The Republic of Armenia (hereafter “Armenia”) is a landlocked country in the southern Caucasus region between the Black and Caspian Seas. It is bordered by the Republic of Türkiye (hereafter “Türkiye”) to the west, Georgia to the north, Azerbaijan to the east and Iran to the south. The country spans an area of around 29 800 km² with a population of just over 3 million. Yerevan, the capital, is the largest city with approximately 1 million inhabitants.

Armenia’s economy has undergone numerous reforms since the economic crisis of the early to mid-1990s. It has transitioned from a Soviet-era, centrally planned economy to a partially market-oriented one, with most enterprises now privately owned. Foreign capital investment began in the early 2000s and has been an important contributor to economic growth. In 2024, gross domestic product (GDP) stood at USD 25.8 billion.

Armenia became a member of the European Union’s Eastern Partnership in 2009 and has been an observer to the EU Energy Community since 2011. Armenia joined the Eurasian Economic Union (EAEU) in January 2015 alongside Belarus, Kazakhstan and the Russian Federation (hereafter “Russia”) (Kyrgyzstan followed in August), and in March 2021, Armenia and the European Union signed a Comprehensive and Enhanced Partnership Agreement (CEPA), which established framework for political, economic and trade co-operation.

In 2023, Armenia’s total energy demand was 120 petajoules (PJ), with transport accounting for roughly one-third, or 37 PJ. Overall energy demand has risen by around 30% since 2015, though transport’s share of the total has held steady over this period. Rising demand for transport has driven higher fuel consumption.

Energy demand growth in Armenia’s transport sector is driven by increasing road activity, which is fuelled predominantly by natural gas.

In 2023, natural gas accounted for half of Armenia’s total energy demand, followed by petrol (20%), diesel (14%) and liquid petroleum gas (13%). Natural gas is the dominant fuel in Armenia’s road transport sector, powering more than 70% of vehicles nationwide – and an even greater share in Yerevan. Most run on compressed natural gas (CNG), though some are designed to run on liquified natural gas (LNG). There are about 380 CNG filling stations across Armenia, all of which are privately owned. Since 2015, there has been a significant increase in the use of liquid petroleum gas (LPG), which is more affordable than petrol.

Armenia has made substantial progress in transport electrification. Its 782-km railway network (operated by South Caucasus Railway, a subsidiary of Russian Railways) is fully electrified at 3 kV DC. Armenia’s rail network is largely domestic, however, with international connections extremely limited. Rail links were severed with neighbouring countries – with the exception of Georgia – in the early 1990s.

Aviation fuel demand is currently dominated by jet kerosene. While air transport accounts for a relatively small share of emissions, it remains one of the hardest to decarbonise.

Armenia relies entirely on imported fossil fuels, leaving it vulnerable to external economic and energy-security risks. The country spent more than USD 500 million importing refined petroleum in 2022. Russia is also the country’s predominant source of natural gas: In 2021, Russia supplied 88% of the country’s natural gas via a pipeline from Georgia. The rest is imported mainly from Iran.

Armenia is a net exporter of electricity, although most of this is exchanged for natural gas from Iran under a barter agreement. Armenia also trades electricity with Georgia, though volumes remain low because the two grids are not synchronised. Energy interconnections with Azerbaijan and Türkiye are currently inactive for political reasons.

Over the past two decades, Armenia has substantially reformed its energy sector, including privatising the electricity market. The changes have spurred investment in capacity and networks, considerably improving reliability.

Electricity prices are relatively low, and the market applies a day-night tariff structure that incentivises use during off-peak hours.

Armenia has a diverse electricity mix. In 2024, Armenia produced 9.3 terawatt-hours (TWh) of electricity, of which 37% (3.5 TWh) was derived from natural gas, 32% (3 TWh) from hydro and other renewables, and 30% (2.8 TWh) from nuclear. Armenia is the only country in the Caucasus region that generates nuclear power. Major efforts to increase solar generation capacity are also under way. Electricity production from solar photovoltaic (PV) systems has surged from virtually zero in 2015 to nearly 1 TWh in 2024. By May 2025, Armenia’s installed solar capacity exceeded 870 megawatts (MW), of which about 330 MW came from utility installations, 485 MW from households and another 55 MW from Masrik-1, an industrial-scale solar PV plant in the eastern province of Gegharkunik.

