Significant investment projects are underway within the energy and bioeconomy sectors

During the meeting Coordination Council for Large and Strategically Significant Investment Projects the issues raised by the Investment and Development Agency of Latvia (LIAA) were discussed regarding significant investment projects with a total planned investment exceeding EUR 9 billion. The Council operates as a central institution under the Prime Minister and is responsible for identifying and monitoring the progress of all major investment projects in Latvia.

The primary topics of discussion included the availability of forest resources, the development of wind parks, and the storage of CO2 emissions.

In recent years, Latvia has seen a rapid development of bioeconomy companies, which process biomass into various industrial materials using the biorefinery method. Biorefinery is extensively utilized to produce raw materials for building materials, road construction, the food industry, and other sectors. To ensure the availability of raw materials, the Council has decided to enhance the mechanisms for wood auctioning. The potential investment impact of this decision is estimated to be €1.1 billion.

Efforts were also made to reduce the CO2 footprint by ensuring that the extraction and production of raw materials occur in close geographical proximity. Investors have shown interest in storing CO2 in geological structures similar to the Incukalns gas storage facility. Latvia potentially has several geological structures suitable for CO2 storage. During the Council meeting, decisions were made regarding the necessary studies and regulatory framework for CO2 storage. The stored CO2 can be utilized to produce aviation fuel and other resources. The total investment impact of these initiatives could reach up to €3.6 billion.

Several potential investment projects are currently in progress within the energy sector.

For instance, developing wind parks is paving the way for the creation of various green products. The ports of Liepaja and Ventspils offer suitable infrastructure and locations for green hydrogen projects, particularly in light of the Estonian-Latvian state-run cross-border offshore wind project, ELWIND, along the Kurzeme coast. Additionally, efforts are ongoing to advance the Fokker Next Gen Hydrogen-Powered Passenger Aircraft project. To encourage the development of such initiatives, the Council has agreed to establish a regulatory framework outlining the procedures for auctioning offshore sites for wind farm development. This framework is pertinent to several projects, with a total investment impact of €3.6 billion.

The war in Ukraine and the general economic downturn in several European Union countries, Latvia’s main export markets, have slowed investment flows. However, the situation improved in the second quarter of this year. In the first six months of 2024, 28 investment projects have been implemented with the support of LIAA, contributing €263 million to the economy and creating 1,245 new jobs.

Notable sectors of existing investments include information and communication technologies (ICT), bioeconomy, smart energy and mobility, smart materials, and photonics.

Of the projects launched this year, 13 are in Riga, 9 in Kurzeme, 3 in Latgale, 2 in Vidzeme, and 1 in Zemgale. While Riga traditionally hosts the most significant number of projects, Kurzeme is also emerging as a strong contender, particularly in Liepaja and Ventspils, where favorable conditions attract investment in the manufacturing sector.

Most current investment projects in Latvia are related to the Netherlands, Germany, Denmark, Finland, and the USA. There is notably high investor interest in developing new projects within smart energy, hydrogen, metalworking, and ICT sectors.

The Council’s next meeting will address decisions on habitat mapping and its impact on investment, investment opportunities in the defense industry, land lease regulation, developing an eID roadmap for an expedited process, and attracting foreign labor.

Source: Press release (LIAA)