Advancing the green transition is essential for reconciling robust economic growth with domestic and global sustainability objectives. This chapter explores the extent to which greening policies and initiatives in the Western Balkan economies have translated into convergence with the EU. It examines efforts to accelerate decarbonisation, highlighting achievements and ongoing challenges in reducing carbon emissions and expanding renewable energy capacity, along with their implications for air quality and public health. It also assesses progress in enhancing the use of energy, water and municipal waste, to foster the more sustainable use, consumption and production of these resources across the region.
Economic Convergence Scoreboard for the Western Balkans 2026
Abstract
With a regional average of 39 in 2023-2024, Greening ranks as the second-lowest cluster among the six, at half the level recorded by EU neighbouring economies (78). The cluster is also the only one diverging from the EU average, with the regional average down by 15 points since 2014-2016. Albania leads the region, slightly exceeding the EU neighbours' score, while Kosovo records the lowest score (Figure 7.1).
Notes: “EU neighbours average” is the average cluster score of Bulgaria, Croatia, Greece, Hungary, Romania and Slovenia. For more information on score calculation and the overall methodological approach, please consult the Methodology section.
The slow pace of decarbonisation is holding back the region's green transition and weighing on its economic convergence with the EU (Figure 7.2). The region emits twice as much carbon dioxide (CO2) per unit of economic activity as the EU average, and despite a fall in absolute terms, the gap with the EU continues to widen due to the region's continued reliance on coal and lignite for power and heating. Renewable energy is the area closest to convergence: installed capacity is broadly in line with the EU average, though this position rests largely on legacy hydropower and has narrowed as the EU has expanded wind and solar power at a faster pace. This same dependence on fossil fuels carries direct human costs: air pollution-related premature deaths remain more than three times the EU average, weighing on human capital through lost productivity and higher mortality.
The region also uses energy, materials and water less efficiently than in the EU (Figure 7.2). The Western Balkan economies extract less economic value from the energy they consume than their EU peers, at 79% of the EU average, as poorly insulated buildings and networks that suffer significant losses reduce the share of energy supplied that reaches productive use. Moreover, the region generates nearly twice as much municipal waste per unit of output as the EU: most of this waste ends up in landfills, at a rate around three times the EU average, reflecting the region’s very limited capacity to sort, collect and recycle. Finally, the region draws on water for comparatively lower economic value, reaching only 24% of the EU's water productivity, driven by the region's high reliance on water-intensive thermal power generation, compounded by ageing and inefficient water infrastructure and extensive irrigated agriculture.
Notes: Scores are rounded to the nearest whole number. “EU neighbours average” is the average indicator score of Bulgaria, Croatia, Greece, Hungary, Romania and Slovenia. For more information on score calculation and the overall methodological approach, please consult the Methodology section
CO2 emissions intensity captures the volume of carbon emissions generated per unit of economic output, and thus the degree to which economic growth is decoupled from CO2 emissions.
With a regional average of 0.22 kg of CO2 per USD of GDP1 in 2023-2024, against 0.11 kg in the EU, the Western Balkan economies remain considerably more carbon-intensive than both the EU and the EU neighbouring economies (Figure 7.3). Although regional intensity fell by 25% since 2014-2016, the EU's intensity dropped by 35% over the same period, thus leading to the divergence between the region and the EU. This increasing gap mainly reflects a carbon-heavy power mix,2 a road-dominated transport system3 and the limited reach of carbon pricing policies.4 Overall, Albania records the lowest intensity (0.08 kg), the only economy below the EU average, while Bosnia and Herzegovina and Kosovo both emit around three times the EU average level.
Note: Data are unavailable for Montenegro (2024) and Serbia (2024).
Sources: (World Bank, 2025[1]). Data for Kosovo (2014-2022), Montenegro and Serbia were calculated by the OECD based on (IEA, 2026[2]) and (World Bank, 2026[3]). Data for Kosovo (2023, 2024) sent by KAS to the OECD.
Installed renewable capacity, measured as the share of renewables5 in total installed electricity capacity, indicates the extent to which the power system contributes to economies’ decarbonisation.
At 55% of installed capacity in 2023-2024 (Figure 7.4), the region is broadly in line with the EU (56%) and the EU neighbouring economies (58.9%), making this the strongest-performing indicator of the Greening cluster. The region led decisively in 2014-2016, with 48.4% of installed capacity against the EU's 36.4%, but progress has since been markedly slower than in the EU, which has closed the gap over the last decade. This slower pace reflects a reliance on legacy hydropower rather than developing newer wind and solar capacity, which has expanded only modestly across most of the region.6
Albania leads the region, with renewables accounting for nearly all installed capacity (96.6%) in 2023-2024, owing to its large hydropower base, while Kosovo ranks lowest (17.8%), reflecting its significant dependence on coal-fired power generation.
