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<!DOCTYPE html>
<html>
<head>
<meta charset="utf-8">
</head>
<body>
<h1>Albania's NDC</h1>
<h1>ABBREVATIONS</h1>
<table>
<tr>
<td>
<p>4NC</p>
</td>
<td>
<p>Fourth National Communication of Albania to the UNFCCC</p>
</td>
</tr>
<tr>
<td>
<p>AFOLU</p>
</td>
<td>
<p>Agriculture, Forestry and Other Land Uses</p>
</td>
</tr>
<tr>
<td>
<p>ALKOGAP</p>
</td>
<td>
<p>Albania - Kosovo Pipeline (Project)</p>
</td>
</tr>
<tr>
<td>
<p>AR5</p>
</td>
<td>
<p>Fifth Assessment Report of the IPCC</p>
</td>
</tr>
<tr>
<td>
<p>ARDA</p>
</td>
<td>
<p>Agriculture and Rural Development Agency</p>
</td>
</tr>
<tr>
<td>
<p>BAU</p>
</td>
<td>
<p>Business-as-usual</p>
</td>
</tr>
<tr>
<td>
<p>BOD</p>
</td>
<td>
<p>Biochemical oxygen demand</p>
</td>
</tr>
<tr>
<td>
<p>C</p>
</td>
<td>
<p>Carbon</p>
</td>
</tr>
<tr>
<td>
<p>CAP</p>
</td>
<td>
<p>Common Agricultural Policy of the European Union</p>
</td>
</tr>
<tr>
<td>
<p>CCGT</p>
</td>
<td>
<p>Combined cycle gas turbine</p>
</td>
</tr>
<tr>
<td>
<p>CCKP</p>
</td>
<td>
<p>Climate Change Knowledge Portal</p>
</td>
</tr>
<tr>
<td>
<p>CH4</p>
</td>
<td>
<p>Methane</p>
</td>
</tr>
<tr>
<td>
<p>CMPI5</p>
</td>
<td>
<p>Coupled Model Intercomparison Project Phase 5</p>
</td>
</tr>
<tr>
<td>
<p>CO2</p>
</td>
<td>
<p>Carbon dioxide</p>
</td>
</tr>
<tr>
<td>
<p>CO2e</p>
</td>
<td>
<p>Carbon dioxide equivalent</p>
</td>
</tr>
<tr>
<td>
<p>COD</p>
</td>
<td>
<p>Chemical oxygen demand</p>
</td>
</tr>
<tr>
<td>
<p>ECCS</p>
</td>
<td>
<p>Draft Environmental Cross-cutting Strategy</p>
</td>
</tr>
<tr>
<td>
<p>EE</p>
</td>
<td>
<p>Energy Efficiency</p>
</td>
</tr>
<tr>
<td>
<p>EFFIS</p>
</td>
<td>
<p>European Forest Fire Information System</p>
</td>
</tr>
<tr>
<td>
<p>EU</p>
</td>
<td>
<p>European Union</p>
</td>
</tr>
<tr>
<td>
<p>EU</p>
</td>
<td>
<p>European Union</p>
</td>
</tr>
<tr>
<td>
<p>FAO</p>
</td>
<td>
<p>Food and Agriculture Organization of the United Nations</p>
</td>
</tr>
<tr>
<td>
<p>FNC</p>
</td>
<td>
<p>First National Communication</p>
</td>
</tr>
<tr>
<td>
<p>FOLU</p>
</td>
<td>
<p>Forest and Other Land Use</p>
</td>
</tr>
<tr>
<td>
<p>GACMO</p>
</td>
<td>
<p>Greenhouse Gas Abatement Cost Model</p>
</td>
</tr>
<tr>
<td>
<p>GDI</p>
</td>
<td>
<p>Gender development index</p>
</td>
</tr>
<tr>
<td>
<p>GDP</p>
</td>
<td>
<p>Gross Domestic Product</p>
</td>
</tr>
<tr>
<td>
<p>GHG</p>
</td>
<td>
<p>Greenhouse gas</p>
</td>
</tr>
<tr>
<td>
<p>GWP</p>
</td>
<td>
<p>Global Warming Potential</p>
</td>
</tr>
<tr>
<td>
<p>Ha</p>
</td>
<td>
<p>Hectares</p>
</td>
</tr>
<tr>
<td>
<p>HDI</p>
</td>
<td>
<p>Human Development Index</p>
</td>
</tr>
<tr>
<td>
<p>IAP</p>
</td>
<td>
<p>Ionian Adriatic Pipeline Project)</p>
</td>
</tr>
<tr>
<td>
<p>ICSP</p>
</td>
<td>
<p>Integrated cross-sectoral plan for the coastal belt</p>
</td>
</tr>
<tr>
<td>
<p>IMWGCC</p>
</td>
<td>
<p>Inter-Ministerial Working Group on Climate Change</p>
</td>
</tr>
<tr>
<td>
<p>INSTAT</p>
</td>
<td>
<p>Albanian Institute of Statistics</p>
</td>
</tr>
<tr>
<td>
<p>IPARD</p>
</td>
<td>
<p>Rural Development Programme 2014-2020 under the Instrument for Pre- accession Assistance</p>
</td>
</tr>
<tr>
<td>
<p>IPCC</p>
</td>
<td>
<p>Intergovernmental Panel on Climate Change</p>
</td>
</tr>
<tr>
<td>
<p>IPPU</p>
</td>
<td>
<p>Industrial Processes and Product Use</p>
</td>
</tr>
<tr>
<td>
<p>ISARD</p>
</td>
<td>
<p>Inter-sectoral Strategy for Agriculture and Rural Development</p>
</td>
</tr>
<tr>
<td>
<p>kt</p>
</td>
<td>
<p>Kilotons</p>
</td>
</tr>
<tr>
<td>
<p>LANFPF</p>
</td>
<td>
<p>Draft law on the administration of the national forest and pasture fund in the republic of Albania</p>
</td>
</tr>
<tr>
<td>
<p>LEAP</p>
</td>
<td>
<p>Low Emissions Analysis Platform</p>
</td>
</tr>
<tr>
<td>
<p>LPG</p>
</td>
<td>
<p>Liquefied petroleum gas</p>
</td>
</tr>
<tr>
<td>
<p>MARD</p>
</td>
<td>
<p>Ministry of Agriculture and Rural Development</p>
</td>
</tr>
<tr>
<td>
<p>MOTE</p>
</td>
<td>
<p>Ministry of Tourism and Environment</p>
</td>
</tr>
<tr>
<td>
<p>MSW</p>
</td>
<td>
<p>Municipal solid waste</p>
</td>
</tr>
<tr>
<td>
<p>N</p>
</td>
<td>
<p>Nitrogen</p>
</td>
</tr>
<tr>
<td>
<p>N2O</p>
</td>
<td>
<p>Nitrous oxide</p>
</td>
</tr>
<tr>
<td>
<p>NDC</p>
</td>
<td>
<p>Nationally Determined Contribution</p>
</td>
</tr>
<tr>
<td>
<p>NEEAP</p>
</td>
<td>
<p>National Energy Efficiencies Actions Plans</p>
</td>
</tr>
<tr>
<td>
<p>NREAP</p>
</td>
<td>
<p>National Renewable Energy Action Plan</p>
</td>
</tr>
<tr>
<td>
<p>NSCC</p>
</td>
<td>
<p>National Strategy on Climate Change</p>
</td>
</tr>
<tr>
<td>
<p>NSDI-II</p>
</td>
<td>
<p>National Strategy for Development and Integration 2015-2020</p>
</td>
</tr>
<tr>
<td>
<p>NSE</p>
</td>
<td>
<p>National Energy Strategy 2018-2030</p>
</td>
</tr>
<tr>
<td>
<p>NTP</p>
</td>
<td>
<p>National Territorial Plan</p>
</td>
</tr>
<tr>
<td>
<p>PDFS</p>
</td>
<td>
<p>On Policy Document of the Forest Sector in Albania – 2030</p>
</td>
</tr>
<tr>
<td>
<p>PPM</p>
</td>
<td>
<p>Parts per million</p>
</td>
</tr>
<tr>
<td>
<p>RCP</p>
</td>
<td>
<p>Representative Concentration Pathways</p>
</td>
</tr>
<tr>
<td>
<p>RES</p>
</td>
<td>
<p>Renewable Energy Sources</p>
</td>
</tr>
<tr>
<td>
<p>SDG</p>
</td>
<td>
<p>Sustainable Development Goals</p>
</td>
</tr>
<tr>
<td>
<p>SLR</p>
</td>
<td>
<p>Sea-level rise</p>
</td>
</tr>
<tr>
<td>
<p>SPDBP</p>
</td>
<td>
<p>Strategic Policy Document for the Protection of Biodiversity</p>
</td>
</tr>
<tr>
<td>
<p>SPEI</p>
</td>
<td>
<p>Standardized Precipitation Evapotranspiration Index</p>
</td>
</tr>
<tr>
<td>
<p>TAP</p>
</td>
<td>
<p>The Trans Adriatic Pipeline Project</p>
</td>
</tr>
<tr>
<td>
<p>TCI</p>
</td>
<td>
<p>Tourism Climate Index</p>
</td>
</tr>
<tr>
