Lithuania 2021 Energy Policy Review INTERNATIONAL ENERGY AGENCY

Home , 2021 in Lithuania, Energy in Lithuania, Government of Lithuania, Harmony Link, Ignitis, Lithuania

The IEA examines the IEA member IEA association full spectrum countries: countries: of energy issues including oil, gas and Australia Brazil coal supply and Austria China demand, renewable Belgium India energy technologies, Canada Indonesia electricity markets, Czech Republic Morocco energy efficiency, Denmark Singapore access to energy, Estonia South Africa demand side Finland Thailand management and France much more. Through Germany its work, the IEA Greece advocates policies Hungary that will enhance the reliability, affordability Ireland and sustainability of Italy energy in its Japan 30 member countries, Korea 8 association Luxembourg countries and beyond. Mexico Netherlands New Zealand Norway Poland Portugal

Please note that this Slovak Republic publication is subject to Spain specific restrictions that limit Sweden its use and distribution. The terms and conditions are Switzerland available online at Turkey www.iea.org/t&c/ United Kingdom United States

This publication and any The European map included herein are without prejudice to the Commission also status of or sovereignty over participates in the any territory, to the work of the IEA delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Foreword

The International Energy Agency (IEA) has conducted in-depth peer reviews of its member countries’ energy policies since 1976. This process not only supports energy policy development, but also encourages the exchange of and learning from international best practices and experiences. By seeing what has worked – or not – in the “real world,” these reviews help to identify policies that deliver concrete results. Since 2017, the IEA has modernised the reviews by focusing on the key challenges in today’s rapidly changing FOREWORD energy markets.

The IEA in-depth review of the energy policies of Lithuania was carried out in the framework of Lithuania’s request to become a member of the IEA. I welcome the broad alignment of the country’s energy policies with the shared goals of the IEA.

Our review provides a range of recommendations to help the government design its future energy and climate policies, in the light of the EU-wide efforts to shift toward climate neutrality and regional ambitions to strengthen energy security.

First, this review offers policy advice on how to seize the opportunity to use EU funds for economic recovery from the Covid-19 pandemic to support clean energy transitions. Electrification will determine the speed of the region’s clean energy transition, and our recommendations also emphasise how Lithuania can make modern bioenergy and electricity a pillar for the further decarbonisation of transport, industry and buildings while enhancing resilience and security.

Second, Lithuania is continuously emphasising the importance of energy security in its energy strategy. Amid rising geopolitical tensions in the Baltic region, I commend the government for boosting regional gas security with the Klaipeda LNG terminal and for placing electricity security at the heart of its regional efforts. Security is more important than ever, as threats from extreme weather events or cyber-attacks place ever greater stress on the power system.

It is my hope that this in-depth review will help guide Lithuania in its admirable efforts to accelerate the energy transition toward its ambitious 2050 targets. The IEA is committed to help the Lithuanian government achieve its energy policy goals of providing affordable, secure and clean energy to its people as they adapt to a fast-changing international energy landscape.

Dr Fatih Birol

Executive Director

International Energy Agency

reserved. rights

3 All IEA.

ENERGY INSIGHTS

Foreword ...... 3 1. Executive summary ...... 11 2. General energy policy ...... 15 Country overview ...... 15 Supply and demand ...... 17 Energy policy institutions ...... 21 Assessment ...... 27 Recommendations ...... 29 TABLE OF CONTENTS OF TABLE ENERGY SYSTEM TRANSFORMATION

3. Energy and climate change ...... 31 Overview ...... 31 Emissions trends ...... 32 Climate policies and targets ...... 36 Assessment ...... 43 Recommendations ...... 45 4. Energy efficiency ...... 47 Overview ...... 47 The role of energy efficiency ...... 48 Energy intensity ...... 49 Energy efficiency governance ...... 51 Energy efficiency targets and policies ...... 51 Policies and measures by sector ...... 54 Assessment ...... 63 Recommendations ...... 67 5. Renewable energy ...... 71 Overview ...... 71 Renewable energy in total final electricity consumption ...... 72 Assessment ...... 80 Recommendations ...... 83 6. Energy research, development and innovation ...... 85 Overview ...... 85 IEA framework for energy innovation policies ...... 86 reserved. rights

5 All IEA. TABLE OF CONTENTS

Energy priorities linked to innovation policy ...... 87 Lithuania’s energy innovation ecosystem ...... 88 Resource push ...... 89 Knowledge management ...... 92 Market pull ...... 93 Socio-political support ...... 95 Assessment ...... 96 Recommendations ...... 99

ENERGY SECURITY

7. Electricity...... 101 Overview ...... 101 Electricity supply ...... 102 Electricity demand ...... 103 Electricity generation capacity, imports and exports ...... 104 Electricity grids and interconnections ...... 107 Electricity market reforms ...... 111 Security of supply ...... 115 Assessment ...... 119 Recommendations ...... 123 8. Natural gas ...... 125 Overview ...... 125 Supply and demand ...... 126 Emergency response policy ...... 136 Assessment ...... 137 Recommendations ...... 139 9. Oil ...... 143 Overview ...... 143 Supply and demand ...... 144 Oil industry structure ...... 148 Oil infrastructure ...... 150 Oil emergency policies and organisation ...... 153 Assessment ...... 155 Recommendations ...... 157 reserved. rights

6 All IEA. TABLE OF CONTENTS

ANNEXES

ANNEX A: Organisations visited ...... 159 ANNEX B: Review team and preparation of the report ...... 160 ANNEX C: Energy balances and key statistical data ...... 162 Footnotes to energy balances and key statistical data ...... 165 ANNEX D: International Energy Agency “Shared Goals” ...... 166 ANNEX E: Glossary and list of abbreviations ...... 169 Acronyms and abbreviations ...... 169 Units of measure ...... 170

LIST OF FIGURES, TABLES AND BOXES TABLE OF CONTENTS OF TABLE

Figures

Figure 2.1 Map of Lithuania and the region ...... 16 Figure 2.2 Overview of Lithuania’s energy system by fuel and sector, 2019 ...... 17 Figure 2.3 Lithuania’s total energy supply by source, 2000-19 ...... 18 Figure 2.4 Lithuania’s domestic energy production by source, 2000-19 ...... 18 Figure 2.5 Lithuania’s total final consumption by sector, 2000-19 ...... 19 Figure 2.6 Lithuania’s total final consumption by source and sector, 2019 ...... 19 Figure 2.7 Breakdown of total energy supply in IEA member countries and Lithuania, 2019 ...... 20 Figure 2.8 Ownership of energy companies and assets in Lithuania ...... 22 Figure 2.9 Governance of Lithuania’s National Energy and Climate Plan ...... 23 Figure 3.1 Greenouse gas emissions in Lithuania by sector, 1990-2018 ...... 32 Figure 3.2 Energy-related CO2 emissions and main drivers in Lithuania, 2000-19 ...... 33 Figure 3.3 CO2 intensity per GDP in Lithuania and IEA member countries, 2000-19 ...... 33 Figure 3.4 CO2 intensity for electricity and heat generation in Lithuania and selected IEA member countries, 2000-19 ...... 34 Figure 3.5 Energy-related CO emissions in Lithuania by sector, 2000-19 ...... 35 Figure 3.6 Energy-related CO emissions in Lithuania by energy source, 2000-19 ...... 35 Figure 3.7 Lithuania’s bioenergy₂ production, 2008-19 ...... 36 Figure 3.8 Bioenergy net trade₂ ...... 36 Figure 3.9 Lithuania’s non-ETS emissions and EU targets, 2005 and 2013-20 ...... 38 Figure 4.1 Decomposition of total final energy consumption trends in Lithuania ...... 48 Figure 4.2 Energy consumption and drivers in Lithuania, 2000-19 ...... 48 Figure 4.3 Energy intensity in IEA member countries, 2018 ...... 49 Figure 4.4 Energy intensity in selected IEA member countries, 2000-19 ...... 50 Figure 4.5 Total final consumption in Lithuania by sector, 2000-19 ...... 50 Figure 4.6 Lithuania’s primary and final energy consumption and targets, 2000-50 ...... 52 Figure 4.7 Residential and services* energy demand in Lithuania by fuel, 2000-19 ...... 55 Figure 4.8 Heat generation in Lithuania by source, 2000-19 ...... 57 Figure 4.9 Market shares of district heat production in Lithuania, 2019 ...... 58 Figure 4.10 Average district heating price in Lithuania, 2000-19 ...... 58 Figure 4.11 Industry energy demand in Lithuania by fuel, 2000-19 ...... 60 reserved. rights

7 All IEA. TABLE OF CONTENTS

Figure 4.12 Transport energy demand in Lithuania by mode and fuel, 2018 ...... 61 Figure 5.1 Renewable energy in total final energy consumption in Lithuania, 2000-19 ...72 Figure 5.2 Share of renewables in total final energy consumption in electricity and heat in Lithuania compared to IEA member countries, 2018 ...... 72 Figure 5.3 Share of renewables in total final energy consumption in transport in Lithuania compared to IEA member countries, 2018 ...... 73 Figure 5.4 Renewable energy in Lithuania in electricity, heat and transport, 2019 ...... 73 Figure 6.1 The IEA’s four functions of a successful innovation ecosystem for energy ....86 Figure 6.2 Lithuania’s gross domestic expenditure on total R&D, 2004-20 ...... 91 Figure 6.3 Energy-related public RD&D budget per GDP in selected IEA countries, 2019 ...... 91 Figure 6.4 Lithuania’s private sector spending on R&D per GDP, 2008-16 ...... 92 Figure 7.1 Electricity generation by fuel and consumption by sector, Lithuania (2019) 102 Figure 7.2 Lithuania’s electricity supply by source, 2000-19 ...... 103 Figure 7.3 Renewable electricity generation in Lithuania, 2000-19 ...... 103 Figure 7.4 Electricity consumption (total final consumption) in Lithuania by sector, 2000-19 ...... 104 Figure 7.5 Lithuania’s electricity net imports and exports by country, 2000-19 ...... 106 Figure 7.6 Map of Lithuania’s power system ...... 107 Figure 7.7 Map of Lithuania’s electricity connections ...... 110 Figure 7.8 Composition of the electricity retail price in Lithuania, 2017-20 ...... 114 Figure 7.9 Industry and household electricity prices in Lithuania and selected IEA countries, 2019 ...... 114 Figure 7.10 Electricity prices in Lithuania and selected IEA countries, 2009-19 ...... 115 Figure 8.1 Share of natural gas in total energy supply, electricity generation and total final consumption in Lithuania, 2000-19 ...... 126 Figure 8.2 Lithuania’s natural gas imports, 2000-19 ...... 127 Figure 8.3 Lithuania’s natural gas consumption by sector, 2000-19 ...... 127 Figure 8.4 Map of natural gas infrastructure in Lithuania ...... 129 Figure 8.5 Lithuania’s security of supply ligqufied natural gas financing model ...... 132 Figure 8.6 Natural gas industry prices in IEA member countries, 2019 ...... 133 Figure 8.7 Natural gas household prices in Lithuania and IEA member countries, 2019 ...... 133 Figure 8.8 Natural gas prices in Lithuania and selected IEA countries, 2009-19 ...... 134 Figure 9.1 Share of oil in energy production, total energy supply, electricity and total final consumption in Lithuania, 2000-19 ...... 144 Figure 9.2 Lithuania’s oil demand by product in Lithuania, 2000-19 ...... 145 Figure 9.3 Trends in oil demand by sector in Lithuania, 2000-19 ...... 146 Figure 9.4 Lithuania’s crude oil net trade by country, 2000-19 ...... 147 Figure 9.5 Lithuania’s refinery output, 2019 ...... 147 Figure 9.6 Lithuania’s oil products net trade by country, 2000-19 ...... 148 Figure 9.7 Price comparison for automotive diesel in the IEA, 2Q 2020 ...... 150 Figure 9.8 Price comparison for light fuel oil in the IEA, 2Q 2020 ...... 150 Figure 9.9 Map of Lithuania’s regional oil infrastructure ...... 153 Figure 9.10 Lithuania’s oil stock level in days of net imports, as of November 2020 .... 155

Tables

Table 2.1 Lithuania’s energy and climate targets ...... 25

Table 2.2 Total investment needs for the implementation of the NECP 2020 ...... 26 reserved. rights

8 All IEA. TABLE OF CONTENTS

Table 3.1 Lithuania’s greenhouse gas emissions reductions targets for non-ETS sectors in 2021-30 ...... 37 Table 3.2 Excise duty rates in Lithuania, 2004-20 (in EUR) ...... 40 Table 3.3 Registration tax for passenger cars in Lithuania (2020) ...... 42 Table 4.1 Lithuania’s planned energy efficiency policies and measures, 2020-30 ...... 53 Table 5.1 Lithuania’s medium- to long-term targets for renewables ...... 74 Table 7.1 Outlook of installed net generating capacity in Lithuania (in MW) ...... 105 Table 7.2 Net transfer capacity at Lithuania’s borders ...... 109 Table 7.3 Lithuaia’s three-stage phase out of retail electricity price regulation ...... 113 Table 8.1 Lithuania’s natural gas pipeline network capacities ...... 128

Boxes

Box 2.1 The Government‘s Programme in Energy 2021-24 ...... 26 Box 5.1 Energy consumers become prosumers in Lithuania ...... 77 Box 6.1 The Action Plan for Strengthening the Lithuanian Energy Innovation

Ecosystem ...... 88 CONTENTS OF TABLE

reserved. rights

9 All IEA.

1. Executive summary

This first review of Lithuania’s energy policies by the International Energy Agency (IEA) comes at a momentous time for the country’s energy sector, which is undergoing significant reforms and witnessing greater regional integration within the Baltic and European Union (EU) energy markets.

The review was conducted in the context of Lithuania’s process of accession to the IEA. ENERGYINSIGHTS Lithuania’s energy policy aligns sustainability goals with the objectives of boosting energy security, competitiveness and technology innovation. As such, the country’s energy policies are broadly aligned with the IEA Shared Goals (see Annex D).

Over the past decade, Lithuania has witnessed several energy transitions. With the closure of its only nuclear power plant (Ignalina’s two reactors shut down in 2004 and 2009), Lithuania switched from the position of a net exporter to one of a net importer of electricity. Since then, the shares of electricity imports, natural gas and bioenergy have increased. Today, Lithuania imports over 70% of its electricity needs, while bioenergy is taking the lead in domestic energy supply. Most of Lithuania’s co-generation,1 district heating and residential heat have switched from natural gas to biomass.

Since Lithuania regained its independence in 1990, its energy policy has continuously emphasised energy security. The 2012 National Energy Independence Strategy, which was updated in 2018, reflects these fundamental goals. Lithuania is commended for its ambitious 2050 targets for emissions reductions, renewables and energy efficiency under the strategy. Lithuania supports the EU climate neutrality goal and is starting to place a greater emphasis on the mitigation of climate change, while boosting economic growth and technology innovation.

Up to 2030, policies and measures are well identified under the integrated National Energy and Climate Plan (NECP), which was adopted and submitted to the European Commission at the end of 2019. The NECP sets ambitious medium-term targets as well as the actions needed to achieve them. The Ministry of Energy, the lead co-ordinator of the NECP, will have to work closely with the Ministry of Environment and the Ministry of Transport and Communications on implementing it. This review suggests it should do so by adopting sectoral strategies, for instance for transport or the bioeconomy. Stronger co-ordination of energy and climate policies and monitoring of progress will be critical to ensure full implementation of the planned measures in the coming years.

The NECP is being implemented at a time when the EU Green Deal promotes new action towards climate neutrality by 2050. EU leaders agreed in 2020 to reduce emissions by 55% by 2030. In 2021, the EU will review its energy and climate targets and policies for 2030. Lithuania has had a long-term vision to 2050 for a decade; however, climate change has not been a key driver of its energy policies to date. While the IEA commends

reserved. 1 Co-generation refers to the combined production of heat and power. rights

11 All IEA. 1. EXECUTIVE SUMMARY

Lithuania’s achievements in recent years, including the adoption of the NECP, the envisaged medium-term development should be more aligned with a development path towards achieving the long-term vision for 2050. By 2023, Lithuania, like all EU countries, will need to report progress on the implementation of its NECP and provide an updated NECP by 2024, which will have to reflect national progress and the increased climate and energy ambitions at EU level.

With regard to climate action, Lithuania has decoupled greenhouse gas emissions and economic growth, and has met its 2020 targets for the sectors outside of the EU Emissions Trading Scheme. However, meeting the 2030 target will be a challenge, as for the first time, a decrease in emissions (of 9%) is required.

There are several challenges for implementing the NECP. Progress in energy efficiency has slowed down, as in other IEA countries. Lithuania did not meet its 2020 final energy consumption target of 4.3 million tonnes of oil equivalent (Mtoe) and additional measures are needed and envisaged, notably in building renovation and the transport sector. For 2030, the target is 4.5 Mtoe of final energy consumption. All sectoral measures are well identified, but their implementation will depend on public funding and procurement, as the role of energy service companies and private renovation is small to date.

The government had achieved its 2020 renewables target as early as 2014 and sold the surplus credits to Luxembourg. Looking ahead, the government aims to reach a share of renewables of at least 45% in final energy consumption by 2030 and 80% by 2050, with 100% in the electricity mix. Such high levels of renewables will require actions to manage power system security and flexibility, as well as compliance with EU sustainability requirements. Recent auctions have confirmed the interest of investors in Lithuania, with a preference for public purchase agreements rather than subsidies.

Around 75% of all heat is produced by burning woody biomass, of which the largest share is harvested in Lithuania, with some imports coming from the regional Baltpool platform. Imports of woody biomass from Belarus have increased due to large deforestations in that country. The Baltpool platform promotes cheaper imports, which may raise concerns over the sustainability of biomass trade. Modern bioenergy can play an important role in Lithuania’s low-carbon future. Lithuania’s forests are also a major carbon sink and the government is already counting these towards EU emissions reduction targets up to 2030. Bioenergy can also balance variable electricity generation, mainly wind and solar, and will remain important to match peak load capacity, especially for cold winter days. Biofuels are also key to decrease emissions in the transport sector.

Co-generation and related district heating remain the best ways to boost energy efficiency, advance renewables and link heating with electricity for flexibility. Lithuania is well placed to make the best use of this “sector coupling”. Despite comparably low district heating prices, the role and economics of co-generation is changing, with a trend towards heat- only boilers or heat pumps. In support of the 100% renewable electricity target by 2050, the government is encouraged to design a long-term renewable energy strategy for Lithuania, which would analyse the electrification of end-uses, notably heat, and an assessment of system integration needs across sectors.

Without new policy action, emissions will continue to grow, notably in transport. The IEA encourages Lithuania to introduce an annual vehicle tax, create the Sustainable Mobility Fund and phase out tax exemptions (e.g. of agriculture operators from the environmental reserved. pollution tax) and update excise duty rates in line with carbon content. The Lithuanian rights

12 All IEA. 1. EXECUTIVE SUMMARY government has shown leadership in the transport sector with the adoption of the Alternative Fuels Law in March 2021. A holistic approach to mobility is needed to meet its ambitious 2050 vision. The government should prepare a comprehensive strategy for improving vehicle efficiency, rolling out zero-emission vehicles and biofuels blending. Besides subsidies for the roll-out of zero-emission vehicles, a package that combines fiscal instruments and local mobility measures, based on alternative fuels, biofuels and electrification targets, could be very effective.

Important institutional reforms have taken place in the Lithuanian energy sector since the creation of the Ministry of Energy in January 2009, and most recently under the EU Third Energy Package and the accession to the OECD in 2018. As a result of the reforms, independent system operators for gas and electricity, unbundled from supply activities, were created. Lithuania has made progress in gradually opening up its electricity and gas markets. However, amid security concerns, it has increased the level of state ownership in its energy sector in recent years. This may result in entry barriers for private players in ENERGYINSIGHTS its gas/electricity markets and implies that the state will ensure that energy companies can make the needed investments in clean energy. In this context, it is welcome that Lithuania is implementing a step-wise phase out of price regulation for residential consumers in the electricity market. However, Lithuania maintains high market concentration in the residential gas market with regulated prices.

The implementation of the NECP requires around EUR 14 billion of public and private financing in the clean energy transition. In 2021, EU and national recovery funds will be disbursed under the National Resilience and Recovery Plan. Commendably, Lithuania has deployed significant stimulus funding, amounting to around 10% of its gross domestic product. To ensure the best use of EU and national recovery funds in the medium term, policies play a critical role for scaling up private/public investments and allow the private sector to take over. The government could use an auctioning system for clean energy technologies (e.g. renewables, hydrogen and energy storage), and encourage private industry energy service companies to lead the renovation wave.

Boosting investments in clean energy technology innovation is a new and promising area. The IEA welcomes the Action Plan for an Energy Innovation Ecosystem, which is in line with the IEA’s technology and innovation framework. The IEA encourages Lithuania to establish a regular tracking process of energy innovation results and funding. In the context of Lithuania’s new Innovation Promotion Fund, created by the Ministry of Economy and Innovation, the Ministry of Finance, and the Investment and Business Guarantees (Invega), the action plan is an opportunity for boosting energy sector investments.

Amid rising geopolitical tensions in the Baltic region, energy security remains as important as ever before. At the heart of Lithuania’s security policy lies a strong renewables strategy, based on bioenergy and wind energy, as part of a move to reduce electricity imports by half in the horizon to 2030 and towards zero by 2050. Today, rather than independence alone, regional integration underpins energy security. Lithuania is part of the highly interconnected Baltic-Nordic electricity markets. An even greater integration with the EU energy system is a core policy objective, with the milestone of reaching full synchronisation with the European continental electricity grid by 2025. Lithuania also co-ordinates with regional partners on other electricity security issues, notably on the implementation of the Baltic Energy Market Interconnection Plan, and investments in new electricity and gas infrastructure, co-financed under the Connecting Europe Facility. reserved. rights

13 All IEA. 1. EXECUTIVE SUMMARY

One of the current major challenges for Lithuania is to ensure that no electricity could enter the Baltic states’ market from Belarus, where the Astravets nuclear power plant was commissioned recently. Lithuania’s Special Law declares the plant as unsafe, as it poses serious threats to nuclear safety, the environment and national security across the Baltics and notably for Lithuania’s capital, Vilnius.

Lithuania’s liquefied natural gas (LNG) terminal in Klaipėda has significantly reduced the country’s dependence on direct gas imports from the Russian Federation, a declared policy priority for the government. The terminal has also improved the gas market integration and lowered gas prices in the region. A Baltic gas market is emerging, which connects infrastructure and countries in the region: the Klaipėda LNG terminal in Lithuania, the Baltic gas storage in Latvia (Inčukalns) with Estonia’s and Finland’s gas network through the Balticconnector pipeline, and with Poland through the Gas Interconnection Poland-Lithuania by the end of 2021. Lithuania and its neighbours have an opportunity to access global LNG and use natural gas as a transition fuel to end coal and oil use in the region. The IEA encourages the government to complete the regional gas market, based on regional gas pricing and infrastructure expansion and usage.

Oil security is a core mandate of the IEA. As an EU member state, Lithuania has a solid oil stockholding system in place for national emergencies. Lithuania’s oil stocks are well above the IEA’s 90-day minimum requirement, totalling 173 days of net imports at the end of 2020. Under the accession process to the IEA, the government has reviewed the national system and made strong progress in adopting legislation, procedures and rules for allowing the country to participate in an international crisis response through a collective IEA action and a national demand restraint programme. The Law on State Stocks of Petroleum Products and Oil was accordingly modified in June 2020. Lithuania has started efforts to update the existing oil demand restraint policy and its emergency handbook to meet the IEA requirement to be able to reduce oil demand quickly by up to 10% in a crisis.

Key recommendations

The government of Lithuania should:  Mobilise public and private finance, including EU funding, by adopting robust policies such as auction schemes to strengthen Lithuania’s economy and meet energy and climate ambitions.  Complete the opening of the electricity and gas markets, reform energy and environmental taxes and levies, and promote energy technology innovation, with a view to boost competitiveness and accelerate the switch to clean energy technologies.  Enhance energy and climate governance to continuously review targets and monitor progress and implement the NECP. Update the NECP in the light of EU and national climate neutrality goals.  Intensify co-ordination with Baltic and Nordic neighbours on the design and implementation of climate and energy policies, including the implications for the security of electricity, gas and oil supply as well as cybersecurity. reserved. rights

14 All IEA.

2. General energy policy INSIGHTS

Key data (2019)

Total energy supply (TES): 7.61 Mtoe (oil 37.9%, natural gas 24.5%, biofuels and ENERGY waste 18.8%, electricity trade 10.6%, heat 3.5%, coal 2.2%, wind 1.7%, hydro 0.4%, solar 0.1%), -13.2% since 2009 TES per capita: 2.8 toe/cap (IEA average 3.7 toe/cap, IEA median 3.5 toe/cap) TES per unit of GDP*: 80 toe/USD million* (IEA average: 85 toe/USD million, IEA median 79 toe/USD million PPP) Energy production: 1.98 Mtoe (biofuels and waste 75.8%, heat 13.4%, wind 6.5%, oil 2.0%, hydro 1.5%, solar 0.4%, peat 0.4%), -55% since 2009 Total final consumption (TFC): 6.6 Mtoe (oil 36.9%, natural gas 23.4%, heat 12.8%, electricity 13.8%, bioenergy and waste 10.6%, coal 2.5%), +26% since 2009

CO2 emissions by sector: transport 56.2%, energy industry own use 13.2%, industry 11.4%, electricity and heat generation 7.5%, residential 6.6%, and services and other 5.0%

* GDP is computed in USD 2015 prices and purchasing power parities (PPPs).

Country overview

Situated on the eastern shore of the Baltic Sea, the Republic of Lithuania (Lithuanian: Lietuvos Respublika, hereafter “Lithuania”) is one of the Baltic states. With a mostly flat territory of 65 300 km2, rich in agricultural and forest resources, Lithuania borders Latvia to the north, Belarus to the east and south, Poland to the south, and has borders with the Russian Federation’s exclave Kaliningrad Oblast (Figure 2.1). Lithuania has a population of 2.8 million inhabitants, with around 580 000 living in the largest city, the capital Vilnius, followed by the cities of Kaunas and Klaipėda. Since 2007, the working-age population (20-64 years old) has decreased by more than 12% (from 1.81 million in 2007 to 1.59 million in 2017) and continues to shrink as emigration has been on the rise.

Lithuania was the first country to declare independence from the Soviet Union in 1990. Since its independence and the transition from a centrally planned economy to a small and open market economy, the country has substantially raised economic growth and the well- being of its citizens. This was supported by Lithuania’s membership to the European Union (EU), the Schengen area, the North Atlantic Treaty Organisation (NATO) and the eurozone since 2014, as well as the Organisation for Economic Co-operation and Development

(OECD) since 2018. reserved. rights

15 All IEA. 2. GENERAL ENERGY POLICY

Figure 2.1 Map of Lithuania and the region

This and all the maps in this report are without prejudice to the status of or sovereignity over any territory; to the limitation of international prontiers and boundaries; and to the name of any territory, city or area.

Over the past ten years, Lithuania’s gross domestic product (GDP) grew faster than in most OECD countries, with real growth rates of 4.2% in 2017, 3.6% in 2018 and 3.9% in 2019 (IMF, 2020). In 2020, GDP stood at USD 38 777 per capita (OECD, 2020). The financial system is resilient, and the fiscal position has stabilised after a long period of deficit and rising debt, thanks to strong exports of energy products, chemicals, machinery and equipment, and textiles.

However, the global COVID-19 pandemic led to a 2% contraction in GDP growth in 2020 and is expected to see a recovery of 2.7% in 2021. However, this depends on the evolution of the pandemic, domestic demand, and the shape and speed of the economic recovery of Lithuania’s trading partners (OECD, 2020). The IMF expects the Lithuanian economy to rebound even by 4.1% in 2021 (IMF, 2020). reserved. rights

16 All IEA. 2. GENERAL ENERGY POLICY

The head of state is President Gitanas Nausėda, who was elected in June 2019 for a five-year term. He took over from Dalia Grybauskaitė, who served as long-standing President of Lithuania from 2009 until 2019. The next presidential elections are scheduled for 2024. Parliamentary elections took place from 11 to 25 October 2020 to elect the 141 members of the Seimas, Lithuania’s parliament. A centre-right coalition won the elections made up by the conservative and two liberal parties. Lithuania’s Prime Minister Ingrida Šimonytė was appointed by the president and parliament on 25 November 2020. On 9 December 2020, the Šimonytė Cabinet was approved by parliament, with Mr. Dainius Kreivys designated as the new Minister of Energy.

Supply and demand

Lithuania’s energy position strongly depends on imports (Figure 2.2), as domestic ENERGYINSIGHTS production in 2019 (1.97 million tonnes of oil equivalent [Mtoe]) covered only one-quarter of total energy supply (TES,1 7.61 Mtoe). Two-thirds of TES comes from oil and natural gas and a quarter from renewables. Bioenergy and waste2 covered more than three-quarters of domestic energy production in 2019, with the remainder coming from heat (13%) and renewables (8.5%) – such as wind, hydro and solar – and oil (2%).

Figure 2.2 Overview of Lithuania’s energy system by fuel and sector, 2019

Mtoe 8 Bunker oil Transformation, losses and 7 bunkering fuels District heat 6 Services Electricity 5 Imports Residential Other renewables** 4 Transport Bioenergy and waste 3 2 Natural gas 1 Industry Oil 0 Coal Production Total supply* TFC (by fuel) TFC (sector demand) IEA. All rights reserved.

As domestic production is mainly bioenergy, most of total supply is imported. Both energy supply and demand are dominated by fossil fuels, with high shares of bioenergy and waste.

* Total supply includes bunker fuels for international aviation and shipping (not part of TES). ** Other renewables includes wind power, geothermal, hydro and solar energy. Note: Mtoe = million tonnes of oil equivalent. TFC = total final consumption. Source: IEA (2021), “World energy balances”, IEA World Energy Statistics and Balances (database), www.iea.org/statistics.

Due to the high level of losses in the energy system, total final consumption (TFC) was 6.6 Mtoe in 2019, of which oil accounted for 37%, natural gas 23%, heat 13%, electricity 14%, bioenergy and waste 11%, and coal 3%. Almost all coal, oil and natural gas was

1 TES is made up of production + imports – exports – international marine and aviation bunkers ± stock changes. This equals the total supply of energy that is consumed domestically, either in transformation (e.g. power generation and refining) or in final use. Nuclear energy supply in TES includes losses. The primary energy equivalent of nuclear

electricity is calculated from the gross electricity generation by assuming a 33% conversion efficiency. reserved. 2 Bioenergy and waste also includes non-renewable municipal and industrial waste. rights

17 All IEA. 2. GENERAL ENERGY POLICY imported. The transport and industry sectors are the key drivers of consumption, covering one-third of TFC each. The residential sector accounts for less than a quarter of TFC, with services and other sectors (including agriculture) making up the remaining 11%. Taking a closer look at the historic evolution of TES over time, Lithuania’s energy system reveals a number of interesting features. The phase-out of nuclear energy, with the closure of the two reactors of the Ignalina nuclear power plant in 2004 and 2009, caused drops in TES in 2005 and 2010 (Figure 2.3).

Figure 2.3 Lithuania’s total energy supply by source, 2000-19

Since the phase-out of nuclear energy, TES is now sourced mainly from oil, natural gas, electricity and heat, with a low share of renewables (mainly bioenergy and wind).

* Other renewables includes wind power, geothermal, hydro and solar energy. Note: Mtoe = million tonnes of oil equivalent. Source: IEA (2021), “World energy balances”, IEA World Energy Statistics and Balances (database), www.iea.org/statistics.

Figure 2.4 Lithuania’s domestic energy production by source, 2000-19

Mtoe 5 Nuclear Other renewables* 4 Bioenergy and waste Geothermal 3 Oil

Nuclear energy production stopped in 2010, while bioenergy continued to increase its share.

18 All IEA. 2. GENERAL ENERGY POLICY

After 2010, the share of natural gas and electricity imports initially increased to partially cover the loss in energy supply, while recently bioenergy and waste have continued to grow as has the supply of oil (Figures 2.3 and 2.4).

TFC has increased since 2000, despite a temporary drop due to the financial crisis in 2008-09 (Figure 2.5), which mostly affected industry sector consumption. TFC has increased by 26% since 2009. The industry, transport, residential and services/other sectors accounted for 35%, 32%, 22% and 11% of TFC, respectively, in 2018.

Figure 2.5 Lithuania’s total final consumption by sector, 2000-19

Mtoe 7 Industry* 6 Transport ENERGYINSIGHTS 5 Residential 4 Services/other**

The industry and transport sectors dominate TFC, and have both increased in recent years.

* Industry includes non-energy consumption. ** Services/other includes commercial and public services, agriculture, forestry, and fishing. Note: Mtoe = million tonnes of oil equivalent. Source: IEA (2021), “World energy balances”, IEA World Energy Statistics and Balances (database), www.iea.org/statistics.

Figure 2.6 Lithuania’s total final consumption by source and sector, 2019

Industry* 12% 55% 5% 5% 14% 10% Oil 1% Natural gas Transport 95% 4% Coal

Residential 4% 11% 2% 33% 18% 32% Bioenergy and waste

Electricity Services/other** 9% 13% 4% 7% 44% 24% Heat Total 37% 23% 3% 11% 14% 13%

Oil is the major source of TFC, notably in transport, while natural gas accounts for half of consumption in industry. Bioenergy and waste are used in the residential sector and for heat.

* Industry includes non-energy consumption. ** Services/others includes commercial and public services, agriculture, forestry, and fishing. Source: IEA (2021), “World energy balances”, IEA World Energy Statistics and Balances (database), www.iea.org/statistics. reserved.

rights

19 All IEA. 2. GENERAL ENERGY POLICY

Oil was the most important fuel in 2019, accounting for 37% of TFC (Figure 2.6), mainly due to the ransport sector. Natural gas plays an important role in industry, accounting for more than half of TFC in this sector. In the residential sector, one-third of energy needs came from bioenergy and waste, and another third from district heating. Heat plays an important role in the services/other sector as well, accounting for 27%, while 41% of the energy consumed in the services/other sector came from electricity.

By international comparison, Lithuania has a fossil-fuel intensive energy supply, but a high share of bioenergy, similar to its Nordic and Baltic neighbours and Austria (Figure 2.7).

Figure 2.7 Breakdown of total energy supply in IEA member countries and Lithuania, 2019

Australia Luxembourg Netherlands Mexico Poland Japan Ireland Greece Turkey Korea United States Italy United Kingdom Germany Lithuania Portugal Canada Estonia* Spain Hungary Czech Republic Belgium Austria Slovak Republic Denmark New Zealand Switzerland France Norway Finland Sweden 0% 20% 40% 60% 80% 100% Oil Natural gas Coal Peat Nuclear Hydro Bioenergy and waste Wind Solar Geothermal IEA. All rights reserved.

Fossil fuels accounted for three-quarters of TES in 2019, but bioenergy also has a significant share, the fifth-highest compared to other IEA member countries.

* Estonia’s coal is represented mainly by oil shale. Source: IEA (2021), “World energy balances”, IEA World Energy Statistics and Balances (database), www.iea.org/statistics.

reserved. rights

20 All IEA. 2. GENERAL ENERGY POLICY

Energy policy institutions

Established in 2009, the Ministry of Energy of the Republic of Lithuania has led a range of structural reforms of the Lithuanian energy sector. It is responsible for the National Energy Independence Strategy (NEIS), the National Energy and Climate Plan (NECP), and the Action Plan for Strengthening the Energy Innovation Ecosystem, in consultation and co-ordination with other stakeholders. In 2019, the Ministry of Energy created a new section for innovation and internationalisation, which works on energy innovation.

In 2019, Lithuania merged the former State Energy Inspectorate, which fell under the Ministry of Energy, and the National Commission for Energy Control and Prices to create the National Energy Regulatory Council (NERC). NERC regulates the market and supervises the actors in the fields of energy (gas, LPG, electricity, district heating, and petroleum products), water and waste water, and transport. In the energy sector, it certifies energy installations (oil, natural gas, and heat) and authorises licenses for electricity ENERGYINSIGHTS generation, export/imports and transmission, heat supply, and wholesale and retail trade of oil products. NERC’s main tasks are regulating access to Lithuania’s energy infrastructure and the prices of electricity, heat, natural gas and water supplies. This includes the regulation of the transmission and distribution system operators’ tariffs on gas and electricity, the implementation of network codes, the approval of methodologies for price setting, and the organisation of renewable energy auctions for the allocation of incentive quotas. NERC is financed by contributions from the market players, not by the state budget.

Statistics Lithuania is the central data agency for most energy data (except for research, development and demonstration and energy efficiency) and reports to the IEA on energy demand/supply data, energy prices and taxes.

The Lithuanian Energy Agency assesses the state of renewable energy and energy efficiency in Lithuania and is mandated to assess progress towards the energy sector targets under the NECP. It is also the competent authority to manage Lithuania’s strategic petroleum reserves and to monitor oil market developments.

The Ministry of Environment covers a large portfolio ranging from climate change, forest, water, ambient air, nature protection and territorial planning to construction and housing (energy efficiency). It is supported by the Environmental Protection Agency, the Housing Energy Saving Agency, the Public Investment Development Agency and the Environmental Projects Management Agency.

The Ministry of Transport and Communications has oversight over all modes of transport (road passenger/freight transport, rail, sea, inland waterways and aviation), including aspects of safety and logistics. The Ministry implements Lithuania’s targets on energy efficiency in transport, as set under the Law of Energy Efficiency.

The Ministry of Economy and Innovation implements energy policies in the industry sector, including energy efficiency, and leads the innovation policy in Lithuania. The Agency for Science, Innovation and Technology is the administrator of national and international RD&D programmes, clusters in Lithuania, and promotes the commercialisation of results and innovation actions.

The Lithuanian Energy Institute carries out fundamental and applied research and reserved. advisory work in the field of energy at the international level for Lithuanian and foreign rights

21 All IEA. 2. GENERAL ENERGY POLICY institutions of science, government and municipalities, and also trains researchers for research and analyses in the field of energy.

Lithuania has restructured its energy sector assets over the past few years (Figure 2.8). The Ministry of Finance controls investment in generation and distribution through the Ignitis Group, whose subsidiaries are involved in power and heat generation and distribution, natural gas trade, and electricity/gas distribution (Energijos skirstymo operatorius, ESO) and wind energy generation (Ignitis Renewables). EPSO-G is the state- owned group under the Ministry of Energy that owns the gas and electricity transmission grids and the market operators. Through EPSO-G the government has oversight of Litgrid, the electricity transmission system operator, Amber Grid, the natural gas transmission system operator, the Get Baltic, the gas market operator, and Baltpool, a regional biomass exchange. The oil sector is in private ownership (refinery ORLEN Lietuva), while the government took the decision to purchase the liquefied natural gas (LNG) terminal of Klaipedos Nafta, which will be under state operation and ownership as of 2024.

Figure 2.8 Ownership of energy companies and assets in Lithuania

Source: Information provided to the IEA by the Lithuanian government.

The Lithuanian government set in motion a co-ordination process for the preparation of the NECP for the period 2021-30 (Figure 2.9). The Ministry of Energy, in co-ordination with the Ministry of Environment, is working under the framework of the National Progress Plan, which runs in parallel to the NECP. The government evaluates progress towards the overarching Lithuania 2030 Strategy and the NECP under the National Progress Plan (2021-30), based on the United Nations’ Sustainable Development Goals indicators and the metrics that are part of the NECP (Republic of Lithuania, 2020). A public consultation on the NECP was held in two phases from December 2018 to May 2019 and in November 2019, including at the regional level within the Baltic Energy Market Interconnection Plan and the Baltic Council of Ministers. reserved. rights

22 All IEA. 2. GENERAL ENERGY POLICY

Figure 2.9 Governance of Lithuania’s National Energy and Climate Plan

National Integrated Energy and Climate Plan

Plan preparation

Co-ordinator Co-cordinator Ministry of Energy Ministry of Environment Feedback on (Decarbonisation) implementation

Regional Public Information consultations consultations to the plan Identify measures and financing Consultations National Climate Working Policy institutions Change ENERGYINSIGHTS group Municipalities Committee The working group Research institutions includes 19 The committee includes 21 representatives of the representatives of ministries, Government Office, municipal authorities, research ministries and and education, and industrial Lithuania’s Statistic and non-governmental Department organisations

Source: Information provided to the IEA by the Lithuanian government.

Energy strategies and targets The Lithuania 2030 Strategy promotes a smart society, smart governance and smart economy to place Lithuania among the top ten in Europe on sustainable growth, openness, inclusiveness and well-being. Adopted by the parliament in 2013, the strategy supports sustainable growth in the energy, transport and industry sectors. The Lithuania 2030 Strategy notes that “A competitive and environmentally sustainable energy sector will be of utmost importance for the national economy: it is necessary to achieve energy independence and sustainable development of environment-friendly use of resources” (Republic of Lithuania, 2013). The strategy does not contain any specific targets with regards to energy and climate policies except for the Sustainable Development Goals.

Lithuania’s energy policy is planned along two time horizons (2020-30 and 2030-50), with medium- and long-term actions. The National Energy Independence Strategy, adopted in 2012, has been Lithuania’s main energy strategy. In 2018, an updated NEIS was approved by parliament and set out key energy targets and actions for 2020, 2030 and 2050 (Table 2.1). The NEIS aims at completing energy security projects, strengthening competitiveness, reducing the impact on the environment and climate change, and promoting innovation and new technologies (Republic of Lithuania, 2018).

In 2019, Lithuania adopted the final National Energy and Climate Action Plan for the period 2021-30 (Governance of the Energy Union Regulation [EU]) 2018/1999), which outlines actions along several policy objectives:

 Decarbonisation: increasing environmental quality and the sustainability of the use of natural resources, climate change mitigation and climate resilience, boosting the consumption of renewables, promoting renewable and alternative fuels in the transport sector, intermodal mobility, and pollution reduction measures. reserved. rights

23 All IEA. 2. GENERAL ENERGY POLICY

 Energy efficiency: improving energy efficiency and the use of energy from renewable sources in residential and public buildings.  Research, innovation and competitiveness: becoming a leader in energy technology innovation, including for exports in the Baltic Sea region.  Internal energy market: making Lithuania part of the EU single energy market by integrating the Lithuanian natural gas market and interconnecting the Lithuanian power system with the continental European power system in synchronous operation.  Just transition: reducing the energy poverty of the population.  Energy security: ensuring the adequacy of the Lithuanian electricity market and system, increasing the share of locally generated electricity, boosting security in the Baltic Sea region, and safely decommissioning the Ignalina nuclear power plant and disposing of radioactive waste (supported by EU funding).

National energy and climate targets Lithuania’s energy and climate targets are set by EU and national policies, and contained in the NEIS and the NECP (see Table 2.1). By 2030, Lithuania wants to reduce its electricity imports by half and produce 70% of its electricity needs from domestic renewable sources, and complete the synchronisation with the continental European power system by 2025. By 2050, all electricity consumed should be generated in Lithuania. There are no targets for the reduction of fossil fuel imports (EC, 2020).

While overall greenhouse gas (GHG) emissions targets are set at the level of the EU, each member state has a target and needs to meet its national objectives for the sectors outside of the EU Emissions Trading System (ETS). By 2020, Lithuania was required to limit non-ETS sector emissions growth to 15%, compared to 2005 levels. By 2030, these emissions will need to be reduced by 9% compared to 2005.

In terms of renewables, Lithuania has ambitions higher than the EU target (for 2030) and is pursuing a very strong renewables strategy, which relies on bioenergy. The goal is to reach a share of 38% of renewable energy sources (RES) in the gross final energy consumption by 2025 and at least 45% by 2030 (broken down into at least 45% electricity, 90% district heating and cooling, 80% residential household heating and cooling, and 15% transport).

By 2050, the share of RES in total gross final energy consumption should reach 80%. This means that 100% of electricity – and all heating in the district heating sector – should be produced from RES, while in the transport sector, the share of RES will amount to 50%. The role of biomass is expected to be significant.

Innovation and research and development in the energy sector are mentioned in the NEIS and NECP. The NECP stipulates a target of 300 innovative energy products and business solutions tested in the regulatory sandbox for energy innovation by 2030. It also envisages start-up funding (grants and loans) until 2022 in the field of energy technology innovation (product manufacturing) and an obligation for public energy undertakings to invest in innovation.

reserved. rights

24 All IEA. 2. GENERAL ENERGY POLICY

Table 2.1 Lithuania’s energy and climate targets*

Current NEIS targets By 2020 By 2030 By 2050 status Binding target for greenhouse gas emissions -95% (energy and +7% +15% -9% (from 2005 levels) in the transport) non-ETS sectors 45% 80% Share of renewables in RES-E: 45% RES-E: 100% gross final energy 25.47% 23% by 2030 RES-H: 90% RES-H: 100% consumption RES-T: 15% RES-T: 50% Reduce primary and final energy National contribution for PEC:* 7.6 PEC:* 6.5 PEC:* 5.4 intensity by

energy efficiency (in Mtoe) FEC:* 6.5 FEC:* 4.3 FEC:* 4.5 ENERGYINSIGHTS 2.4 times (from 2017 levels) Level of electricity 62% 79% 111% NN interconnectivity Share of research, development and innovation 0.94% 1.9% NN NN budget in GDP in % (non- energy specific) * The definitions of primary energy consumption (PEC) and final energy consumption (FEC) are calculated according to the EU rules set under the EU Directives and do not follow IEA standards. Note: RES = renewable energy sources. Mtoe = million tonnes of oil equivalent. E = electricity. H = heating. T = transport. NN = no value.

The role of the EU Climate Law and the NECPs

The EU Climate Law sets into legislation the objective of a climate-neutral European Union (EU) by 2050 and creates a system for monitoring progress and adjusting national and EU-wide action, if needed. In line with the Paris Agreement, the EU Climate Law provides for a five-year stock-taking process. The national energy and climate plans (NECPs), which are regulated under the EU Governance Regulation, are at the heart of this process. In 2019/20, the first edition of the NECPs was adopted for ten years up to 2030. The European Commission will assess progress made on them by 2023. By 30 June 2023, member states are required to provide a draft update of the NECP and by 30 June 2024, the final updated NECP.

EU member states are also required to report on the implementation of their NECPs. The first such report (a so-called integrated national energy and climate progress report) is due by 15 March 2023. Any new policies and measures can be included in the progress report.

In mid-2021, the European Commission is set to present a range of proposals for a higher emissions reduction goal with the so-called ‘Fit-for-55%’ package of legislative proposals, including rules for the reduction of GHG emissions (effort sharing regulation, ETS) and proposals to revise the Energy Efficiency and Renewable Energy Directives, including their target level. The updated NECPs (by 2023/24) will have to reflect these increased climate and energy ambitions at EU level, once negotiations are finalised, as well as the results of the national progress reports. reserved. rights

25 All IEA. 2. GENERAL ENERGY POLICY

Box 2.1 The Government‘s Programme in Energy 2021-24 The government’s energy programme for the period 2021-24 confirms actions to promote stronger infrastructure, green energy and higher energy security levels, notably by:  increasing the amount of domestically produced renewable electricity by 2025 (1.2 GW of wind and 1 GW of solar PV), the flexibility of the electricity system, notably 200 MW of energy storage (with modern balancing services, emergency and other reserves) and the resilience of electricity networks, as well as pursuing the full integration into regional gas markets, notably by completing the gas interconnection Poland-Lithuania (GIPL).  boosting the share of distributed renewable energy by increasing the share of energy „prosumers” (to every third household by 2025) and energy communities, supporting smart grids and the roll-out of electric charging infrastructure, giving appropriate attention to energy R&D&I while continuing to promote energy start-ups and open-data and prioritising the development of hydrogen, including the blending into the natural gas grid and final energy savings of 20.4 TWh.  ensuring the swift synchronisation with the European Continental power system before 2025, while continuing the principle of not buying electricity from unsafe nuclear power plants (NPPs) and carrying out the safe decommissioning of the Ignalina NPP.

Energy investments for the transition

The NECP stipulates that the implementation of all of the measures for 2030 would require an overall investment of up to EUR 14.1 billion in the coming decade, with the majority needed in the transport sector (Table 2.2). The decarbonisation of the economy will absorb over 70% of the total investment, which is expected to be leveraged largely by public funds, as illustrated in Table 2.2. No information is available on how the private sector investment will be leveraged, through policy or funding instruments.

Table 2.2 Total investment needs for the implementation of the NECP 2020 EUR million Sector Total funding needs Public funds

Energy: energy efficiency 2 605 976 Energy: renewable energy 2 304 1 428 sources Transport 4 138 2 977

Agriculture and forestry 868 729 Industry (including ETS 876 342 sectors) Waste management 5 5 Total greenhouse gas reduction 10 795 6 455 measures Adaptation to climate change 3 303 3 303

Total 14 098 9 759

Source: Republic of Lithuania (2019), National Energy and Climate Plan, reserved. https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_main_en.pdf. rights

26 All IEA. 2. GENERAL ENERGY POLICY

Lithuania’s sustainable recovery plan In March and May 2020, the government of Lithuania adopted the Economic Stimulus and Coronavirus Mitigation Action Plan with short-term funding allocated to solar energy, building renovation and electricity networks. Under the action plan, the government also allowed the deferment, or payment in instalments, of electricity and natural gas bills from UAB Ignitis, and recommended municipalities to allow deferment or payment in instalments of utilities and heat energy. These were largely relief measures and have ended. At the time of writing, the government is preparing a range of recovery projects as part of its National Recovery and Resilience Plan, which it is expected to submit to the European Commission by 30 April 2021 to confirm EU funding for its projects and support investment up to 2026.

Assessment ENERGYINSIGHTS

Lithuania’s energy policy serves the quadruple purposes of energy security, competitiveness, sustainability and innovation. Lithuania’s energy policy is the result of its geographical location at the Baltic Sea and geopolitical conditions at the border with Belarus and Russia (Kaliningrad). Since regaining independence in 1990, Lithuania’s energy policy has continuously emphasised energy independence and energy security. The NEIS of 2012, which was updated in 2018, reflects these fundamental goals. In March 2021, the new government has confirmed in the energy programme for the period 2021- 24 its strong commitment to strengthen energy infrastructure, green energy and energy security.

