Albania faces significant challenges from climate change, with the country experiencing high levels of disaster risk and exposure among European nations. Over the past two decades, floods, wildfires, landslides, and earthquakes have impacted 95 percent of Albanian municipalities. These events threaten critical sectors such as energy and agriculture. Projections suggest that climate-related economic damages could reach 7% of GDP by 2050.
The report highlights the importance of adaptation investments, which are estimated at $6 billion over the next decade. The analysis indicates that for every euro invested in adaptation, returns range from two to ten euros. Benefits include reduced losses and increased economic potential, along with social and environmental co-benefits. By enhancing resilience, Albania could unlock opportunities for businesses and households, supporting job creation and economic growth.
To achieve net-zero emissions by 2050, Albania needs transformative investments in renewable energy sources like wind, solar, and biomass. This transition involves creating a diversified energy system and improving energy efficiency across transport and industry sectors. Such efforts will open new opportunities within the wind, solar, and electric vehicle value chains.
Private sector involvement is deemed crucial for financing climate initiatives in Albania. Across the Western Balkans region (WB6), it is estimated that 85 percent of decarbonization investment will come from private sources. To encourage this investment, a supportive regulatory environment promoting green finance is necessary. Albania can also leverage EU and international funding to develop its green finance infrastructure.
The report suggests that Albania can utilize climate change adaptation and mitigation strategies to foster sustainable growth with higher productivity levels. Recommended policies include investing in human capital development, enhancing business environments, creating fiscal space through improved revenue mobilization and eco-friendly taxation, as well as strengthening institutional frameworks.
Policy recommendations focus on four key areas: resilience and adaptation; decarbonization and mitigation; macroeconomy and financing; regulatory/institutional framework.