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As the energy efficiency performance of stoves varies significantly from one model to another, standardisation, which in turn permits certification (e.g. of energy efficiency performance), is crucial to promote domestic stove manufacturing.

Although better-quality imported household stoves are available on the market, their higher capital costs mean they are generally not an economically viable alternative for most households without innovative support measures or financing schemes.

Most current initiatives using improved heating systems are feasibility studies or one-off pilot projects. Some pilot projects in public buildings have used imported “best-in-class” biomass boilers that offer high levels of efficiency and automation, but their long-term use requires a reliable supply of suitable fuel and qualified maintenance engineers, which can be challenging to find in Georgia.

While the use of fuelwood is culturally ingrained, the consumption of other forms of biomass fuel is not. As awareness of biomass pellets, briquettes, and other upgraded biofuels is low, their use remains very limited.

The market for briquettes is relatively undeveloped, but there are early signs of growth. In 2019, around 15 000 m3 of firewood demand was replaced with briquettes.

have been instances in which production growth has been constrained by local feedstock availability or feedstock price escalation. The main briquette consumers are public bodies (e.g. schools and municipal buildings), as general consumer awareness remains low, with most new customers learning of the fuel through word of mouth. In some cases, briquettes have had to be provided free of charge for a period to demonstrate their additional value over fuelwood.

Supplying end users over great distances is generally uneconomic, ruling out markets far from production sites that are located based on feedstock availability. Meeting household demand is also problematic due to low purchase volumes and the lack of retail outlet suppliers. The approximate cost of briquettes delivered to end users is around GEL 500/tonne.

Although public procurement could help boost supplies and support early-stage market development for upgraded fuels, procurement practices have instead hindered market access for some independent fuel suppliers. This has occurred where state procurement guidelines have specified that public buildings may purchase logwood only or must source the least costly (and not necessarily the best) fuel.

Many tenders specifically request firewood or are based on volume rather than heat content, as municipal governments lack the heating expertise necessary to make informed fuel supply decisions. Furthermore, some public institutions do not pay for heat, so have no incentive to maximise efficiency.

General obstacles to market development for all types of upgraded biomass fuels include: low and, in the case of illegal consumption, zero-cost unsustainable firewood supplies; a lack of consumer awareness regarding upgraded fuels, and unfamiliarity with the concept of purchasing fuels or heat energy in many areas; challenges in establishing reliable supply chains for feedstocks and upgraded-fuel distribution; high interest rates for entrepreneurial fuel producers seeking the capital necessary to purchase equipment to expand operations; absence of supportive policies and financial mechanisms for production and consumption; and incompatibility with the basic stove types commonly used in rural areas.

Other initiatives to produce modern biomass fuels and take advantage of the variety of untapped resources available in Georgia are not widespread. Only a limited number of cases use agricultural residues for energy, mostly linked to processing industries. A number of isolated biogas pilot projects have also been initiated; for example, the European Investment Bank has supported upgrading of Kutaisi’s municipal water sector infrastructure, which will involve biogas production. Generating thermal energy from waste (e.g. through co-generation) is not utilised.

Using briquettes in basic stoves is not advisable due to the combination of their high combustion temperature, creating potential for injury.

It should also be noted that using briquettes in simple stoves can shorten the appliance's lifespan due to their high burning temperature. Basic stoves are also not suitable for other upgraded fuels such as pellets or wood chips, creating a market barrier for these fuels.

Compared with the upper-limit cost of using firewood in a basic low-efficiency stove, the energy savings offered by using low-cost briquettes in an improved stove would easily pay for the additional cost of the appliance in less than one year.

Georgia’s household natural gas costs, which are subsidised, were the lowest in Europe in 2019, at around one-quarter the average EU residential gas price. Household gas prices were also one-third lower than commercial rates in 2019.

However, several factors must be considered:  The prohibitive capital cost (for many households) of a modern natural gas boiler, as well as further heat distribution pipework and home radiator expenses  The cost to the state of subsiding natural g as prices on a per-unit basis and the extension of natural gas transport infrastructure to rural areas  Energy security implications, as natural gas is almost entirely imported.

The current very low gas prices as a result of the COVID-19 crisis offer the Georgian government an opportunity to reassess fossil fuel subsidies.

International best practice in biomass consumption The following examples of good international practices can help guide the development of sustainable biomass consumption in Georgia.

