Background
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Key Findings
Adaptation investments are essential with benefits outweighing costs. Estimated at $6 billion, adaptation investments need to be front-loaded over the next decade or so. The analysis from the region shows that for each 1€ invested, return values range from 2¨C10€. These benefits include reduced losses, increased economic potential, and social and environmental co-benefits. By building resilience, Albania could unlock opportunities for firms and households, supporting job creation and economic growth.
Accelerating the energy transition toward net-zero emissions by 2050 is feasible, but Albania will need more transformative investments in renewables like wind, solar, and biomass, to build the foundation for electrification of transport and industry. This transition requires a diversified energy system, improved energy efficiency, and electrification of transport and heating. This transition will also open new sectors in the wind, solar and EV value chains and create economic opportunities.
The private sector is crucial for financing climate initiatives (it is estimated that across the WB6 region, 85 percent of decarbonization investment will be private). This requires a supportive regulatory environment to promote green finance, including green bonds and EU-aligned sustainable finance frameworks. Albania can leverage EU and international funding to develop green finance infrastructure.
Recommendations
Albania can use climate change adaptation and mitigation to achieve a more sustainable growth model with higher productivity. To do so, the country should implement policies to support climate-resilient growth by investing in human capital, enhancing business and trade environments, creating fiscal space and promoting the efficiency of public spending, and by strengthening institutional development. The public sector is required to incentivize private adaptation investment, enhance social support mechanisms, and generate fiscal space through improved revenue mobilization and eco-friendly taxation. Albania would also need to actively monitor and manage fiscal risks from climate change.
The policy recommendations provided in the report cover four areas: resilience and adaptation; decarbonization and mitigation; macroeconomy and financing; and regulatory/institutional framework.