Pierre-Alain Pionnier
OECD Economic Surveys: Lithuania 2025
Abstract
Lithuania is highly dependent on energy imports and its gross GHG emissions have hardly declined since 2000, despite significant decoupling from GDP growth. Accelerating the green transition will be key to reach emission targets and improve energy security at the same time. This chapter focuses on policies to facilitate the development of renewable energy sources, along with their financial implications, and on policies to curb emissions in the transport and residential sectors, the two sectors where they have grown most rapidly since 2000. Adaptation to climate change risks will also require efforts, particularly with respect to managing cropland exposure to droughts.
Lithuania has achieved a large decrease in net greenhouse gas (GHG) emissions between 1990 and 2022 (‑71%) while GDP has multiplied by 2.3 over the same period, which constitutes a significant decoupling of emissions from growth. Nevertheless, much of this progress has been concentrated in the years following Lithuania’s independence in the context of a rapid transition from a planned to a market economy (Figure 3.1). By contrast, net emissions have increased by 27% since the low point reached in 2000, both as a result of hardly declining gross emissions (-2.5%), and because a decreasing amount of emissions has been absorbed by land use, land-use change and forestry (LULUCF).
Note: Gross (net) GHG emissions do not account for (subtract) absorption from land use land-use change and forestry (LULUCF). CO2 absorption by plants leads to negative emissions from LULUCF in most years. All GHG emissions are sourced from UNFCCC inventories and, as such, they are territory-based. Therefore, road transport emissions only partly account for the emissions generated by the Lithuanian freight transport fleet circulating abroad. They are only related to the combustion of motor fuel sold in Lithuania.
Source: UNFCCC Greenhouse gas emission inventories
Energy use remains the principal source of GHG emissions, and two thirds of Lithuania’s energy needs were covered by imports in 2023 (Figure 3.2, Panel A). Oil and natural gas accounted for the bulk of these imports. Oil is mainly used in the transport sector, while natural gas is used to produce electricity and heat, as a direct energy source by industries and households, and, for a large part, as a non-energy input by the chemical industry. While oil and natural gas terminals on the Baltic Sea and the gas pipeline connection with Poland allowed Lithuania to stop all oil and gas imports from Russia in early 2022, its large import dependence exposes the Lithuanian economy to fluctuations in global energy prices (Chapter 1). Focusing on electricity supply, Lithuania is also largely dependent on imports since the closure of its single nuclear power plant in 2009 (Figure 3.2, Panel B). Energy savings and the transition to renewable and low-carbon energy sources would contribute to improve energy security, economic resilience, and decrease GHG emissions.
Note: Panel A considers net imports, defined as gross imports minus exports. As Lithuania re-exports a significant share of the oil and natural gas that it imports via its Baltic Sea terminal and pipeline connection with Poland, considering gross imports would overstate Lithuania’s dependence to imported energy sources. Other renewables include hydro, solar, wind and geothermal energy. Due to data limitations, net electricity imports in Panel A cannot be broken down by primary energy source. They match net electricity imports in Panel B.
Source: International Energy Agency (IEA), OECD calculations
Between 2000 and 2022, the decrease in emissions from energy industries (-50%) has been compensated by a nearly doubling of emissions from transport (+87%) and significant increases from the residential (+23%) and agriculture sectors (+2.5%). Observed emission trends are partly related to heterogenous carbon prices across sectors.
The industry and electricity sectors face relatively high carbon prices because they fall under the umbrella of the European Emission Trading System (EU-ETS), but carbon prices in other sectors are substantially lower than the EU average. The latest amendment to the Law on excise duties that was voted in June 2024 plans a progressive increase in excise duties and the introduction of a carbon tax on fuels in 2025. By 2030, this plan would raise carbon prices in the road transportation sector slightly above their 2023 EU-wide level. Despite the planned increase, the buildings sector would continue facing the lowest rates and coverage, due to many fuel tax exemptions for households and businesses (see below and Figure 3.3). Complementing the EU-ETS with taxes on carbon emissions in sectors not covered by the ETS could help to accelerate decarbonisation in these sectors and align abatement costs across the economy.