<td>
<p>TJ</p>
</td>
<td>
<p>Terajoules</p>
</td>
</tr>
<tr>
<td>
<p>TNC</p>
</td>
<td>
<p>Third National Communication of Albania to the UNFCCC</p>
</td>
</tr>
<tr>
<td>
<p>TPP</p>
</td>
<td>
<p>Thermal power plant</p>
</td>
</tr>
<tr>
<td>
<p>UNFCCC</p>
</td>
<td>
<p>United Nations Framework Convention on Climate Change</p>
</td>
</tr>
</table>
<h1><a>1. NATIONAL CIRCUMSTANCES</a></h1>
<p>The Republic of Albania is a Balkan country in Southeast Europe. It is located to the North of Greece and to the South of Montenegro and Kosovo. To the West, it borders the Ionian (South) and the Adriatic (North) seas, in the Mediterranean Sea, for 450 km. Albania’s land area totals 28,748 km2. The country’s average altitude is 700 meters above sea level, as 70% of the territory is mountainous.</p>
<p>Albania has a subtropical Mediterranean climate, which involves mild and humid winters and hot and dry summers, with some continental influence. The mean annual temperature (1901-2016) is 11.5°C, and mean precipitation is 1019.8 mm. <strong>Error! Reference source not found.</strong> below shows the average monthly temperature and rainfall.</p>
<p>Figure 1. Albania’s average monthly temperature and rainfall (1901-2016)</p>
<p><img width="423" height="234" alt="Chart, line chart Description automatically generated" src="img/ALB-NDC1-1.png"></p>
<p>Source: World Bank Climate Change Knowledge Portal (CCKP)</p>
<p>Albania is a highly biodiverse country. The mountainous topography, the different geological strata, types of soil and Mediterranean climate with some continental influence contribute to this diversity. About 17% of Albanian territory had protected status in 2016. Albania possesses important water resources. They are an important source of hydropower, producing 90% of the country’s energy and providing irrigation for agriculture. Water resources have been polluted in populated areas. Albania also counts with metals and oil.</p>
<p>In 2019, Albania had an estimated population of 2.88 million. Recent demographic developments show that Albania's population is shrinking and heading towards aging. This is due to negative natural growth and most importantly negative net migration. Most studies project that the demographic decline will continue.</p>
<p>Albania is fairly densely populated. In 2018, the average population density was 99.7 inhabitants per km2. Albania has experienced a strong urbanization process: urban population increased from one-third in the early 1990s to an estimate of almost two-thirds (62%) in 2020. The largest city is Tirana, the country’s capital, which had an estimated population of 421,000 in 2020, with a greater metropolitan population of 764,000. The second-largest metropolitan area in Albania is the ancient city of Durrës, only 30 km from Tirana, with an estimated population of 201,519 in 2020. Other major cities include Vlorë, Elbasan and Shkodër. The urban population share is expected to rise.</p>
<p>After 50 years of communist rule, Albania has transformed from one of the poorest countries in Europe in the early 1990s to an upper-middle-income country in 2020. As a result of three decades of remarkable economic growth, in 2019, its GDP amounted to USD 15.3 billion, and its GDP per capita to USD 5,450.</p>
<p>This economic growth has been associated with structural economic changes, with a transition from an economy based on raw materials and agriculture and industry, into a more diverse economy, where the service sector plays a leading role. In 2019, the service sector (represented by the subsectors of trade, transport, commercial activities and telecommunication services) constituted about 50% of the GDP of the country. Industry and construction made up about 20% of the GDP and the agriculture sector contributed about 19% of the GDP. Public debt was over 65% in 2019.</p>
<p>Over the last three decades social indicators have improved in Albania. In 2019 Albania’s Human Development Index (HDI) value, which considers life expectancy at birth, education and gross national income per capita, was 0.795— which put the country in the high human development category— positioning it at 69 out of 189 countries and territories<a href="#fn1" class="footnoteRef" id="fnref1"><sup>1</sup></a>. In 2012, the most recent year with official poverty figures, 14.3% of Albanians lived below the national poverty line<a href="#fn2" class="footnoteRef" id="fnref2"><sup>2</sup></a>, while 1.1% lived below the international extreme poverty line and 39.1% lived below the upper middle income poverty line. Unemployment reached a historically low 11.4 percent in Q3 of 2019. The latest Gini index was estimated at 33.2 in 2017 (0 representing equality and 100 inequality).</p>
<p>The socio-economic progress of Albania has been recently hampered by two shocks. The country was hit by a devastating earthquake in November 2019. The earthquake, measuring 6.3 on the Richter scale, the strongest in 30 years, caused 51 fatalities, injured at least 913 people and affected over 200,000 people (17,000 people were displaced). It caused extensive damage to physical assets in 11 municipalities, including the two most populous and developed municipalities (Tirana and Durres). Tourism assets and housing were hit the hardest. The earthquake led to losses equivalent to an estimated 7.5% of GDP.</p>
<p>In the midst of the reconstruction efforts, the COVID-19 crisis is putting more pressure on the Government’s budget and response, and the country’s socio-economic progress, as it forced Albania, as other countries, to put key economic sectors in lockdown. The tourism sector, a key driver of growth, was hit especially hard because of containment measures and travel restrictions. In the second quarter of 2020, employment declined by 3.6% year-on-year. The earthquake and the pandemic are expected to significantly increase poverty, resulting in poverty rates comparable to those in 2005.</p>