Armenia’s Transmission System Operator (TSO) is High-Voltage Electric Networks (HVEN), a state-owned enterprise responsible for managing the electricity transmission infrastructure, ensuring grid stability, power distribution and system reliability. A privately owned entity, Electric Networks of Armenia (ENA), serves as the Distribution System Operator (DSO), managing the distribution of electricity to consumers. There is a plan for a complete rollout of smart meters in Armenia by 2025.

Electric vehicles (EVs) are hard to miss in central Yerevan. Since May 2020, both new and used EVs classified as M1 (passenger cars) or M1G (light commercial vehicles) have been exempt from import duties, a rule that applies to both businesses and individual buyers and is subject to an annual quota of 8 000 vehicles. Since 2019, EVs – including passenger cars, small and medium-sized city buses, motorcycles and mopeds – are also exempt from Armenia’s 20% value-added tax (VAT). All EV tax exemptions are reviewed annually under the framework of the Eurasian Economic Union (EAEU).

These measures have helped create a more favourable environment for EV adoption and use. Between 2019 to 2024, 36 000 EVs were imported into Armenia. The pace of imports is accelerating rapidly, nearly tripling to 9 528 units in 2024, from 3 526 in 2022.

Most EVs in Armenia are imported from the United States and Japan, with Chinese models steadily increasing in market share. For now, only a handful of official EV retailers exist. Local banks offer financing for vehicle purchases, including a few products tailored specifically to EVs. Currently, there are about 200 public EV charging stations in Armenia. The market for charging services is deregulated and there is a nationwide network of fast chargers with several charge point operators (CPOs), such as EVAN and Team Energy. Armenia has not established standards for vehicle charging equipment or for AC and DC plugs at charging stations. Public chargers currently offer a mix of connectors compatible with European, American, Japanese and Chinese-made vehicles, reflecting the country’s import patterns.

International multimodal freight transport is crucial for Armenia’s economic development, but as a landlocked country, it faces significant challenges in maintaining global connectivity and access. Armenia links to road networks in Europe as well as the Asian Highway Network. Connectivity with Georgia is especially vital, accounting for up to 80% of Armenia’s trade. In 2009, Armenia signed an agreement on developing multimodal transport as part of the Transport Corridor Europe-Caucasus-Asia (TRASECA) project. Launched by the European Commission in 1993, TRASECA aims to facilitate the movement of goods and people across Europe, the Caucasus and Central Asia.

Transport infrastructure data in Armenia is categorised as either general-purpose or total. General-purpose data covers public and commercial transport of passengers and goods on roads and rail networks – explicitly excluding military transport. The table below gives an overview.

Armenia is actively leveraging infrastructure to enhance regional integration, trade capacity and economic development. In October 2023, the government launched “Crossroads of Peace,” aimed at strengthening regional energy and transport links and facilitate multimodal freight between Asia, Europe and Russia. The initiative frames key infrastructure investments within a broader strategy to boost Armenia’s role as a transit hub. Projects initiated under this programme include:

• The North-South Road Corridor: A project initiated in 2009, it upgrades the Meghri-Yerevan-Bavra motorway to four lanes, allowing speeds of 100 to110 km per hour and cutting travel time to less than five hours from 10 hours. The USD 2 billion to USD 2.5 billion project is financed by the Asian Development Bank, the European Investment Bank and the Eurasian Development Bank.
• The Persian Gulf-Black Sea Transport Corridor: Launched in 2016, it aims to create a new freight corridor linking Europe, India and Iran via Armenia, further integrating the country into international trade networks.

By 2026, Armenia plans to establish three logistics centres to facilitate the transport and storage of cargo between Europe, the EAEU and Iran. One, located in the northwestern city of Gyumri, will handle goods shipments between Europe and the EAEU. The other two will be located further south and will focus mainly on shipments to and from Iran.

Efforts are also being made to improve air connectivity. While commercial aviation remains primarily international, regular domestic links exist between Yerevan- Zvartnots International Airport and Shirak Airport in Gyumri, Armenia’s second- largest city. Prior 2020, departing international passengers from Yerevan airport paid a levy of AMD 10 000 (Armenian drams1; around USD 25). This tax was later removed to encourage air travel to new destinations.