In line with EU objectives, the 2024 National Energy and Climate Plan (NECP) targets net-zero GHG emissions by 2050 and sets intermediate milestones for 2030 (Government of Lithuania, 2023[1]). This chapter focuses on policies to develop renewable energy sources, which matter for both decarbonisation and energy security. In addition, it discusses policies to curb emissions in transport and residential sectors, the two sectors where they have grown most rapidly since 2000.
Net effective carbon rates (ECRs), EUR per tonne of CO2 equivalent
Note: Net effective carbon rates (ECRs) measure carbon prices resulting from fuel excise duties, carbon taxes and emission trading systems, net of pre-tax fossil fuel support (Garsous et al., 2023[2]). Net effective carbon rates in 2030 are based on the trajectory of excise duties and the carbon tax in the June 2024 amendment to the Law on excise duties. While the carbon tax is expected to increase each year between 2025 and 2030, no increase in excise duties is expected beyond 2026.
Source: Government of Lithuania, OECD calculations
Generating more low-carbon electricity will be a prerequisite for reaching net-zero emissions, not only due to the sizeable current emissions resulting from electricity generation from fossil sources, but also because zero-emission electricity will be vital for the success of decarbonising other sectors such as transport and buildings through increasing electrification. According to the 2024 NECP, the domestic production of electricity should entirely be based on renewables and fully cover domestic needs by 2030. This rests on the significant and rapid development of wind and solar energy.
For onshore wind and solar energy, reaching the 2030 targets of the energy strategy would require installing about the same additional capacities as in 2023 every year until 2030. For offshore wind energy, this would require commissioning two wind farms of 700 MW each in the Baltic Sea by 2030 (Figure 3.4). One of the two tenders has already been completed. After an unsuccessful attempt in early 2024, the second tender has been re-launched in November 2024 and the selected company is expected to be announced in May 2025. This planned development would allow Lithuania to produce 22 TWh of electricity from wind and solar energy by 2030, which would cover close to 90% of its expected electricity needs by that date (DNV EPSO-G, 2023, p. 41[3]).
The objective of developing a self-sufficient production capacity may be justified by supply uncertainties related to imports, especially as current exporters will be confronted with increased domestic electricity demand to meet their own countries’ decarbonisation targets.
Source: Lithuanian Energy Agency for 2020-23, (DNV EPSO-G, 2023[3]) for 2030.
While decisive to improve energy security and reduce GHG emissions, investment in low-carbon energy sources has a cost that requires careful government budget planning and relevant incentives to attract private investment. Even though no final decision has been taken regarding Lithuania’s future energy mix, in particular about whether or not to reinstall nuclear reactors, initial estimates indicate that the required capital expenditure in low-carbon energy sources would amount to around 2% of GDP per year until 2050 (Figure 3.5). While RRF and EU structural funds are expected to finance around 25% of this expenditure in 2025-26, this source of financing, especially RRF funding, is largely temporary and will need to be replaced with domestic funds in later years. Increasing domestic funds allocated to public investment by around 0.5% of GDP per year to replace declining EU funds seems justified and could be considered as a lower bound of how much public investment is needed to reach the objectives set in the National Energy Independence Strategy (Chapter 1).
Even if domestic public funds compensate for the expected decline in EU funds, attracting private investment will be key to avoid a large financing gap. One way to increase the efficiency of public funds is to use them to crowd in private investment rather than to directly finance investment projects with grants and subsidies, for example through financial instruments such as loans, guarantees and equity participations. Once they have been repaid, financial instruments can be used to finance other projects, and they allow sharing risks with the private sector. While Lithuania allocated less than 10% of its European Structural Investment Funds to financial instruments over 2014-20 (OECD, 2023, p. 129[4]), this share could be substantially increased.
