Croatia needs significant investments to achieve EU climate goals

ZAGREB, 9 April (Hina) – Croatia needs significant investments to achieve EU climate goals, and it fares worst in the transition of the transport sector, Croatian National Bank (HNB) Governor Boris Vujčić said on Tuesday.

Vujčić was speaking at the conference “Days of Croatian Financial Institutions – Sustainable Financing and Economic Development”, organized by the Croatian Chamber of Economy (HGK) in partnership with the Croatian Financial Services Supervisory Agency (HANFA) and held under the auspices of the Finance Ministry.

Climate change is significant, with ever more frequent weather extremes such as torrential rains and drought, which causes additional costs for the economy, Vujčić said.

It is therefore necessary to do what is possible to prevent further warming, with EU goals being clear – the reduction of greenhouse gas emissions by an additional 55% until 2030 and the attainment of carbon neutrality until 2050.

To achieve those climate goals, significant investments will be needed, of up to an additional 2% of GDP annually until 2030, which requires the cooperation of all stakeholders, including banks, international financial institutions like the EIB, as well as the corporate and public sectors, Vujčić said.

Around 75% of businesses in Croatia, which generate more than 50% of the total revenue, are not financed by borrowing from banks, he said.

Total investment in carbon neutrality should be raised to 4.5% of GDP

Total investments in achieving carbon neutrality in the EU should be increased to 4.5% of GDP until 2030, with focus being on investments in energy production, decarbonization of manufacturing industry processes, transport and the buildings sector, including energy renovation and alternative ways of heating and cooling, he said.

The necessary investments in carbon neutrality in Croatia could be higher than the estimates because even though Croatia is among the countries with the highest share of energy obtained from renewable sources in total consumption, of 27.9%, the goal is to raise that share to 36.4% until 2030, Vujčić said.

Around 80% of the necessary investments in climate transition in the euro area refer to transport and the buildings sector, while in the transport sector, this concerns mostly electrification and the construction of charging stations.

Electric cars accounted for 5.4% of newly registered vehicles in Croatia in 2023, EU average 21.6%

In 2023, of the total number of newly registered cars in Croatia, 5.4% were electric cars, while the EU average is 21.6%.

As for the energy renovation of buildings, annual investments in Croatia are around 0.7% of GDP, and the desirable rate is 3%, said Vujčić.

Financial market should be strengthened

Finance Minister Marko Primorac cited an EC estimate saying that investments of an additional €700 billion should be secured to achieve the EU’s goals regarding the green transition and climate change in the period until 2030, adding that the banking sector could not be the only linchpin in that process.

Speaking of Croatia, he underlined the need to continue strengthening the financial market, with emphasis on small investors, recalling the government’s contribution to the development of the capital market in the form of treasury bill and bond issues, which mobilized around €3.3 billion of citizens’ savings.