Lithuania has a unique energy history. It is decommissioning its main electricity production facility, the Ignalina nuclear power plant and its two reactors, under the accession to the EU in 2004. The plant’s two reactors were closed in 2004 and 2009, respectively, and are currently undergoing decommissioning by 2038. In 2009, the country switched from being a net exporter to a net importer of electricity. Today, Lithuania imports over 70% of its electricity needs. The share of natural gas increased, but has recently been replaced by biomass, notably in district heating and residential heat.

Overall, the IEA commends the Lithuanian government for the significant progress made through the establishment of an integrated energy and climate framework for 2030. The NECP for 2030 was adopted in December 2019, setting ambitious targets as well as the actions needed to achieve them. Lithuania also has a long-term vision under the NEIS, with 2050 targets for renewables and energy efficiency, very unique by international comparison.

Recent efforts have focused on the actions needed for 2030. An inter-ministerial action plan is in place for implementing the NECP, which will require institutional co-ordination and monitoring of progress. At this point, the National Progress Plan is the key monitoring instrument, which is welcome. The Ministry of Energy, the lead co-ordinator of the NECP, needs to step up the joint implementation with the Ministry of Environment and the Ministry of Transport and Communications, including through sectoral strategies, for instance on transport and inter-ministerial progress reports. The strengthening of the Lithuania Energy Agency is a welcome development. As energy and climate targets are strongly interlinked, the government will need to create a robust and independent governance, which should review progress over periods up to 2030, 2040 and 2050. reserved. rights

27 All IEA. 2. GENERAL ENERGY POLICY

This first review of Lithuania’s energy policies comes at a time when the EU is implementing the Green Deal, with ambitions to reach climate neutrality by 2050. In 2021, the EU will be discussing higher emissions reductions targets and reviewing its energy and climate targets and policies for 2030. Lithuania has had a long-term vision to 2050 for a decade; however, climate change has not been a key driver of its energy policies to date. In 2019, more than half of the country’s energy-related CO2 emissions came from the transport sector, followed by the energy industry.

The IEA commends Lithuania’s achievements in recent years, including its strong renewables strategy, based on bioenergy, solar and wind, as reflected in the NECP. The envisaged medium-term development should, however, be more strongly aligned with a development path towards achieving the long-term vision towards 2050. This relates to the sustainable use of bioenergy and a more flexible electricity system with higher shares of wind and solar. By 2023, Lithuania needs to report progress on the implementation of its NECP and provide an updated plan by 2024, which should reflect any increased climate and energy ambitions at the EU level and national progress.

Important institutional reforms have taken place in the Lithuanian energy sector since the creation of the Ministry of Energy in January 2009. These were most recently boosted by the implementation of the EU’s Third Energy Package and accession to the OECD in 2018. These reforms were completed in 2019-20 and led to the creation of independent system operators for gas and electricity, unbundled from supply activities, and the reform of the NERC. Lithuania has made substantial progress in gradually opening up its electricity and gas markets. On 1 January 2021, it started the phase-out of regulated prices, starting with large consumers. However, in natural gas, market concentration remains high and regulated prices persist. Lithuania has increased the level of state ownership in its energy sector, amid energy security concerns. However, this means that the state has to ensure that state-owned companies can make the needed investment in the clean energy transition. Privatisations may be another way to deal with inefficiencies or market concentration, as recommended by the OECD’s 2020 Economic Survey of Lithuania (OECD, 2020).

To finance the energy transition, Lithuania estimates it will require EUR 14 billion of investments, with the lion’s share coming from the public sector and the EU. The decarbonisation of the economy will absorb over 70% of the total investment, which is expected to be leveraged largely by public funds. The government needs to identify private sector investment and create more own resources, as it is largely relying on EU funding for most of its energy sector public spending. As an example, Lithuania was able to create a fund based on the monetisation of its renewable energy surplus under its national RES target. Another opportunity is taxation: the government should consider reforming energy taxation in the coming years, aligning its tax structures to the energy content, CO2 emissions and other air pollutants. There are plans to introduce an annual vehicle tax, create a Sustainable Mobility Fund and phase out existing exemptions. The IEA underlines the critical importance of this reform and the existing ample opportunities for better aligning taxation to climate and energy objectives (see also Chapter 3).

Although the COVID-19 pandemic did not strongly impact Lithuania’s economy during 2020, it did that of its trading partners. The expected impact seems to be limited to a 2% negative growth of GDP in 2020. A consistent recovery in 2021 is expected thanks to a government fiscal stimulus of almost 10% of GDP. Following a EUR 5 billion economic relief package (16 March 2020), Lithuania adopted additional fiscal measures in May 2020. reserved. rights

28 All IEA. 2. GENERAL ENERGY POLICY

At the time of writing, Lithuania is preparing its national resilience and recovery plan. Much of the funding is expected to come from EU funds in the perspective up to 2026.

Lessons from the 2008/09 financial crisis have shown that governments withdraw fiscal stimulus too early for the economy to recover and loose impact by designing new complex funding instruments. The Lithuanian government should ensure that the fiscal stimulus kick starts investments that continue for a three- to five-year period or even longer, notably through policies that let the industry take over. In this context, the government should assess which existing policies could be used to scale up private/public investment by the energy market players. As an example, the government could be using auctions for clean energy technologies, like advanced biofuels, hydrogen, storage and large-scale renovation by energy service companies. The government should indeed seize the opportunity of the EU recovery funding to boost the country’s clean energy transition, by directing funds to the needed modernisation and renovation of buildings and transport infrastructure. ENERGYINSIGHTS Boosting investments in clean energy technology innovation is a promising area, including for aligning short-, medium- and long-term goals for 2050. Lithuania hopes to advance strongly in the coming years. The government should adopt an investment-oriented economic policy on innovation, including in the framework of recovery, with a coherent policy framework to support science-business co-operation. A welcome step is the adoption of the Action Plan for an Energy Innovation Ecosystem by the Ministry of Energy. The plan can also boost the performance of the energy sector under the newly created Innovation Fund.

Recommendations

The government of Lithuania should:  Strengthen the governance of inter-ministerial collaboration on energy and climate issues for the swift implementation of the National Energy and Climate Plan and the EU Clean Energy Package by designing sectoral strategies, monitoring progress and institutionalising co-ordination across government to deliver on the targets.  Ensure that the fiscal stimulus of the Lithuanian recovery plan remains robust and extends into the future to mobilise citizens, consumers and industry towards meeting sustainability goals and boosting employment, by directing funding to the renovation of buildings, renewables and alternative fuels using existing but scalable policy instruments.  Mobilise the private and public funding needed for the clean energy transition by completing the opening of the electricity and gas markets, reforming energy taxes and levies, and promoting energy technology innovation, with a view to boost competitiveness and accelerate the switch to clean energy technologies.

reserved. rights

29 All IEA. 2. GENERAL ENERGY POLICY

References EC (European Commission) (2020), Assessment of the Final National Energy and Climate Plan of Lithuania, EC, Brussels, https://ec.europa.eu/energy/sites/ener/files/documents/staff_working_document_assessme nt_necp_lithuania.pdf IEA (International Energy Agency) (2021), “World energy balances”, IEA World Energy Statistics and Balances (database), www.iea.org/statistics IMF (International Monetary Fund) (2020), “World Economic Outlook Database”, World Economic and Financial Surveys (database), IMF, Washington, DC, www.imf.org/en/Publications/WEO/Issues/2020/09/30/world-economic-outlook-october- 2020#Statistical%20Appendix (accessed on 30 November 2020). OECD (2020), OECD Economic Surveys: Lithuania 2020, OECD Publishing, Paris, www.oecd.org/economy/lithuania-economic-snapshot Republic of Lithuania (2019), National Energy and Climate Action Plan of the Republic of Lithuania for 2021-2030, Republic of Lithuania, Vilnius, https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_main_en.pdf. Republic of Lithuania (2018), National Energy Independence Strategy (NEIS), unofficial translation, Ministry of Energy, Vilnius, https://enmin.lrv.lt/uploads/enmin/documents/files/National_energy_independence_strategy _2018.pdf and www.e-tar.lt/portal/lt/legalAct/8c1793f07c3011e8ae2bfd1913d66d57. Republic of Lithuania (2013), Lithuania 2030 Strategy, Republic of Lithuania, Vilnius, www.unesco.org/education/edurights/media/docs/2953897c103c13043bfabea84b716ae2f8 c82f47.pdf reserved. rights

30 All IEA.

3. Energy and climate change ORMATION Key data (2018/19)

GHG emissions without LULUCF* (2018): 20.3 Mt CO2-eq, -58% since 1990 GHG emission without LULUCF* by sector (2018): transport 30%, agriculture 21%, and energy supply and use 49%

GHG emissions with LULUCF* (2018): 16.4 Mt CO2-eq, -60.2% since 1990

Energy-related CO2 emissions (2019): CO emissions from fuel combustion: 11.2 Mt CO , +9.1% since 2000

CO₂ emissions by fuel: oil 72.2%, natural gas 19.1%,₂ coal 7.1% and other 1.5% CO₂ emissions by sector: transport 56.2%, energy industry own use 13.2%, industry 11.4%, electricity and heat generation 7.5%, residential 6.6%, and services and other 5.0% ₂ CO intensity per GDP:** 0.12 kg CO /USD (IEA average 0.24 kg CO /USD)

* Land₂ use, land-use change and forestry (Source:₂ UNFCCC). ₂

** Gross domestic product in 2015 prices and PPP (purchasing power parity). ENERGYSYSTEM TRANSF

Overview

Lithuania has largely decoupled greenhouse gas (GHG) emissions from economic growth and is on track to meet its 2020 targets under the European Union (EU), which allowed an increase of 15% in sectors outside of the EU Emissions Trading System (ETS). However, total energy-related CO2 emissions have increased by 9% since 2000, notably from transport activities, which account for the lion’s share of Lithuania’s emissions. Existing measures are not enough to reverse the rise in emissions from transport, agriculture and industrial sectors and decrease emissions by 9% by 2030, compared to 2005 levels.

Under the National Strategy for the Climate Change Management Policy (Republic of Lithuania, 2012), Lithuania has set a target to reduce GHG emissions by 80% by 2050 compared to 1990 levels, and aims to reduce the remaining 20% with negative emissions and forests as carbon sinks. Lithuania is currently reviewing the National Strategy, as it joined other EU countries in supporting a vision for climate neutrality. The National Energy and Climate Plan (NECP) contains a range of climate-related measures for 2030, in line with EU rules, on emissions, renewables and energy efficiency (Republic of Lithuania, 2019). Lithuania relies for their implementation mainly on the availability of EU funding. The NECP has also started a process of integrating energy and climate policies and measures across government. reserved. rights

31 All IEA.

Lithuania 2020 National Report Inventory 2020National Lithuania UNFCCC (2020), Source: has grown by 165%, while CO GDP increased by 83%. otherwise, management, in Lithuania has decoupled GHG emissions from economic growth. During Energy * as well as sector energy the from largely came and levels, 1990 than lower 58% were LULUCF excluding emissions gas greenhouse total Lithuania’s 2018, In equivalent (Mt In 2018, GHG emissions Lithuania in stood at 20.3 million tonnes of carbon dioxi trends Emissions 3. 1 2018, t and has largely replaced natural gas, notably district in heating. increased use of natural gas power in generation. Figure 3.1 Greenouse gas emissions Note (CO energy intensity the of economy (TPES/GDP). The (Figure 3.1). Energy (1 emissions, as Lithuania has large emissions from contribution and excludes indirect CO indirect and excludes

CO -15

15 25 35 45 55 Gross domestic product in product domestic 2015 prices Gross -5

ENERGY AND CHANGE ENERGY CLIMATE 6%) andwaste (5%). role of The forests as carbon sinks important. is However, 2018. 1990 2 s Mt CO Mt 2

: emissions were impacted by the closure of the Ignalina nuclear power plant 2010 in ;

/TPES) increased 2010due in to the shutdown of the last nuclear reactor andthe Mt CO Mt per capita grew rapidly (Figure 3.2). Since 2000,

includes power and heat generation, services, households, industrial energy consumption households, industrial services, powerincludes generation, andheat otal GHG emissions decreased by% 58 emissions GHG otal 1992 2 - Total Total eq 2 - CO eq = 1994 from

GHG GHG 2

and accounted for 19% of the total GHG emissions (or 3.9 CO million tonnes of carbon dioxide carbon of tonnes million

1996 emissions emissions

removals in forests has declined since 2012, due to active forest 2 From 2000From to 2019, Lithuania’s total population declined by20%, while 2 - . emissions have stabilised recentin years at 20Mt CO eq), excludinguse, landland 1998 - related emissions accounted Lithuania’s 59% for of 2000 would 2002

and PPP (purchasing powerand PPP (purchasing emissions emissions 2004 have been flat, in line with the steady decline in the 2006 in Lithuania by sector, 1990- equivalent. equivalent. have 2008 32

2010 remained stable. , gross while domestic product (

LULUCF use,- land = land The role of biomass has increased since since increased has biomass of role The

2012 - agriculture (21%), industry processes , , carbon intensity the of energy supply use change and forestry (LULUCF) https://unfccc.int/documents/226319 p arity). Lithuania’s economy (GDP/capita) 2014

2016

agriculture and industry. and agriculture

2018

Trends in use change - 80% 2050 2018 the period 2 energy - , ,

. .

CO - related GDP 1990-

2 - eq) the de de )

IEA. All rights reserved. member countries (0. decrease from 2000 levels. is This more than since but in 2010 plant power nuclear Ignalina the of closure the after increased Note of 30 a weighted average of IEA30 the* is IEA equivalent member countries. IEA countries. of average the has economy Lithuania’s of intensity carbon The was 0.115 kilogrammes of carbon dioxide (kg CO In 2019, Lithuania’s carbon intensity, measured as the ratio of emissionGDP,ofs per unit Note . Ener 2000 since 165% by grown has economy Lithuania’s Figure 3.2 Energy rce: IEA (2020), “CO IEA (2020), rce: Sou are estimate , (database) , (database) Source: IEA (2020), “CO IEA (2020), Source: (PPP) Figure 3.3 lowest 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 1.0 1.5 2.5 3.0 0.0 0.5 2.0 0 s s Index 2000 kg CO kg : : . Data for 2019 are estimate . kg CO kg Real power USD GDP in TES: 2015prices energy and supply. parit total purchasing

among IEA countries 2019 in . ₂ www.iea.org/statistics www.iea.org/statistics s /USD GDP PPP /USD . 2

CO = kilogrammes = 2

intensityper GDP in Lithuania and IEA member countries, 2000- 2 2 -

related CO emissions by product and by product emissions flow” emissions by product and by product emissions flow” 239

carbon dioxide. Real GDP in USD 2015 prices and purchasing power in purchasing 2015 and parities USD GDP carbon Real dioxide. prices . .

s. kg CO kg

In recent years, it has plateaued around 0.12 kg CO kg 0.12 around plateaued has it years, recent In 2

emissions and main drivers in Lithuania, 2000- 2 / USD

GDP PPP) (Figure 3.3). Lithuania ranked fifth- 33 , , CO CO twice as low as the weighted average

decreased by 49% since 2000 and is below below is and 2000 since 49% by decreased ₂ ₂

Emissions from Fuel Combustion Fuel from Statistics Emissions Combustion Emissions from Fuel Combustion Fuel from Emissions Combustion 2 ) per United States d gy -

related CO related 3 . ENERGY AND CHANGE ENERGY CLIMATE 2 ies

ollar (USD), a49% emissions emissions have stabilised stabilised have

(PPP) Statistics . 2019 for Data IEA. All rights reserved. All rights IEA. United Kingdom Lithuania IEA30* Finland Estonia IEA. All rights reserved. All rights IEA. TES/GDP Population CO2/TES CO2 emissions GDP/capita CO CO 2 /USD. 2 2 /TES

emissions 19 of IEA IEA of

since 2010. since electricity andheat generation has emissions from natural gas combustion have declined since 2010 as the share gas in of In 2019 in Emissions from the transport sector emissions thein transport sector, where oil accounted for 95% of the energy demand. peaking In 2019, Lithuania’s energy CO Note * Lithu CO 3. below the IEA weighted average the fourth - for 72%for totalof energy and at , (database) Figure 3.4 CO and the remarkable switch from natural gas to bioenergy heat in generation. level since 2000 in 2019, thanks to the expansion of renewables Lithuania’sin power mix countries energy withIn line the growing share emissions of from the transport sector, the largest source of services and residential sectors have been stable overall. cement, chemicals and energy from facilities. stem emissions electricity andheat generation ( Source: IEA (2020), “CO IEA (2020), Source: IEA30 of 30 aweighted average of IEA30 theis IEA equivalent member countries. 100 200 300 400 500 600 700 800

ENERGY AND CHANGE ENERGY CLIMATE 2019. 56% 0 2 s

: 2 2 ania’s electricity and heat generation is low is generation heat and electricity ania’s intensity electricity in andheat generation was 56gCO g CO g g CO2/kWhg

% from other emissions. Oil emissions have increased g CO g emissionsby sector - , followed by other energy , transport accounted for the largest share of total energy related CO in 2007,in . www.iea.org/statistics 2 2 /kWh /kWh lowest carbon intensity electricity in andheat generation From

IEA member countries, 2000-

= grammes = 2

intensityfor electricity heat generation and in Lithuania and selected 2010, the carbon intensity began to decrease again, reaching its lowest t otal emissions began to pick up again 2014, in mainly due to growing 2 2

emissions by product and by product emissions flow” emissions is from oil combustion (Figure 3.6). In 2019, oil accounted -

related emissions, followed by 19% from natural gas, 7% from coal of carbon dioxide per kilowatt hour of carbon dioxide per kilowatt . - related CO

8 ( of 378 of , (7%) %), residential mainly emissions from refining from emissions mainly decreased

have doubled, 2

g CO emissions emissions 19 34 , CO

with the with carbon 2 ₂ /kWh (Figure 3.4). In 2019, Lithuania had

Emissions from Fuel Combustion Fuel from Emissions Combustion . . from 3 from Data for 2019s.Data for areestimate were ,

with a greater role of renewables renewables of role greater a with switch to bioenergy

and services (5%).Industry, in .0 11.

Mt CO Mt 2 2 2

noticeably since 2013, but /kWh 2019,in /kWh significantly Mt CO Mt - Emissions in in Emissions related carbon emissions ; 2

13%), industry13%), (11%), in 2000in amongIEA member 2

Mt CO Mt ) 3.6 . After . After ). 2 ,

IEA. All rights reserved. have increased since 2014, due to the growing share of emissions from transport activity. transport from emissions of share growing the to due 2014, since increased have processing industry. Lithuania mainly produces solid biomass andfirst Lithuania has large forest resources andagriculture, as as afurniture well andwood * Oil the is l Figure 3.6 Energy Services/other * Despite Figure 3.5 Energy the the in demand Source: IEA (2020), “CO IEA (2020), Source: Note ** Source: IEA (2020), “CO IEA (2020), Source: , (database) , (database) biodiesel (from rapeseed). country’s The bioenergy production bothis ** Note: Mt CO Note: 10 12 i Other 0 1 2 3 4 5 6 7 8 9 * 0 2 4 6 8 Industry 2000 Other energyOther s Mt CO Mt Mt CO Mt : Mt CO Mt ncludes emissions from non from ncludes emissions - electricity generation, generation, electricity from emissions decreasing

₂ includes CO includes ₂ www.iea.org/statistics www.iea.org/statistics argest source of CO 2002 2

2 =

= of carbon dioxide. of carbon tonnes million

includes commercial and public services, agriculture/forestry, and public commercial services, includes transport sector. Meanwhile, emissions from gas combustion have decreased since 2010. m includes emissions from refinery gas, petroleum coke, fuel oil, natural gas and natural diesel oil, fuel coke, oil. petroleum refinery gas, emissions includes from of carbon dioxide. dioxide. of carbon tonnes illion 2004 ₂

2 2 - - emissions from combustion at construction and manufacturing industries. andmanufacturing construction at combustion from emissions

related CO related CO emissions by product and by product emissions flow” emissions by product and by product emissions flow” 2006 . . 2 renewable waste. renewable

emissions ₂ ₂ 2008

emissions emissions

ts . Its share Data for 2019are Data estimate 2010

35 , , in Lithuania in Lithuania CO CO

2012 ₂ ₂ has has

Emissions from Fuel Combustion Fuel from Emissions Combustion Emissions from Fuel Combustion Fuel from Emissions Combustion increased since 2013 with growing energy 2014 total energy total by sector, 2000- by energy source, 2000 - s.

and fishing. 3 2016 . ENERGY AND CHANGE ENERGY CLIMATE - related CO related 2018

exported andused Statistics Statistics

generation emissions emissions Other* Coal gas Natural Oil

management, industry and others indicative mid forestry andhas astrong agriculture sector. Lithuania’s b Figure 3.7 Lithuania’s framework for climate policies. It The The National Strategy the for Climate Change Management Policy (2012) describes targets and policies Climate IEA (2021), Source: 2019. to up exports in arise and saw 2007 in bioenergy of exporter anet became Lithuania Figure 3.8 Bioenergy net trade Note: biodiesels and biofuels solid primary of mainly consists bioenergy of production domestic Lithuannia’s agriculture are critical, as Lithuania plans thein heating sector in Lithuania. sustainabilityThe bioenergy of production and 3. objectives (2021), IEA (2021), Source: www.iea.org/statistics www.iea.org/statistics 0.2 0.4 1.2 0.6 0.8 1.4 1.6

0 1 Export Import AND CHANGE ENERGY CLIMATE ktoe - 300 - 250 - 200 - 150 - 100 - Mtoe 100 150 200

- 50 s nes ton = million Mtoe 50 0 . . . Lithuania targets reductions compared to 1990levels - term (2030 and 2040) and long- “ “ World energy balances”, energy balances”, World World energy balances”, energy balances”, World . . of oil equivalent of ioenergy production 2008 ,

contains

. . The The

IEA World Energy Statistics and Balances Statistics Energy IEA World IEA World Energy Statistics and Balances Statistics Energy IEA World strategy sets legally binding short sectoral

to offset its 20% emissions of by use, land

term (until 2050) mitigation and adaptation targets for transport, agriculture, waste - 19

of:

(database), (database), (database), (database), - term (until 2020), Primary solid biofuels solid Primary Renewable waste Biodiesel Biogas Biogasoline IEA. reserved. rights All IEA. Net trade Import Export IEA. All rights reserved. All rights IEA.

the the

IEA. All rights reserved. and waste. Under the EU Effort Sharing Decision, Lithuania’s 2020 target assumes an from most sectors not included the in EU ETS, such as transport, buildings, agriculture member states thefor periods 2013- EUThe Effort Sharing legislation establishes binding annual GHG emissions targets for https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_main_en.pdf and Climate (2019), Energy Plan, National of Lithuania Republic Source: Table 3.1 under the ETS in Annex I to Directive 2003/87/EC. Emission Around athird of Lithuania’s total emissions regulatedis under the EU non-ETS sectors and the ETS in Emissions Lithuania   public electricity and heat generation (17%) emissions stem mainly chemical from and mineral production (46%), oil refining (26%), the of bulk emissions (71%) under falls national targets non- for manufacturing sector. economy by 2050, requirewhich will an industrial transformation of its industry government has decided other to join European countries to achieve aclimate - emission Plan (NECP) Plan Governance Regulation. notification sectoral of emissions reductions targets line with in long expected to be adopted in 2021(Republic of Lithuania, 2020) p mechanisms financial and instruments economic climate targets Lithuania relies strongly on energy efficiency andrenewable energy policies to meet its country with anestablished circular economy by 2050. Environment has declared anambitious goal Lithuania for to become acarbon- Total non sector -ETS services) combustionplants)use (households, and Non Waste management Industry Agricultur Transport Se erformance andenergy efficiency standards has been secondary to date.

as as , 2050 by 80% and environmentally emissions GHG low innovative, toward economy the of sectors all moving by 2040 by 70% ctor ctor - - term strategy to the European by by centralised energyproduction (non applying environmentally safe carbon capture and utilisation technologies (CCU). technologies utilisation and capture carbon safe environmentally applying (including fuel combustion) s -

intensive industrial sites in the Kaunas, Telsiai and Siauliai counties are covered

has reviewed its e Lithuania’s greenhouse gas reduction

) -ETS sectors in draft . draft The . M with

covered covered emissions of 20% s (target)

through the the andthrough technologies friendly These measures require external, mostly EU targets and objectives for the year 2030

2021- rtg includes strategy Under the 2021-

Strategy 30 will beimplementedwill under the National Energy andClimate

(small

Commission on 14January 2020, which requires the 20 and 2021- to update to and alignview its binding GHG a with

emission 37

24 government programme,Ministry the of a 2050 vision

by absorbents by absorbents , and fuel combustionand fuel industry in (11%). -9% -9% -15% - - - Targets ( 40% 9% 9% 30. These targets concern emissions s s , including taxation,

reductions deployment compared to from from 3 for climatefor neutrality and . , . ENERGY AND CHANGE ENERGY CLIMATE .

public funding. use The of Lithuania notifiedthis draft the the with targets for non- targets ETS emissions. ETS ETS emissions. ETS Article 15 the of forestry sector forestry

of renewable energy renewable of

2005)

- EU targets wide ETS, while ETS, wide

as well as well as , as well well as , neutral neutral . ETS The The

and EU EU is is

(poultry andpigs), but also from the management of the refinery. Lithuania’s industrial emissions stem largely f the highest sulphur dioxide emissions the in which EU, is largely dueto Lithuania’s old thein transport andagriculture sectors. Energy production and distribution Lithuania in has measures concentrations 2018.in that there were around 2 7 on of of Source: . Decision = ESD ETS Sharing Trading = Effort System. Notes: Emissions 2019- Data ** for Lithuania’s air pollutants have decreased since quality Air from compared to 2005. I Existing measures are expected to lead to an increase thein non- * Lithuania’s non-ETS emissions have increased by 1 is - increase of up to +15% in non- 3. for somefor pollutants data non- reductions thein sectors not covered under the EU ETS (transport,agriculture and target requires strong efforts to meet a 9% reduction of emissions compared to 2005 levels. to the meet targets under the Effort Sharing Regulation. to road transport andresidential activities (use solid of biomass heating). in The EEA Particulate matter emissi Figure 3.9 year between 2026 and 2030. The NECP 10 12 14 16 Actual emission data for 2018 are provisional. 2018 data for are provisional. emission Actual

0 2 4 6 8 ENERGY AND CHANGE ENERGY CLIMATE - the rise since 2016 residential in andservices and transport sectors 9% compared to 2005 in line with the Effort Sharing Regulation. Mt CO2 21% by 2030, according to the GHG that removals government. outlines NECP The

ETS industry) ETS from LULUCF 2005 EC (2020) andEEA (2019). +15% - eq

the European Environment Agency (EEA

under the NECP Lit 20 are allocations for the ESD annual emissions. annual ESD for 20 areemissions. allocations the huania’s n

could , 2013

which require in thein past five years amount n the horizon upto 2030, the NECP focuses onthe emissions Likewise, nitrogen oxide emissions remain high at ons (PM ons on- 2014

00 premature deaths attributable to fine particula matter te

ETS emissions and EU targets, 2005and 2013 to 6.2 to

could allow 2015 ETS sectors compared to 2005 levels. The 2030 target 2.5 additional

) decreased Mt per y per Mt

2016 .

states that part these of Lithuania 38 ear national action. The implementation of these 5% since2005 2017

the 1990s

between 2021 and 2025, and between 2011 and 2011 between

2018* 2020), to

achieve rom agriculture rom . However, hazardous waste industry andof in line with its target. The 2030 2019** a rebound has been depicted 2020** an

removals a 2014, but have been emissions reduction ccording to the latest ETS sectors by 6% sectors ETS . They are attribut - related

2005) Target (compared to allocations ESD annualemission emissions Actual non-ETS astable level

can be used IEA. -

20 5.3

Mt per Mt per found ed ed

IEA. All rights reserved. assessment of th LithuanianThe National Risk Analysis, which was updated 2018, in provides an the NECP for the period 2021- thefor National Climate Change Management Policy I policies and measures to reduce the vulnerability natural of ecosystems and domestic economic sectors. The change up to 2050. The strategic goal of Lithuania's climate change adaptation policy is assessment comprises the evaluation of all threats in Lithuania, including those climate adaptation strategy, outlin NationalThe Strategy for Climate Change Management Policy akey is climate change biodiversity, landscape, water resources andcoastal areas, and urbanised areas energy, industry, transport andcommunication infrastructure, forestry, ecosystems, In Lithuania, the most sensitive sectors climatefor change are agriculture, public health, changeClimate a the EU National Emissions Ceilings Lithuania’s average pollution levels have beenabove the national pollutants limits under and Kaunas. pollution recorded is non- 2030 under standards by the HealthWorld Organi rescue actions Lithuania Commitments Directive management, emergency an emergency management, with scientists and strengthening long ae to states prioritises engaging challenges. Regional and local impacts can bedifferent. Therefore, the government transport andagriculture sectors are especially poorly prepared to manage the adaptation The networks to withstand more severe weather conditions. regard to flooding, andpromote underground cabling distribution for networks andsmart and enhance resilience to climate change. capacity to adapt, plan measures, minimise risks and damage effectively, and maintain outlines measures to subsidise consumers (EUR and study the vulnerability the of country adopt a national programme. would heating.use in It includes to plans impose aroad charge onthe cargo industry. Trucks (EUR travelled on Lithuanian roads. mplementation the of G - hazardous waste and energy activities, mainly electricity generation. increaseAn in term (until 2050) objectives climate for change adaptation NationalStrategy Climate for Change Management Policyemphasises that

30 no longer beable to buy seasonal permits, but pay will according to the distance change. The government has short

million) to switch to vehicles clean and clean mobility andphase out solid fuel meet adopted a

EU ,

andadaptation measures emission

e e Article 6 risk factors with the greatest impact and likelihood

municipalities and residents through National during the summer season and notably in

or or oals andoals s daptation are set Lithuania’s in I ing

reductions “ of Directiveof (EU) 2016/2284 ( the NEC Dithe NEC d natural events

Lithuania’s Lithuania’s Air Pollution Control Plan 2019 in with 30. T he plan targets the heating and transport sectors and

O resilience preparedness resilience bjectives the for P

z commitments Directive ation, notably particulate for matter. and resilience resilience and rective are ’ vision, goal vision, s ecosystems and economy, to strengthen the - 39 term, indicative medium

Adaptation m important. important. management, prevention, warning systems,

” ). ). ( The The 2001/81/EC nterinstitutional Action Plan for the

for 2020for - 1

s andobjectives to address climate (Republic Lithuania, of 2013) andin NEC Directive obliges EU eriod of 2013- 000 per car) andmunicipalities The The awareness . Co easures are putwith place in National Emission R Emission National 3

strategyincludes quantitative . ) up to 2020 and allowed ENERGY AND CHANGE ENERGY CLIMATE 29 and 2030 onwards and - ordination of disaster risk and must of of cities main the - - term (until 2040) and 2020 the of Strategy - co raising, commitments commitments . This occurringof This .

further monitor

caused by operation . eduction m Vilnius Vilnius ember up to the

T used in products have remained stable over time and have many exemptions. are not in line with carbon content. Excise duty rates andtheir structure across energy by the Law on subject to a higher excise duty.duties Excise on energy products Lithuania in areregulated since 2008, animportant gapremains between diesel and gasoline taxation, which is compared to gasoline. country has one also the of largest “diesel differentials”, i.e. the the gapin tax rate ondiesel Lithuania has one of the lowest excise duties on petrol and diesel the in OECD. The social contributions transport are the second- average economic losses in GDP should not exceed 0.08%. to account at for least 89% of all weather events, the annual cost of climate- * In subsidies and Taxation protection measures. adaptation targets by 2030. All residents living in flood risk areas should have flood 3. *** use. business applicable for Rates ** Source: Ministry of Finance, Lithuania. of Ministry Finance, Source: have Monetary Union, MWh prior = 1 andtaxes hour. Notes: 2015,Prices ofto megawatt the entry January and date into the Economic MWh) (per Electricity MWh) lignite and Coke MWh) Coal MWh) fuel as heating gas Natural fuel motor as gas Natural gas petroleum Liquefied oil fuel Heavy a in Diesel Kerosene fuel heating as Diesel Diesel gasoline Leaded gasoline Unleaded Product All rates are per 1 rates All griculture griculture able 3.2

ENERGY AND CHANGE ENERGY CLIMATE

2018, Rates applicable non- applicable for Rates

(per (per (per (per

(per (per

agriculture almost tripled from 1July 2015to 1January 2020.

revenues from

was 2004 2004 125.12* 125.12* 15.06* 290.20* 25.91* 290.20* 560.13* * 381.72 Excise duty rates in Lithuania, 2004-

2.4% of GDP), according to Eurostat data (Eurostat, 2020). Taxes on

Duty Excise 000 litres unless indicated with * for unless indicated 1 000 litres

2007 2007 8.98*** 4.63** 7.53*** 3.77**

been converted from Lithuanian litai using the conversion rate LTL/EUR. the of using 3.45280 litai Lithuanian conversion from been converted stem from environmental taxes (

business use. business With h With

2008 2008 21.14 421.11 274.27 274.27 323.22

Despite the gradual increase excise in duties imposed ondiesel environmen lowest the in EU. O

(No. IX (No.

azardous, natural and catastrophic weather events expected

(Jan) 2009 304.10* 579.24 304.10* 330.17 330.17 434.43

569, 30 Octoberas 2001),illustrated Table in 3.2 , but in Lithuania in taxes tal

(Aug) 2009 274.27

(Jan) 2010 1.01*** 0.52**

40 000 kilos.

nly nly

219.53 (April) 2010

20 0.3% total of revenues from taxes and compared to the EU average 1.2% of

(in EUR) (in 302.07

2011 2011

represented 2% of GDP (

330.17 2013

21.00 2015

The The 2016 2016 0.54** 23.60 1.08***

tax on diesel diesel on tax

2018 2018 347.00 56.00 0.00

the the

related related 2020 2020 60.00 372.00 466.00

EU EU

IEA. All rights reserved. of coal,of coke and lignite, natural andof gas as heating fuel. Lithuania does not havean annual vehicle tax be Plan, the government plans to introduce aroad charge for freight which would no longer out the subsidies ( agricultureoperators from in pollutants discharged into the environment (NO Lithuania levies a general tax on environmental pollution (EC, 2015) exempt from excise duty. excise from exempt petroleum gas was applied) gas used as motor fuel was introduced (before the taxation with the carbon content. government The Under the NECP, Lithuania has outlined plans to phase out exemptions and align excis 2021. The government has plans to phase out the exemption of bioenergy by2028. vehicles emitting thanmore 130 between EUR 13.5 andEUR levied 540is onvehicles (Table 3.3 ). excise duty exemption was applied). In April 2010, exciseAn duty imposed is on diesel used in agriculture since January 2015 (before total 1 Coal, coke and lignite are subject to excise duty since 1January 2007and electricity since petroleum gas supplied in cylinders or bulk in alsois exempted from excise duties. co- Also exempted from excise duty the is consumption of natural gas as a motor fuel, for on Charity andAid as well as electricity from renewable sources. transmission networks), supply domestic to consumers receivers and aid under transmission (including for the maintenance and losses electricity in distribution and Electricity exempted is from excise duty activities for related to generation, distribution and 2 administer the tax State Inspectorate Tax under the Ministry Finance of andthe MinistryEnviro thenment of biomass for heating andtransport purposes qualifies anexemption for from the tax. The (gl (tyres, accumulators used transport in vehicles and others) andspecified filled packaging CO gasoline budget amount to EUR 19 and 207 pollution levels. The tax will apply to around 170 gasoline or gas fueled cars the for same amount of CO

January 2010. Natural gas for heating is subject to excise duty 1January since 2016. 2019, the ass, plastic, metal, paper and other packaging). use The of biogas, solid and liquid a seasonal road usage permit generation, - 2 generation refers to the combined production of heat and power to production refers the combined generation

emissions of motor vehicles as reported by manufacturer the vehicle 000 cars changing owners every year. expected The revenues for the state m otor 2

, by households and/or by charitable organisations. Domestic liquefied taxing from the same threshold

reduced on l pollution. The v ehicle ehicle

- 20 million per year. r the excise tax egistration . Since 1January 2018,

and gradually phase graduallyenvironmental pollution tax by 2024and , but acharge thefor kilometres travelled. g/km, atest amendments bec rates) heatingfor gas oils, and the commerci t ax ax

making no differentiation between adiesel or came into force on 1 July 2020. Based on the 41

, 000 newly registered vehicles but applying different tax rates diesel, for but but x , SO , a separate excise duty rate natural for same same . . seeks seeks imposes imposes natural gas used as motor fuel is x

and particles), specified goods 2

excise duty rate for as

Under the National Pollution Air and, in such a to abolish the exemptions of 3 . a ENERGY AND CHANGE ENERGY CLIMATE a registration tax. Adopted me effectiveme on 1January

fee The , a r , a , egistration fee way, reflecting reflecting way,

is imposed on on imposed is which covers in Lithuania liquefied liquefied the Law the al use use al

used thefor implementation climate of - the Around 30% of the revenues collected from the financeClimate and investment The Table 3.3 3. Lithuania relies onEU Climatethe Cha nge Programme. budget. environmen Change in number of exemptions (for instance 95 (130

ENERGY AND CHANGE ENERGY CLIMATE 2021. The government plans to amend the tax in 2023 to

g/km CO of Lithuanian Environmental Investment Fund, which promotes tax tax CO From g/km) and faris from meeting the latest requirements passengerfor cars 171 161 151 141 131 116 291 281 271 261 251 241 231 221 211 201 191 181 0 2

structure Revenues received from auctioned allowances under ETS the are EU directed to

(2009) 301 and301 more

emissions (g

Registration tax for passenger cars passenger tax for Registration The Law The on sectors. tal 2 established the Climate Change Programme Lithuaniain under the state , being phased- does not incentivise low 300 290 280 270 260 250 240 230 220 210 200 190 180 170 160 150 140 130 115

/ To km) S

tructural and I

in forin vehicles 95% of in 2020 with 100% compliance for for Management of related projects. Diesel nvestment 330 300 270 240 210 180 150 120 540 510 480 450 420 390 360 90 60 30 fa - 0 0 emission vehicles or efficient driving, and has

rmers). tax The aligns with old EU standards

Tax onTax motor vehicle ( e

nvironmental in Lithuania F unds

Financial Instruments Climate for

The for the period 2014-

expand Alternative Fuels Law, which G

asoline p (2020) 165 150 135 120 105 270 255 240 225 210 195 180 ollution ollution 90 75 60 45 30 15

0 0 small

EUR its scope

- scale projects in all t ) ax

are .

20; , directed to which are 148 121 229 202 175 94 67 40 13 Gas 135 108 243 216 189 162 81 54 27 0 0 23% is . . . .

. . 5 5 5 5 . . .

5 5 5 5 5

IEA. All rights reserved. increasing for several years, putting at risk Among e GHGs, total Climate Change Management Policy longThe - sector. and technology innovation the in transformation of Lithuania’s industry and agriculture targets. EUR policy. the country. R and the p thefor Climate Change Management Policy currently under discussion thein Lithuanian 2030goals and2040 for with reduction of Lithuania hasan ambitious set long Assessment was related CO last decade), maintaining such asteady emissions level means that the country year.the Lithuanian As economy has beengrowing at afast (~3.5% rate year over per GHG emissions. Transport emissions. GHG further growth in emissions and has mostly been able to decouple econo are planned to beraisedthe European from R Change Programme. Funds. Independence Strategy, the 58.4% share the of total emissions 2019. in m The most significant source, transport (31% in 2019) and the The most significant source GHG of emissions the in Lithuan is ia in thein NECP and theand in National Progress Programme. Many strategic documents have been reflected goals (up to 2030) are more thoroughly elaborated the in and lower than in 1990. The of bulk the reductions in emissions occurred between 1990 GHG emissions in Lithua industries. sector 4%. processes andproduct use contributed 16.7% the of total GHG emissions, and the waste arliament includes the objective of climate neutrality as a vision for educing GHG emissions from the current levels the is key challenge for the coming

creation of the

1993. In more recent years, emissions have stabilised adopted by Parliament in 20% of emissions under

1.8 The developmentThe anaction of plan e- for

Pilot measures, worth EUR 56million, are already funded through the Climate

Any net National Air Pollution Reduction Plan.

billion required is to beinvested during the period 2021- term framework the for climate policies is set in the National Strategy the for 2

GHG emission GHG To someTo extent, this growth was offset by reductions energyin emissions - zero pathway would need significant energy Sustainable Mobility for Fund the implementation the of alternative fuels the

, NationalProgress Programme, for instance have grown fast, related also to the truck transit going through the missions in the transport and agriculture sectors have been account (40% and 70%, respectively). The nia havenia dropped significantly. Emissions 2018 in were 58% s

National Strategy the for Climate Change Management Policy sector emissions, which made up56% of the energy total of of

LULUCF.

March 2021 - 80% by energy industries (11% in 2019). Agriculture theis second ing

for 20.8% of total emissions. Emissions from industrial -

term term which, in addition to the 2050 vision

2050 compared to 1990 levels, requiring offsetting target for and comes into force on

43 the achievement the of 2030 climate change

ecovery ecovery

ain contributors the in mobility part is the of of Law. total A

climate neutrality, with anenvisaged F und, as as well the EU Structural update of the NECP for theNECP2021 period for - 3

at around 20 Mt CO efficiency, renewable energy . ENERGY AND CHANGE ENERGY CLIMATE 30 and themost of funds 1 energy sector st the

2050. July 2021, energy sector are National Strategy N mic growth from from growth mic , sets reduction, sets ational Energy

Medium - intensive

includes includes 2 avoided avoided , - eq per years. with with - term term

the 30 a -

through the LULUCF flexibility thefor period 2021- for the period for 2021- bodies are involved. Under the NECP, climate and energy polic climateAs goals are connected with many policy areas, many ministries and government 3. The The reducing emissions from the transport sector. sustainable urban mobility are plans seen by the government as critical measures for the electrification railways, of promotion of alternative fuels and implementation of negative externalities from air pollution when it is used heating for purposes. In transport, exemptedis from the environmental pollution tax and its pricing does not reflect the efficiency,environmental performance generation. Taxes imposed ontransport activities do not sufficiently incentivise energy Transport the is largest emitter flexibility. sustainable agricultural LULUCF policy order the in to of make use particular attention to the sustainable use of farmland and forest land as as well a non- higher than 2005levels). However, by 2030, Lithuania has to reduce emissions from the The government The emissions those in sectors be the will biggest challenge for Lithuania the in coming years. transport), where EU on the development the of Lithuanian climate change policy andco- more interlinked. National The Climate Change Committee, established consultations for As 71%As of the GHG emissions in Lithuania stem from non- industrialand non- implementation, 26 includes climate importance adapting of Lithuania’s critical in renovations and new constructions can bevery effective. The IEA emphasises the decades. Adaption measures such as updated planning procedures and requirements for industrial development will require detailed scenarios and emissions excellent step thein right direction to promote the industrial supply chain. However, the Lithuania to is itsmeet long- addressing transport sector emissions to 2030 and beyond, which will be critical if Lithuania may be able to offset 6.5 Mt CO availableEU funds external/EU (2021- change are source main The for The enabling infrastructure. to operationalise targets for the different use of fuels andthe needed investment the in investments. will have to beadapted to make full use of financial instruments andprivate sector external funds grantsfor will probably

ENERGY AND CHANGE ENERGY CLIMATE ETS sectors by 9% compared to 2005 IEA occurrence of extreme weather c 30), out the of EUR 14.1 billion needed, EUR 9.8 billion is planned to come from - proofing of electricity distribution grids.

encourages the g external/EU

public funds. beginning At the the of period, the g is is governmental organisations. to sure beontrack with to the non- for 2020goal 30) to meet the GHG emission

financ m financingthe measures mitigation for adaptation and climateto

ember ember public funds. For instance, the for NECP implementation period overnment to develop adedicated strategy androad e e

representatives of ministries, local authorities, research, and term emission targets.

climate

states have binding of GHGs of - e amount of available related available measures. of However, amount the decrease or onditions

2 , followed by industry, and electricity and heat lower c - levels eq (around the5% of total non- 44 frastructure to these changes, notably the for

over time and the policies and measures onsumption of fossil fuels. Biomass use use Biomass fuels. fossil of onsumption (a reduction of 31% from today’s levels). is expected to s reductions

The draftThe Alternative Fuel Law an is ainl redu ction targets, reducing national g The 30. target for non- y overnment relying is on ETS sectors (incl sectors ETS increase in the coming coming the in increase overnment should pay planning havebecome ETS emissions (+15% reduction ordination of ETS emissions emissions ETS

ETS sectors sectors ETS s pathways map for uding

its its

IEA. All rights reserved. technologies, notably hydrogen critical this for transition. government The should study critical role of the clean energy newof business opportunities to support the transition. Technology and innovation will be   long There is no There is g seen positive impacts on buying and usage behaviour. IEA The encourages the combustion vehicles one in way or another, supporting while electric vehicles, and have emissions from the transport sector. Most IEA member countries impose taxes on private  The governmentLithuania of should: Recommendations vehicles Lithuania; in there is the transport andother sectors. Currently, noroad there- is Lithuania has a large and mostly unexplored potential to use taxes to steer behaviour in taxes, differentiated to CO    overnment to closely study the applicability these of measures Lithuania. in

policy Design sector policy sectors towards 2030 and beyond Develop a comprehensive set of emissions reduction pathways for the non- energy technology andinnovation targets. Policy Management Adopt andimplement an updated National Strategy the for Climate Change transport, with comprehensive measures, including carbon price signals and the contribute to climate change adaptat economy by developing futureproof energy systems andbusiness models, which will Seize the opportunities of Green the and EU Deal transitioning to aclimate- (e.g. Strengthen planning procedures to ensure that risks stemming from cli goals, Accelerate infrastructure as well as clean mobility. externalities (i.e. annual car taxation, road charges), support to alternative fuels and new critical infrastructure or buildings.

- term decarbonisation efforts.

potential floods, high wind speeds) are alleviated when renovating or constructing

including through taxation reforms. single competitiveness of the Lithuanian economy. private sector involvement andfinancing attaining for the climate policy

solution reaching for climate neutrality – to scale road 2

emis

only amotor vehicle registration tax. Studies show that such

maps maps sions of cars, could have a strong impact on reducing

and CCU

up policies for reachingup policies for climate neutrality,including with with and review them on aregular basis.

ion and mitigation, security supply, of resilience,

priority actions in

45 ,

to enable negative emissions meeting in

this means that there are a lot

3 non . ENERGY AND CHANGE ENERGY CLIMATE use tax levied onprivate - ETS sectors, notably in

mate changemate , to reflect neutral ETS ETS

- https://e Policy Management Change G I the for Plan Action Interinstitutional (2013), Lithuania of Republic Vilnius, , Plan andClimate Energy National (2019), Lithuania of Republic Vilnius, Lithuania, of Republic Strategy Policy Management Change Climate National Draft (2020), Lithuania of Republic Statistics Combustion “CO IEA (2020), Balances and Statistics IEA https://ec.europa.eu/eurostat/statistics Statistics Tax Environmental (2020), Eurostat %2C%20buildings%2C%20agriculture%20and%20waste 2#:~:text=The%20Effort%20Sharing%20Decision%20(ESD)%20No%20406%2F2009%2F, Copenhagen, (ESD) Decision Sharing Effort the under Emissions Gas Greenhouse (2019), EEA nia sheets/lithua Copenhagen, EEA Type=Other+indirect+tax https://ec.europa.eu/taxation_customs/tedb/legacy/taxDetail.html?id=385/1424159249&tax Pollution on Tax (2015), EC =LT&esdYear=&search=Search¤tSortSettings= https://ec.europa.eu/clima/ets/transactionsCompliance.do?languageCode=en&esdRegistry Commission) (European EC References National Inventory Report Inventory National 2020 : Lithuania (2020), Change) Climate on Convention Framework Nations (United UNFCCC tar.lt/portal/lt/legalAct/TAR.F1333EAD263B 2013- Policy Management Change Climate the for Strategy National (2012), Lithuania of Republic ENERGY AND CHANGE ENERGY CLIMATE oals and O and oals (International Energy Agency) Agency) Energy (International (European Enviro (European Republic of Lithuania, Vilnius, Vilnius, Lithuania, of , Republic 2050 https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_main_en.pdf seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.447537

bjectives for the P the for bjectives - www.eea.europa.eu/data www.eea.europa.eu/themes/air/country . 2

IEA CO IEA flow”, and product by emissions

(database) nment Agency) nment

(database), .

(2020), (2020), EC

ptation Plan), Plan), ptation Ada (National https://ec.europa.eu/clima/sites/lts/lts_lt_lt.pdf - 2013 of eriod , , Brussels, , Bonn, Bonn, , UNFCCC , IEA, Paris, Paris, IEA, , ), “World ), (2021

www.iea.org/statistics , , Log Transaction Union European

- , Lithuania Sheet Fact Country (2020), explained/index.php/Environmental_tax_statistics - and www.e

. 46

2020 of the Strategy for the National Climate Climate National the for Strategy the of 2020 - maps/data/esd , Euro , www.iea.org/statistics

https://unfccc.int/documents/226319 IEA World Energy Energy World IEA balances’”, energy stat - ( fact , L accessed on 4 December 2020). December on4 accessed . Republic of Lithuania, Vilnius, Vilnius, Lithuania, of Republic

. uxembourg, uxembourg, 2

. -

- sheets/2020 Emi ssions from Fuel Fuel from ssions Republic of Lithuania, Lithuania, of Republic mplementation of the the of mplementation .

EC, Brussels, country .

EEA, - fact , , EEA -

. .