Attracting private investment also requires developing “project pipelines” guaranteeing that sufficiently many similar investment projects will be available over time, thus lowering transaction costs and providing visibility on long-term financing needs (OECD, 2018[5]). Within these project pipelines, the public sector can also contribute to de-risking investments in renewables to match the constraints of risk-averse investors such as pension or sovereign wealth funds (Montague, Raiser and Lee, 2024[6]). De-risking schemes by the public sector, however, do not need to imply a subsidy and may be provided at a charge, which could be calibrated to ensure an expected fiscal impact of zero. For example, the United Kingdom introduced “contracts for difference” to foster investments in offshore wind energy. To ensure that the costs incurred by project developers will at least be partly covered by future cash flows, such contracts include a guaranteed energy price for 15 years. Whenever the market price falls below the guaranteed price, the private investor receives the difference from the government, and the opposite holds when the market price exceeds the guaranteed price (OECD, 2018, pp. 111-126[5]). Beyond providing such revenue guarantees, de-risking may involve bundling together investment projects into financial instruments and creating secondary markets where investors can buy or sell stakes in renewables investment projects. To maximise the impact of public funds, they should mainly be invested in less established technologies and markets where risks are higher (OECD, 2021[7]).
Capital expenditure for electricity and heat generation plants (% of GDP)
Note: The capital expenditure considered here covers the construction of wind, solar hydro, biomass, waste, hydrogen and nuclear power plants. It corresponds to the “Roadmap scenario” in (DNV EPSO-G, 2023[3]), defined as “the recommended strategic direction that the transformation of the Lithuanian energy sector should take”. Nevertheless, several key strategic decisions, including the construction of nuclear reactors, have not been taken yet. Other options with a different cost may eventually be preferred. Therefore, the overall capital expenditure presented in this Figure and its allocation over time should be considered as indicative. EU and State budget financing projections are not available beyond 2027.
Source: Required capital expenditure: (DNV EPSO-G, 2023[3]); EU and State budget funding: Government of Lithuania
Road transport by car accounts for the bulk of transport emissions in Lithuania. While road vehicle ownership is relatively low in international comparison, Lithuanian households are driving one of the oldest, hence most emission-intensive, car fleets in Europe (Figure 3.6). Unless other modes of transport are developed as a substitute, car ownership will continue to increase with income growth. Limiting emissions from transport calls for policies to encourage the renewal of the vehicle stock, deter the use of cars when there is a public transport alternative, improve the availability and energy-efficiency of public transport, facilitate alternative transport modes such as walking and cycling, and limit urban sprawl.
Note: Panel A breaks down by transport mode the transport emissions shown in Figure 3.1
Source: Panel A: European Environment Agency; Panel B: European Automobile Manufacturers’ Association (ACEA)
3.3.1. Increasing carbon prices on motor fuels
Despite recent increases, motor fuel prices remain lower than in Western Europe, which is mainly related to low excise duties, especially for gasoline. This only provides limited incentives to buy more efficient vehicles and switch to alternative transport modes (Figure 3.7).
Note: Prices surveyed on 10 February 2025. Gasoline prices are Super 95 prices, and diesel prices are automotive gas oil prices.
Source: European Commission – Weekly Oil Bulletin, OECD calculations
The 2024 NECP targets a maximum increase of transport emissions of 11.3% by 2025 and a 14% decrease by 2030, both compared to 2005. Compared to 2021, this amounts to reductions in transport emissions by 24% by 2025 and by 41% by 2030. The increase in excise duties and carbon taxes for fuels is by far the main envisaged policy measure to curb transport emissions (Government of Lithuania, 2023, pp. 65-75[1]). Two amendments to the Law on excise duties that were passed in May 2023 and June 2024 will increase fuel excise duties over 2024-26 and introduce a carbon tax on fuels that will increase progressively between 2025 and 2030 (Table 3.1, Figure 3.3).
While OECD simulations showed that the excise duty and carbon tax levels that were planned in May 2023 would reduce transport emissions by only 5% by 2025 and 11% by 2030 and thus be insufficient to meet the emission targets (OECD, 2023, pp. 70-71[4]), the impact of the stronger increase that was legislated in June 2024 has not yet been assessed. In case this increase proves insufficient, the government should stand ready to take additional measures to reach the 2030 transport emission target.
