Green energy transition in Armenia

| 5th December 2019
Yerevan
Pixabay
There is a huge potential for this landlocked country in the Caucasus to accelerate its transition to green energy.

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Armen Kirakosyan sits at his desk in the small backyard office in the northern outskirts of Yerevan, surrounded by shelves stuffed with books, some hidden behind photographs of — horses.

Kirakosyan is an engineer who, together with a few friends, established the horse farm ‘Ayrudzy’ in the town of Ashtarak in 1980 that later developed into a horse riding club. Combining his love for horses and engineering, he turned Ayrudzy into an NGO in 2007 with the aim to develop energy cooperatives in Armenia.

Since 2013, the club members have been working on the creation of an energy cooperative and, only recently, installed a solar station at Ayrudzy.

Energy cooperatives

When asked about his motivation, the 60-something fills his pipe, lights it and takes a few puffs. He recounts walking through the Ararat valley south-west of Yerevan. He says that the plants he saw on the banks of the Aras river at the bottom of the valley 30 or 40 years ago, now grow 200 metres higher up.

Kirakosyan says: ‘The climate is changing and now, in Ararat valley, we have a desertification process.' And he believes that energy cooperatives can be part of the solution to address global warming by reducing Armenia’s dependence on natural gas.

Apart from that, Kirakosyan adds, he also just finds new technology exciting — he’s an engineer after all.

While Armen Kirakosyan has clear ideas about how Armenians can tackle the climate crisis, the issue itself can’t yet count on the awareness of the Armenian population at large. The country does have a long history of environmental mobilisations, but most of them have targeted localised problems that, for instance, affect the country’s rivers, lakes and forests.

Recently, citizens of the spa town Jermuk blocked the road to the by-now infamous Amulsar gold mine, which threatens to pollute the water in Jermuk and potentially even Lake Sevan, Armenia’s freshwater reservoir. This presents only the latest instance in a chain of environmental battles.

Velvet revolution

The fact that global warming hasn’t really featured high on the general public’s agenda shouldn’t really take anyone by surprise. Armenia remains a country where greenhouse gas emissions lie far below the ceiling that the Paris Agreement foresees for the country.

More importantly, however, Armenians had other problems to focus on: it was only a year and half ago that Armenian society began to free itself from a corrupt political elite in the social media-driven ‘Velvet Revolution’. 

Since then, the new Armenian government under former opposition leader Nikol Pashingyan has rooted out systemic corruption from the top — even opposition MPs agree on that — and ushered in attempts to reform the economy, education, health and other sectors. One can sense an atmosphere of hope but also high expectations in the country.

Crucially, Pashinyan has also made the case for accelerating Armenia’s green energy transition and, in his government’s 5-year economic plan, foresees solar energy to cover 10 percent of the country’s total energy consumption in 2024.

The country has huge untapped potential for green energy — hydro, solar, wind power and geothermal. That’s particularly true for solar: according to Armenia’s solar map, the country receives 1,720 kilowatt hours per square metre of sunlight every year, compared to an average of 1,000 in Europe. 

Geopolitics

Pashinyan’s plans to diversify Armenia’s energy supply, however, aren’t entirely new. Previous governments already encouraged the development of renewable energy as early as 2003. So these plans might be less rooted in the urgency to tackle global warming but rather in Armenia’s recent history and geopolitical situation.

When talking to Armenians about their country’s geopolitics, one can often hear variations of this very phrase, ‘A small country with limited resources’.

Unlike its eastern neighbour Azerbaijan, the landlocked country doesn’t have any indigenous fossil resources like oil or gas to provide a steady and independent energy supply. In its recent past lack of domestic resources put Armenia through a ‘dark’ period, still influencing its politics today.

In 1988, shortly before the fall of the Soviet Union, a devastating earthquake caused at least 25,000 deaths in the north-western part of the Armenian Soviet Socialist Republic. With the Chernobyl disaster two years earlier in mind, Soviet leader Mikhail Gorbachev decided to close down Armenia’s nuclear power plant Metsamor, which was located a mere 100km from the earthquake’s epicentre. 

Energy crisis

Then, Armenia was connected to the Trans-Caucasus electrical grid and received gas and oil from Azerbaijan to compensate for the closure of Metsamor. As an effect of the dissolution of the Soviet Union, the shortage of domestic energy sources became a real problem.

In late 1991, tensions over Nagano-Karabakh, a disputed territory between freshly independent Armenia and Azerbaijan, reached a peak. Azerbaijan, and later its ally Turkey, closed their borders and put a fuel embargo on Armenia.

This, in turn, led to a severe energy crisis lasting until 1995 when Metsamor was finally reactivated. During this time Armenian industry collapsed and GDP dropped by more than 50 percent. So did GHG emissions —by more than 70 percent, remaining stable ever since.