<p>Since the early 1990s, Albania has implemented important structural reforms to promote equitable economic growth and improve governance and public service delivery. In a transition from a centrally planned to a market-oriented economy, this has included macroeconomic and fiscal sustainability, financial sector stabilization, energy reform, social assistance and disability reform, and territorial decentralization.</p>
<p>The key national planning document currently in place is the National Strategy for Development and Integration 2015-2020 (NSDI-II), which was adopted by the Government of Albania in May 2016. This strategic document reflects the vision, priorities, objectives and means for social and economic development of the country up to 2020. About 37 sectoral strategies<a href="#fn3" class="footnoteRef" id="fnref3"><sup>3</sup></a> adopted by the Albanian Government (and in three cases, by the Parliament) complement the NSDI-II. The NSDI-II is organized around 13 cross-cutting foundations on good governance, democracy and rule of law, and four main sectoral pillars: i) growth through macroeconomic and fiscal stability; ii) economic growth through enhanced competitiveness and innovation; ii) investing in social capital and social cohesion and iv) growth through sustainable use of natural resources and territorial development. National elections took place in April 2021.</p>
<p>The overarching goal of NSDI-II is the accession to the European Union (EU). After the EU’s decision in March 2014 to open accession talks with the country, Albania is advancing the EU integration agenda. As part of the process, the country is transposing and implementing parts of the EU legislation - most national plans or actions, including in the environmental domain, are now designed to take into account policies and directives of the EU. Albania is also considering the EU’s strategies and plans for the Western Balkans of which Albania is part<a href="#fn4" class="footnoteRef" id="fnref4"><sup>4</sup></a>, such as the EU Economic and Investment Plan for the Western Balkans<a href="#fn5" class="footnoteRef" id="fnref5"><sup>5</sup></a>, adopted in October 2020, the EU Green Deal for the Western Balkans<a href="#fn6" class="footnoteRef" id="fnref6"><sup>6</sup></a>, adopted in November 2020, and the the Decision Nr. 90, date 17.2.2021 « On approval of National Plan for European Integration, 2021–2023 »among others.</p>
<p>Besides the EU, Albania is an active participant in multilateral organizations and agreements. The Republic of Albania is a signatory Party of the United Nations Framework Convention on Climate Change (UNFCCC), which was ratified by the Albanian Parliament in 1994. In April 2016, Albania signed the Paris Agreement. In December 2017 the Albanian Parliament unanimously approved a resolution confirming the country’s commitment to Agenda 2030 and achievement of the Sustainable Development Goals (SGDs).</p>
<p>In line with global and regional commitments and national priorities, Albania has made progress on climate change mitigation and adaptation. In 2014, the Albanian government established the Inter-Ministerial Working Group on Climate Change (IMWGCC), which coordinates all institutions involved in climate change processes and facilitates the integration of climate change into relevant new and existing policies, programs and activities. In July 2019 Albania approved a National Climate Change Strategy and corresponding national mitigation and adaptation plans. The country has implemented several mitigation and adaptation projects and studies.</p>
<p>The Republic of Albania submitted its first NDC in November 2015, with the commitment “to reduce CO2 emissions compared to the baseline scenario in the period of 2016 and 2030 by 11.5%, or 708 kT CO2 emission reduction in 2030”. Regarding mitigation, the scope was limited in terms of both gases and sectors. The NDC only covered CO2 gases - it did not include other relevant gases such as CH4, N2O, F-gases; and it only covered energy and industrial processes sectors - it did not include agriculture, Forest and Other Land Use (FOLU) and waste sectors. No references to specific mitigation actions or adaptation were included.</p>
<h1><a>2. MITIGATION</a></h1>
<h2><a>2.1 Situation of the country</a></h2>
<h3>2.1.1. Historical GHG emissions trends</h3>
<p>Albania’s greenhouse gas (GHG) mean annual emissions, according to the national inventory prepared for the 4th National Communication and the final draft of 1st BUR, amounted to 10.8 Mt CO2e/y in the period 2009-2016. Compared to the rest of Europe, this level of emission is low. While the level of emissions per capita is 8.7 t CO2e/hab in the EU-27 in 2018, the level of emission per capita in Albania is 3.5 t CO2e/hab in 2016.</p>
<p>During this period, emissions have increased only slightly: they amounted to 9,925 kt CO2e in 2009 and to 10,139 kt CO2e in 2016 (+2.2%). During this period, only important variation in terms of emissions is due to exceptional episodes of forest fires in 2011-2012 that are accounted in the FOLU sector.</p>
<p>Figure 2. Albania’s mean annual GHG emissions (kt CO2e) per sector (2009-2016)</p>
<p><img width="602" height="204" alt="image" src="img/ALB-NDC1-2.png"></p>
<p>This overall national evolution hides discrepancies between individual sectors:</p>
<ul>
<li>
<p>Emissions of the Energy sector amounted to 4,243 kt CO2e in 2009 and to 4,664 kt CO2e in 2016 (+9.9%).</p>
</li>
<li>
