Latvia risks not achieving its climate goals in the transport sector by 2030 because policy coordination is fragmented, support instruments are scattered and public resources are not sufficiently targeted towards measures with demonstrable impact and high cost-effectiveness. Significant funding has been diverted to support electric vehicles and the creation and maintenance of the related charging infrastructure without a unified and clear long-term vision for a long time. In the field of fuel, however, the government has not prepared for changes sufficiently, has not promoted the restructuring of the sector and European Union (EU) requirements have been introduced late. In addition, climate policy is being implemented without assessing the social impact of changes sufficiently, as potential increase in fuel prices will affect all residents, especially vulnerable groups, but targeted compensatory support measures have not been introduced.
IN BRIEF
- Latvia risks not achieving its climate targets in the transport sector by 2030. Of the 35 planned measures, 66% have not been identified for their impact on GHG emissions, 69% have a high or medium risk of implementation, and 31% have not even been initiated.
- Approximately 2.9 billion euros are needed to implement the planned measures, but only 41% have been identified at present. In addition, some of the already limited funds have been allocated to measures with no impact on climate targets.
- Latvia is not ready for changes in the fuel sector, and the expected price increase may affect the population significantly. EU requirements have been introduced late, there is a lack of a clear tax and decarbonization policy, and the development of biofuels and alternative fuels has not been coordinated sufficiently and directed strategically.
- The state electric vehicle support policy lacks a clear common vision and is not accessible to socially vulnerable groups of people. Approximately 31 million euros have been spent on electric vehicle purchase support programs, while other state and municipal support mechanisms have paid out more than 6 million euros.
“This audit shows that the problem is not in individual measures but in the approach as a whole. Latvia’s climate policy in the transport sector is being implemented currently without a single direction and clear priorities. It means that achieving results with the current approach is difficult. Moreover, changes, especially in the fuel sector, will inevitably affect all residents. Without targeted support for the most vulnerable, there is a risk that the implemented climate policy will become both ineffective and socially unjust,” emphasised Mr Mārtiņš Āboliņš, Council Member of the State Audit Office of Latvia.
There is a lack of coordinated and targeted policy to achieve climate goals in the transport sector
The transport sector in Latvia is responsible for approximately 31% of total greenhouse gas (GHG) emissions. As an EU Member State, Latvia has committed to achieving the EU’s increased climate targets by the end of 2020. However, the audit has identified shortcomings in the very prerequisites for achieving these targets. The National Energy and Climate Plan (NECP) envisages 35 measures in the transport sector by 2030, but there is no clear main direction that would contribute to the reduction of GHG emissions. 66% of the measures have no determined impact on the reduction of GHG emissions, 69% have a high or medium implementation risk, and 31% have not even been initiated. The cost-effectiveness of those measures that have an expected impact on the reduction of GHG emissions also varies significantly. It indicates insufficient prioritization of measures and cost-effectiveness assessment to achieve the goals at the lowest possible cost.
The above is significant because only 41% of the approximately 2.9 billion euros required for the implementation of the measures have been identified at present. In addition, part of the previously identified funding has already been redistributed to measures that do not contribute to achieving the goals. For example, more than 100 million euros have been allocated to the Rail Baltica project, which is not included in the NECP and does not contribute to achieving these 2030 goals. Also, at least two measures will create additional costs for citizens, namely, the obligation for fuel suppliers to reduce GHG emissions intensity and the “polluter pays” principle to be introduced in tax policy.
Progress towards the goals is also complicated by fragmented institutional responsibility for the implementation of related policies (climate, energy, transport, taxes), key measures and available funding. Responsibility is shared mainly between the Ministry of Climate and Energy and the Ministry of Transport, but the Ministry of Finance and the Ministry of Economics play a significant role. In its turn, the Ministry of Transport as the main coordinator in the transport sector, which has a new structural unit established for this purpose from 2026, does not have sufficient instruments for the practical implementation of the policy.
Latvia is not prepared enough for the significant changes in the fuel sector
Although the Latvia’s NECP includes 35 measures to be implemented in the transport sector, 86% of the planned GHG emission reduction is based on only one of them, that is, the obligation to reduce the intensity of GHG emissions imposed on fuel suppliers. Transport energy in Latvia is almost entirely based on fossil fuels. In order to achieve the climate goals, significant changes are planned in the fuel sector such as fuel must become “greener” and renewable energy in transport must be increased significantly.
In the area of transport fuels, Latvia must implement significant EU requirements, a share of renewable energy of at least 29% or a reduction in GHG emission intensity of at least 14.5% must be achieved by 2030 and the use of modern biofuels, biogas and other renewable fuels must be increased at the same time. It is important that the EU Emissions Trading System (ETS 2) shall be introduced in 2028. It means that the cost of CO2 emissions will also be included in the fuel price.
The audit has established that although the EU requirements in the field of fuels have been known for several years and their implementation in Latvia began several years ago, they were fully adopted late, only at the end of 2025. There is also a lack of an integrated vision of transport decarbonization and the necessary changes in tax policy despite the fact that taxes account for approximately 50–55% of the fuel price.
The introduction of these requirements affects the price of fuel directly. Although the total impact of the expected changes on fuel prices is not estimated clearly at present, the projected price increase may create a price shock for socially vulnerable households. Among all EU Member States, Latvia had the sixth highest proportion of residents at risk of poverty or social exclusion in 2024. Already now, approximately 243,000 households in Latvia are facing transport poverty, and the price increase may worsen this situation significantly. However, sufficient and targeted support mechanisms have not yet been developed in Latvia to mitigate this impact. Although Latvia has access to funding from the Social Climate Fund (217 million euros) for this very purpose to mitigate the social impact of ETS 2 taking effect, the auditors assess that the measures envisaged by Latvia will not ensure a sufficient impact on transport poverty issues and other alternative support mechanisms have not yet been created. It poses a risk of both increasing social inequality and reducing public support for climate policy.