. ,

4. Energy efficiency

Key data (2019)

Total final consumption (TFC): 6.6 Mtoe (oil 36.9%, natural gas 23.4%, heat 12.8%, electricity 13.7%, bioenergy and waste 10.8%, coal 2.6%), +26% since 2008 TRANSFORMATION Consumption by sector: industry 34.8%, transport 32.4%, residential 21.5%, services/other* 11.3% Energy consumption (TFC) per capita: 2.3 toe/capita (2018 IEA average 2.8 toe/capita, 2018 IEA median 2.4 toe/capita)

Energy intensity (TFC/GDP)**: 70 toe/USD** million (2018 IEA average 62 toe/USD** million, SYSTEM 2018 IEA median 62 toe/USD** million)

* Services/other includes commercial and public services, agriculture, forestry, and fishing. ** GDP is computed in USD 2015 prices and purchasing power parities (PPPs).

Overview ENERGY

Rising industrial and transport activity undermines Lithuania’s efforts to progress towards its national savings target for final energy consumption by 2020, which would require a sharp decrease of energy use. COVID-19 impacts may lead to a short-term decline in consumption, but not to a structural change in transport and industry efficiency.

The National Energy and Climate Plan of Lithuania (NECP) set targets for primary and final energy consumption for 2030 and announced a number of policies across all sectors to achieve those quantitative targets. The new Energy Efficiency Law sets out obligations for all ministries in their respective sectors.

IEA analysis underlines the significant role energy efficiency can play in the short and medium term for mitigating the expected rebound of consumption and emissions as the economy recovers in the coming years. Policies and measures are in place for making progress in public building renovation and the EU Renovation Wave can present an opportunity to boost progress towards the 3% renovation rate per year.

The IEA estimates that energy efficiency will play an instrumental role in achieving the emissions reductions necessary for the climate neutrality of the economy by 2050. Commendably, the National Energy Independence Strategy (NEIS) of 2018 includes an energy savings goal for 2050. In its final assessment of the 2030 targets, the European Commission qualified Lithuania’s 2030 target as a modest effort (EC, 2020a). reserved. rights

47 All IEA.

), IEA (2021), Source: ), (2020), Odyssee Source: industry). petrochemical consumption final total www.iea.org/statistics Figure 4.1 Decomposition of total final energy consumption and 4.1, final consumption without energy efficiency. As a decompositi * 2000. since declined has population total the as increased, has while TFC/capita years, in recent GDP than rate aslower at increased has TFC Figure 4.2 Energy consumption and drivers Note the halve to allowed savings Energy and changes to the structure the of economy since 2000 would have to led effici interrupted by asmall drop 2008 in amidst the global financial crisis. The role energy of Lithuania’s economy and energy consumption have continuously grown since 2000, only efficiency energy of The role 4. Note 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 0 1 2 3 4 5 6 7 8 GDP

ENERGY E Mtoe Final consumption s s e Index 2000=1 2018 : : TFC cons = final total ency has been important. increasing The economic activity (in transport andindustry)

data are in billion USD 2015 prices and are USD ( data billion 2015prices PPPs in Mtoe = million tonnes of oil equivalent. oil equivalent. of tonnes = million Mtoe nergy savings allowed the 2000 3.77 to bereduced by half FFICIENCY “World energy balances”, energy balances”, “World .

(6.5 Mtoe), non- (6.5 data Mtoe), include as IEA

Decomposition Decomposition

Activity 3.08 umption . GDP = gross domestic production. GDP gross = . domestic . T Structure ool 0.49 potential , n consumption from n consumption i rise potential Final consumption 2018 doesin Mtoe) Final with not IEA correspond (5.53 consumption IEA World Energy Statistics and Balances Statistics Energy IEA World - www.indicators.odyssee p urchas Energy savings Energy increase in final consumption consumption final in increase 48 energy use (use of hydrocarbons by chemical and of byenergy hydrocarbons chemical use (use

2.04 in Lithuania ower power ing mure.eu/decomposition.html

arit ies Other 0.20 , 2000-19 ). on analysis shows in F in shows analysis on

trends

2000 and 2018. 2000 and , (database) Final consumption TFC/GDP Population TFC Electricity consumption/capita TFC/capita GDP

igure igure

IEA. All rights reserved. in (Figure 4.2) * -h seventh the had nia Lithua (44 per growing economy, whose gross domestic produc Since 2000, total final consumption (TFC) has increased by 50%, driven by Lithuania’s intensity Energy Source: IE Source: of oil equivalent. tonne = toe Note: Figure 4.3 Energy intensityin IEA member countries, 2018 the IEA average (2.9 of higher than the IEA 2018in (Figure 4.3). The energy intensity the of economy (70 toe/USD million) was 13% result of the increasing TFC Energy intensity as expressed in TFC/capita has increased after a decrease in 2010, as a www.iea.org/statistics 0.02 0.04 0.06 0.08 0.12 0.14 0.1 GDP

0 the the below ranked and 2018 IEA member countries, as TFC/capi 0 1 2 3 4 5 6 7

000 capita (33 USD thousand/capita) is lower than average the IEA

toe/USD thousandstoe/USD (2015 data are in billion USD 2015 prices and are USD ( data billion 2015prices PPPs in toe/capita A USD (2021), (2021), . C

thousand/capita). In terms ompared to IEA member to countries, Lithuaniaompared ranked seventh by TFC/GDP “ World energy balances”, energy balances”, World . ave toe/capita). prices andPPP) Energy consumption per capita (TFC/capita) capita per consumption Energy rage (62 toe/USD million). It should be noted that Lithuania’s Energy consumption per GDP (TFC/GDP GDP per consumption Energy

ighest energy consumption per GDP among IEA countries countries IEA among GDP per consumption energy ighest

and adecreasing population , IEA average in energy consumption per capita. per consumption energy in average IEA

IEA World Energy Statistics and Balances Statistics Energy IEA World ta for for ta

of TFC/capita, Lithuania ranks belowthe median p urchas 49 Lithuania (2.3 toe/capita) 19 is

ower power ing ( t GDP p arit which has seen large emigration ies ) ). doubled that in time

)* )*

(database), (database), 4 . ENERGY EFFICIENCY ENERGY

GDP

important in Figure 4.4 Energy i Lithuania’s energy intensity dropped byis Th 9%. accounting one for - Lithuania’s industry sector has had the largest share energy final in demand since 2000, ** * energy most the been has sector industry The Figure 4.5 Total final consumption in Lithuania by sector, 2000-19 Note: countries. neighbouring and countries member in IEA trends follows intensity energy in Lithuania’s decline The IE of that At 4. however, the transport sector has seen a fast rise in energy consumption. in energy rise afast seen has sector transport the however, IEA (2021), Source: Note: Mtoe = million = Mtoe ofoil tonnes Note: million rangingagriculture from and food (2021), IEA (2021), Source: www.iea.org/statistics www.iea.org/s 0.06 0.07 0.08 0.09 0.10 0.11 0.12 0.13 2.5 0.5 1.5 Industry

0 1 2 Services/other Services/other ENERGY E the Mtoe GDP toe/USD 1000GDP PPP regional level, the decline of the

includes non- includes

data and are in USD ( billion 2015 prices PPPs A A member countries in the region (Figure 4.4). Between 2008 and 2018, FFICIENCY tatistics IEA member countries( ublic services, and services, public commercial includes “ “ World energy balances”, energy balances”, World World energy balances”, energy balances”, World . . energy consumption. third of (Figure TFC 4.5). Lithuania has export

ntensityin selected IEA countries, member 2000-19

equivalent. equivalent.

processing, IEA World Energy Statistics and Balances Statistics Energy IEA World IEA World Energy Statistics and Balances Statistics Energy IEA World - 13%), notably in Poland ( TFC/GDP TFC/GDP 50 - intensive sector since 2000. In recent years, recent In 2000. since sector intensive p agriculture, forestry agriculture, urchas

biotechnology and chemicals to furniture ratio since 2000 ing powering

decrease was p arit , and fishing. ies - 19%) and Estonia ( ) ; - nne of oil equivalent. to = toe oriented manufacturing has been

(database), (database), (database), (database), ,

on average, IEA. All rights reserved. rights All IEA. IEA. All rights reserved. rights All IEA. weaker Services/other** Residential Transport Industry* IEA30 Lithuania Finland Poland Estonia - 22%). more

than than

IEA. All rights reserved. h Public Agency andthe Finance, the Environmental Project Management Agency, the mandatory of energy savings industry. in Besides policies, the Ministry implementation of Agriculture Communications for achievingfor the quantified targets their in respective sectors. Improvements (Republic Lithuania, of 2020) allocates the responsibility to each ministry Ministry Energy of are implemented across government. The Lithuania has a unique governance to ensure that energy savings calculated by the reporting onenergy efficiency progress. guarantee programmes. Lithuania The n compared to neighbouring countries and anincrease car in ownership. 2014 to 2019, linked to more freight activity, tourism tank due to favourable taxes transportThe sector has been catching up, with a 30% increase in the four years from Energy and several agencies. In transport, In the buildings sector, the Ministry of Env residential and services/other sectors has been flat since 2000. products. 5.4 by updated NEIS of 2018, the government aims to reduce primary and final energy intensity for contains the main national energy efficiency goals. In 2012, the NEIS set the t fundamental driver for reaching long - Lithuania’s energy strategies recognise the important role of energy efficiency as a polici and targets efficiency Energy E governance efficiency Energy and wood products, textile and clothing. the biggest decrease expected from transport Lithuania equipment Lithuania, 2020). The Lithuania, 2018a). and gives priority to energy efficiency improvement measures that reduce energy demand over measures are expected to amount to at least 27 Directive (EU) 2018/2002, cumulative energy savings energy from efficiency improvement with 2017in to 1 nergy efficiency policies are designed andimplemented by wide a

2020, which was geared to a 1.5% annual energy efficiency improvement. Under the 1.5 by times 2030 million tonnes of oil equivalent ( Law on Energy Efficiency Article 7 of theArticleof Energy 7 governs agreements with energy suppliers

in thein fields of . made the up7% of country’s GDP 600 ktoe by followed 2030), by i The The

together with

Under Ministry and

engineering,- high the I

nvestment Development Agency of theof Economy and c 2.4 times by 2050 l Efficiency Directive 2012/27/EU (EED II), as amended by aw, aw, local municipalities

Improvements Mtoe Lithuania targets aprimary energy consumption of term climate targets upto 2030 and 2050. The

) Energy Agency carries out themonitoringof and a final energy consumption of 4.5 Mtoe, with In 2019, the 51 ironment lead ironment precision instruments, furniture andmedical ndustry (fro ndustry

(from (from

280

and ten it is contains binding energy saving targets

ompared to 2017 2 and industrial facilities (Republic of ; agricultureand in , 071 kilotonnes Innovation gigawatt hours (

manufacturing machinery of and the Ministry Transport of and m 1 s, together with the Ministry of es es new factories were openedin

028

offer Law on

Housing Energy Saving ktoe is responsibleis for the

range of stakeholders.range of various subsidies or of oil equivalent [ equivalent oil of

4 GWh levels to 933ktoe). In line . ENERGY EFFICIENCY ENERGY Energy Efficiency Efficiency Energy

Consumption in in Consumption the Ministry Ministry the ) . The l (Republic o aw also also aw NEIS arget ktoe and and of of f ]

EU Directives anddonot follow Directives IEA EU standards. Lithuania’s p Figure 4.6 Lithuania’s consumption has increased over s Source Strategy. Independence Energy level measures place in for each sector andassess their cost year to meet the 2030 target. The following sections will evaluate the different policies and public buildings over the past five years only amounts to what would benecessary each industryfor and buildings. However, progress remains low: the cumulative renovation of sector (outside of tax measures), while effective energy efficiency programmes are place in There were no major national energy efficiency measures implemented the in transport https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_main_en.pdf Lithuania Republic Plan ofof the and Climate Notes: di be will it consumption, energy final of drop a significant to lead changes structural Unless For 2020, Lithuania targeted a17% reduction its of efficiencytowards targets Progress energy systems,provided the former are c more supply 4. 1 https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nrg_bal_c Mtoe 2018, in which was in much above the target consumption. In 2018, Lithuania’s final energy consumption The The solutions. Lithuania,The 2019). mea (2021-

0 1 2 3 4 5 6 7 8 9 Primary Primary

2000 fficult for Lithuania to achieve its 2020 target for FEC for target 2020 its achieve to Lithuania for fficult ENERGY E Mtoe NECP s, reaching 6.5 Mtoe = million tonnes of oil equivalent. oil equivalent. of tonnes = million Mtoe : - 30 Eurostat ( Eurostat side side measures the in investment plans distribution of andtransmission networks or 2002 e nergy ), with apriority onbuilding renovation, industry andtransport (Republic of

FFICIENCY reflectsdetailedthe objectives and policiesand measuresthe nextyears for ten 2004 c onsumption andonsumption f 2020), 2020), 2006

Complete Energy Balances Energy Complete Mtoe . In terms of primary energy consumption, Lithuania consumed 6.3

2008 rimary and final energy consumption and targets

sures are outlined in Table 4.1 along of primaryof energy consumption or inal inal 2010 e line with its 2020 nergy

the last years. four

for 2021- for National NEIS NECP = Plan. Action Energy National = National andClimate 2012

co nsumption are according tonsumption the calculated rulesEU under set the

2014 (database), 2030, 52 ost-

2016 effective than relevant energy supply .5 Mtoe. P target Mtoe. 6.5 of , ,

2018 ; final energyfinal use, let alone the 2030 and 2050 targets. 2050 and 2030 the let alone National Energy Energy (2019), National of Lithuania Republic - effectiveness. 2020 was

with the expected savings. 2030 4.3

5.55 Mtoe

Mtoe final of energy 2050

compared to 2009 rimary 1 ( NECP targets PEC consumption (PEC) Primary energy NEIS targets FEC NECP targets FEC consumption (FEC) Final energy NEIS targets PEC Figure , 2000 - IEA. All rights reserved. All rights IEA. energy 4.6 50

) ,

IEA. All rights reserved. Table 4.1 renovation (before 1993) (before renovation Multi bui public of energy efficiency the increasing for Programme sector and commercial/residential Buildings of use fuel fossil Reduction fleet vehicle public suburban urban and of Renewal of rail Electrification p Sustainable vehicles of c green procurement renewal fleet and Public elect of Promotion vehicles efficient of Promotion Transport industry Large energy medium (notably onenergy saving companies with energy Agreements Industry Sector Renovation of private homes private of Renovation lans -

apartment building building apartment

small and small

sized enterprises ldings

u Lithuania’s Lithuania’s - rban intensive intensive

ric vehicles m

obility obility lean lean

)

plan

N3) and 50% of busesN3) and50% be must clean.

w of 814 (by 2030) ofkm rail Electrification city and buses commuter city 150 of about electric Purchase of heavy and 16% M1, of(categories theM3)M2, fleet 100% be M3) 2030, clean. By (category must M2M1, andN1) and80% of buses 60% of (categories public 2025, By fleet by 2025and50%cars by 2030. to (M1 beelectric cars class) passenger andre- of registered 10% between2020 by 42% Increase transport). equipment, (installations, equipment end the in measures improvement efficienc per for industry Targets Target 1 500 multi C least class reach each year to buildings 85public Renovate . (+64.7%) gas petroleum liquefied (+5.2%), di of petrol(+14.7%), price Higher ith new lines/substations ith power 000 individual houses 000 individual ned energy efficiencypolicies and measures,

- the the apartment buildings per apartment buildings year

energy efficiency of new energy efficiency cars

- duty vehicles (N2 vehicles and duty . and 2030. . . registered registered 53

- powered y . esel esel - user user

. . implemented and audits measures for reduction tax service Public EU funding during 2023- during funding EU 30% of investment of investment 30% cost of up to Reimbursement electric vehicles electric new of Subsidy 1 EUR motors electric system cooling ventilation, lighting, buildings, processes, transport, in measures specify energy audits for Subsidies and measures Policies private investors private Subsidies Subsidies organi international Funds, Investment Structural European budgets, municipal budget, s the from Subsidies 2023- during funding EU vehicles fuel use of alternative the and public transport cycling, use, walking, car Reduced ement procur Public min above EU consumption on andtaxes duties fuel excise applicable Higher imum

and 000 subsidy . 2 EUR

taxation levels taxation

4 EUR . , ,

etc. 000 for used 000 for . (5 4 . 000 for

s .years) . . ENERGY EFFICIENCY ENERGY

ations, ations, tate . .

25. 25. s 2020- , 5.5 TWh 5.5 3.36 TWh 3.36 0.521 TWh 0.521 6 TWh 6 TWh 5.5 2030 bysavings Estimated 5.5 TWh 5.5 TWh 0.393 TWh 2.95 0.74 TWh 0.74 0.9 TWh 0.9 1.1 TWh 1.1 6 TWh 6 30

and that amount is services sector. arere a The e (Figure 1.5 Buildings make up alarge share Lithuania’s of and services sectors increased by almost 10% following years to decrease 2015. until Between 2015and2018, the TFC in residential followed by major role, accounting for almost aquarter of total energy consumed thesein sectors, thein form of district heat ( In 2019, the residential and services sectors buildings including sectors, services and Residential sec by measures and Policies Lithuanian government. Energy efficiency a also is area the focus in economic recovery measures targeted by Boosting energy efficiency under sustainable recovery T Note: 4. lion’s share are multi only account asmall for share. T area of 99.2area of 2020 includesrenovation. measures on Lithuania’s medium the DNA Plan the for Economy the of Future, adopted June in 2020, also target in energyin efficiency of EUR efficiency. 976 million (Republic Lithuania, of 2019). (after 1993) (after advice and education Consumer lighting of street Modernisation boilers pumps/biofuel heat efficient more to boilers of Conversion multi waterin systems and hot Moderni Sector nergy used by the residential and services sector peaked 2006in and plateaued

ENERGY E

Mtoe - apartment buildings apartment

h = hour. terawatt ati 4.7). Most of th of Most 4.7).

on of heating on of heating was For the period up to 2030, the NECP 2020 stipulates overall investment needs FFICIENCY

natural gas (12%) million

in thein residential sector and 0.7

m expected to decrease to 1.8

- 2 apartment dwellings1945built between . O e energy used by the residential and services sectors in 201 250 heating stations per year stations 250 heating 25% of all luminaires Lithuania ofin all luminaires 25% . heating to not connected households 50 Target about 65 about The shortThe nly 167 000 boilers to be replaced in to in bereplaced 000 boilers 29%) and electricity (26%). Bioenergy and waste also played a

2 total 1.45 of million

il andcoal had. Oil ashare 6 of .6 000 luminaires by 2030.000 luminaires b he central government occupies 2.1 m - 000 (18.6 000 m million illion illion term recovery plan adopted by the government March in and public funds are expected to contribute EUR

54 .

district district

, then Mtoe for services, agriculture and forestry energy consumption the in residential and million dwellings Lithuania in , , , oehr consumed together tor or or

2 decreased )

m of of those 30% of investment of investment 30% cost of up to Reimbursement suppliers with energy Agreements cost investment of 50% of Reimbursement and measures Policies energy service com service energy private guarantee, Public 2

by 2021. . Total . Total % and3% respectively - to and . were built after 1995. The

again by 2019. 4% in long-

1980. Public buildings

. term recovery plan, illion m illion 2.2 for atotal dwe panies

Mtoe, Mtoe, .

. 2

of buildingsof

ed 3 TWh 3 11 TWh 2030 bysavings Estimated 0.11 TWh 0.11 0.55 TWh 0.55 of whichof energy 9 9 in the

lling was was

the

IEA. All rights reserved. buildings were demolished, and sold renovated (see also EC, for thefor renovation of public buildings. In the period member states to have achieved its annual renovation target as well as the 2014- constructed building Since January 2018, minimum energy performance requirements apply to newly Policies andmeasures * demand. energy services and residential of portion important an for accounts also Bioenergy electricity. and heat mainly consumes sector residential The Figure 4.7 Residential and services* energy demand in Lithuania 2 governmen t buildings by2030. This amounts By 2020, 470000 m government buildings) to berenovated annually by 2030. Note: Mtoe = million = Mtoe ofoil tonnes Note: million companies (ESCOs) and direct subsidies. However, multi single under state administrative budgets. Besides public buildings, progress in renovation of buildings relies much less on energy service companies benefited from EUR were renovated mainly thanks to subsidies, and public procurement and renovation following th planning andcertification” to the Technical Construction Regulation STR 2.01.02:2016 “ (2021), IEA (2021), Source: remain achallenge dueto shared ownership models building envelopes, In line with www.iea.org/statistics data, and 0.5 1.5 A includes residential, commercial and public services, agriculture andforestry agriculture andpublic services, commercial residential, includes and services Residential 0 1 2 . 2018/2002. (EU) amended bys Directive Mtoe - owner apartments has beensatisfactory thanks to private energy service revised energyperformance indicators

e 2019 amendment of the r Article, II 5of the EED “ World energy balances”, energy balances”, World . s with a with s more robustmore

2 100 million of EU funds over the period.

had been

equivalent. equivalent. ricter . St t least an t least

targeted renovation. for Lithuania is among the few EU engineering systems and

requirements havebeen 2 IEA World Energy Statistics and Balances Statistics Energy IEA World

Lithuania needs to A+ and, as from JanuaryA+ and, as from 2021, egulation, 55

. 510

2014- . setting more rigoroussetting more 000 m than annually renovate 3% central of 19, around 411

owner lower applied 2 on the availability financingof Building energy performance

(of the(of floor central area of

The r The 2020 ship apartment buildings cost-

(database), (database), since 4 b enovation public of byfuel, 2000-19 . optimal calculation an ). Public buildings buildings Public ). ENERGY EFFICIENCY ENERGY 251 February 2020, A

19 target Coal Oil gas Natural Bioenergy Electricity Heat of public public of

thermal insulation. average The annual heat consumption 160 is kWh/m DH. However, only 4 buildings. theof Lithuanian multi source heatof ( waste. Recently, the roles have switched, and bioenergy andwaste became the main was generated from natural gas (61%) andoil (20%), andonly 3% from (2019), while the role of natural gas decreased substantially. In the year 2000, newly built and renovated multi significantly shareThe renewablesof Heat generation in Lithuania has changed its energy sources in recent years (Figure cooling and Heating As in many countries with a large 4. 3 st 31st implementation plan to convert buildings all to near privateresidential andnon- 10 months renovation and the houses achieve an energy performance class higher than C. Lithuania also targets individual Performance Improvement Programme targets the renovation public of buildings to renewables and smarter the 600 governmentThe estimates that government (Republic of Lithuania, 2021). which theis priority focus area and where the 2019, households receive compensations. Despite available EU funding, between 2005 and Lithuania’s final reada proven energy consumption or heat metering. Lithuania could improve the incentives significantly through better heat billing and existing buildingsa longwith-

The Energy every Directive of required by Buildings Performance presentmember ato state strategy renovation

ENERGY E March 2020. March of Marchof 2021 the Long- ble asble 25 of October 2020. only 2 only , not cost not is this that and multi and 000 buildings families have spend 30- to In line withIn line the Amongst the FFICIENCY ,

2 to to 00 apartment buildings (out 38 of 18% and0.4 NECP NECP %) in 201 56%) in - apartment buildings and wants to

reduction of energy poverty, aligned with increasing shares of 200 are newly built or renovated buildings .go The - country’s 38 country’s ownership apartment sector is inefficient heat consumption in announced

- and municipal waste in D EED II EED effective. effective. energy system %,

cost allocation term national strategy thefor renovation residential buildings andfor new buildings, with an

vernment intends to prioritise an integrated approach to 9 respectively. investment EURof , whil , - term Renovation Strategy has been adopted by the , all consumers, all should onthe bebilled basis actual of apartment buildings 80- is it district heating( N that the government targeting is the renovation of 000 apartment buildings, 18 ewly installed metering devices were to e the e 40% of their income onheating. L

. Up to s. Up 56 ,

except specific in circumstances where it shares of

needs are the highest. 000) were renovated. DH

H H 2030, the Public Buildings Energy

) zero billion doubled, renovatearound 5 infrastructure,the major

natural gas and oil decreased - energy buildings by 2050.

would beneeded 90 kWh/m². 90 from 43 from

while 000 are provided with

3 13

% (2012) to 82 of theof public and 800 have poor

bioenergy and 000 buildings, ² During winter , whereas in be remotely to renovate ow most heat challenge - income income 4.8). 4.8). On On

% is is

IEA. All rights reserved. 77 to biomass and a decrease the in average DH price, which dropped by 39%, from bysignificant investments funds under EUdrove the major fuel switching from naturalgas price of oil and natural gas. price The factor together with the technology shift prompted the most convenient source for InDH. 2019, the price of biomass was less than half the Amid rising prices of natural gas and fuel oil recentin years, biomass has become by far organisations (14%). consumers, with the remaining shares being municipal institutions (14%) and business power plants (Figure (2021), IEA (2021), Source: biofuels liquid andrenewable waste, biofuels Since 2007,support from EU Note have sources generation Heat Figure 4.8 Heat generation in Lithuania by source, 2000-19 4 I higher air pollution and energy bills. however, rural in development the of heat market the andin transition to renewable energy sources. Today, subsidise the replacement of inefficient fossil fuel fossil inefficient of replacement the subsidise www.iea.org/statistics to the 50% of investment cost for renewables technology. A independent producers (44 companies), from both heat only boilers andco- of 2 of has been stable at 57% in rural areas and 76% in urban areas, with a DH pipeline network rdingAcco to government estimates, the share district of heat the in overall heating sector 10 20 30 40 50

Co 0 PJ EUR/MWh in 2012 to 47 - s generation refers to the combined production of heat and power to production refers the combined generation : 885 PJ = = PJ

km. Around athird (34%) the of heat delivered to these networks comes nergy i Bioe petajoule.

(biomass and heat pumps) single in family buildings. The

total amount of amount total “ World energy balances”, energy balances”, World . areas, heating systems 4.9). Almost three- ncl EUR/MWh 2019in (Figure 4.10). udes the direct useudes of the bioenergy,

shifted from fossil fuels to bioenergy and waste. and bioenergy to fuels fossil from shifted EUR 14 million will be allocated the in period 2019- S tructural tructural , and biogases. a household, IEA World Energy Statistics and Balances Statistics Energy IEA World n 2019, Lithuania put forward aprogramme to quarters (73%) of DH consumers are residential

F remain outdated and the results use of oil in 57 unds has

depending the of effi - based boilerswith boiolers fuelled by . .

c ele made a significant impact on the tricity and district heat produced from solid heat produced anddistrict from solid tricity

Coal Peat Oil gas Natural Nuclear Geothermal* Biofuels and waste Ambient heat generation 22.

from from up 4

The buildingThe stock dominatedis by multi companies exporting their products to Eastern and Western Europe andbeyond. created in the increasing boiler and other equipment manufacturing sector, with Lithuanian Source: Gov Source: with widerThe biomass use of boilers has supported the Notes: lowered has fuel biomass to gas natural from switch The FigureAverage 4.10 district heating price Notes: heat district total the of 34% provided companies heat Independent Figure 4.9 4. well aswell replacing for boilers with more efficient technologies. to provide subsidies modernising for heating and hot water systems these in dwellings as Despite law,EU smart heat meters are not installed at scale. government The planning is savings. the istry of Energy. of Ministry Source: 10 20 30 40 50 60 70 80

0 ENERGY E apartment level andhouseholds donot have incentives awareness andlack energy for

2000 EUR/MWh inefficient heat consumption. B - does value notMWh The include = hour. price megawatt DH 2001 =

ernment estimates ernment district heat district

FFICIENCY Market shares of district heat production in production Lithuania, heat district shares of Market 2002 23% 2003 2004 . 11% CHP

28% 2005 = . combined heat and heat powercombined 2006 2007 38% 2008 uildings often do not have individual heat 2009 2010 - apartment buildings built in the period 1945- 58 Cogeneration plants of IHP of IHP boilers Heat-only Cogeneration plants of DH companies Heat-onlyboilers of DH companies 2011 in Lithuania . .

IHP 2012 = added independent heat producer. heat independent 2013

Lithuanian economy price of DH in recent years recent in DH of price the tax. 2014

, 2000- 2015

2016 . . 19 2017

2019 2018

. N 2019

ew were jobs

IEA. All rights reserved. production of nitrogen fertil increased since 2009 (+51% between 2009 and2018) linked andis to the increase the in and district heat (10%). After adrop in 2008- the industrial energy demand in 2019 (Figure 4.11), followed by electricity (14%), (12%) oil Most the of energy used in the industry sector natural is gas, which accounted for 55% of Industry Energy Regulatory In line with the 2018 Law on the Heat Sector (Republic of Lithuania, 2018b Lithuania. than 10 In 2019, Lithuania’s DH sector had 49 heat supply companies with annual sales of more Polices and measures long On the heat production side, there has beenincreased municipalities. the smaller the are annually adjusted for actual heat sold, inflation, fuel structure and other factors. For producers NE networks. energy exchange (Baltpool). currentregulation creates modernisationin and new technologies, greater reliability or new flexibility services. The regulatory framework encourages competition; and the fuel) when they produc Under the new regulat remuneration thefor fixed costs of their boilers, whether they were producing heat or not. themselves purchasedheat from independent heat market Co burdens both for electricity buy formal approval to generate electricity. Kaunas 2020,mber the Nove lns n ans n Pnvžs otne prtn o a rgetr bss only. basis fragmentary a on operating continue Panevėžys and Kaunas in plants 2015- led eligible electricity produced from fossil fuel co - RC generation to a60% decrease of electricity delivered to national the network over the period - term heat prices (over a period of 19.

, in 2018 GWh, which are mainly owned by the municipalities thein 60 cities and districts of with with The Vilnius CHP Vilnius The , Out 49suppliers, of 44companies are independent heat producers. T

whichnow mak he new Procedure new he of Heat Purchase from Independent Heat Producers DH companies companies DH is determinedis by monthly a heat auction or

a -

back quota (subsidies for co- plants operat potential impact on the brought about NERC

Council (NE Council , ion

itself and regulatedfor companies. -

is 3 was shut down, while they only receive remuneration (full costs; the for installation delays in setting basic prices and e e (less than 10 GW e e ers andchemical products

Under the previous regulation,

in all largein Lithuanian cities. In 2015, Lithuania abolished the significant up 34% (2 up 34% plant CHP e e RC heat and have won ) regulates the regulates )

financial viability of DH companies. The amount of thr

changes in the regulation and pricing the in DH producers ee 869 GWh) total of heat delivered to the DH launched commercial operations after getting 59 generation) -

generation to five to h however, it does not incentivise investment of annual production) 09, natural gas supply to industry has

other large natural gas co

and/or produced by DH companies years) each for DH company, which se se the auction acertain in month. The competition from independent heat

(by AB Achema). (by AB and no longer sets the volume of companies plants (natural gas, fuel oil). This gani the DH companies received s ed by the operator the of increases administ

based oncost 4 . , ENERGY EFFICIENCY ENERGY prices are set by

), the National), -

generation rative rative - plus plus

by by In In

  Under the Law on Energy Efficiency Improvement (2020), the Ministry Economy of Policies Note years. recent in again increasing been has use its 2008, in dropping After sector. industry the by used fuel main the is gas Natural Figure 4.11 4. (2021), IEA (2021), Source: Innovation www.iea.org/statistics savings largein energy Between 2014 and 2020 efficiency upgrades. their audits. Eighty per Around 30- implementation of saving measures in return for a rebate from the public service tax. For large industries, energy audits are mandatoryand agreements are in place for the implement energy efficiency improvement measures specified the in audits. governmentThe offers subsidies to SMEs help entrerprises (SME renewable sources of energy, efficient more and Development implementation energy of audits anddigitalisation (Republic Lithuania, of 2014). 0.5 1.5 2.5

0 1 2 ENERGY E i 0.5 0.5 for completed were centrali or enterprises industrial other to energy renewables of use Energy audits at industrial enterprises industrial at audits Energy Around the the implement to able were audits. nstallation of renewable energy energy renewable of nstallation s Mtoe : Indus million

try

90 projects projects 90 and measures FFICIENCY 40 large industrial users have used ISO 50001 certification thein framework of is required to achieve at least 5.5 terawatt hours (

includes non- includes . Industry energy demand in Lithuania by fuel, 2000-19

Around 20% of the the of 20% Around supportednumber a “ World energy balances”, energy balances”, World . ). s).

in industrial enterprises for own consumption needs consumption own for enterprises in industrial an amount of more than than more of amount an

energy consumption; ( with a total allocation of EUR 20.5 million) were dedicated to the the to were dedicated million) 20.5 EUR of allocation atotal with -

intensive industry and5.5 TWh from small and cent , the

res res measu efficiency energy of Lithuania’sof ESCOs are focused onindustry energy Programme Promotion for of Investment and Industrial 40 production and and production IEA World Energy Statistics and Balances Statistics Energy IEA World

industrial enterprises that had performed energy audits audits energy had performed that enterprises industrial

of industrial projects to promote increased use of

Mtoe = million =Mtoe of oil tonnes million

(65 projects) were supported with a budget of budget a with supported were projects) (65 60 EUR

ed energy networks. Out of 90 of Out networks. energy ed perform energy consumption audits and the u the

15 million. low se of technologies for more efficient efficient more for technologies of se - carbon technologies, and the the energy energy the after recommended

equivalent. equivalent. TWh )

(database), (database), of mandatoryenergy

projects

sized sized

EUR EUR and , 72

IEA. All rights reserved. by gasoline (11%) andliquefied petroleum gas ( dieselof represented more than three- supported by a Lithuania hadaround 1.4 m is much linked to this. Figure 4.12 Transport energy demand in Lithuania transport role in consumption and decreasing. diesel tax is lower than in neighbouring countries international comparison (Figure 4.12), due to transiting truck energy consumption 2018, in followed by trucks (38%), which is a P recentin years (EAFO, 2020). slow. installation The recharging of points saw astrong rise during 2016- gas used as transport fuel from excise duty, electrification but of transport activity has been strong market for compressed natural gas and LPG use thanks to exemption of natural networks Alternative * andtrucks cars by oil diesel of consumption of mainly consists sector transport the in consumption Energy withrail 3%. Cars remain the m In 2018, road transport accounted for 95% transportof energy consumption, followed by Transport  Source: IEA (2020a Source: ** are not visible about are andrepresent 0.2% the visible and chart in each. not buses Ships, motorcycles

ublic transport (rail andbuses) accounts onlyfor 8.9% passenger of travel and its use is Electricity Electricity on the recommendations of the technological audit performed. audit technological the of recommendations on the processes production of digitalisation of perspectives and possibilities the assess to order in 53 million audits audits of supported also programme The Motorcycles* Buses* Ships* Trains Trucks Cars/Light Trucks is not visible in the chart and represents 0.3%. in of notis total andrepresents the visible consumption chart for f uel passenger cars represent less than 1% of total cars despite expanding ,

refuelling and electric charging points use the including

. ), ), lower excise duty rate 38%

Energy E Energy

fficiency Indicators 2020, Indicators fficiency 3% illion of of ain

equipment with integrated digitalisation technologies, based based technologies, digitalisation integrated with equipment passenger cars in 2020. The share diesel of high,use is the 59%

mode of transport,mode of representing 59% total of transport on diesel than on diesel quarters recent increase in the sector’s energy consumption

(98 projects) with a budget of EUR EUR of a budget with projects) (98 SMEs industrial www.iea.org/statistics 61

of totalof consumption the of sector, followed LPG 11% . International freight plays an important

on (177 points in 2020) 5% ) (5%). by fuel, mode and 2018 gasoline. In 2018, the consumption 4% 1% 1%

filling up in Lithuania, as its 78% rather high share by

Radviliškis Radviliškis connecting it to the already electrified Vilnius Kena to Klaipeda. This includes the electrification the of Vilnius railway junction by electrificationThe railof is apriority the for government, notably along the key artery from taxes (diesel, gasoline and LPG) with anexpected savings mobility plans as well as green public procurement. The government aims to increase fuel greater electrification, the and i 150 electric plans to purchase anurban andsuburban public vehicle fleet with the purchase aboutof theof total fleet. of Half the target buses for must bezero emissions. least 16% of the total fleet, andthe number of clean buses (category M3) must be100% 100% theof total fleet, non- non- (category M3) must be at least 80% of the total fleet. Until 2030, procurement must beat least 60% of the total fleet andthe number of clean buses and 50% by 2030. The share of clean cars (categories M1, M2 and N1) in green the minimum public procurement targets in 2025. The the clean use of vehicles and reduce the number of conventional fuel vehicles by meeting nationalEconomic Stimulus and CoronavirusMitigation sh Action Plan allocates represent EUR Under the NECP, the efficiencyEnergy and sustainable recovery MinistryThe Transport of and Communication targets policies the for r Policies andmeasures 2017),in which stillis one theof lowest the in EU. electrificationRail increased to 8% of the total network (149 km of electrified railway lines 4. 5 At the local level, Lithuania has around 20 s vehicles The Parliament March in 2021 set on the promotion of clean and energy efficient road transport vehicles transport of road andenergy promotion on the clean efficient funding with other states Baltic 2021- finalising its operational programme under the EU Cohesion Policy funds for the period which investment in building renovation one is of the priority areas. Lithuania also is Plan to benefit from the funding under the EU Resilience and Recovery Facility under preparation. At the time of writing, Lithuania preparing is its draft Resilience and Recovery In line with EU Directive 2019/1161 , By mplementation of these plans expected is of to mplementation

Directive 2019/1161 of the European Parliament and of the Council of 20 of Council andof the of Parliament the 2019/1161 European Directive

ENERGY E

2030 the government plans to have electrified double government supports the purchase of electric vehicles (including second hand electric polluting light vehicles (categories M1, M2 and greenN1) in procurement must be 27. aim ) with the aim to to

FFICIENCY Lithuania’s medium building renovation. Lithuania’s cycling, ( -p 125 km owered city andcommuter buses during 2023-

2.6 b

) and n and Radviliškis to reach ashare 10 of . P investment needs in energy efficiency the for period up to 2030 , increase is implementing the Baltica Rail project supported by ublic funds are expected to contribute promotion of rail and the development of local sustainable polluting heavyvehicles (categories N2 and N3) must beat s out suite afull of measures. public transport and the use of alternative fuel vehicles 5 L - Klaipėda ithuania is adapting its % 62 able urban mobilityustain in plans significantly

electric cars passenger in car sales by 2025 - (196 Kaunas section,

814 k - km) . to- long Alternative Fuels m m June 2019 June . reduce car use, of railway lines In addition, Lithuania, of 6TWh (see Table 4.1). 25 with funding EU 25 . term recovery plan under is

legal framework to increase

amending Directive 2009/33/EC Directive 2009/33/EC amending to electrify Kaišiadorys EUR 976 million. The enewal of

the proportion of

Law The governmentThe . promote walking

, adopted by

place. The EU funds. funds. EU

vehicles, together ort - term term

. -

IEA. All rights reserved. even public in buildings efficiency has been lagging behind: buildings is renovation Mtoe for final energy consumption (from the current level of 5.5 Mtoe). Progress energy in whereas cross amount to 27.3 TWh ktoe (2 346 lion’sThe share savings of needs to from come the energy savings obligation which , sector. implemented until 2020 implemented. transport The sector hadalmost no national energy efficiency measures However, (- final energy intensity is 1.5 times (- Directive (EU) 2018/2002. reached 6.3 Mtoe in Lithuania aims to Assessment According to the IEA Sustainable Recovery Plan targets by 2030. It also supports requirements to consider introduces involvement several of m Energy efficiency policies andmeasures expand across arange of sectors with the fuels, energy savings agreements and consumer consultation agreements. 6 TWh (516of ktoe). These measures relate to changes in consumption and economic growth years, some for energy final c an increasing trend since 2014. are not only boosting short explicit and is in industry.in order In to address market barriers, Lithuania (for residential buildings) is still at anearly stage, but good experience was found as well. The energy service companies’ market for energy performance contracting in Public funding is important, but private investments will need to contribute to a large extent create scale quickly andhelp mobilise private capital. the sharing of information andbest practice across the country to catalyse learning effects, engagementwith municipalities and local authorities. central The government can improve install or improve urban transport infrastructure. Both measures will require strong example, energy efficiency retrofits can often beramped upquickly,projects as can to risks and fuel prices, and and economic growth while the Lithuanian the EUR Reconstructionand Development ELENA Project Development Assistance, renewable 42%) 42%)

300 below 2050 target, Lithuania leads internationally the

million in green bonds. This has brought down interest rates investmentsfor in Lithuania will needadditional measures in order to reach its

energy, energy efficiency, clean transport, andpollution prevention andcontrol. clear responsibilities for each process

2017 level - st cutting measures ate increase energy efficiency an with - 2018, which close is to its 2020 target 6.5 of Mtoe. of owned company Ignitis, co- in

finalis s b s , although

The buildingThe s and -t contributing strongly to climate targets andsustainability. For inistries and stakeholders. recently The adopted legislation y 2050, as part of the NEIS of 2018. boosting self erm employment,erm but are also creating ing results

) for the period 2021 preparations thefor next period. In terms of green finance,

are also expected , had a successful initiative resulting the in issuanceof

energy consumption has been this onastark rise in In terms primary of energy consumption, 66%) 66%)

of audits carried out industryin are not always and transport sectors are the targeted key areas , - sufficiency, decreasing reliance on supply chain below 2017 levels by m managed by the European Investment Bank, 63 inistry implement to quantified energy saving

Lithuania has been successful in (IEA, operation with the European for Bank .

to - objective to ensure that primary and 30 Lithuania

2020b)

play arole, under the EED II, as amended by well well , energy efficiency measures excise duties applicable to

has decoupled 2030 the energy onsumption below the targeted rate, With this ambitiousWith and with projected savings long- and 4 .

ENERGY EFFICIENCY ENERGY 2020 term job impacts

about 2.4 times - efficiency has has target 4.3 of its energy Lithuania using the record - first first ed

and Heating building Building onthe progress in public buildings, Lithuania is encouraged to further prioritise Buildings creation potential under the national recovery efforts. principle 4. Heating andcooling untapped opportunit applied in practice and energy efficiency action is fragmented across government, leaving 60% and 20% respectively 2000) in to biomass buildings into near Lithuania renovation. of Lithuania’sof national recovery, plan 2050 a LongThe - frontload investments.frontload presented implemented to implemented poverty (27.9% 2018) in andaims to reduce Lithuania records the second - sector buildings and multi auctions, grants and rebates the current financing schemes inventory its building of stock (notably the of public buildings). Continuing and increasing renovation and modernisation efforts with a clear trajectory on a comprehensive built g R initiative. programme should also be part of the renovation strategy, as a appliances government should continue to support available from the EU under the Next Generation EU and the next Multiannual As appliancesAs are a renovation based onaneighbourhood approach. information sharing and capacity building. Local authorities are encouraged to promote policy measure under the NECP, but incentives and finance should be combined with schools, universities, hospitals types public buildings of (beyond central government buildings, like municipality buildings, governmentThe should engage with subnational authorities to scale uprenovations of all Framework. final consumersfinal is supposed to beremoved in the coming five years ( the energy poor andmaywish to review opportunities this area, in as price regulation of households. The government could adapt energy efficiency standards and programmes to overnment is encouraged to closely monitor the overall progress in the building

esponsibilities ENERGY E s well ass well a list

renovations across the Term Renovation Strategy set FFICIENCY by the European Commission in October 2020,

through

for for cooling partly compensate - zero energy buildings by 2050.

entire major energy

ies mandatory labelling and targeted rebates. of national financing measures. a Itis supply switched buildingrenovation are more broadly

Opportunities aboundunder the needs to facilitate the cost

to promote investment in energy efficiency andleverage job - energysystem. H apartment buildings with multiple owners. ,

but also by expanding ESCOs, notably publ for in the in EU households of number highest , etc.). Providing them with some subsidies is as listed a should beencouraged, including through procurement consumer

in thein recovery context and increase the funds for to apply for funding to finance concrete projects and from fossil fuels (natural ga (natural fuels fossil from for for s

minimum energy performance standards for out indicative milestones for 2030 64 owever

energy in in the

it to 17%it by to 2030. Support schemes are shared among several ministries.

the sectors, commercial and residential - , and waste (82% in 2019) related expendi - it is it is not clear how this princip effective transformation existingof

EU Renovationve,EU Wa which was

key planning tool in the context

and the additional support

s and oil had shares of An applianceAn upgrade

ture in energy see “ cash for clunkers affected by energy Chapter ic and serv and ic , thanks to , thanks , - 2040 Financial le will be 7 ).

- poor

The The and ice ice ”

IEA. All rights reserved. remuneration of companiesDH under declining heat demand. and reviewing whether the regulatory framework provides stability the for operation and projects at the encourages is projectedis to decline Lithuania from independent heat suppliers, whereas the overall demand the in (withoutheat separately covering fixed costs). sectorrecords The increased competition marketThe regulation establishesremuneration companiesto DH onlywhen they produce incentivise use of Recovery Plan ambition to move to legislation. theof potential efficient for heating andcooling, required bythe 2020 endof under EU encouraged to put substantial effort into the preparation the of comprehensive assessment production and networks. long The - tofails incentivise such investment in the modernisation, upgrade andsmartness of heat introduced regulation newly the of as district heating critical, particularly is funding Public by electricity, oil ISO this obligation is implemented well Lithuania. in and measures an on obligation Energy efficiency improvements industry in are largely triggered by shou to consider promoting smart and integration, integration of renewables andthe use of waste heat, Lithuania is encouraged the furtherTo promote by modernising outdated heat metering, heat management and adjustment systems Opportunities abound the in heat sector, where energy efficiency be could energy efficiency investment. increased. lower The DH prices are onereason whythere are lower also incentives for Heating prices have decreased sharply 6 one- Industry Industry Strategy. efficiency upgrades, reforms of the sheet exceeding EUR 43 sheet million. 250, annual than revenuegreater 50 exceeding andthe EUR million, in its i.e. the audit is activities withonly territory, mandatory for an annualcompanies average numberloyees of emp sector. sector.

The (every obligatory is audit four 50001 for third, followed by transport. ld ld be given to respecting sustainability requirements for biomass. Lithuania

in To new technologies, including technologies, new

- represents the highest share of final energy consumption, depth s or the recommendations needs to promote heat supply diversification

exploit the identified potential, including for the recovery waste of heat, policies

DH This assessment can enable assessment This the governmentconsiderto a balanced approachwhen engaging renovation

suppliers to switch district scale, by addressing demand-

offer anopportunity to place vrmn plans their energy management systems. government The

evaluationenergy th of e efficiency potential in should be identified and interlinked with and heat extracted from the ambient by fourth- as a result of energy efficiency improvements in buildings. IEA The decarbonisation of heating and cooling as well as energy system

years) only for large companies registered only andyears) Lithuania registered forin out large economic companies carrying generation

It continues to be largely fuelled modern to innovative and efficient more technologies. heat market and support from EU

from term renovation strategy andthe Resilience and heat pumps andsolar technologies. DH pr DH

effective decision effective heating and cooling technologies. Due attention in theyears,in past as the biomass has role of energy audits. Applicable to large enterprises 65 renovation andheat the in recovery context.

ojects. new The Heat Law Many

value of assets shown in the company the in assets shown of value companies have been certified under and away from biomass and boost

heat pumps. - supply

making the Long-

the by natural gas side measuresside

and should bebased district heating sect accounting about for heating and cooling

4 . ENERGY EFFICIENCY ENERGY S ter

further improved improved further energy savings tructural

m Renovation Renovation m is expectedis to

Lithuania is

a financial financial a

, followed followed ,

together ’ s balances has has F unds.

the an or or ,

6 .

of industry sector, Lithuania records agood participation measures through information sharing, which notis yet exploited fully in on the basis the of level requirements limiting CO The LawThe on Alternative Fuels presents funding.EU increase by a a are switching to polluting aless internal combustion engine (ICE) vehicle (diesel fuelled cars Incentives are provided to encourage the replacement of old vehicles, available even for cars in application entering into power purchase agreements development and should be effectively implemented. The industry should also explore potential recoveringin waste heat in internal processes integration and Considering the high reliance on fossil fuels and the objectives of smart energy system the planned increase fuel taxes in does not target diesel use, However, Lithuania has not yet used taxes to steer behaviour and fuel economy. In fact, new andhave not beenincluded in the energy efficiency policies and measures to date. efficiency measures to infrastructure renewal andelectrification, all measures which are Directive 2019/1161.welcome It is that the government has significantly expanded energy IEAThe commends Transport audits. as well as on upgrades and the instru 4. to measures targeting the public transport fleet. a level of more than 46 Lithuania has also set ambitious plans for the uptake electric of vehicles, aiming to reach emissionsexceed CO improvements. new The motor vehicle registration tax, applicable since July 2020, The g The sustainable urban mobilityplans, railways (including Baltica,Rail ajoint project with transport fleet aspumps motors, andlighting; industrial installation opportunities. Recent changes the in national regulatory framework are energy use through innovative digital technologies modal shift and reduc

ENERGY E CO renewable energy sources , however ment to encourage companies to implement energy efficiency measures, focusing 2 overnment intendsto

SMEs are incentivised with grants component and depends on the fuel type. tax The rate setis for cars whose

a FFICIENCY 2 tax rebate

, 030. S not included). s, promoting green public procurement, pursui

the savings realised. SMEs can also be incentivised to implement efficiency

ubsidies in the EU. C EU. the in

or greening of heat, power and gas consumption, identifiedthe audit in circular economy, industry should consider using the untapped e e the government’s leadership on public procurement, in line with 2 available to companies that implement the

CO district heating network. Upgrading key industrial equipment, such 130g/km 000 2

engage emissions. electric vehicles are provided th for

2 in thein transport sector by 2030,

, emissions for cars which is above well the threshold emissionsfor for new better control

urrent intentions are to introduce an annual car in co in import a

- operation22 municipalities with framework for achieving the goal of

for

for for ant renewal of the 66

the preparation of in in circulation by 2025, followed renewables

e purchase of electric vehicles, addition in ling

Most these of measures will benefit from

Estonia and Latvia) and implementing

industrial processes are animportant driver ef for of ESCOs. of , ih provide might .