New investment in Armenia’s energy and transport projects depends largely on international donors, on whom the country continues to rely for support.

Sustainable transport spans multiple policy areas, including energy, climate and mobility. Armenia’s goal of producing 50% of its energy from renewable sources by 2030 aligns closely with European Union aims to raise the share of renewables in final consumption to between 42.5% and 45% over the same period. Energy policy now prioritises developing domestic sources – primarily renewables – while extending the operating life of the 1980s-era reactor at its Medzamor nuclear plant, which supplies nearly a third of the country’s electricity.

As envisioned in the Nationally Determined Contributions (NDC) 2021-2030, Armenia’s transport-sector climate transition rests on three pillars: improving public transport efficiency, expanding the use of renewable energy sources, and promoting the adoption of electric vehicles. The current target is for electric passenger cars to make up 10% of the total vehicle fleet by 2030. Armenia has not adopted fuel economy standards for passenger vehicles. As an EAEU member, Armenia’s truck emission standards currently follow EURO V regulations. However, under the terms of its Comprehensive and Enhanced Partnership Agreement (CEPA) with the European Union, Armenia is expected to align with EU transport-efficiency standards by 2030.

In December 2023, the government adopted the Long-term (until 2050) Low Greenhouse Gas Emissions Development Strategy (N 2318-L), setting out the priority areas for emissions mitigation through 2050, including energy and transport.

The strategy defines the following sectoral priorities:

• Improving passenger flow management and transport infrastructure.
• Expanding and upgrading the public transport network.
• Optimising passenger and freight transport and developing infrastructure for bicycles, electric scooters and pedestrians.
• Enhancing digitalisation and online services.
• Renewing and modernising the vehicle fleet, including buses, with a gradual transition to alternative energy sources such as electricity, natural gas, biofuels and hydrogen.

The strategy sets a target of reducing greenhouse gas emissions to 2.07 tonnes of CO2 equivalent per capita by 2050, down from 2.13 tonnes of CO2 equivalent per inhabitant in 2022. The strategy proposes an emission trading system, but it excludes the transport sector.

The long-term strategy is framed around three scenarios: a baseline with no new policy interventions (“without measures”), one reflecting “ongoing and planned measures,” and a third incorporating “additional measures”. Only the “additional measures" scenario would make it possible for Armenia to achieve the 2030 and 2050 targets. Transport’s transition is tracked using three indicators: the pace of vehicle fleet renewal, the growth rate for electric vehicle sales and the share of passengers using public transit. The scenario also assumes a marked reduction in transport demand, driven by a rise in telecommuting and remote work. The long- term strategy does not spell out specific measures to meet sectoral priorities, but the 2021-2026 Action Plan offers additional detail on the way forward. The Global Environment Facility (GEF) project, Transition Towards Electric Mobility in Armenia, is central to shaping the country’s strategic planning for low-carbon e-mobility. Its objectives include:

• Drafting regulations that promote electric mobility.
• Developing a national e-mobility strategy.
• Purchasing EVs for participating government agencies in the GEF project.
• Purchasing and installing charging infrastructure.
• Publishing a consumer guide for electric vehicles.
• Developing policies and regulations to support e-mobility expansion.
• Hosting a national forum on electric mobility.

The government has set an ambitious goal of increasing renewables to 66% of power generation by 2036, up from 7% in 2012. This target covers small hydro, wind and solar PV, but excludes biofuels. To achieve this, Armenia will need to install about 2 000 MW of new renewable energy by 2036. Planned additions include roughly 50 MW of small hydro, more than 140 MW of large hydro, 500 MW of wind and 1 000 MW of solar PV. Solar PV projects are slated for the near term (through 2030), while wind projects are planned for the following decade. By 2040, the government aims to increase combined solar and wind capacity to at least 2 000 MW.

In January 2021, the government adopted the Republic of Armenia Energy Sector Development Strategic Programme to 2040 and the Action Plan to Ensure Implementation of the Republic of Armenia Energy Sector Development Strategic Programme, which lays out a vision for least-cost strategies to develop the energy system and the steps needed to implement them.