<p>Emissions of the Industrial processes and Product Use (IPPU) sector amounted to 1,356 kt CO2e in 2009 and to 1,020 kt CO2e in 2016 (-24.8%). This decrease is mainly due to a technology switch in the Iron & Steel sector between 2009 (Direct Reduced Iron Production) and 2010 (Electric Arc Furnace).</p>
</li>
<li>
<p>Emissions of the Waste sector amounted to 621 kt CO2e in 2009 and to 838 kt CO2e in 2016 (+35.1%).</p>
</li>
<li>
<p>Emissions of the Agriculture sector amounted to 2,239 kt CO2e in 2009 and to 2,344 kt CO2e in 2016 (+4.7%).</p>
</li>
<li>
<p>Emissions of the Forest and Other Land Use (FOLU) sector amounted to 1,467 kt CO2e in 2009 and to 1,274 kt CO2e in 2016 (-12.4%). Emissions peaks are caused by the effect of exceptional episodes of forest fires in 2011-2012. However, the fuelwood demand is the important driver of FOLU trends in general and is the main reason why the FOLU is not a net carbon sink during the period as CO2 emissions from the combustion of wood are reported under the FOLU sector and not under the energy sector.</p>
</li>
</ul>
<p>Specific trends per sector are presented on the figure below:</p>
<p>Figure 3. Emission trends (kt CO2e) per sector (2009-2016)</p>
<p><img width="511" height="204" alt="image" src="img/ALB-NDC1-3.png"></p>
<h3>2.1.2. 2016 GHG inventory</h3>
<p>In 2016, according to the national inventory figures from the draft of the first BUR and the 4th National Communication, used as a base for the NDC projections, Albania emitted 10,184 kt CO2e, 46.0% from the Energy sector; 23.1% from the Agriculture sector; 12.6% from the FOLU sector; 10.1% from the IPPU sector and 8.3% from the Waste sector.</p>
<p>Figure 4. 2016 emissions</p>
<p><img width="306" height="257" alt="image" src="img/ALB-NDC1-4.png"></p>
<h2><a>2.2. Projections</a></h2>
<h3>2.2.1. BAU scenario</h3>
<p>The NDC relies on the comparison between a Business as Usual scenario (BAU) and a NDC scenario considering mitigation measures. Projections rely on macro-economic assumptions such as GDP and population forecast but also on historical trends, strategies and plans as endorsed at national level. Population is expected to remain constant on the time-series. GDP forecast considered in the assumptions is presented on the figure below.</p>
<p>Figure 5. Historical data and GDP forecast<a href="#fn7" class="footnoteRef" id="fnref7"><sup>7</sup></a></p>
<p><img width="551" height="264" alt="image" src="img/ALB-NDC1-5.png"></p>
<p>The BAU scenario relies on current trends and future economic development. It considers the national circumstances such as the current energy poverty. No major technology switch is taken into account. The BAU considers only very small scale improvements for Energy Efficiency (energy efficiency based on technology improvement and fleet renewal) and Renewable energy as well as laws adopted before 2016 (increase of biofuels share in the road transport to reach 10% in 2030) and introduction of imported Natural gas in the country around 2023.</p>
<p>The NDC scenario takes into account national strategies and action plans as detailed at sectoral level below (<a href="#bookmark18">summary; more details are provided in</a> <a href="#bookmark18">Annex 1. Mitigation calculations (details for</a> sectors)).</p>
<p>Figure 6. Historic and projected emissions (kt CO2e) for all sectors (BAU)</p>
<p><img width="568" height="227" alt="image" src="img/ALB-NDC1-6.png"></p>
<p>Considering all sectors (including FOLU), emissions for the BAU scenario increase from 10,139 kt CO2e in 2016 to 15,148 kt CO2e in 2030, which represents an evolution of +49.4%.</p>
</li>
<li>
<h3>NDC scenario</h3>
<p>The figure below presents the projected evolution of emissions for all sectors according to the NDC scenario. The relative contribution of each sector to the total of emissions remains similar to the situation of the reference year, except for the FOLU sector that has a decreasing impact, due to a higher level of absorption by sinks and a lower level of emissions by sources.</p>
<p>Figure 7. Evolution of emissions per sector (kt CO2e) according to the NDC scenario</p>
<p><img width="570" height="227" alt="image" src="img/ALB-NDC1-7.png"></p>
<p>The aggregated effect of mitigation actions is presented in the following figure.</p>
<p>Considering all sectors (including FOLU), emissions for the NDC scenario (with mitigation measures) increase from 10,139 kt CO2e in 2016 to 11,978 kt CO2e in 2030, which represents an increase of +18.1%. The difference, in 2030, with the BAU scenario, is -3,170 kt CO2e, which represents a mitigation impact of -20.9%.</p>
<p>Overall, the mitigation actions accounted in the NDC scenario could help avoid, in total during the period 2021-2030, 16,828 kt CO2e compared to the BAU scenario. This is the cumulative effect of the emissions reduction between NDC scenario and BAU scenario.</p>
<p>Figure 8. Evolution of total emissions according to the NDC scenario and difference with the BAU scenario</p>
<p><img width="529" height="184" alt="image" src="img/ALB-NDC1-8.png"></p>
<p>Figure 9. Emission reductions between the NDC and BAU scenarios by sector, in 2030</p>
<p>The % reduction relate on each sector, not on the total GHG emissions as presented in the table below.</p>
<p><img width="436" height="181" alt="image" src="img/ALB-NDC1-9.png"></p>
<p>Table 1. Summary of the mitigation reduction in 2030 (NDC compared to BAU scenario)</p>
<table>
<tr>
<td rowspan="2"></td>
<td>
<p>2030 BAU</p>
</td>
<td>
<p>2030 NDC</p>
</td>
</tr>
<tr>
<td>
<p>GgCO2e</p>
</td>
<td>
<p>GgCO2e</p>
</td>
</tr>
<tr>
<td>
<p>Energy</p>
</td>
<td>
<p>8 466</p>
</td>
<td>
<p>6 544</p>
</td>
</tr>
<tr>
<td>
<p>IPPU</p>
</td>
<td>
<p>1 854</p>
</td>
<td>
<p>1 854</p>