, or by selling it to a but petrol and LPG. EUThe urban and suburban public

audit g the ng

re by introducing various commendations s and ; some additional electrification of electrification

Lithuania. to are and

a implement fivefold by afivefold

a welcome reimbursed 15% share optimis includes ficiency nearby

In the the In of of

tax. tax. the the ing

IEA. All rights reserved. with the requirements of the EU g integration of electrification of transport proper attention should be given electricity to grid stability andsmart charging. Successful Considering the projected significant increase in the deployment of electric vehicles challenges and to limiting costly investments gridin capacity ensuring while cost already heavily used electricity system. Smart charging can contribute to addressing these The through a Smart MobilityStrategy. strategy to address decarbonisation and  The governmentLithuania of should: Recommendations measures and targets.    Buildings overnment should also secure the deployment of recharging points in

jobs andjobs economic by stimulus Make energy efficiency acentral component of the economic recovery plan to create energy poverty. specific needs of low contracting, Design effective building renovation medium notably the actions, NECP andapply the energy Speed upthe implementation of energy efficiency policies and measures all sectors, in systems. funding Implement the the Implement co- renovation of public buildings across the country. renovation. withWork municipal and local authorities to boost investment in g overnment has assessed the needs for the charging infrastructure deployment. ordination across government

- to building renovation and energy efficiency upgrades heat in andtransport term recovery of the economy, and monitor the electric vehicles electric private financi - long

- term renovation strategy The The income citizens means

ng IEA

Energy Performance Buildings of Directive.

and projects onaneighbourhood scale, andaddress the

and charging points in the electricity system. The

that the new load

encourages Lithuania to develop a comprehensive . directing

and low schemes 67 efficiency

available - performing buildings in order to alleviate

including -efficiency- that can boost energy performance must must in thein transport sector, including EU, EU, national and other public not lead to congestion in an its progress o first principle

financing measures for 4 . ENERGY EFFICIENCY ENERGY buildings, in line f building stock stock building f

by improving - efficient the ,

 Transport    Industry   Heating 4.

ENERGY E

schemes and taxation m through a suite of measures, including emissions performance standards, support efficiency Design a strategy points, electrification railof and others) as a means to create jobs and boost recovery. an Place policies, including incentives, information sharing and training. measures, which were identified in the audits the in segment SME through asuite of Desi effic equipment. co- withWork industry on strategies to exploit the use of waste heat and the potential for companies. building renovation projects, involving co- Ensure that the regulatory framework geothermal, solar and the diversification of the heating andcooling mix, notably by exploring the potential of cooling Complete a generation and energy efficiency upgrades, like ordination between supply ient operation of DH companies andadequate investments. gn astrategyto drivethe uptake andimplementation of the energy management

and c FFICIENCY

(district and decentralised), including for the recovery waste of heat. Promote emphasis onthe role of infrastructure investment (electric vehicle charging and ooling

comprehensive assessment the of potential for efficient heating and fuel economy andfacilitates the shift to alternative fuels and vehicles

for thefor decarbonisation the of transport sector that strengthens heat pumps. easures.

- and demand-

. municipalities, DH DH all relevant stakeholders, e.g municipalities, . of of 68 DH

provides sufficient incentives to side measures when measures side the replacement of motors and

In this context, ensure carrying out promote larger larger

IEA. All rights reserved. Energy Efficiency I Efficiency Energy “ (2020), Lithuania of Republic sritys Long- (2021), Lithuania of Republic mure.eu/decomposition.html 0), (202 Odyssee sector - www.iea.org/reports/sustainable (2020 IEA (2020 IEA (databas Balances and Statistics IEA 2020) November on10 (accessed Eurostat, (database), “ (2020), Eurostat of_the_energy_efficiency_directive_com2020954.pdf https://ec.europa.eu/energy/sites/ener/files/progress_report_towards_the_implementation_ 2010/31/EU Directive Buildings P D I (2020b), EC ment_necp_lithuania_en.pdf Brus (2020a), Commission) (European EC www.eafo.eu/countries/lithuania/1742/summary EAFO References seimas.lrs.lt/rs/legalact/TAD/27aceff00acc11e687e0fbad81d55a7c/format/ISO_PDF - 2014 for Development Industrial and Promotion Investment for Programme (2014), Lithuania of Republic seimas.lrs.lt/portal/legalAct/lt/TAD/13c3cf30b26911e8aa33fe8f0fea665f?jfwid=tu0odnswl - https://e Sector Heat on the Law (2018b), Lithuania of Republic endence_strategy_2018.pdf Lithuania, (2018 Lithuania of Republic https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_main_en.pdf - 2021 for (2019 Lithuania of Republic 10 November seimas.lrs.lt/portal/legalAct/lt/TAD/158ba3c0aa5011ea8aadde924aa85003 mplementation of the Energy Efficiency Directive 2012/27/EU and T 2012/27/EU Directive Efficiency Energy the of mplementation erformance R erformance eployment of N of eployment (International Energy Agency) Agency) Energy (International sels, - - 1/statyba . ( n Alternative Fuels Observatory Fuels Alternative n Europea 2030, 2030,

https://ec.europa.eu/energy/sites/ener/files/documents/summary_of_swd_assess b a Vilnius, ), ), ),

2020 2020 A Sustainable Recovery Plan for the Energy Sector Energy the for Plan Recovery A Sustainable E Energy

2020). equirements in the EU in EU in the equirements European Commission, Brussels Commission, European ir early Z early - Decomposition T Decomposition Primary and f and Primary

- bustas/ilgalaike enmin.lrv.lt/uploads/enmin/documents/files/National_energy_indep https:// A mprovement], ssessment

https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nrg_bal_c , 2020 Indicators fficiency 2020 ero - a Lithuania of Plan Republic the of andClimate Energy nal Natio ), energy B energy , Republic of Lithu of Republic , . . . National Energy Independence Strategy (NEIS) Strategy Independence Energy National ), Energijos v Energijos

inal inal , EC, Brussels, , EC, Brussels, of the P the of

e), IEA, Paris, Paris, IEA, e), - recovery/a - https://e . renovacijos ool ), “ ), (2021 e term Renovation Startegy Renovation term nergy nergy uildings and C and uildings , , NECP Lithuania’s of Assessment Commission - www.indicators.odyssee rogress rogress A artojimo artojimo with ccordance c World e World 69 Complete Energy Balances Energy Complete ”, onsumption - sustainable -

ania, Vilnius, Vilnius, ania, strategija www.iea.org/statistics M

) ) IEA, Paris, Paris, IEA, , (accessed on 10 November 2020). 2020). 10 November on (accessed Lithuania Lithuania (2020), ade by Member States T States Member by ade e ost nergy nergy fektyvumo fektyvumo . - , optimal optimal

Republic of Lithuania, Vilnius, Lithuania, of Republic recovery b the Energy Performance of of Performance Energy the alances www.iea.org/statistics https://e , https://am.lrv.lt/lt/veiklos d M idinimo į idinimo , IEA, Paris, Paris, , IEA, inimum E inimum - plan ”, ”, D - owards the the owards , atabase IEA World Energy Energy World IEA . . - 4 for . statym ENERGY EFFICIENCY ENERGY - owards the the owards nergy nergy - the

(accessed on (accessed EAFO, EAFO, energy , Republic of of Republic , as ” . . .

[Law on [Law .

- EC

- , . .

5. Renewable energy

Key data (2019)

Renewables in total final energy consumption (TFEC)1 (2019): 1.8 Mtoe or 33.5%,

IEA30 (2018): 12.9% TRANSFORMATION Renewable share by sector TFEC (2019): 75.8% electricity, 53.9% heating, 3.7% transport Renewables in electricity generation (2019): 2.5 TWh or 76%* (wind 44.5%, bioenergy and waste 18.4%, hydro 10.2%, solar 2.7%), IEA30: 25.4% * Taking into account that Lithuania imported 70% of its electricity consumption, the share of renewables was 18%. SYSTEM

Overview

Renewable energy is the main pillar of Lithuania’s ambition of reaching energy independence and further decarbonising heat and transport. The share of renewables in total final energy consumption1 (TFEC) increased by 67% between 2009 and 2019 from 20% to 34%, well above the IEA average of 12.9%. In 2018, Lithuania ranked sixth-highest, ENERGY after Norway, Sweden, Finland, Denmark and Austria and fourth-highest for the share of renewable district heat.

Direct use of bioenergy has been the main source of TFEC and witnessed a further expansion in district heating (DH). Half of the heat demand is covered by bioenergy (including non-renewable waste). In transport, the role of alternative fuels remains small, with only 4% of demand covered by biofuels and renewable electricity. Lithuania’s domestic electricity generation is already low-carbon, with 76% of electricity produced from renewable sources (wind, bioenergy and waste, hydro, and solar). Considering that Lithuania imports around 70% of its electricity consumption, the share of renewable electricity in total supply is only 18%.

Lithuania has adopted renewable targets up to 2030 and 2050, at which time 100% of electricity is expected to come from renewables. New support schemes (auctions, prosumers and renewable energy communities) are in place and funding from Lithuania’s recovery plan targets the deployment of more renewables and energy efficiency alongside system integration (storage and grids), all of which should boost renewable deployment significantly.

1 Total final energy consumption is the sum of the final energy consumption in the transport, industry and other sectors

(also equivalent to total final consumption minus non-energy use). This does not correspond exactly to the Eurostat reserved. definition of “gross final energy consumption”. rights

71 All IEA.

Figure 5.1 Renewable energyconsumption energy in final total 2019, driven by the increase wind of power and bioenergy use electricity for renewable electricity experienced even faster growth, ), IEA (2021), Source: heat. and electricity for TFEC in renewables of share the for sixth ranked Lithuania countries, member IEA to Compared Figure 5.2 Share of renewables in total final energy consumptionand electricity in * renewables. from sourced increasingly are generation heat and electricity but TFEC, of pillar the remains Bioenergy Direct bioeuse of nergy consumption electricity final total energy in Renewable 5. 2 tha renewablein electricity production (Figure 5.1). Renewable district heat increased more recent years bioenergy also is increasingly used in ), IEA (2021), Source: ** generation. electricity Notes: Mtoe = million tonnes of oil equivalent. TFEC = TFEC energy of oilfinal toal = Mtoe consumption. tonnes Notes: equivalent. million 10% 20% 30% 40% 50% 60% 70% 0.2 0.4 0.6 0.8 1.2 1.4 1.6 1.8

0% Bioenergy is computed as th as computed is electricity Renewable

0 1 2 Bioenergy (direct use) (direct Bioenergy RENEWABLE ENERGY n threefold, Mtoe

only includes renewable bioenergy sources, excluding non- excluding sources, bioenergy renewable includes only h eat from 1 from IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World

in Lithuania i ncludes solid biofuels and renewable waste, liquid biofuels liquid andrenewable biofuels ncludes waste, solid

kilo

historically dominated the renewables sector Lithuania,in but in

tonnes of oil equivalent (

compared to IEA member countries, 2018 lectricity consumption consumption e lectricity 72

DH x the share of renewablethe share domestic energy in ktoe , andwind energy growing is quickly from 3 from renew , , ) www.iea.org/statistics/ www.iea.org/statistics/ in able waste. able

200 4 4 ktoe 200 in 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% , 9 9

and biogases. to 45 to

in Lithuania

6 6 Direct use of renewables Renewable district heat electricity Renewable Renewable electricity* Renewable Target axis) (right TFEC Share of renwables in use)** (direct Bioenergy Renewable district heat , while while 201 9, ktoe 9 9 . .

to 664

generation. , 2000-19 ktoe in

IEA. All rights reserved. Note: Mtoe = million = Mtoe ofoil tonnes Note: million agriculture). (including buildings * hydro. and bioenergy by followed electricity, renewable dominates wind while transport, and heat for energy renewable of source largest the is Bioenergy in Lithuania energy in electricity,Figure transport, heat and 5.4 Renewable 2019 IEA (2021), Source: transport. in renewables of share the to it comes when median IEA the below was Lithuania renewable energy transport, in including the use of electricity (Figures renewable from 0.2% electricity. Lithuania performed below the IEA average 2018 in in TFEC the in transport sector from came renewables 2019,in with 3.5% from biofuels and heatand in TFEC (54%), the renewables role of in transport remains low. Only 3.7% of In contrast to the significant role renewablesof in domestic electricity generation (76%) IEA countries alongside Norway, Sweden, Finland, Denmark and Austria (Figure 5.2). Recent growth of renewables in electricity andheat places Lithuania among the leading Figure 5.3 of Share renewables in total final energy consumption ** data incollection. due limitations under electricity usedstatistical to for included is heating Electricity generation. ), IEA (2021), Source: 25% 10% 15% 20% 0.0 0.2 0.4 0.6 0.8 1.0 1.2 0% 5% Electricity Heating Mtoe includes direct use of renewable energy and renewable district heating in industry, residential and service andservice residential industry, in heating renewable direct useincludes of district andrenewable energy

refers to final electricity consumption electricity torefers final Electricity* Lithuania IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World com

equivalent. equivalent. pared to IEA member countries, 2018 Heating**

, with the breakdown by fuel based on domestic electricity with based the electricity on breakdown by fuel domestic 6 . ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY 73

Transport , , www.iea. www.iea.org/statistics/

org/statistics/ 0% 15% 30% 45% 60% 75% 90%

Renewable share (right axis) (right share Renewable Solar Hydro Wind Bioenergy and waste transport in electricity Renewable 5.3 and in transport in . . Biofuels electricity Renewable

ION

is envisagedis by about 10 TWh (Republic of Lithuania, 2018a). Under the 2018 NEIS, projections. 100%renewable a of energy countriesEU ( renewables electricity in consumption. At national 2050 target of 80% of renewable energy overallin energy demand and 100% around 400 additional of its consumptionof sourced from renewables by 2030. 24.6 Deducting this statistical transfer, Lithuania investment renewable in energy projects and research Lithuania. in Finland I Progresstowards r case for systematic expansion of renewable energy. National Energy Independence Strategy (NEIS). The updated NEIS 2018 of makes the Renewable energy is one the of key pillars of Lithuania’s long- Renewable energy strategy and targets 5. * A * 700 of minimum its 2018of - consumpt sources. renewables https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_main_en.pdf (2019), of Lithuania Republic Source: 4.3% transport in Table energy consumption Of district RES heating share in which heat RES of Share transport sector RES in of Share electricity sector RES in of Share renewab of Share n 2014,

RENEWABLE ENERGY fter ing 9%

statistical trans 5 ) 18 and coolingsectors .1 in 2018,in placing it among which source more than Under the EU methodology the for renewable energy targets, the

ion from renewable resources by 2020. ihai had Lithuania Lithuania’s medium terawatt hours

20 renewable energy production as a statistical in in

Austr

MW by MW Lithuania Lithuania

final energyconsumption final energyconsumption in final energyconsumption in

le energy ( sources – –

fer

2030, which requires atotal capacity 1 of GWh atGWh a in 2018in (Table 5.1)

is expected to to Luxembourg .

ia, Denmark, Ireland,

2025 and another 370 MW by 2030). about 3.8 terawatt hours ( enewable targets , 18.4% in electricity and and stood electricity at 46.2 in heating %cooling in and 18.4% , ( already achieved its objective to source

TWh revenue National Energy and Climate andClimate Plan, Energy National ) - of of to long- (electricity) (electricity) 20% RES annual be produced from wind both onshore and offshore the leading EU member states ( . of EURof 10 million. These funds are earmarked for

)

in of their of in

term targets renewables term for Luxembourg andSpain) final final the the the the the the electricity 74

’s share’s of renewables in TFEC

EU EU level, Lithuania joined acoalition of five scenario in

final final TWh InLithuania 2017, agreed to transfer part targets

50.9% energy consumption energy generation,than more half 2020 30% 30% 70% 10% Lithuania ) o

The governmentThe also specified a f annualf onshore

31.48 targets 89.3% 9.23% 63.1% t 2025 I 38% he EU’s EU’s he

n 2050, . 300 surplus

aims term energy strategy, the %

calling thefor inclusion targets 67. megawatts ( 2030 90% 15% 45% 45%

to have behind 2% 23%

Lithuania will need to Luxembourg:

long

wind generation targets from renewable 100% 100%

2050 50% 80% - of its energy term climate climate term - Sweden and at least at

of which of

MW share of 24.69 reached reached 46.02% 18.41 67. 4. 2018 33% ( ) 5% 45% %* %* % an an

– a

IEA. All rights reserved. deforestations its territory.in years, bi imports biomass through the Baltpool market (without sustainability certification). In recent share harvested is Lithuania in itself. Almost bioenergy all the used in heating sector is woody biomass, which of the largest biofuels market. 18 independent heat producers and 98 biofuel suppliers were active the in Lithuanian around 7 Lithuania’s bioenergy sector generated around EUR 300 million of turnover and employ sustainability and Bioenergy Lithuania has several support schemes Policies and measures Energy from Renewable Sources and reached ahistoric low in May[ 2020(EUR 111.99/toe across Denmark, Finlan Denmark, across for bioenergyfor Management Agency Moreover, hydrogen and biomethane gases (Republic of Lithuania, 2021). support measures biofuelsfor and alternative fuels, including renewable electricity, electricity The The L through auctions), as well as provisions for renewable energy communities (Republic of under half biofuels liquid biofuels produced and consumed Lithuania in are rapeseed- date,To Lithuania does not produce domestic second- and breached the historic peak of EUR million 10 13.02 million with EUR forest, peatlands, wetlands or high biodiversity lands produce to 7%. the contribution from biofuels produced from crops that be used could food for production ( concerns about the impacts arising from competition of biofuels with food production import and/or production of Lithuania’s Sustainability a critical is requirement thefor continuous bioenergy, use of notably for abundant. wants to move from biogas to biomethane, produced by waste as feedstock, which is the Renewable Energy Directive [ Under EU law, sustainability criteria were introduced 2015 in ILUC) (2015/1513). Under the ithuania, 2020). 2020, Alternative Fuels

This meansThis de ( omass supply from Bela from supply omass substantial amounts of second Fatty Methyl Acid Esters

500 - (regulat

p year contracts increased by 28% the government bioenergy andproduction, trade as part the of necessary move towards the arliament approved amendments to the

people 2019. in amajor also It is under the Environmental Pollution Tax andthe excise duty.

ed by ’s ’s

Law facto e ChangeProgramme Climat . the d, Sweden and the three Baltic s

second- offers loans andsubsidies under the Environmental Project was adopted in March

National Energy Regulatory Council [ Council Regulatory Energy National

that Lithuania in , Lithuania’s Baltpool is the wholesale market for biomass overall

rus to Baltpool increased, as B , , RED FAME) generation moving to- a sliding feed

EU Depending on the price trends, the country also ] 6 , -

. and generation biofuels.

which have beenadjusted over time. In 2018 ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY 10% . Feedstocks are not 75 ,

2 m 2 5.0 EUR from the export industry.In 2019, 46DH

biofuels blending target for biofuels, the EU limited biofuels cannot beproduced onprimary

Fuel Quality Directive)

. 2021. The EUThe is also phasing out food - Law the of Republic Lithuania of on generat Lithuaniataxalso has exemptions EUR EUR

and related technologies. It 9.63/MWh tates.Prices woodchips of will form thewill basis for new ion biofuels and most of the in premium for renewable premium in (based onamendments to However,the government

commercially available to to available commercially ion toill EUR 6.42 m elarus carriedout major based first based NERC ] the turnover) and the

in April 2021. Aprilin

] in responsein to and allocated companies, - generation illion crop crop ION

transmission network, a 330 environmental procedures. connect To the offshore wind farm to the Lithuanian The The e cbe p o h Drėa sbtto ad e 30 V rnmsin ie along lines transmission kV 330 new and substation Darbėnai Darbėnai the to up cable new The newThe scheme started 2019in gross final consumption. producedand from renewables upto 2025 premium over 12 years on a competitive basis to reach a total of on the production cost of the cheapest technology. government The allocates a and let scheme by the In May 2019, a slight slowdown of investment until 2018. 2020until was fully achieved 2015, in and the support was suspended, which resulted in Under the Law on Energy from Renewable Sources Renewable electricity and biogas of 1% in biofuels through a new certification process. RED II promotes shares of advanced biofuels 5. production alternatively, the until scheme Estonia, Estonia, based on EUR EUR production costs of the most cost the difference between the electricity market price (“reference price”) and the average Producers firstThe auction was held September in 2019 for renewable all energy technologies guaranteedpriority diffe confirms the attractiv tenders and setting the price”), which today is onshore wind in Lithuania. pay 100% of cover wind turbines will European Commission and discussed in p Februaryin 2023. dedicated A offshore wind support scheme being is negotiated with the with acapacity In June 2020, theg the production quote of 0.7 TWh. The next auction is scheduled for April 2021. 2020The auction was declared void by allows companies to operate under market condition s.

RENEWABLE ENERGY rence of the refer

Lithuanian EnergyAgency 48.93/MWh. UAB UAB 48.93/MWh. 0/MWh thefor entire promotion quota proposed 2019(0.3 for

wind, solar, biomass andhydropower installations with atotal budget EUR 385 of million, following the approval the of state aid - Finland, Germany Latvia, Poland Mūša a quotas bid the the joint declaration by the European Com

the - of upof to 700 M European Commission . for a for Panevėžys grid connection costs

by bidders that offer the overnment dispatch for 12years Lithuanian government introduced a new renewable electricity aid 2025 and at least 3.5% 2030. in

eness of the the of eness maximum 5 TWh 5 reference price and the maximum price eachfor auction. 137.5 km W ence price of EUR 45.07/MWh and the maximum price of

indfarm Akmene One won

. Lithuania’s offshore plans are part aregional of strategy, kilovolt ( kilovolt

W to be constructedW targetreached. is released aplan to promote offshore wind in 2

, premium premium will will lead onthe approvals of and annual auctions are planned until 1July 2025or, 30 k - electricity price at the exchange, coupled with the efficient renewable energy technology (“maximum kV) substa kV) .

NERC Auctions are run a technology in

offshore and the arliament.

76 of EUR of lowest premium tariff to to and

, as l , as meet the targetrenewable electricity of tion at sea would be built to

Sweden. The co- favourable The allocation is done by auctions for and by 2030, ess than NERC

, the auction The territoryThe the for Sea in Baltic the 3.86/MWh the production quota for the period

at at mission and Lithuania, Lithuania, and mission

an average water depth 35 of compete thefor premium based

is is in charge of organising the three based onatender to beheld cost of onshore wind,

by bidding a premium of during the auction, the . bids werebids submitted for

The The premium is set as operation focuses on spatial planning and

TWh 5 5 TWh of electricityTWh of -

neutral manner per year). This the

connect to a

Producers

Baltic Sea Denmark, - feed

which which

m. m. in in in in .

IEA. All rights reserved. schemes, including direct subsidies, net metering and virtual power plants (Box 5.1). including solar PV and wind power facilities, thanks to acombination of different support model, energy consumers are becoming energy producers of local electricitygeneration, The supporting by system, as it can generate 900 MW for 12 hours. It operates was initially planned for 8 Lithuania plans to expand also has the Kruonis pumped storage power plant. plant The partAs the of government Baltic Sea increasing     Box 5.1 Energyconsumers become prosumersLithuania in  

2050 (thus reducing today’s import needs from 70% to 0%), Lithuania actively is

buildings with access to solar power. power. solar to access with buildings 1 instance (for facility PV big a of part lease or buy can Individuals charged. be will transmission electricity the only another; in electricity its and consume country the of part in one stations PV power construct - demand of provision the boost will and in Lithuania model prosumer the into integrated being are plants power Virtual plan. investment operator system distribution the in prosumers of integration the for needed investments the of inclusion and accounting control of elimination installations, solar for incentives financial of modification requirements, limitation capacity the of easing enterprises, permits, production and development for preconditions lower by is facilitated also scheme prosumer The scheme. prosumer the to EU funds from 23 million EUR allocated has government years, the five coming the For in support. capacity installed of kW per 323 EUR received prosumers 2019, of As prosumers. support funds EU communities. units, commercial households, by private entity: personal or legal by any kW 500 to up wind installations and PV solar for used be 2015 in introduced Net small for scheme prosumer for l targeted the below still is This capacity. MW 0.5 with prosumers 63 had it when 8 by 50% 2050. and byby 30% 2030 2020, prosumers (1.6 consumers total electricity of 2% of a share targeted Lithuania [ 3megawatts to (up plants power 500 to (up plants power solar for costs investment the of 45% medium EUR Around 2020. during facilities production energy decentralised for tenders in Luxembourg invest government The communities. energy andrenewable consumers energy private by small of deployment the promotes Lithuania plant 80.5 of capacity installed an with prosumers 473

2020. By 2024, a total of 696 MW of installed capacity is envisaged under the the under envisaged is capacity installed of 696MW of atotal 2024, By 2020. - metering is in place for electricity production from solar and wind. Net wind. and solar from production electricity for place in is metering 7 7

within the Baltic Energy Market Interconnection provide million are allocated to renewable energy communities, farmers communities, energy renewable to allocated are million offshore wind power capacity andimproving the transmission system in the decentralised energyproduction - sized enterprises sized s

energy storage ,

but the design has been reinforced over the years. Net years. the over reinforced been has design the but a for for cost reduced units, but only 225 four ’s s s

strategy to produce all of its electricity supply domestically for small for - the revenues received from the statistical transfers to transfers statistical the from received revenues the scale renewable energy facilities. energy renewable scale MW to the grid and significant flexibility the for power and supply - sca

6 ] ). . connecting to the networks, a general opening to to opening ageneral networks, the to connecting ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY

le renewable projects. The support funds up to up to funds support The projects. le renewable 77 000 kW), thereby providing multi providing thereby kW), 000

- through its prosumer scheme. this der Un scale renewable energy installations owned owned installations energy renewable scale - side sy side MW hydroMW units are operational today. MW, a significant increase from 2015 2015 from increase a significant MW, At the end of end At the stem services.stem Itis possible to Plan.

in conjunction in

kilowatts [ kilowatts

2020, Lithuania had Lithuania 2020, million) to be to million)

, with the Kaunas kW and - - metering was metering metering can can metering ] - ) and wind wind and ) apartment apartment small and small and come come evel evel ION ’s ’s

electricity system with higher shares of variable renewables, including at a distributed level. Chapter Business Support Agency. producers when such heat cheaper is than the heat produced by the H supply. obligation This does and producers exceeds demand heat for the upper reservoir the of Kruonis as a competitive activity with auctions. cities As activity competitive a as incineration and geothermal energy. The critical role in the promotion heat of supply from biofuels, renewable energy sources, waste co- obliged to promote the purchase renewableof heat under a the older units. Lithuanian utility investment cost consumption and particulate matters. Diesel dominates the fuel use i In recent years,the increase of transport has energytransport in Renewable Lith Renewable heat hydroelectric power p 5. 3 for for EN meet boilers to efficient more renewable heating, including heat pumps andbiomass boilers that fundingEU EUR 21.7 of is million supported second- electricity remains at a very low level (3.6%). date, To there is no domestic made up 10% of renewable fuels used, which of biodiesel dominates (86.4%) and renewables transportin has stagnated at around 4.3% since 2014. In 2018, bioethanol supply, competition andaccess to heat networks T the governmentThe supports the conversion of heat installations for househ Lithuania’s the negative impact of the heat sector onthe environment sources, biofuels like and renewable energy heat for production, the while all mitigating sector. sector. Co municipalsect heat

Co he transport sector has the lowest renewable energy penetration

eat suppliers are obliged to purchase all heat from renewables generated by independent RENEWABLE ENERGY - generationunder,the Renewableandthe Law Heat SectorLaw, municipalities playa

- 50% uania’s generation 303 Climate ChangeProgramme , generation refers to the combined production of heat and power to production refers the combined generation satisfies environmental andquality requirements as as standards well for security of

- generation biofuelproduction Lithuania; in thebiofuels rapeseed mostof is - 5:2012), particularly areas in with high local air pollution. Funding compensates of the purchase cost 7 7 ass 5 examines in detail the opportunities and challenges from operating Lithuania’s the conversion from fossil fuel heating to biomass boilers. From 2019 to 2022, Law onthe Heat Sector National Programme for the Development the of Heat Sector 3

s supply a is public service in Lithuania, while efficiency and emission and efficiency of EUR 110 million) is being planned, which would be more efficient than or plans, alternative heat sources and the modernisation th of e

lant. lant.

The installationThe an of additional 225

not apply when renewable heat generated by independent of theof installation.

Ignitis Ignitis through its being being plant with funding with plant ( - by Heat Law - is alsois investing in heat consumers allocated to the conver municipalities s 78

annual fundingenvelope of EUR 2- requ

) of 2018 not only regulate , irements (under European standard but promotes also the use domesticof

. . of EUR of caused rising emissions, energy

have large have set out heat plans and are (see Chapter

(Republic Lithuania, of 2018b) a publi

heat production is organised 235 small small sion inefficient of biomass c service obligation. 000 from the Lithuanian floating solar plant on MW MW unit (with t n DH 4). road heat supplier and the share of olds.Since 2011,

s networks and

transport. transport. the quality of

builds on 3 million, million, 3 based based it

otal otal self self

DH .

IEA. All rights reserved. first renewable fuel certificates by 2030through acombination of measures. aims to reach a share 15% of renewable of energy in energy final consumption transportin and Fuel suppliers can therefore renewable transport fuels. a sub- blending obligation for fuel suppliers (based onan energy target) upto 16.8% 2030, in with into force on 1 July 2021. methyl biofuel production (part of the price of rapeseed oil used thefor production of rapeseed The National Paying Agency the of Ministry Agriculture of subsidises raw materials for political regulations The The proportion to the percentage additives of biological of origin the in product. Committee for Standardization. The excise duty rate reduced is by the percentage in that the meet standards 14214 EN and CEN/TS 15293approved by the European containing at least 7% biofuel.exemption The f date,To fuel traders are obliged to sell gasoline containing 5- production of dehydrated ethanol reimbursed). is support scheme for biomethane production facilities, feed sector 3) Biomethane, hydrogen renewable fuels delivered by other non- mandates (with quotas) for biodiesel and bioethanol; 2) In transport, Lithuania uses vehicles create procurement pr fuels by 2030 and after 2026 all passenger cars and buses purchased through public the purchase of stations to promote the use of hydrogen or biomethane, and public financial support A SustainableA Mobility Fund will be created under the l renewable sources anda national registry. Lithuania,of 2019). In 2020, Lithuania introduced guarantees of origin of gas from residues infrastructure, including 6 With the fund, the government aims to financially support the roll the and phas the government will need to examine options for raising fuel, excise androad usage taxes

exemptionsthe from

alternative fuels policy. It - generation biofuel. - hydrogen and promotes the electricity use of f Alternative Fuels in tariffsin set by NERC a a target 3.5% double of of counted advanced biofuel, and in 2030.in government The plans to existing shift biogas production subsidies (with low [ ethyl , biking, walking biking, , . Biomethane production should reach 92 million cubic metres by 2030 (Republic ing - pollution zones the in main cities

] ou est ocedures t exemptions, as explored in Chapter 3

light er and part the of price of rapeseed and cereal grain purchas

and incentives - duty

Law I and environmental pollution tax.

mproved infrastructure (refilling stations), vehicles and will will have to be clean vehicles. Municipalities will

000 public electric vehicle It new offers provisions for the support biofuels, of biomethane , electric vehicle

was was transferring obligations between fuel suppliers or syngas

will needwill to raise significant revenues. Apart from EU funding, ) to biomethane production and create anew investment thus reduce

meet the obligation by physically blending biofuels three main support schemes biofuels:for adopted by

are needed b for should make up at least 5% of TFEC obligated suppliers ( 6 . air quality s. All public transport should run on alternative ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY 79

, the Parliament in March 2021 which should encourage the switch to clean

rom excise dutyrom is only available Lithuania proposes to increase the biofuel

iomethane transport in charging stations, 30natural gas filing

concerns or aw to aw

. using f

the horizon 2030. upto Lithuania

exemptions from excise

finance e.g. . eedstock from wastes

biomethane producers). 10% biofuels anddiesel the implementation of of implementation the certificate system certificate - out the of enabling

in the in transport .

(engines) be required and will enter

1) for registering ed for the ed for duty

blending

biofuels , using ; , and and and and

ION for for for for to to

of of Under targets, the EU Lithuania has substantial in renewable energy Today, bioenergy the is of bioenergy role The stipulates that electricity imports should be replaced polic part its energy of securityagenda, increasing domestic capacity remains acritical energy Renewable energy is t Assessment 5. bioenergy domestic production) would allow Lithuania to continue to rely on and expand the role of Clear and enforceable sustainability requirements for biomass feedstocks (imports and raise Renewable Lithuania one is the of few countries to have used statistical transfers under the EU gross final energy consumption, strong certification sustainability, of the platform biomass from Belarus have increased dueto large deforestations in Belarus. biomass. for the regional platform, exchange Baltpool which the largest share is harvested Lithuania. in Trade biomass of organised is at the 75% of all heat production in Lithuania. Around 95% of bioenergy woody is biomass, of provides the largest share Lithuanianof renewable energy supply andaccounts around for criteria for for criteria management. implementation The the of RED forest biomass harvesting must beconditioned to requirements the of sustainable forest other environmental dimensions, afurther increase the biomass in use of and intensive e small development: investment new in energy Lithuania. in Two major developments have beenthe driving forces behind this strategy. strategy. by renewable electricity 2050. in As Lithuania wants to reduce electricity imports to 30% under the schemes prosumersfor and renewable energy obligations communities, new blending renewables. The country has joined (district heating) and transport, line in with EU ambitions, but not yet geared towards 100% Today, storage and hydrogen. system integration of variable renewables with planned investments gridin connection, of of The r esearch anddevelopment renewable of energies.

RENEWABLE ENERGY

2030 the the renewable energy 2030, the government should indeed implement an ambitious renewable energy y priority. Today Lithuania imports around 70% itsy priority. electricity. of 2018NEIS The launch of new support schemes (feed-

concerns on the sustainability biomass of trade Ignalina and 100% 2050.in Lithuania has targets for renewable energy deployment in electricity, heating

Law and the Energy Energy

sustainability bioenergy. of on Alternative Fuels) are generous polices that will increase avoid sustainabilityconcerns. nuclear power plant, Lithuania became anet importer of electricity and as : Directive. domestic

. Commendably, the recoveryprogramme aims also promote to the he main pillar of Lithuania’she main pillarof energyindependence. After the clos largest

electricity generation should reach 70% (30% imported) Revenues from the transfers are reinvested in renewable

reaching 24% in 2018, above the target 23% of 2020. in renew a able source - coalition of EUsix countries that aim 100%for scale scale 80 in premiumin with technology

In order to avoid impacts on biodiversity and

capacity for r for capacity

ly II Directive requires Lithuania to adopt

promotes cheaper imports, which may

increased

. (all sectors(all considered) by electricity local generation In recent years, imports woody of enewable electricity and in the share of renewables in - neutral auctions the the . production Bioenergy Without Without from from ure ,

IEA. All rights reserved. sustainability criteria are subject to the same CO Finland Finland promotes domestic modern bioenergy production by taxing unsustainable use. In Nordic countries tax. tax. attention to ensuring the electricity grid, which was developed for imports from the east. Lithuania will need to pay offshore wind capacities in the western annually was imported. This rapid expansion primarily is driven bywind power pace to reach 76% 2019in or 18%, taking into account that elect 70% of sharedomesticThe of RES in electricityproduction Lithuaniain Renewablesin electricity Lithuania’s a forests are also Indeed, modern bioenergy can play animportant Lithuania’s in role low 5 4 Lithuania could review its bioenergy support schemes to ali emissions the in transport sector, notably heavy in transport, freight, maritime and peak load capacity variable electricity production, mainly wind and solar, remain andwill important to match its sinks towards EU emissions reduction targets up to 2030. Bioenergy is also balancing (first stable voltage levels. voltage stable fuels Like new RES new increase in wind andsolar capacity. PV rising share solar of PV. supportThe mechanisms new for RES capacity will support an self Lithuania has special support mechanisms for small which expectedis to bring astep change. communities communities increase significantly the in coming years. Prosumer schemes and renewable energy potential impacts of the prosumer scheme on the electricity market and cost the government phasing is out regulated prices households, for timely it is assess to the stronger storage and demand- combining investment support and net metering. The integration of solar PV will require At the distributed level, solar will PV further grow, thanks to the generous support scheme, which theis most significant target any in country. EU topics. totalThe number prosumersof targeted is to grow to around 700 awareness of renewable energy, public acceptance andsocietal involvement onthese pricing, including grid costs. renewables,this can offshore wind thein future. If Lithuania further increases the share of domestic variable Growth expected is from onshore wind (today the cost most

System relates System strength to ofthe a ability power to system in ormanage fluctuations supply demand while maintaining The ability of the power system to return to its normal or stable conditions after being disturbed is called stability. disturbed calledis being stability. after normal or of to the to ability its power return The stable conditions system -

producing consumers (prosumers), the number which of the government wants to - ; other countries on generation, agricultur 3) b ,

second - E capacity E thethrough auction 700 of iofuels are classified to in help to engage citizens in financing new capacity, which helps develop

- , generation wh , ich ich impact grid operations, power system stability especially cold for winter days. Biofuels are key for are successfully investing in sustainable bioenergy. For instance, theBaltic andNordic Sea flexibility of the system. Moreover, the system. government the aims at the of flexibility al

biofuels (waste, lignin cellulose, origin) are subject to the 50% of CO

major carbon sink and the government is already counting side flexibility, still all under development Lithuania.in As

ories: three categories: 6 . part of the country require investments the in ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY 81

tax as fossil fuels; 2) MW MW - shores scale power plants and incentives for of off of , Lithuania, eyes investment in 1) - gn shore wind thein Baltic Sea,

biofuels that to fail meet etc.) are exempt from CO them with its its with them - efficient technology) and has 2

tax onequivalent fossil 4

and strength.

increased at arapid sustainable biofuels ricity consumed consumed ricity - carbon futu re. 000 by 2050, neighbouring , decreas but a also - reflective reflective aviation. 5

Large ION ing

while oil andcoal hadsmall the a quarter the of district heat and electricity. Bioenergy and waste played a major role, accounting almost for Most the of energy used by the residential and services sectors in 2018 was in the form of Renewables in heat working actively towards these goals, as the - in adequacy the of Lithuanian power system. system The and grid operators are already synchronisation with the European Continental power system by ensure 2025andto the 5. when shiftingwhen from fossil biomass. Support given is biomass to heating installations (Class 5) andto heat pumps supportof mechanisms in since place 2011 which promoted ashift from natural gas to The renewableThe share of district heating tripled between The The confirms. interconnection andsynchronisation with network the EU (see also Chapter system integration Quite a unique and rare feature switch to biomass, which also lowered the final heat price. purchase renewable heat combined with expensivemore natural gas prices to led the security, reduc integration, which can potentially increase the system’s flexibility andthus improve energy sector a Flexible heat supplies will contribute also to system flexibility. Electrification of the heating heat, the government should indeed invest the in remaining 30%. pumps (possibly ground source). Despite having already 70% of renewables in district and target 100% renewable district heat supplies, thanks to large- consumption, the government should leverage this asset by improving network efficiency maximi inertia/storage buildings.in However, this requires a higher level building of insulation (to successfulA strategy would rely on partial heat electrification with heat pumps and thermal to include the- socio elements need to be further analysed by the government andthe system operator. These government wants to the reach and in single- rural areas mainly us buildings, pumps, the government could promote the installation of shallow geothermal energy in of theof heating sector will be relevant both for decentralised heating and DH renewable- electricity supply shifts entirely to renewable date,To the electric use of driven heat energy development and demonstration of system services powerfor system stability.

o o RENEWABLE ENERGY muc IEA - se efficient technology heating. for Lithuania targets 100% renewables by h pressure on biomass resources and to

s well as the industry andtransport sectors can contribute to energy system recommend

thermal inertia in buildings). Given the high share of district heating building in for instancefor by financially supporting the exploration, based alternative to fuels, fossil and an alternative to biomass. Electrification family houses ing total energy consumed these in sectors, followed by natural gas (12%), of renewables, both within Lithuania andas part its regional of electricity the need interconnections. for government The should assess the economic cost, opportunities innovation from , s

e e that woody biomass heating.for useThe biomass of district in heating

fuelled heat installations. public The service obligations to the Lithuanian government take , shares however among target 100% renewables of by 2050, several critical each. , negatively impacts local air quality.Besides heat pumps is pumps is IEA member countries, single -

82 energy,electrification heatingof offer will a

depthanalysis Chapter in 7 mitigate local pollution. low Lithuania. in Heat pumps are an 2011 and

further steps to accelerate the

2018. This was the result in orderin to avoid putting

scale electric heat family houses in in houses family

and technology .

of this report report of this 7

2050. As ). ). If the the If

IEA. All rights reserved.   The governmentLithuania of should: Recommendations the roll complemented by a number of urban clean mobility targeting plans biking, walking, hydrogen and biomethane), vehicles and enabling infrastructure. This framework is The transport in Renewables reduce the overall system costs via flexibility andsector integration. per production in Lithuania. Given the onthe limit first use of target for advanced biofuel components). There no is domestic second- raisewill the blending obligation for fuel suppliers up to 16.8% 2030 (15% in the plus sub- in demandin as the countryimplements its alternative fuel mandate to 2030. biofuels as well as hydrogenation- exemption. taxThe exemption should be First duties incentives like reduced taxes or subsidies. Lithuania Economic opportunities to develop domestic production can be promoted through infrastructurecost a in investments in the production of green gases and the maintenance gas of distribution to agreen energy transition. In order to ensure the right framework conditions for the longer term, biomethane and other green gases could provide valuable contributions requirements to ensure their applicability injected to hydrogen December gas in 2020. gasof infrastructure over time. governmentThe adapted the natural gas quality system (shifting biogas to biomethane subsidies) to gradually support the decarbonisation In the area of renewables, Lithuania is promoting the injection of biomethane into the gas thein electrification of rail, including the Rail Baltica project. such as h as such sustainability at 7%, Lithuania needs to invest in supplies of second- A A decreasing.use is a strategy analyse also should the consequences for the gas infrastructure, as natural gas future use gaseous of fuels, notably energy for services that are difficult to electrify. Such

new biofuel blending scheme spectives for electrification in general and identify potential barriers and instruments to under the Ensure that biomass for energy meets standards high sustainability, of required as needs across sectors. electrifi long In support energy of independence and the 100% renewable target by 2050, design a - Alternative Fuels Law generation biofuel blends (FAME and ethanol) currently benefit from an excise duty

- and value- and out of clean vehicles and the - term renewable a energy strategy Lithuania, for including ydrogenation-d cation of end- EU

added tax Directive on R

- effective way, the government should develop astrategy the for erived erived uses, uses,

in orderin to increase energy efficiency the in transport sector. promotes a range of alternative fuels (including

r notably heat enewable enewable will be introducedwill derived renewable diesel, which expected is to increase enabling infrastructure,al

6 . ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY E d 83 nergy (RED iesel. modified ,

and anassessment system of integration

under the Alternative Fuel Law has recently introduced higher excise

and applied to second to applied and

II).

ongside planned investment - generation biofuels for

generation biodiesel,

generation biofuel strategy

- generation electricity,

for thefor

which which and and ION

In In

   5.

of Lithuania, Vilnius, Vilnius, Lithuania, of Sector Heat on the Law (2018b), Lithuania of Republic _2018.pdf https://enmi Vilnius, Lithuania, of Republic English, into translation Republic n.pdf Vilnius, National (2019), Lithuania of Republic tar.lt/portal/lt/legalAct/TAR.FC7AB69BE291/asr Sources (2020 Lithuania of Republic - Results=0&searchModelUUID=1876719a seimas.lrs.lt/portal/legalAct/lt/TAP/2eea182262ce11eaa02cacf2a861120c?positionInSearch s Fuel Alternative (2021), Lithuania of Republic (d (2 Agency) Energy IEA (International References seimas.lrs.lt/portal/legalAct/lt/TAD/d145d7d0b28511e8aa33fe8f0fea665f?jfwid=11dyhejazj RENEWABLE ENERGY

atabase), atabase), Boost economic opportunities f support measures (tax incentives, subsidies and grants) of theof existing gas infrastructure in Develop astrategy the for production and use of green gasses and the continued use higher taxes firstfor those energy services which are difficult to electrify. excise electricity order in to ensure the Assess the conditions under which prosumers can produce and consume renewable . .

https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_nec2018ap_main_e ,

National Energy Independence Strategy Independence Energy National (2018a), Lithuania of Republic of Lithuania, of Republic duty . n.lrv.lt/uploads/enmin/documents/files/National_energy_independence_strategy www.iea.org/statistics/

or other environmental tax exemptions to those fuels, while considering

https://e - generation biofuels and fossil fuels. Law of the R the of Law ), -

Vilnius, Vilnius, or the production of second - . . proper functioning of the electricity market. IEA World Energy Statistics and Balances and Statistics Energy World IEA 021), , , Plan andClimate Energy www.e order to provide renewable energy sources for - bfd9 epublic of Lithuania on Energy from Renewable Renewable from onEnergy of Lithuania epublic 84

- Law . . 45af , - https://e b539-

[2003, amended in 2018], 2018], in amended [2003,

b09314895eb0 -

generation biofuels

as well as Republic of Lithuania, Lithuania, of Republic , unofficial unofficial ,

extending the

Republic Republic

through

. .

6. Energy research, development and innovation

Key data

Total energy-related RD&D budget (2020 estimated): EUR 7.64 million TRANSFORMATION Share of GDP: 0.08 per 1 000 GDP units (IEA average: 0.25)* Total private RD&D expenditure (2016): EUR 1.3 million (0.03% of GDP) * Average for Lithuania and eight member countries for which 2019 data are available.

Overview SYSTEM

Lithuania’s Ministry of Energy is stepping up the challenge of revitalising its energy innovation policies. The high-level objective of Lithuania’s energy innovation policy is to become an energy technology exporter by 2030, based on the goals set out in the National Energy Independence Strategy (NEIS) of 2018 and the actions of the NECP.

The ministry is building on Lithuania’s overall robust innovation policy and funding ENERGY framework, and the ecosystem of technology and science clusters and start-ups in Fintech, eco-innovation and biotechnologies. The government promotes research, development and demonstration mainly through the Smart Specialisation Programme, which includes one priority on sustainability and energy. As the government starts preparing the next programme period of the Innovation Fund and recovery funding, it is timely that the Ministry of Energy adopted in September 2020 the Action Plan for Strengthening the Lithuanian Energy Innovation Ecosystem.

The action plan presents a comprehensive and consistent strategy for innovation of the energy sector, with actions to improve the availability of funding, preparation of energy projects, investments in human resources in the private and public sectors, and boosting collaborative activities, including at EU level under the EU research frameworks, like the SET Plan initiatives.

The government relies on a framework of grant funding, public procurement and regulatory sandbox models for business innovation. Commendably, the action plan will also create a consistent set of indicators for the monitoring and tracking of funding and results. reserved. rights

85 All IEA.

can increase the chances successful of technological change. Successful innovation systems involve a wide through co- policy interventions. comprehensive A approach to energy innovation policy, such as wide variety of mandates and responsibilities. These actors can be engaged by targeted policies might operate at levels different levels, such as local, national municipal or ecosystems its existingof research and development ( management IEAThe groups these elements into corefour functions: 1   size While the appropriate policy measures to address each function can vary widely with the Paris, Source: systems a variety innovation elements of energy that characterise successful Technology innovation processes are complex and decision makers must pay attention to policies for innovation energy framework IEA 6. Figure 6

ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY academia, companies, policy makers and international partners, among others among partners, andinternational makers policy companies, academia, K Knowledge management: research. basic or problems specific to directed be can . T required (laboratories, infrastructure research and engineers) Resource push: and structure of a country’s economy, the technologies it prioritises and the strength www.iea.org/reports/trac IEA (2020), Tracking Clean Energy Innovation: A Framework for Using Indicators to Inform Policy, IEA, Policy, A to Framework Indicators Using Inform Clean Tracking for Innovation: IEA Energy (2020), .1 .1 The The ordinated can hese resources can come from private, public or even charitable sources, and sources, charitable even or public private, from come can resources hese ; 3 IEA’s four functions of a successful innovation ecosystem for energy ) market pull have effective polic A sustained flow of R&D funding, a skilled workforce (e.g. workforce askilled funding, R&D of flow A sustained action under each of these king - - clean ; and energy nowledge nowledge 4 ) socio ) - ies innovation

in each of the four areas. In some cases, the - political support ( 86 ers, ers, research between smoothly flow should R&D

. . ION range actors of with aligned interests and a four headings

) base, successful energy innovation

research institutes and universities) is is universities) and institutes research ) resource2 push; Figure 6

instead of a .1). .1).

researchers and researchers silo

) knowledge (IEA, 2020 (IEA, .

approach, .

) .

