Input Paper “Georgia and Euro­pean Green Deal”

Foto: Shut­ter­stock, artteam

As part of our project “Eastern Part­ner­ship Plus”, we are pub­lish­ing a second series of input papers on the topic of Per­spec­tives and Pri­or­i­ties Euro­pean Green Deal (EGD) in Ukraine, Georgia and Moldova. The authors from the region (Nataliya Andru­sevych, Manana Kochladze, Iuliana Can­taragiu) analyse the role of the Euro­pean Union in sup­port­ing the imple­men­ta­tion of the EGD and for­mu­late their polit­i­cal rec­om­men­da­tions for deci­­sion-makers in Berlin and Brussels.

By Manana Kochladze, Democ­ra­ti­za­tion and Human Rights, CEE Bankwatch Network

The Euro­pean Green Deal (EGD) will fun­da­men­tally change eco­nomic and polit­i­cal rela­tions with the EU’s neigh­bour­hood. The Gov­ern­ment of Georgia has not made yet any com­mit­ments with regard to the EGD.[1][2] The government’s approach to the country’s eco­nomic devel­op­ment pri­mar­ily involved exten­sive lib­er­al­iza­tion and dereg­u­la­tion for decades. This changed only with the sig­na­ture of the EU-Georgia Asso­ci­a­tion Agree­ment (AA) in 2014. Since then, Georgia has taken a few pos­i­tive steps in the envi­ron­men­tal, energy and climate sector, but envi­ron­men­tal pro­tec­tion and climate resilience are still con­sid­ered to be of sec­ondary pri­or­ity; eco­nomic growth takes top priority.

The current path of eco­nomic devel­op­ment and its impact on health and the envi­ron­ment are chal­leng­ing. The Global Alliance on Health and Pol­lu­tion has reported that at least 140 out of every 100,000 deaths in Georgia are linked to air pol­lu­tion, one of the highest rates in Europe.[3] World Bank esti­mates that the costs of envi­ron­men­tal degra­da­tion (air pol­lu­tion, lead expo­sure, forests, agri­cul­ture land degra­da­tion, climate change impacts) were equiv­a­lent to 15% of Georgia’s GDP in 2018.

Article 29 of Georgia’s Con­sti­tu­tion requires the gov­ern­ment to ensure the pro­tec­tion of the envi­ron­men­tal pro­tec­tion and ratio­nal use of natural resources in the inter­ests of current and future gen­er­a­tions. The Law on Envi­ron­men­tal Pro­tec­tion pro­vides for an envi­ron­men­tal plan­ning system to ensure “con­di­tions appro­pri­ate for the sus­tain­able devel­op­ment of the country”. The law requires the devel­op­ment of a sus­tain­able devel­op­ment strat­egy for the country. This require­ment has yet to be met, as have those for a five-year national envi­ron­men­tal action plan and plans and policy doc­u­ments for indi­vid­ual areas. The social-eco­nomic devel­op­ment strat­egy “Georgia 2020” (2014)[4] acknowl­edges inef­fi­cient use of natural resources and exten­sive agri­cul­tural pro­duc­tion, com­bined with low tech­no­log­i­cal devel­op­ment and inno­va­tion level. In 2015, gov­ern­ment adopted the a national strat­egy to meet SDGs by 2030.[5]

The Asso­ci­a­tion Agree­ment between EU and Georgia and the Asso­ci­a­tion Agendas have fuelled numer­ous pos­i­tive changes. The first step was enact­ment of a new Envi­ron­men­tal Assess­ment Code in line with the nEIA and SEA direc­tives (2018), address­ing mul­ti­ple fail­ures in envi­ron­men­tal deci­sion-making on projects and poli­cies during (2007–2017), and rein­tro­duc­ing public par­tic­i­pa­tion in deci­sion making. Several other laws and policy doc­u­ments have also been adopted, includ­ing the Waste Code and Waste Man­age­ment Strat­egy 0216–2030, the Forest Code (2020), envi­ron­men­tal lia­bil­ity leg­is­la­tion (2021), etc. The Third National Envi­ron­men­tal Action Program of Georgia (NEAP‑3) 2017–2021,[6] the key policy doc­u­ment in this area, was influ­enced by the EU-Georgia Asso­ci­a­tion Agree­ment and United Nations Sus­tain­able Devel­op­ment Goals. However, its imple­men­ta­tion is behind sched­ule both with respect to envi­ron­men­tal gov­er­nance and in key strate­gic sectors. This is due to inef­fec­tive gov­er­nance and insti­tu­tional model, inad­e­quate funding, only 0.4% of the state budget was allo­cated to envi­ron­men­tal pro­tec­tion (around 60 million GEL). This was coupled with con­stant lob­by­ing on behalf of the busi­ness sector to delay or abandon the new envi­ron­men­tal reg­u­la­tions. For instance, Georgia is behind sched­ule in in des­ig­nated pro­tected Emerald-network sites[7] under the Council of Europe’s Con­ven­tion on the Con­ser­va­tion of Euro­pean Wildlife and Natural Habi­tats (Bern Con­ven­tion). The country needs to develop a national fresh­wa­ter strat­egy due to abun­dant hydropower devel­op­ment plans.[8]

