Investing in climate resilience and transitioning from fossil fuels to renewable energy could significantly benefit Kosovo's economy and protect its citizens from natural hazards, according to a new report by the World Bank Group. The Country Climate and Development Report for Kosovo, released today, outlines the necessary steps for sustainable economic development.
The report estimates that Kosovo will need to invest approximately $2.8 billion over the next decade to safeguard people and property against the escalating impacts of climate change. Long-term adaptation investments are projected to require 1.4 percent of GDP annually until 2050. Despite high costs, the report highlights that inaction would result in even greater expenses.
"Kosovo has made significant improvements in its living standards in the past decade, but these gains have come with some unwanted environmental and health impacts," said Massimiliano Paolucci, World Bank Country Manager for Kosovo and North Macedonia. "Investments in climate actions are expected to bring significant environmental and public health benefits while creating new job opportunities."
The implementation of climate adaptation initiatives is expected to enhance human capital development, improve workforce skills, and increase trade opportunities in Kosovo. Key sectors such as agriculture could benefit economically by safeguarding rural livelihoods, while railway and waste sectors might see environmental and public health improvements.
Kosovo's reliance on coal due to its lignite deposits presents challenges with aging power plants and deteriorating infrastructure, contributing to environmental degradation and negative health outcomes. The report stresses that achieving net-zero emissions by 2050 is feasible but requires radical transformation at national and regional levels. This includes phasing out lignite power plants by 2045, expanding wind and solar capacity, enhancing storage solutions, and strengthening regional cooperation.
The private sector is identified as crucial for driving this transformation through investments in renewable energy, technology development, and partnerships for a sustainable energy future. Commercial banks and firms are also expected to support mitigation and adaptation efforts.
"Under a net-zero emissions trajectory for Kosovo, the private sector is expected to play a leading role in decarbonization, contributing about 85 percent of the required investments," said Nicolas Marquier, IFC Regional Manager for the Western Balkans. "To mobilize this capital, it will be crucial to establish an enabling regulatory environment that supports climate-focused investments."
The report provides recommendations for policy reforms focusing on short-term actions up until 2030 while laying groundwork for scaling up climate action in future decades.