IEA. All rights reserved. identified priority areas: 1) which can help achieve substantial technology andinnovation breakthrough seven in electricity networks, digital system exporting energy innovations. Priorities ecosystem NEISThe called for strengthening the Lithuanian energy research and innovation past programming period ( batteries, hydrogen, low at better integrating Lithuania’s industry into European strategic value chains, such as chains. The government promotes the competitiveness of the country’s industry andaims economy andby integrating the country into international more clusters andglobal value Lithuaniain by investing in more innovative and higher value- intermodal transport; 3) the so- Based onthe National Progress Programme, Lithuania’s main strategy innovation for is storage, Adopted2019,the National in Progress Programme(2021 - openness, inclusiveness and well with the goal of placing the country among the top Lithuania 2030 Strategy promotes asmart society, governance smart and smart economy focus on boosting incentives for business to invest green in technology development. The area. The Lithuania 2030 Strategy and its implementing National Progress Programme Lithuania’s overarching innovation framework focuses onthe energy sector as apriority policy innovation to linked priorities Energy Th   institutional and policy landscape across these four functions. innova current state of play and derive concrete recommendations on how to enhance the 6) food technologies streamlined across three priority areas supported projects biomass,in solar PV, waste recycling, energy efficiency society. Under the priority energy of and sustainable environment, the government enhancing the interoperability the of distributed and centralised generation, networks and and energy efficiency. food; 2) food; In the next programming period ( andgrids systems.

developing a new idea can be borne by the private sector. sector. private by the be borne can idea a new developing of the risk of much then high, are incentives the market If legislation. by established ntives ince and rules market of a function often is this and worthwhile, risks R&D the make Socio pull: Market s, s, service or information and communication technologies is is report will apply the IEA innovation framework to Lithuania with aview to assess the tion ecosystem for the energy clean transition. following The sections present the called Smart Specialisation Strategy andits related funding programme. the During

- ICTs, ICTs, ciency, hydrogen technologies, and alternative fuels production. fuels alternative hydrogen and technologies, energy eﬃciency, politicalT support: . Lithuania goal’s despite potential opposition from those whose interests might be threatened. be might interests whose those from opposition potential despite inclusive and creative society; and

The expected market value of new product new of value market expected The ; 5)

The latter includes the energy sector with four main themes: 1) h -

carbon industries and the new production processes, materials and technologies; ealth technologies and biotechnologies 2014- e - socio broad be to needs here

nergy andasustainable environment is tois become the leader the in region developing in and 20, -

2021- being (Republic of Lithuania, 2013). and cybersecurity solutions, the development extendedto 2023) : 1)

27) for innovation the in energy sector include 6 . ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY h , the Smart Sp Smart , the 87 ealth technologies, biotechnologies andsafe

(ICTs) 3) circular economy. circular n ten in Europe on sustainable growth, , ew production processes, materials the government supported projects ; s s and 7) and or service political support for new product new for support political ecialisation Programme will be

30) promotes a smart economy

an added ; s s 4) inclusive inclusive ; must bebig must a

gro

smart, clean and segments the of - innovation and and creative , , and smart

enough to to enough of energyof smart smart

ION

s s ,

( referred to as the In preparing the plan, extensive consultations took place with ministries, aims to develop smart technologies and digitalisation as innovations for the energy sector. Action Action and research institutions, energy opportunities for carbon capture utilisation andstorage (Republic of Lithuania, 2019). industry andtransport, with in line the EU H as the exploration of innovation opportunities, such as the energy Th ecosystem innovation energy Lithuania’s 2019The National Energy andClimate Plan (NECP) targets the growth of renewable biomass and the recycling waste of energy; for and4) energy system efficiency (smart systems); 2) digitalisation; 3) 6. and innovation; fragmentationof programmes, funding mechanisms The partners. will be monitored in annual be monitoredwill reports (Republi in expenditure by 2027. The plan also sets out targets and actions up to 2030and progress increase innovative and pre- Box

ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY Box 6 Box     Lithuania’s 2020 between be implemented to planned are which 51 measures, established plan the areas, these develop successfully a Lithuania’s strengthening and developing producers local representatives, well A The 2. 1. e government working is to boost the Lithuanian energy innovation ecosystem ction ction

modernity of energy of modernity Popularis Agency Executive Networks and Innovation in Participation - pre of Promotion Specialis 6 a Human resource Financing a .1). .1). It ction P ction ction exports andthe development of new energy technologies in the country, as well - lan S for functioning energy innovation ecosystem will bring together scientific and business business and scientific together bring will ecosystem innovation energy functioning p .1 .1

in in ecosystem innovation energy the strengthen to is lan The Action The Plan for Strengthening the Lithuanian Energy Innovation aims to achieve the established goals in the NEIS. Under Ecosystem p p a the the in innovations for ed funding ation of the energy profession in Lithuania; Lithuania; in profession energy the of ation - 2020 period the for in Lithuania plan innovation energy integrated the is lan lan lan includes 51 actions and important reforms aiming to reduce the ction ction improve innovation skills across businesses andpublic institutions

trengthening the Lithuanian E a ction p lan focuses on eight areas oneight focuses lan the the commercial procurement and public procurement of innovatio of procurement public and procurement commercial s s -

related study programmes study related p EU Innovation Fund managed by managed Fund Innovation EU lan) was adopted byMinistry the of commercial procurement to 20% of total public procurement and - , related businesses andassociations the the improve to and researchers 2 023.

in 88 c of Lithuania, 2020a; energy sector (Innovation Promotion Fund) Promotion (Innovation sector energy novative products. The main objective of the the of objective main The products. novative

, ION . . including measures including ydrogen nergy nergy

. , I and support nnovation S trategy, andthe potential and i ncreased attractiveness and attractiveness ncreased the the use of hydrogen energy, in

Energy September in 2020 ’s Commission European

eight specific areas. To To areas. eight specific solar energy.

Ecosystem see Box 6.1). developing the use of as follows; as

servicesresearch for conditions for further further for conditions the ,

higher education and other social NEIS, Lithuania

(hereinafter

Lithuanian n. n. . The The . ;

30. 30. . . and

IEA. All rights reserved. strengthen to university researchers and grants to small and medium Lithuania’s main approach to financial support energyfor R&D is based on capital grants push Resource environment solar energy andwaste recycling energy for of interoperability programming period, coreThe funding programme theis Smart Specialisation Programme. During the 2014- - start EUR Out atotal of public budget EUR of 679million over the period across all priorities, and Innovation and the Ministry Education of and Science andtheir              - co for responsible is Energy of Ministry The 8. 7. 6. 5. 4. 3.

H EU the on building , Lithuania in programme promotion and development technology hydrogen the of Creation innovations energy digital of development the of Promotion technologies innovative other and hydrogen using sources renewable from energy of storage and production the for project Demonstration products innovative dev the for data sector energy of availability the of An assessment functions additional perform to resources financial and human providing by the of Promotion ment of ment Develop consumer identify to consultations public Regular promotion innovation to activities regulated from income Legislation energy of field the in tool Bed Test Innovation Open the applying of analysis Feasibility of Creation SET the as such initiatives, innovation and research energy Union European with engagement active More . innovation and research their for funding of amount for priorities of Identification of Organisation

up companies. 150

Communication and innovationculture Consumers Regulatory environment and Science services and Products Infrastructure

million ha million efficient andsmart energy use ”

and promoted R&D and demonstration projects that improve the to allow companies engaged in regulated energy activities to direct part of the the of part direct to activities energy in regulated engaged companies allow to a regulatory sandbox by sandbox a regulatory

d d t new generation, an regular energy sector hackathons and innovation workshops innovation and hackathons sector energy regular

ech

- Lithuanian Energy Agency Energy Lithuanian Funding has beenadministered mainly bythe Ministry Economy of been spent by the 2019, endof with EUR 31.43 million granted the in Plan Steering Group, Horizon Europe and other related formats. formats. related other and Europe Horizon Group, Steering Plan . indicator syst indicator theprogramme includedpriority a nology

enabling ydrogen S ydrogen em

distribution grid

establishing . . innovation energy of progress the measure to 6 . ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY energy technologies energy ordinating the implementation of the a the of implementation the ordinating 89 and the development of renewable biomass, . trategy

as as

a competence centre of energy innovation energy of centre competence a . .

. . legislation insector energy model the s’ . .

needs s and efficient energy -

sized entrer . . . .

“ with a view to clarify to view a with energyand sustainable related agencies. prises (SME prises t of new new of t elopmen . . . ction

use that s) and p

lan.

the the ION 20 . .

0.94% GDP, of we Total R&D spending peaked 2015 in at around EUR Lithuania’s priorities or sub - 1.9% GDP of until 2030 (Republic Lithuania, of 2020b). In energy terms of Programme; that programme continues to require funding innovationfor at a minimum of from In development and research on energy spending Public innovation vouchers for scientists (up to EUR compete for funding. Ministry The Energylever of has no to to direct energy R&D There strongis competition between the different priority fields and projects have to Mi transport. The lion’s share of the programme (EUR 398 million) administeredis by the energy andsustainable environment priority andEUR 40.36 million for smart andclean 6. R&D expenditure, spending levels remained flat and at relatively low levels. Ministry The EUR to EUR scientific research, development andinnovations overarching Innovation Promotion Fund EUR to European Unionfunds. In June 2020, research, development, demonstration or focuses on the implementation of the audit results onenergy efficiency andless on efficiency and increasing the use of renewables industry.in programme The mainly Programme for Promotion Investment of and Industrial Development IndustrialThe Development Programme and its funding instrument, the 2014- financed “ instruments: “Investment and Business founded by the Ministry Economy of andInnovations, the Ministry Finance of , T calls will beorganised. 2021; financial instrument would promote the development the of start inves this instrument. “Accelerator 2” is a venture capital instrument covering acceleration and businessesthe loans form of provided in directly by dedicatedInvega.is EUR 1million to the promotion of innovation through the Invega. f The fundThe was created by the Ministry Economy of andInnovation and is managed by entrepreneurship. Perspective he Innovation Promotion Fund started its activities

ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY nistry Economy of andInnovation andcovers all R&D, not only in 2018,

EUR tment activities,an allocation with upto of EUR from 20million the state budget. This 900 and 2)

52 30 Lithuania’s total public expenditure onR&D amounted to EUR 426.3 million, up out of this f this of out

million is intended to be allocated. Around 20% expectedis to come from

379 million 2017and in than more 000 for development orthe 000 Agency Science, for Innovation and Technology supports start ” “ 1) und enlargedmay be to others, as they implement financial instruments for Accelerator 2” aims aims “ the Lithuanian to priorities. Perspective”

protect intellectual property) start andinnovation funding for SMEs (up ll belowll set the 2023target 1.9 of % to und, whether there can be earmarking promot

remains to beseen how energy innovation projects can be

, which planned is implemented to be not earlier than 2022 in . Guarantees” (Invega). f The , which planned is , be implemented to the in first quarter of e e p innovation by providing favorable financing conditions for arliament adopted the legal basis thefor creation of an recruitment researchers of whose aim is to promote fundamental and applied f und.

commercialisation activities. 90

a threefo

ION 000), innovation patents (with funding up

. Fo

390 million. In 2018, it ld increaseld since 2004 (Figure 6 a r the period 2020- in thein updated National Progress t the beginning of 2021. Itwas for fundingfor andhow competitive und has twofinancialund has main ).

, - also support energy up ecosystem and

the energy sector. 40, - ups by offering offering by ups - related public

amounted to and the JSC a budget of

- related 2020 2020 .2). .2).

IEA. All rights reserved. member countries. member Note energy for budget public The Figure its Nordic or Baltic neighbours but thanmore Hungary andthe Slovak Republic. to energy In r- Source: There estimated. being Note in the government spent EUR 7.3 million in 2019 and expect Energyof reported to the IEA R&D database the for first time 2020 in and informed that

Source: Source: Figure government remain incomplete. d.htm 0.2 0.4 0.6 0.8 1.2 1.4 1.6 1.8

100 150 200 250 300 350 400 450 2020. However, historic data collection 2019, Lithuania was 0 1 50 0 : : s : Since 2020,: Since yet 2019 data are not yet Energy RD&Dspending thousandper units of GDP . EUR million EUR 2004 OECD (2020 a IEA ( IEA 6 6 .2 Lithuania’s gross domestic expenditure total on R&D, 2004- .3 Energy - related public R&D spending per GDP (Figure 6.3). Lithuania spends less than ), 2021), 2019 2006 the the Energy Technology RD&D Technology Energy Budgets

), ),

Ministry of Energy reports energy of Ministry reports Energy are Gross Gross - relatedpublic RD&D ported to the OECD after 2014. after OECD the to no data reported onenergy R&D 2008 le for all availab for le

among the low performers of IEA member countries when it comes D omestic omestic - sector RD&D in Lithuania is below the level of neighbouring IEA IEA neighbouring of level the below is Lithuania in RD&D sector 2010 E

xpenditure onR&D xpenditure

IEA member countries. countries. IEA member 2012 6 . ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY , and evaluation of energy sector trends by the budget budget - 91 www.iea.org/statistics 2014 related R&D expenditure to the R&D 2020 with the data expenditure IEA, for to related

, https://data.oecd.org/rd/gross per GDP in GDP per 2016 2018 ed .

to spend EUR 7.6 million selected

2020 - stic dome

ION on-

Figure 6 carbon capture and storage, which include renewable energy, smart systems, energy efficiency, sustainable transport, spending GDP, in including public andprivate spending onthe Energy Union competitiveness. Indicators examine the number of patents and the share of energy R&D sector. One the of Energy performance with regard to the Energy Union, the EU’s flags Union tracking. Up to 2017, the European Commission evaluated member states’ research networks. The Lithuania (Figure Source: At At m Knowledge indicators/scoreboard_en?dimension=Research%2C+innovation+and+competitiveness energy. and andnuclear capture storage, carbon U Energy Note: Lithuania spent 0.03% on private development and research onenergy spending Private 6. programme, notably Kaunas University The Innovation or the Clean Energy Ministerial. Technology Collaboration Programme (TCP) the Agency International for Science and Technology Development Programs AgencyThe Science, for Innovation and Technology, which started 2010 in issues onanational level and covers programmes and basic research financing. Lithuania of Gediminas Technical University, Vytautas Magnus University andthe Research Council co- the between business and science, encouraging various Lithuanian universities, institutes and innovation as the major governmental institution. It important role in co- 0.000% 0.005% 0.010% 0.015% 0.020% 0.025% 0.030% 0.035% 0.040%

ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY h international the ordinates several clusters on energy and construction across Lithuania, including with private sector to accelerate knowledge and technology transfer. agency The LEI andthe country’s universities are active partners under the EU Horizon 2020

EC ( EC 6 .4 .4) according to the latest available data from the European Commission’s Energy ), 2020a), 2008

Lithuania nion priorities include renewable energy, smart systems, energy efficiency, sustainable transport, sustainable transport, energy efficiency, smart systems, include renewable energy, priorities nion (RCL) Energy , to name the most active ones. RCL The 2009 level, Lithuania’s research organisations participate in ’s

Union Indicators, Union Indicators, anagement anagement ordinatingnational activitiesand international programmes on

private

2010 and nuclear energy.

sector spending on R&D per GDP, 2008- Union - https://ec.europa.eu/energy/data n n

2011 sector energy ’s key priorities key ’s Energy Institute (LEI) joined the IEA hydrogen

of Technologyof

ION

2012 in 1999 in

(KTU), Vilnius University, the Vilnius R&D and . Lithuania not is part Mission of 2013 supports collaborative activities is research,is innovation and

analysis/energy focuses mostly on researchfocuseson mostly hip initiativehip energy thein

2014 demonstration 2016 in . - - union 2015 16 and replaced EU andEU IEA IEA. All

’s

priorities,

plays an an plays rights reserved. rights 2016

IEA. All rights reserved. C Cluster. The platform shall implement innovative projects and help develop a long stakeholders EU in programmes, such as and energy efficient materials, alongside eco- export innovative solar modules. nascent A industry is evolving industrialin biotechnology science and technology co- technologies and Lithuania’s biomass energy industry focusing is onthe production of advanced biofuel p Market A Lithuanian Association LINAVA, the Lithuanian Employers’ Confederation), the Enterprises, the Hydrogen Energy Association, the Lithuanian National Road Carriers’ Confederation of Industrialists, the Association Lithuanian of Chemical Industry SG (EPSO Communications), the National Energy Regulatory Council (NERC), energy companies bringing together ministries (Energy, Economy and Innovation, and In December 2020, the Ministry Energy of created the Lithuanian Hydrogen Platform by regional partners. It p LEI The Eurostars. achieve abreakthrough in these technologies in Lithuania (Ministry Energy, of 2020). hydrogen strategy for Lithuania in line with the EU Until August 2020, the energy area needed demonstration activities are lion’s Strategies Research Alliance. collaborates internationally on nuclear energy and active is the in European Energy together regulated public companies, Lithuania state ’s University (Kaunas, Lithuania) the adopted in 2020 consumer safeguards are without having to face regulatory sandbox is technologies, notably the in area of smarter energy systems and demand response. A approach to create aspace for the demonstration Lithuania’s energy sector, the government decided to rely on a regulatory sandbox Lithuania,of 2019). (2011- ublic utoentrepreneurs enter

Dujos, Contrarian Ventures I andothers), business associations (the Lithuanian

share thein country’s energy market

16).

at large and is part the Research and Technology Organization , - , gii Gop Kapds at, me Gi, RE Leua Achema, Lietuva, ORLEN Grid, Amber Nafta, Klaipėdos Group, Ignitis G, for Physical for

performs research the in non T

with the Ministry Energy of andprepared together with the he - university research and technology organisations Lithuania.in LEI The ull LEI has notified 15 patents, most them of the in area hydrogenof (Republic in favour of the manufacturing biomass of combustion equipment, to thanks active

The The ssociation,

Sciences and T provides advice and co-

a safe environmenta safe which in to experiment andcollect experiences a permit. Obtaining su permit. a chrequire apermit d innovator seeking to test a pilot innovative product or service the in the still being established. A LEI LEI

operation. Companies operating in Lithuania also produce and

strict rules strict a regulatory sandbox for the testing of energy innovations not provided inputs to the

the Smart Energy Digital Innovation Hub, the LEI, the always

energy the for field government, the Lithuanian and Baltic s echnology

otherwis 6

. possible. ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY S 93 tructural , innovation and the

and other interested local or international - ordinates the participation of Lithuanian p the owned enterprises, which make up e applicable to the sector, while certain

(FTMC) mendments to the Law on Energy were H

and commercialisation of new energy To stimulateTo innovation and R&D in ydrogen F unds, Horizon 2020 National

tates and the Lithuanian Maritime S trategy and with the goal to ’ e ’ circular economy. economy. circular Energy Energy nergy security reviews reviews security nergy time and effort and Vytautas Magnus the industry andthe Transport and Independence and which brings

EUREKA - term term

ION by by

criteria and the rights and obligation participan of s companies 6. As stipulatedAs above, the services in industry. regulated assetsbasebyregulator. the also ESO is a major investor energyin efficiency le a number of instruments to develop innovative grid and system services at the distribution For example, Lithuania’s electricity distribution system operator (ESO) is putting placein supervised by NERC additionally incentivise regulated public enti manufacturing of renewable energy components and the bioenergy sector. for allfor companies, public entities and advantages the of sandbox could relate to the waiver bigger share of innovative investment as suitable to befinanced from the tarriff). Other Lithuania has avery active start investment at anearlier stage. co while time, first be used to create new markets products for that are ready to be commercialised for the auctions, purchase incentives andcontracts specifically encourage the the use of latest technologies can bebuilt into policies such as International experience among IEA member countries suggests that provisions to in I in accelerator programmes, andmentorship services. Success stories have been entrepreneurs and investors, with pre- - Start electric vehicle everyyear overall, and few involve hardware technologies, despite recent investments in capital activity energy in technologies remains limited. handful A of be deals can (Vinted) that successfully raised up to EUR 140 million single in deals. However,ventur sharing (Citybee), green energy procurement (WePower Network) or textile exchange Univ accredited laboratories and the KTU start the National Innovation andEntrepreneurship Centre, eight research institutes, six innovation ecosystem which encompasses industry, business and university institutions – and technology business incubators. Kaunas The region with the developing KTU is an entrepreneurship and technology development through science and technology centres solutions) Green City Cluster (promoting the use of new technologies for environmentally friendly Cluster (development of environmental energy technologies), andthe newly created Smart equipment andtechnologies efficient for use of biomass) andthe Photovoltaic Technology Biopower Plants Development Cluster (development of modern, innovative biofuel Lithuania has several clusters bringing together industry andscience, including the institutions Lithuania’sinnovation performance has improved 27.8% points the in Europ

vel, including the prosumers anddata hub. investment The recognised is under ESO’s ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY T- ersities,the Kaunaslike University related clean technologies – up Lithuania initiative, aone- ,

the . and businesses researchers for insufficient. and engineers remains The amendments to the Law on Energy establish the main principles and Cleantech Cluster Lithuania and the Circular Economy Cluster. charging infrastructure (start -

funding large for - .

regulatorysandbox for ean Innovation Scoreboard 2020 between 2012 and 2019. The - up sector, notably I in such as start as such privately owned playe rs, scale demonstration projects can attract private stop - seed and seed stage investment schemes, up space. However, the attractiveness public of 94 ties ties -

up Inbalance Grid). - for

shop facility matchmakingfor between ION the testing the of Technologyof byfinancial means - - difference. Public procurement can also

ups developing digital platforms car for over the past decade.

of energy of ts this in approach, which C T andT F

of energy innovation is including -

specific permits. intech, supported bythe (KTU)

(e. g.

in the oil industry,the oil in ,

byrecognising a

It also promote promote also moved upby

NERC may

observed available recorded will be be will e

IEA. All rights reserved. consultations Strengthening the Energy Innovation Ecosystem engagement sectorand intellectua employment knowledge in demonstration to 1.9% GDP of by 2023 (up from 1.04% of GDP 2015)in an innovation- group of energy undertakings and associations, and other social partners. and Programme T I on the business relations overall indicators creatingfor a“ indicators. The overarching National Progress Programme the for period 2021- programmes The monitoring and evaluation of outcomes of Lithuania’s overall innovation policy and of results tracking and evaluation Monitoring, the main government entities responsible for policy MinistryThe Education of andScience and the Ministry Economy of andInnovation are governance Institutional Socio- (EC, 2020 c). index takes into account investments, patents, human capital and other innovation factors The MinistryThe of Energy the Programme Economy andInnovation will be charge of in implementing the Smart Specialisation public sector R&D and innovation (EC, 2020 b). European Semester agencies Lithuania in (OECD, 2020b thein organisation of policies and funding by consolidating the number of innovation tec innovation ecosystem which is expected to build the institutional framework energyfor Ministry Energy of has recently adopted adedicated action plan developingfor anenergy implementa research policies. The Ministry Economy of and Innovation covers the development and Education and Science is charge in of financial and other resources to manage national innovationof strategies, including energy for R&D anddemonstration. The of Ministry The latest OECD OECD latest The ndex, business R&D expenditure he government set anumber overall of hnology development andcommercialisation. Ministry Education of and Science and the Ministry Economy of andInnovation). attractiveness of the research system, employment the in knowledge-

moderate innovator political support political tion of research and innovation policies related to the business sector. The

for thefor upcoming programme period 2021- of is limited to afew indicators, which donot include specific energy sector Lithuania saw the best during 2019 friendly friendly

energy secto energy Economic S across sectors and priorities: increas , and the number of higher education graduates. country report 2020 l propertyl indicators environment does - - based sectors to 13.6% (up from 9.7% 2017); in and 20 s with other 13 urvey of Lithuania r stakeholders. For the development of the ActionPlan for with ministries, not direct ” economy smart and the number patents. of

, small and medium and small ,

). S ).

improvement among

6 that Lithuania should improve the governance for imilarly, the European Commission noted the in fun . . target ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY 95 ding EU EU

higher education and research institutions, s suggests that there can be efficiency gains m T

, under the Smart Specialisation Strategy he government decided of that Ministry ember ember buthas indeed started to develop the I in Lithuania, which are the ,

making, implementation and funding it

27 ( held e e states. Lithuania’s strengths are - sized enterprises,science- public previously previously the extensiveand wide-

EU2

spending on R&D and However,it ranks lower 7 andbelongs to the it was between split 30 includes double the nnovation intensive intensive ranging ; boost

ION to -

consultations with thein smart specialisation programme the for coming period, which also involved - bio active participation from the industry. However, outcomes were digitalisation, low in tank thinkStrata found period. SmartThe Specialisation Programme was reviewed ahead of the next programming I capacity to actively contribute to tracking and monitoring under the EnergyUnion, the a viewto contribute to IEA energy the R&D database. also This renders Lithuania’s Energy started collecting funding programmes. In 2020, linked to the accession process to the IEA, the Ministry of thein sector anddoes not track the outcomes of energy Historically,Ministrythe Energyof does not monitor R&D anddemonstration investments sector, technology experts andthe government. aviewWith to updat proces with energy andclimate priorities, as reflected in the 2018 Lithuania’s Ministry Energy of taking is the lead in aligning innovation policy andfunding Assessment number of patent applications (150 in 2023), the number of 6. The The storage and transport, andthe potential andopportunities carbon for capture, utilisation and development of new types business, of including the hydrogenuse of energy, in industry the innovation objective the of NECP and targets growth energy of exports andthe Lithuania’s energy technology leadership. Based on eight pillars, the action plan relates to Ministry Energy of 2020, in anexcellent is achievement andhas the capacityto promote and academia. rounds to contribute to the priority setting. More than 100participants were from business the research programmes, experts from science and industry were invited to innovative clean energy same time, the government now is looking to develop and demonstrate new enabling where Lithuania may have acompetitive edge and technology export leadership. At the fully supports the development and demonstration cleanof energy technologiean areas, seven- Lithuania. country’s The smart specialisation approach with its policy strategy and Action The The The embed monitoring progress of over time, of which all are aspects good of policy practice. funding with the financing needs of innovators as aswell energy as laid out the in IEA innovation framework. It seeks to improve governance, better align nnovation

ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY refining and solar energy. evaluation This formed the basis updatfor a a ction ction ses (40% in 2023) as well as double year funding programme well is aligned with the country’s energy strategies and I n its 2018 interim evaluation of the in Lithuania, as set out bythe NEIS. p S p lan covers several key components successful of P lan provides a strong for basis coreboard and the NECP. lan forlan

representatives S trengthening the that the energy sector had the best absorption capacitythanks to

technologies, such as hydrogen and and monitoring public expenditure across the energy sector with from

nergy h non research, businesses, the S strengthening the 96 mart mart

ION

number of innovative SMEs (35% 2023). in

I S nnovation pecialisation

energy innovation capabilities in NEIS andthe NECP 2019. of

sector performance public in SMEs

E energy innovation systems storage, which will be much cosystem S trategy

- using new products or climate priorities, ing , adopted bythe , the government ing

th - governmental e priorities of the priorities several

and –

IEA. All rights reserved. efficiency andthe evaluate new opportunities technology for leadership, including on digital technologies for costlier and require different funding and regulatory instruments. Lithuania may also C a new area andLithuania hopes to advance quickly Boosting stakeholders to create such aproject pipeline. sector Lithuania’s energy innovation action plan is acritical framework to boost the energy targets established thefor new period. with acommonly agreed the Smart Specialisation proposed evaluation procedures. Althoughthe a priority associated clean technologies, and thein ability domestic of talents and start thein start efficiency, sustainable transport and low investmentAn commercialisation. regulatedfor andprivate companies from pushing innovative solutions towards regulatory barriers and the low level of available public matching funding present hurdles and boost ties with industry order in to best leverage publicly funded R&D.number Aof the mobilisation the of However, that requires aproject pipeline across a range of clean energy technologies and Transition Fund, Innovation Fund andModernisation Fund, andInvestEU guarantees. demonstration and commercialisation, including the Connecting Europe Lithuanianfor companies under the future EU programmes to receive funds for Smart Specialisation Programme, which does not yet have any with the Ministry Economy of andInnovation the for forthcoming programme period of the outcomes. It will be critical that the Ministry Energy of work on the indicators and targets targets relative to ato- Better defined priorities for the energy sector will also allow the government toentify id including including plan andfuture EU funding present anopportunity the for government to increase funding, companies, remains well carried out mainly under the Smart Specialisation Programme and by publicly owned However,Lithuania’s publicexpenditure onenergyR&D identify andquantify funding needs and possible allocation to the energy industries. Programme in the next period ( the various measures and programmes under the a research priorities with new energy clean transition challenges essential is to ensure that success stories and failure and international markets.Decision makersthese maylearn fromexperiences develop new services – would be the ction lear whole- ’s

p setting. priorities The should be subject to updates over time, based on the newly

to to aims lan participation in the future Innovation Fund and the Smart Specialisation i private n new areas such as hydrogen andenergystorage. There are opportunities also - up sector suggest that investors are confident Lithuania’s in digital sector and main source of - oriented economic policy could boost innovation in the areas resource of - government sector bio

strengthen knowledge transfers the of energy innovation ecosystem - economy. be- rather than hardware technologies – investment cleanin energy technology innovatiorelatively a n is private sector. action The belowdianthe me IEA of member countries. Lithuania’s recovery P

of funding.of The defined baseline, against rogramme, it could be further enhanced the in coming years, s – – s on, priority to promote further investments in clean energy start

2021- cross-

). T 27). ministerial energy

setting can improve help andstrengthen 6 - . carbon industry technologies. l The ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY a 97 he newly created Innovation Promotion Fund ction

ction ction p in this regardin the in coming years. The lan can ction

p p which the government can monitor lan basedis on the priority fields of lan has thelan capacity mobilise to - p related R&D strategy.related R&D lan arelan effective. allow allow , with2019in EUR 7million and bring these to domestic the government to better

specific indicators or Facility, Just atest trends A - – – ups to lign

- both both ups, ups, the ION ing

The promotionThe of regulatory sandboxes under the a F international co- Network and energyEU technology and innovation partnerships (IEA, 2019) and Lithuania's accession IEA. and assessing government and private sector needs to define targets publicfor or private R&D funding. clearA methodology for private thus is R&D funding limited.far it and use of For the energy sector, Lithuania also relevant. For instance, the use of regulatory sandboxes has proven to be strengthen activity the in digital sector but also diversify into other technology areas, if 6. companies. promote competitive energy markets Lithuania, in which still have should beavailable to all public and private companies. Such anapproach can even difference can help produce scale and competition, thus bringing needs. International experience IEA in countries suggests that auctions or contracts for more networks under the IEA, Collaboration Programme (Hydrogen TCP). Lithuania has an opportunity to participate in Energy Institute the is only institution in Lithuania participating in anIEA Technology help to adequate set targets and benchmarks. excellent It is news that the over time under the new a an energy IEAThe metrics of commends trackingfor the progress creation and publication storage. costlier clean energy technologies, such as hydrogen and carbon capture, utilisation and innovation ecosystem. The collected data will allow methodology to continuously monitor the implementation and performance of the energy intends to expand the competencies the of Lithuanian Energy Agency to establish a part the of Baltic partnerships. Equally, there are many regional opportunities for the Ministry Energy of to increase resources business, to share lessons andlearn from other countries’ experience andbuild human enable the government and the Nordic further expanded practice F intech se intech activiti intech

ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY

the priority areas and will provide the quantitative basis can help highlight similarities and common challenges. Progress could be

ctor and capacityLithuania in line within its ambitious energy and climate priorities. Innovation incentives need to also consider private investors Lithuania is highly interconnected with the Baltic and Nordic countries . es, including Estonia and Finland. Regional collaboration and sharing good

Council of Ministers energy in technology andinnovation. This in return will operation in key priority areas

- Nordic electricitymarket. through to the IEA will facilitate will IEA the itsto participation thein IEA Energy Technology

and private sector stakeholders, including universities and ction engagement the in Baltic Energy Market Interconnection Plan but also under the EU SET Plan. p lan. availabilThe

expenditure 98 It

ION is working with is neighbours on digital and

to beextended. Today, the Lithuanian ity data of onenergy

adjust ction in cleanin energy technologies will p ing ing lan ahelpful is approach and for for the the annual reporting to the

barriers to entry new for action plan’s

down the costs for - relatedpublic and ’ ’ successful in capabilities and a

ction measures measures

and is allow p the the lan lan

    The governmentLithuania of should: R  b (2020 EC nt_necp_lithuania.pdf https://ec.europa.eu/energy/sites/ener/files/documents/staff_working_document_assessme indicators/scoreboard_en?dimension=Research%2C+innovation+and+competitiveness - https://ec.europa.eu/energy/data EC References https://data.oecd.org/rd/gross a (2020 OECD - rogen A of Ministry 2023_aprasymas_2020_rugsejis_EN.pdf - ABs_valstyb%C4%97s_finans%C5%B3_duomenys/ERS_2020 of (2020), Finance) of (Ministry MoF www.iea.org/reports/energy Partnerships Innovation Technology Energy IEA (2019), Po IEA www.iea.org/statistics IEA https://ec.europa.eu/commission/presscorner/detail/en/QANDA_20_1150 c (2020 EC content/EN/TXT/PDF/?uri=CELEX:52020SC0514&from=EN

ecommendations E dvanced

R&D and increase international collaboration activities. business sector orderin to make best possible use of the outcomes of publicly funded knowledge andtechnology transfer within the energy innovation ecosystem and to the Introduce appropriate institutional and human resource capacity to accel auctions, contracts creating regulatory sandboxes and providing matching public funding through Incentivise private investments national core competencies andstrengthen and direct energy Increase Develop and regularly adjust a cross- energy innovation ecosystem along the a Establish a methodology to continuously monitor the performance of the energy align key priority areas across government. support the national energy andclimate policy objectives, identify funding needs Finance, licy n Commission) ( n Commission) (Europea Tracking Clean Energy Innovation: A Framework for Using Indicators to Inform Inform to Indicators Using for A Framework Innovation: Energy Clean Tracking ), (2020 (Int , platform IEA, Paris, Paris, IEA, ernational Energy Agency) Agency) Energy ernational - relat , 2020 Scoreboard Innovation European ), ), ), ), (2020 Energy

Vilnius, the level public of funding as share of the order in GDP to further develop

nergy , 2020 Lithuania Report Country Gross Domestic Expenditure on R&D Expenditure Domestic Gross ), - ed R&D expenditure, and to adjust the implementation accordingly. being- T - www.iea.org/reports/tracking

https://finmin.lrv.lt/uploads/finmin/documents/files/LT_ver/Aktual%C5% echnologies . . - developed . -

for -

difference or public procurement. Hydrogen P Hydrogen - technology

- ), 2020a), domestic , in Ministry analysis/ener - 2020 for Scenario Development Economic - Energy Technology RD&D Budgets RD&D Technology Energy (2021), lithuania

by identifying and removing regulatory barriers, Energy latform latform - -

- spending innovation 6 .

. of ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY

ction 99 - Energy, to ministerial energy EC

Union Indicators, Indicators, Union

B - gy - promote

eing D eing , Brussels, Brussels, , - clean - union on-r- - p partnerships

lan, including public and private Vilnius, EC , eveloped in Lithuania to to in Lithuania eveloped energy d.htm OECD, Paris, Paris, OECD, - , , Brussels, - advanced IEA, Paris, IEA, https://eur

. . https://enmin.lrv.lt/en/news/hyd

- innovation EC . . - related R&D strategy to , Brussels, - energy related R&D.

- lex.europa.eu/legal . . . . - technologies

2023 , IEA, Paris, Paris, , IEA, P romote romote

, Ministry Ministry ,

erate , . . . and ION -

c82f47.pdf www.unesco.org/education/edurights/media/docs/2953897c103c13043bfabea84b716ae2f8 Strategy 2030 Lithuania (2013), Lithuania of Republic https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_main_en.pdf Vilnius, , Lithuania Plan (NECP) andClimate Energy National (2019), Lithuania of Republic 0LRVK_NPP.pdf Lithuania, Repu energy https://enmin.lrv.lt/en/news/lithuanias ( Lithuania of Republic - www.oecd.org/economy/lithuania OEC ENERGY RESEARCH, DEVELOPMENT AND INNOVAT RESEARCH, DEVELOPMENT ENERGY b (2020 D blic of Lithuania ( Lithuania of blic - sector

Vilnius, . . OECD Economic Survey Economic OECD ), .

www.esinvesticijos.lt/uploads/main/documents/files/Post%202020/2_%2 National Progress P Progress National ), 2020b Energy 2020a), economic - energy

, , Plan Action Innovation s:

100 Paris, Paris, Publishing, , OECD 2020 Lithuania - snapshot - innovation ION

- 2021 rogramme , . Republic of Lithuania, Vilnius, Lithuania, of Republic - plan - - approved Ministry of Energy, Vilnius, Energy, of Ministry Republic of of , Republic 2030 for , Republic of of Republic - an- - advanced .

7. Electricity SECURITY

Key data (2019)

Electricity generation: 3.6 TWh (wind 44.5%, biofuels and waste 18.4%, natural gas 15.6%, hydro 10.2%, heat 6.6%, solar 2.7%, oil 2.0%) -78% since 2009 ENERGY Electricity net imports: 9.3 TWh (imports 13.3 TWh, exports 3.9 TWh) Electricity import dependency: 70% of total electricity supply Installed capacity: 3.7 GW Electricity consumption: 11.4 TWh (industry 33.3%, services/other 32.9%, residential 25.5%, energy 7.6%, transport 0.7%) Electricity peak demand (2019): 2.0 GW

Overview

Lithuania imports around three-quarters of its electricity needs, as domestic electricity generation is fairly small, with only 3.6 terawatt hours (TWh) in 2019, following a 78% decrease since the end of 2009, when the country shut down its second (and last) nuclear reactor. In 2019, renewable energy dominated domestic electricity generation, accounting for 76% (Figure 7.1). Wind power makes up almost half of the total and biomass has increased its role considerably. Net imports of 9 TWh play an important role to satisfy a consumption of 11 TWh, which is largely driven by the industry and services sectors.

The government has set ambitious targets for reaching 80% renewables in final energy demand by 2050. In the electricity mix, the country aims for a renewables share of 45% by 2030 and 100% by 2050. A unique feature of Lithuania’s market relates to the fast increase of prosumers, which should reach 30% of total electricity consumers by 2030 (see Box 5.1).

Lithuania’s electricity sector has embarked on three major transitions: 1) rapidly reduce import dependency with significant investments in domestic renewable capacity; 2) increase interconnectivity and synchronisation with the European network; and 3) open its market towards competition and choice for final consumers. Thanks to reforms of the electricity sector governance and investments in major new interconnectors with Poland and Sweden, Lithuania’s electricity market is increasingly integrated into the Baltic and Nordic electricity markets. In November 2020, together with neighbouring Estonia and Latvia, Lithuania ceased imports from Belarus, responding to the start of the Astravets

nuclear power plant in neighbouring Belarus. reserved. rights

101 All IEA.

energy sector. government The aims to boost these for fit three transitions to ensure the efficient development the of country’s electricity generation. Until 2009, Lithuania relied onnuclear energy as aprimary energy source of electr Electricity * R In the coming years, ELECTRICITY 7 ), IEA (2021), Source: boosting considers the the shut and natural gas use in electricity generation have compensated and filled the gap left by in power has increased both relative in andabsolute terms With the rise of wind of power and rise the switch the to bioenergyWith power in and heat, TWh). 2 g electricity in 14% from generation increasing , operation for higher shares of variable renewable energy, being a net a being Lithuania’s electricity mix and 69 in share natural of gas fell to 47% ( Figure 7 and choice retail for electricity consumers. markets at the regional level, while synchronisatiothewith European n network the last decades. Solar power deployment still is increased by 50%. in Services/other , , generation electricity domestic of 76% for accounted enewables

2010 2019. The contribution bioenergy of to electricity production increased from 201 megawatt hours ( 9

in 2019. in , but growing, but rapidly. Between 2018and 2020, the installed capacity solar of to -

. 1 Electr down of nuclear. Natural gas quickly became the regional co regional 15%

10% reach

W being a net a exporter to being includes commercial and public services, agriculture, forestry agriculture, and public commercial services, includes

ith the closing the of Ignalina nuclear power plant i 7%

introduc IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World 18% 3% icity generation by fuel and supply 45% 2019. in

MWh Lithuania - operation, and increasing tion anappropriate of 45% ) to 2008to in

hydro sources have been constant at around 400 MWh over will need to adapt rules andregulations to make the market Bioenergy or or Oil Solar Heat Hydro gas Natural Bioenergy and waste Wind

1.8 TWh) in TWh) 20141.8 and1 6 importer electricity of phasing out regulated prices 533 MWh in 2019.

the st

102 . This will require new balancing andreserve medium eadily increased eadily

consumption by sector capacity eneration 2009in to 63% 2010in

flexibility to adapt the power system small at 3%, barely reaching 0.1 - te 25% rm rm remuneration ,

Hydro plays animportant role in www.iea.org/statistics/

( in thein electricity mix ). Electricity imports imports 7.2Figure Electricity ). , power system and fishing. and % (0. 8%

electricity of source main its role and reached 16% with 33% n n 1% , 52 promoting competition promoting 2009, i

45% from wind wind from 45%

TWh) 2019. in 33% i mechanism, while while mechanism, mplementing , Lithuania

t switched t . dqay and adequacy

(2019) power

Wind Wind TWh TWh from from icity icity the

IEA. All rights reserved. gas, electricity imports and rising shares of renewable energies meet electricity demand. demand. electricity meet energies renewable of shares rising and imports electricity gas, Electricity demand Electricity IEA (2021), Source: TWh = hour. Note: terwatt in 2019 in Lithuania electricity renewable of source largest the became and 2012 since increase highest the seen has power Wind Figur * after source supply electricity domestic main the be to ceased Nuclear Figure (Figure produced from renewables, the growth wind of power can bebetter appreciated exposure to There potentialis for further development solar, in particularly given Lithuania’s extended Lithuania’s electricity consumption was 11. IEA (2021), Source: TWh = hour. Note: terwatt overpastthe decades, except in electricityin consumption in 2009( -10 0.5 1.5 2.5 10 15 20 -5 on th on visible Not 0 5 0 3 1 2 TWh TWh e

7. 7 7.3). 7.3). .3 Renewable electricity generation 2 Lithuania’s electricity supply source, by 2000-

is scale daylight during IEA World Energy IEA World IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World , increasing from 0 , from increasing

, (database) andBalances Statistics

the for durifor

megawatt hours (MWh megawatt summer months. Taking a closer look at electricity Figure 7.4). ng . .

the global financial crisis, which led to 4 4 103 TWh in 2019 TWh

in Lithuania ) 2011 to 0.09 in , and has grown at constant levels www.iea.org/statistics/ www.iea.org/statistics/ , 2000- 19

MWh in 2019. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

19 2009. Today, natural natural Today, 2009.

Net import Net Solar* Wind Hydro Nuclear Bioenergy and waste gas Natural Oil IEA. All rights reserved. rights All IEA. Target axis) (right share Renewables Solar Wind Hydro Bioenergy 7 ELECTRICITY 7 a a decrease

sector years, power ** In 2020, Lithuania had around 3.6 gigawatts ( Electricity generation capacity generation Electricity accounting for 33% In 2019, * sector. industry the by driven mainly increase, steady a seen has consumption Electricity Figure ELECTRICITY 7 e Kaunas Hydroelectric Power has Plant 99 provides Lithuania has important hydro power resources. Kruonis The Pumped Storage Plant mainly natural gas and renewables (1% generatin withby 110MW afifth unit. These offshore wind sector (2 sector ), IEA (2021), Source: TWh = hour. Note: terwatt 10 12 0 2 4 6 8 Energy lectrical demand Lithuania.in In 2021, Lithuania adopted new 2000 Services/other TWh or 0.1 TWh). Electricity demand in

demand ta followed by the residential and includes petroleum refineries, coal mines, oil and gas extraction, andblast ovens, coke oilfurnaces. andgas coal extraction, refineries, mines, petroleum includes 7

6% .4 Electricity consumption ( rgets 2002 energy storage with atotal capacity 900 of g capacity 2025 for 4.8 of the 2000-19 or or

includes commercial and public services, agriculture, forestry agriculture, and public commercial services, includes : 1GW solarof PV and 1.2 GW of wind power by 2025, with and the increase thein capacity the of Kruonis pumped storage hydro plant industry andservices sectors were the largest electricityconsumers, 2.9 increased by than less 1%, whil IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World 2004

TWh (3.

8 8 ), energy transformation (8% 2006 TWh)

and 33%

2008 capacity GW

(hydro,biofuels), wind, as illustrated in Table 7.1. have not beenincluded the in projections for net total final consumption final total 2010 the . (3. services sectors at

8 8

industry sector has increased by 104 MW MW of capacity andsupplies about the 3% of

TWh) GW 2012

e e the energy sector decreased by 2%. ) , respectively, followed by the residential , imports and exports and imports , of installed power generation capacity,

or 0.9 TWh) and the transport sector 2014 MW MW (4 units, 225 MW each). , www.iea.org/statistics/ , 7 and fishing. 2016 % and

) solar PV, hydro and wind in Lithuania 2018 %. T 20%.

MW MW

The The

ten of of

IEA. All rights reserved. Vilnius CHP Vilnius longer sets the volume of eligible electricity produced from fossil fuel Lithuania abolished the electricity buy eau, LatviaLithuania was an exporter electricity of to Belarus, energy Nuclear roleThe co- of Co-generation Note Table 7. 1 during the 1990s. (natural gas, fuel oil) plants in Kaunas and Panevėžys continue operating on deli Source: Litgrid 2020 Litgrid Source: DSO operator. system operator. distribution = system transmission

Co Biomass Kruonis HPSPP newKruonis - vered to the national network over the period 2015- s Kaunas HE (RoR) HE Kaunas generation refers to the combined production of heat and power. to production refers the combined generation Wind (on shore) Wind Kruonis : Small HE (RoR) HE Small MW MW Biomass new Panevezio E Other small Vilniaus E3 Waste new Mazeikiu E Lietuvos E Kauno E TOTAL 1 Waste – Solar Outlook of i megawatts. megawatts. and

- HPSPP 3

generation biogas

has not been operating since 2016;large other naturalgas

The Ignalina nuclear power plant was once the pillar of Lithua nia’s

HPSPP HPSPP

Several plants have been mothballed during the past years. nstalled net generating capacity in Lithuania Fuel G G G G G O 1 as as as as as = h =

il has decreased since 2015, with a60% decrease of electricity

ydr 3 1 2020 540 282 900 169 150 148 112 o pumped storage power storage o pumped plant

43 89 27 99 32 018 610

Renewable capacit Fossil fuelFossil capacity 1 1 3 2021 610 141 150 148 900 172 112

27 99 32 16 44 89 018 622 0 -

back quotaback (subsidies co- for

105 1 1 4 2022 927 141 150 148 900 250 109

27 99 32 16 44 63 89 018 013

1 1 1 1 4 2023 150 148 900 376 141 109

27 99 32 16 44 63 89 215 018 427

. .

RoR RoR a short 1 1 4 19 2024 150 881 900 511 141 109

27 99 32 16 44 63 89 406 468 0

. This is linked to the fact that

and

un- - 1 1 4 2025 term basis. term of 150 881 110 900 676 141 109

27 99 32 16 44 63 89 506 843 0 0 -r the the iver plant iver

co- Russia generation) P MW) (in Mothballed power Including 53 MW generation Municipal Municipal waste rojectof common mothballed unit TSO TSO . Comments TSO = connected connected

co- interest 7 ELECTRICITY 7 n n

plant and and Federation generation

waste DSO DSO DSO

and no

plants plants

The The

electricity 70% physical trade flows reported by Russia and reported trade of flows some the physical Baltic and commercial reciprocal electricity There data withand Litgrid regard bediscrepancies to betweenmay IEA Note: upto exporter A net S exports and imports Electricity energy supply. It consisted two of Soviet ELECTRICITY 7 2 IEA (2021), Source: imports + electricity generation). electricity + imports European(EU), Union Following the Chernobyl disaster consequence. demolished 1989.in design A flaw of Unit 1was noted first 1983, in with noofficial thirdA reactor was planned and construction started 1985, in but it was suspended and the similarity both in reactor Lithuania started importing electricity Russia from (including Kaliningrad) in (2.3 ( kanalnyy electorate’s opposition at 62.7%. However, the project was cancelled following the and 2. government. respectively 2004 in and 2009. The safe decommissiong by apriority 2038is the for financed the decommissioning with EUR Lithuania discussed options in 2.4 Lithuania Figure

MW Electricity import dependency import isElectricity herecomputed as ofthe share net imports supply (net over the total electricity ince the

Net imports Lithuania 2015, Net exports TWh TWh

10 12 -4 -8 -6 -2 TWh), andfrom Latvia 2010(2.8 in TWh). In 2018, imports reached 3. 2 e 0 2 4 6 8

) of its of 8 8 each. Unit TWh 7 TWh for Russia for TWh .5 , in 2016 and

has been ex from or

closure of Lithuania’s e Lithuania’s electricity supply 2019. in

“high-

IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World Belarus, s 1 and started import 2009 power channel 3.6

porting the Lithuania agreed to the close ( ,

TWh TWh Latvia, Latvia, lectricity net imports and exports by country, 2000- 2 online came December in 1983 and August 1987 respectively. Lithuania has has Lithuania

Figur Ignalina s’ s’ for some electricity again in 2019. Overall net trade in electricity design of and lack a robust containment .5). e 7.5).

Russia building ing in 1986in , - type reactor”) reactors of 1 nuclearpower plant

electricity from Sweden from electricity After the commissioning of the NordBalt sea cable of of levels increasing importing been

and

- a new nuclear power plant close to Visaginas. designed RBMK (

106 820 million, and Unit and as part the of ac

Sweden.

s tates. since 2016.

Ignalina Electricity 2012 referendum, showing the , , Lithuania has been importing www.iea.org/statistics/ reaktor bolshoymoshchnosti

in 2016, ranging between nuclear power plant

300 imports imports s cession process to the 1 and wa megawatt electrical s 9.3 TWh in9.3 2019. s

building. electricity since electricity 3 3 co 2 were closed . TWh for Latvia Latvia for TWh

given 2011 . .