</td>
</tr>
<tr>
<td>
<p>Waste</p>
</td>
<td>
<p>966</p>
</td>
<td>
<p>959</p>
</td>
</tr>
<tr>
<td>
<p>Agriculture</p>
</td>
<td>
<p>2 140</p>
</td>
<td>
<p>2 071</p>
</td>
</tr>
<tr>
<td>
<p>FOLU</p>
</td>
<td>
<p>1 722</p>
</td>
<td>
<p>549</p>
</td>
</tr>
<tr>
<td>
<p>Total</p>
</td>
<td>
<p>15 148</p>
</td>
<td>
<p>11 978</p>
</td>
</tr>
<tr>
<td colspan="2">
<p>Reduction in NDC compared to BAU</p>
</td>
</tr>
<tr>
<td>
<p>GgCO2e</p>
</td>
<td>
<p>%</p>
</td>
</tr>
<tr>
<td>
<p>-1 921</p>
</td>
<td>
<p>-23%</p>
</td>
</tr>
<tr>
<td>
<p>0</p>
</td>
<td>
<p>0%</p>
</td>
</tr>
<tr>
<td>
<p>-7</p>
</td>
<td>
<p>-1%</p>
</td>
</tr>
<tr>
<td>
<p>-68</p>
</td>
<td>
<p>-3%</p>
</td>
</tr>
<tr>
<td>
<p>-1 174</p>
</td>
<td>
<p>-68%</p>
</td>
</tr>
<tr>
<td>
<p>-3 170</p>
</td>
<td>
<p>-20,9%</p>
</td>
</tr>
</table>
<h3>2.2.3. Energy</h3>
<h4>2.2.3.1. Energy supply and consumption (2009 – 2016)</h4>
<p>The primary energy supply in Albania is dominated by oil products, hydro and net import electricity, fuel wood and a small amount of coal and natural gas as shown on Figure 12. Final Energy Consumption by energy source for the year 2009 (%) and 2016 (%) Oil products have been reduced from 60.40% (2009) at 58.93% (2016), hydro & net import electricity have increased from 26.69% (2009) to 28.53% and wood has been reduced from 10.04% (2009) to 7.96% (2016). <strong>Error! Reference source not found.</strong> shows the Final Energy Consumption in Albania in 2009 and 2016 respectively, demonstrating that the transport sector consumes the most final energy, followed by households and industry.</p>
<p>Figure 10. Energy supply (ktoe) by energy source for the period 2009-2016</p>
<p><img width="506" height="294" alt="image" src="img/ALB-NDC1-10.png"></p>
<p>Figure 11. Energy Supply by energy source for the year 2009 (%) and 2016 (%)</p>
<p><img width="290" height="267" alt="image" src="img/ALB-NDC1-11.png"> <img width="291" height="267" alt="image" src="img/ALB-NDC1-12.png"></p>
<p>Figure 12. Final Energy Consumption by energy source for the year 2009 (%) and 2016 (%)</p>
<p><img width="290" height="267" alt="image" src="img/ALB-NDC1-13.png"> <img width="290" height="267" alt="image" src="img/ALB-NDC1-14.png"></p>
<p>Electricity generation has been historically met almost exclusively by hydropower plants, with a total installed power capacity of 2,011 MW at the end of 2016. The country has exploited approximately 50% of its hydropower potential, and future expansion of hydropower capacity is possible mainly along the Drini, Mati, Devolli, and Bistrica rivers. Given that one of the most important natural renewable energy resources for electricity generation in our country is the hydro it is very important that Water Secretariat Responsible for Water Resources Administration should be monitoring all new licenses issued for hydro power plants. Monitoring of water resources should guarantee the protection and preservation of water resources in the country, in accordance with the policies integrated in the field of water resource management.</p>
<p>The only thermal power plant, Vlora TPP, is not yet operational, and its conversion to natural gas is foreseen following construction of the Trans Adriatic Pipeline (TAP). Albania imports electricity from neighboring countries, although imports have progressively dropped in the last ten years following the increase in domestic power generation and the reduction of (technical and non-technical) electricity losses in the distribution system, which have been reduced from 45% in 2013 to 28% by the end of 2016<a href="#fn8" class="footnoteRef" id="fnref8"><sup>8</sup></a> with a clear investment and management plan to reduce them further to 17% by the end of 2022. Albania’s electricity market is under transition from a centrally planned to a market-based system. The wholesale power market is dominated by the state- owned, regulated generation company KESh, which supplies to OSHEE the electricity needed for captive customers under regulated “full supply” condition. The competitive wholesale environment consists of independent producers and a small number of large customers supplied through bilateral contracts.</p>
<h4>2.2.3.2. BAU scenario in the energy sector</h4>
<p>(summary; more details are provided in Annex 1. Mitigation calculations (details for sectors)<i>)</i></p>
<p>In the Energy sector, consumptions are expected to increase rapidly according to economic development based on current technologies. GHG emissions for the BAU scenario increase from 4,664 kt CO2e in 2016 to 8,466 kt CO2e in 2030, which represents an evolution of +81.5%.</p>
<p>Figure 13. Projected energy-related emissions</p>
<p><img width="602" height="163" alt="image" src="img/ALB-NDC1-15.png"></p>
<p>The BAU scenario is based on the most likely evolution of the Albanian energy sector according to the baseline scenario of the National Strategy of Energy approved by the Albanian Government on August 8, 2018 and with no further policy interventions. It was developed accordingly to the National Energy Strategy considering new set of macro-economic drivers such as GDP and population. LEAP was the energy model used for energy demand forecast for baseline and other scenarios for policy makers (see below for further description) taking as base year 2015 and carry out yearly energy demand until 2030.</p>
