential to utilize renewable energy resources. Speaking broadly, the country has a lot of hydropower potential. There are 26, 000 rivers in the nation, of which 300 are important for generating energy. It is estimated that there is a total of 15,000 megawatts (MW) of potential capacity. Moreover, wind energy has the potential to produce 1500 megawatts (MW) of electricity in these rivers. Georgia also has geothermal water reserves with an annual capacity of 250 million cubic metres. The country experiences high levels of solar radiation due to its geographic location. Most of the country’s regions experience 250 to 280 sunny days and 6,000 to 6,780 hours of daylight annually. Georgia can potentially save seven tons of conventional fuel in the near future if these resources are used wisely.

Georgia has implemented ambitious environmental and energy reforms over the years as part of its Association Agreement with the European Union and the European Energy Community. After reviewing these strategic documents, it is easy to draw some conclusions. First and foremost, progress in energy transformation is visible, and international organisations have even acknowledged this development. However, several multifaceted challenges are also apparent. The following points should be considered the main challenges for Georgia as it moves toward a green economy:

1) There is a need to develop a long-term strategy that is based on solid analysis, and it is also critical to create proper implementation mechanisms.

 2) It is also critical to ensure that the energy strategy aligns with Georgia’s development goals, such as being compatible with strategic climate change documents, sustainable development strategies, and economic, environmental, and social policies.

3) Georgia should also improve its national energy statistics collection.

4) It is worth noting that the country should strengthen its analytical capacity for energy market and policy analysis, as well as its collaboration with think tanks specialising in this field.

5) The government should pass legislation governing the electricity and gas markets in order to promote energy efficiency and renewable energy.

 6) The country should concentrate on further development and creating a competitive energy market.

 7) The government should protect vulnerable groups who do not have equal access to various services.

 8) It is critical to promote transparency and effectively monitor various key sectors.

To summarise these points, the main challenges are related to a lack of a comprehensive energy strategy and solid analysis. Proper monitoring and implementation are also critical to success on the road to a green economy.

Potential for change

Despite these obstacles, Georgia has the potential to transform its energy sector. Natural resources in Georgia are a significant source of the country’s wealth and have the potential to speed up inclusive socio-economic development. It should be noted that the country’s reliance on nonrenewable resources had a negative impact on agriculture and forest land, air quality, and the coastal zone. This clearly had a negative impact on the economy. For example, it is estimated that land degradation ended up costing the country 0.7 percent of GDP in 2018. The country is focused on developing its tourism sector. As a result, coastal damage directly affects this sector and has resulted in an estimated economic cost of five per cent of GDP in 2018. Evidently, air pollution has a negative impact on people’s health and raises mortality rates, which significantly reduce a nation’s GDP. Like any other country, Georgia faces a serious threat from climate change as it is directly impacting every part of the nation. It has a negative impact in areas such as agriculture, water resources, forests, coastal regions, and public health.

A focused combination of enabling policies, effective incentives, and investments will be necessary to move Georgia toward sustainable development. In order to achieve this, Georgia should properly address structural problems, analyse the impact of losses in economic activity, and take appropriate action. A multisectoral approach to sustainable development should be developed, as well as improvements in forest and landscape management, coastal zone development, and pollution control. This will help Georgia accelerate its transition to green growth.

Georgia’s environment is a valuable economic resource. However, the consistently high cost of environmental degradation shows the need for sustainable and greener economic development.

There has been some development in the legal framework governing the forest sector. The Georgian government prioritises forest management. The government works to improve the management of degraded watersheds while also supporting sectoral reform and especially in forestry institutions. The country’s eastern regions, where land degradation is more problematic, also show signs of declining watershed quality. The government should seek out more funding to address this issue and direct it toward improving land management, repairing harmed landscapes, and enhancing environmental infrastructure.

At the same time, the country’s coastal regions face a more severe challenge due to land degradation. This directly affects public health and the safety of Georgians living in the coastal regions, as well as harming the state’s economic development. In-depth geological research and specialised tools are required for the improvement of early warning systems. Georgia should follow the good example of other Black Sea Basin countries, which mainly rely on a healthy coastal environment for their fisheries and tourism industry. Georgia can reap additional benefits from fisheries, increase the number of jobs in these areas, and improve the socio-economic conditions of the populace, if it successfully addresses the issues related to coastal degradation. Climate change will exacerbate the situation. Erosion may accelerate, and more floods are likely. For this reason, the Georgian economy should become more resilient.

It is important to note that the transition to a green economy will be futile unless pollution levels are reduced. Georgia should address this issue by regulating and monitoring air pollutants in all industries. A monitoring system of this type should also be created and developed. The country’s air protection legislation should be improved. Transport-related pollution is a significant source of air pollution in the country. Georgia has raised its fuel standards to meet EU standards, but inspections of fuel quality and monitoring systems must be improved.

Mobilising the country

Thanks to some reforms, Georgia has a good reputation as a “reformer state”. These reforms can provide a basis for the country’s new green economy. Tbilisi made several good decisions that made it a leading state in doing business ratings and other important ratings. Economic activities are largely conducted by the private sector, but the country has the potential to encourage such companies create even more jobs. As a former Soviet Union republic, everything in Georgia was once owned by the state. After the Rose Revolution, Georgia privatised many state-owned enterprises between 2004 and 2011. Despite this, further actions are needed. Currently, it can be said that forest land is primarily controlled by the state, whereas agricultural land is privately owned. To enable private companies to create jobs by responsibly using natural resources, they must be supported. Most importantly, in order to create “green jobs”, the country must improve workers’ knowledge and skills. The government should invest more in education and training for those who need to learn new skills.

To summarise, Georgia has made significant progress in greening its economy, but this must become the country’s top priority in order to achieve better results. The country has implemented several environmental policies over the last few decades, but there is still much work to be done. While the legislation is still incomplete, the country needs a comprehensive green strategy that not only exists on paper. It needs to be actively implemented in order to achieve attainable goals like the reduction of air pollution and resource inefficiency. Finally, there should be a strong focus on enhancing public health, coastal zones, ecosystem sustainability, and the biodiversity of the nation.

This article is published as part of a project to promote independent digital media in Central and Eastern Europe funded by the National Endowment for Democracy and coordinated by Notes from Poland. You can subscribe to the newsletter of the project or tune in to the VoiCEE podcast. 

Lasha Gamjashvili holds a bachelor’s degree of Social Sciences in International Relations from the International Black Sea University (Georgia) and the master’s degree in Social Sciences from Vytautas Magnus Univeristy (Lithuania). Lasha is a contributor of several think tanks and has worked on European and international events.

energy, energy security, Georgia, green transformation, South Caucasus