While the additional increase in excise duty and carbon tax on fuels that was legislated in June 2024 will be used to partly finance the increase in defence expenditure (Chapter 1), securing political support for a stronger increase would probably require redistributing the corresponding fiscal revenues to households. OECD simulations based on the carbon tax that was legislated in May 2023 showed that average gains from redistributing the related tax revenues via uniform lump-sum transfers to all Lithuanians would ensure positive average net gains to households in the seven lowest income deciles. A recent survey of 40,000 people across 20 countries shows that support for carbon taxes hinges on their perceived impact on lower-income households and on respondents’ assessment of their own gains and losses (Dechezleprêtre et al., 2022[8]). While a carbon tax is widely considered as the most cost-effective instrument to reduce carbon emissions, there is a strong academic support for redistributing the related revenues to secure political acceptability (Akerlof et al., 2019[9]). Switzerland is one example where most revenues from carbon pricing are redistributed to the private sector (OECD, 2024[10]).
3.3.2. Encouraging the adoption of electric vehicles
Beyond increasing carbon taxes on fuels, financial support for the purchase and use of electric vehicles (EVs) has been used to step up demand. EVs remain 10 to 50% more expensive than combustion engine equivalents in Europe depending on the exact country and car segment (International Energy Agency, 2024[12]). In Lithuania, they only represent a marginal share of new car registrations (Figure 3.8), and the second-hand market for EVs is still in infancy. In most mature EV markets, government support has proven key to jump-start early adoption (International Energy Agency, 2023[13]). This has required strong fiscal support, both for charging infrastructure and in the form of purchase subsidies and tax exemptions, such as the VAT or registration tax exemptions granted in Norway (Box 3.1). This fiscal support can be motivated by the fact that the use of zero-emission EVs has a positive external effect that is not internalised by individual users when choosing their motor vehicle.
In order to maximise cost-effectiveness, fiscal support needs to be carefully calibrated. This starts with the financing of an adequate public charging infrastructure, which is key to propel the use of EVs. So far, only relatively few public charging stations are available in Lithuania compared to other countries, which may create bottlenecks (Figure 3.9). While the voltage of the electricity grid in Lithuania allows EV owners to charge their vehicle from a regular domestic socket overnight, public charging stations are needed in cities where most people live in multi-apartment buildings and have a more limited access to home charging. Public charging stations also alleviate concerns about range and allow for vehicles with lower battery capacity, thereby reducing costs and critical material demand (International Energy Agency, 2024[12]). Prioritising fast charging stations along main traffic corridors is important to connect cities, encourage the use of EVs over longer distances, and prepare the charging infrastructure for the increase in the number of EVs over the next years.
Lithuania has ambitious targets for rolling out public charging infrastructure. The objective set in the Law on Alternative Fuels is to reach 6,000 public charging stations by 2030. The new infrastructure would be entirely financed by EU funds, mostly by the RRF. In terms of public charging stations per inhabitant, this would bring Lithuania close to the current level of Austria and Finland where the market share of EVs in new car sales represents between 20 and 40% (Figure 3.8). While this infrastructure deployment plan covers the most urgent needs, the government should consider reinforcing it by allocating additional domestic funds to the construction of public charging stations.
In addition, the government currently offers EUR 5,000 for the purchase of a new EV, and EUR 2,500 for a second-hand one, which is in the mid-range of purchase subsidies in Europe (Montout and Robinet, 2024, p. 12[14]). These direct purchase subsidies are complemented by the possibility to deduct VAT for EVs below EUR 50,000, and by specific parking and circulation privileges in large cities. Financial incentives for EV purchases should be regularly evaluated for their effectiveness and revised as needed, including based on the respective lifecycle costs of electric and non-electric vehicles in the domestic market. Germany, Sweden and the United Kingdom, where EV markets are more mature than in Lithuania, have already started to roll back their initial purchase subsidies (International Energy Agency, 2023, pp. 77-79[13]). Potential options that could be considered to enhance the effectiveness of such incentives could include targeting lower-income households, where subsidies may have a stronger effect on the switch towards EVs, conditioning them on scrapping particularly polluting vehicles, or limiting them to the purchase of smaller or less expensive EVs.