IEA. All rights reserved. 126 134 Figure 7 charge of the lion’s share theof grid). territory Notes: 110 of lines In 2019, Lithuania’s power grid consist interconnections and grids Electricity km ofkm undersea cables (under the Baltic Sea). electricity The distribution grid of 600 HVDC =HVDC high ; ; to the delimitation of international frontiers andboundaries frontiers of international to the delimitation km .6

Map Map of Lithuania’s power system

kilovolt (kV), 330 kV is operatedis by - voltage direct current. This of This is or prejudice map status direct overto without current. any sovereignty the voltage 5 5

distribution system operators ( and 400 powerkV transmission lines, including about ed of aroundof 7190 107

; and to the name of any territory, or area. any name city and to of the territory, kilometres

DSOs

) (km) of high of (km) (with one DSO in DSO one (with 7 ELECTRICITY 7 - voltage

preparation since 2009, starting with the The part and Lithuania. synchronouslyThe operating joint system BRELL covers Belarus, Russia, Estonia,Latvia cons the three Baltic states and developing cross implementationThe o published. unplugging Kaliningrad from its no new date has been agreed. Russia was to conduct its own test first by temporarily the Baltic states to unplug themselves from the Russian grid was postponed in 2018 and Continental European electrical system entered into force of on27 test May first 2019. A C the European Network of Transmission System transmission network operator submitted an application to the relevant regional group of 2018, the Prime Ministers Estonia, of Latv ( the power system operation remains separate, as Lithuania forms part the of BRELL Despite being a member of the EU since 2004 and integrated thein Nordic market, to date, between Estonia and Finland. Synchronous Area through NordBalt between Lithuania and Sweden and Estlink 1 and 2 Europe through the agreement, a formal merger procedure was initiated by synchronise and The Baltic s BalticThe with Synchronisation Lithuania targets ELECTRICITY 7 to it, as as a330 well switch kV yard “ Darbėnai target of Belarus (1 Belarus well interconnectivit rely even oninterconnections more to the European Continental System, with an comes onlinecomes in L NordBalt The The (680 Belarus ontinental European networks to the Baltic states. agreement The for accession to the

2025. The countries agreed to analyse options synchronisation. for Based onthis icipates dispatch in and regulation. - interconnected to its neighbouring countries, with existing net transfer capacity to Harmony Link will increase the LitPolLink capacity with Poland by 700 MW rcin f 30 V oe tasiso ln Bitėnai line transmission power kV 330 a of truction of of MW MW export and 600 MW import) and Poland (500 MW in both directions, LitPolLink). synchronisation of the Baltic states with continental Europe has been under the European Commission signed ajoint political road , Russia - 15%) Bitėnai, a 330 kV switch yard switch kV 330 a Bitėnai,

800 MW 800 MW import/and 1 ink), Latvia export (684 MW and1 tates

the Baltic s , which it has already achieved. By 2030, it is expected that Lithuania will

y level of 111%.y illustrated As level of Figure in 7.6 andTable 7.2, Lithuania is Lithuania has access to the joint Baltic countries’ power reserves and 2025. , Estonia, Latvia and Lithuania)

’ ’ 23% of interconnectivity with by the EU 2030 ( power system is currently asynchronously connected to f the road the f

LitPolLink between Lithuania and Poland and to the Nordic tates

neighbouring states in May 2019, but noresults have been the the with map map 350 MW export),350 MW Sweden in (700 MW both directions,

in in Continental Europe Grid Europe Continental the continental European network through Poland Mūša June 2019 requires reinforcing the internal grids of

signing a of declaration joint of principles. In June “ Darbėnai ia and Poland ia 108 ” .

Operators (ENTSO Operators border infrastructure. These include the and 234 MW 234imports), MW Russia/Kaliningrad ” and connecting a new offshore cable – – the Russian on 21 September 2018, the Polish and - Kruonis PSP, line a330kV the President well Unified PowerSystem. - map, whi E) extension for the of

above the EU

s ch ch of Lithuania Lithuania of C ontinental plans to

when it - wide wide

IEA. All rights reserved. The roadThe Connecting EuropeFacility. and Poland), which will open also the cross * totalThe cost of synchronisation amount       2020,In April the second stage the of electricity network investment theseAll of actions will involve significant investments Lithuania and Poland (Harmony Link). Grid optimisation measures will also be carried out. Poland and Lithuania, together with a new- high Synchronisation will take place through Poland, notably via the existing link between Table 7.2 Lithuanian borders continental power system change will imports/exports andnet transfer capacities at the by EU funding under the Connecting Europe Facility. Source: Litgrid 2020 Litgrid Source: Note: Russia Baltic s Baltic

Nordic and B and Nordic f sync of number adequate e the in the stability frequency i e l in Lithuania reinforcements grid internal and related - high the for 2020 in call Facility Europe Connecting c c Poland ensuring Agreement Connection the under measures of a number of mplementation 2023 and in 2021 Link Harmony the of construction of start and tendering of aunch Sweden ompletion of the investment request and submission of a financing proposal for the the for proposal afinancing of submission and request investment the of ompletion 2021 by in Alytus autotransformers kV 400/330 of ommissioning nsuring an adequate amount of system services (inertia) in the Baltics, including via an via including Baltics, the in (inertia) services system of amount adequate an nsuring - high the of operation of principles of laboration Lithuania Latvia MW MW HVDC, Harmony Link) Harmony HVDC, N tates ended imports of electricity Belarus from of endedimports tates n Federation et transfer capacity – Third Third - - -Lithuania megawatts. megawatts. map

Lithuania border cost allocation decided by the four regulators ( Net transfer capacity at Lithuania’s borders - Lithuania Belarus -Latvia HVDC)

’s ’s countries countries altic regions altic main milestones

HVDC = high = HVDC

(LitPolLink (Kaliningrad) (AC OHL) (AC OHL)

(Nordbalt (Nordbalt

Baltic s Baltic

hronous condensers by 2024 by condensers hronous

- voltage direct current. direct voltage

tates. towardssynchronisation include: 680 MW export and

800 MW i 800 1 600 MW import

350 MW export350 1 1 the possibility to receive EU funding under the 684 MW 500 MW 700 MW

234 MW 2019 s to EUR 1.6 billion, and upto 75% will becovered . mport and 109

voltage submarine cables between the the between cables submarine voltage k cable cable k Lin Harmony submarine voltage and Poland and voltage direct current line between

in thein coming years.

950 MW 500 MW 700 MW 2020-24

0 MW* 0 S ynchronisation with the EU

Estonia

was completed with , Latvia,Lithuania

950 MW 700 MW 700 MW 800 MW 2025-30 7 ELECTRICITY 7 0 MW 0

territory = HVDC high Notes: ( exports to Lithuania). However, given the low electricity consumption needs the of exclave (Baltiskaya Kaliningrad in Russian power companyRosatom’s INTER RAO has beenbuilding anuclear power plant L Figure 7.7 ELECTRICITY 7 development of nuclear power Belarus in which supposed is to start commercial its full operation activity2021. May in In November 2020 Belarus has started operations at the Astravets nuclear power plant, synchronisation. construction of the Belarus. plants and one coal the EU grid this way. Russia’s Rosatom has started the construction of three natural gas s Baltic the has been consultation with the Baltic countries, has raised concerns during the construction phase. Amid safety concerns after the Chernobyl accident Kaliningrad is self ithuania ; ; to the delimitation of international frontiers andboundaries frontiers of international to the delimitation Network developments Russia, in Belarus andthe suggested is of specialof is tates (thus reasserting its influence) and the EU, and Map of Lithuania’s ofMap

- voltage direct current. This of This is or prejudice map status direct to over without current. sovereignty anythe voltage

- sufficient thanks to a new natural gas Astravets nuclear power plant in Belarus have accelerated plans for - that that fired plant importance for Russia to access its exclave Kaliningrad. The Russi

NPP) since 2010, arguably to supply Kaliningrad a would build the nuclear power plant

electricity connections in Kaliningrad and electricityof networks in Russia and 110

close to Lithuania’s capital Vilni

; and to the name of any territory, or area. any name city and to of the territory,

- fired station

Kaliningrad area around nuclear safety already getting

wi and coal and th a viewth a to supply market to access as as the well (which today us

plants t , without , without he three

The The ), it it ),

IEA. All rights reserved. (Litgr T Electricity Market Development andImplementation Plan and access to power trading within the Nord Pool market area, expectedis to remain place in until the low windof availability andsignificant imports from Sweden imports from Belarus. There are increased import flows from Latvia, notably during periods consisted of the holding company EPSO networks and the gas and electricity exchanges. As 31of December 2018, MinistryThe Energy of is the shareholder sole the of gas andelectricity transmission regulator Package. rangeA critical of reforms are has carried out a major restructuring of its electricity sector, line with in Thirdthe EU Energy Lithuania’s power sector the is result adecade of reforms.of In recentyears, Lithuania reforms market Electricity There are noimmediate supply security    Lithuania adopted a raised by the European Nuclear Safety Regulators Group. countries. It has ceased imports from Belarus in November 2020 together with neighbouring power plant. Baltic s the Russian/Belarusian power Lithuania’s utility BALTPOOL andTETAS small renewable There are 1 electricity (and gas the Baltic Energy Market Interconnection Plan, initiated by the European Commission commonA Nordic electricity market including the Baltic distribution pipelines. 71% AB electricity consumers to final (households plus industry). Created 2016as amerger in of agreed Astravets power trading with Belarus. In early November 2020, Belarus started operations the of

he government unbundl are determined by laws of physics) of laws by determined are . Russia through Baltics the C ction of proof of origins of origins of proof of ction Introdu . Lithuania to Kaliningrad and Latvia to Russia from maintained are trade for Corridors Trade

LESTO and AB Lietuvos Dujos, ESO operates around 130 ease id, AmberGas, EPSO of which are overhead which of and 29% cable, with tates collectively opposed the construction and commissioning the of actions including: continues continues , the National Energy Regulatory Council commercial flows between Belarus and Lithuani and Belarus between flows commercial

nuclear power plant andthe Baltic states The startThe was postponed from March 2021 the in light the of safety concerns

668 Lithuania considers it not safe and dangerous for the close by capital Vilnius.

licensed electricity producers (2 Ignitis Group. There are also energy (with reduced amounts) only between Russia and its enclave Kaliningrad. Kaliningrad. enclave its and Russia only between amounts) reduced (with ) DSO, DSO, ) l

aw that allows it to suspend commercial flows

– a – producers (up In to total, 30kW). around 59companies supply

ed - G, Ignitis),

nd Energijosskirstymo operatorius

supply andtransmission system late in 2025. indirectly controlled GET Baltic.

Russi .

third desynchroni an trade to to trade an

risk -G - 111 being implemented party access to transmission and distribution, s and

four smallerfour DSOs. for for

Belarusian no that ensure 502 licenses), the majority which are of four subsidiaries the s

( ation of Baltic electricity sys collectively initiated aseries of pre- NERC Baltic around 9 a (physical flows will remain as they they as remain will flows (physical and market operation activities states has been the objective of

(Republic of Lithuania, 2018). via NordBalt. The new regime The NordBalt. via ), states linked to cease the of to revoke the licences fo and 000 km of electricity lines, lines, electricity of km 000

based on Lithuania has onemajor (ESO), fully owned by 000 km of000 natural gas km – established

with Belarus andthe , Amber Grid, Litgrid Grid, , Amber electricity electricity EPSO the the 7 ELECTRICITY 7 new nuclear Lithuanian

tems from from tems NERC - G group enters enters

. r

prices accounted for 2.96 consumers around 1.6 million household consumers. Starting in 2021, regulated prices for household largely chosen to remain prices. pay market prices, household while consumers can choose market. 2013, users can choose to purchase electricity from a public supplier Retail market competition exists for both households and industrial consumers. retailElectricity market and prices been declin Thanks to the integration in the Nordic electricity market, wholesale electricityprices have differing from the Nordic system price at times of congestion on the interconnectors. Lithuania has its own price zone Wholesale electricity andmarket prices commissioning of NordBalt (700 MW Lithuania- in ELECTRICITY 7 in increased again (43.48 EUR/MW a decrease 13%of since 2015. gradual the opening the of retail market. government The decided onsteps to implement the regulatedof prices by 2020. May The 2020 amendments to the Electricity Law bring in Lithuania undertaking is a major reform of the electricity retail market, which congestion onthe interconnectors region has full price convergence with the Nordic market, except whenfor there is was bidding area Lithuania in which allows market access to Nord Pool. second A milestone markets. Progress has been made on both fronts. In 2012, Nord Pool Spot established a interconnectionsbasedon both physical of infrastructuresandthe electricity gas)(and 5 5 regulated2021, priceshouseholds endedfor an annual withconsumption above connection between Lithuania and 2017 Instances of congestion last market. Russia, Lithuania pays ahigher price, dueto acapacity payment the in Russian power by 101- Lithuanian interconnection disconnected or limited due to a exceeded the established capacity by limit 101 480

000 2009 with 2021. Norway and Sweden due to drought

hours. the completion the of Lithuania- – – kWh. In 2018, consumption of the

EUR 5 EUR 108%. Congestion F

phase- The 2015 Baltic Energy Market Interconnection Plan had called for the phase out ive suppliers have

ing wil C a viewa to end the isolation the of Baltic region from the integration EU. The is

apacity during these hours was 300- , l out regulated of prices since 2015. 2017, In gradually gradually on 1November 2018– be TWh, which largelyis industry consumption, as households have with regulated prices. In 2019, the Lithuanian retail market had , with the physical flow exceeding o the ing phased out. n the n

status public supplier of Lithuania. in Industrial consumers In 2018, electricity prices within the for for lack of network of lack h . ), which was the result of lower hydro power in thein Nordic electricity market Russian

three ( Sweden Poland interconnection (500 MW, LitPol Link) andthe the wholesalethe consume at stages of the consumption levels , the, increa se the in EU EUR 15.85) andrepairs the of hours - 112 Lithuanian interconnection in 2018 lasted for , 2019) NERC

rs who buy electricity at wholesale market Sweden link) in 2015. Since then, Baltic the were capacity.

elect 600 MW, whereas -

116%. customers No have been determined 2018 in o ricity price was EUR

the established capacity limit When importing powerWhen from to pay market or regulated

ETS price (on 1 , with Lith

or buy directly the in Nord uanian price zone the

electricity prices .

n the Latvian- the n Balt electricity As physical flow flow physical

35.13/ has

of Januaryof production January

ed start MWh, MWh, Since Since about

IEA. All rights reserved. Several steps are envisaged the for gradual opening by terminated andconditions becreated will for active engagement of electricity suppliers. objective to is install 1 million smart meters between majorA milestone of the * 2021 to 1 January 2023, the monopoly services of the public governmentThe maintain wants regulated to prices for those consumers. From 1January phases. critical A step will bethe identification of vulnerable consumers or energy poor. Lithuania, 2018), the phase out regulated of prices now is envisaged Lithuanian ElectricityMarketDevelopment andImplementation Plan Lithuania had planned to phase out regulated prices for several years. Under the Table January 2021. Households consuming more than per 5MWh yearno longer pay regulated prices as of : Source those consumers whom for smart meters are the sr ad those and with commercial all users consumers from AB “INTER RAO Lietuva”. UAB “Scener”. More than all90% electricity of sales on the power exchange in 2018 c AB suppliers. In 2018, there were four main suppliers the in wholesale electricity market: 1 Lith on the power exchange ( Lietuva” andUAB “Energijos tiekimas” sharing platform (data hub) through which data will be available fo shifted from 60 metering time resolution bewill aligned to the imbalance settlement period, which will be remaining consumers will be provided with smart meters after 2024 at their own cost. The consuming less than 1 with rising network charges made upmore than 50% the price of final 2020 (Figure in 7. purchase price. Retail prices include a number of public service charges, which together Electricity retail prices have been on the rise since 2017, with an increase the in electricity Vulnerable consumers represent about 6% (or 101 about represent consumers Vulnerable 000 Stage Stage Stage Stage Stage Stage

Stage Total “INTER RAO Lietuva”, “Energijos UAB kodas”, “Lietuvos AB uania’s electricity market remains kWh per year Republic of Lithuania (2018), Lithuanian Electricity Market Development and Implementation Plan. and Development Implementation Market (2018),Electricity Lithuanian of Lithuania Republic 7 .3 .3 III II

Lithuaia’s three Lithuaia’s with smart meters. The implementationwere meters. equipped smart of smart metering with starts 1 1 1 Start date Start

minute January January January January 2023 2022 2021

S to 15-

mart meters will not meters mart besystematically deploy 000 kWh per year000 per kWh NERC process of market opening the is roll consumer in kWh - consumption (by stage phase out of retail electricity price regulation minute intervals. ESO has also plans a for 1 1 , 2019). 000 Annual <1 >5

In In

000 000 -5

the past years, 000 –

conc

household consumers who consum purchased about two- 000) of all household consumers 113 ) entrated to becompleted until the end 2023of All .

consumption Total m 11.10% 32.40% 56.50% , despite a large number licensedof

most cost most two companies –

arket 2020

the

and thirds

- - effective. effective. supplierwill be end of 2024( end of out smart of meters. The

. . energijos gamyba” and 2023, r processes.market 1 1 consumers Number of 762 138 760 of all electricity tr 661 by 2025 data collection and

013 814 484 AB “INTER RAO RAO “INTER AB 311* covering 70% of In 2016,3 for customers (Republic of of (Republic e mo 7 ELECTRICITY 7

Table in in gradually 45.70% 45.90% 8.40% re than Share several several

7 aded

ame 000 .3). .3).

8).

Energy Energy andTaxes IEA, 2020 (2020), Prices Source: Note not is United States. available for the Tax* Information count member IEA among range lower the at are prices electricity Household of those above are prices electricity industry Lithuania’s Figure LV low = = MV Notes: volt. volt. medium Figure 7 ELECTRICITY 7 Source: Source: 100 120 140 160 180 200 100 150 200 250 300 350 400 10 12 14 20 40 60 80 50 0 2 4 6 8 0 0 EUR cents / kWh / cents EUR s USD/MWh USD/MWh : MWH = megawatt hour. Industry price data are not available for Australia, MexicoMWH Japan, data price Australia, = are not hour. available for Industry megawatt NERC 7.9 2017 .8 Composition of the electricity retail price electricity the retail of Composition countries Industry and household electricity prices 2020.

2018 , 2019

2019 Households 2020 firsthalf www.iea.org/statistics Industry

114

2020 secondhalf s neighbouring Estonia and Poland. Poland. and Estonia neighbouring

in Lithuania . in Lithuania and selected IEA Purchase price Purchase ceiling price service Transmission System price service ceiling ceiling price obligations supply Public ceiling price service supply Public (households) MV ceiling price service Distribution (households) Distribution service price ceiling LV , 2017 - ries. ries. or 20 New Zealand. New Zealand. IEA. All rights All IEA. IEA. All rights reserved. rights All IEA. IEA. All rights reserved. rights All IEA.

Tax component Tax component reserved.

IEA. All rights reserved. Figure electricity was above prices accounted the which IEA average 24%, for (Figure 155.8 household electricity price levels stood lowest industry prices were above the regional price Conversely, household and Estonia (99.8 USD/MWh) (Figure 7.10) 2019.in regulator 116.9 The MinistryThe Energy of is formally responsible securityfor electricity of Security IEA (2020), Source: Note: countries. neighbouring in prices above are prices industry while region, the across lowest the are households for prices electricity Lithuania’s Since their peak 2013in at 171.7 USD/MWh (SAIDI) was not allowed to be longer than 52.12 minutes per year, and the average number supply. In 2018, the average duration of electricity supply interruption consumersfor (SAIDI/SAIFI) measure the performance of the reliability the of Lithuanian electricity non- At the transmission level, Lithuania uses electricity security standards, such as energy power system) by 2025. 2) 70% of ele of 70% by self Lithuania’s Energy Independence Strategy places a requirements transmissionfor and distribution.

100 120 140 160 180 200

fostering the market integration with the EU (and desynchronisation 2030 by two means: 1) investing in local generation – 20 40 60 80 - 0 sufficiency power in generation, 0921 0321 072019 2017 2015 2013 2011 2009 supplied andthe average interruption time. At the distribution level, two key indicators MWH = hour. megawatt USD/MWh (Figure 7 (Figure USD/MWh USD/MWh

USD/MWh 7. in 2019,in compared to IEA member and neighbouring countries. Estonia’ 10 NERC ctricity consumption by 2030on the path towards El of supply ectricity prices in Lithuania and selected IEA countries, 2009- Energy Energy andTaxes 2020, Prices Lithuania

Industry Industry sets standards in 2019,in and

electricity prices in Lithuania

. Estonia ). 10).

included atax component of

for the for In contrast to industry, the tax share for household with atarget of reducing electricity imports by 30% Czech Republic Czech www.iea.org/statistics

qualityservice of andreliability 115

, i levelsdepicted Poland in (98.9 USD/MWh) 100 150 200 250 300

at 151.2 USD/MWh and Poland’s at

50 0 ndustry have prices decreased, reaching

0921 0321 072019 2017 2015 2013 2011 2009 USD/MWh ,

at 142.9 Poland . major emphasis oncreating mainly renewables –

Household 9% (Figure9% 7.9). USD/MWh

United Kingdom 100% by2050;

with minimum minimum with

7 ELECTRICITY 7 the Russian

Lithuania’s

one of the 7.9). 19 to cover

and and

The The DC connections LitPol and NordBalt there provide anopportunity receiving for current ( to Lithuania. with the Rules of Electricity Supply (Order andUse 1- No supply electricity of the in event an emergency of is limited or suspended in accordance with regard to the generation, transmission, distribution andsupply electricity. of The LawThe on Electricity establishes the statutory for emergency basis response policies Emergency response policy 0.72 interruptionsof per consumer per year (SAIFI) when caused by the ELECTRICITY 7 NERC overseeingfor emergency response the in electricity sector. Emergency Situation Operations Centre, within the Ministry Energy, of also is responsible activated during peak power consumption periods Kruonis The plans system and with BRELL operators thefor jointly maintained secondary reserve. The In anemergency, Litgrid relies onsecondary reserves to ensure electricity suppl undertaken and its respective evaluation. to report to the European Commission within three months, which would then be presented Once the state emergency of is not reliable. incorrectly calculated emergency as anywell situations, other assistanceas expected from the the causesfor electricity at disruption hand and the planned measures to mitigate or at a ,and the should DSO TSO the electricity sector, the anemergencyof within provide during information an emergency. procedure asfollows: The foreseen is the in case annuallythe to government. will bepassedwill early 2021which w in request LithuanianThe Ministry Energy of and other institutions are national given the authorityto account the needs of the electricity system and electricity grid users. electricity market. co- countries, andfor including the development interconnections of with the electricity systems other of operator services. Litgrid responsible is for the maintenance and management the network of operations of the electricity system through national balancing and the provision system of Litgrid, as Lithuania’s TSO, responsible is under the l electricity network more EU member states capacity for allocation and ensuring for the security the of the transmission system operate with foreign system national energy regulators to ensure that the transmission times. Following an inquiry 2019, in in placein restrictingfor or disconnecting consumers should a power shortage occur.

greater frequency (i.e. EU’s EU’s is responsibleis for monitoring the reliability the of electricity system and reporting

information about energy enterprise activities. A draft of a energy of aboutinformation draft activities. A enterprise DC)

(TSO)

Electricity Coordination Group. The ex

connections management contracts with the Pumped Storage Plant serves as a tertiary power reserve

has one or more integrated system(s) at

reduc . Litgrid holds contracts with the power plantsthe in Lithuanian byin the ma ing

the capacity constraints in the transmission network, taking into

a few hours), to information the submit Ministry Energy of about

Article 76(1) l (2) the of over

DSO and the available data for , the, Ministry of Energy would be obliged to provide a emergency assistance from neighbouring countries. ill clearly

116 NERC

fore define electricity enterprises’ obligations to

found that these key indicators were offer offer

when there is a lack of offers thein post aw to maintain stable andreliable aw stipulates that NERC emergency supply arrangements the regional level covering two or

report would include actions all Polish andPolish Swedish TSOs also 38 of 1 38 of

Government Resolution 1 February2010).

DSOs not greater than 2012- m ember 18 18 , which ,can which be on a daily basis a on are therefore s tates. tates. y e lectricity lectricity and has

should should direct direct

The The ,

IEA. All rights reserved. in electricity: 45% of electricity consumption tois be covered by renewable generation estimated to account for 3%, biofuels 9%, hydropower 8% and biogas 2% by 2030 source of electricity generation, accounting at for least 70%, solar while energy is provided by synchronous operation with Russia. energyWind expected is to be the main increase are Today, the in in Renewable energy dominates Lithuania’s electricity generation, accounting 75% for variable integrationrenewables ofSystem e Power system adequacy systemPower Litgrid now is part ENTSO of to a maximum of eight of maximum a to Based onthe amended saf by ACER according to the new European Resource Adequacy Assessment methodology approved However, the IPS/UPS system occurs. powerof supply by the time the to implement a market support by 2025. Lithuania planned to address this situation major retirements in electricity market. Baltic The Regional Security- Co operation of the electricity tran smission systems of the Baltic states andthe common Sec Regional Baltic the framework of regional security co- inefficient andnon- demand facilities, storage facilities (such as batteries), equipment operated by independent mechanism mechanism rules) (- rules) regional security co- N 2.46 GW resource adequacy assessments under the new EU Electricity Regulation. capacity mechanism system adequacy assessment to beperformed in 2021, decisions onthe most appropriate latter mechanism under the state aid rules. However, based on the results of the power xpectationLithuania in etwork

2030. overall energy demand and 100% renewables in electricity consumption. 2019. powerWind makes up almost half of eguarding of

dispatchable and capacity of 38%

- The governmentThe specified also anational 2050 target 80% of renewable of energy response aggregators and new facilities to be operational by 2025 (to replace old, independence from imports D with different criteria, so results could by by ENTSO evelo system benefits biomass from co use in to to 2029, as electrification of the economy progresses, according to Litgrid’s be implemented through technology

adequacy challenged is with higher peak demand (+15% by 2025)

the pment During 2019- - E will liant facilities).comp European The Commission needed Lithuanian power system L

model will bereviewed and implemented. a source of flexibility balancing, for inaddition to ithuania ord - wide capacity mechanism to maintain asufficient level security of

P Law onElectricity

could increase to 29.5 hours per year up to 2025). Peak demand expectedis to increase from 2 GW to ination among the Baltic TSOs, including short urity Coordinator Agreement 2016 in to support the common lan 2020- perform hours per year.

- E and theE regional TSO collaboration. Under the ENTSO and the Baltic region 20, L 20, desynchronisationthe Lithuanian of power system from ordinators, the Baltic TSOs (Elering, AST, Litgrid) signed the European resource 29. 29. ithuania adopted amendments to the Law on Electricity

, the government has ENTSO

, by introducing acapacity mechanism It was planned for 117 loss of load e Lithuaniaload of aims to limit loss

adequacy. adequacy.

- E significantly significantly total total expects that 2025, in the load of loss - more broadly neutral auctions existing for generation - ordinators generation oe generation. power

ambitious targets for renewable adequacy assessment 2021 in

influence next steps towards .

h market the

set upthe framework for (due environmeto EU ntal and hydro power, which the

spinning With a viewWith to

- -

to approve the wide wide term regional regional term 7 ELECTRICITY 7 xpectation

with state state with reserves capacity

and - E

ava Lithuania, Latvia, through the introduction of the All Baltic Capacity Calculation Region (Estonia, Finland, level, but it system operator In Lithuania, electricity from consumers (1.6 by by 2020- TSO Grid investments are part the of solution and Litgrid’s centralised information exchange platform for market participants by 2023. 80.5 and 2020, the capacity prosumers of increased rapidly play an increasing role to meet the targets established by the government. Between 2015 Much of the future renewable energy will come from distributed levels and prosumers will the flexibility the of system andits resources. (prosumers) at the same time. During the coming years, Lithuania will need to increase as Lithuania will also have to integrate rising shares distributed of variable renewables integration of variable renewables and rising peak demand. This particularlyis challenging Litgrid has carried out work to identify potential challenges and solutions betterfor capacity) as well as technologies, which could ensure inertia of the system and fast response (ramp up/dow Work ongoingis to enhance system flexibility by grid investments using smart solutions). The data hub will evolve with the roll as well as innovative solutions (demand response, cybersecurity, smart grids andcable deregulation, smart metering and a data hub), system services flexibilityfor and storage distributionThe system operatorworking ESO is tosupport active users (prosumers, a deadline for 2024, which offer will flexibilitymore services for peak and off system operator needs to adjust to operations with higher shares of variable renewables extension balancing service contract With the rise in wind energy the in horizon upto 2030. Lithuania, of 2019). government The also is looking at hydrogen to store offshore(Republic ELECTRICITY 7 Litgrid aims at creating a demand response. Litgri response across the region. In June 2020, great Demandresponse avail is regulatory framework ESOfor as it does Litgrid.for other control (FRR) exchange and sharing agreements with the NERC

also MW (aroundMW Baltic TSOs, takin TSOs, Baltic 29 includes EUR 1.25 billion investments at transmission level. Litgrid flexibility. b locks.

collaborate to identify curtailment needs. .4 capital with aweighted average of 5.34% under price cap regulation five for

is implementing tools for

TSOs in theTSOs in Baltic region have worked together to harmonise demand million) to become wind and solar power, system become integration will

currentlynational does not use countertrading or redispatching at the Poland and 8473

demand response. The introduction of smart metering ongoingis with g the necessary steps to enter into af requency d prosumers). Lithuania targets l oad publically consults , able at wholesale level in the Nordic market, which provides and imbalance purchase and renewable energy sources f requency Sweden) prosumers by 2020, 30% by 2030and 50% by 2050.

redispatching orcountertrading

. The distribution system The operator. control 118 it

on baseline methodology, implementation of

was appointed independent aggregator for

- year periods (2016- b lock in in lock

- TSOs of neighbouring out of smart meters and become a

: (2021) the a share of is priorityis dispatched. The power N from 0.5 MW (63from 0.5 prosumers) MW to sales contract. etwork Baltic region Baltic . NERC

D 2% of 2% of 20) evelopment at at

estoration , applies the same a priority the

together with the with with l

total electricity electricity total

oad oad - ESO peak periods. regional level level regional is regulated one-y a f requency

P and and the r eserve eserve lan for ear the the

n .

IEA. All rights reserved. prerequisites for the synchroni stability of need to further analyse several critical elements. notheoretical There is barrier to the T renewables. to the energy prices. Litgrid evaluates European technology solutions are only proven at small- removing the energy price for consfor assessed, notably the impact the of prosumer scheme on the electricity market, the cost conditions renewablesfor integration and socio - investment understand and tes research anddemonstration projects will therefore be needed to learn from experience, European standard mFRR balancing energy balancing market frequency restoration reserve (mFRR) to balanc but also in in line with the Nordic market. Litgrid is considering upgrade of transmission and distribution grids and wind must gohand in handwith the promotion asocial licence,of the adaptation and 3.7 import Litgrid’s up to 2023. designtheof European platforms bothfor manual andautomatic FRRs in of theof Ignalina nuclear power plant 2009. in In 2019, 70%of Lithuania shifted Assessment an automatic FRR necessary. is with frequency quality and balance control synchroniThe with domestic production of cover Lithuania and Poland (Harmony L interconnected, which will increase Poland andSweden allowed diversification import of sources andLithuania now is competitiveretail market. integrated it into the Baltic have restructured the institutional governance of the electricity sector, closelymore Over the past decade, Lithuania’s Ministry Energy of has adopted critical reforms, which o reach the the common Baltic b

GW GW and apeak demand of ed by ed v alue of l of alue

umers future efforts will focus oni , to balancing supplier parties. date, To the maximum price for the manual mainlyfrom Sweden, Russia andLatvia. Lithuania has an installed capacity of , and stakeholder involvement. Last but not least, the costs technicalof

renewables, primarily wind, solar andhydro. alancing service providers

a power system without conventional generation; target of 100% renewables by 2050, the government andthe system operator sation the of Baltic region will require the countries’ power systems to com , and the future biomass of and its sustainability. ost ost from being anet exporter of electricity to anet importer with the closing Electricity Balancing G Balancing at 345EUR/MWh. In line with the Electricity t system stability in large in stability system t l oad, alancing market, applied when the system runs out reserves. of will These be essential The commissioningThe in 2016 two of HVDC interconnectors with limit. Baltic b 3.6

and Nordic electricity markets

2 2 T the possibilities TWh. TWh. s ogether with the Baltic TSOs ink). GW. ation and integration of higher shares variableof mplement even more with the new subsea cable connecting

Three Its with alancing service providers

electricity consumption was 11.4 in Eastern Europe. that To end, the creation of 119 - - ing out predefined limits

quarters quarters scale applications. deploymentThe solarof products, the Baltic TSOs TSOs Baltic the products,

of an of not only to balancing responsible parties a 15- e e which which scale and in mini economic implications will need to be the introducing a

minute imbalance settlement period increase in of domesticof power generation energy market is set in the Baltic

requires , , Litgrid

and set out for plans a

its long balancing energy prices scarcity pricing function

electricity supply was was supply electricity fo -

grids to date. More however, emerging will be will could compete with with compete could - r mFRR balancing term planning and the comingyears are are

TWh implementing 7 ELECTRICITY 7 uideline and considering

in 201 in was was well ply ply 9 , ,

dynamic prices offer such incentives. With relatively low electricity wholesale prices, investments in the internal grid and interconnectors. andTSO DSO n together with the synchroni connected to Prosumers gain advantage from net profitability and capacity is mothballed. With when prosumer has generated at onemoment the in grid anduse it later the same year. Consequently, the local generation and thereby particular thefor power balance and peak load. Flexible renewable generation, The ambition is is ambition The Lithuania aims to increase the number of renewable decentralised prosumers significantly. possible curtailment is minimised, hence reducing system costs. regulation for RES should bedesigned so that the need redispatch,for countertrade and Renewable generation is priority dispatched. Future support schemes and market balancing and other system services. replacing old gas power plants could be a viable option the in future for electricity grid Large capacitiesLarge generation 2030in and 100% 2050. in renewable electricity: electricity 45% of consumption is to becovered by renewable for around targets 70% of its electricity, ambitious Lithuania is highly commended its for in Renewable energy dominates Lithuania’s electricity generation, accounting 76% for renewable energy supply. one There is TSO, five DSOs, five large producers andanumber smal of on adecline since 2015. Transmission and distribution are Due Lithuania forms asingle price area within the joint Nordic and Baltic wholesale market. Lithuania has carried out a electricity marketWholesale    In the coming five ELECTRICITY 7 priorities etwork, requires massive investments in the networks in a short time.

2019. power madeWind up44% total generation. Considering that the country operation to higher shares of variable renewable energy renewable variable of shares higher to operation consumers. consumers. p level regional the at markets reserve i b mplementing the synchronisation with the European network and related balancing and and balancing andrelated network European the with synchronisation the mplementing hasing out regulated prices regulated out hasing medium oosting to integration the in Nordic electricity market, wholesale electricity prices have been shortage there a is : co

no incentive to use electricity during times of production high or to use less - the power system in the coming years. This new generation capacity, generation s, the for

of on of

producers.

- years, Lithuania 30% of all30% consumers of term electricity adequacy in Lithuania and adapting the power system system power the adapting and Lithuania in adequacy electricity term shore and offshore wind power as well as g overnment should

remains avery important technology the for power system, in in in massive sation of the Baltic power system with the Central European the market andprices are high, unless smartmeters and

reduce , promoting promoting

restructuring of its electricity market the in past years. faces amajor implementation period with three key

metering, meaning that they can “store” electricity

the country’s dependency on imported electricity.

to be to 120 metering andsmart competition secure secure an increasing share of variable renewable

prosumers in 2030. Prosumers invest in co-

the generation struggling is with its

necessary financing critical for unbundled from generation and

solar co-

are expectedto be T generation ogether with the of household of

imports imports plants plants l

IEA. All rights reserved. load to increase from 2 by 1.9% per year. Considering the electrification of the society, Litgrid expects the peak household consumers who consume more than 1 ra a the customers a few very ones. small should This be favourable The DSO ESO socialfor aid or energy vouchers to support poorer consumers directly. very concentrated. reading andswitchingcapability. Lithuaniahasone large gas for and DSO the with DSO awide variety metering of point data and technical functions, such as remote or suppliers should ensure that mechanisms, rolling out smart meters and developing the data new demand- when put it is small customers. complete A roll Litgrid ’s According to the energy regulator Retail increase in renewable energy the in coming years, implementing support schemes for different sizes and forms of generation. the With Lithuania putsof a lot functioning electricity market. Regulated prices limit incentives for phaseThe - supplier. All customers, including vulnerable consumers, will then have to select an of customersof (those with an annual consumption below 1 electricity prices householdsfor and the regulated prices are terminated thefor last group stepwise phase- capacity power system flexibility. Lithuania already benefits interconnectionsfrom andhydro power were to beabolished by 2020. Market opening has beendelayed households for bilateral contract. electricity from a public supplier at regulated prices or to buy directly the in market with a suppliers the in retail market. 2013, Since all commercial users can choose to purchase Accor supplier. supplier generation. load as well as for facilitating the demand side most likely has development. all customers creates ises awareness energy of saving among consumers. In addition, smart meters provide smart meter installed. Ro ding to the s supply over the 99% of demand, despite the possibility

; ten electricity andmarkets smart energy systems

however -

The r The out regulated of prices needs to be understood as the cornerstone a of year independent providers to enter the private consumer market, which remains

into use. side services. The

, covering together around 90% the of electricity consumption,

out now is progress. in Lithuania seeks to achieve the full deregulation of plans to deploy smart meters between Baltic Energy Market Interconnection Plan, price regulation mechanisms N oll T ,

etwork the DSOs foster atransparent and non- The The government could also choose to phase prices out for all and opt - he market demand- out of smart

an opportunity for demand-

effort in effort 032 MW to 2 D evelopment ll side response ing ing unused potential relieving for the challenge of meeting peak

f remains concentrated to

- y meters and the opening of the electricity retail market for out would also enable a maximum benefit of the data hub out smart meters enables dynamic price contracts and ,

increasing investme NERC should beencouragedshould to install smart i ntegration rapidlyof increasing volumes variableof 466 MW within ten years. Demand response and P , there are 5 lan lan forecas 121 is notis yet promoted to asimilar extent. The

side response and should be a target for 000 kWh per year.000 per Thus kWh the ts ts public suppliers and59 independent or household customers , nts in new generation capacity by focus needs to shift to boosting full electricity consumption increase to 000 kWh) 2020 discriminatory environmen t for for

developing demand- and for householdsfor to change hub. government The

as of as

consumers to switch the end 2023of for

1 January 2023.

meters for also

electricity electricity almost half of of half almost 7 ELECTRICITY 7 independent would have as as , public but a side side and

Lithuania forward the start of theis integration their of energy systems into the common European electricity and market be phased out by 2025. In order to ensure the system. major A part the of installed capacity are generating old units operational FCR capacity market Lithuania. in This service provided is system integration (which may belimited if there are noother uses it).for may electr opportunities system for integration may come also (after 2025) Lithuania will need to assess how to use the synchronised interconnections with the EU retail price reform will be also important the for system integration variableof renewables. requirements responsible for monitoring the reliability the of electricity system overseeingfor emergency response in the electricity sector. regulator, The NERC is , EmergencyThe Situation Operations Centre, within the Ministry Energy, of responsible is co- Lithuania is part of the Baltic Regional SecurityCoordinator, which is a grid security requirements, such as developing system defence and restoration plans. national risk electricity sector, including preparing national electricity crisis scenarios and related secondary legislation to meet requirements EU concerning emergency situations the in Lithuania currentlyis in the services. process of drafting system of primary and provision stable and reliable operations the of electricity system through national balancing andthe implemented in 2021. Litgrid, Lithuania’s TSO, is responsible under the l assessments and reporting of the reliability the of Lithuanian electric f A fundamentalA objective of the energy strategies of later. on the most appropriate capacity mechanism model w the results of the power system adequacy assessment to beperformed in 2021, decisions Lithuania has apeak load reserve consisting of gas securityElectricity There is one critical enabler for be implemented by Litgrid) and smart meters, asas well the use of its interconnections. coming years, Lithuania will also increase the flexibility demand from response (which will In 2020, Lithuania planned to put place in a reduce the need costlyof investments the in distribution and transmission networks. smart systems such as smart charging vehicles, of can smoothen the demand profile and ELECTRICITY 7 by 2025, the moment when the power system inter alia P total installed capacity approximately of 1 ollowing ower operation initiative set up by the three Baltic TSOs. The

need to design astrategy hydrogen for production anduse and assess the value for

icity, heat, gas and transport) and the use of hydrogen in Lithuania. The government , acapacity mechanism (market P identifies risks of operational security areas in close to national borders and the lant the synchroni ceased importing

synchronised operations with the European Continental Network by

for for

- for preparedness plans and by electricity from neighbour from electricity by and the system integration higherof shares of wind and solar energy.

the transmission and distribution grids. new A improved methodology for sation with Europe.

power

demand from , as well asas well meeting power system operation

- Belarus - side flexibility side wide model) was explored. However, based on

capacity mechanism to secure new investment 122 100 MW. FRR MW. 100

Lithuanian power system adequacy

will be synchronised with the In EU. the in

ing countrie s.

the the Balt late 2020, and will do so from - from sector integration (coupling of and oil : dynamic retail pricing. Lithuania’s ill bereviewed ill andimplemented ic s ic s l Securityl CoordinatorRegiona are provided by the Kruonis - fired production units with a tates , including setting minimum T – here currently is including Lithuania – , which are likely to

ity grids will be by the IPS/UPS IPS/UPS by the aw to maintain maintain to aw

Russia Russia

2025. going going

New New no no

power plant reco emergency response and crisis management the in electricity sector. The The Electricity Regulation (EU) 2019/943 by 1July 2022. alsois striving to establish a Regional Coordination Centre the two countries, Baltic other stopped immediate electricity security concerns should also be addressed. Lithuania, together with thefor system synchronis capacity variable while renewable generation on is the rise, andthe continued preparation some challenges can beidentified relation in to the phase- At the time, same the ever sector specific cybersecurity policies, including thein electricity sector. accreditation information of resources. Lithuania should now seek to establish energy monitoring and control theof implementation cybersecurityof requirements, and Ministry National of Defence, with responsibility unified for management cyber of incidents, power system. In 2018, Lithuania established the National Cyber Security Centre at the importance of assessing and taking steps to address cybersecurity risks

neutral directly or through aggregators andother service providers. Ensure that DSOs are than 1 roll Keep the announc electricity grid balancing andother system services, and Ensure that co- services wholesalein and retail markets orderin Foster the deployment of demand- a context, this In market. prosumers, to bring them conformity in with anopenand market facilitate the integration of increasing volumes of variable renewable e mmendationsthe for g IEA’s - out of smart meters to customers all (including those with aconsumption

overall assessment that is Lithuania currentlyis in a good position terms in of 000 facilitators of market opening.

in thatin country bec system kWh) andengage customers all sizes of the in electricity market either generation djust renewable electricity support schemes, such as net and ed scheduleed the phase for - heat sector needs. overnment therefore aim at a medium

ationwith Continental Europe.Nevertheless, some more - increasing digitalisation the of electricity sector raises the plants have a

It me operational also makalso

importing electricity Belarus from when the nuclear side response and the uptake of energy storage

es the 123

short

operational andfinancial capacityprovide to

in Novemberin 2020. - out of regulated prices, promote afast term adequacy assessments. Lithuania

satisfy satisfy to to ease out installed of dispatchable security supply the of of peak load situations and - i term perspective term n accordance with the

- d elec base nergy.

specific to the - 7 ELECTRICITY 7 metering for

, of of where tricity tricity less less

  governmentThe securityElectricity ELECTRICITY 7 https://ec.europa.eu/energy/sites/ener/files/market_reform_plan_lithuania.pdf , Plan Implementation and Development Market Electricity Lithuanian (2018), Lithuania of Republic n_en.pdf Lithuania, , Plan andClimate Energy National (2019), Lithuania of Republic 15e9- Vilnius, mission Com European the to Lithuania of Republic the of Markets Gas Natural NERC (2020 IEA (database), (Int IEA R

eferences infrastructure capacity andoperational security issues, e.g. Carefullypreparethe for synchroni defence plans and restoration plans. processes Plan S variable renewable Ensure wift - b37a . ) ) Council Regulatory Energy (National ly implement the Lithuanian Electricity implement Marketly Development andImplementation ), ), (2021 Agency) Energy ernational - www.ceer.eu/documents/104400/6693346/C19_NR_Lithuania_EN.pdf/367d5cca . .

xes and Ta Prices Energy ), Vilnius, that that

- 1fa0 www.iea.org/statistics/

(frequency response) andupdating risk preparedness plans, market participants maintain 4ff04aa74fed of Lithuania should:

https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_mai Republic of Lithuania, Vilnius, Vilnius, Lithuania, of Republic elect

ricity production and decreasing imports from third countries. . . . .

(database) 2020 sation with the EU electricity market in terms of

IEA World Energy Statistics and Balances Balances and Statistics Energy World IEA 124 Annual Report on Electricity and onElectricity Report Annual (2019),

resource adequacy , IEA, Paris, Paris, , IEA, Republic of of Republic www.iea.org/statistics amid rising amid

balancing market . , NERC

distributed system , .

8. Natural gas SECURITY

Key data (2019)

Domestic production: none

Net imports: 2.2 bcm (2.7 bcm imports, 0.5 bcm exports) ENERGY Share of gas: 24% of TES, 16% of electricity generation, 22% of TFC Gas consumption by sector: industry 68%, electricity and power generation 14%, residential 9%, commercial 5%, transport 1%, other energy 4%

Overview

Natural gas has been a pillar of Lithuania’s energy mix as the country decommissioned its nuclear plant. In recent years, the role of natural gas has decreased in the wake of increasing investments in renewable energies, the closure of older gas-fired combined and heating plants, and the increased use of biomass for district heating. In 2010, natural gas accounted for 54% of electricity generation and 62% of heat production, but it has since declined substantially, respectively to 16% and 18% in 2019. Natural gas had made up 35% of TES in 2010, but decreased to 24% in 2019 (Figure 8.1). Russian imports saw a steady decline. However, with 22% of total final consumption (TFC), natural gas is the second most prominent fuel in Lithuania, after oil. Natural gas is now mostly used by industry, including over 50% of the country’s gas consumption by the region’s largest fertiliser and chemicals company, Achema.

Lithuania is entirely dependent on natural gas imports as the country has no domestic gas production. Until 2014, Lithuania was fully dependent on imports of Russian gas, either directly through interconnection with the Russian Federation or from its connection to the Incukalns storage facility in neighbouring Latvia, where Russian gas is typically stored in the summer for use in the winter. Thanks to the commissioning of the Klaipeda LNG Terminal at the end of 2014, Lithuania diversified its gas supply in support of national and regional security of supply. In 2019, the total volume of imported natural gas amounted to 2.75 billion cubic metres (bcm), of which 0.5 bcm was exported to neighbouring Latvia, leaving Lithuania with an inland consumption of 2.23 bcm. In 2019, the utilisation rate of the liquefied natural gas (LNG) terminal in 2019 was at 49.3%, the highest since its construction. Lithuania is not yet connected to the European gas pipeline network. The Gas Interconnection Poland-Lithuania (GIPL), when completed by the end of 2021, will enable Lithuania, Estonia and Latvia, as well as Finland, to trade natural gas with continental Europe. At the same time, Lithuania’s supply to the gas retail market for households is highly concentrated and governed by regulated prices. reserved. rights

125 All IEA.

With nodomesticWith gas product demand and Supply * last the over diminished has role its but 2010, in production energy nuclear of end the after generation electricity support to fuel transition key was the gas Natural transition towards a low Lithuania committed is to asustainable transition towards climate neutrality. During the GAS NATURAL 8. ), IEA (2021), Source: strongly. grown has energy renewable Note Lithuania’s natural gas imports reached 2. the absence of adedicated gas storage Lithuania. in provides Lithuania access to the Incukalns underground gas storage facility in Latvia, in serves to transit gas to the Russian exclave of Lithuania’s storage and regasification unit (FSRU) in network has three entry points: Belarus, Latvia, andthe liquefied natural Gas between gaspipeline January new 2020, the in the the bidirectional start of Balticconnector With 61%, imports to Lithuania have (4.5%). other The half (1.21 bcm) was sourced from Russia via pipeline. gained access to Lithuania’s LNG terminal, as reflected in the signature of several short several signature of the reflected in as LNG terminal, accesstogained Lithuania’s gas markets hasimproved gassupplyregion’s security. industries andFinnish the Estonian via the LNG to Latvia. More than half Lithuania’s of gas imports 2019 in (or 1.41 bcm) were sourced Figure 8.1 Share of natural in gas total energy supply, electricity generation and promoting the production and transportation hydrogen of Lithuania.in has gases. green Work LNG andcompressed natural gas use as alternative fuel renewable energy sources coming in years. government The is also planning on promoting 10% 20% 30% 40% 50% 60% 70% 0% L refer to data refer atest s - : fired power plants continue will to provide flexibility the for integration rising of Share of natural gas TES = = TES from 3.1 bcm in 20 in bcm 3.1 from Estonia and Estonia Finland, the connectivity s between the Baltic total energy supply total

total final consumption in Lithuania gas network is the interconnection from Russia through Belarus, which also t erminal, mostly from Norway (82.8%), Russia (12.7%) and the United

TES

IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World 2018 .

started onscaling up current biogas to biomethane production and - 10 (Figure 8.2). carbon economy, natural gas is expected to have a role to play. . TFC = total final consumption. final total = TFC . declined by ion

, Electricity generation Lithuania is fully reliant on imports. country’s The gas

17% andRussian deliveries have

7 Klaipeda. largest The of these entry points to 126 bcm in 2019, of which 0.

Kaliningrad. The interconnection with Latvia

, 2000 -

, in thein transport sector with along 19 www.iea.org/statistics/ TFC* tates’ and the Finnish 5 5

bcm was exported

gas (LNG) gas decade as as decade

Since .

