Draft Energy Conservation Law for Georgia

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Draft Energy Conservation Law for Georgia

• Julia Weller
• Pierce Atwood
• 11-13 July 2008
• Batumi, Georgia

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Overview

• Context of Draft Energy Conservation Law
• Customary Provisions in Law
• Chapter One Purpose, Objectives and Definitions
• Chapter Two Development of National Energy
  Conservation Policy
• Chapter Three Implementation of Energy
  Conservation Policy
• Chapter Four Energy Efficiency Standards
• Chapter Five Incentives for Energy Efficiency
• Chapter Six Sanctions
• Conclusion

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1. Context of Draft Energy Conservation Law

• Energy conservation potential from adopting EE
  measures in Georgia is estimated at 30
• UN-funded 2008 National Assessment Report fort
  Sustainable Development estimates amount of
  consumed electricity per GDP in Georgia is 2
  kWh/USD, compared to 0.28-0.6 kWh/USD in
  developed countries3-7 times higher
• Implementing even voluntary EE measures such as
  audits, public education and incentives could
  result in enormous savings for population and for
  energy companies, particularly during peak usage
  times when imports of fuel are highest

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Context of Draft Energy Conservation Law

• In 2007 EBRD extended 35MM credit line to
  participating banks in Georgia for on-lending to
  private sector for RE and EEfirst loan done
• Georgia was first country to get funds under
  Caucasus Energy Efficiency Program
• EBRD currently considering another EE line for
  USD 5 million for Cartu Bank under CEEP for
  on-lending to private industrial and residential
  customers to finance EE projects
• To be complemented by grant funds to engage
  consultants to prepare energy audits

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Context of Draft Energy Conservation Law

• Multilateral Carbon Credit Fund (MCCF)
  established Dec. 2007 by EBRD and EIB
• Allows shareholder countries to purchase carbon
  credits from emissions reductions projects in
  Central Asia (including Georgia) financed by EBRD
  or EIB
• EE in industry (co-generation) and larger
  projects in residential sector (double glazing,
  insulation) qualify for carbon credits
• First pilot energy audit of building belonging to
  Ministry of Education Science and British
  Ambassadors residence being conducted by EEC of
  Georgia

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2. Chapter One General Provisions

• Scope of the Law
• This law establishes the main principles of
  state policy for increasing the efficiency of
  energy usage and the conservation of energy
  regulates the legal and economic rights and
  obligations of energy producers, manufacturers of
  energy-consuming equipment and materials,
  participants in the building and housing
  industry, and consumers of energy and identifies
  the roles and tasks of national and local
  governmental bodies responsible for
  administration of this law.
• This law does not address state policy regarding
  production and processing or storage and
  transportation of fossil fuels.

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Chapter One General Provisions

• Purpose of the Law
• The purpose of this law is to promote economic
  development, energy security, environmental
  protection and improvement of the social
  conditions of the people of Georgia by
  encouraging energy efficiency and energy
  conservation.

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Chapter One General Provisions

• Objectives of the Law
• The objectives of this law are to
• Create the appropriate legal and institutional
  framework to promote EE and energy conservation
• Develop EE responsiveness through introduction of
  energy audits and modern energy management
  methods
• Develop mechanisms for financing energy
  conservation activities and the forms of state
  incentives and support
• Develop state efficiency standards and
  certification procedures
• Promote research and development of new energy
  efficient technologies and
• Foster public education regarding EE and energy
  conservation.

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Chapter One Definitions

• Definitions of New Concepts
• Energy audit means a systematic procedure to
  obtain adequate knowledge of the existing energy
  consumption profile of a building or group of
  buildings, of an industrial operation and/or
  installation or of a private or public service,
  identify and quantify cost-effective energy
  savings opportunities, and report the findings
• Energy efficiency improvement means an increase
  in energy end-use efficiency as a result of
  technological, behavioral and/or economic
  changes

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Chapter One Definitions

• Energy savings means an amount of saved energy
  determined by measuring and/or estimating
  consumption before and after implementation of
  one or more energy efficiency improvement
  measures, whilst ensuring normalisation for
  external conditions that affect energy
  consumption
• Energy services company or ESCo means a legal
  or natural person providing services on
  improvement of energy efficiency and
  conservation, who is paid or is able to attract
  financing, in whole or in part, based on the
  energy or cost savings resulting from the
  services
• Large energy consumer means a consumer whose
  energy consumption exceeds 100 toe

