North Macedonia remains heavily reliant on coal, with over 60% of its electricity generated from this fossil fuel. This dependence has significantly contributed to severe air pollution, particularly in the capital, Skopje, where pollution levels rank among the highest in Europe (1). As part of the "Tackling Air Pollution" project, the University of Goce Delcev conducted studies measuring air quality levels and sources, starting in Skopje during 2020 - 2021 and expanding to five more municipalities nationwide. The findings revealed that biomass used for heating is a major contributor to pollution (2). Climate change will only exacerbate this issue, making the adoption of renewable energy and energy-efficient retrofitting of homes and businesses an urgent priority.
This raises a critical question: Could switching household heating sources and supporting SMEs in adopting greener solutions benefit everyone? While studies indicate that such a transition is feasible, the real challenge lies in economic conditions—can households and SMEs afford to make this shift? Vulnerable groups, in particular, may face significant barriers in accessing cleaner energy solutions (3).
Green Finance Facility: A Path to Cleaner Air and Climate Action in North Macedonia
Addressing these challenges is the goal of the UN joint programme, "Green Finance Facility (GFF) to Improve Air Quality and Combat Climate Change in North Macedonia." This flagship initiative, a partnership between the UN system, the Government, and financial institutions, is estimated at US$ 46.5 million.
This innovative and transformative programme provides affordable financing to small and medium-sized enterprises (SMEs) and underserved households, particularly those led by women, single parents, individuals with disabilities, Roma communities, returning migrants, and remittance recipients. By targeting those with limited access to financial support, the programme delivers 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, provided as performance-based payments upon completion and verification of renewable energy and energy efficiency projects.
"The GFF offers a viable alternative to full subsidy support, enabling impact at a larger scale and accelerating sustainability objectives. It achieves this by bringing together international, public, and private sectors to co-invest in sustainability—or, in technical terms, leveraging funding through blended private financing and public funds. Most importantly, the GFF is a financial tool that integrates the expertise and resources of multiple partners to fast-track the green transition in North Macedonia while advancing Agenda 2030 and SDGs 7, 11, and 13 on affordable and clean energy, sustainable cities, and climate action," stated Armen Grigoryan, UNDP Resident Representative, at the GFF Annual Conference at the end of 2024.
Supporting Households and Businesses in Green Investments
The GFF collaborates with financial institutions to support green investments. However, many citizens in the target group are unsure about the best renewable energy and energy-efficient solutions for their homes. While transitioning away from harmful energy sources is clearly beneficial, affordability remains a key concern.
To address this, the programme emphasizes technical assistance and community engagement. This includes training for loan officers, guidance for local officials, support for loan applicants, and outreach to communities—ensuring that target groups are well-informed and prepared to leverage financing opportunities. Research shows that many people in these groups hesitate to take loans (4), but with proper consultation and support, they are more likely to make informed decisions.
Progress and Impact in 2024
In 2024, the joint programme made significant strides in promoting renewable energy (RE) and energy efficiency (EE) projects, accelerating North Macedonia's green transition and combating climate change (5). Interest in the programme continues to grow, with more applicants coming forward daily, and successfully implemented projects serving as success stories.
Atanas Kosevski, Executive Director of Transkop Bitola, shared his experience:
During a recent management meeting, we decided to invest in a photovoltaic power plant at the intercity bus station in Bitola. This idea emerged due to rising electricity costs, making renewable energy the most viable solution for reducing operational expenses. The GFF process was straightforward, and both consultants and partner banks provided excellent support.
Looking Ahead
At the end of 2024, the GFF Annual Conference marked another milestone, with formal agreements signed between Komercijalna Banka and TTK Banka, unlocking an additional US$ 5.5 million in private capital for financing renewable energy and energy efficiency investments.
The Green Finance Facility continues to be a game-changer in North Macedonia’s transition towards clean energy, improving air quality, and fostering sustainable economic growth. By providing targeted financial support, capacity building, and incentives, the programme is paving the way for a cleaner, greener, and more inclusive future.
Professor Dame Dimitrovski, Advisor to the Prime Minister and co-chair of the GFF Steering Committee, in the opening statement, referred to the high expectations 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.”
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.
[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
[4] to the study on vulnerable groups, climate change and air pollution https://api.klimatskipromeni.mk/data/rest/file/download/306e7fff1d808e276a7f259b7b0bb59f26f09a6ae373e99292e9304b0f2b6016.pdf
[5] Based on GFF 2024 Annual Progress Report