Georgia has been a full member of the Euro­pean Energy Com­mu­nity since 2016. The adop­tion of the Law on Energy and Water Supply in line with the Third Energy Package (2019) was a break­through for further energy reforms. Renew­able energy leg­is­la­tion was adopted in 2019 is in line with the EU’s 2009 renew­ables direc­tive. Leg­is­la­tion on energy effi­ciency adopted in 2020 twill enter into force after 2022. The trans­po­si­tion of the Large Com­bus­tion Plants Direc­tive into Geor­gian law and the prepa­ra­tion of the Energy and Climate Action Plan (NECP) have been delayed. As the Clean Energy Package will be inte­grated into the Energy Com­mu­nity Treaty by the end of 2021, the ECT Sec­re­tariat has started to assist with the trans­po­si­tion and imple­men­ta­tion of energy reforms, includ­ing the Clean Energy Package.[9]

Georgia has no energy sector devel­op­ment strat­egy or action plan for 2030 aimed at decou­pling energy use and eco­nomic growth. Unsus­tain­able elec­tric­ity con­sump­tion and the country’s depen­dence on imported fossil fuels (70–75% of primary energy con­sump­tion) are not stressed in any strat­egy doc­u­ment. Sparsely avail­able policy doc­u­ments[10] promote increased energy con­sump­tion and the build­ing of new gen­er­a­tion plants, includ­ing the large hydropower plants that the vast major­ity of the public oppose. Mean­while, cryp­tocur­rency mining, which can be done at next to no cost thanks to low rates charged for elec­tric­ity, is neg­a­tively affect­ing both on the energy balance and on cit­i­zens’ lives in Abk­hazia and Svane­tia[11]. It is esti­mated that cryp­tocur­rency accounts for at least 15% of Georgia’s total power load.[12] Accord­ing to USAID, “Current and strate­gic deci­sions of the energy sector are not made on the basis of rel­e­vant and suf­fi­cient infor­ma­tion analy­sis and research. There is no proper system and pro­ce­dures in place for pro­vid­ing expert research and pro­fes­sional support for deci­sion-making”.[13]

In April 2021, the Gov­ern­ment of Georgia approved an updated nation­ally deter­mined con­tri­bu­tion (NDC)[14] under the UNFCCC and an imple­men­ta­tion tool for it. The NDC includes uncon­di­tional (35%) and con­di­tional (50–57%) mit­i­ga­tion targets for the reduc­tion of GHG emis­sions by 2030 com­pared to 1990 levels. It defines targets for a number of sectors (trans­port, con­struc­tion, energy gen­er­a­tion and trans­mis­sion, agri­cul­ture, indus­try, waste man­age­ment and forestry). The National Adap­ta­tion action plan will be elab­o­rated with the support of the Green Climate Fund.

The trans­port sector rep­re­sents the biggest emitter and was respon­si­ble at least for 24% of GHG emis­sions (2015). The updated NDC pre­dicts that emis­sions would rise up to 71% under the base­line sce­nario by 2030, with planned reduc­tion of 15%. The country does not have “a single entity with respon­si­bil­ity for over­ar­ch­ing national trans­port sector strat­egy and policy.”[15] This has resulted in the allo­ca­tion of a dis­pro­por­tion­ate amount to road infra­struc­ture, with severe impacts on local com­mu­ni­ties, reduc­ing their incomes and forcing invol­un­tary reset­tle­ment, and on the envi­ron­ment, includ­ing pro­tected areas.

Despite promises to the con­trary, no green economy policy, green economy strat­egy 2030 or green economy action plan for 2017–2022[16] were ever adopted. A tech­ni­cal report pre­pared for use in the devel­op­ment of a green economy strat­egy that analysed three sectors of economy – con­struc­tion, agri­cul­ture and tourism – pointed out the poten­tial for such a strat­egy to gen­er­ate sig­nif­i­cant savings and addi­tional eco­nomic and envi­ron­men­tal ben­e­fits, includ­ing job cre­ation.[17] Activ­ity in this area is mainly sup­ported by inter­na­tional donors, includ­ing the EU.[18]

The EGD has the poten­tial to com­pletely elim­i­nate the country’s reluc­tance to update exist­ing eco­nomic models and to define new per­spec­tives for Georgia’s devel­op­ment. This would require the rel­e­vant guid­ance and skills support coupled with exten­sive aware­ness raising, trans­parency and public involve­ment in deci­sion making to build the own­er­ship and ensure a results-ori­ented approach. Georgia is expe­ri­enc­ing stag­na­tion in the devel­op­ment of democ­racy and its economy [19] due to a polit­i­cal crisis[20] com­bined with Covid-19 pan­demic. In this sit­u­a­tion, EGD could provide a much-needed stim­u­lus for further development.

