The nationally determined contribution (NDC) of Georgia, communicated to the United Nations Framework Convention on Climate Change (UNFCCC), stresses that substantially limiting Georgia’s greenhouse gas (GHG) emissions to meet its climate goals requires greater investments in low-carbon technologies throughout the country. More broadly, Georgia’s Socio-Economic Development Strategy – “Georgia 2020” – provides a clear vision for development. The strategy highlights three key principles: fast and efficient economic growth; inclusive economic growth, envisaging the universal involvement of the population in the development process; and rational use of natural resources, ensuring environmental safety and sustainability and avoiding natural disasters. All of them inevitably require further policy reforms to mobilise various sources of finance for economic growth that is green, stable and inclusive.

Georgia has undertaken a wide range of economic reforms, significantly improving economic and social indicators. However, its environmental performance has lagged. In response, the government of Georgia and Georgian municipalities, often in collaboration with development co-operation partners, have been actively developing policy for climate action and green growth. Policy documents include the nationally determined contribution (NDC), Low Emission Development Strategy (LEDS), National Energy Efficiency Action Plan (NEEAP) and Nationally Appropriate Mitigation Actions (NAMAs). Eleven Georgian municipalities have submitted their own Sustainable Energy Action Plans (SEAPs) under the “Covenant of Mayors” initiative. The government of Georgia has also started developing a Green Economy Strategy, a National Renewable Energy Action Plan and a Climate Action Plan as an implementation strategy for the NDC.

This chapter describes challenges and opportunities regarding further mobilising finance for climate action in Georgia, based on analysis in subsequent chapters. It examines investment needs for climate action vs. potential and available sources of finance, recognising that climate action should benefit both the environment and the economy. It highlights the importance of coherence among several strategic policy documents on climate change and green growth. It also assesses creating demand for financing climate action through enhanced policies and regulations. Finally, it examines development of the financial market and other enabling conditions conducive to further mobilisation of finance for climate action in the country.

This chapter takes stock of investment needs to achieve Georgia’s climate targets. The Georgian government and its development co-operation partners have estimated investment needs for the country’s climate action, but information is often fragmented in different policy documents. Thus this chapter reviews several publicly available information sources and attempts an overview of the needs for finance towards 2030. It highlights the National Energy Efficiency Action Plan, the Low Emission Development Strategy, the Nationally Determined Contribution, among others.

Strong and stable climate policies are essential to create demand for investment in climate action in Georgia. Climate policies and regulations that directly affect business opportunities, costs, risk and returns on investment are often uncertain. Indeed, this is one of the most frequently cited barriers to scaling up finance for climate action in Georgia and elsewhere in the world. This chapter provides a brief overview of the country’s nationally determined contribution (NDC) and two key strategic policy documents: the Low Emission Development Strategy (LEDS) and the National Energy Efficiency Action Plan (NEEAP). It also touches upon other strategic policy documents related to climate change mitigation in Georgia.

This chapter takes stock of existing financial channels available for a range of climate action in Georgia. These channels include the central and municipal governments, which invested directly in infrastructure and risk mitigation instruments. State-owned enterprises, sovereign equity funds, domestic commercial banks and other types of Georgian financial institutions have also provided finance. Bilateral and multilateral donors provide development finance as well. Finally, the chapter explores new financial channels for green finance that may be used for Georgia’s climate action in future. Green bonds, for example, are attracting more interest.

Scaling up finance for climate action in Georgia requires a broader set of conditions that enable further finance to flow to achieve the country’s long-term goals. This chapter reviews a range of policies that directly or indirectly influence investment conditions to mobilise such finance in Georgia. It examines enabling conditions on the following areas: financial market design; provision of risk mitigation instruments; public funding entities, and competition (especially in the electricity sector). The chapter also briefly discusses gaps in information, awareness and capacity, and potential options to bridge them. Filling these gaps is also an important enabling condition on both demand and supply sides of finance.