World Bank Report: Climate Action Key to Moldova’s Economic Growth and Resilience Amid Rising Vulnerabilities

The World Bank Group’s latest Moldova Country Climate and Development Report outlines the significant opportunity climate action presents for the country’s sustainable growth, energy security, and poverty reduction.

Moldova, one of Europe’s most energy-vulnerable countries, has been urged by the World Bank Group to embrace an ambitious climate action agenda to revitalize its economy, reduce poverty, and protect its citizens from the impacts of extreme weather events. The Moldova Country Climate and Development Report (CCDR), released today, stresses the potential of climate action to accelerate economic growth, create jobs, and enhance resilience in the face of mounting environmental challenges.

Inguna Dobraja, the World Bank Group’s Country Manager for Moldova, emphasized that despite Moldova’s national development strategies already including key climate measures, more action is required to address structural challenges like weak economic growth, rising poverty, and the need for deeper integration with the European Union (EU) markets. “Embracing climate action offers Moldova a significant opportunity to advance its development goals and achieve long-term economic resilience,” Dobraja said.

Economic Vulnerabilities and the High Cost of Inaction

Moldova is heavily reliant on energy imports, with nearly all its coal, gas, and oil products coming from abroad, making it highly susceptible to global energy price fluctuations and supply disruptions. Furthermore, the country’s carbon-intensive economy, with greenhouse gas emissions per $1,000 of GDP six times higher than the EU average, exposes Moldova to risks from the EU’s carbon tariffs scheduled to take effect in 2026.

Agriculture, a vital sector for Moldova, is especially vulnerable to climate change. Droughts, floods, and extreme weather events already contribute to economic instability, rural poverty, and increased mortality from air pollution. The country suffers approximately $164 million in annual economic losses from climate hazards, equivalent to 1.3% of its 2021 GDP.

The report underlines the vast benefits of a green transition, noting that investments in renewable energy, improved energy efficiency, and climate-resilient infrastructure could modernize Moldova’s economy, generate jobs, improve public health, and boost energy security.

People-Centric Climate Action

The CCDR highlights the need for a people-centric approach to climate action, emphasizing that the benefits of climate policies should reach the most vulnerable populations. Improving access to modern, climate-resilient infrastructure, enhancing social protection systems, and preparing the workforce for the skills required in a low-carbon economy are essential for ensuring an inclusive transition.

Key Recommendations for Moldova’s Green Transition

The report provides a series of recommendations to foster climate resilience and economic transformation:

• Energy Security and Efficiency: Scaling up renewable energy and improving energy efficiency are critical to reducing Moldova's energy dependency and enhancing its economic competitiveness. The integration of Moldova’s energy sector with EU markets is also a priority.

• Adaptation Investments: Substantial investments in adaptation are necessary to mitigate the effects of climate shocks, particularly in agriculture. Improved risk financing mechanisms could help Moldova better manage disasters and build financial resilience.

• Macroeconomic Policies: The report stresses the need for smart fiscal policies to support climate goals, such as implementing carbon taxes, prioritizing investments in sustainable infrastructure, and strengthening social safety nets to protect vulnerable populations.

• Private Sector Engagement: To achieve the required scale of investment in climate action, the report calls for active participation from the private sector. Public investments should create an enabling environment for private funding through improved policies and partnerships.

• Private Sector Investment Strategies: The World Bank emphasizes the need for Moldova to enhance investment attractiveness by improving financial returns on green projects, leveraging state assets through Public-Private Partnerships (PPPs), and creating a regulatory framework that supports green transitions.

Funding the Green Transition

The report estimates that Moldova will need approximately $31 billion over the next 30 years to meet its climate goals. In addition, the country will need an extra $8 billion to achieve net-zero emissions. Two-thirds of this investment must come from the private sector, particularly in the energy, agriculture, and industry sectors.

To mobilize private investment, the report recommends:

• Improving financial returns on green projects to attract private sector capital.
• Leveraging public assets to encourage private sector participation in climate initiatives through PPPs.
• Establishing a favorable policy and regulatory environment for green finance and investment.

The World Bank also suggests that Moldovan banks, with the support of multilateral development banks, could establish green credit lines and bonds to further support sustainable projects.

Conclusion

The World Bank’s Moldova CCDR underscores the need for coordinated action to mitigate climate risks and build a sustainable, low-carbon future. With significant investments required to meet climate goals, Moldova must harness the power of both public and private sector collaboration to secure long-term economic growth, resilience, and prosperity.