Beyond granting scrapping and purchase subsidies, France has recently introduced a social leasing scheme whereby subsidised long-term EV rental contracts benefit lower-income households. Social leasing rapidly proved popular (Box 3.1). While limited to six years per household in its current format, this system aims to increase the pool of EVs available on the second-hand market and thus increase the affordability of EVs for lower-income households in the longer term.
Share of electric vehicles in new car registrations, 2022, %
Source: European Environment Agency
Number of public charging stations per 10,000 inhabitants (end of 2023)
Note: The numerator is the number of public charging stations at the end of 2023, and the denominator is the population count in 2022.
Source: European Automobile Manufacturers’ Association (ACEA, 2024[15]), World Bank Development Indicators
Norway
Fully electric or plug-in hybrid vehicles represented close to 90% of new car registrations in 2022 in Norway. This required a comprehensive mix of policies:
Tax breaks for EV owners: full exemption of VAT (normally 25%), exemption from the one-off motor vehicle registration tax, and a reduced rate for the re-registration tax.
Concessions for EV drivers: reduced rates on parking, road tolls and ferry fares, and provisions allowing the use of bus lanes.
Regulations: There is a target that all new passenger cars sold and all city buses should be zero emission by 2025.
Support for charging stations: a subsidy program run by the state-owned company ENOVA covers up to 100% of investment costs, including purchase of a charger, grid connection, shielding and communication and payment solutions.
However, the push to persuade households to purchase electric vehicles has come at a price. The policy has contributed to a sizeable revenue decline from car-related excise duties, from NOK 78 billion in 2007 to an estimated NOK 40 billion in 2021. This equates to an average revenue loss of about 0.1 percentage points of mainland GDP each year. In addition, VAT revenues have fallen because of the VAT exemption for electric cars. These incentives have been lowered over time, as the Norwegian EV market became more mature. For example, VAT was reintroduced in 2023 for EVs costing more than NOK 500,000 (EUR 43,000), the use of bus lanes has been limited to EVs carrying at least one passenger after 2016, and EVs are now subject to Oslo’s congestion charges.
France
In France, government support to EVs accounts for household income and EV environmental performance:
For all households, a financial penalty is applied to emission-intensive vehicles. As of 2024, it kicks in for vehicles emitting more than 117g CO2/km and reaches EUR 60,000 for vehicles emitting more than 194g CO2/km. This penalty is reviewed every year.
Lower-income households receive additional support from the government:
Higher subsidies. Since 2023, the scrapping subsidy of EUR 1,000 to replace an internal-combustion vehicle by an EV is reserved to households earning less than the median income, and those households are also eligible to higher EV purchase subsidies (EUR 7,000 vs. EUR 4,000). With the current subsidies for lower-income households, an electric city car is more cost-effective than a combustion-engine alternative after only 3 years, 10 years earlier than without subsidies.
Social leasing. Since 2024, lower-income households can benefit from long-term EV rental contracts at a price of 100-150 euros per month. Such contracts may be renewed once, for a cumulated length of maximum 6 years. More than 50,000 contracts had been signed 6 weeks after the introduction of social leasing, more than the 30,000 purchase subsidies granted to lower-income households over 2023 as a whole.
Source: OECD Economic Survey of Norway (2022, pp. 66-68[16]); (Montout and Robinet, 2024[14])
3.3.3. Developing alternative transport modes
Developing alternatives to road transport by car will be key to reduce overall transport emissions. At 5.4% in 2021, the share of public transport in total passenger traffic in Lithuania was the lowest in Europe, well below the EU average of 14.8% (Odyssee-Mure, 2023[17]).