Energy efficiency measures are guided by the government’s 24 March 2022 decision approving the Programme on Energy Saving and Renewable Energy for 2022-2030 and its Action Plan Ensuring Implementation of the First Phase (2022- 2024) of the Programme on Energy Saving and Renewable Energy for 2022-2030. For transport, three main initiatives have been identified to boost energy savings:

• Improving the effectiveness and quality of public transport services. Includes launching a more energy-efficient route network and structure for public transport, especially in Yerevan; upgrading buses to enhance service and comfort; and gradually expanding the electric bus fleet.
• Reforming street parking fees. Shifts the focus from revenue collection to traffic management. Implementation would follow public transport modernisation to avoid overburdening drivers.
• Promoting electric vehicles. Maintains and expands existing policies, including exemptions from import duties and VAT. New public parking privileges are planned for EV owners, and charging infrastructure will be rolled out across Armenia through public-private partnerships.

The Programme on Energy Saving and Renewable Energy for 2022-2030 projects road transport sector energy use under two scenarios: a baseline under which current trends continue, and an energy-saving policy scenario built on the following assumptions:

• Starting in 2022, electric vehicles are expected to gradually expand their share of the light-duty fleet, reaching 10% by 2030.
• A new public transport network in Yerevan is projected to increase the energy efficiency of the system by 70% in 2030, from 2022 levels.
• Starting in 2023, the share of electric vehicles in the public transport stock will gradually increase, reaching 50% by 2030.
• Improvements in public transport and the introduction of a new street parking fee policy are expected to increase public transit’s share of passenger traffic to 60% by 2030.

Under the energy-saving policy scenario, energy consumption by the road transport sector falls 36% by 2030, compared to 2022 levels.

Digitalisation is seen as key to making the transport system more efficient, lowering CO2 emissions, improving convenience and reducing transport costs. Under the CEPA agreement, several EU directives related to traffic safety and intelligent transportation systems are currently being incorporated into Armenian legislation.

The city of Yerevan actively promotes sustainable transport through several key initiatives. The metro forms the backbone in the city’s public transport system, supplemented by modern buses with improved fuel efficiency and pilot demonstrations of electric buses. Efforts also include the rollout of a unified digital ticketing system that lets passengers pay electronically.

Yerevan operates an active parking policy, under which EVs park for free. In August 2024, the city adopted a new scheme designed to ease congestion in central districts and to encourage EV use. Parking fees apply between 9am and 10pm, with free parking outside these hours. Charging point operators (CPOs) may also designate paid spaces equipped with chargers, with fees tied either to the electricity consumed or the time spent at the parking space.

Sustainable transport in Armenia is shaped by a network of government bodies, each with specific responsibilities spanning policy development, regulation, enforcement and data collection. Key ministries and agencies coordinate on infrastructure, environmental standards, safety, tariffs and statistics to support the country’s transition to a more efficient and low-emission transport system.

• The Ministry of Territorial Administration and Infrastructure (MTAI) is responsible for developing and implementing energy and transport policy. It develops relevant legislation, as well as investment plans for transport infrastructure and state-owned companies.
• The Ministry of Environment is the main body responsible for developing and implementing environmental policy, including climate change mitigation and adaptation. The Ministry includes the Climate Policy Department, which was established after the adoption of the Paris Agreement and is responsible for environmental impact assessments. It is the designated national authority for projects under the Kyoto Protocol’s Clean Development Mechanism. The Ministry also hosts the Environmental Project Implementation Unit (EPIU), which executes and co-ordinates international climate projects.
• The Ministry of Internal Affairs is responsible for maintaining internal security. The Road Police department operates under the Ministry of Internal Affairs and is responsible for enforcing traffic laws, managing accidents, registering vehicles and ensuring compliance with required technical inspections and emission standards.
• The Public Services Regulatory Commission (PSRC) is an independent body tasked mainly with setting and reviewing tariffs, overseeing licensing and regulating imports and exports. The PSRC also regulates energy and rail transport. Electricity and natural gas tariffs are set by the PSRC on a cost-plus basis, ensuring suppliers a fixed rate of return after covering their operating costs. The gas supply system operates under a single, uniform tariff.
• The Statistical Committee of the Republic of Armenia is responsible for the collection, validation and dissemination of official energy and transport statistics.