LocationsFor many in North Macedonia, one of the most pressing concerns is the threat of heightened air pollution, especially in winter. Despite widespread concerns, there’s no single, sweeping solution on the horizon. But can individual actions make a meaningful difference in improving the overall situation?
North Macedonia remains heavily reliant on coal, with over 60% of its electricity generated from this fossil fuel. This dependence has contributed to severe air pollution, particularly in the capital, Skopje, where pollution levels rank among the highest in Europe[1]. Meanwhile as part of the "Tackling Air Pollution" project the University “Goce Delcev” has measured the sources and levels of air quality, starting from the municipality of Skopje during 2020/21 and continuing in five more municipalities on national level. The studies revealed that biomass used for heating is a significant contributor to pollution[2]. Climate change will only exacerbate this problem, necessitating the adoption of renewable energy and energy efficiency retrofitting of homes and businesses.
This raises the question: Could changing household heating sources and supporting the SMEs for greener solutions benefit everyone? While studies suggest this is a feasible solution, the real challenge lies in whether the economic conditions allow households and SMEs to make such a switch. For some, this transition may be more difficult than for others, with vulnerable groups facing the greatest obstacles.[3]
Green Finance Facility: A Path to Cleaner Air and Climate Action in North Macedonia
Addressing challenges above is the goal of the UN Joint Programme “Green Finance Facility (GFF) to Improve Air Quality and Combat Climate Change in North Macedonia”, a flagship partnership initiative of the UN system, Government and financial institutions estimated at USD 46.5 million.
This innovative and transformational program offers affordable financing to small and medium-sized enterprises (SMEs) and underserved households, particularly those led by women, single parents, individuals with disabilities, Roma communities, as well as returning migrants and remittance recipients. By targeting those who need financial support the most but have limited access, the program also provides additional benefits: SMEs and households receive technical assistance and financial incentives: up to 10% of the original loan amount for SMEs, and up to 30% of the loan principal for households in ex-post, performance-based payments for completed and verified investment projects in renewable energy and energy efficiency.
“The GFF offers a viable alternative to full subsidy support, enabling impact at larger scale and accelerated achievement of sustainability objectives. This is due to its ability to bring international, public, and private sectors together to jointly co-invest in sustainability or to use more technical jargon to leverage funding and use blended private financing with public funds. Most importantly, the GFF is a financial tool that enables finances and expertise of multiple partners to come together in the acceleration of green transition in the country as well as achievement of Agenda 2030 and the SDG goals 7, 11 and 13 on affordable and clean energy, sustainable cities and climate action.” stated Armen Grigoryan, the Resident Representative of UNDP at the GFF Annual Conference at the end of 2024.
[1] e.g., Skopje's air pollution of 40 μg/m3 in 2018 was 60% higher than EU guidelines, and four times the limit deemed to be healthy by the World Health Organisation (WHO).
[2] part of the UNDP Programme Framework, funded by Sweden, studies available at the links: Skopje - Cist Vozduh, Struga, Gostivar, Kumanovo, Kavadarci and Strumica available at the link https://cistvozduh.mk/publikacii/air-pollution-reports-in-five-municipalities/
[3] According to the study on vulnerable groups, climate change and air pollution https://api.klimatskipromeni.mk/data/rest/file/download/306e7fff1d808e276a7f259b7b0bb59f26f09a6ae373e99292e9304b0f2b6016.pdf
Support towards best result
GFF partners with six financial institutions for green investments, however many citizens in the target group are unsure about the best energy-efficient and renewable energy solutions for their homes. While it's clear that transitioning from harmful energy sources is beneficial, affordability plays a major role in decision-making. Therefore, technical assistance and community engagement are key to the program's success. This includes training for loan officers, local officials, support for loan applicants, and outreach to communities, ensuring the target groups are informed and ready to utilize financing opportunities. Research shows that target group members are often hesitant to take loans[1] but with support from consultants, they are more likely to make informed decisions. T
What are the results so far
In 2024[2], the Joint Programme made a significant progress on the promotion of renewable energy (RE) and energy efficiency (EE) projects in North Macedonia toward green transition and combating climate change. This interest rises and we see more applicants each day, while the realized projects are true success stores. Atanas Kosevski, executive director from the company Transkop Bitola shared their experience with the GFF Programme: “Recently on a management meeting we have decided that we will invest in photovoltaic power plant placed on the intercity bus station of Bitola. This idea was born as a result of the high electricity stock prices, as the only solution to the high operational expenses… The process through GFF was very simple, while the consultants and the partner bank were very helpful during the realization.”
