Cyprus is moving very slowly in implementing projects related to the green transition and energy security. According to a recent IMF report, "progress on these fronts has been slow, and efforts are needed for more decisive implementation of these plans."

The IMF highlights that "plans to connect the electricity grid with neighboring countries, introduce LNG, increase the share of renewable energy, and introduce competition in the energy market are critical." However, the report emphasizes that "further measures are required to achieve Cyprus's ambitious climate goals."

The IMF suggests several key actions:

First, the introduction of a green tax will bring Cyprus closer to its climate targets. Therefore, the scope of the tax needs to be expanded.

Second, more effort is required in areas not covered by the EU Emissions Trading System (ETS), besides transportation.

The IMF analysis states that "the growth impacts will be manageable." Additionally, it asserts that "a strategic adaptation plan is needed to limit the costs of climate change," noting that "extreme heat, drought, and rising sea levels pose risks to the Cypriot economy."

The report recommends that Cyprus "advance emergency planning, implement early warning systems, and carefully plan coastal development and protection to manage these risks." It also stresses that "public investments and reforms are needed to boost private sector climate adaptation."

Furthermore, it highlights that "in the field of climate and environmental policies, Cyprus faces challenges from high greenhouse gas emissions, gaps in water and waste management, and the need to protect biodiversity and wildlife."

From the EU’s perspective, the priority is Cyprus's electrical interconnection. The EU notes that "the Cyprus Recovery and Resilience Plan contributes €100 million towards the construction of a 1,208-kilometer cross-border electricity interconnection between Crete, Cyprus, and Israel."

The plan explains that it will contribute €100 million to the "Great Sea Interconnector" project, which will connect Cyprus to the EU electricity grid and enhance renewable energy production.

The green investments in the plan include various support programs totaling €89 million to promote energy efficiency, renewable energy sources, and combat energy poverty. Investments of €87 million are allocated to promoting sustainable and green mobility, encouraging a shift from private cars to public transportation, and promoting the use of electric vehicles.

Finally, the plan includes several reforms to introduce green taxation, reform the electricity market, and facilitate the use of electric vehicles.