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Chapter Two Development of Energy Conservation
Policy

• The energy efficiency policy objectives of
  Georgia are implemented through a National Energy
  Conservation Policy and Energy Conservation
  Action Plans.
• The National Energy Conservation Policy is
  approved by the Government, based on the
  recommendations of the Minister of Economic
  Development, as an integral part of the National
  Energy Policy.
• The National Energy Conservation Policy is
  submitted to the Parliament for approval and
  adoption in a law.
• The Ministry of Energy implements the National
  Energy Conservation Policy through Energy
  Conservation Action Plans, based on the
  recommendations of the Sustainable Energy Agency.

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Chapter Two Development of National Energy
Conservation Policy

• The National Energy Conservation Policy is based
  on the following principles
• Reduction of energy waste in energy generation,
  transformation, transmission, distribution and
  consumption is a national priority
• Improvement in energy efficiency through fiscal,
  economic and other incentives, development of
  energy efficiency standards, introduction of
  modern technologies and processes, adoption of
  international norms, education and
  scientific-analytical research, and targeted
  state programs provides social and economic
  benefits at least cost.

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Chapter Three Implementation of Energy
Conservation Policy

• The Ministry of Energy shall
• Submit to the Government for its approval the
  Energy Conservation Action Plans containing long
  and short-term programs and targets for energy
  conservation prepared by the Sustainable Energy
  Agency
• Coordinate the implementation of such plans with
  other Ministries and local self-governments
• Publish periodic reports assessing the
  effectiveness of the measures adopted in the
  Energy Conservation Action Plans
• Cooperate with international and regional
  organizations and other governments in the field
  of energy conservation and monitor Georgias
  compliance with its international obligations
  regarding EE

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Chapter Three Implementation of Energy
Conservation Policy

• The Ministry of Energy shall
• Facilitate attraction of financing for EE
  measures including from investors, international
  donors, the state budget and other sources
• Propose financial incentives for EE investment
  for approval of the Government
• Initiate legislative changes in support of EE in
  conjunction with the Ministries of Economy,
  Environment, Transportation and Public
  WorksApprove EE and certification standards,
  and audit mechanisms and
• Issue legal normative acts provided for in this
  Law.

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Chapter Three Implementation of Energy
Conservation Policy

• A Sustainable Energy Agency shall be established
  within the Ministry of Energy
• The Executive Director of the Agency shall be
  appointed by the Minister of Energy, with the
  approval of the Prime Minister
• The Agency shall be funded from the budget of
  the Ministry of Energy.

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Chapter Three Implementation of Energy
Conservation Policy

• The Sustainable Energy Agency shall
• Prepare and implement the Energy Conservation
  Action Plans
• Prepare periodic assessment reports for the
  Ministry of Energy
• Within one year from the effective date of this
  Law
• Develop minimum energy efficiency standards for
  new electrical equipment and appliances
• Develop minimum energy efficiency standards for
  new buildings
• Develop energy efficiency labeling for new
  electrical equipment and appliances sold in
  Georgia and
• Make recommendations on fiscal incentives for
  energy efficient equipment, appliances and
  materials.

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Chapter Three Implementation of Energy
Conservation Policy

• The Sustainable Energy Agency shall
• Provide expertise and support for EE in various
  sectors of the economy
• Guide research in the field of energy
  conservation
• Review applications and make recommendations on
  financial support from the Sustainable Energy
  Fund
• In conjunction with technical universities,
  develop qualifications and certification
  standards for energy auditors, energy managers
  and ESCos
• Collect and disseminate data on new EE
  technologies, materials, methods and experience
  and
• Develop reporting forms for energy consumption
  and energy audits.

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Chapter Three Implementation of Energy
Conservation Policy

• Role of Other Ministries and Departments
• All minimum energy performance standards
  applicable to electrical equipment and
  appliances, fossil fuel and new buildings shall
  be approved by the State Agency of
  Standardization
• All proposed fiscal incentives for implementation
  of energy efficiency measures shall be submitted
  to the Government for its approval
• All technical norms and standards shall be
  approved by the State Agency of Standardization
  and other competent Ministry
• The Department of Statistics shall develop fuel
  and energy balances on the production,
  transformation, supply and consumption of energy
  resources.

