A Call to Urgently Eliminate Latvia’s Backwardness in Transport Decarbonization

"The Latvian transport sector urgently needs an additional push to rapidly increase decarbonization—especially considering that in 2022 biofuels, as part of renewable energy in transport, accounted for only 1%, while the development of biomethane, hydrogen, and electric transport is still at an early stage. According to the new, third version of the Renewable Energy Directive, EU Member States must achieve a target of 29% renewable energy in transport by 2030. To avoid the state having to spend taxpayers’ money on purchasing emission reduction quotas from other countries, decisive action is required from both public institutions and the business sector. It is positive that the Ministry of Climate and Energy has begun coordinating the Climate Law. This is intended as an umbrella law that will promote and regulate emission reductions across all sectors," noted Armands Gūtmanis, Head of the Sustainability Cluster Latvia, at the seminar.

In Latvia, light and heavy freight vehicles, municipal transport, and buses together account for more than 40% of all road transport emissions. So far, there has been little broader discussion on decarbonizing this sector. Technology replacement is not simple, as fossil fuel vehicles must be replaced with complex and expensive equipment, and planning must start well in advance.

Aigars Pušinskis, Managing Director of Scania Latvia:"As a company, we have set very clear goals—namely, to reduce emissions in our operations by 50% between 2015 and 2025. We are also increasingly offering clean technology vehicles to our clients. The environmental impact of an electric vehicle is many times smaller than that of a diesel vehicle. However, an electric vehicle is almost twice as expensive as a diesel one, which is why many transport companies cannot afford it. In addition, there are not enough charging stations along the roads, and these should be developed at depots or logistics centers. At charging points, vehicles can be charged quickly enough—on average within 65 minutes—which would be very helpful for long-distance drivers. It is also important to increase the capacity of green energy production. To reduce transport emissions, support from the state and EU funds is necessary."

Gunārs Valdmanis, representative of the Ministry of Climate and Energy, emphasized that the ministry needs to see calculations made by the different sectors regarding the required level of subsidies and the amount of emissions that could be reduced with state support.

Several regulations will transform the transport sector, including the Alternative Fuels Infrastructure Regulation, the Directive on the promotion of energy from renewable sources, as well as regulations concerning sustainability and ESG issues. As a result, customer and investor demand for sustainable services will increase. For Latvian transport companies to remain competitive in EU markets, faster adoption of electromobility and alternative renewable fuels in daily operations is necessary.

Ivo Ošenieks, President of the Latvian Passenger Transport Association, emphasized that electric buses are purchased by the state for a 10-year service life, yet in practice, the average mileage in one company is currently only 45 kilometers per day, while in another it reaches 125 kilometers. “I would call for public procurement procedures to take mileage volumes into account so that sustainable transport procurements are not carried out merely for the sake of ticking a box. Green energy is more expensive, and vehicles powered by it must be driven more than diesel-powered ones,” he noted.

“As carriers, we are ready to fulfill all obligations imposed by the state or the European Union, but it is important to understand to what extent all requirements can be met without state involvement and co-financing. In the sector, we are prepared to become greener and emission-free, but the question is whether we will be able to compete in the broader European market. We are in high demand both in Scandinavia and across Europe, but competing is not easy—we are in a very disadvantageous geographical position compared to our competitors, as our country borders Russia,” noted Aleksandrs Pociluiko, Secretary General of the Road Carriers Association “Latvijas Auto”

Annija Novikova, Director of the Public Transport Services Department at the Ministry of Transport, acknowledged that “the ministry’s responsibility is to ensure wider use of public transport for large passenger flows and to reduce the use of private vehicles in the Riga metropolitan area, as well as to promote and offer broader opportunities for passengers to plan journeys using different modes of transport, including bicycles and micromobility tools.”

Seminar participants also highlighted other unresolved issues. Jānis Bethers, representative of Virši-A, noted that companies need clarity as soon as possible regarding the pace and costs of emission reductions in the transport sector. Andris Kaņeps, Deputy Director of the Legal Implementation Department of the Procurement Monitoring Bureau, pointed out that the legal requirements for “green procurement” are currently being met at only the minimum level in the public sector when carrying out procurements and services. Andris Karlsons, representative of Eco Baltia Vide, stressed that high technologies cannot be detached from everyday life, and there is still no clear answer about what we will do and what we will be driving in 2030, but efforts are being made to adapt and implement the changing laws.

The participants reiterated concerns about financial risks if the state fails to meet emission reduction targets—namely, how much money will be needed to purchase emission reduction quotas from other countries. Estonia’s Prime Minister, Kaja Kallas, announced last winter that Estonia would have to spend €225 million if it does not implement intensive emission reduction solutions. Meanwhile, Lithuania’s Minister of Environment, Simonas Gentvilas, has projected as much as €645 million. The Latvian government has not yet publicly mentioned the expected costs.

On September 7 of this year, a seminar entitled “Decarbonization of Freight Vehicles, Municipal Transport, and Buses – How Will We Achieve the 2030 Renewable Energy and Competitiveness Targets?” took place, where transport and related sector experts provided an overview of the most significant regulations set to transform the transport sector, the necessary changes in legislation, and the use of EU funds to promote emission reductions. This was the fifth seminar in the series “Less Emissions, More Renewable Energy,” organized by the Latvian Renewable Energy Federation together with the Latvian Climate Neutrality Cluster 2050.

Additional Information:

Laine.otersone@metaadvisory.lv