Croatia
With a cumulative score of 2.13, Croatia ranks number 5 among emerging markets and number 26 in the global ranking.
- Emerging markets
- Europe
2.38 / 5
Power score
1.73 / 5
Transport score
1.75 / 5
Buildings score
Low-carbon strategy
Net-zero goal and strategy
Croatia’s Low-Carbon Development Strategy published in 2021 lays out how emissions can be lowered from 1990 levels under three scenarios – a continuation of existing practices, and a “gradual” and “strong” transition.
Under the gradual transition scenario, the country’s emissions would be reduced by 33.5% by 2030 and 56.8% by 2050. In the strong transition scenario, emissions would be lowered by 36.7% by 2030 and 73.1% by 2050. The strategy says that a net-zero emissions scenario will be presented once the implications of the European Union’s (EU) climate neutrality goal become clear. As a member of the EU, Croatia shares the bloc’s ambition to reach net-zero greenhouse gas emissions by 2050.
Nationally Determined Contributions (NDC)
EU members submit a joint Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC), outlining the bloc’s plan to help achieve the goals of the Paris Agreement. The EU’s initial NDC committed to lower emissions by at least 40% by 2030 compared to 1990 levels. The updated NDC submitted in December 2020 increased the ambition of this target to at least a 55% reduction by 2030.
Fossil fuel phase-out policy
During the COP26 climate summit in November 2021, Croatia announced a 2033 target to phase-out of coal from electricity production.
Power
Power policy
Croatia is aiming for renewables to account for 36.4% of gross final energy consumption by 2030, up from an estimated 20% in 2020. It also has a target for renewables to account for 63.8% of electricity consumption in 2030, versus 47% in 2020. Currently, around 6% of power is generated from biomass and waste, 10% from coal, 14% from wind, 21% from natural gas, and 48% from hydro.
The country launched its first ever renewables auction in 2020, and a 638-megawatt auction was held in June 2022. The Croatian Energy Market Operator, known as HROTE, intends to hold auctions for renewables at least once a year, and the duration of the potential power purchase agreements with HROTE is 14 years. HROTE conducts auctions for the allocation of market premiums and for the signing of power purchase agreements with a guaranteed purchase price. Annual quotas for individual technologies should ensure market competition and the planned start of power production in new facilities.
Power policies
Power prices and costs
Electricity prices for Croatian households have historically been among the lowest in the EU.
Electricity in Croatia can be traded in two types of wholesale markets: the Croatian power exchange (CROPEX) and also bilateral over-the-counter contracts. Most electricity is traded through the bilateral market.
Power market
HROTE pays incentives to generate electricity from renewable energy sources. These payments are funded by a 1.36 euro cents per kilowatt-hour (1.32 US cents/kWh) renewables incentive fee paid by all Croatian electricity consumers. There is a premium for projects larger than 500 kilowatts (kW) of installed power and an incentive through a guaranteed redemption price for projects up to 500kW. This refers to both a guaranteed reference price and a feed-in premium.
There are numerous privately owned companies active in Croatia’s power generation market, but they are dwarfed by state-owned utility Hrvatska Elektroprivreda, known as HEP.
HOPS is the sole electricity transmission system operator. While it is owned by HROTE, it has functioned as a separate entity since 2005.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Utility privatisation
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
The Croatian government does not plan to phase out a number of specific fossil-fuel subsidies, such as excise duty exemptions, in order to protect the competitiveness or economic viability of various sectors. There is no national taxation to increase the cost of fossil fuels used in thermal power plants, but the country participates in the EU’s carbon market, known as the Emissions Trading System.
Currency of PPAs
Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel price distortions - Subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel price distortions - Taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?
Transport
EV market
Croatia’s battery-electric vehicle (EV) fleet has been growing, particularly between 2020 and 2021, when the number of EVs jumped from 1,353 to 2,370.
EV policy
The rising number of EVs comes despite there being no favorable electricity green tariff for EV charging and few charging points along the motorways. There are also no local grants for infrastructure or battery swapping stations.
Transport policies
Fuel economy standards
Does the country have a fuel economy standard in place?
Buildings
Buildings market
According to Croatia’s 2019 National Energy and Climate Plan, the country is seeking to boost the share of renewables in heating and cooling energy consumption from 33.3% in 2020 to 36.6% in 2030. However, EU member states are supposed to aim to increase the share of renewables in heating and cooling by between 1.1-1.3 percentage points each year until 2030, meaning Croatia is falling short of the bloc’s target.
The country is seeking to decarbonize and improve the energy efficiency of its national building stock through the renovation of both residential and non-residential buildings. It is looking to increase its annual buildings renovation rate to 3% by 2030 and 4% by 2050, from 0.7% at present. By the middle of the century, all new construction will be for nearly zero energy standard buildings.
Energy efficiency policy
Does the country have a national energy efficiency plan?
Energy efficiency policy
Are there minimum energy performance standards for buildings?
Energy efficiency incentives
Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?
Buildings policy
The Environmental Protection and Energy Efficiency Fund (FZOEU) offers grants to support the energy renovation of family houses and the installation of renewable energy systems. The budget for the program is about €26 million euros. Individual applicants can receive a maximum of €49,000 to cover up to 80% of the costs of improving thermal insulation in family houses. This includes all necessary equipment and works for the insulation of external walls, ceilings, floors, and roofs, as well as for waterproofing and replacing of elements of the roof frame. The FZOEU also provides co-financing for standalone houses to install renewable energy systems - depending on the location, citizens can get co-financing up to 40%, 60% or 80% of eligible costs, with a maximum amount of 128,00 kunas (€17,000).
Buildings policies
Additional insights
from BNEF
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