Latvia’s transition to clean energy presents an important opportunity to bolster energy security and lower energy prices

Actions taken today to reduce emissions will inform the pace and scale of Latvia’s energy transition and achieving its ambitious goal of climate neutrality by 2050, according to a new in-depth policy review by the International Energy Agency (IEA).

The review, published today, is a key milestone in Latvia’s accession to the IEA, coming after ministers of IEA member countries in February invited Latvia to become the Agency’s 32nd member.

Latvia continues to expand the share of renewable energy in its power mix, which accounts for around three-quarters of electricity generation, with much of the current output from hydropower and biomass. This provides a strong foundation for the country to further reduce its emissions economy-wide and reach its renewable energy targets, including a recently updated intention to meet nearly 60% of its final energy consumption from renewables alone by 2030.

However, other sectors – notably transport and buildings – continue to consume large amounts of energy and rely on dated infrastructure. According to the report, this is hindering stronger efforts to reduce overall energy consumption and greenhouse gas emissions. It therefore urges the government to prioritise energy efficiency and fuel switching in these sectors.

To further electrification within the energy sector, which is crucial for Latvia’s broader climate goals, policymakers must foster a conducive environment for investors to support new renewable energy projects, especially in wind and solar. The report finds that streamlining permitting procedures and eliminating regulatory bottlenecks can help unlock new investments.

Energy Policy Review of Latvia 2024 will be launched today at an event in Riga by IEA Deputy Executive Director Mary Warlick alongside Latvia’s Minister of Climate and Energy Kaspars Melnis.

“Latvia has taken impressive steps to reduce its energy dependence on Russia in such a short period, ending imports of both electricity and natural gas,” said IEA Deputy Executive Director Mary Burce Warlick. “We also encourage Latvia to accelerate efforts to synchronise with European electricity networks, deploy greater shares of renewables and diversify imports to safeguard its energy security. We look forward to continuing the IEA’s cooperation with Latvia as it takes significant steps to advance its energy transition.”

The report finds that the creation of a new Ministry of Climate and Energy in January 2023 has been an important step towards meeting many of the country’s energy and climate goals. As Latvia moves forward with the next phase of its energy transition, the report offers a series of recommendations. This includes producing a detailed electricity sector roadmap that reflects a growing share of renewables to increase electrification and provide greater certainty for prospective investors.

"The recommendations of the International Energy Agency are equally in line with Latvia's priorities, which are at the forefront of 'today's' energy policy,” Minister Melnis said. “We have been working actively to put in place regulations by mid-June that will make wind farms increasingly attractive to citizens and municipalities. The cheapest way to produce energy is at home, so we plan to maximize the potential of wind energy to provide cheaper energy for the Latvian population, inject additional investment into the national budget, promote energy security and reduce emissions that are not environmentally friendly. Equally, several support programmes have been developed or modified to promote both the installation of renewable energy generation equipment among households and the replacement of our old fleet with green and environmentally friendly vehicles.”

The report highlights the opportunity for Latvia to significantly improve energy efficiency of the country’s existing building stock, which would require consistent financial support for renovation and retrofit projects. Incentives to transition the vehicle fleet in favour of newer, more efficient models, including electric vehicles could also help greatly reduce emissions in the transport sector. 

Latvia’s energy system is closely tied with its neighbours, meaning energy transition strategies will need to be well coordinated across the Baltic states, the report notes. Latvia’s large underground Inčukalns natural gas storage facility has proven instrumental in bolstering regional security of supply across the region following a ban on Russian gas imports in 2022. Likewise, the expected closure of thermal electricity generation in the region will increase the need for strong interconnection capacity to support energy security and avoid price spikes in the future.