Source: (IRENA, 2025[4]; 2026[5]).
Energy productivity measures the economic output an economy derives per unit of energy, capturing the degree to which growth is decoupled from energy use and its associated CO2 emissions.
At USD 14.2 per kilogramme of oil equivalent (kgoe) in 2023-2024, or 79% of the EU level, the region remains less energy-productive than its EU peers (Figure 7.5). While energy productivity rose across the region by 25.7% since 2014-2016, this growth has lagged behind that of the EU (31.6%), increasing the convergence gap from 17.5% to 21%. This slight divergence reflects various factors, including inefficient heating of the building stock7, high losses in electricity transmission and distribution8 and limited alignment with the EU and Energy Community acquis on energy efficiency,9 which has slowed the adoption of efficiency standards among businesses. In fact, a recent OECD survey indicates that only 37.7% of SMEs in the region have adopted energy efficiency measures (OECD, 2026[6]).
The sectoral composition of an economy also influences energy productivity. The Western Balkan economies' lower energy productivity partly reflects the smaller share of services in GDP compared with the EU, as services are generally less energy-intensive than industry and, in most cases, agriculture.10
Overall, Albania leads the region at USD 22.5 per kgoe in 2023-2024, the only regional economy above the EU average, while Bosnia and Herzegovina ranks lowest at USD 9.2, or around half the EU level.
Sources: OECD calculations based on (Eurostat, 2026[7]), (World Bank, 2026[8]) and (World Bank, 2026[3]). Energy productivity in EUR in market prices for Kosovo (2023, 2024) sent by KAS to the OECD.
Water productivity measures the economic output an economy derives per unit of water abstracted, capturing how efficiently water resources are managed. As the region faces rising temperatures, frequent droughts and reduced snow cover, increasing pressure on freshwater resources is likely to become a key constraint on sustainable economic growth.
Standing at USD 55.9 of GDP per cubic metre of abstracted water in 2023-2024, the regional average stands at just 23.6% of the EU average, making water productivity the weakest-performing indicator in the Greening cluster (Figure 7.6). Over the last decade, the region’s water productivity rose by 23.6%, compared with 28.2% in the EU, slightly reducing the region's relative performance from 24.5% to 23.6% of the EU average. This persistent gap reflects the region's high reliance on water-intensive thermal power generation,11 compounded by ageing and inefficient water infrastructure12 and extensive irrigated agriculture,13 which together raise the volume of freshwater needed to sustain economic activity.
Overall, North Macedonia records the highest water productivity in the region, at USD 94.1 in 2023-2024, or 40% of the EU average, while Bosnia and Herzegovina ranks lowest at USD 28.6 (12%).
Sources: OECD calculations based on (World Bank, 2026[3]) and (European Environment Agency, 2025[9]). Data for Kosovo (2024) has been sent by KAS to the OECD. Data are imputed for Kosovo (2023) and Montenegro (2014, 2015, 2016). For more details, please refer to the Technical Annex, published separately from this report.
Municipal waste intensity captures the quantity of municipal waste generated per unit of economic output, providing an indication of the degree to which economic growth is decoupled from resource use.
In 2023-2024, the region generated 19 grams (g) of municipal waste per USD 1 000 of GDP, or 1.9 times the EU average level of 10 g (Figure 7.7). This gap has not changed significantly since 2014-2016, when regional intensity stood at 2.1 times the EU level (23 g against 10.9 g). This trend is primarily driven by weak waste prevention and treatment policies,14 which limit the region's capacity to curb waste generation as economic activity expands, with municipal waste rising by 15% over the last decade, compared with 6% in the EU.15 Moreover, persistent gaps in waste data collection and reporting also undermine the reliability of municipal waste statistics in the region and consequently may understate actual waste levels.16
Overall, the six economies record broadly similar levels, ranging from 16.9 g per USD 1000 of GDP in Albania in 2023-2024, to 20.8 g in Serbia.
Note: Data are unavailable for Kosovo (2014, 2016), North Macedonia (2016, 2017, 2024), Serbia (2024), Austria (2024), Bulgaria (2024), Greece (2024), Ireland (2015, 2024), Italy (2024) and Romania (2024).
Sources: (Eurostat, 2026[10]) and (World Bank, 2026[3]). Data for Albania (2024) sent by INSTAT to the OECD.
Municipal waste landfilled measures the share of waste sent to disposal rather than recycling or recovery and thus reflects the quality of municipal waste and resource management. Lower landfill rates support sustainable economic growth by promoting resource efficiency, creating opportunities in the circular economy, and limiting the environmental and health costs associated with waste disposal.
