Skopje, October 7, 2024 - North Macedonia could face economic damages of up to 4 percent of its gross domestic product (GDP) by 2050 due to the impact of changing climate, highlights the World Bank Group¡¯s new Country Climate and Development Report (CCDR) for North Macedonia launched in Skopje today.
According to the report, North Macedonia needs to invest US$6.4 billion over the next decade to effectively protect people and property against the impacts of climate change.
With history marked by devastating floods and severe weather events such as torrential rains and heat waves, causing US$667 million in losses over the past 20 years, North Macedonia¡¯s climate challenges are mounting.
¡°Natural hazards disproportionally affect vulnerable sectors, especially agriculture, where small family farms are affected by droughts and hail due to inadequate irrigation, hail protection, and insurance," says Massimiliano Paolucci, World Bank Country Manager for Kosovo and North Macedonia.
Along with investments in climate adaptation, North Macedonia needs to accelerate the energy transition to achieve net zero emissions by 2050, in line with the European Union¡¯s targets.
According to the report, transitioning away from fossil fuels can bolster energy security by fostering a more flexible and modernized energy system. This shift is also likely to yield substantial improvements in health and long-term economic outcomes, primarily through better air quality and the reduction of long-term energy system operating costs.
¡°Reaching net zero by 2050 is possible for North Macedonia but will require stepping up investments significantly.¡± said Nicolas Marquier, IFC Regional Manager for the Western Balkans. ¡°Mobilizing private capital will be essential to accelerate the green transition and spur long-term sustainable growth.¡±
These investments encompass building 6.9GW of renewable energy generation capacity, electrifying key sectors like transportation - most prominently 90% of passenger cars would be e-vehicles by 2050 - and increasing energy efficiency to save 36% of heating energy per year.
Fiscal policy is key to accelerate the transition to a greener economy. North Macedonia Climate Public Finance Review, presented today alongside the CCDR, underscores that tax policies could incentivize renewable energy, green transportation and sustainable technologies by removing subsidies for coal-fired electricity while protecting vulnerable households from increased energy costs. Climate budget tagging and green procurement processes can help with monitoring green finances and boost green purchases.
The Climate Public Finance Review also highlights the urgency of implementing carbon pricing to reduce greenhouse gas emissions and generate significant state revenue, potentially up to EUR 730 million annually that could be used for needed mitigation and adaptation investments and just transition.
¡°Revenues from carbon pricing could support households and businesses during the green transition and would provide other co-benefits such as improved air quality and health in North Macedonia,¡± said Sanja Madzarevic-Sujster, senior economist at the World Bank and the lead author of the report.
