The food system
Food production is North Macedonia’s third most important economic activity; however, it is closely tied to environmental and social challenges. Agriculture, a priority sector, is central to the national strategy to modernise production, meet domestic demand and enhance the quality of products for value added exports. National goals include fostering sustainable consumption, promoting healthy diets and improving food-processing, retail and export systems. Aligning with EU standards remains critical for improving food quality and market access, with reforms ongoing to address EU integration challenges.
Urbanisation and population ageing are additional strains on the sector, as 58% of people live in cities, while rural areas, covering 89% of the land, experience economic disparities. Agriculture contributes 11% to gross value added and employs 14% of the workforce, and yet low productivity and income levels persist due to fragmented landholdings and reliance on small family farms. Crop production, accounting for 76% of output, faces inefficiencies from limited technology adoption and poorly managed food supply chains, particularly for fresh produce.
Climate change, pollution, land degradation and biodiversity loss compound these challenges, necessitating sustainable practices. Projects promoting climate-smart agriculture have introduced modern technologies such as plastic tunnels, irrigation systems and hydroponics to improve productivity. Additionally, rural development initiatives by the Food and Agriculture Organization of the United Nations (FAO) focus on small-scale investments to enhance living conditions and promote sustainable farming.
Policy coordination and institutional collaboration are vital for addressing these systemic issues. Sustainable agricultural practices must prioritise environmental protection, socioeconomic equality and resilience. Integrated pest management and organic farming are gaining traction, alongside improved irrigation systems that promote biodiversity, soil health and sustainable land use. Strengthening cooperatives and farmer organisations can enhance access to markets, resources and knowledge, enabling farmers to adopt innovative techniques and improve economic viability. Renewable energy adoption is also key, supporting efforts to lower agriculture’s environmental footprint. Youth and gender inclusivity are emphasised to create a more equitable and dynamic agricultural sector. Despite its challenges, the sector has shown resilience during economic crises, highlighting the importance of continued collaboration among governments, non-governmental organisations and local communities to build a sustainable and prosperous future for agriculture in North Macedonia.
The energy system
In 2023, North Macedonia’s electricity production was dominated by thermal power plants, which accounted for 46.27% of the total output, followed by hydroelectric plants at 25.15% and combined heat and power plants at 20.57%. The share of renewable energy sources (RESs) has fluctuated over the years, peaking at 36.7% in 2016, but only reaching 26% in 2022. This variability is largely influenced by hydrological conditions. Despite some progress, the overall shares of renewables in electricity production and final energy consumption remains low, averaging around 25% and 18%, respectively. The country has not yet reached the 2020 RES target of 23.9% in final energy consumption. To align with EU targets for 2030, the country needs to significantly increase its renewable energy output. The government has initiated plans to construct new power plants, including storage hydroelectric plants and gas-fired facilities, and a newly announced gas interconnector with Greece, with the European Bank for Reconstruction and Development financially supporting this transition.
The country has made strides in reducing reliance on coal and increasing the use of RESs, with an inventory of 106 hydroelectric plants, 2 wind farms and 576 photovoltaic installations. Public awareness campaigns (e.g. workshops/seminars for households and businesses on energy-efficient technologies and behaviour) and government projects (e.g. the World Bank public sector energy efficiency project,) have encouraged energy efficiency and the adoption of renewable technologies, such as air conditioning units replacing fossil-fuel-based heating systems. Research and technological advancements play a crucial role in the energy transition. The Bogdanci Wind Park, operational since 2014, is set for expansion, and a new strategic wind park project is in the pipeline.
Programmes to subsidise renewable energy installations in households have been introduced, leading to increased interest in photovoltaic plants due to financial incentives. Local governments have allocated funds to support air quality improvement measures, including subsidies for solar collectors and energy-efficient heating systems; however, reducing reliance on fossil fuels remains a challenge. The introduction of preferential tariffs facilitated the participation of renewable energy producers in the market, with a notable increase in those utilising these incentives since 2007. The energy market is increasingly aligned with EU standards, having launched its first day-ahead electricity exchange in May 2023. This development aims to enhance network efficiency and attract investments in renewable energy.
In response to economic challenges, the Energy Regulatory Commission implemented a tiered tariff system to encourage reduced consumption among higher users. In 2023, new legislation was developed to further align with EU energy policies, focusing on market requirements, energy crises and the construction of renewable energy projects. These measures aim to improve the efficiency and transparency of the energy sector, facilitating progress towards renewable energy goals.
The mobility system
In Skopje, which hosts around 40% of the urban population, efforts to improve urban transport have included the procurement of 313 new public buses that align with European emission standards. This EUR 50 million nationally funded investment aimed to provide modern, safe public transport. Additionally, 226 bus stops in Skopje were upgraded using EUR 1.07 million from City of Skopje funds. Private and national investments were used to build new parking garages, adding 3 070 parking spots in key areas. Municipalities are actively introducing subsidies as incentives to promote cycling to citizens as an environmentally friendly mode of transport and providing funding for improvements to pedestrian and cycling infrastructure, with ongoing projects for pavements, bike lanes and related facilities. Recently, the Ministry of Transport and Communication funded 78 km of pedestrian lanes and 2 km of bicycle lanes in various municipalities, worth EUR 1.4 million in total.
Urban transport planning in the capital remains crucial, with a focus on implementing sustainable mobility without overdependence on any single travel mode. The expectations are that the bicycle network in Skopje will increase by 30–50% in the next three years and the percentage of bicycle trips will increase by 5%. Environmental sustainability is achieved in cooperation with various ministries. The rail sector has advanced with the purchase of two electric multiple units, funded by a European Bank for Reconstruction and Development loan, to reduce emissions. Additionally, four passenger diesel units were procured to replace old and outdated ones.
The number of road transport electric vehicles (EVs) in the country remains small, with only 451 EVs registered in 2022. To encourage the import of clean technology vehicles, the government has banned the import of vehicles that do not meet Euro 4 standards and introduced a new vehicle import tax calculation method that favours vehicles with lower carbon dioxide emissions. Further incentives to promote EV transport and appropriate infrastructure development should be promoted. Transport financing involves restructuring, such as transforming the Road Fund into the Public Enterprise for State Roads and improving the road toll system. Major project financing originates from international financial institutions like the World Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the EU Instrument for Pre-Accession Assistance and the Export–Import Bank of China. North Macedonia’s transport legislation aligns with EU standards, in terms of both policy development and implementation. The Ministry of Transport and Communication sets policies, while regulatory bodies ensure compliance.
The government has made significant progress in aligning its legislative and regulatory framework with the EU acquis and is committed to continuing its efforts to achieve EU membership. Strategic documents guide the transport sector reforms, addressing planning, safety and regulatory improvements to strengthen inspection capabilities and intermodal transport initiatives.