Blog by Douglas Webb* and Ketevan Vardosanidze**
There is a simple but powerful idea at the heart of climate action: you cannot reduce what you do not measure. Before countries can cut greenhouse gas emissions, introduce carbon pricing, or participate in global climate markets, they must first know how much is being emitted, and from where.
For Georgia, this is no longer an abstract principle. In April 2026, the country took an important step forward by adopting legislation that introduces a national system for monitoring, reporting, and verifying greenhouse gas emissions across key industrial sectors.
At the same time, a major external driver has come into force: the European Union’s Carbon Border Adjustment Mechanism (CBAM), which entered its definitive phase in January 2026 and is already reshaping the conditions of international trade.
Together, these developments mark the beginning of a new phase in Georgia’s climate and economic transition.
A Changing Global Landscape
Around the world, carbon pricing is becoming an increasingly important tool for addressing climate change. By assigning a cost to emissions, governments create incentives for businesses to invest in cleaner technologies, improve efficiency, and reduce their environmental impact.
The European Union has led this shift through its Emissions Trading System, the world’s largest carbon market. Under this system, total emissions are capped, and companies must hold allowances for the emissions they produce. The cap is reduced annually, helping to drive emissions down while encouraging innovation.
CBAM extends this principle to international trade. It requires EU importers of certain carbon-intensive goods, such as iron and steel, aluminum, fertilizers, cement, electricity, and hydrogen, to account for the emissions embedded in those products. If those emissions have not been priced in the country of origin, a charge is applied at the EU border.
This represents a fundamental shift. Carbon is no longer only an environmental concern; it is becoming a core factor of competitiveness in global markets.
What This Means for Georgia
Georgia is directly affected by these changes. Several of its key exports to the EU, including fertilizers and iron and steel, fall within the scope of CBAM. While the immediate economic impact is relatively modest, the direction of travel is clear: as carbon pricing expands and more countries introduce similar mechanisms, the pressure on carbon-intensive production will increase.
Carbon is no longer only an environmental concern. It is a core factor of competitiveness in global markets
An EU and UNDP-commissioned study finds that the immediate impact of CBAM on Georgia is manageable but tangible, with an estimated export shock of around US$10 million in 2026 and additional per-ton costs that will affect the competitiveness of key sectors, particularly fertilizers and iron and steel.
At the macroeconomic level, the effect on GDP is very small, but the study underscores that long-term risks are likely to grow as CBAM scope expands and similar mechanisms are adopted by other countries.
The most significant risk is not the policy itself, but a delayed response. Early preparation offers an opportunity to adjust, invest, and remain competitive. Delayed adaptation risks increasing costs and reduced market access over time.
Building the Foundations: The Role of MRV
At the center of Georgia’s response is the introduction of a system for monitoring, reporting, and verifying emissions, known as the ‘MRV’.
MRV provides the data foundation for climate policy. It enables emissions to be measured accurately, reported transparently, and verified independently. Without such a system, it is not possible to implement carbon pricing or demonstrate credible climate action.
Georgia’s new framework establishes, for the first time, legally binding obligations for companies to monitor their emissions, submit annual reports, and undergo third-party verification. These requirements will become fully operational from 2028 and will apply to major industrial sectors, including energy, metals, and chemicals.
From Challenge to Opportunity
As with any major reform, the transition presents challenges. Institutional capacity must be strengthened, technical systems developed, and businesses supported to meet new requirements. A domestic ecosystem of accredited verifiers and technical experts will also need to be established.
At the same time, these challenges also represent opportunities. Developing expertise in emissions monitoring and carbon management can create new economic activity and strengthen national capabilities. More importantly, early investment in low-carbon technologies and reporting systems can position Georgian companies to compete more effectively in international markets.
MRV is not an end in itself; it is the enabler of future policy options. It opens the door to the potential introduction of carbon pricing instruments, such as emissions trading or carbon taxes, which could help align Georgia’s system with European standards and reduce the cost burden associated with CBAM.
Supporting the Transition
UNDP is working closely with national partners to support this transition, from policy development to practical implementation. This includes support for secondary legislation, institutional capacity building, private sector readiness, and the development of digital systems for emissions reporting and data management.
Through its broader climate and development initiatives, UNDP is also helping to ensure that climate action translates into economic opportunity: mobilizing finance, supporting innovation, and strengthening partnerships across government, business, and the international community.
Looking Ahead
Georgia’s transition to a low-carbon economy is already underway. CBAM is in force, and its implications are immediate. Domestic MRV systems are being established, with key milestones approaching over the coming years.
The path ahead will require coordinated action across government institutions, the private sector, and development partners. But it also offers a clear opportunity: to build a more resilient, competitive, and sustainable economy aligned with global trends.
Measuring emissions may not attract headlines, but it is the foundation of meaningful climate action. By putting this system in place, Georgia is taking an important step toward shaping its own low-carbon future.
Blog by Douglas Webb* and Ketevan Vardosanidze**
*UNDP Resident Representative in Georgia
**UNDP Senior Green Transition Specialist in Georgia