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Chapter Three Implementation of Energy
Conservation Policy

• Regional administrations and local municipalities
  shall
• Phase-in energy efficiency building code and
  equipment standards within their territory, using
  local budget funds, targeting public buildings
  such as local government buildings, schools,
  hospitals, and street lighting and
• Implement public education and information
  programs on energy efficiency.

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Chapter Three Implementation of Energy
Conservation Policy

• Large Consumers of Energy, in compliance with
  normative acts issued by the Ministry of Energy,
  shall
• Develop energy management plans
• Conduct periodic energy audits of their energy
  usage and provide the audit reports to the
  Sustainable Energy Agency
• Carry out metering of their energy usage and
  submit data on their annual usage to the
  Department of Statistics.

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Chapter Four Efficiency Standards

• The Ministry of Energy shall decide on the
  appropriate time period within which to phase in
  efficiency standards applicable to new electrical
  equipment, appliances, wood burning stoves and
  cooking stoves
• Producers and importers of electrical equipment,
  appliances, wood burning stoves and cooking
  stoves may not sell, lease or put on to the
  market any devices which do not meet the minimum
  efficiency standards applicable to such devices
• The institutions accredited for inspection shall
  carry out tests and measurements and issue a
  certification if the devices meet the minimum
  efficiency standards applicable to such devices
• Testing shall be performed at the expense of the
  manufacturer and importer and the test results
  shall be reported to the Sustainable Energy
  Agency.

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Chapter Four Efficiency Standards

• Efficiency standards applicable to new buildings
  and required to be included in the Building Code
  of Georgia shall be phased in over a three year
  period
• New buildings shall be inspected by a certified
  energy auditor for compliance with the energy
  efficiency standards in the Building code
• All buildings or apartment units which are sold
  or rented shall, one year of the effective date
  of this Act, be required to have an Energy
  Passport certifying the energy efficiency of the
  buildings envelope, windows and heating usage
  per square meter, certified by an energy auditor
  such Energy Passport shall stay with the building
  or unit until energy efficiency improvements are
  made and a new Energy Passport is issued by a
  certified energy auditor

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Chapter Four Efficiency Standards

• All new electrical equipment, appliances, wood
  burning stoves and cooking stoves shall have
  affixed to them by the manufacturer or importer
  the standard EE label developed by the
  Sustainable Energy Agency and approved by the
  Ministry of Energy
• The labels shall inform consumers of the energy
  consumption levels of the electrical equipment,
  appliances, wood burning stoves and cooking
  stoves
• The labels may be removed only by the
  end-consumers.

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Chapter Five Incentives

• Sustainable Energy Fund
• The Sustainable Energy Agency shall provide
  grants, low-interest loans and loan guarantees
  from the Sustainable Energy Fund for consumers,
  industries and energy service companies related
  to the purchase or installation of certified
  energy efficiency products
• Tax Incentives
• The Ministry of Finance shall approve tax
  reductions for consumers, industries and energy
  service companies for the purchase or
  installation of certified energy efficiency
  produts
• Regional and local tax authorities may institute
  tax incentives for energy-saving measures.

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Chapter Six Sanctions

• Sanctions
• Sanctions shall be imposed for violating the
  mandatory provisions of this Law, including the
  sale of uncertified or unlabeled electric
  equipment, appliances, wood burning heating
  stoves and cooking stoves, and the failure to
  comply with the energy efficiency standards of
  the building code.

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Conclusion

• New Energy Conservation law will attract
  investors to take advantage of carbon credits
  generated by EE if Georgia has right legal and
  regulatory framework
• Focus in developed countries on buying carbon
  credits to comply with mandatory and voluntary
  obligations makes countries with high energy
  intensity attractive
• This is the right moment in time for Georgia to
  enact an Energy Conservation Law

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Thank You!

• Julia Weller
• Pierce Atwood
• jweller_at_pierceatwood.com
• Batumi, Georgia
• 11-13 July, 2008