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Energy Policy Review: Georgia 2020

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Energy Policy Review: Georgia 2020 Georgia 2020 Energy Policy Review Georgia 2020 Energy Policy Review INTERNATIONAL ENERGY AGENCY The IEA examines IEA member IEA association the full spectrum countries: countries: of energy issues including oil, gas Australia Brazil and 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 Ireland the reliability, Italy affordability and Japan sustainability of Korea energy in its 30 Luxembourg member countries, Mexico 8 association Netherlands countries and New Zealand beyond. Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States The European Commission also participates in the work of the IEA Please note that this publication is subject to specific restrictions that limit its use and distribution. The terms and conditions are available online at www.iea.org/t&c/ Source: IEA. All rights reserved. International Energy Agency Website: www.iea.org Foreword The International Energy Agency (IEA) has been conducting in-depth peer reviews of energy policies of its member countries – and of other countries – since 1976, and it recently modernised these reviews to focus on some of the countries’ key energy transition and security challenges. As the IEA has opened its doors to emerging economies, in-depth reviews have come to play an increasingly prominent role in bilateral collaborations. Georgia is one of the focus countries of the EU4Energy programme, which is implemented FOREWORD by the IEA and the European Union, along with the Energy Community and the Energy Charter, and which includes Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. The programme is designed to support the goals and aspirations of the eleven Focus Countries to implement sustainable energy policies and foster co-operative energy sector development at the regional level. As part of this programme, an in-depth review of each Focus Country is being conducted during 2019-21 to update, enrich and extend analysis of the IEA’s 2015 Energy Policies Beyond IEA Countries: Eastern Europe, Caucasus and Central Asia. Georgia is the first country to have hosted the in-depth peer review team during this cycle. Since the 2015 review, Georgia has made solid progress in both improving the security of its energy supply and transitioning to a more sustainable energy system. The energy sector has been instrumental in establishing the overall liberal economic policy that has earned Georgia a reputation for being a “star reformer”. Since Georgia’s accession to the Energy Community in 2017, its government has undertaken ambitious reforms to implement the EU acquis1 for electricity and gas markets, security of supply, renewable energy, energy efficiency and statistics. It is my hope that this second in-depth review will guide Georgia in its energy sector reforms and help it achieve its energy policy goals of providing affordable, secure and clean energy to its population while strengthening its position both internationally and as a key energy transit country in the Caucasus region. Dr. Fatih Birol Executive Director International Energy Agency 1 Acquis communautaire (in French): The body of Community legislation by which all EU member states are bound. reserved. Countries joining the EU must have implemented the existing acquis communautaire by the time of accession rights All 3 IEA. ENERGY INSIGHTS 1. Executive summary .....................................................................................................11 Progress to date ................................................................................................................11 Challenges ahead ..............................................................................................................12 Key recommendations .......................................................................................................17 2. General energy policy .................................................................................................19 Country overview ...............................................................................................................19 Energy supply and demand ...............................................................................................20 Energy production and self-sufficiency .............................................................................21 Energy consumption ..........................................................................................................23 CONTENTS OF TABLE Energy sector governance ................................................................................................25 Key policy directions ..........................................................................................................27 Assessment .......................................................................................................................31 Recommendations .............................................................................................................35 ENERGY SECURITY 3. Natural gas ...................................................................................................................39 Overview ............................................................................................................................39 Supply and demand ...........................................................................................................40 Gas sector structure ..........................................................................................................43 Infrastructure......................................................................................................................45 Gas prices ..........................................................................................................................48 Assessment .......................................................................................................................49 Recommendations .............................................................................................................53 4. Oil ..................................................................................................................................55 Overview ............................................................................................................................55 Supply and demand ...........................................................................................................56 Oil demand ........................................................................................................................57 Transport infrastructure .....................................................................................................57 Oil market structure ...........................................................................................................58 Emergency response policy ..............................................................................................60 Oil prices and taxes ...........................................................................................................60 Assessment .......................................................................................................................61 reserved. Recommendations .............................................................................................................63 rights All 5 IEA. TABLE OF CONTENTS 5. Hydrocarbon exploration and production ................................................................65 Overview ............................................................................................................................65 Oil and gas .........................................................................................................................65 Coal....................................................................................................................................69 Assessment .......................................................................................................................70 Recommendations .............................................................................................................71 6. Electricity......................................................................................................................73 Overview ............................................................................................................................73 Supply and demand ...........................................................................................................73 Sector structure .................................................................................................................79 Market reforms...................................................................................................................82 Infrastructure and cross-border trade ................................................................................83 Security of supply ..............................................................................................................86 System integration of renewable energy ...........................................................................88
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