2010, gas

floating States States 2019 2015 2010 2005 2000 -

IEA. All rights reserved. (from 1.7 (from fertili n Figure 8.2 Lithuania’s 2020). byexports Gazprom’s threefirst to the 10% 2020. fell quartersin Estonia of Lithuania’s n Figure 8.3 Lithuania’s ), IEA (2021), Source: * gas of out phasing the by driven in 2019, bcm 2.2 to 2010 in bcm 3.1 from decade, last the over decreased has consumption gas Natural G Two bcm billion = cubic Note: metres. 2011. since progressively decreased have gas natural of imports net total Lithuania’s LNGcoincided year with Lithuanian (up by the imports37% higher terminal from which Estonia, Latvia to from exit flows in remarkably, anincrease more term deals, and ** ), IEA (2021), Source: Note: bcm = billion cubic metres. bcm billion = cubic Note: metres. non- Industry as consumption for Services/other 0.5 1.5 2.5 3.5

Net-0.5 exports 0 1 2 3 4 0.5 2.5 1.5 Net imports3.5 bcm - 0 1 2 3 4 energy use, which saw a 47 s thirds natural of gas consumption Lithuania in in 2019 er company, responsible is more for than half the of bcm

and

bc other energy m m 2010in to 0. , agriculture and public services, includes commercial IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World

include include

electricity atural gas imports, 2000 atural gas consumption by sector, 2000-19

3 3 non- bcm bcm 2019),in to reach 14 energy use (oil andgas extraction). (oil energy use

% increase from 2010 (1. generation has and heat generation - fired power plants and switching to renewables. renewables. to switching and plants power fired 127

- 19 forestry,

% of % , , www.iea.org/statistics/ www.iea.org/statistics/

fa 5 5 gas consumption in Lithuania.

wa generation 2019. in bcm

and fishing. ll en s consumed

in 2019in ). sharply

Residential Other energy**** Services/other*** Industry** Transport* heat generation and Electricity in recentin years

year in year in

a a

user to use the LNG reloading station located the in sea port Klaipeda of , Since Leigh system. The FSRU was built by Hyundai HeavyIndustries Co., Ltd. andis owned by Table 8.1 transmissionpipelines and Lithuania's gas transmission and distribution network consists 2 of Note infrastructure gas Natural G GAS NATURAL 8. Source: Ministry of of Ministry Energy Source: for for 170 named unidirectional. There also is a from Russia enters Lithuania Kotlovka in atBelarusian the - stations, 5% share of Lithuania’s natural gas consumption ( predominantly used for cooking, not heating. The commercial sector responsible is for biomass. R The KlaipedaThe LNG Gazprom, extended 2015in until December 2025 (Amber Grid, 2015). Russian gas flowing to the LNG terminal in Klaipeda (Table 8.1). Lithuania also serves as a transit country for facility andto the pipeline which provides Lithuani (Kaliningrad Region) Russian Federation Belarus (Kotlovka) Latvia (Kiemenai) Interconnector as s -

s s metre cubic = million : mcm/d fired (PGNiG, 2020)

Höegh LNG (Norway). permanen It is tly 1 April 2020, “ 000 m Independence”, 3 3 Lit co gas metering esidential gas co gas esidential - huania’s n generation

, a berth an and

Latvian andEstonian gas markets, andgives these countries access to

erminalstarted operating December in 2014 andconsists anof PGNIG S.A.,the biggest Polish gas company, has the exclusive .

2020.

atural (3 29.9 Import capacity N 6.0 stations and 65 gas distribution stations. A major supply pipeline with a total capacity up to of 10.25 mcm/d and has LNG storage

the Kaliningrad ot reversible plants are being retired and 25.4

around mcm/d (6 mcm/d per day. mcm/d connection nsumption is relatively small ( small relatively is nsumption GWh/d) g 18-kilometre a with access to the Incukalns underground gas storage as

GHw/d = gigawatt hours GHw/dper day. gigawatt = 9 9 p 5.1 5.1

573 ipeline ipeline

GWh/d) km ofkm distribution grids. with with R 128 egion upona long-

gas pipeline connecting it to transmission the n

Latvia’s

etwork

moored to a berth thein Klaipeda s (109.2 10.5 mcm/d N Export capacity 6.5 mcm/d (67.6 ot reversible Fig GWh/d) ure 8.3).

gas systems through abidirectional c apacities are

GWh/d) largely largely

9 Lithuanian border and is term transit contract with % of the total), of % as it is It has It has

exclave to throughgas Lithuania Tra (BalticsFinland) and point the in region The biggest N facility the markets and Estonian access to the Latvian Lithuanian companies Interconnector gives Comments being

2 2 becoming its sole theKaliningrad 113 k nsit ofnsit Russian gas compressor Incukalns storage

, as well as to replaced by m m

-1 eaport. of gas gas of FSRU entry right

a ,

IEA. All rights reserved. supervision of the regulator. aresult, As the Lithuanian market remains still highly were deregulated, but the prices householdfor consumers remain regulated under the market structure is not favourable thisfor option. Natural gas prices for large consumers theory sales 2019 in (NERC, 2020). There is supplier natural of gas to household consu consumers; 7 In 2019, there were 603 marketGas structure Figure 8.4 Map of natural gas infrastructure in Lithuania 1 with 1.6 energy services. people than million providing Lithuania, andgas in more electricity Igni into merged werealso Litgas and Gilė Tiekimas, Energijos Tiekimas, Energijos territory = HVDC high Notes: In purchased 64% the of volume of natural gas supplied. UAB Ignitis but they consumed only 36% of the natural gas supplied; non- consumers. In 2019, household consumers accounted for 98.72% theof gas retail market,

In 2019,

2018, there were 587 6 ; ; consumers , to the delimitation of international frontiers andboundaries frontiers of international to the delimitation Ignitis, an energy Ignitis, all company, the inherited rightsservice of andobligations Lietuvos

700were non- - voltage direct current. This of This is or prejudice map status directto without current. over sovereignty anythe voltage have the

000 natural gas consumers Lithuania, in mostly household 00 option to household consumers. This number is growing steadily. household gas consumers and 7

hardly any competition at retail level in Lithuania. In switch natural gas suppliers, but practice in the 129 mers with a with mers

; and to the name of any territory, or area. any name city and to of the territory,

market share 99.89% of total of

tis, which is the largest supplier of supplier largest the is which tis, household consumers 400 non 1

remains the main 8. NATURAL GAS NATURAL 8. E nergija. Lietuvos Lietuvos nergija. - household

industrial companies), as aswell medium Grid Amber supply companies. The company operates 65 gas distribution stations and 2 and is AB Amber Grid the is designated operator of Lithuania’s natural gas transmission system operator ( customers. 2020, through which the fully controlled by the Lithuanian Ministry Energy of andserves as aholding company UAB EPSO compressor stations and all gas transmission pipelines. Amber Grid 96.58%is owned by Lithuania are state All companies chargein theof transmission and market operations of natural gas in responsible 89%for of offer. The state guarantee necessary is to obtain a loan, KlaipedaThe LNG controlled by the state- distribution network operator LESTO AB and gas company consumers. T concentrated, GAS NATURAL 8. financed through afee levied onLithuanian gas consumers, the so- leasing costs connected to the construction and operation of the terminal were exclusively necessary to ensure security gas supply of Lithuania. in Under the 2013 decision, the loan for AB Klaipedos Nafta to finance the under EU natural gas to final consumers. products with physical delivery Estonia, in Finland, Latvia andLithuania. On 1 which administrates the electronic trading system spot for and forward natural gas also also owns 66% GET of Baltic FSRU million from aprivate financial institution, procurement process in the second half of 2021 for selecting the most advantageous approved by the Commission Septemberin 2019. Lithuania intends to organise a public the LNG of supplement operation the of LNG t Nasdaq Achema Group, aprivate state (72.3%), represented bythe Ministry Energy, of with 10.41% ownership held by h European the be needed beyond 2024 The . the one currently operating or he largesthe

in GET Baltic launched adedicated secondary capacity trading platform for Finnish (EC, 2020)

Vilnius. In 2019, the Lithuanian p charge of transmission of natural gas via high- TSO state rules, aid a Lithuanian measure to a state issue guarantee for securing a

. Into the order reduce financial burden onconsumers, Lithuania replaced part - ’s customers’s gas and electricity DSO Established on 1January 2016through the merger the of Lithuanian electricity G, with the remaining shares owned by minority investors. UAB EPSO s upplement with aloan guaranteed by the Lithuanian state,was which

) Commission with Ignitis Ignitis with and .

m t owned. network’s The pipelines belong to t the distribution system operators ( erminal operatedis by AB Klaip inistry manages the entire erminal

owned supplies on the wholesale market. are large companies (power plants, district heating plants and . In particular, the Commission found that the measure was company, andthe remaining ownership shares traded on supplying the99% of retail market and Achema being

Lithuanian government decided to purchase an FSRU, either

Ignitis, was supported by approved state aid in November 2013 by – –

another, one another, In the operator the of regional Baltic November 2020, the European Commission approved,

in Lithuaniain which owns 97.66% of - arliament decided that the LNG terminal will also sized companies operating in Lithuania and gas 130 as this amount this as should cover the costs of FSRU FSRU in orderin to decrease the long-

energy transmission sector. Amber Grid is is purchase. ESO, e pressure pipelines to syste users.m DSOs dos Nafta dos

which serves which cannot exceed EUR

). its

Lietuvos D T shares. he , majority owned by the e transm he - construction andinitial Finnish gas exchange % of Lithuanian99%

ujos ission systemission term pric term

called AB

December December , ESO is is ESO , -

LNG LNG loan G is is G e of

160 160 gas the the

IEA. All rights reserved. nor the ITC agreement with the three other TSOs and did not sign the its active participation market in merger planning and ITC discussions, could not reach an sin countryborders. TSOs The Estonia,of Finlandand same entry oneach tariff entry point to entry/exit the single zone andremoving tariffs on entry/exit zone encompassing all the participating states (FINESTLAT), establishing the sets out the principles of aninter Lithuania agreed on on 14 February 2019. The arrangements have been be established by abolishing all cross EU’sstrategicthe priorities itsfor TEN benef and Lithuania” along the “ to enlarge this common gas market to include Lithuania, based on a tariffs. Based onthe Baltic Energy Market Interconnection Plan, d an analysis to support ITC the to becarried out by TSOs, all to is undertake, with the assistance of anexternal contractor, integration of their respective countries. first The action setthe out road by 2020,April In energy ministries,regulators and TSOs of of TSOs corridors identified by TEN Before the start the of Klaipeda LNG Tiekimas UAB started gas distribution activity. activity by 31July 2013andthe unbundling the of company Legislation was passed to ensure the gas market in the Baltic s transparency the in natural gas market Lietuvos Dujos, started gas transmission activity activity by 31October 2014. On 1August 2013, Amber Grid, which was unbundled from security and market integration with neighbouring countries focused onreducing the region’s reliance onasingle supplier andensur Under the EU Baltic Energy Market Interconnection Plan, market reforms in gas Course, 2020). halve deliveries 2021 in amid lower gas demand in Lithuania and elevated cost (Baltic signed, but according to media reports, the Ministry Energy of wantsrenegotiate to and the terminal in Klaipeda. August 2014 supply contract with Lietuvos Dujos. and the breaking up Lithuania was sourced thefrom Russian company Gazprom pursuant to a long‑ accomplished November in 2014. unbundling The of The The implementation of the market reforms Gas entry gle its its of Estonia, Finland and

Roa a common tariff andpricing zone andalternatives for

tariff settariff at EUR 142.77 MWh/day/year.However, the Lithuanian TSO, despite agreement, andLithuania remains afully separate entry and afi dmaponregional gas market integration between Estonia,Finland,Latvia,

for thefor years 2020- a road of of rst rst the dominant vertically integrated monopoly five In 2019, another tates. tates. -E map establishing a EU EU -

year LNG supply contract was signed supplyingfor LNG to (Trans Latvia signed a

design and the emergence aco of - Third E Third 22. - - TSO compensation mechanism (ITC) and a

European Network for Energy) Negotiations with Statoil/Equinor were completed t - unbundling of then Lietuvos Dujos - , contributing to the creation of erminal operation, Fr border tariffs. Lithuania is E programme. E The nergy Package in the Lithuanian gas sector was om 2022 onwards, a five 131 - m year LNG supply contract with Equinor was

the the process the for future regional gas market , emorandum of u of emorandum and on1 November 2014 , TSOs Latvia signed the ITCfinal agreement in place in

supply

from Estonia, Finland, Latvia and all of the natural gas supplied to memorandum of understanding of memorandum memorandumof understanding . T

since 1

he activities common price zone should a ’ s natural gas dis

nderstanding, evaluating the costs and plan regional marketmerger. iscussionsongoing are .

ordinated position on -

a functioning regional cost January 2020, with a In October 2018, the exit area. has helped

is one is of the priority

ing transmission from

- gas transmission transmission gas benefit analysis benefit

greater energy 8. NATURAL GAS NATURAL 8. map, which is Lietuvos Dujų Dujų Lietuvos

in line within increase increase tribution single have have term term in in , ,

amounted to household 47.9 eighth- for How to to How CEER (2019), Source: In 2019, Na The In Lithuania, natural gas prices household for consumers are regulated e611- =Boil BOG Notes: s Figure 8.5 Lithuania’s GAS NATURAL 8. prices householdfor consumers. Natural gas companies Unlike electricity, in the in gas retail market, Lithuania has noplans to phase out regulated major supplier. Households Lithuania in account one- for period. Natural gas suppliers must submit speci difference between the forecasted andactual natural gas prices of the previous tariff operating costs Klaipedos(of Nafta); security supply of model with three components: 1) LNG terminal infrastructure and Under the Law on the LNG Terminal, the financing scheme the of terminal is based ona transmission, distribution, storage, regasification and consumers every months. six tariff The consists theof sum theof forecasted specific According to NERC, the system creates a level playing field allfor gas suppliers. quantity (Ignitis); and3) administrative costs incurred by the TSO Amber Grid (Figure 8.5). LNG reloading

non The securityThe component consists the infrastructureof and operating costs LNGterminalof thenecessary for the operation of tural gas prices prices gas tural 2a49- National Energy Regulatory Council ( USD/ Activity related to a small small a to Activityrelated the LNG terminalthe LNG (part “ ofAB volumeLNG terminal Revenues Unregulated activity highest - “AmberGrid”)the costs the designated and of supplier, therelated to Regulated activity household customers are not regulated.

85703d1d54d6 Lithuania’s natural gas industry prices were 37.0 USD/MWh, ranking MWh, MWh, prices was 29% ( 17% (Figure 8.6). -

off gas in comparisonin Regasification the . . . Costs LNG terminalLNG operator fied natural gas. natural gas. =fied lique LNG AB “ sixth- Fo Klaipė Klaipė ecurity ster LNG LNG ster

dos lowest dos Figure 8.7) Transfers to IEAto member countries. nafta nafta

In 2019,In Lithuania’s natural gas household prices were M of supply ligqufied ” ”),securityadministrationcomponent the and assemblyof costs (part AB , Europe in arkets Costs among LNG terminalLNG funds

Security of supply AB “Amber Grid” “Amber AB 2) costs the of designated supplier a of mandatory administrator .

NERC)

132 IEA membercountries. Transfers

Naturalgas consumers fic tariffsfic approvalfor to NERC www.ceer.eu/documents/104400/ is

The gas market is small, with only one responsible for mandatority Accounts gas for Transfers Pays Buy and accounts for gasaccountsand for Buy supply prices of natural gas natural gas The Part costs of Designated supplier third total of gas consumption. quantity (part of UAB“ propose UAB “ UAB

tax shar accounts Buy and for gasfor Ignitis approving financing model ” tariffs for household natural Sells gas e in The 2. 1. supplier: Coststhe designated of 3. BOG Bank guarantee import price Difference between Naturalgas market Ignitis with price caps.with price -/-

natural gas natural industry prices prices industry natural gas Accounts Accounts Sells /57d62db2- gas tax share in for for for for tariffs ”). .

, Equinor and the ; prices prices ; db0a- it it

the the

IEA. All rights reserved. (Figure 8.8). were 47.9 USD/MWh, the countries, were amongst the low However, Lithuania’s household prices over the same period, compared were 35.4 USD/MWh and prices the in Czech Republic were 32.7 USD/MWh. In 2019, Lithuania’s natural gas industry prices were 37.0 USD/MWh, whil Lithuania’s industry prices have been, on average, gas prices have decreased significantly. Compared to Eastern European countries, Since 2013, starting around the time of the commissioning of the LNG terminal, natural Note * - sixth the are prices gas natural household Lithuania’s Figure 8.7 Natural gas household prices in Lithuania and ** * - eighth the are prices industry Lithuania’s Figure 8.6 Natural gas industry prices in IEA countries, member 2019 ), IEA (2020), Source: Note Energy P Energy IEA (2020), Source: 100 120 140 20 40 60 80 10 20 30 40 50 60 70 80 Tax information not available for United States. available for the not Tax information Ta 0 Korea’s natural gas prices include the individual consumption tax. consumption individual include the natural gas prices Korea’s 0 USD/MWh x information not available for United States. available for the not x information s s USD/MWh : : MWh = megawatt hour. Data not available for Australia, Finland, Japan, Mexico Finland, Japan, MWh for Data Australia, = not hour. available megawatt MWh data price = are hour. Industry megawatt 2019 Energy Energy andTaxes 2020, Prices

rices and Taxes 2020, Slovak Republic’s 54.5 USD/MWh and Poland’s 51.8 USD/MWh est in

highest that group. In 2019, Lithuania’s household prices

w www.iea.org/statistics ww.iea.org/statistics , for Australia not available 133

in an IEA compar IEA an in higher over the last decade (2009- lowest

. .

IEA IEA an in Japan, Mexicoor Japan, ison IEA member countries, countries, member IEA or . rison compa Norway.

8. NATURAL GAS NATURAL 8.

Norwa Tax component Tax component to the same . . y. 19).

respect servicesof terms and conditions of contracts thefor purchase and supply natural of gas or provision for heatfor generation. Gas 2016 of (Republic of Lithuania, 2016) summer with Russian gas, using compressor injection, and used in completion of the Balticconnector. Traditionally, Incukalns the reserve is filled in or to expand it even further to store natural gas volumes required by Finland since the increase the active capacity to 3.2 to bcm ensure the Baltic region’s needs for natural gas, withdrawal technical capacity 4.47 of bcm, which of 2.32 bcm was working volume in 2019. It theis only countries over the past decade. decade. past the over countries Authority energy andsupervision o independent national regulatory authority regulating activities of entities in the field of made available to customers upon commercial conditions (Conexus and north- gas storage site As Energyof Overall responsibility security for gas sup of ply gaseous fuels (Republic of Lithuania, 2018). infrastructure, regional interconnections andlower gas prices as as well alternative Independence Strategy (NEIS), the government prioritised the investment in new gas Lithuanian government for than more adecade. Under the 2018 S of supply Security Note: those to similar trends followed have prices gas natural Lithuania’s Figure 8.8 Natural gas prices in Lithuania and selected IEA countries, 2009- GAS NATURAL 8. Energy Energy and Taxes IEA2020, (2020), Prices Source: 10 20 30 40 50 60 70 ecurity gas of supply through supply diversification has been a policy priority the of 0 0921 0321 072019 2017 2015 2013 2011 2009 Lithuania does not have natural gas storage fac USD/MWh MWh = hour. megawatt to

handle

west Russia (Pskov). facility The owned is by Conexus JSC Baltic Grid andis , the

unfair commercial activities natural of gas suppliers under the Law onNatural It . capacity 30 of mcm/d. A naturalgasunderground storage fa Lithuania

lo handles also

in Latvia,which also supplies gas to major consumers Estonia, in Latvia, Industry Industry TSO complaints from complaints

Amber Grid Amber Slovak Republic Slovak f f

the stateT energy sector).

complaints and disputes from

household customers relation in to unfair application of

ccording to the owner the of and Estonia www.iea.org/statistics . the 134

in Lithuaniain is divided between the Ministry 100 energy regulatory authority ( 10 20 30 40 50 60 70 80 90 cility in the Baltic s 0 0921 0321 072019 2017 2015 2013 2011 2009 ilities, it us Poland USD/MWh he State Consumer Rights Protection . es the Incukalns underground Household Czech Republic Czech

household customers with customers household in in facility other other and tates

Baltic Grid the

Eastern European European Eastern National Energy , it is possible to, it is

has a , an the the

IEA. All rights reserved. with 19 Lithuanian public and business organisations, established the Lithuanian connected to the gas grid in are already active producinin gbiogases Lithuania in the firstbiomethane and be plantwill biogases the in gas network 2030in (Republic Lithuania, of 2018). Forty renewable energy source- National Energy Independency Strategy has set a target of Twoprojects major term contribution to regional security supply. of purchasing a floating storage and regasification unit (storage tank), will ensure its longer Lithuania has also committed to developing a gasesGreen direct access to the Ukrain EU gas market. In addition, through the 1 of d The The GasThe Interconnection Poland– and supply route (i.e. Russian pipeline gas). Further investment the in uritysec its since interconnectivity Lithuania and Poland, with 7.11 mcm/d capacity of capacity of capacity Polish TSOs, Amber Grid andG one of the European Commission’s projects of common inter by the Lithuanian and Latvian TSOs, Amber Grid and AS Conexus Baltic Grid, also and is underground gas storage facility Incukalns. at interconnection The Kiemenai gas monitoring station Lithuania in as well as facilitate the the use of Latvian pipelines onLatvian territory, increase the pressure to 50bar (now 40bar) and expand the infrastructure project to improve regional interconnectivity. moderniseIt will the gas The enhancement of the Latvia- GIPL interconnection. European Commission. estimated at EUR 500million and creating an integrated European energy market. total The Commission’s declared p rojects ofcommon directions (from 5.91 t 6.5 Article Under EU rules, Lithuania required is to meet the infrastructure standard line with in 153.4%. Therefore, even under critical conditions existing infrastructure sufficient is to ensure and safe secure gas supply with anN standard is wheremet the N in in the notwill beimpacteBoth gas networkd. projects will further increase security and resiliency Ministry Energy, of arisk he capacity of the gas transmission system between Lithuania and Latvia, in both

mcm/d January 2022, will connect Lithuania, gas sector, elevating Lithuania’s N evelopment the of Klaipeda LNG t

5 of the GasEU Security of Supply Regulation 2017/1938. The EU infrastructure

to 12.5 mcm/d exit for capacity to Latvia). gas exiting Lithuania. The

and security supply of

start of operations 2014,in by ending the reliance on a single supplier

r underway are mcm/d The

ian assessmen generated electricity consumed 2021. On 30 November 2020, the Ministry Energy, of together - Latvian and Estonian gas TSOs

1 value is greater market. market. to 11.63 mcm/d entrycapacityfrom Latvia and from and over the 60% of project costs are financed by the Lithuania (GIPL) project, ex AZ in Lithuania Interconnection is the second- -

T SYSTEM respectively. It the oneof is European t of Lithuania’s gas infrastructure to improve regional . GIPL is being implemented by the Lithuanian and he p he s

- outhern section of the GIPL the 1 to erminal

135 the Lithuanian gas sector confirmed i roject will have will roject nterest towards improving gas supply security other Baltic states and Finland with the single more thanmore

market for

than

, gas entering Lithuania and 5.57 mcm/d has Lithuania’s protected gas consumers

or equal to 100%. According to the had apositive impact on energy

200%. green gases in the country. The

bi directional in thein country, and2% of pectedto be operational as est costs

up to 5% of

are also co- . The project will double double will project The . is beingis implemented of theof GIPL project is in

terminal Poland, it will give capacity - two 8. NATURAL GAS NATURAL 8.

financing the biogas in

companies companies , including between that the the that largest - 1 of all all

The EmergencyThe Situation Operations Centre policy response Emergency Hydrogen Platform GAS NATURAL 8. ( emergency centre crisisfor management, involving over the state’s natural gas security supply of Lithuania. in Ministry The Energy of has an Lithuanian emergency gas policy, which on market relies experts and additional members potentially invoked times in crisis. of fuel services) representing only portion asmall of consumption, with protected gas consumers (consisting households of and essential event of most serious crises scenarios, reflects the specific structure of its domestic gas the TSO, turn which in provides it to t response plans. In an emergency, these companies are obliged to provide information to All companies participating the in gas market are obliged to have their own emergency currently analysing the application of p has transmission system to the t joinedalso promotion of clean hydrogen technologies (Ministry Energy, of technologies, and for institutions, businesses and public sector bodies developing in innovative hydrogen hydrogen technologies. The agreement provides for the The The thefor transportation and delivery available of gas supplies. application any of restrictions or phasing production of electricity andheat. TSO The would provide instructions to suppliers onthe uninterruptible days of number infor theis “crisis manager” responsible for system balancing, gathering andtransmitting critical According to the National Emergency Plan, casein of an emergency, Amber Grid, as TSO, volumes held pipelines in the at situations, including forecasts on schemes for the frequency and type information of that must be provided under crisis informati protected consumers, the while LNG terminal operator responsible is for providing responsible for security of standards hydrogen for will beco- application of alsois ongoing in this regard: joint research plannedis on gas quali transfer it consumers in cases of major or partial gas supply disruptions, 2020). Republic of Lithuania [2008], Resolution No

for cooking rather than heating. mation, and making recommendations to the also also “ Description theof Measures to Safeguard the Reliability Naturalof Supply Gas

on about technical LNG terminal capacities.

been participating the in European Clean Hydrogen Alliance. The operator is to the gas grid by the gas TSO

systems to the hydrogen mixture. At the same time, initiatives to develop

contracts, and information on the volumes of gas being consumed for the ’ ’ cover that such storages provide vulnerablefor consumers and , with the establishment a of programme thefor development and .

Co the co aim of - ransportation of green gases. Since autumn 2020, Amber Grid

- the distribution system andguaranteeing gas supply to operation with TSOs

Amber Grid, which have will adapting akey role in the ordinated amongst the Baltics and Finland LNG facility the andin Inc available supply through all entry points, gas storage

he ower out of gas supplies, with pre- operatin m 136 inistry. inistry. under the Ministry of Energy 163 of 26 February 2008), -

overall natural gas use, primarily the using -g as technology to extract hydrogen and g g m

from other Baltic countries andFinland T inistry oncrisis response. The DSO is in the creation and development of

he National Emergency 16 mobilisation of Lithuania’s different specialists, with - based instruments even the in

ukalns

2020). This initiative was taking into account the

established priorities

storage facility, the

designates priority

ty and technical technical and ty has (Amber Grid,(Amber

competence competence P lan detail

science science gas 3 s ” ”

IEA. All rights reserved. sources the in country’s energy mix. Until reaching goals regarding a low The shareThe natural of gas in the country’s total energy supply remains significant Lithuania. underground gas storage facility Latvia, in as there nounderground is Kaliningrad. The interconnection with Latvia provides Lithuania access to the Incukalns accountedgasusers for over all98% of natural gas willnatural have gas trend 2050, until depending onfuture to available forecasts, natural gas consumption will remain stable with aslight upward Lithuania has committed to asu predominantlyas it is used cooking, for not heating. interconnection with Belarus, which also serves to transit gas to the Russian exclave Klaipedain . The largest these of entry points to Lithuania’s gas network is the decommissioning of aging gas in in 2021, andthe creation of the Lithuanian Hydrogen Platform grid anddeploymentof Its Lithuania has no domestic natural gas production and thus is fully dependent on imports. Assessment n possibilities the of gas system. In line with gas EU security rules (Regulation amount of gas available in the pipelines Amber Grid is Po November 2020. The first biomethane plant will be connected to the gas grid 2021. in provide backup for renewable energy sources consumers under natural gas grids, supported by the Work has already started onintroducing green gases (biomethane, hydrogen) into the transport sector. on planning (coldest period); or extreme temperatures in apeak period of 7 for anyfor consumers with whom uninterruptible ( winter conditions the in event disruption of one of the of largest gas infrastructures everyyears 20 based on statistical probability;period at or a of least 30days average in permits. permits. notof fulfilling their storage obligations could result the in year, information including about the volume and location of their storage; gas in instances in of gasof held thisfor purpose stored is in consumers and must accumulate andstore gas reserves Supply companies are r Republic of Lithuania, atural gas storage

2010 following increasing investments in renewable energy sources andthe 201 2019. The gas suppliers must provide asecurityreport to the Ministry Energy of every wer gas network has three entry points, including with Belarus 9 - to , although its role andshare the in overall energy mix has declined from 35%

gas will beessential to promoting LNG andcompressed natural gas use as alternative the fuels in

conducting analytical work on hydrogen injection into the Lithuanian gas

the follo an must be must

2019).

esponsiblethe uninterruptible for power important role to play. Gas wing cases: a30-

- stainabletransition towards maintained sufficient at alevel tovulnerable supply to implement the NEIS - fired power plants. In 2019, -g Alternative Fuels Law, as facilities. Pilot programmes and tests to EU climate goals andthe , but residential gas consumption relativelyis small,

the Inc and 137 day period of exceptionally high gas demand contracts have beenconcluded.

in in

in in the ukalns the technical technical gas storage facilities and the coming years. government The also is ’ ’ - fired power plants will continue to goals 2030 for and 2050. TSO The

facilities in Latvia, about 38 adopted for such consu such for

and

supply gas of to vulnerable

climate by the Ministry Energy of in suspension of share renewable of energy

Latvia andfrom an FSRU days, which occurs once household consumers in in

neutral p arliame - carbon economy, mers gas storage in 8. NATURAL GAS NATURAL 8. ity The majority 2017/1938 ), their . According. nt

as well asas well

in March in ,

at 2 at supply supply define define mcm 4 % of

the deployment power of operational conditions and technical requirements are already planned, in order to enable GAS NATURAL 8. gas market, remaining outside the corridors identified by TEN energy security. which aims at Lithuania working is on regional gas market integration with whole Bal and grow. The LNG terminal not only improved security gas of supply Lithuania in and the conditionsThe created on the Lithuanian market should enable and Finland. thisto join mechanism and extend a common balancing zone to include all Baltic s and Latvia. mcm/d) regasification capacity 10.3 of mcm/d, will will have to be reached. implementation of these projects, solidarity agreements between all countries of the region expected to reach over 100%. In order to achieve the optimal security benefits from the standard reaching over 200%, for while the Baltic region including Finland, country as as well KlaipedaThe LNG terminal has been primary of importance the for zone could also help open the gas market. competition. and ending the total on the wholesale market 99% of the retail market (6. Lithuania has joined the regional Baltic the terminal will ensure its longer infrastructure standard(N following the installation asecond of the line of Kla ipeda- thein domestic gas market. terminal’sAfter the start operations of December in 2014 and gas market. The completion these of projects will result in Lithuania’s N contributing both to improved gas security the of region andto the creation of the Baltic the Baltic gas systems and connect these and Finland with the EU single gas market, increase capacityin the of gas interconnector with Latvia will create greater of integration As a resulta As electricity, the government has not put forward plans to phase out regulated gas prices. householdfor consumers remain under the the market. T traded on the platform are rapidly increasing. An Two major infrastructure projects are underway. construction The of the the existing one or areplacement), to ensure the terminal’s operations until 2044. loan guarantee to the terminal’s operator, Klaipedos Nafta, to purchase an December 2019, the Lithuanian parliament (the Seimas) approved the granting astate of the opportunity switch to natural gas supplier, but thus noother far supplier There is hardly any competition at retail Lithuanialeve in l Consumers . participants onashort 30% was set. Moreover, gas supply contracts are predominantly concluded by the market

and ensures flexibility in tic region , it ,

In April 2020,In April the government elaborated which aroad map will allow Lithuania the Lithuanian market still remains highly concentrated,

Phasing out regulated prices and joining the common regional gas market he natural gas prices largefor consumers were deregulated, but the prices

reducing the region’s reliance onasingle supplier and to ensure greater

The BalticThe Energy Market Interconnection Plan gas in is oneof the priority

for thefor whole Baltic region, providing access to global LNG markets,

- reliance on Russian pipeline gas that previously existed. With term basis ( also provid

- to - 1) in Lithuaniain reached1) over well 100%. Further investmentin - . The 4 TWh/y), and Achema being responsible 89%for supplies of - E. However gas projects. balancing gas supplies in awide range of crisis scenarios

government common entry one es

term contribution to regional security of supply. In

the country with , year or spot). - the Lithuania is not still afull member of this regional Finnish gas excha

138

terminal exceeds Lithuanian gas needs (6.1

will need towill need supervision theof in regulator. Unlike - ambitious goal of a churn ratio reaching exit exit tariff

access to global LNG mar

Estonia, zone between Estonia, nge andnatural gas volumes look for ways to enhance its its neighbouring countries Kursenai pipeline, the competition to develop with Ignitis with gas security the of are - 1 infrastructure

s the standard is

GIPL and the provided with FSRU (either have

supplying supplying

entered Finl tates tates kets. kets. and and ,

IEA. All rights reserved.  The governmentLithuania of should: gas Natural Recommendations plants where idle generation capacity used is as acritical back up sources. In particular, ensuring gas supplies to district heating systems andto gas power same time, Lithuania must ensure coherence in its energy security policies across fuel legislation andprocedures are sufficient to ensure effective crisis management. At the to be implemented. All responsiblebalanc for for The Emergency Situation Operations Centre within the Ministry of Energy responsible is sustained even in the most serious crises the of Lithuanian gas market currently underway will improve this further. Natural gas supply in Lithuania can be to balance the market using market used cookingfor rather than heating. Under crises scenarios, Amber Grid would be able Lithuanian emergency gas policy, which on market relies information to the TSO own emergency response plans. In anemergency, companies these are obliged to provide representing only portion a small of gas consumption, with protected gas consumers (households and essential services) event the of  with stockswith maint protectedof consumers and consumers with uninterruptible within a maximum of afew days, more in while severe crises scenarios, the consumption investment efforts to improve  procedures required by Lithuania has established an emergency management structure andemergency planning Lithuania’s gas security supply of policy well is established. As a member the of EU,

natural gas emergency response, while the TSO, Grid, Amber the is “crisis manager” expansion Ensure countries. Join the terminal. terminal. and contribute to regional security supply of by finali Ensure long- interconnector with Poland, prices and barriers Seek waysSeek to promote competition and reduce common to timely implementation of ongoing of infrastructure projects, including the implementation timely most serious crises scenarios, reflects the specific structure of its domestic

-exit t entry

enabling ga competition in the Lithuanian market, phasing out regulated natural gas of

term access for Lithuanian traders and consumers to global LNG markets ained the in Inc market

inter ing the system and preparing recommendations on crisis measures

, companies participating thein gas market are obliged to have their entry connection capacity with Latvia and ariff. which turnin provides it to the m

EU legislatio s consumers to choose their supplier.

- exit zone between Est

the to enhance ukalns

- resilience its gas supply of system, projects andthe based measures andrestore supplies to normal levels

overall gas use (approximately 0.2 bcm/y), primarily n on gas security. It

storage facility Latvia. in

139 regional regional

gas market concentration by eliminating onia market integration , inistry. inistry. Finland Finland - sing the purchase of the LNG based instruments even the in contracts would be balanced has also has also made significant

the construction an of and Latvia for

electricity security. security. electricity with neighbouring 8. NATURAL GAS NATURAL 8. . E resulting a in mergency

   governmentThe o gas Natural GAS NATURAL 8.

next Cabinet”, Baltic Course, Baltic Cabinet”, next ( Course Baltic - russian long - www.ambergrid.lt/en/news/pressrelease/ab Vilnius, Grid, Amber release, press Lithuania”, of Republic the through the to gas natural of transportation on the Amber lithuanian www.ambergrid.lt/en/news/pressrelease/commentary Platform Amber References advanced energy technologies energy advanced Energy of Ministry ” Lithuania in (2020 IEA terminal (database), LNG (IEA) Agency Energy International Klaipėda - klaipeda for - https://ec.europa.eu/info/news/state guarantee “ (2020), Commission) (European EC Riga, Conexus 85703d1d54d6 , Europe CEER on13 (accessed

ensuring that gas Ensure coherent emergency response policies across energy sectors, includi non- order to test andimprove national emergency measures (market crisis conditions through the EmergencySituation Operationsand Centre Organise regular exercises and training sessions on gas market functioning under measures an for F security donot rely on NESOs inalise a regional risk assessment (with Estonia, - term - www.conexus.lv/operating

akt based) market Grid (2015), Grid Grid (2019), (2019), Reglators) Energy European of (Council - federation ”, press release, Amber Grid, Vilnius Grid, Amber release, press ”,

CEER, Brussels, lng Baltic Grid Baltic - - Energy Pric Energy ),

agreement - hydrogen of other Baltic Sea countries.

www.iea.org/statistics/ - (2020), “ (2020),

terminal

), “ 2020), . .

security

December 2020) December

f Lithuania should: (2020), “ (2020), - through “ effective andsmooth implementation the of solidarity mechanism.

- platform (2020), “ (2020), Commentary on the establishment of the Lithuanian Hydrogen Hydrogen Lithuanian the of establishment the on Commentary - long new a signed Gazprom andPAO Grid Amber AB - - fired power plants whose idle capacity is used to back lithuania on- Lithuania government leaves decision on Equinor LNG purchases to to purchases LNG Equinor on decision leaves government Lithuania

2020 and es Taxes and test regional co- - the interruptible contracts.

www.ceer.eu/documents/104400/ - the Hydrogen platform being developed in Lithuania to promote promote to Lithuania in being developed platform Hydrogen - - transportation Conexus o Conexus

- (a

” - 2020 republic , www.baltic ccessed on ccessed s, s, Vilniu Energy, of Ministry segments .

. . IEA World Energy Statistics and Balances Balances and Statistics Energy World IEA (2021), - aid nov State aid: Commission approves an additional state state additional an approves Commission aid: State - of

perating s perating commission -

20_en - Kaliningrad r Kaliningrad lithuania -

140 course.com/eng/energy/?doc=161143&output=d (accessed on16 (accessed of (database), IEA, Paris, Paris, IEA, (database), amber December 2020) 11 December , - natural

ordination emergency of response (accessed on (accessed

egments -

grid (accessed on27 (accessed - approves - - gas on- egion of the Russian Federation Federation Russian the of egion - and- - the - Finland and Latvia) to ” How to F to How ,

- pao - December 2020) December webpage, Conexus Baltic Grid, Grid, Baltic Conexus webpage, -/- - the establishment 8 - - /57d62db2 additional December 2020) December . . gazprom ka www.iea.org/statistics liningrad

November 2020) November oster LNG LNG oster ,

- - state - signed - db0a EC, Bruss EC, - term agreement agreement term - of region . . -

- the up electricity electricity up - - guarantee based and - e611 the the and and M . . -a- arkets in in arkets - of new TSO in in TSO - . adopt - 2a49 - the

with with - els,

. . ng

IEA. All rights reserved. wid=x4249l5w5 Vilnius, 2016 Gas Natural on Law (2016), Lithuania of Republic _2018.pdf https://enmin.lrv.lt/upl tr (NEIS) Strategy Independence Energy National (2018), Lithuania of Republic on21 (accessed https://ec.europa.eu/energy/sites/ener/files/documents/lt_final_necp_main_en.pdf - 2021 for Lithuania of Republic the of Plan Action Climate and Energy National (2019), Lithuania of Republic 2020) 30 November lithuania/newsGroupId/1910852?changeYear=2020¤tPage=1 http://en.pgnig.pl/news/ PGNiG ( f 22_Report_European_Commission_2019.pd Vilnius, , Commission European the to Lithuania of Republic the of Markets Gas Natural and onElectricity Report Annual (2020), Council) Regulatory Energy (National NERC - advanced https://enmin.lrv.lt/en/new anslation, Republic of Lithuania, Vilnius, Vilnius, Lithuania, of Republic anslation, legalAct/lt/TAD/a071f720c78511e682539852a4b72dd4?jf https://eseimas.lrs.lt/portal/ - www.vert.lt/SiteAssets/naujienu ), “ ), 2020 ( energy accessed on9 accessed

(accessed on (accessed ”, ”, in Lithuania operations starts PGNIG November 2020). November - technologies . . oads/enmin/documents/files/National_energy_independence_strategy - /news s/hydrogen December 2020). December 2030 (NECP) - 1 list/id/pgnig

(acce December 2020) December

- ssed on 13 on ssed platform - medziaga/2020/2020 - starts 141

- (accessed on (accessed being-

- December 2020) December . . operations Republic of Lithuania, Vilnius, Vilnius, Lithuania, of Republic - developed PGN , Republic of Lithuania, Lithuania, of Republic - iG, Warsaw, Warsaw, iG, December 2020) 12 December in - - 09/202009 in . - lithuania

(accessed on on (accessed - to 8. NATURAL GAS NATURAL 8. , - - promote unofficial unofficial NERC, NERC, . .

9. Oil SECURITY

Key data (2019) Net imports of crude oil: 196.9 kb/d, +13% since 2009

Domestic crude oil production: 1 kb/d (2019) ENERGY Domestic oil products production: 204 kb/d (2019) Net export of oil products: 138.1 kb/d, +5% since 2009 Share of oil: 40% of total energy supply (TES), 2% of electricity generation, 37% of total final consumption (TFC) Consumption by sector: 58.8 kb/d (domestic transport 75%, international bunkers 11%, industry 8%, residential 3%, services 2%, electricity and heat generation 1%, other energy <1%)

Overview

Oil is Lithuania’s dominant energy source in terms of both total energy supply (TES) and total final consumption (TFC). The share of oil in total supply, total energy supply with international bunkers, increased from 30% in 2000 to 40% in 2019, while its share in TFC reached 37% in 2019, up from 33% in 2000 (Figure 9.1). The role of oil in domestic electricity production is minimal, with a share fluctuating between 2% and 6% since 2000 (with the exception of 2010, the year after the closure of nuclear power in Lithuania, when oil accounted for 13% of total power generation).

Lithuania is entirely dependent on crude oil imports through a single sea terminal, as domestic oil production is marginal. However, security of supply in the country is rather high thanks to a robust supply infrastructure relative to domestic demand. This includes a modern refinery, with an operating capacity to produce three times Lithuania’s oil needs and which, as the region’s only refinery, serves as a key supplier of finished products to the other Baltic states.

reserved. rights

143 All IEA.

and increased between 2000 and 2019. and 2000 between increased Lithuania has avery level small of demand and Supply * whil declining, been has production energy Lithuania’s in oil of share The Figure OIL 9. domestic chemical industry. Production in 2019 was 50 Although fully reliant on crude oil imports, Lithuan production from depleting fields (LOTOS Geonafta, 2020). and domestic producers instead seek to use advanced technologies to maximi barrels per day [ ( gradual increase from 2003 (50 kb/d) to 2008 (64 kb/d), and from 2014 (52 Lithuania’s consumption. refined products averaged 139.8 kb/d and was more than twice as much as exporter refined of products, principally to regional neighbours ( to produce oil products well excessin of domestic demand, making Lithuania anet ), IEA (2021), Source: 575 previous year, reflecting the progressive decline in production since its 10% 15% 20% 25% 30% 35% 40% 45% 67 kb/d) (Figure 9.2). 0% 5% Share of oil energyShare in supply total Ukraine 000

Domestic energy production Share of oil 9

.1 Share of oil in energy production, total energysupply ton

total oil demand has grown over the decades since 2000, with two periods of final final ne ) but further also afield (

s (10 kb/d). exploration Oil Lithuania in has no prospects IEA World IEA kb/d consumptionin Lithuania ]) produced from 14 onshore oil fields. This was 13.5% lower than the

Energy Statistics and Balances and Balances Statistics Energy + Total supply* international bunker fuels international

the

crude Un ited States). In 2019, Lithuania’s net exports of 144

oil production, , 2000 - Electricity generation

. , (database) ia’s domestic refinery has the capacity 19

000 www.iea.org/statistics/

which used is entirely the in ton ne Estonia s (lessthan 1 , electricity total and TFC e

for newfor discoveries its supplies supplies its , peak . Latvia, Poland Latvia,

in 2001atin thousand

inland inland 2019 2015 2010 2005 2000 se

IEA. All rights reserved. generation in 2019in , Demand growth IEA (2020), Source: gas = LPGpetroleum = per kb/d day. barrels thousand liquid Notes: conti has use, car personal and transport freight transit by propelled diesel, transport for Demand Figure much lower than that diesel of prices in comparison to neighbouring countries. Gasoline consumption in Lithuania is use in Lithuania (7 kb/d) is consumed by transit freight transport, benefiting fuel from lower to 13% from public transport (Ministry Transport of and Communications, 2020). Passenger cars account for roughly Lithuanians 55% of accou has grown, with the transport sector representing an 5 Over Over refuelling the in country. importance of both the 9 (Figure together with (4 kb/d) gas oil accounted totalfor 57% of oil product 1.4%, to 67 kb/d), diesel consumption continued to increase (by 2.6%, to 35 kb/d), and While total oil consumption Lithuania in slightly decreased 2019 in compared to 2018 (by 10 20 30 40 50 60 70 80 0 kb/d andconsumption of both aviation and residual fuels amounted to 3 kb/d each. Thousand barrels per day nued to drive total oil demand growth again since 2014. 2014. since again growth demand oil total drive to nued the nting for 9 compared to 23 kb/d just prior to the global .2 .2 .3). Since 2017, diesel oil use in Lithuania has increased by 9.3%, underlining the at ten last (by (by Lithuania’s o Lithuania’s

90%) and other energy usage just under allhalf of Monthly Oil Data, Monthly Service has been driven by together diesel use with which gas, oil reached 39

years , dieselisation the of domestic fleet and the role of transit freight il demand by product in Lithuania, 2000 oil

use has diminished only the in sectors of power , and stood at 6 inkb/d 2019, while LPG andethane totalled www.iea.org/statistics oil con oil 145 sumption 2000and in reaching 72% 2018. in (by (by

99%). other In all sectors 2008 . . . increasing share total of oil demand, ’ ’ financial crisis. One daily modal transport, compared

demand in the country - 19

, oil consumptionoil - Other products fuels Residual Other gasoil Diesel Jet and kerosene gasoline Motor Naphtha LPG and ethane fifth IEA. All rights All IEA.

and heat

of diesel diesel of reserved. 9. OIL 9.

kb/d kb/d

yield of diesel oil and gasoline (PKN Orlen, the Mazeikiai suppliers. Since 2019, it 32.5 thein region, with a30% share non of - R 78% of total78% of crude imports imports declining from 98% 2010to 2018, 68% in alow in of before rising again 2019to in 3.6 itsoil imports in from the Russian Federation Total net crude oil imports 2019 in reached 196.9 f by production usedis directly the in chemical industry. At the same time, with refinery capacity Lithuania fully is reliant onimports crude of oil, as the relatively amount small domestic of Trade nosecondis - biofuel components ( requirement to 16.8% by 2030, including setting blending requirements on advanced April 2020) anexemption of onblending winter in months. Lithuania anticipates the raising increased from 5% to 10% applied andis throughout the year the since removal (as of In * use. oil Lithuania’s of majority growing a for accounts sector transport the in consumption Oil Figure OIL 9. ** con vegetable(HVO) oil generation biofuels as as hydrogenation well derived renewable diesel * ), IEA (2021), Source: per day. barrels thousand = kb/d Note: 10 20 40 70 30 50 60 ** 0 Services/other efinery 2000

ndustry 2016 International bunkers International January 2020, the biofuel blending requirement product set onoil suppliers was

ar ar f straints of onthe use kb/d in 2013 to as high as 48 kb/d in 2017, and from Saudi Arabia, starting at 6.2 kb/d

million tonnes per year (475 kb/d), which allows the company to negotiate flexibly with exceeding domestic demand, Lithuania anet is exporter refined of products. 9 and i 2002

, has astrategic objective to diversify its crude oil supplies to all of its six refineries .3 Trends in oil demand by sector in Lithuania, 2000 ncludes non-

reaching includes commercial and public services, agriculture, forestry agriculture, and public commercial services, includes over the last decade, with imports rising substantially from generation biofuel production Lithuania. in For diesel, R 2004 efinery,strivingto obtainanoptimal crude blendto order in maximise the IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World

energy consumption. energy consumption. include include will need to beensured, given the region’s colder climate and weather 2006 the 22.2 kb/d in 2018.22.2diversificationin This kb/d has led

has also started buying lighter crude oil from the United States for Alternative Fuels Law, adopted 2021by in the Parliament). There bunker fuels for international navigation and aviation bunkers andaviation navigation international bunker fuels for yatt methyl acid esters 2008 . (Figure 9.4).

The PKNThe Orlen S.A. 2010

Russian supplies. PKN Orlen S.A. purchases about 2012 However, 146 2020). 2014

( FAME

Lithuania

imported kb/d, with the vast majority imported 2016 Group, the owner the of Mazeikiai ). , www.iea.org/statistics/ 2018 , and fishing. and fishing. has progressively diversif -19 to the share of Russian

supplies second- of

. , from Kazakhstan from , Residential Domestic transport generation Electricityand heat Other energy Industry*** International bunkers** Services/other* or hydrotreated .

kb/d kb/d ie d

IEA. All rights reserved. consisting of diesel (50 kb/d) and motor gasoline (17 kb/d). collectively account go to neighbouring andnearby countries Estonia of ( gaso refinery produced 66 kb/d of gas/d re Lithuania’s total oil product exports stood at exclude outputs Refinery Note demand. product oil domestic its surpasses largely output refinery Lithuania’s Refinery output of finished oil products l per day. barrels thousand = kb/d Note: years. in recent diversification increasing been has there although imports, oil crude its for onRussia reliant heavily is Lithuania Figure ), IEA (2021), Source: ), IEA (2020a), Source: Figure 100 120 140 160 180 200 220 -20 Figure Jet and kerosene 20 40 60 80 LPG and ethane Other products 0 Residual fuels Residual sulting a in net export of 138.1 Gas/diesel oil s kb/d : line (versus 6kb/d demand) in and22kb/d kerosene of (3 kb/d demand) in kb/d = perkb/d day.barrels thousand Gasoline Naphtha 9 9 9 .4 .4 .5 Lithuania’s refinery output, 2019 .5 ). Lithuania’s c Lithuania’s

0 IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World Monthly Oil Monthly Service Data refinery losses. refinery ed 10

for nearly total60% of net exports 2019 in (83.8 kb/d) rude oil net trade by count

kb/d (Figurekb/d 9.6). iesel oil (comparediesel oil 39 demand),to in kb/d o 58 kb/d , www.iea.org/statistics thousand barrels per day thousandper barrels 30 argelyexceeds domestic demand. 147 158.6

40 The bulk of Lithuania’s product exports 9, with importskb/d 201 in with 9, , . ry, 2000- Latvia, Poland 50 , www.iea.org/statistics/ T he United Stateshe United 19 60

and Ukraine,which 70

Refinery Output Demand In 2019, the of 19 of , primarily , primarily IEA. All rights reserved. rights All IEA. accounts Total net trade net Total Saudi Arabia Kazakhstan Poland Other Federation Russian kb/d, kb/d, 9. OIL 9. f

UAB Manifoldas. The fifth upstream company, LL Lithuania, after activities and participated (owned by the second biggest Polish oil company, Grupa LOTOS) performed upstream In 2019, Investicijos are now the in Lithuanianoil production Upstream structure industry Oil per barrels = kb/d Note: thousand customers. distant more to terminal a sea via exported is production of 40% Around . Poland including countries, neighbouring its to products oil its exports Lithuania 30 afor substantial share of Lithuania’s net exports, which in 2019 totalled OIL 9.

