CHISINAU, January 30, 2025 - Effective climate action can help Moldova revitalize its economy, create jobs and protect its people from the impacts of extreme weather events, says the World Bank Group's Moldova Country Climate and Development Report (CCDR).
Moldova's national development strategies already include many of the necessary policy measures to achieve a thriving, low-carbon, and resilient economy. However, the country can go further to address persistent structural challenges, including weak growth and rising poverty, and accelerate integration with European Union (EU) markets.
"As a small, landlocked country on the doorstep of Europe, embracing an ambitious program of climate action presents a significant opportunity for Moldova to achieve its development objectives," said Inguna Dobraja, World Bank Group Country Manager for Moldova. "The CCDR provides a comprehensive and actionable roadmap for the country to address its climate challenges while fostering inclusive and resilient economic growth."
The cost of inaction is high. Moldova is one of Europe's most energy-vulnerable countries, importing nearly all its coal, gas, and oil products. It is also a carbon-intensive economy, with greenhouse gas (GHG) emissions per $1,000 of GDP six times higher than the EU average, exposing the country to risks from the EU's carbon-related trade tariffs that come into force in 2026.
Strong reliance on drought-prone agriculture, and exposure to natural shocks are contributing to weak and volatile economic growth and rising rural poverty. Severe flooding is already common, droughts have become more frequent and severe and air pollution causes up to 3,000 deaths per year. Annual economic losses from multiple hazards are estimated at around $164 million, equivalent to about 1.3% of 2021 GDP.
There are considerable benefits to be reaped from a green transition. It would revitalize and modernize Moldova's economy, create better jobs, improve health outcomes and minimize premature deaths from air pollution, and enhance energy security.
The report stresses the need for a people-centric approach, focusing on the opportunities and well-being of people while safeguarding the most vulnerable and marginalized people. Enhancing social protection, improving access to modern, climate-resilient infrastructure and public services, and preparing people for the skills requirements of a low-carbon economy are crucial for ensuring that the workforce is equipped to support as well as benefit from climate action.
Key recommendations include:
- Energy Security and Efficiency: Scaling up renewable energy and improving energy efficiency are vital for enhancing Moldova's energy security and economic competitiveness. This will require substantial investments and the full implementation of sectoral reforms to integrate with EU energy markets.
- Adaptation Investments: To manage the impacts of climate shocks and raise productivity in vulnerable sectors, significant adaptation investments are necessary, especially in Moldova's agriculture sector, which is highly susceptible to droughts and other climate hazards. Risk financing solutions can help Moldova hedge against disasters and build financial resilience.
- Policy Priorities: The report highlights the need for smart macro-fiscal policies to implement ambitious climate measures. These policies will lay the foundation for sustainable and resilient growth, by implementing taxes on carbon emissions and pollutants to promote greener practices and generate revenue, prioritizing spending on modernizing and decarbonizing infrastructure and industries, and strengthening social protection.
- Private Sector Participation: Most of the funding for climate action will need to come from the private sector. The report calls for augmented public sector investments to create an enabling environment for private sector participation.
Significant investments will be needed for the green transition agenda. Over the next 30 years, Moldova would require an estimated $31 billion to meet the goals of the government action plan, and additional $8 billion to reach net-zero emissions. Around two-thirds of the investment needs will need to come from the private sector, particularly in the energy, industry and agriculture sectors.
To mobilize private investment, the report outlines three key approaches:
- Enhancing investment attractiveness through policies that improve financial returns on private sector projects.
- Leveraging state assets by enabling private participation via Public-Private Partnerships (PPPs) or privatization.
- Establishing a supportive policy and regulatory framework for green transitions.
With support from multilateral development banks and the government, Moldovan banks can create green credit lines, bonds, and loans. A sustainable finance roadmap and EU-aligned green taxonomy would drive climate-focused lending and investment.
Download the Moldova Country Climate and Development Report here
The World Bank Group's Country Climate and Development Reports (CCDRs) are core diagnostic reports that explore the interlinkages between climate change and development. They help countries prioritize the most impactful actions that can foster a low carbon transition and boost resilience, while delivering on broader development goals. CCDRs build on data and rigorous research and identify main pathways to reduce GHG emissions, their externalities and climate vulnerabilities, including the costs and challenges as well as benefits and opportunities from doing so. The reports suggest concrete, priority actions to support the transition. As public documents, CCDRs aim to inform governments, citizens, the private sector, development partners and all stakeholders engaged with the development and climate agenda. CCDRs feed into other core Bank Group diagnostics, country engagements and operations, and help attract funding and direct financing for high-impact climate action.
