The definitive version of the text was subsequently published in Energy Policy, 108, 2017-09 Published by Elsevier and found at http://dx. AbstractArmenia and Georgia are taking climate change agenda seriously and contributing to efforts for mitigating global climate change through various ways including preparation of low carbon development strategies for their future economic growth. The improvement of energy efficiency is one of the key elements of the low carbon development strategies. This study develops a methodology to estimate marginal abatement cost (MAC) curve for energy efficiency measures and apply in the building sector in both countries. The study finds that among the various energy efficiency measures considered, the replacement of energy inefficient light bulbs (i.e., incandescent lamps) with efficient light bulbs is the most cost effective measure in saving energy and reducing greenhouse gas (GHG) emissions from the building sector. Most energy efficiency improvement options considered in the study would produce net economic benefits even if the value of reduced carbon is not taken into account. While the MAC analysis conducted demonstrates the cost competitiveness of various energy efficiency measures in Armenia and Georgia, the study also offers a caution to policy makers to have supplemental analysis before prioritizing the implementation of these measures or introducing policies to support them.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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