When asked, Armenians still remember these times with disbelief, recounting how they could use electricity for merely one or two hours per day and often resorted to candles illuminating their houses at night.

Explosive potential

The borders with Turkey and Azerbaijan remain closed to this day. In effect, Armenia’s energy supply is largely dependent on natural gas from Russia, transported via a pipeline through Georgia and transformed into electricity by thermal power plants.

Most cars in the country are also fuelled by natural gas and one third of imports are used in homes for heating purposes. In 2016, Armenia was only able to cover 34 percent of its energy demand with domestic energy sources.

While the country’s energy crisis in the early 90s might not be constantly present in the minds of Armenians, the energy question still has a socially explosive potential.

The Armenian Electricity Network, largely owned by Russian state-owned companies, announced a price hike of more than 17 percent in electricity prices in June 2015, thousands of Armenians took to the streets in the country’s capital in what was dubbed the “Electric Yerevan” protests.

After a week of protests and a heavy-handed response by the riot police, the price hikes were suspended and the Armenian Electricity Network sold to the Armenian-Russian oligarch Samvel Karapetyan. Similarly, Pashinyan finds himself in volatile negotiations with Vladimir Putin on gas prices after they had been increased by 10 percent in January 2019.

Energy poverty

The Electric Yerevan protests reflected a bigger socio-economic problem in the country, the widespread energy poverty: around 30 percent of the country’s population can be considered energy poor, having to spend more than 50 percent of totally family income on energy and heating.

With an average income of around 400 USD, Armenian families often spend more than 100 USD on heating alone. Oftentimes they don’t even heat whole apartments, but just the common areas.

In the rural parts of the country in particular, this leads poor families to not heat with expensive gas but with cheaper wood instead — contributing to already high levels of deforestation.

It’s because of these various reasons — Armenia’s lack of fossil resources, its history of energy insecurity and socio-economic problems like energy poverty — that Armenian governments have developed a high interest in diversifying the energy supply, notably through renewable energy sources.

At the same time, the energy sector is by far the biggest emitter of greenhouse gases, having accounted for 70.3 percent of all emissions in 2012.

Bearing this in mind, it seems that climate change mitigation, alleviating socio-economic problems and the country’s national security interest could go hand in hand.

Potential and limitations 

Member of Parliament Mikayel Zolyan, who sits on the Parliament’s Foreign Affairs Committee, not only reaffirms the country’s interest in renewable energy but also the danger of its old nuclear reactor Metsamor, which the European Union has consistently argued should be phased-out.

Referring to the EU’s stance however, Zolyan clarifies that as long as there’s no massive financing effort, Armenians have no other option than to keep Metsamor running or else return to the dark days of energy shortages.

With regards to global warming, Zolyan’s sentiment is also reflected in Armenia's First Biennial Update Report under the United Nations Framework Convention on Climate Change, the framework under which the Paris Agreement was signed in 2015.

The report’s projections rely on a new nuclear reactor to deliver about 63 percent of mitigation in the energy sector until 2030. 

Astghine Pasoyan, an economist at the Energy Saving Foundation, is also sceptical of the hype around solar energy. According to her, apart from a new nuclear reactor, a stronger focus on the demand side management would turn out more cost effective to reduce emissions in the short term.

For instance, most residential buildings in Armenia have been built during Soviet times when energy was cheap and readily available. Making them more energy efficient could go a long way reducing demand: a recent UNDP pilot project saw a multi-apartment building insulated, saving up to 58 percent of energy and lowering costs by 60 percent for residents.

Green roadmaps

Nevertheless, Pasoyan does see real potential in green energy in the medium and long term to lower gas demand. She helps municipal governments to set up green roadmaps — plans for local green development — which often attract grants instead of loans by international donors.

In particular, setting up public green energy projects could allow municipalities to provide public buildings with cheaper energy, create jobs and use their budget for local development instead of paying the gas bills.

In the end, with regards to the green energy transition in Armenia, one thing is clear: it will need a lot of money to succeed. Whether it’s in the form of the EU’s external investment funds, grants from development banks or even a Global Green New Deal, rich countries will need to provide investment to drive the transition. 

There are some good signs. The European Investment Bank has recently adopted a new lending policy, intending to phase-out the funding of fossil fuels until 2021 and ‘increasing the impact of investment to support energy transformation outside the EU’.

Similarly, the EU’s new neighbourhood policy instrument (NDICI), currently under negotiations for the next EU budget, aims to streamline investments and operations with regards to climate change.

And discussions about the future of the Eastern Partnership, which Armenia and five other countries in Europe’s East are part of, certainly bear the potential for increased ambitions to tackle the climate crisis.

In Armenia, there is certainly a multi-faceted interest to move quickly towards a green energy transition.

This Author 

Daniel Kopp is a journalist and executive editor of International Politics & Society (IPS). 

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