Lithuania is making strong strides toward decarbonising its industry through a combination of ambitious policy, green‑investment projects, growing cleantech capacity, and evolving regulatory frameworks. Key sectors — energy, transport, heavy manufacturing — are at the centre of the transition, supported by public funding, EU programmes, and private sector innovation.
Key Policies & Legal / Regulatory Frameworks
1. National Energy & Climate Plans (NECP & Energy Independence Strategy)
Lithuania’s updated NECP 2021–2030, submitted in 2024, sets ambitious targets: 100% renewable electricity by 2030, significant improvements in energy efficiency, phasing out coal-based power, and ensuring energy security through diversified supply lines. The National Energy Independence Strategy complements this, aiming for domestic electricity and heat generation to be covered almost entirely by renewables by 2030 and fully by 2050.
2. Law on Alternative Fuels (2021)
This law targets the transport sector, one of Lithuania’s largest GHG emitters, to shift toward electric vehicles (EVs), alternative fuels such as biomethane and hydrogen, and stronger infrastructure for charging and refuelling. Key measures include increasing obligations for fuel suppliers to blend biofuels, offsetting blending of biomethane and hydrogen, setting requirements for public procurement of green vehicles, and implementing low-emission zones in cities.
3. Corporate Sustainability Reporting Directive (CSRD) & “Stop-the-clock” Amendments
Lithuania has moved to transpose the EU’s CSRD into national law. Large listed companies, banks, and insurers with over 500 employees are now required to publish annual sustainability reports, with other companies following in subsequent years. However, under the “Stop-the-clock” directive adopted in 2025, some governance-related sustainability reporting requirements have been postponed by up to two years, particularly for small and medium-sized listed companies.
4. Legislative Changes to Protect Critical Infrastructure
Amendments to the Law on Electricity, effective from May 2025, restrict remote access by foreign entities to control systems of solar and wind farms and large batteries, unless cybersecurity safeguards are in place. Existing systems are not dismantled, but operators must comply with new rules to prevent risks related to foreign control.
5. OECD Recommendations and Reform Options
The OECD has outlined a range of reform options to help Lithuania meet its 2050 climate neutrality target. These include phasing out fossil fuel subsidies by 2026, reforming environmental tax policies, strengthening investor confidence through regulatory stability, and expanding institutional capacity to implement and oversee decarbonisation.
Major Projects, Investments & Industry Moves
1. Cleantech Sector Growth
Lithuania’s cleantech sector has expanded significantly, with over 170 active companies in energy, transport, agriculture, and waste management. In 2024, the sector attracted around €140 million in combined public and private investment. Major players include Green Genius, which secured substantial funding from international development banks, and Ovoko, which also attracted considerable venture investment.
2. Infrastructure & Clean Energy Projects
Several large-scale infrastructure and clean energy projects are under development. These include:
- Expansion of the Kruonis Pumped Storage Plant to support grid balancing as renewable capacity grows.
- Electrification of rail transport, with the national operator introducing electric and battery-powered trains.
- Modernisation of district heating systems in Kaunas, integrating thermal storage and renewable sources.
- Over €1 billion investment in modernising the Mažeikiai oil refinery, aiming to improve efficiency and reduce emissions.
3. Business Investment Trends
According to a 2024 investment survey, 92% of Lithuanian firms have taken steps to reduce emissions. While businesses in Lithuania are slightly ahead of the EU average in terms of climate-related investments, many report challenges including regulatory uncertainty, limited skilled labour, and financing constraints — especially for smaller firms.
Companies & Sectoral Leaders
- Ignitis Group: A state-owned energy holding company leading in renewable energy generation, energy storage, grid development, and e-mobility infrastructure.
- Green Genius: A private renewable energy developer active in solar and battery storage, with projects across the Baltics and substantial institutional backing.
- Ovoko: A growing cleantech startup that secured major private funding in 2024.
- Kauno Energija: A key player in Lithuania’s district heating sector, modernising infrastructure for energy efficiency.
- Orlen Lietuva: Lithuania’s largest industrial emitter, now investing heavily in cleaner refining technologies.
Key Challenges & Gaps
- Regulatory & Permitting Delays: Despite recent reforms, permitting and administrative bottlenecks continue to slow the pace of renewable energy deployment.
- Skills Shortages: Firms report a lack of qualified professionals in areas such as hydrogen, battery storage, and systems engineering.
- Access to Finance: While public funding is increasing, SMEs often lack the capacity to access and co-finance large-scale decarbonisation projects.
- Infrastructure for Hard-to-Abate Sectors: Heavy industry faces significant challenges transitioning to low-carbon processes, especially in the absence of developed carbon capture, hydrogen, or high-grade electrification infrastructure.
- Transparency & Governance: The delay in sustainability reporting requirements, while helpful to some firms, may reduce accountability and hinder long-term investor confidence.
Recent Legislative Developments
- New cybersecurity rules for critical infrastructure, particularly in the renewable energy sector, have tightened controls on foreign access to operational technologies.
- The transposition of the CSRD into national law is now underway, although implementation has been staggered to ease administrative burdens on small and medium firms.
- Amendments to company and investment law have been introduced to create a more investor-friendly environment, including simplified decision-making procedures for foreign investment.
Lithuania’s decarbonisation outlook is centred on scaling up its hydrogen strategy, with a strong emphasis on developing electrolysis capacity and identifying industrial applications across key sectors. Offshore wind energy is also emerging as a strategic priority, with auctions and supportive legislative frameworks currently under review. Achieving the national target of 100% renewable electricity by 2030 will demand accelerated deployment of solar and wind power, along with substantial investments in grid infrastructure and energy storage systems. To ensure an inclusive transition, more targeted support for SMEs and tailored decarbonisation pathways for hard-to-abate sectors—such as cement, steel, and petrochemicals—will be critical. Meanwhile, the rollout of more robust sustainability reporting obligations is expected to drive greater corporate accountability and transparency across the industrial landscape.