The development of alternatives to road transport requires consistency between transport and urban planning. Lithuania’s urban sprawl and low-density development have contributed to over-reliance on private vehicles and unsustainable travel patterns (OECD, 2021[18]). Similar issues have been encountered in Estonia, where the built-up surface has increased significantly despite a population decline over the last decades (OECD, 2022[19]). Population ageing and shrinking provide a key opportunity to rethink urban planning in a way that limits urban sprawl and promotes the densification of central areas, where the use of public transport and active transport modes such as cycling and walking is easier.
Adequate interconnection between different transport modes and networks is key to reduce the use of private cars. The State Data Agency and the Ministry of Transport and Communications are currently developing an integrated digital platform to provide information on all municipal public transport systems. Data collection from municipalities has started in end-2024. Completing this exercise as soon as possible would allow using the platform to coordinate timetables and facilitate the use of public transport to cover longer distances.
Rail transport would be a natural alternative to road transport, but that would require further network expansion. The Lithuanian railway network is one of the least developed and most emission-intensive in Europe (Figure 3.10). As a result, rail transport is only marginally used for passenger transport in Lithuania, with only 140 km travelled each year by rail per inhabitant, compared to 880 km in the EU as a whole. Electrification is under way, with the objective to electrify 814 km (40%) of the rail network by 2030.
Note: The railway network in Panel B includes high-speed and conventional lines, but excludes light rail, metros and trams. With the 390 km of the Rail Baltica track that is currently under construction, Lithuania will gain 6 km of railway lines per 1000 km² of land area by 2030 but will remain below the European average in terms of railway network density.
Source: Eurostat (Panels A and B), EU Transport in Figures - Statistical Pocket Book 2023 (Panel B)
The 390 km of the Rail Baltica track that is expected to connect Lithuania with Poland, Latvia and Estonia by 2030 will contribute to expanding the railway network (Government of Lithuania, 2023[1]). Nevertheless, a joint review by the National Audit Offices of Estonia, Latvia and Lithuania (2024[20]) recently alerted about major delays and cost overruns for this project, which are not yet reflected in national budget strategies for the coming years. While most of the project is funded by the EU, all EU funds are time-bound and excessive delays may prevent spending some of them, in which case national governments would have to cover for the loss of funding. Moreover, EU regulation prevents some expenditures such as those related to the purchase of the trains to be financed by EU funds, and national governments still need to clarify how to finance them. Looking ahead, it is key to ensure that all expenditures related to Rail Baltica are adequately reflected in national budgets and that excessive delays do not lead to cuts in EU funding.
Three quarters of the building stock in Lithuania was built before the early 1990s, at a time where no specific insulation materials were used (Government of Lithuania, 2021[21]). As a result, the overall energy performance of the stock is poor and renovations are only advancing at a slow pace (Figure 3.11). Beyond being an issue for GHG emissions, the poor energy efficiency of dwellings also explains that a significant share of households, over 30% in the first income quintile, were unable to adequately heat their home when energy prices surged in 2022-23 (OECD, 2024[22]).
Only 2% of buildings are publicly owned by the state or municipalities and, due to arrangements taken at the end of the Soviet era, most Lithuanian households live in a dwelling that they own. Therefore, the pace of renovations depends crucially on the return on investment of energy-efficiency improvements, on the public awareness of renovation benefits, and potential financial constraints that households are facing.
Note: In panel A, due to the lack of energy certificates for most residential buildings, energy performance is assessed based on the construction date of buildings. Energy performance is assumed to be D or below for all buildings constructed before 2005, C for those constructed between 2006 and 2013, B for those constructed between 2014 and 2018, and A or above for those constructed since 2019.
Carbon prices in the residential sector have long been kept low because most heating energy sources were untaxed (Figure 3.3). Following the 2023 and 2024 amendments to the Law on excise duties, increased excise duties and a carbon tax will apply to coal, diesel, LPG and peat used for residential heating, but natural gas will remain outside the carbon tax framework (OECD, 2023, pp. 89-116[4]). Moreover, before-tax retail electricity and gas prices are regulated at a low level (Chapter 2). While this contributes to energy affordability, regulated prices for all could be replaced by targeted cash transfers to low-income households to avoid discouraging energy efficiency improvements for those who can afford them.