Residential and commercial heating accounts for over half of all wood pellet consumption in the European Union. Austria and Italy are two of the major residential wood pellet markets.

New installations are commonly modern automated systems that offer around 90% efficiency and comply with air pollution regulations, thanks to combustion control to ensure optimal combustion temperatures and air-to-fuel ratios. Plus, certification ensures appliance quality: for example, in Italy, AriaPulita certifies domestic appliances and provides a star rating based on efficiency and emissions.

The pellets most commonly used in both countries meet the highest quality specifications (A1), having less ash content and therefore lower associated particulate matter emissions.

Policy has played a key role in promoting the use of residential biomass heating systems. In Italy, renewable heat installations are eligible for a tax reduction. Alternatively, the Conto Termic scheme provides two years of payments for households installing biomass systems of <35 kW capacity. Financial support is contingent on the heating system meeting prescribed limits for particulate matter emissions, and households cannot receive both support measures for the same system.

In Austria, the Environmental Assistance in Austria (UFI) programme provides purchase incentives for biomass and other renewable heating systems, of up to 35% of investment costs, but installations must meet certain quality standards to be eligible for support. Support levels are highest for the replacement of fossil-fuelled heating systems, with the next-highest support offered for replacing an old wood heating system (pre-2003) with a modern biomass heating system.

Austria also has a specialist training programme for installers of renewable heating technologies as well as guidelines for public buildings to set a good example, including by using renewable technologies as widely as possible.

EN Plus is an independent third-party scheme for wood pellet certification, covering around 12 Mt of supply across 46 countries in 2020. In 2018, 85% of pellets produced in the European Union were from forestry residues. The scheme ensures consistent fuel quality by assessing the entire fuel supply chain, and pellets meet established technical specifications (calorific value, ash content, size, durability, moisture content, etc.) largely based on the international ISO 17225 standard.

This exchange facilitates the trading of biomass fuels in Lithuania (e.g. wood pellets and wood chips) by providing a platform that connects suppliers and purchasers. In 2019, over 95% of all purchases by regulated heat producers took place over the exchange. Sellers submit offers and specify the distance over which they are prepared to deliver, and the exchange matches purchasers with the best suitable offer.

This increase in supply has in turn reduced biomass fuel prices and delivered greater uniformity of pricing. Furthermore, suppliers are validated to ensure they are technically and financially able to fill orders and that fuels supplied meet the established technical specifications, thereby raising purchaser confidence.

Many countries and regions throughout Europe have undertaken heat-mapping exercises to produce geographic information system (GIS) visualisation tools to guide public sector decision makers and industries in the best-practice deployment of low-carbon heating solutions.

Several European countries apply a lower VAT rate for biomass fuels to incentivise a switch from fossil heating fuels such as natural gas, heating oil or coal to sustainable biomass.

Georgia's biomass sector has significant potential to contribute to the country's energy security and mitigate greenhouse gas emissions.

Harnessing donor funding and the capacity of the GEF to support programmes, such as technical assistance to design projects, conduct feasibility assessments, secure grants or soft loans, purchase efficient stoves economically, and establish upgraded-fuel supply businesses, can help modernise biomass consumption in Georgia.

Identifying regional clusters of biomass supply and heat demand, and launching focused initiatives to establish upgraded-fuel production businesses in these areas, can also help stimulate early-stage market development.

Establishing a strategic communication strategy to enhance public awareness of the benefits of higher-efficiency heating appliances and upgraded fuels, best-practice combustion practices, and the health impacts of poor air quality can also support biomass consumption modernisation efforts.

Using development funding to create biomass boiler and stove pilot projects is one way to highlight best practices and stimulate early-stage market development, but it's important to consider the challenges in obtaining suitable fuels, maintenance expertise, and parts.

Rather than conducting one-off projects, development funding for pilots would be more effectively used to install higher-efficiency stoves and boilers at capital costs that allow for the creation of local, self-sustaining business models.

Supporting fuel supply businesses: Support new fuel production businesses through financial de-risking measures (e.g. grants, soft loans or fiscal measures ) to facilitate investment in equipment. Create capacity-building and training opportunities to offer technical support to biomass fuel producers from industry leaders in briquette and pellet production. Establish an active industry association to support the common interests of biomass fuel businesses though the dissemination of information and lobbying on their behalf.