The development of alternative fuels also poses additional challenges. Although the use of biofuels should be increased to reduce emissions significantly, their share in Latvia is below the EU average (8.8% in 2024, compared to around 11% in the EU at an average). The development of the sector is hampered by low domestic production and high import share, the lack of a clear and coordinated policy framework as well as the fact that the support measures introduced are selective and limited.
The state’s electric vehicle support policy lacks a clear vision and is not accessible to socially vulnerable groups of people
Increasing the number of electric vehicles is one of the main directions of state policy in the decarbonization of the transport sector in Latvia. In recent years, significant public funds have been invested in this area. From 2020 to 2025, the number of electric vehicles has increased approximately 21 times from 658 to approximately 14,000 in Latvia. Approximately 31 million euros have been spent on support programs for the purchase of electric vehicles while other state and municipal support mechanisms (free first-time vehicle registration, assignment of license plates, free parking spaces in Riga, Liepāja and entry fee relief in Jūrmala) have cost more than 6 million euros. The most significant of these is free parking in Riga because, according to conservative estimates, it cost at least 1.5 million euros in 2025 and up to 3.7 million euros in total between 2020 and 2025.
The NECP envisages increasing the number of zero-emission vehicles by 20 thousand by 2030 by continuing existing and introducing new support programs. It requires approximately 600 million euros in investments, including private financing.
Although significant investments have been made, the audit has found that electric vehicle support measures are not implemented in a unified and coordinated manner, as support instruments operate in a fragmented manner, without centralized monitoring and a single coordination mechanism. A unified policy has not been established that would link electric vehicle purchase support with the development of charging infrastructure and financial incentives. Similarly, the costs of these support measures are not recorded, conditions for reviewing and gradually reducing support, taking into account market development, have not been established, and the effectiveness of support has not been assessed fully, including with regard to externally charged hybrid cars, the support of which poses risks in terms of the real impact on the reduction of GHG emissions.
The availability of support for different groups of society is another essential problem. Support for the purchase of electric vehicles reaches residents with medium-high and high incomes mainly. The profile of vehicles purchased also illustrates that, for example, Tesla, Volkswagen Tayron, Audi e-tron. In its turn, this support is often not available to vulnerable groups even with state co-financing. However, the increased support rate for the purchase of electric vehicles for Latvian Honorary Families (large families), introduced since 2024, is positive.
From 2026, 70 million euros of financing (Social Climate Fund) is planned for the purchase of electric vehicles for approximately 4,000 vulnerable transport users. However, the audit identified significant risks, as the target group was not defined clearly and the needs and financial capabilities of these residents were not assessed sufficiently. Therefore, the support might not reach those who need it most. Moreover, the actual support will reach only 3% of the identified target group.
The governance of the electric vehicle charging infrastructure is not targeted enough in Latvia, and the development planning of the sector is not consistent and data-based. The state has created the basis for the coverage of the electric vehicle charging network throughout Latvia (139 stations). At the same time, the electric vehicle charging network generates an average of approximately 380 thousand euros in losses per year by maintaining significant dependence on state budget funding, that is, the state covered 2.37 million euros in total in 2020–2025. In its turn, the cost of the electric vehicle charging tariff and the shortcomings in the allocation of costs have created a burden of at least 722 thousand euros for the state budget over five years.
Recommendations of the State Audit Office of Latvia #PēcRevīzijas
The audit has provided nine recommendations to the Ministry of Transport, the Ministry of Climate and Energy and the Road Traffic Safety Directorate (CSDD). By implementing the recommendations by 2030, the NECP will include cost-effective measures with a real impact on achieving the goals of the transport sector while improving the coordination among state institutions. In cases of redistribution of funding for the measures included in the NECP, the impact on achieving the goals will be assessed and compensatory mechanisms will be created in a timely manner. Support mechanisms will be introduced by facilitating the development of modern biofuels and alternative fuels. A single state policy will be created in the field of increasing the number of electric vehicles, their charging infrastructure will be planned purposefully as well as state budget subsidies for the electric vehicle charging network maintained by the CSDD will be reduced. Solutions will be introduced to ensure a just transition by providing targeted support to socially vulnerable groups of people.
The State Audit Office of Latvia will address the Cabinet of Ministers to propose the formation of a single state support system to mitigate the impact of rising fuel prices on households affected by transport poverty and to call for an assessment of the impact of the redistribution of EU funds on the achievement of NECP climate goals.
Additional reading: audit report summary, infographics.
The audit also prepared an interim audit report “Has the electric bus measure of local and regional governments been implemented effectively?”.
About the State Audit Office of Latvia
The State Audit Office of the Republic of Latvia is an independent, collegial supreme audit institution. The purpose of its activity is to find out whether the actions with the financial means and property of a public entity are legal, correct, useful and in line with public interests, as well as to provide recommendations for the elimination of discovered irregularities. The State Audit Office conducts audits in accordance with International Standards of Supreme Audit Institutions of the International Organization of Supreme Audit Institutions INTOSAI (ISSAI), whose recognition in Latvia is determined by the Auditor General. Upon discovering deficiencies, the State Audit Office of Latvia provides recommendations for their elimination, but it informs law enforcement authorities about potential infringements of the law.