North Macedonia, which is vulnerable to both severe flooding and drought, needs to invest US$6.4 billion over the next 10 years to effectively protect people and property from the effects of climate change.
North Macedonia faces economic losses of up to 4% of its gross domestic product (GDP) by 2050 due to the effects of climate change, according to the World Bank Group’s Country Climate and Development Report (CCDR) released this week. There is a possibility.
The report claims that North Macedonia needs to invest US$6.4 billion over the next 10 years to effectively protect people and property from the effects of climate change.
North Macedonia’s climate change challenges are growing, with a history marked by devastating floods that have caused losses of US$667 million over the past 20 years, as well as severe weather events such as torrential rains and heat waves.
“Natural disasters have a disproportionate impact on vulnerable sectors, especially agriculture. Small family farms are affected by drought and hail due to lack of irrigation, hail protection and insurance.” said Massimiliano Paolucci, World Bank Country Manager for Kosovo and North Macedonia.
This country is highly dependent on imports. Historically, approximately 40% of electricity supply has been met by imports of electricity and natural gas. There are also serious vulnerabilities in the import source. Gas is only supplied from Russia via Bulgaria.
This level of dependence makes the country highly vulnerable to energy price and supply shocks. Furthermore, dependence on oil and petroleum products for energy supply and coal for power generation (approximately 35 percent of production is coal and 5 percent oil) means that North Macedonia’s energy system is not fit for the future. This means that they remain vulnerable to the environment. influence.
Delay in coal phase-out
Alongside investments in climate adaptation, North Macedonia needs to accelerate its energy transition to achieve net-zero emissions by 2050, in line with the European Union’s goals.
Last year, the country pledged to phase out coal-fired power plants from its energy mix by 2030, but the new government that took office in June, First Deputy Prime Minister and Minister of Environment and Spatial Planning, Izzet Mexiti, said 9 In May, he suggested: The date could go back up to 20 years.
According to a World Bank report, a transition away from fossil fuels could foster more flexible and modernized energy systems and strengthen energy security. This change could also lead to significant improvements in health and long-term economic outcomes, primarily through improved air quality and reduced long-term energy system operating costs.
“It is possible for North Macedonia to reach net zero by 2050, but investment will need to be significantly stepped up,” said Nicolas Marquier, regional manager for the Western Balkans at the International Finance Corporation (IFC).
“Mobilizing private capital is essential to accelerate the green transition and foster long-term sustainable growth.”
These investments include building 6.9 GW of renewable energy generation capacity, electrifying key sectors such as transportation (most notably, 90 percent of passenger cars will be electric by 2050), and improving energy efficiency. This includes savings of 36% per year on heating energy.
fiscal policy
North Macedonia is an upper middle income country aiming to join the European Union, but its sustained growth is being achieved at high environmental and health costs.
North Macedonia is approaching the EU in terms of gross domestic product (GDP) per capita (41.5% of the EU27 average in purchasing power parity (PPP) in 2009, up from 34% of the EU27 average).
cents in 2021), poverty decreased. However, the country’s energy and carbon emissions remain higher than the EU-27 average. Air pollution is a major problem, especially in the capital Skopje and other urban areas, including those near thermal power plants.
Fiscal policy is key to accelerating the transition to a greener economy, the report argues. The North Macedonia Climate Finance Review, published this week in parallel with the CCDR, aims to ensure that tax policy protects vulnerable households from rising energy costs while eliminating subsidies for coal-fired power generation, increasing renewable energy, It highlights the potential to encourage green transport and sustainable technologies.
Climate budget tagging and green procurement processes help monitor green finances and encourage green purchasing.
The Climate Finance Review aims to reduce greenhouse gas emissions and generate significant national revenues of up to €730 million a year, which could be used for necessary mitigation, adaptation investments and simply transitions. It also emphasizes the urgency of introducing a carbon pricing system.
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