Optimising fuel procurement: Reform procurement guidelines and processes to ensure that sustainability is a key criterion in sourcing biomass heating fuels. Use public sector demand to stimulate market development in upgraded fuels, with long-term public sector supply contracts strengthening the business case for fuel supply investments.

Boosting upgraded-fuel competitiveness: Consider making the VAT for sustainable renewable fuels lower than for coal, fuel oil and natural gas. Ensure that forestry residue feedstocks for upgraded fuels (e.g. wood chips or pellets) are provided at a suitable price to make the fuels more cost-competitive.

Increasing combustion efficiency: Establish education and outreach programmes that offer guidance on best-practice combustion to ensure that households continuing to use firewood at least do so as efficiently as possible. Support new efficient-stove production businesses through financial de-risking measures (e.g. grants, soft loans or fiscal measures ) to facilitate investment in equipment.

Cross-cutting: Introduce appropriate standards and certification measures (e.g. for stove efficiency or fuel characteristics) to improve end-user confidence and facilitate market development. Develop replicable exemplar pilot projects in public buildings capable of long-term operations, bringing together appropriate technologies, upgraded-fuel supplies and operational competences.

In this vision, Georgia has fully integrated biomass into its national energy policy through formalised policies for the use of biomass wastes and residues. Robust implementation of the Forest Code means best-practice sustainable forestry management is widespread, and illegal forest activity is low. Responsibilities for all relevant stakeholders, as outlined in a government-approved national bioenergy strategy, are widely understood, and public procurement focuses on upgraded biomass fuels from sustainable origins.

The country’s modern bioenergy industry produces diverse upgraded biomass fuels of uniform quality using sustainable feedstocks sourced from forestry, agriculture, energy crop plantations and wastes. Thriving national and local businesses produce and supply upgraded fuels such as pellets, wood chips and briquettes to the public and residential sectors, where they are consumed in economical biomass heating systems with verified high efficiency levels.

Numerous environmental benefits have been realised. Sustainable forest management has greatly reduced pressure on national forestry resources and prevents deforestation. This in turn ensures the integrity of the natural environment and greatly reduces the risk of floods, forest fires and landslides. Waste management is now sustainable, avoiding environmental impacts on the air, land and water.

Positive social benefits are also in evidence. A far lower share of Georgia’s rural population relies on firewood for their energy needs, and modern biomass stoves provide greater thermal comfort and reduce indoor air pollution, improving health. Upgraded biomass fuel production and supply operations create rural employment. Energy security is also higher, as the full range of domestically produced biomass resources is being maximised. The avoided costs of environmental and health impacts make investments in sustainable biomass supply and modern appliances programmes economically self-sustaining.

Biomass use in Georgia is a crosscutting issue that has implications both within and beyond the energy sector. As the principal fuel used for household heating in rural areas, bioenergy is an important part of Georgia’s energy system. However, there is considerable scope to improve the sustainability of biomass consumption – first by modernising the fuel supply with a diverse set of upgraded biomass fuels from sustainable resources, and second by making all forms of biomass fuel consumption more efficient through the use of better heating and cooking appliances.

As biomass falls under the jurisdiction of multiple agencies, a coordinated approach to policymaking, governance and market development is required. Furthermore, to establish a modern bioenergy industry by 2030, biomass use needs to be integrated into wider energy policy at all levels of government. Achieving the vision outlined in this roadmap will therefore require more comprehensive and better-coordinated government, private sector and international development agency efforts.

The Government of Georgia could consider incorporating all the measures needed to modernise biomass resource use into a dedicated national bioenergy strategy. The primary objective of the strategy should not be to raise bioenergy consumption from the current level, but to transition to a modern and sustainable bioenergy industry.

Programmes to scale up sustainable biomass fuel supply volumes and the use of higher-efficiency heating appliances cannot be delivered without an adequate budget. While the GEDF could provide funding, other financing sources may also be needed. International development donor funding will likely be available to support projects to increase biomass use sustainability and reduce indoor air pollution.

There are numerous examples of international best practice in the area of bioenergy that Georgia could replicate with in-kind support. The avoided costs of environmental and health impacts currently incurred from unsuitable biomass use for heating should be factored into equations that assess the cost of policies upport to establish a modern bioenergy industry.

Other measures that can substantially facilitate growth of a sustainable bioenergy industry in Georgia can be undertaken at no cost. These include ensuring that biomass wastes and residues are adequately addressed in waste management regulations; refocusing public fuel procurement policies to take fuel sustainability into consideration; and providing forestry residues at a reasonable price to make upgraded fuels more cost-competitive.