Outcome 1: SMEs
- 46 SME sub-projects financed, with a total value exceeding USD 11.1 million.
- Supported businesses in various sectors, helping them adopt sustainable solutions.
- Business sectors include transport, energy, manufacturing, retail and medical services.
- Promoted gender inclusivity with the inclusion of women-owned SMEs as beneficiaries.
- Partner financial institutions: Sparkasse Bank A.D. Skopje, Sparkasse Leasing, ProCredit Bank A.D. Skopje and Komercijalna Banka A.D. Skopje
Outcome 2: Underserved Households
- Above 30 underserved households supported with access to affordable finance and technical assistance for RE and EE solutions. The value of household projects financed is USD 264,138.
- Beneficiaries include female-headed households, single parents, households with a person with a disability, remittance recipients, and returning migrants.
Partner financial institutions: Silk Road Bank A.D. Skopje and TTK Bank A.D. Skopje
Example Projects:
- Heat Pumps and Photovoltaics: Investments in heat pumps and roof-top and land-based photovoltaic systems for SMEs and households to improve energy efficiency and reduce carbon emissions.
- Energy-Efficient Cooling Solutions: Projects aimed at enhancing cooling efficiency in commercial and residential buildings.
- Insulation: Investments in insulation for roofs, facades, and windows to improve energy efficiency in buildings.
- Electric vehicles: promoting the adoption of electric-powered transportation to reduce greenhouse gas emissions, reducing air pollution, and contributing to a cleaner, healthier environment.
Key results include:
- Emission Reductions: the Programme has helped to avoid 464 tonnes of CO2-equivalent emissions per year, supporting SDG 13 by mitigating climate change through reduced greenhouse gas emissions.
- Renewable Energy Capacity: The programme has added 0.28954 MW in new renewable energy capacity, further advancing SDG 7 by increasing the share of renewable energy in the national energy mix.
- Financial Inclusion: By providing affordable financing for RE and EE projects, the GFF programme has enabled access to clean energy solutions for SMEs and targeted households, including female-headed households, single-parents, and underserved, socially vulnerable communities, underscoring the UN principle of leave-no-one-behind.
- Capacity building on green finance in partner financial institutions (PFIs): As many as 184 loans officers in the PFIs of which 97 were female have benefitted from training on design and assessment of green investments in renewable energy and energy efficiency, and disaggregated data collection.
At the end of 2024, the Annual GFF event marked another milestone with formal agreements signed with Komercijalna Banka and TTK Banka, unlocking an additional USD 5.5 million in private capital for financing renewable energy and energy efficiency investments.
[1] to the study on vulnerable groups, climate change and air pollution https://api.klimatskipromeni.mk/data/rest/file/download/306e7fff1d808e276a7f259b7b0bb59f26f09a6ae373e99292e9304b0f2b6016.pdf
[2] Based on GFF 2024 Annual Progress Report
Professor Dame Dimitrovski, Advisor to the Prime Ministerand co-chairof the GFF Steering Committee in the opening statement referred to the high expectations in order to impact the future. “We stand at a critical juncture. The urgency of our mission has never been clearer, and the stakes have never been higher. The recent high-level global gatherings at COP29 in Baku and at the International Forum on Energy for Sustainable Development in Bangkok have underscored the need for immediate and decisive action. It is imperative that we continue to leverage our financial systems to support sustainable initiatives, reduce carbon emissions, and promote environmental stewardship.”
Professor Dimitrovski emphasized the Government of North Macedonia’s commitment to the Sustainable Development Goals in the 2030 Agenda, highlighting efforts to improve air quality and address the undeniable impacts of climate change for both current and future generations. Given the country’s climate challenges and urgent air pollution concerns, this commitment should be embraced by all.
The UN Joint Programme "Green Finance Facility to Improve Air Quality and Combat Climate Change in North Macedonia" is financed by the United Nations Joint SDG Fund; its contributors include the European Union and the governments of Sweden, Spain, Netherlands, Norway, Switzerland, Germany, Denmark, Ireland, Italy, Luxembourg, Republic of Korea, Saudi Arabia, Poland, Portugal, Monaco, and private sector. The Government of North Macedonia and EBRD are also financially supporting the Programme. Implementation is led by UNDP North Macedonia, in partnership with the Government of North Macedonia, EBRD, IOM, UNECE and local financial institutions.
This article is created with support of the UNDP GFF team.