In 2023-2024, 84.6% of municipal waste in the Western Balkan economies was sent to landfill, three times the EU average (28.5%) (Figure 7.8). Landfill rates have remained broadly unchanged in the region since 2014-2016 (85.7%), while the EU’s average dropped by 10 percentage points over the last decade, lowering the region's relative performance from 46% to 34% of the EU average. This divergence largely reflects the region’s insufficient infrastructure for sorting, collecting and recycling municipal waste17 as well as the limited enforcement of waste management policies.18 Moreover, in the absence of waste management infrastructure, the informal sector has emerged as the primary actor responsible for collecting recyclable waste across the region, exacerbating data collection challenges and complicating efforts to monitor progress towards waste-management targets.
Overall, Serbia records the lowest landfill rate in the region, though still at 75% of municipal waste in 2023-2024, while in Kosovo, nearly all waste is sent to landfill (98.4%).
Note: Data are unavailable for Bosnia and Herzegovina (2021), Kosovo (2014, 2016), North Macedonia (2016, 2017), Montenegro (2017), Serbia (2020), Austria (2024), Bulgaria (2024), Czechia (2024), Greece (2024), Ireland (2015, 2024), Italy (2024), Latvia (2023) and Romania (2024).
Sources: OECD calculations based on (Eurostat, 2026[10]). Data for Albania (2024), North Macedonia (2024), and Serbia (2024) were sent by INSTAT, MAKSTAT, and SORS to the OECD.
Air pollution-related premature deaths19 capture the health burden of poor air quality, which weighs on human capital through workforce productivity losses, higher healthcare costs and premature mortality.
In 2023-2024, the region recorded 126 premature deaths per 100 000 inhabitants, more than three times the EU average (39.5) and approximately 1.6 times the EU neighbours' average (78.5) (Figure 7.9). Although air pollution-related premature deaths fell by 29% in the region from 178 in 2014-2016, the EU cut its own toll by 39%, reducing the region's relative performance from 37.7% to 32.2% of the EU level. This divergence reflects the region's reliance on ageing coal and lignite plants with limited emissions-filtering equipment,20 a road-dominated transport sector and the widespread use of solid fuels in households.21
Montenegro records the lowest mortality in the region, at 89 per 100 000 inhabitants in 2023-2024, while North Macedonia records the highest mortality rate (146).
Note: Data are unavailable for all economies (2024).
Source: (Eurostat, 2025[11]).
References
[21] European Commission (2022), Energy Support Package for the Western Balkans, https://neighbourhood-enlargement.ec.europa.eu/system/files/2022-12/WBIF%20Energy%20support%20pack%20221202.pdf (accessed on 24 January 2025).
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[24] United Nations (2019), Air Pollution and Human Health: The Case of the Western Balkans, https://www.developmentaid.org/api/frontend/cms/file/2019/06/Air-Quality-and-Human-Health-Report_Case-of-Western-Balkans_preliminary_results.pdf.
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← 1. Throughout this chapter, “USD” denotes USD in 2021 prices expressed in purchasing power parity.
← 2. For more details, see the indicator GR.02 on renewable power installed capacities.
← 3. In 2024, the region had an average of 332 passenger cars per thousand inhabitants, which, although well below the EU average of 577, still represents a 58% increase on 2015, well above the EU's 13.5% growth over the same period (Eurostat, 2026[19]).
← 4. While most economies have committed to aligning with the EU Emissions Trading System and introducing carbon pricing instruments as part of their climate strategies, Montenegro remains the only one to operate an emissions trading system, and at the beginning of 2026, Serbia introduced a tax on greenhouse gas emissions, in accordance with the Law on the Tax on Greenhouse Gas Emissions (“Official Gazette of the Republic of Serbia”, No. 109/25). Carbon pricing has direct implications for businesses, as it raises the cost of carbon-intensive production processes and strengthens incentives to adopt green practices: cost savings are the most frequently cited motivation for greening among SMEs in the region in 2025, cited by nearly half (49%), ahead of both reputational benefits (41%) and regulatory compliance (36%) (OECD, 2026[6]).
← 5. Renewable energy sources include hydropower, wind, solar, and biomass (solid biofuels, renewable waste, liquid biofuels and biogas). This indicator captures only electricity capacity and therefore does not reflect traditional biomass used for household heating, which remains widespread in parts of the region. Biomass represents a marginal share of installed renewable capacities in the region, ranging from 0% in Kosovo and Montenegro, where no biomass capacity is installed, to 1.63% in Serbia (62.22 MW), while 0.04% in Albania (1.43 MW), 0.33% in Bosnia and Herzegovina (10.21 MW) and 0.69% in North Macedonia (13.1 MW) (IRENA, 2026[17]).