As ensuring biomass supply sustainability is a key priority, robust implementation of the updated Forest Code to introduce best-practice sustainable forestry management is vital. The social-cutting policy should be phased out responsibly by 2023 with measures that ensure affordable and sustainable alternatives to fuelwood for the rural population.

Effectuating this transition in a manner that does not increase fuel poverty will be challenging, but it is a policy priority.

Georgia's potential to produce sustainable fuels from wastes and residues should be exploited as a key means to shift away from using firewood in rural areas.

The single most effective method to improve the sustainability of biomass use in Georgia is to transition to more efficient heating appliances.

This should be a nother key policy priority, and adequate attention should also be given to measures that strengthen the business case for the production of upgraded biomass fuels such as pellets, woodchips and briquettes made from sustainable resources.

It is crucial to capitalise on donor funding and the capacity of the GEDF to support programmes that make efficient heating appliances affordable and that establish upgraded-fuel supply businesses; support could take the form of soft loans or grant schemes.

The fact that the household fuel cost savings that can be realised from switching to an efficient stove can pay for the appliance in less than a year means that government support schemes should be financially sustainable.

A countrywide rollout of such devices would reduce pressure on Georgia's forestry resources considerably.

The roadmap for sustainable bioenergy development in Georgia aims to promote a low-carbon economy and reduce dependence on fossil fuels.

A comprehensive approach is needed to address the challenges of energy production, consumption, and efficiency in Georgia, including the role of biomass in meeting renewable energy targets.

The bioenergy sector has significant potential to contribute to the reduction of greenhouse gas emissions and meet the increasing demand for heat and power in Georgia.

Pellet market share and other market data are essential for understanding the bioenergy industry in Europe and identifying opportunities for Georgia's sustainable bioenergy development.

Landfill taxes and bans can be effective policy instruments to promote waste-to-energy plants and reduce greenhouse gas emissions from waste disposal in the European Union.

Energy consumption patterns in households and industries must be understood to develop targeted policies and programs for energy efficiency improvement in Georgia.

The under-heating of buildings in Georgia leads to significant losses of GDP, highlighting the need for energy-efficient solutions to improve building insulation and heating systems.

Municipal waste statistics are essential for developing effective waste management strategies and reducing greenhouse gas emissions from waste disposal in Europe.

Baseline data on energy demand, supply, and efficiency in Georgia are critical for informing policy decisions and tracking progress towards sustainable bioenergy development.

Vineyard prunings can be a valuable feedstock for heat production, with European experiences offering lessons for Georgia's agro-biomass sector.

Forest and land use statistics are essential for understanding the impact of forest management practices on biodiversity conservation and greenhouse gas emissions in Georgia.

The Swedish roadmap for bioenergy development provides insights into the challenges and opportunities of meeting demand for biomass energy in a fossil-free economy.

Georgia: Country Environmental Analysis – Institutional, Economic and Poverty Aspects of Georgia's Road to Environmental Sustainability, World Bank, Washington, DC.

Valuable comments, feedback and input were provided by the Georgian Ministry of Economy and Sustainable Development, the Georgian Ministry of Environment Protection and Agriculture, the Georgian Forestry Agency, the EU Delegation to Georgia, GiZ, CENN, Marani Developers, Visioni, Greenergy, and the Biomass Association of Georgia.

And a final invaluable thank you to the European Commission for their support of the IEA’s work on EU4Energy.

The IEA examines the full spectrum of energy issues including oil, gas and coal supply and demand, renewable energy technologies, electricity markets, energy efficiency, access to energy, demand side management and much more.

Through its work, the IEA advocates policies that will enhance the reliability, affordability and sustainability of energy in its 30 member countries, 8 association countries and beyond.

This publication reflects the views of the International Energy Agency (IEA) Secretariat but does not necessarily reflect those of individual IEA member countries or the European Union.

EU4Energy is a collaboration between the IEA, the European Union, Focus Countries and other implementing parties, designed to support the aspirations of Focus Countries to implement sustainable energy policies and foster co-operative energy sector development at the regional level.

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.