), IEA (2021), Source: Figure product pipeline (diesel) to Latvia. the re mainder Orlen Lietuva trades its 40% production of across the sea to distant more customers, while consisting of motor gasoline (27 kb/d) and residual fuel oil (3.8 kb/d). -160 -140 -120 -100 -80 -60 -40 -20 20 0

1990. kb/d 9 .6 .6 five as owner 50% of UAB Minijos of Nafta and 100% of , n.d.; Production, drawn exclusively from onshore fields, peaked in 2001 andall Lithuania’s o Lithuania’s

companies is distributedis to the nearby countries via road and rail transportvia or a

IEA World Energy Statistics and Balances (database) andBalances IEA Statistics Energy World final LOTOS stages

il product Geonafta,

day. were

output commenced 1964in but only reached larger scale

in thein management three of of productionof .

producing crude oil Lithuania. in LOTOS AB Geonafta

s net trade by country, 2000-

2020). 148

Investicijos, privatelyis ( owned , www.iea.org/statistics/ other upstream companies in

both UAB Gen 19

Estonia

and fields fields kb/d, kb/d, LL LL

IEA. All rights reserved. countries ( price 1.0of USD/L, with atax 58% of rate exports, and, owned as it is by the largest Polish taxpayer, Lithuania’s biggest exporting company, with a12% share the of country’s overall Orlen Lietuva is a major contributor to the domestic economy as the country’s largest energy infrastructure. the two. The Mazeikiai) substantial competitive pressures from refineries other in jurisdictions and tightening the biggest historic foreign direct investor Lithuania. in However,refinery the facing is and expand the production higher of value light products T by petroleum products of Orlen domesticThe retail network is supplied by androad rail shipments, with supply dominated approximately 900 petrol stations There are approximately 300 companies engaged oil productin responsible supplyingfor up to 80% of the oil products consumed in Lithuania. Wholesale Department based in Vilnius, the is biggest player onthe wholesale market, Circle K supply data ongasoline prices to the IEA. diesel demand. transiting freight trucks filling up The main participants in Lithuania’s wholesale market are Orlen Lietuva, Viada but there are noentry or quotas. import petroleumfor products have beenestablished within the framework of regulations, the EU exciseof duty andthe value- petroleum products are not regulated by the state. For petroleum products, only the rates countries and Lithuania’s automotive diesel price theis ninth- Oil prices and taxation two decades; there are LithuanianThe oil sector has been operating under open market conditions for than more r and Wholesale Orlen Lietuvadownstream central is to Lithuania's Downstream he refinery making efforts is to improve energy efficiency, diversify into petrochemicals Lietuva, Neste Lietuva and Baltic Petroleum. Orlen Lietuva, with its Inland , the only import crude oil terminal (Butinge Terminal) andapipeline connecting Figure portion of the supply infrastructure, including the country’s only refinery (at Orlen Lietuva Orlen the the

Carbon taxes are not levied 9 third .7 etail ). Prices are lower than in its

- lowest the in European Union (after Luxembourg and Poland), at a no legal restrictions onthe import of liquid fuels and the prices of

R added tax are fixed bythe state. Mandatory qualitydicators in efinery a key is part Lithuania’s of and the Baltic regi Li

Lithuania in etuva.

(of which 29 belong to Orlen

149 , and thus adding some 20% to the country’s on any in Lithuania. fuel Lithuania does not

which is which lowest when compared to IEA member oil company, PKN ORLEN PKN company, oil oil sectoroil neighbouringcountries, resulting in

around the median value IEA of

(Orlen Lietuva, , as it owns and operates a Lietuva) ( retail retail 2020) Furman EU EU , it represents regulations. . sales andsales

Lietuva, , 2020) 9. OIL 9. o n’s n’s . .

Figure 9.7 Price comparison for automotive diesel in the IEA, 2Q 2020

USD/L Tax component 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0

Automotive diesel prices in Lithuania are the ninth-lowest in an IEA comparison.

Note: Automotive diesel is not available for Mexico. Source: IEA (2020b), Energy Prices and Taxes Second Quarter 2020, www.iea.org/statistics.

Lithuania’s light fuel oil is priced at 0.4 USD/L, the lowest among IEA countries, with a tax rate of 23%, also the lowest among IEA countries (Figure 9.8).

Figure 9.8 Price comparison for light fuel oil in the IEA, 2Q 2020 USD/L Tax component 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0

Light fuel oil prices in Lithuania are the lowest of all IEA member countries.

Note: Data for light fuel oil are not available for Australia, Hungary, Mexico, New Zealand, Norway, the Slovak Republic or Sweden. Source: IEA (2020b), Energy Prices and Taxes Second Quarter 2020, www.iea.org/statistics.

Oil infrastructure

Refining Lithuania’s Orlen Lietuva Refinery is the only refinery in the Baltic states. Owned by PKN Orlen, the biggest Polish oil company, it is located in northwestern Lithuania, close to the city of Mazeikiai, 90 kilometres from Lithuanian terminals in Butinge, Klaipeda and

150 IEA. All rights reserved. IEA. (PKN 2020in a emissions, an electrostatic precipitator was installed R to 9 to light refined product wide and flexible range of high- Modern processes andtechnologies applied bythe refinery allowed have the Until as as design capacity of a dedicated Butinge- before. The main reason for that was a significant decrease in first half of 2020, the plant’s revenues were 45% lower than the period in same the year C The 10 percentage points. upgrade, which would increase the refinery’s diesel, gasoline and jet fuel yield by around crude oil. Currently other (Orlen Lietuva, 2020) owner andoperator the of refinery in in the beginning Ch refinery’sThe design and location w Lithuania ’s Oil 10.4 15 Latvian domestic refinery. terminal The Polish PKN Orlen S.A. a majority stakeholder and operator the of plant International sign among emp around 90% state possible co-f year onaverage, the future investments Although the refinery had net profits between 2016 and 2019 of about ( Furman, 2020) efinery its since Orlen a emical Industry Committee what of time wasthe the at million ton . n w p 4 million tonne crude oil import terminal. In the 2015- - mi orthern strand the of trunk pipeline system Druzhba, supplemented by crude oil and

2006, the refinery’s feedstock was almost exclusively Russian crude oil shipped by

estern part of Lithuania near Palanga. It owned companyNa feedstocks delivered by railway as as truck well shipments of domestically produced orts Orlen, 2020b) OVID llion tonllion

Ventspils. refinery The was put into operation 1980 in with adesign capacity of Lietuva

PPF PPF in 197 in Butinge Terminal Oil - loyees. In 1998, d asignificantha 19 pandemicR impact onOrlen has Lietuva of sharesof remaining in the government’s hands andthe other 10% inancing of the b nes crudeof oil per year nes per year, or 205kb/d. . ’s s

ed plitter installation for the production of propylene was commissioned

ma 14 million tonnes per year ( 2. T 2. , purchase 2006 in – s per year ( the main deliveriesthe main crude of oil come via the O Butinge .

Mazeikiai pipeline (both owned and operated by Orlen Lietu . va) an agreement under which Williams International became a 33 . in export markets – yield PKN Orlen planning is the for largest investment the in Mazeikiai he refinery remained fully state nd subsequently renamed Orlen fta reorgani s currently at 72.5%. the Lithuanian government, Mazeikiu Nafta, and Williams ). 190 kb/d ottom quality refined products that meet regional standards, with is ownedis and operated by O

. In 200 . In exclusively exclusively - of sedinto joint ere -

the investment abottom in

may bechallenged andPKN Orlen is discussing 19 Estonia, Latvia, Lithuania, Latvia, Estonia,

; 151 based on the decision of - barrel barrel however period 2, 283 kb/d). 2006, Since thet

until until 2006 , when the refinery was bought by

the Russian company Yukos became a is ais single point mooring terminal with a dedicated In 2019, orderIn in to reduce particulate upgrade project withgovernment the , - stock company Mazeikiu Nafta, with with Nafta, Mazeikiu company stock t i , he average import volume amounted n the catalytic fluid cracking unit and its current maximum capacity is for importingfor crude for oil controlled Lietuva rlen consumption USSR - of

Lietuv - the Poland and Poland USD in

, with - the State Oil and Oil State the

until 1995 whenuntil 1995 barrel processing September 2009 a a erminal operates

and il il 200 it to produce a efinery

T of road fuels construction erminal situated in distributed million per

Ukraine. . In the the . In 9.

and and the the O % IL

Klaipedos Nafta, or “KN Oil Terminal”, located in the central part of the Lithuanian Baltic Sea coast, is the northernmost ice-free port on the eastern coast of the Baltic Sea. It is the most important and biggest Lithuanian transport hub and fulfils the important role of importing and exporting petroleum products. The port is majority owned by the state (72.3%), represented by the Ministry of Energy, and a 10.41% shareholding is held by Achemos Group, a private company, with the remaining ownership shares traded on Nasdaq Vilnius (Klaipedos Nafta, 2020). The terminal is able to handle both crude and refined products, offering loading and discharging services between tankers and rail cars and tanker truck loading for regional diesel and gasoline supplies. Its total annual import/export capacity is 8 million tonnes (160 kb/d).

Additionally, the Krovinių terminal, adjacent to the KN Oil Terminal, specialises in handling oil products and petrochemicals, with a capacity to handle up to 2 million tonnes per year (40 kb/d). The terminal can handle and discharge products from both rail-tanks and tankers and offers mooring services, cargo forwarding and transportation by rail within Lithuania, Belarus and Latvia.

Pipelines There are two main crude oil pipelines in Lithuania; however, only one remains in operation, connecting the Butinge Oil Terminal and Mazeikiai Refinery (92 km long). This line is owned and operated by Orlen Lietuva and has a design capacity (import/export) of 14 million tonnes per year (283 kb/d). Since 2006, the pipeline is working only in import mode (from the Butinge Oil Terminal to the Mazeikiai Refinery). Over the 2015-19 period, the average import volume amounted to 9.4 million tonnes per year (190 kb/d). The other pipeline connecting Lithuania’s refinery to Russian crude supplies, Polock-Birzai-Mazeikiai (Belarus-Lithuania), was designated to supply 16 million tonnes per year (323 kb/d); however, this branch of the Druzhba has not been in operation since July 2006 due to a reported technical malfunction.

Lithuania’s only product pipeline is the Ilukste-Birzai-Ventspils (Latvia-Lithuania-Latvia), transporting diesel into the northern region of the country. The pipeline length in Lithuania is 87 km and annual throughput capacity is 6 million tonnes of petroleum products (123 kb/d). In 2015-19, the average transported volume of diesel was 3.4 million tonnes per year (70 kb/d).

Storage Lithuania’s total oil storage capacity amounts to 2.88 million m3 (18.1 million barrels [mb]), entirely consisting of above ground tanks as there are no oil caverns in the country.

Storage capacities for crude oil accounts for a fifth of the total (3.89 mb) and are located at the Butinge Oil Terminal (1.93 mb), the Orlen Lietuva Refinery (1.26 mb), terminals of Klaipedos Nafta and Kroviniu Terminalas (0.7 mb).

Storages for refined products amount to 14.2 mb and are primarily located at the Orlen Lietuva Refinery (3.27 mb), the Klaipedos Nafta Oil Terminal (3.18 mb) and the Subacius Oil Terminal (2.25 mb). The Subacius Oil Terminal, located 150 kilometres north of Vilnius, is an inland oil product storage facility that provides both long-term storage for Lithuania’s emergency stocks and short-term storage and handling for commercial stocks. The majority of the facility’s capacity (1.63 mb) is dedicated to emergency stocks. Built

152 IEA. All rights reserved. IEA. in orderin to participate in an IEA collective action. amendments to the L (2009/119/EC). On 25June 2020 the Lithuanian parliament (the Seimas) adopted emergency response measures. This law transposes the EU Directive on O which emergency stocks oil are to and beheld provides the legal powers for activating Petroleum Products and (Law Oil onS territory E organisation and policies Oil emergency = HVDC high Notes: in also providesservic Klaipedos N Figure 9.9MapofLithuania’sregionaloilinfrastructure mergency response for crises oil has a legal basis thein Law on State Stocks of

1964, the terminal has ; ; to the delimitation of international frontiers andboundaries frontiers of international to the delimitation afta. - voltage direct current. This of This is or prejudice map status direct overto without current. any sovereignty the voltage

The terminal receives and dispatches oil products via tanker trucks and es forblendingbio-a aw onS beenupgraded regularly and since 2012 is tocks which allow Lithuania to activate emergency m tocks). The law establishes the level andmanner in dditives 153

. ; and to the name of any territory, or area. any name city and to of the territory, operated by il easures S tocks tocks 9.

O IL

Under the Law on Stocks, Council of Ministers’ Resolution No. 12 of 2003 lays out the procedures for co-ordinating emergency response in the event of an energy supply disruption. The Resolution requires all energy “undertakings” (i.e. producers, suppliers/importers, storage and transportation operators, etc.), to maintain emergency plans which ensure operations in a crisis, while maintaining optimal energy supplies to consumers through the use of alternative energy sources, reducing consumption and/or limiting supplies. The Resolution places responsibility on the Ministry of Energy for overseeing national emergency preparedness and for proposing specific response measures in a crisis for approval by the Council of Ministers. The Lithuanian Energy Agency is responsible for overseeing emergency oil stockholding as well as advising the ministry on a national energy strategy, including the development of demand restraint measures, renewable energy sources and the implementation of energy efficiency measures.

Within the Ministry of Energy, the Emergency Situation Operations Centre (ESOC) is responsible for co-ordinating energy crises, including for oil. In the case of an oil crisis, ESOC would prepare an assessment and recommendations for emergency response to the Minister of Energy, who could decide to lower the stockholding obligation of industry. In order to use the specific stocks of the Lithuanian Energy Agency or to activate the legal basis for implementing oil demand restraint measures, the minister would submit a proposal to the Council of Ministers for decision.

Ministerial Order No 1-107 forms the basis for the administration’s plan for implementing restrictions on the supply and use of oil products in addition to the release of emergency stocks. When activated, the plan allows the Council of Ministers to stabilise the supply and/or consumption of petroleum products when an energy emergency is declared. The ministry is preparing a revised plan in order to be in line with the IEA’s requirement to be able to reduce oil consumption by up to 10% in case of a disruption.

Emergency oil stocks According to the Law on Stocks, Lithuania's oil stockpiles must be sufficient to cover 90 days of average daily net imports or 61 days of average daily inland consumption in the previous year, whichever is greater.

This is consistent with the EU stockholding requirement (Council Directive 2009/119/EC imposing an obligation on member states to maintain minimum stocks of crude oil and/or petroleum products), and in the case of Lithuania, the relevant obligation level is 90 days of net imports. Under this law, the Lithuanian Energy Agency is responsible for maintaining 30 days of publicly held emergency oil stocks and an obligation is set on industry to maintain the remaining 60 days. When including industry’s commercial and operational stockholdings, Lithuania’s total level of oil stocks is well above the IEA 90-day minimum requirement, totalling 173 days at the end of November 2020. All of the Lithuanian Energy Agency’s emergency stocks are held in the Subacius Oil Terminal and all are in the form of refined oil products.

Separate from the emergency oil stocks described above, a stockholding obligation is also placed on heat and electricity generators with over 5 megawatts (MW) capacity, to maintain backup reserves during the cold season sufficient to cover 10 days of operations (Law on Energy, Article 29). The most common stocks to meet this requirement are

154 IEA. All rights reserved. IEA. net exporter of refined products, principally to regional neighbours ( capacity to produce oil products well in excess of domestic demand, making Lithuania a reliant onoil imports to meet demand. At the time, same its Lithuania has only asmall level of domestic oil production and therefore is nearly fully Assessment IEA (2020c Source: 90- the above been consistently has level stock oil Lithuania’s the year (1 anyin the of companies required to hold these backup fuels). During the warm period of biofuels, Figure 9 determined by the energy companies themselves. and rgy efficiency, diversify into into While the diversify refinery making is efforts to improve efficiency, energy competitive pressures from refineries in other jurisdictions and tightening EU regulation. infrastructure and a major contributor to the domestic economy. refinery The facing is The OrlenThe Mazeikiai Kazakhstan accounting for most of the remaining imports. have since declined to less than 70% in 2018, Russian crude imports system through Belarus. a result,As Lithuania has diversified its crude oil import sources. closure of another crude pipeline connecting the refinery to the Druzhba trunk pipeline ButingeThe T capacity)which connects the with Butinge S the Mazeikiai R the its refinery role of as the only the onein Baltic region. Orlen Lietuva owns and operates Lithuania’s oil supply infrastructure is robust relative to its domestic oil demand, reflecting Lithuania’s net exports were more than twice its inland consumption. 100 150 200 250 50 0 Ukraine) but also further afield ( Daysof net imports .10 heavy fuel oil, shale oil and diesel (natural gas notis considered as a backup fuel April to 31October), the energy backup requirements and quantities are Lithuania’s o Lithuania’s erminal has beenoperating as an import terminal since 2006, following the ), ), efinery (205 kb/d capacity)well as as the pipeline crude oil (242 Monthly Oil Monthly R , efinery a is key part of Lithuania’s and the Baltic region’s energy which used to account for nearly 100% of total imports 2013 until

Statistics il stock level in days net imports, of as of November 2020 , www.iea.org/statistics the the Netherlands 155 ea ea

T erminal (280 kb/d import/export capacity).

. . with imports from Saudi Arabia and

and t

day obligation threshold. threshold. obligation day he domestic r United States). In 2019, Estonia, Estonia,

efinery has the Latvia, Latvia, 90 days 90 domestic Public Industry domestic industry Abroad Abroad public Poland 9. kb/d kb/d O IL

IEA. All rights reserved. ENERGY SECURITY 9. OIL petrochemicals and expand the production of higher value light products, it will be challenged to adapt to increasing mandates for alternative fuels which displace demand for traditional fuel products.

Orlen Lietuva supplies approximately 80% of domestic oil demand while the remaining volumes of oil products consumed in Lithuania are imported via the other two seaport terminals that together have the capacity to import volumes well in excess of domestic demand.

The biofuel blending requirement set on oil product suppliers was increased from 5% to 10% as of January 2020, and is applied throughout the year since the removal (since April 2020) of an exemption on blending in winter months. Under the new Alternative Fuels Act, Lithuania anticipates raising the requirement to 16.8% by 2030, including setting blending requirements on advanced biofuel components. There is no second-generation biofuel production in Lithuania and in the case of diesel, given the region’s colder climate and weather constraints on the use of FAME, supplies of second-generation biofuels as well as hydrogenation derived renewable diesel will need to be ensured.

Lithuania has lower excise duty rates on energy products compared to neighbouring countries, which attracts fuel tourism as diesel trucks are transiting through the country. Diesel has also benefited from a lower excise duty rate compared to gasoline, although the differential has narrowed in recent years (now at less than 10% difference). The country has recently introduced higher excise duties and value-added tax in order to increase energy efficiency in the transport sector.

Oil emergency response

Emergency response for oil crises has a legal basis in the Law on State Stocks of Petroleum Products and Oil, which was modified in June 2020 in order to permit Lithuania to participate in an IEA collective action. Under this law, the Lithuanian Energy Agency is responsible for maintaining 30 days of net imports of publicly held emergency oil stocks and an obligation is set on industry to maintain the remaining 60 days. When including industry’s commercial and operational stockholdings, Lithuania’s oil stocks are well above the IEA 90-day-minimum requirement, totalling 173 days of net imports at the end of November 2020.

Within the Ministry of Energy, ESOC is responsible for co-ordinating energy crises including for oil. In the case of an oil crisis, ESOC would prepare assessments and recommendations for emergency response to the Minister of Energy, who could in the case of an IEA collective action decide to lower the stockholding obligation on industry. In order to use the public stocks of the Lithuanian Energy Agency or to activate the legal basis for implementing oil demand restraint measures, the minister would submit a proposal to the Council of Ministers for decision.

Lithuania’s oil security of supply is well developed and the ESOC team, working closely with the minister, provides a strong basis for maintaining dynamic and flexible emergency response, including reviewing and improving response policies where needed. Lithuania’s accession to the IEA has necessitated such a review, and ESOC has taken significant steps in this regard, including updating its existing oil demand restraint regulation to meet the requirement under the IEA’s treaty, the Agreement on an International Energy Program (IEP Agreement), to be able to reduce oil demand quickly by up to 10% in a crisis

156 IEA. All rights reserved. IEA.    The governmentLithuania of should: Oil  The governmentLithuania of should: Oil R ecommendations al Directive. and others) at refineries to qualify for generating credits in line with the EU RED II Consider all viable pathways to renewable meeting targets in transport, includi making hierarchy, andindustry participants. emergency procedures within the country’s wholesale price data available through apublic website to increase price transparency. Broaden the L w f to ensure well Conduct regular emergency exercises based on Promote business growth and competition the in wholesale product market (includin infrastructure and encouraging new entrants. or liquid biofuels) byencouraging investment new in storageblending and security markets holesale product markets to ensure proper market functioning and make retail and lowingco- for

processing renewable of feedstocks (synthetic fuels, green hydrogen ithuanian EnergyAgency - functioning communication channels and strong familiarity of

157 ’s ’s market monitoring activities to incl

emergency response team, the decision - the the emergency response handbook 9. u O ng de IL g

9. OIL 9. PKN Orlen ( Orlen PKN on29 (accessed ( Orlen PKN www.orlenlietuva.lt/EN/Company/Pages/History.aspx ( Lietuva Orlen on24 (accessed p. availability their and resources of use efficient on the based is area a given within travel teritorijoje tikroje tam keliauti galimybė asmenų grindžiama prieinamumu ( andCommunications Transport of Ministry www.llinvesticijos.lt/en/about LL Investicijos https://lotosgeonafta.pl/en/2062/about_us/history Geonafta LOTOS trading/410 Nafta Klaipedos (2020 IEA www.iea.org/statistics ), (2020b IEA ), IEA (2020a (database), ( Agency Energy International Orlen Parkiet, The Lithuania”], in investment T. Furman, References seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.312271 (2020), Lithuania of ublic Rep on29 (accessed www.orlenlietuva.lt/LT/Company/ModernizationAndInvestments/Puslapiai/default.aspx Orlen, PKN webpage,

, - Ministry of Transport andCommunications Transport of Ministry mysli c ( ), ),

-o- (accessed on (accessed www.iea.org/statistics/ ), 2020b 2020) Monthly Oil Statistics Oil Monthly (database), IEA, Paris, Paris, IEA, (database), Service Data Oil Monthly nowych ) 2020a 2020 Quarter Second and Taxes Prices Energy ), ), 2020

( ( November 2020) November November ) 2020 , “ “ ” ” Litwie na inwestycjach nowych o myśli Orlen Modernizacija ir investicijos” [“Modernisation and i and [“Modernisation investicijos” ir Modernizacija , n.d. . “History”, webpage, Orlen Lietuva, Orlen webpage, “History”, - ( inwestycjach 2020

, PKN Orlen website, website, Orlen PKN “Share trading” “Share ) , 29

) 2020) 2020) ,

- November 2020) November us “About us”, webpage, LLInvesticijos webpage, us”, “About “About us”, webpage, LOTOS Geonafta, Geonafta, LOTOS webpage, us”, “About

IEA , 113 Resolution (accessed on (accessed . . . , . . - IEA, Paris, Paris, IEA, ) ) na (2021), (2021), -i- www.parkiet.com/Surowce - Litwie.html , Klaipedos Nafta, Klaipedos 158 ) 2020 . . IEA World Energy Statistics and Balances and Statistics Energy World IEA October 2020). 2020). 31 October

www.iea.org/statistics www.orlenlietuva.lt/LT/Puslapiai/default.aspx .

(accessed on (accessed , Republic of Lithuania, Vilnius, Lithuania, of Republic www.lrs.lt/sip/getFile3?p_fid=9944

2 on2 (accessed “ Efektyviu išteklių naudojimu ir jų ir naudojimu išteklių Efektyviu

(accessed on24 (accessed

, Mazeikiai

www.kn.lt/en/for www.iea.org/statistics 31 October

[Orlen is considering new new considering is [Orlen December - paliwa/309299974 (database), IEA, Paris, Paris, IEA, (database), . .

October 2020) October nvestment”] ” [“

- The ability to 2020). 2020). - investors/share

, 2020)

Gargždai Gargždai - https://e , . .

. .

”] , , , ,

ANNEX A: Organisations visited

Agency for Science, Innovation and Technology (MITA)

Amber Grid

Energijos Skirstymo Operatorius AB (ESO) ANNEXES EPSO-G

Get Baltic

Government strategic analysis center (STRATA)

Ignitis Group

Kaunas University of Technology

Klaipedos nafta

Lithuanian Biomass Energy Association

Lithuanian District Heating Association

Lithuanian Energy Agency (LEA)

Lithuanian Energy Institute (LEI)

Lithuanian Solar Energy Association

Lithuanian Wind Power Association

Litgrid

Ministry of the Economy and Innovation

Ministry of Education, Science and Sports

Ministry of Energy

Ministry of Environment

Ministry of Finance

Ministry of Transport and Communications

National Energy Regulatory Council (NERC)

ORLEN Lietuva

Public Institution for Housing Energy Saving Agency

Research Council of Lithuania (RCL)

ANNEX B: Review team and preparation of the report

The in-depth review team visited Lithuania virtually from 1 to 12 September 2020. The review team met with government officials, energy suppliers, market participants, interest groups in the public and private sectors, associations, research institutions, and other organisations and stakeholders. The report was drafted on the basis of the information obtained during these meetings, the review team’s preliminary assessment of Lithaunia’s energy policy, the government’s response to the IEA energy policy questionnaire, and information on subsequent policy developments from the government and private sector sources. The members of the team were:

IEA member countries Mr Bo Diczfalusy, Sweden (team leader)

Mr Jesper Lorentzen, Denmark

Mr Dennis Trigylidas, Canada

Ms Bettina Lemström, Finland

Mr Jaanus Uiga, Estonia

Mr Michael Moser, Switzerland

Ms Aleksandra Swiderska, Poland

Ms Agnija Rasa, European Commission

International Energy Agency

Mr Aad van Bohemen, Head of Energy Policy and Security Division

Ms Sylvia Beyer, Senior Energy Policy Analyst (review co-ordinator)

Mr Jason Elliott, Senior Energy Analyst

Ms Rachael Boyd, Legal Counsel

Ms Erica Robin, Head of Section 2

Mr Joerg Husar, Programme Officer, Accession Co-ordinator

The team is grateful for the co-operation and assistance of the many people it met with during the visit. Thanks to their kind hospitality, openness and willingness to share information, the visit was highly informative, productive and enjoyable. The team thanks the Minister of Energy, Mr Žygimantas Vaičiūnas, for his participation in the opening and closing sessions of the review, and for the insightful review meetings organised by his team in the ministry. Thanks to the co-operation of the many people the team met throughout the visit, their engagement, openness and willingness to share information, the discussions were informative, productive and enjoyable. The review team wishes to express its gratitude

160 IEA. All rights reserved. IEA. IEA. The SharedIEA. Goals 4 The press launch. The report was edited by Jennifer Allain. the layou editing process and Astrid Dumond managed the production process Roberta thanksSpecial to the IEA Grergely Francois Briens, Sara Moarif, Simone Landolina, comments Helpful maps. the report Security The review was prepared under the guidance of Aad van Bohemen, Head of the Energy Policy and the review. Mr Kim Bomi and Clémence Lizé drafted the sections relating to energy d to the organising team at June

Dainius Shared Goals, which were adopted by the International Energy Agency (

1993 mee 1993

Quadrelli and Quadrelli Division at the Molnar, t. . Milosz Karpinski

and Bra

Tanya Dyhin managed the design process. Jad Mouawad andJethro Mullen supported the ž Dahyeon Yu , i ū César Aljeandro Herná ting in Paris, provide the evaluation criteria for the in-depth reviews conducted by the nas , chapter reviews and updates were provided by the follow , ,

as well the as many people the team formet their tireless efforts and support to Domenico

IEA. IEA. are presented Annexin D. and Jason Elliot S Sylvia Beyer Sylvia who ecretariat with regard to the data, h Mnsr o Eeg, n atclr r amna Kržs and Kerežis Daumantas Mr particular in Energy, of Ministry the

togetherensured Lattanzio

ndez, Peter Fraser and Carlos Ferná

managed the review andis the t provided support onstatistics. wr ote the chapters on oil and natural gas. Alessio 161

the preparation of the report with figures, tables and

Jean ata containedeach in chapter, supported by -Baptiste le Marois, Simon Bennett, publicationand editing. . Isabelle NonainIsabelle -Semelin finalised main author Therese ing IEA staff:ing ndez Alvarez. E) m IEA) Walsh managedWalsh the and co-ordinator inistersat their Heymi Heymi

Erica Robin,

Scanziani ANNEXES Behar, of of

ANNEX C: Energy balances and key statistical data

Unit: Mtoe SUPPLY 1990 2000 2010 2016 2017 2018 2019 TOTAL PRODUCTION 4.94 3.40 1.52 1.85 2.04 1.99 1.98

Coal ------Peat 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Oil 0.01 0.33 0.12 0.07 0.06 0.05 0.04 Natural gas ------Biofuels and waste1 0.29 0.65 1.12 1.41 1.52 1.53 1.50 Nuclear 4.50 2.25 - - - - - Hydro 0.04 0.03 0.05 0.04 0.05 0.04 0.03 Wind - - 0.02 0.10 0.12 0.10 0.13 Geothermal - - 0.01 0.00 0.00 - - Solar/other2 0.09 0.13 0.21 0.23 0.29 0.28 0.27 TOTAL NET IMPORTS3 11.41 4.11 5.59 5.37 5.39 5.62 5.70 Coal Exports - - 0.02 - - - - Imports 0.76 0.08 0.20 0.15 0.18 0.17 0.18 Net imports 0.76 0.08 0.17 0.15 0.18 0.17 0.18 Oil Exports 9.56 3.17 7.53 8.66 8.39 7.66 7.57 Imports 16.78 5.37 10.25 11.60 11.31 10.90 10.81 Int'l marine and aviation bunkers -0.23 -0.12 -0.19 -0.26 -0.28 -0.33 -0.32 Net imports 7.00 2.08 2.54 2.68 2.64 2.91 2.92 Natural gas Exports 0.15 - - 0.04 0.17 0.15 0.43 Imports 4.82 2.07 2.49 1.89 2.08 1.91 2.30 Net imports 4.68 2.07 2.49 1.85 1.91 1.76 1.86 Electricity Exports 1.42 0.56 0.19 0.24 0.28 0.28 0.34 Imports 0.39 0.44 0.70 0.96 1.03 1.11 1.14 Net imports -1.03 -0.12 0.52 0.71 0.75 0.83 0.80 TOTAL STOCK CHANGES -0.28 -0.36 -0.06 -0.01 0.12 0.04 -0.07

TOTAL SUPPLY (TES)4 16.07 7.14 7.05 7.21 7.54 7.64 7.61 Coal 0.78 0.08 0.18 0.16 0.16 0.17 0.17 Peat 0.02 0.01 0.02 0.03 0.03 0.04 0.03 Oil 6.71 2.05 2.56 2.73 2.79 2.96 2.88 Natural gas 4.68 2.06 2.49 1.84 1.92 1.78 1.86 Biofuels and waste1 0.29 0.65 1.00 1.37 1.43 1.46 1.43 Nuclear 4.50 2.25 - - - - - Hydro 0.04 0.03 0.05 0.04 0.05 0.04 0.03 Wind - - 0.02 0.10 0.12 0.10 0.13 Geothermal - - 0.01 0.00 0.00 - - Solar/other2 0.09 0.13 0.21 0.23 0.29 0.28 0.27 Electricity trade5 -1.03 -0.12 0.52 0.71 0.75 0.83 0.80 Shares in TES (%) Coal 4.9 1.1 2.6 2.2 2.2 2.3 2.2 Peat 0.1 0.2 0.3 0.3 0.5 0.5 0.4 Oil 41.8 28.7 36.4 37.9 37.0 38.7 37.9 Natural gas 29.1 28.9 35.3 25.6 25.5 23.2 24.5 Biofuels and waste 1 1.8 9.0 14.1 19.0 19.0 19.1 18.8 Nuclear 28.0 31.4 - - - - - Hydro 0.2 0.4 0.7 0.5 0.7 0.5 0.4 Wind - - 0.3 1.4 1.6 1.3 1.7 Geothermal - - 0.1 0.0 0.0 - - Solar/other 2 0.5 1.8 3.0 3.2 3.8 3.6 3.6 Electricity trade 5 -6.4 -1.6 7.3 9.9 9.9 10.8 10.6

0 is negligible, - is nil, .. is not available, x is not applicable. Please note: rounding may cause totals to differ from the sum of the elements.

162 IEA. All rights reserved. IEA. Peat Peat Oil Natural gas gas Natural Peat Peat Peat Peat 0 is negligible, - is nil, .. is not available, x is not applicable. Please note: rounding may cause totals to differ from the sum of the elements. of the sum differ from the to totals cause may rounding note: Please applicable. not is x available, not is .. nil, - is negligible, 0 is Heat Heat Coal Shares total in industry (%) Heat Electricity Solar/other Geothermal andwaste Biofuels gas Natural Oil Peat Coal INDUSTRY TOTAL Electricity Solar/other Geothermal andwaste Biofuels Coal Shares TFC in (%) Heat Electricity Solar/other Geothermal andwaste Biofuels Coal TFC CONSUMPTION FINAL DEMAND Electricity Electricity Solar/other Geothermal and waste Biofuels Coal Shares other in (%) Heat Electricity Solar/other Geothermal and waste Biofuels Coal OTHER TRANSPORT Electricity Solar/other Geothermal andwaste Biofuels N Oil Peat Peat Peat Natural gas gas Natural Oil Natural gas gas Natural Oil Heat Heat Oil Natural gas gas Natural atural gas gas atural 7 7 2 2 2 2 2 2 2 4 4 1 1 1 1 1 1 6 6 04 .054 .46.44 6.04 5.40 4.40 10.41 9020 0021 2017 2016 2010 2000 1990 047144505.3 5.0 4.4 7.1 20.4 37821. 0811.1 10.8 11.1 8.2 13.7 133. 213. 30.9 24.7 30.0 25.0 32.1 20.9 3.5 34.4 17.1 3.3 31.3 12.5 4.1 3.2 16.0 10.5 13.8 9.3 14.5 11.2 14.2 11.4 13.7 17.1 11.2 042. 042. 24.3 34.3 23.1 34.9 20.4 32.0 20.6 32.8 20.4 39.9 655. 085. 56.6 11.0 55.6 11.7 50.8 13.8 52.0 19.8 36.5 33.8 001. 711. 14.3 13.8 17.1 18.8 20.0 .001 .602 0.24 0.23 0.26 0.16 0.60 .201 .801 0.24 0.31 0.19 0.29 1.29 0.18 0.25 0.23 0.00 1.13 0.16 0.09 0.24 0.20 0.00 0.82 0.72 0.09 0.22 0.47 0.00 0.75 0.09 0.28 0.00 1.53 0.01 1.42 0.00 0.04 0.87 0.83 0.84 0.92 0.72 0.83 0.16 0.53 2.08 0.16 1.03 0.18 0.07 0.74 .606 .406 0.68 0.55 0.65 0.54 0.74 0.12 0.48 0.02 0.66 0.08 0.11 0.33 0.02 1.36 0.07 0.10 0.55 0.02 0.09 0.14 0.01 0.06 0.89 0.01 0.70 .100 .200 0.02 0.02 0.02 0.01 0.01 .619 .121 2.21 1.95 2.15 1.86 2.31 1.48 1.93 1.03 4.36 1.86 0.10 0.10 2.28 0.08 2.03 0.03 1.61 0.01 1.44 4.19 0.69 0.69 0.74 0.61 0.27 .605 .205 0.52 0.54 0.62 0.57 0.26 .514 .321 2.21 2.11 1.73 1.44 4.15 .309 .013 1.57 1.39 1.10 0.91 2.13 . . . . 1.0 1.0 0.9 0.3 0.1 . . . . 0.4 0.4 0.4 0.2 0.1 . 982. 4923.6 24.9 26.7 29.8 6.0 4.4 4.7 4.7 2.2 0.3 11.4 13.6 13.8 2.6 . . . 0.1 0.1 0.1 0.1 . . . . 3.7 4.3 5.3 0.9 1.0 13.4 13.9 13.3 2.5 12.1 2.6 9.9 3.3 1.7 7.1 ------163 ------

------10.8 0.92 ------082019 2018 1511.7 11.5 0128.7 26.4 30.1 25.3 9.6 14.1 10.4 14.2 3523.6 23.5 10.6 11.0 3912.8 13.9 3613.7 13.6 2223.3 36.8 22.2 36.3 2454.8 12.0 52.4 13.6 .30.22 0.33 0.23 0.32 1.26 0.28 0.00 1.17 0.11 0.30 0.00 0.10 0.91 0.89 0. 0.17 .10.85 0.91 6.62 6.56 .80.62 0.57 0.68 0.57 0.12 0.02 0.06 0.11 0.03 0.08 .62.17 2.14 2.26 2.07 0.11 0.11 2.30 2.23 0.70 0.72 .30.51 0.53 .60.25 0.26 .30.02 0.03 .82.43 2.38 .61.54 1.46 . 5. 5.0 . 2.9 3.4 . 1.0 1.2 . 4.8 5.0 . 4. 4.3 2. 2.6 . 0.3 0.4 0.1 ------

Unit: Mtoe ANNEXES 17 7 5 6 ------

Unit: Mtoe DEMAND ENERGY TRANSFORMATION AND LOSSES 1990 2000 2010 2016 2017 2018 2019

ELECTRICITY GENERATION8 Input (Mtoe) 8.97 3.83 1.87 1.29 1.30 1.22 1.17 Output (Mtoe) 2.44 0.96 0.43 0.32 0.31 0.26 0.29 Output (TWh) 28.41 11.12 4.99 3.68 3.61 2.98 3.37 Output shares (%) Coal ------Peat ------Oil 14.6 5.9 13.0 6.0 3.9 4.4 2.0 Natural gas 23.8 14.5 63.8 26.8 16.6 11.1 15.6 Biofuels and waste 1 - - 2.9 14.8 16.3 21.1 18.4 Nuclear 60.0 75.7 - - - - - Hydro 1.5 3.1 10.8 12.4 16.7 14.4 10.2 Wind - - 4.5 30.9 37.8 38.4 44.5 Geothermal ------Solar/other 2 - - - 1.8 1.9 2.9 2.7 TOTAL LOSSES 5.66 2.99 1.65 1.17 1.12 1.09 1.00 of which: Electricity and heat generation9 4.20 1.88 0.55 0.25 0.23 0.20 0.19 Other transformation 0.12 0.08 0.11 0.04 0.01 0.03 -0.03 Own use and transmission/distribution losses 1.33 1.03 0.99 0.89 0.89 0.85 0.85 Statistical differences - -0.24 - - -0.01 - -0.01 INDICATORS 1990 2000 2010 2016 2017 2018 2019

GDP (billion 2015 USD) 25.02 22.52 34.39 42.47 44.27 45.89 47.69 Population (millions) 3.70 3.50 3.10 2.87 2.83 2.80 2.79 TES/GDP (toe/1000 USD)10 ...... Energy production/TES 0.31 0.48 0.22 0.26 0.27 0.26 0.26 Per capita TES (toe/capita) 4.35 2.04 2.28 2.51 2.67 2.73 2.72 Oil supply/GDP (toe/1000 USD)10 0.27 0.09 0.07 0.06 0.06 0.06 0.06 TFC/GDP (toe/1000 USD)10 0.42 0.20 0.16 0.14 0.15 0.14 0.14 Per capita TFC (toe/capita) 2.82 1.26 1.74 2.11 2.28 2.34 2.37 11 CO2 emissions from fuel combustion (MtCO2) 32.2 10.2 12.3 10.8 10.8 11.1 - 11 CO2 emissions from bunkers (MtCO2) 0.7 0.4 0.6 0.8 0.9 1.0 - GROWTH RATES (% per year) 90-00 00-10 10-15 15-16 16-17 17-18 18-19

TES -7.8 -0.1 -0.0 2.3 4.6 1.3 -0.4 Coal -20.3 8.4 -2.5 -0.6 2.5 6.1 -2.3 Peat -3.7 8.1 -3.6 25.0 36.0 8.8 -27.0 Oil -11.2 2.3 -0.4 8.9 2.2 6.1 -2.6 Natural gas -7.9 1.9 -3.7 -10.9 4.3 -7.5 5.0 Biofuels and waste1 8.5 4.4 6.0 2.6 4.5 1.8 -1.8 Nuclear -6.7 -100.0 - - - - - Hydro -2.1 4.7 -8.2 30.0 33.3 -28.8 -18.9 Wind - - 29.8 40.0 19.4 -16.2 31.6 Geothermal - - -16.7 - -50.0 -100.0 - Solar/other2 4.3 4.9 2.4 -1.3 23.7 -3.8 -1.4 TFC -8.3 2.1 1.7 2.6 6.6 1.9 0.9 Electricity consumption -6.4 3.0 2.3 4.4 3.2 3.4 1.3 Energy production -3.7 -7.7 3.6 1.8 10.2 -2.1 -0.9 Net oil imports -11.4 2.0 -0.0 5.6 -1.3 10.3 0.2 GDP -1.0 4.3 3.8 2.6 4.2 3.6 3.9 TES/GDP -6.8 -4.3 -3.7 -0.3 0.4 -2.2 -4.2 TFC/GDP -7.3 -2.2 -2.0 0.1 2.3 -1.7 -2.9

0 is negligible, - is nil, .. is not available, x is not applicable. Please note: rounding may cause totals to differ from the sum of the elements.

164 IEA. All rights reserved. IEA. waste. Data are often based on partial surveys and may not be comparable between countries. 10 9 8 7 6 5 4 3 2 1 data statistical key and balances to energy Footnotes bunkers are not included in national totals. Approach methodology non-specified. efficiencies of approximately 33% for nuclear and 100% for hydro, wind and solar photovoltaic. autoproducers. For non -fossil refers only to electricity generation.

“CO T Biof Inputs to electricity generation include inputs to electricity, co Other Industry Excludesinternational marine bunkers andinternationalaviationbunkers. additionIn tocoal, oil, natural andelectricity, gas total net importsinclude also biofuels. Other Losses arising in the production of electricity and heat at main activity producer utilities and onnes ofonnes oil equivalent waste and uels 2

emissions from fuel combustion” have been estimated using the IPCC Tier I Sectoral includes tide, wave and ambient heat used in heat pumps. includes residential, commercial and publicservices, agriculture/forestry, fishing ,

includes non-energy use. from the 2006 IPCC Guidelines. Emissions frominternational comprise solid biofuels, liquid biofuels, biogases, industrial waste and municipal

per thousand US dollars at 2015 prices and exchange rates. fuel electricity generation, theoretical losses are shown based on plant

165

-generation

andheat plants. Output

marine and aviation

ANNEXES and other

ANNEX D: International Energy Agency “Shared Goals”

The member countries* of the International Energy Agency (IEA) seek to create conditions in which the energy sectors of their economies can make the fullest possible contribution to sustainable economic development and to the well-being of their people and of the environment. In formulating energy policies, the establishment of free and open markets is a fundamental point of departure, though energy security and environmental protection need to be given particular emphasis by governments. IEA countries recognise the significance of increasing global interdependence in energy. They therefore seek to promote the effective operation of international energy markets and encourage dialogue with all participants. In order to secure their objectives, member countries therefore aim to create a policy framework consistent with the following goals:

1. Diversity, efficiency and flexibility within the energy sector are basic conditions for longer term energy security: the fuels used within and across sectors and the sources of those fuels should be as diverse as practicable. Non-fossil fuels, particularly nuclear and hydro power, make a substantial contribution to the energy supply diversity of IEA countries as a group.

2. Energy systems should have the ability to respond promptly and flexibly to energy emergencies. In some cases, this requires collective mechanisms and action: IEA countries co-operate through the Agency in responding jointly to oil supply emergencies.

3. The environmentally sustainable provision and use of energy are central to the achievement of these shared goals. Decision makers should seek to minimise the adverse environmental impacts of energy activities, just as environmental decisions should take account of the energy consequences. Government interventions should respect the polluter pays principle where practicable.

4. More environmentally acceptable energy sources need to be encouraged and developed. Clean and efficient use of fossil fuels is essential. The development of economic non-fossil sources is also a priority. A number of IEA member countries wish to retain and improve the nuclear option for the future, at the highest available safety standards, because nuclear energy does not emit carbon dioxide. Renewable sources will also have an increasingly important contribution to make.

5. Improved energy efficiency can promote both environmental protection and energy security in a cost-effective manner. There are significant opportunities for greater energy efficiency at all stages of the energy cycle, from production to consumption. Strong efforts by governments and all energy users are needed to realise these opportunities.

6. Continued research, development and market deployment of new and improved energy technologies make a critical contribution to achieving the objectives outlined above. Energy technology policies should complement broader energy policies. International co-operation in the development and dissemination of energy technologies, including industry participation and co-operation with non-member countries, should be encouraged.

166 IEA. All rights reserved. IEA. underst Mexico, Mexico, n, Luxembourg, Korea, Japa Italy, Ireland, Hungary, Canada, the Belgium, Austria, Australia, * 9. and energy security. Distortions to energy trade and investment should be avoided. 8. Free and open trade practicable, the environmental costs of energy production and use should be reflected in prices. artificially below the costs of supply to promote social or industrial goals. To the extent necessary and 7. Undistorted energy prices enable markets to work efficiently. Energy prices should not beheld (The confidence necessary to achieve global energy security and environmental objectives. energy systems and markets worldwide. These are needed to promote help the investment, trade and the Slovak the

Co Shared Goals -operation among all energy market participants anding, and encourages the development of efficient, environmentally acceptable

Republic, Spain, Sweden, Switzerland, Turkey, United Turkey, Kingdom the Switzerland, Spain, Republic, Sweden,

were adopted by IEA

and asecure framework for investment contribute to efficient energy markets Czech Denmark, Republic, Finland, Estonia, France, Germany, Greece, m inisters at the meeting of 4 June 1993 167 t he Netherlands

helps to improvehelps to informationand , New Zealand, Norway, Poland, Portugal, New Norway,Portugal, Zealand, Poland,

and the United States. in in

Paris, France.)

and flexible

ANNEXES

ANNEX E: Glossary and list of abbreviations

In this report, abbreviations and acronyms are substituted for a number of terms used within the International Energy Agency. While these terms generally have been written out on first mention, this glossary provides a quick and central reference for the abbreviations used. ANNEXES Acronyms and abbreviations

BRELL Belarus, Russia, Estonia, Latvia and Lithuania CCU carbon capture and utilisation

CO2 carbon dioxideDC DC direct current DH district heating DSO distribution system operator EED Energy Efficiency Directive ESCO energy service company ESD Effort Sharing Decision ESOC Emergency Situation Operations Centre ETS Emissions Trading System EU European Union EV electric vehicle FAME fatty acid methyl esters FRR frequency restoration reserve FSRU floating storage and regasification unit GDP gross domestic product GDP PPP gross domestic product in purchasing power parity GHG greenhouse gas GIPL Gas Interconnection Poland-Lithuania HVDC high-voltage direct current ICT information and communications technology IEA International Energy Agency Invega Investment and Business Guarantees ITC inter-TSO compensation KTU Kaunas University of Technology LEI Lithuanian Energy Institute LNG liquefied natural gas LPG liquefied petroleum gas LULUCF land use, land-use change and forestry NECP National Energy and Climate Plan NEIS National Energy Independence Strategy NERC National Energy Regulatory Council OECD Organisation for Economic Co-operation and Development PM particulate matter PPP purchasing power parity PV photovoltaic R&D research and development

RED Renewable Energy Directive RES renewable energy source SME small and medium-sized enterprise TCP technology collaboration programme TEN-E Trans-European Network for Energy TES total energy supply TFC total final consumption TPES total primary energy supply TSO transmission system operator USD United States dollar

Units of measure bcm billion cubic metres CO2-eq carbon dioxide equivalent GW gigawatt GWe gigawatt electrical GWh gigawatt hour kb/d thousand barrels per day kg kilogramme km kilometre ktoe kilotonne of oil equivalent kV kilovolt kW kilowatt kWh kilowatt hour mb million barrels mBtu million British thermal units mcm million cubic metres Mt CO2 million tonnes carbon dioxide Mt CO2-eq million tonnes carbon dioxide equivalent Mtoe million tonnes of oil equivalent MW megawatt MWe megawatt electrical MWh megawatt hour PJ petajoule toe/cap tonne of oil equivalent per capita TWh terawatt hour

170 IEA. All rights reserved. IEA. This publication reﬂects the views of the IEA Secretariat but does not necessarily reﬂect those of individual IEA member countries. The IEA makes no representation or warranty, express or implied, in respect of the publication’s contents (including its completeness or accuracy) and shall not be responsible for any use of, or reliance on, the publication. Unless otherwise indicated, all material presented in figures and tables is derived from IEA data and analysis.

This publication and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Typeset in France by IEA - April 2021 Cover design: IEA Lithuania 2021 Energy Policy Review

The International Energy Agency (IEA) regularly conducts in-depth peer reviews of the energy policies of its member, partner and accession countries. This process supports energy policy development and encourages the exchange of international best practices and experiences.

Lithuania has made strong progress towards realising its vision of a secure, competitive, sustainable and innovative energy system in the Baltic region.

The government supported major reforms of the electricity and natural gas markets, and further integrated with the EU energy system and markets. Thanks to the expansion of renewable energy sources, notably bioenergy and wind, the carbon intensity of the power and heat sector has decreased over the past decade.

Nevertheless, emissions have been on the rise, notably in the transport sector. Lithuania will need to make energy efficiency a priority, design a strong renewable strategy, and reform energy taxes to underpin its ambitious targets. This kind of clean energy leadership can drive emissions reductions up to 2050.

In this report, the IEA provides energy policy recommendations to help Lithuania accelerate its energy transition towards its ambitious 2050 targets for for climate neutrality.