Kosovo is aligning its energy and climate policies with European Union standards, despite not being a party to the United Nations Framework Convention on Climate Change or the Paris Agreement. As part of the Energy Community Treaty, Kosovo is committed to Europe's goal of becoming the first climate-neutral continent by 2050.
The country faces significant costs in adapting to climate change, estimated at $2.8 billion over the next decade. This investment is crucial for protecting people and property from escalating climate impacts. Long-term adaptation investments could equate to 1.4% of GDP annually until 2050.
Adaptation efforts offer benefits beyond damage prevention, such as job creation, skill enhancement, and increased trade opportunities. Sectors like agriculture could see improvements in food security and rural livelihoods through climate-proofing measures. Other sectors, including railways and waste management, are expected to gain environmental and public health benefits while generating employment.
Achieving net-zero emissions by 2050 is feasible for Kosovo but requires substantial changes at national and regional levels. An analysis within the WB6 CCDR suggests that full decarbonization will necessitate decommissioning lignite power plants by 2045 and increasing wind and solar capacity along with storage solutions.
To reach net zero with minimal economic impact, Kosovo needs an additional $760 million investment in its energy system by 2030 and $4.7 billion by 2050—about 2.9% of GDP per year on average until then. Most investments would focus on transitioning from lignite-based power generation to renewables, potentially involving significant private sector contributions.
Commercial banks and firms play a vital role in supporting mitigation and adaptation actions in Kosovo. The private sector is expected to provide about 85% of decarbonization investments under a net-zero trajectory, particularly in transport, buildings, and power sectors.
Recommendations for Kosovo include adopting equitable fiscal policies, improving business environments through technology adoption and better state-owned enterprise management, investing in human capital for inclusion improvement, and enhancing environmental management practices.