← 6. By 2023, onshore wind and solar power production reached only 2% and 4% of their respective technical potential in the region – the estimated maximum capacity for deployment based on natural resources, topography and technological limitations (IRENA, 2025[4]).
← 7. A major challenge to improving energy efficiency is the inefficient heating of buildings, which accounts for over 40% of the region's total energy consumption (European Commission, 2022[21]). Many of these buildings rely on solid fuels (such as wood, lignite and coal) for heating and are poorly insulated.
← 8. For more details, see the indicator IC.04 on power losses (Infrastructure and Connectivity cluster).
← 9. For more information on the Energy Community’s acquis, see: https://energy-community.org/legal/acquis.html.
← 10. Services accounted for an average of 55.2% of GDP in the region in 2025 (ranging from 46.2% in Kosovo to 63.4% in Montenegro), compared with an EU average of 65.9% (World Bank, 2026[16]).
← 11. The region's electricity mix remains dominated by ageing coal- and lignite-fired power plants, which rely on water-intensive cooling systems to sustain thermal power generation. Cooling water accounted for 74.3% of total abstraction in Serbia and 81.8% in Bosnia and Herzegovina in 2023, compared with just 3.5% in Albania, reflecting the latter's near-total reliance on hydropower (European Environment Agency, 2026[15]).
← 12. Water infrastructure includes irrigation, public water supply and sanitation systems, many of which were built decades ago. Across most Western Balkan economies, non-revenue water – water supplied but subsequently lost or unaccounted for – ranges between 55% and 67% of total distribution, increasing freshwater abstraction to compensate for these inefficiencies (WAREG, 2021[14]).
← 13. Albania, North Macedonia and Serbia account for 91% of irrigated land in the Western Balkan economies, reflecting less favourable rainfall patterns, putting additional pressure on freshwater abstraction for agricultural production. By contrast, irrigation remains limited in Bosnia and Herzegovina and Kosovo, where topography and crop composition reduce water demand (OECD, 2024[13]).
← 14. Across most Western Balkan economies, awareness-raising initiatives aimed at educating citizens and businesses about waste prevention and sustainable consumption habits remain inconsistent. Incentives to reduce waste, such as “pay-as-you-throw” schemes, are either absent, as in Albania, Kosovo and North Macedonia, or largely ineffective. It should be noted, however, that Serbia adopted the Waste Prevention Plan in 2025, setting goals and priority areas for waste prevention, as well as implementation measures for the period 2025-2030 (Korançe, 2022[12]). Limited awareness extends to businesses as well: only 38% of surveyed SMEs report adopting circular practices such as waste reduction, eco-design or recycling (OECD, 2026[6]).
← 15. Municipal waste generation increased from 484.7 kilograms (kg) per capita in 2014-2016 to 514 kg in 2023-2024 in the EU, and from 353.7 kg to 406.7 kg in the region over the same period. Albania stands out as the only regional economy where per capita waste generation declined, from 456 kg to 306 kg (Eurostat, 2026[10]).
← 16. Actual waste generation in the Western Balkan economies may be higher than reported due to the lack of reliable data. In some cases, underreporting may result from inadequate monitoring and reporting mechanisms. Several economies have taken steps to improve data quality, including the installation of weighing bridges in Albania to better track waste entering landfills and the introduction of electronic systems for waste data collection in Bosnia and Herzegovina and North Macedonia (European Environment Agency, 2022[20]; OECD, 2024[13]).
← 17. In economies such as Albania, Kosovo, North Macedonia and Serbia, progress in municipal waste sorting and collection infrastructure is limited to small-scale pilot programmes focused on collecting recyclable materials (e.g. paper, cardboard, plastics).
← 18. Enforcement gaps concern a range of policy tools, including extended producer responsibility (EPR) schemes and sustainable product design requirements (e.g. minimum recycled-content standards, bans on single-use plastics). Limited institutional capacity, including insufficient inspection and monitoring systems, together with fragmented national approaches, prevent effective implementation (Western Balkans 6 Chamber Investment Forum, 2025[18]).
← 19. This indicator has been introduced in the Scoreboard’s 2026 edition. For more details on the economic impact of air pollution, see (Health and Environment Alliance, 2022[22]).
← 20. For more details, see the indicator IC.04 on power losses (Infrastructure and Connectivity cluster).
← 21. The main sources of particulate matter are electricity generation from thermal power plants, mostly lignite-fired, and household heating. Over 60% of the region's population relies on solid fuels such as coal and firewood for domestic heating, while only 12% of buildings are connected to district heating systems (United Nations, 2022[23]; 2019[24]).