<p>LEAP is a widely used model-building tool for analyzing energy systems in the medium to long term. LEAP is a user-friendly accounting framework that can be used to analyze the integrated energy and environment results of a baseline and alternative scenarios of the energy system as it grows over time. An Albania-LEAP model has been in use since 1997. A basic characteristic of LEAP models is that the calculation of energy demands is based on a “bottom-up” approach with many decentralized data, such as end-use energy intensities, the efficiency and penetration rates of different equipment and the demand for energy services at the residential, commercial, agriculture, industry and transport sectors levels. Given these sectoral demands, LEAP software calculates the demand for primary energy sources, electricity and all other energy commodities. LEAP also calculates a variety of emissions that are generated from the fuels used.</p>
<p>Nowadays, the Albanian economy is predominantly based on the service sector. Agriculture has also been one of the most important economic sectors in Albania. Nonetheless, during the last decade the Albanian economy has shifted towards industry and service due to increased urbanization and emigration. Consequently, the service sector is today the largest contributor to GDP, comprising around 60% of the total, followed by agriculture and manufacturing industry. All these factors have been incorporated into the Baseline sectoral demand projections.</p>
<p>The main drivers of energy consumption in the residential sector are population and the number of households. Data on the number of persons per household in developed European countries and countries in transition show that household size decreases as the standard of living grows. The decrease occurs due to the aging of the population and the increase in the number of one- member and two-member households. In Albania, the number of persons per household is expected to decrease from 2.92 in 2014 to 2.41 in 2030.</p>
<p>To reflect the various climatic zones in Albania, households were categorized into three zones with respect to their heating and cooling demands. Breakdown between zones is done based on the concept of Heating Degree Days according to the Albanian Energy Building Code (approved by the Albanian Council of Ministers in January 2003). Zone 1 is most of the urban centers in coastal area of Albania with heating degree days lower than 1300 °C, Zone 2 with cities with heating degree days higher than 1300 °C and lower than 2300 °C, and Zone 3 is mountainous areas with heating degree days higher than 2300 °C.</p>
<p>The basic measure of heating standard in the model is heated area. The heated area of the average household was determined based on statistical data and calibrating with the data from the energy balance. The share of heated area in total living area (load factor) is 31% and is the result of the purchasing ability of the population, the availability of firewood, the price of electricity, and life priorities arising from tradition and cultural heritage. Therefore, with standard growth, the further increase of the share of heated area in a total area of housing units is 70% by 2030.</p>
<p>In order to calculate the energy demand, the Service Sector was divided in two branches: Public Service and Private, or Commercial Service. The Public Service Sector is based on the traditional approach to heat demand, mainly using not efficient technologies, installations and organization, although in some recent cases new schemes have been introduced. Commercial Service Sector approach is based on rapid introduction of modern technology, but improvements are needed regarding the efficient utilization. Private Service Sector has inherited some traditional repair-service and small shops/restaurants that have neither possibility nor demand for space heating and air conditioning. Meanwhile, in many services, the private sector has experienced modern and qualitative developments. This service group includes business categories such as hotels, restaurants, banks, tourist agencies, consulting and insurance offices, etc. as well as many parallel services with the public service such as education, culture, health, etc., aiming the maximal comfort. Analysis of the energy demand is based on the general tendency of the previous period. A number of driving factors were taken into consideration as determining factors for the future energy demands. The public service buildings have as a special driving factor the total volume, divided in the heated stock and unheated stock. In order to increase the service quality, improve the working conditions and the comfort for the public administration, was forecasted that until the end of the period 2014-2030, the existing ratio would change in favour of the heated stock in 2030. The GDP growth from the service sector will be accompanied with energy demand increase due to high comfort requirements, the qualitative improvement of the services and changes of the ratio between the urban and rural populations in favour of the former.</p>
<p>The structure of the industry sector in Albania shows that three main industrial sectors are consuming the highest share of energy: food, metal and building materials industries. Each of these industries is represented by its final energy consumption of electricity and other fuels. The growth in GDP is the most influential determinant of energy demand in industry. In addition to overall GDP growth, the value-added structure of the GDP drives the energy consumption for the industry and agriculture sectors. In the early development of a society, agriculture contributes a significant share of GDP. GDP from agriculture has been dominant in the past. As the society develops, GDP from the Agriculture sector will increase in absolute terms, but the sectoral share will remain constant in relative terms while the share of industry grows. GDP from the Service sectors will increase in absolute terms. In developed economies the dominant GDP share belongs to services, followed by industry and then agriculture. The growth in GDP is the most influential determinant of energy demand in industry. For this analysis, given that little structural changes are anticipated in the near-future, the expected contribution from agriculture is expected to remain constant at 22.7%, while the contribution from the overall industry sector to be increased from 14.9% (2014) up to 25% at 2030.</p>
