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Lithuania is committed to a significant transition to the green economy over the next 10 years, and it can only be done sustainably if the right incentive system is in place, as Gediminas Šimkus, Chairman of the Board of the Bank of Lithuania, told at the Economics Conference of the Bank of Lithuania on greening the economy.

“We have to promptly identify the employees and regions of the country that will be affected the most by the green transformation of the economy, ensure positive incentives, regulation and compensation mechanisms, retraining of the staff and creation of new jobs in climate-friendly activities,” says Gediminas Šimkus, Chairman of the Board of the Bank of Lithuania.

The greenhouse gas emissions per capita in Lithuania have not decreased over the last 10 years and have even increased in the last few years, putting Lithuania in the middle of the list of the EU Member States according to this indicator. Four sectors are responsible for the majority of greenhouse gas emissions (almost 70%): land transport (26%), household private transport (19%), agriculture (17%) and chemical industry (9%). A well-balanced framework for investment, incentives, regulation and taxation on pollution would help achieve the goals of the European Green Deal.

Investment in modern public transport, clean private vehicles and the development of infrastructure that is crucial to them could contribute to the decarbonisation of the transport sector and reduce air pollution. The recent spike in gas prices clearly demonstrates the need to urgently invest in renewable energy, as a way of reducing the dependency on fossil fuels and external energy suppliers. Climate-friendly investment, for example, the creation of clean energy technology, would not only solve climate change problems but also help the country’s economy to boost its value chain. The EU is planning to invest at least €1 trillion for the implementation of the Green Deal by 2030, while Lithuania intends to invest around €1 billion from the EU funds to achieve the green targets.

The analysis by international institutions, such as the International Monetary Fund (IMF), shows that the CO2-related taxation is the most efficient tool for combating climate change. In some European countries, the CO2-related taxation is already in place and the number of such countries is growing every year. Lithuania, however, does not apply such a tax yet. According to the economists at the Bank of Lithuania, taxation on pollution would enable us to collect a considerable amount in government revenues which could be used to accelerate the green transformation of the economy and create compensation mechanisms for those affected the most by this transformation.

A keynote speech at the Economics Conference of the Bank of Lithuania “Creating Pathways Towards the Green Economy” will be delivered by Ian Goldin, Professor of Globalisation and Development at the University of Oxford and author of many books on the topic; Simonas Gentvilas, Minister of Environment, will present Lithuania’s long-term vision for climate change action and energy policy; and representatives from the Central Bank of the Netherlands, the IMF and other organisations will share their insights and experience.