The relative homogeneity of the Lithuanian building stock calls for the implementation of standardised renovation techniques to lower the price of energy efficiency improvements. Since most buildings were built between the early 1960s and the early 1990s, they only offer limited architectural and structural diversity (Government of Lithuania, 2021, p. 17[21]). Moreover, 80% of multi-apartment buildings are managed by municipally appointed administrators (OECD, 2023[23]), which could facilitate knowledge sharing across renovation projects. This setting looks ideal to exploit modular and industrialised solutions that become available for building renovation, and the results of pilot projects run outside Lithuania are promising (Box 3.2). The related economies of scale would contribute to accelerate the pace of building renovation and reduce its cost.
At this point, barriers to the wider-scale application of modular solutions include the lack of awareness and uncertainty of households and firms about costs and benefits, the fact that only a few firms master the required technology, and that construction workers would need to be retrained. Given the potential of these solutions for Lithuania and the existence of positive externalities leading private actors to wait that others invest first to reduce uncertainty, the government was right to launch eight pilot projects to explore modular solutions for building renovation. These projects are currently being implemented and will allow accumulating experience and providing demonstration cases, thus reducing uncertainty for the private sector. Looking forward, it will be important to identify the most cost-effective solutions and target financial incentives accordingly, promote these solutions in awareness raising campaigns, and ensure that a sufficient number of construction workers receive the required training.
The idea of modular and industrialised solutions for building renovation is to rely on prefabricated substructures to be anchored to existing buildings and hosting all the components needed for the retrofit (e.g. windows, energy generation and distribution systems, mechanical ventilation). While traditional retrofitting approaches involve extensive workforce needs on site and significant risks of errors, a prefabricated approach decreases the assembly risk on site and enhances the level of performance of the installed technologies. Moreover, industrialised solutions hold the potential for economies of scale at the construction stage of the prefabricated structures and time savings at the installation stage. Coupling industrial and digital tools is key to lowering costs, reducing production and assembly time, and improving the fit between the prefabricated elements and the destination buildings.
Several pilot projects in this area are being funded by the EU, such as 4RinEU, P2ENDURE, Pro-GET-OnE, and MORE-CONNECT. Preliminary results for P2ENDURE point to a cost saving of 15% and a time saving of 50% compared to traditional retrofitting methods. MORE-CONNECT has been applied in six EU countries including Estonia and Latvia. Preliminary results for this project show that prefabricated retrofitting modules make it possible to reduce the primary energy consumption of a typical residential building by 80% and the installation time to below two weeks.
Compared to other countries, Lithuania’s exposure to climate change risks seems more limited (Table 3.2). The most prominent risk in Lithuania is the increased exposure of cropland to droughts (Figure 3.12). In a scenario of moderate warming, changes in management practices at the farm level may significantly contain the negative impact on agricultural yields and farmer revenues. Such changes include using species that are more resistant to heat stress, altering the timing or location of cropping activities, using specific techniques to conserve soil moisture, and diversifying income by developing other farming activities.
Public institutions have a key role to play to induce changes in management practices at the farm level. A first step would be to convince farmers that climate changes are real and likely to continue and will have an impact on their activity, while raising awareness about existing adaptation techniques. This could be complemented by financial support for public water transport and storage infrastructure. Mandatory crop insurance coverage could help to convey relevant price signals and reducing insurance premia via risk pooling (Howden et al., 2007[26]) (OECD, forthcoming[27]).
Lithuania’s country ranking from highest to lowest exposure to climate-change risks (out of 51 countries)
Note: The 51 countries contributing to the OECD International Programme for Action on Climate (IPAC) are included in the comparison. For each risk, a ranking of n indicates that Lithuania is the country with the nth most significant risk in the sample.
Soil moisture anomaly in cropland, 2014-23 compared to the reference period 1981-2010 (%)
Note: Soil moisture in Lithuania was 2.9% lower over 2014-23 than over 1981-2010.
Source: OECD Database on Exposure to Climate-Related Hazards
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