Support for bioenergy and its impact: the case of Latvia

Abstract

The restricted resources of fossil fuels, concerns for energy security, and the need to respond to climate change have led to growing world-wide interests in renewables, including bioenergy. The paper deals with the analysis of bioenergy support instruments in Latvia, with an objective to evaluate the direct impact of the bioenergy support to energy costs in Latvia. The results show that, in general, the main bioenergy support instruments in Latvia are similar to the support applied in other EU countries; yet, it should be revised due to the latest EU recommendations, particularly, regarding support of the first generation biomass. The generation support for electricity from biomass is provided as feed-in tariffs; biofuels are supported by mandatory blending requirement (during 2005-2010 price support was provided) which has stimulated rapid increase in the production of electricity from biogas and transport biofuels. Up to now, the targets for bioenergy in total electricity and transport consumption have not been met despite rapid increase of bioenergy production in Latvia. The generation support for renewables (including bioenergy), and especially feed-in tariffs, have high burden on Latvian consumers. Due to feed-in tariffs and mandatory blending requirement, energy costs in Latvian agribusiness are higher than in other Baltic States and reduce competitiveness of agrifood production.