Bulgaria’s green transition offers powerful geopolitical, socio-economic and financial advantages. Yet, the nation is facing substantial obstacles and lagging behind other Central and Eastern European countries. To secure a sustainable future, Bulgaria must take decisive action – both politically and financially – to build a stronger economy, enhance living conditions and promote a healthier environment. Achieving these goals hinges on mobilising robust political support for the transition, tapping into public finances beyond EU funding, boosting private investment, and fostering international engagement through participation in global initiatives.
Bulgaria should view the green transition as a strategic economic necessity, not just as a cost or an environmental requirement. Notwithstanding its limited fiscal space, investing in sustainable practices will bring benefits in the form of competitiveness – especially in construction and manufacturing – and public health. It will also bring the country in line with EU directives, and support its ambitions to adopt the euro and join the Organisation for Economic Co-operation and Development (OECD). Indeed, Bulgaria could be a regional leader in climate initiatives, if it capitalises on opportunities such as the possibility of switching from coal to renewable energy, without reliance on gas.
Bulgaria must also take the risks of climate change seriously if it is to put its financial system on a stable footing for the long term. Its exposure to climate hazards such as floods and extreme heat poses significant financial risk. Increasing the resilience of its system will better allow it to weather these storms, as well as increase its attractiveness as an investment market.
Bulgaria needs to take decisive action to remove the barriers hindering its green transition, in four areas:
- Mobilising political support for the transition.
- Harnessing public finance beyond EU funding.
- Enhancing private finance flows for the transition.
- Promoting international engagement and membership in global initiatives.
Mobilising political support for the transition
- It is vital that political parties work together to establish long-term strategies, to be followed even under caretaker governments – or Bulgaria risks losing EU funding for the green transition.
- Creating a dedicated Climate and Transition Ministry could provide the necessary channel to develop and manage a coherent, long-term vision.
Harnessing public finance beyond EU funding
- Mandating green public procurement can help mainstream sustainability across sectors and ensure consistent demand for green products and services. Integrating sustainability into defence spending will contribute significantly to environmental goals.
- The role of public banks should be expanded to include more comprehensive support for green projects, which in turn will facilitate private sector involvement.
- A wider range of tax incentives and regulations is needed to promote sustainable practices. Support mechanisms should be available to help energy-poor households participate in the energy transition.
Enhancing private finance flows for the transition
- Businesses, small and medium-sized enterprises (SMEs) and the middle class all have a role to play in the transition. Government can create an environment to encourage and support their participation by providing financial and regulatory support, and information and training.
- Sustainable investments can be encouraged by adopting a regulatory framework to encourage the development of sustainable financial products.
- The financial sector’s role should be expanded to give businesses more targeted regulatory support in complying with the EU sustainable finance framework.
- Local energy communities and Energy Service Company (ESCO) models are nascent initiatives in Bulgaria that are worth helping to grow.
Promoting international engagement and membership in global initiatives
- By joining initiatives like the Network for Greening the Financial System (NGFS), Mission Innovation, and C40 Cities, Bulgaria can not only demonstrate its commitment to climate action, but also benefit from shared resources and support to accelerate its transition.