The party cur­rently in power is in the process of prepar­ing a national plan for Georgia devel­op­ment to 2030. If devel­oped with wider public par­tic­i­pa­tion and based on the “grow back better and greener” prin­ci­ple in line with EU leg­is­la­tion and the EGD, the plan may be able to serve as recov­ery tool to address imme­di­ate shocks and ensure the sus­tain­able devel­op­ment of the country. The EGD together with Asso­ci­a­tion Agree­ment pro­vides new oppor­tu­ni­ties for Georgia to make progress towards sus­tain­abil­ity goals and to access poten­tial finan­cial sources, as well as further Georgia’s ambi­tions for closer inte­gra­tion with EU.

 

Rec­om­men­da­tions:

  • The EAP summit in 2021 should spot­light the EGD as a major topic, and the EU should con­tinue to empha­size this topic on mul­ti­lat­eral and bilat­eral levels with the EaP coun­tries to encour­age co-own­er­ship and engage­ment on their part.
  • The Green Deal Roadmap and Strat­egy should be elab­o­rated with the involve­ment of all stake­hold­ers and ensure com­mit­ments in envi­ron­ment and climate sector in line with a long-term vision for the areas of energy, indus­try, trade, agri­cul­ture and transport.
  • The new envi­ron­men­tal action plan to be devel­oped should be geared towards Georgia’s tran­si­tion to a climate-neutral, resource-effi­cient clean and cir­cu­lar economy in line with 2030 targets of the Euro­pean Green Deal.
  • The capac­i­ties of deci­sion makers should be enhanced to promote the imple­men­ta­tion of already exist­ing envi­ron­men­tal and climate leg­is­la­tion, as well as EDG inte­gra­tion into dif­fer­ent eco­nomic sectors.
  • Ensure sus­tain­abil­ity of the projects funded through EU-related finan­cial streams, includ­ing those of inter­na­tional finan­cial insti­tu­tions (e.g. EIB, EBRD and etc) and ECAs (e.g. KFW, ADFB , SACE and others).
  • The EU Tax­on­omy Reg­u­la­tion, estab­lish­ing the frame­work for the EU tax­on­omy of sus­tain­able activ­i­ties, should be widely pro­moted and encour­aged vis-à-vis the EaP countries.
  • Promote EGD inte­gra­tion into dif­fer­ent areas at dif­fer­ent levels (coop­er­a­tion among par­lia­ments, local author­i­ties, devel­op­ment of civil society, acad­e­mia, cross-border coop­er­a­tion. etc.).
  • Country strate­gies and action plans for zero pol­lu­tion and zero emis­sion systems should be defined for the agri­cul­ture, energy and trans­port sectors.
  • Provide support for and engage in sys­tem­atic trans­fer of knowhow — new tech­nolo­gies, inno­v­a­tive project models, intern­ships and train­ings for deci­sion makers, experts, CSOs, businesses.

[1] 31 May 2021 on joint hearing of the Par­lia­men­tary Com­mit­tees on Euro­pean Inte­gra­tion and Envi­ron­men­tal Pro­tec­tion and Natural Resources was men­tioned that there are ongoing nego­ti­a­tions with the EU for Green Deal roadmap and strat­egy devel­op­ment. The state­ment does not receive any follow up.

[2]   The Euro­pean Green Deal and its Sig­nif­i­cance for Georgia, Eka­ter­ine Mikadze, Feb­ru­ary 2021,

[3] GAPH, 2019, 2019 Pol­lu­tion and Health Metrics: Global, Regional and Country Analysis,

[4] Social-eco­nomic Devel­op­ment Strat­egy of Georgia “GEORGIA 2020”, Gov­ern­ment of Georgia 2014,

[5] Sus­tain­able Devel­op­ment Goals National Document.pdf

[6] NEAP‑3 2017–2021,

[7] Network anal­o­gous to Natura 2000 outside of the EU.

[8] https://rm.coe.int/files04e-2020-georgia-svaneti1-candidate-emerald-site-nenskra-govt-rep/16809ce010

[9] New phase of EU4Energy Gov­er­nance project launched in Georgia, Moldova and Ukraine

[10] E.g. Georgia’s elec­tric­ity net­works devel­op­ment plan 2021–2031

 [11]Despite Bitcoin’s Dive, a Former Soviet Repub­lic Is Still Betting Big , New York Times, 2019, November

[12] Georgia 2020 Energy Policy review, IEA

[13]  Energy Policy Concept of Georgia , Novem­ber 2020, USAID

[14] Georgia Nation­ally deter­mined con­tri­bu­tion 2021,

[15]  Climate Decar­boniza­tion Sce­nar­ios for Georgia Trans­port Sector, Thomas Day, Sofia Gon­za­les-Zuñiga, Swithin Lui, New Climate Insti­tute, January 2021

[16] Min­istry of Economy and Sus­tain­able Devel­op­ment, 2017, Green Economy Policy and Strategy,

[17] Sup­port­ing the Devel­op­ment of a Green Growth Eco­nomic Strat­egy in Georgia, Tech­ni­cal Report, 2018, EaP Green

[18] EU-funded Projects Aiming at the Main Goal and Prin­ci­ples of the Green Deal in Georgia

[19] https://freedomhouse.org/country/georgia/nations-transit/2020

[20]Defus­ing Georgia’s Polit­i­cal Crisis: An EU Foreign Policy Success? May 2021


 

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