<p>The Transport Sector is the largest energy consuming sector in Albania and plays an important role in the consumption of energy resources. After 1990, there was a significant increase in the number of the transport modes, especially for road transport, which lead to a significant increase of transport activity and fuel consumption, mainly diesel and gasoline. In order to calculate the future transport energy demand, the sector was divided in two sub sectors: transport of freight and passengers. For the transport sector, two main indicators measure the demand for passenger and freight transport: passenger-km and ton-km. It is forecasted that ton-km will increase by 85% in 2030 compared to 2014, while passenger-km will increase by 37%. The vast majority of transport is undertaken by road vehicles. Albania’s transport sector has been increasing rapidly since 2000. The number of vehicles in circulation has increased and infrastructure is being improved, which leads to an ever-increasing total traffic load. The transport sector consumes significant quantities of energy (mostly in the form of diesel and gasoline).</p>
<p>Albania will continue to remain for many years a country where the agriculture dominates. The income increase from the agricultural production, livestock, agro-industry, fishing and forestry remains the main alternative for the economic and social development of the country. The development of the agriculture sector is conditioned by many factors where the most important are: Farms are of minimal sizes and fragmented; Problems exist over arable land property rights; Farm inputs have very high prices and the distribution system for agricultural production is unorganized and inefficient; There is a lack of available agriculture crediting, and Agricultural production is insufficiently mechanized. The organisation of farms brings energy savings in the NDC scenario.</p>
<h4>2.2.3.1. Energy NDC scenario</h4>
<p>The analysis of the Albanian Energy Sector was performed using the Albania-LEAP model results adjusted according to the latest development of the period 2014-2020, a proven tool used previously by the Albanian Government and commonly used by other countries in the region and globally. The analytical results provided quantitative metrics for assessing the likely outcomes of possible energy scenarios against the goals of this strategy.</p>
<p>Establishment of the NDC scenario for Energy Sector was based mainly on the Albania’s Energy Sector Strategy, which is harmonized in terms of goals, energy sector details and timeline with a number of other strategic and legal documents that are in force, adopted or drafted in the same time frame as this document. Building on and complementing these documents has led to synergies in the prioritization of policies and programs and in the development of strategic recommendations. The National Strategy for the Energy Sector (2017-2030) is aligned with the following key documents:</p>
<ul>
<li>
<p>Obligations under the Energy Community;</p>
</li>
<li>
<p>National Strategy for Development and Integration – 2015-2020 (Albanian Council of Ministers, 2017);</p>
</li>
<li>
<p>National Programs for Economic Reforms (NPER) 2015-2017 and 2016-2018 Albanian Council of Ministers, 2017);</p>
</li>
<li>
<p>Albanian Renewable Energy Source Action Plan (NREAP adopted by the Governmental Decree no.27, dated 20.01.2016);</p>
</li>
<li>
<p>1st National Energy Efficiency Action Plan 2011-2018 (Government Decree no. 619, date 7.09.2011)</p>
</li>
<li>
<p>2nd and 3rd Albanian Energy Efficiency Action Plan 2017-2020 (Government Decree no.709, date 1.12.2017);</p>
</li>
<li>
<p>Intended National Determined Contribution (INDC approved by the Albanian Government on September 2015);</p>
</li>
<li>
<p>The Decision of the Council of Ministers (DCM) no. 519, dated 13.07.2016 “On the approval of the Market Model of the Power Sector”;</p>
</li>
<li>
<p>The DCM no. 125, dated 11.02.2015 “On the approval of the financial recovery plan in the power electricity sector”;</p>
</li>
<li>
<p>Albanian National Gas Master Plan (November 2016);</p>
</li>
<li>
<p>Transport Sector Strategy in Albania – Final Strategy & Action Plan (DCM No. 811, dated 16.11.2016);</p>
</li>
<li>
<p>Albanian Sustainable Transport Plan (Draft Jane 2016);</p>
</li>
<li>
<p>Law on Biofuels No 9876 (2008)</p>
</li>
<li>
<p>Law on Power Sector No. 43/2015, dated 30.04.2015;</p>
</li>
<li>
<p>Law on Renewable Energy Sources No. 7/February 2017;</p>
</li>
<li>
<p>Law on Hydrocarbons No. 6/February 2017;</p>
</li>
<li>
<p>Law on Natural Gas No.102/2015, dated 23.09.2015;</p>
</li>
<li>
<p>Law on Energy Efficiency No. 124/2015, dated 12.11.2015;</p>
</li>
<li>
<p>Law on Energy Performance in Buildings No. 116/2016, dated 10.11.2016;</p>
</li>
<li>
<p>Law on Climate Change</p>
</li>
<li>
<p>Official Albanian Energy Balance prepared from AKBN for years 2009-2019;</p>
</li>
<li>
<p>Official ERE Annual reports related to Power Sector Electricity Balance prepared from ERE for years 2012-2020;</p>
</li>
<li>
<p>CENSUS 2011 – Albanian Household Registration (INSTAT website);</p>
</li>
<li>
<p>GDP sectorial development 2012-2019 – (National Bank of Albania and the World Bank websites)</p>
</li>
<li>