The EU4Energy Programme aims to improve energy efficiency and security in the Eastern Partnership countries, with a focus on Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine. The Programme will achieve this by supporting the development of national energy strategies, promoting the use of renewable energy sources, increasing energy efficiency in buildings and industries, and enhancing regional energy cooperation. The EU4Energy Programme is an initiative that will help to reduce greenhouse gas emissions, increase the share of renewables in the energy mix, and improve energy security across the region.

Energy efficiency plays a crucial role in the transition towards a low-carbon economy, as it can help reduce energy consumption and mitigate climate change. By improving the efficiency of existing infrastructure, technologies, and practices, we can achieve significant greenhouse gas emission reductions.

Raising the level of energy efficiency in buildings, industry, and transportation is essential for meeting global climate goals. Energy-efficient solutions can be achieved through a combination of technological advancements, behavioral changes, and policy frameworks that incentivize their adoption.

Energy-efficient technologies have numerous benefits beyond just reducing emissions. They can also improve energy affordability, enhance economic competitiveness, and create new job opportunities in the clean energy sector.

The IEA examines the full spectrum of energy issues including oil, gas and coal supply and demand, renewable energy technologies, electricity markets, energy efficiency, access to energy, demand side management and much more.

Through its work, the IEA advocates policies that will enhance the reliability, affordability and sustainability of energy in its 30 member countries, 7 association countries and beyond.

The four main areas of IEA focus are: Energy Security: Promoting diversity, efficiency, flexibility and reliability for all fuels and energy sources; Economic Development: Supporting free markets to foster economic growth and eliminate energy poverty;

Analysing policy options to offset the impact of energy production and use on the environment, especially for tackling climate change and air pollution;

Working closely with association and partner countries, especially major emerging economies, to find solutions to shared energy and environmental concerns.

Energy is an indispensable catalyst of economic activity and a source of comfort and well-being for all of us. Yet energy production and use is responsible for around two-thirds of global greenhouse gas emissions and is, therefore, central to achieving the goals of the Paris Agreement. The energy sector is also a key source of air pollution, the fourth-largest risk to human health globally. This is why energy is so important for the United Nations Sustainable Development Goals.

This transition will not be the same everywhere and will be shaped according to each country’s circumstances. But, while indigenous endowments of fossil and renewable resources differ, there is one fuel to which all countries have access, a fuel that has everything needed for a sustainable and secure energy sector: energy efficiency.

The benefits of energy efficiency are numerous. Energy not consumed due to efficiency is carbon-free by default. And energy efficiency supports the clean energy transition more broadly across the energy system; for example, smart and efficient electricity use facilitates a faster decarbonisation of the power sector and supports the integration of renewable energies.

Nonetheless, we cannot sit back: 68% of global final energy use is still not covered by energy efficiency codes or standards. And the most recent IEA data point to a slowing of global efforts on energy efficiency in 2017, while the need for an accelerated energy transition becomes ever more urgent.

Further progress on efficiency is critical. Our analysis in this report demonstrates the compelling economic case for energy efficiency, and so it would seem paradoxical that so much efficiency potential remains untapped. But this highlights the crucial role that policy has to play in stimulating greater uptake of efficiency opportunities that are not pursued by the market alone.

The IEA family of countries now accounts for more than 70% of global energy consumption. We will work together with all our governments and beyond to make sure that best-practice energy efficiency policy is placed right where it belongs: at the top of the energy policy agenda.

This publication was prepared by the International Energy Agency (IEA), with support and funding from the German Federal Ministry for Economic Affairs and Energy (BMWi).

The individuals that contributed to this study are not responsible for any opinions or judgements contained in this study. All errors and omissions are solely the responsibility of the IEA.

The energy transition will require a significant increase in energy efficiency to meet the challenges of climate change and energy security. Energy efficiency has the potential to reduce greenhouse gas emissions by up to 30% and can also help to achieve the Sustainable Development Goals.

Energy efficiency is often overlooked as a key component of the energy transition, but it has the potential to play a crucial role in reducing emissions and achieving a low-carbon economy. However, energy efficiency will require significant investment and policy changes to unlock its full potential.

In this chapter, we will explore the role of energy efficiency in the clean energy transition, including the benefits, challenges, and opportunities for different sectors and regions.

Energy efficiency can be achieved through a range of measures, including improving building design and insulation, increasing the use of renewable energy sources, and promoting sustainable transportation options.

Investment is needed to unlock the full potential of energy efficiency, but it also has the potential to create jobs and stimulate economic growth.