<p>First National Communication of Albania to the UNFCCC (FNC – 2002);</p>
</li>
<li>
<p>Albania’s Second National Communication to the Conference of Parties under the United Nations Framework Convention on Climate Change (SNC – 2009);</p>
</li>
<li>
<p>Albania’s Third National Communication to the Conference of Parties under the United Nations Framework Convention on Climate Change (TNC – 2016);</p>
</li>
</ul>
<p>The following long-term strategic objectives were identified to actualize the Guiding Principles and the current commitments that have been undertaken by the Albanian government.</p>
<ul>
<li>
<p>Improving the reliability and security of energy supply;</p>
</li>
<li>
<p>Developing the domestic primary energy sources in a sustainable and competitive manner Improving the cost-effectiveness of energy supply systems;</p>
</li>
<li>
<p>Achieving the targets for renewable energy sources and energy efficiency established in the second National Energy Efficiency Action Plans and the National Renewable Energy Action Plan;</p>
</li>
<li>
<p>Developing least cost and sustainable policy for residential heating and cooling</p>
</li>
<li>
<p>Integrating the Albanian power and natural gas markets with regional Energy Community and European markets; and</p>
</li>
<li>
<p>Achieving the Nationally Determined Contribution (NDC) targets for greenhouse gas (GHG) emission reductions.</p>
</li>
</ul>
<p>To understand the costs and benefits of these possible policies, the following four other scenarios were developed and analyzed using the Albania-LEAP model.</p>
<ul>
<li>
<p><strong>Energy Efficiency (EE):</strong> This scenario assumes that Albania meets its Energy Community Treaty commitments by implementing the second National Energy Efficiency Action Plan and enforceing the Law on Energy Efficiency (together with improvement of the Law to transpose EED requirements) and the Law on Energy Performance in Buildings. EE target for 2030 has been defined to be 15%.</p>
</li>
<li>
<p><strong>Renewable Energy Sources (RES):</strong> Assumes that Albania meets its Energy Community Treaty commitments of reaching a 38% renewable energy target in 2020 by implementing the Albanian National Renewable Energy Action Plan. RES target for 2030 has been defined to be 42.5%.</p>
</li>
<li>
<p><strong>Natural Gas Promotion:</strong> Assumes maximum possible penetration of natural gas in line with the Gas Master Plan. Natural gas penetration rate of penetration target for 2030 has been defined to be 8-10% (National Natural Gas Master Plan). Natural gas in Albania will be mostly for guaranteeing the security of electricity supply since Albanian power sector is 100% based on the hydro resources and in electricity import.</p>
</li>
<li>
<p><strong>Combined:</strong> Combines the EE, RES and Natural Gas Promotion scenarios. Under this scenario all above mentioned targets have been aggregated and guaranteeing so proper development scenario for development of energy sector until 2030.</p>
</li>
</ul>
<p>The Energy sector NDC scenario is based on Combined – Strategy scenario calibrated with real figures for the period 2015-2019. The NDC scenario takes into account the introduction of natural gas in almost all sectors (including energy industry, manufacturing industry, transport, commercial, residential and agriculture). It also considers the implementation of the different National Energy Efficiencies Actions Plans (NEEAP) to increase energy efficiencies in both supply and demand reaching a 15% gain in 2030. It also takes into account the National Renewable Energy Action Plan (NREAP) with objectives of a share of 38% of renewables in the final energy consumption in 2020 (already almost reached in 2019) and 42% in 2030.</p>
<p>Emissions for the NDC scenario (with mitigation measures) increase from 4,664 kt CO2e in 2016 to 6,544 kt CO2e in 2030, which represents an evolution of +40.3%. The difference, in 2030, with the BAU scenario, is -1,921 kt CO2e representing a mitigation impact of -22.7%.</p>
<p>Figure 14. Projections for energy sector according to BAU and NDC scenarios</p>
<p><img width="572" height="164" alt="image" src="img/ALB-NDC1-16.png"></p>
<p>The following table presents a summary of the mitigation actions taken into account in the NDC scenario for this sector. The list of measures presented below is based on the list of measures presented under the Energy Strategy and all other strategic documents mentioned above.</p>
<p>Table 2. Summary of the main mitigation actions for the energy sector</p>
<table>
<tr>
<td>
<p>N°</p>
</td>
<td>
<p>Sector</p>
</td>
<td>
<p>Name</p>
</td>
<td>
<p>Subsector</p>
</td>
<td>
<p>Policy context</p>
</td>
<td>
<p>Description</p>
</td>
</tr>
<tr>
<td>
<p>E1</p>
</td>
<td>
<p>Energy</p>
</td>
<td>
<p>Energy efficiency</p>
</td>
<td>
<p>Transport</p>
</td>
<td>
<p>National Energy Efficiencies Actions Plans (NEEAP), NSE, Action Plan of Transport sector, National Energy Strategy 2018-2030</p>
</td>
<td>
<p>Efficient transport system:</p>
<p>Increasing the share of public transport for passengers and freight (roads, railways and waterways). Up to 2030, 30% of the road transport of over 300 km shall be shifted to other transport modalities, like the rail. Up to 2050 the goal to be achieved is 50%.</p>
<p>Energy labelling of new vehicles.</p>
</td>
</tr>
<tr>
<td>
<p>E1</p>
</td>
<td>
<p>Energy</p>
</td>
<td>
<p>Energy efficiency</p>
</td>
<td>
<p>Buildings - Residential & Tertiary</p>
</td>
<td>
<p>National Energy Efficiencies Actions Plans (NEEAP), National Energy Strategy 2018-2030</p>
</td>
<td>
<p>Improving the energy performance in buildings keeping into account the local and climatic conditions of the country, interior comfort of buildings and cost effective.</p>