EPG Reports

The Central and Eastern European (CEE) region faces significant challenges in meeting the building energy efficiency goals set by the European Union. Despite considerable efforts to renovate the region's building stock, deep energy savings remain limited, and renovation projects often underperform relative to expectations. With the built environment contributing nearly 40% of the EU’s emissions, and the continued fossil fuel dependence of CEE countries, improving building energy efficiency through renovation is an essential action for reaching the EU’s climate goals. The Energy Performance of Buildings Directive (EPBD) establishes a framework for improving building energy performance, including standardised calculation methodologies, minimum renovation requirements, and Energy Performance Certificates. In alignment with the European Green Deal, the “Renovation Wave for Europe” aims to double the energy renovation rate by 2030, serving as a crucial step toward achieving the EU’s decarbonisation targets by 2050. The most recent revision of the EPBD, adopted in 2024, increases the ambition of building-related energy efficiency improvements, with particularly ambitious standards and goals for public buildings. Considering the EU's energy efficiency targets, CEE countries face unique challenges, including an ageing building stock, dependence on fossil fuels, and inadequate insulation standards. Decarbonisation efforts are inconsistent across the region, often dependent on government initiatives and varying levels of climate action, and renovation rates reflect a sluggish pace of climate action. In particular, a lack of monitoring of the actual impact of implemented renovations leads to potential delays in achieving renovation goals and an inefficient use of public funding, often used to finance building renovations. To overcome these issues, meet energy efficiency targets and transform its building stock, the CEE region must learn from past experiences and best practices while strengthening policy and implementation frameworks for building renovation. This report shows that many renovation efforts underperform due to common barriers such as poor monitoring and data availability, limited financing, inadequate regulation, and a lack of technical expertise. The OUR-CEE project aims to shed light on the gap between planned and actual energy performance in renovated public buildings and recommends key strategies to mitigate underperformance. The main goal of this report, part of the OUR-CEE project, is to identify the primary barriers and underlying factors contributing to the low performance of building renovations across the CEE region. It provides an in-depth analysis of the status of the building stock in four CEE countries (Bulgaria, Croatia, Poland, and Romania), highlights common challenges, and offers recommendations to advance policy reforms, enhance financial instruments, and foster innovative solutions to accelerate sustainable and energy-efficient renovations. By implementing these strategies, the CEE region could make significant strides toward overcoming underperforming renovations, thus progressing against its climate goals, while maximising ancillary benefits such as socio-economic development and public health. OUR-CEE (Overcoming Underperforming Renovations in Central and Eastern Europe) is part of the European Climate Initiative (EUKI) of the German Federal Ministry for Economic Affairs and Climate Action (BMWK). The opinions put forward in this study are the sole responsibility of the author(s) and do not necessarily reflect the views of the Federal Ministry for Economic Affairs and Climate Action (BMWK). Luciana Miu, EPG Head of Clean Economy Luciana Miu is the Head of Clean Economy at Energy Policy Group. She holds a Master’s degree in Sustainable Energy Systems from the University of Edinburgh and a PhD in Energy Efficiency of Residential Buildings from the Imperial College London. Before joining EPG, Luciana worked for the UK Parliament and for the British Government’s Department of Business, Energy and Industrial Strategy (BEIS), as well as a consultant for Climate-KIC and London City Hall. She is passionate about volunteer work, being one of the founding members of European Youth Energy Network and a professional speaker for conferences dedicated to the role of youth in energy transition. Contact: luciana.miu@enpg.ro

The transition towards climate neutrality that the European Union is undergoing may face challenges concerning the social acceptance of decarbonisation policies, due to a lack of effective public engagement and insufficient consideration given to the socio-economic impact of the transition. As climate policies evolve and start becoming more encompassing, potential regressive effects could directly impact consumers and households, especially those most vulnerable. Tackling energy poverty and pursuing a just transition are among the most relevant methods for addressing the socio-economic impact. However, this report highlights the limitation of the current approach to dealing with energy poverty and just transition. Romania’s efforts to mitigate energy poverty and ensure a just transition lack key governance features and leave substantial implementation gaps. Financing mechanisms, institutional responsibilities or targets and clear timelines for implementing policies and measures are sparse or not mentioned at all in Romania’s main strategic climate planning documents, the National Energy and Climate Plan and Long-Term Strategy, or the draft Romanian Energy Strategy 2022-2030, with a 2050 perspective.   This is particularly evident for the current approach to dealing with energy poverty and just transition. Energy poverty has long been treated as an isolated phenomenon, being insufficiently integrated in broader strategic documents. While there is some variation among strategies, none manages to address the issue in a compelling manner and the planned interventions are largely inadequate. The contribution of national strategies to ensuring a fair transition is similarly uncompelling.  The national framework for just transition lacks a definition for it and the concept is oftentimes coupled with measures to tackle energy poverty or addressing the coal phaseout, leaving other carbon intensive areas unaddressed. While the significant focus given to education and green jobs is important, Romanian strategies fall short on other just transition topics such as economic diversification, gender-based effects and policies, redevelopment of the affected areas. The engagement and implication of the public in the design of Romanian climate policy have also proven insufficient, as it seems likely that not even the requirements for public participation of the Governance Regulation have been properly implemented. The analysis and survey that EPG conducted for this report highlight the lack of transparency and the informational gaps in the process of drafting climate policy, as authorities showed deficiencies in communicating with the public. To anticipate and cushion an upcoming greenlash against climate policies that can emerge as a result of the current policymaking shortcomings, the current planning process should consider the following recommendations. Energy poverty: Integrate energy poverty as a cross-cutting topic across legislation in order to have a comprehensive and coherent framework. Define targets for energy poverty, clear up institutional responsibilities and set up a data collection and monitoring system. Develop and implement an integrated energy poverty action plan which should include clear and targeted social assistance measures, going beyond financial handouts and focuses on addressing the systemic causes of poverty. Establish an energy poverty action group at the government level to integrate and coordinate the governance efforts. Set-up one-stop-shops at the local level.  Just transition: Offer a just transition definition and set objectives in national climate strategies. Provide a plan or framework for economic and educational transformation, by offering targeted financial support and tailoring the plan to the local particularities. Address other social consequences of the transition, such as the impact on women, loss of cultural identity and address the risk of school dropout for children in just transition regions.  Public participation: Allocate additional resources (both human and financial) to the implementation of the public participation process. Set clear and detailed procedures for public participation. Ensure early engagement, at the incipient stages of drafting documents and define in legislation what is considered as reasonable timeframes for consultations. Enhance transparency and access to information by making information publicly available through different channels in the early stages of the consultation process. Enable different formats and create avenues for public participation to foster more input from stakeholders/citizens. Enshrine in legislation a permanent stakeholder engagement platform on climate policy with representatives of industries, unions, NGOs, academia, research institutes, and local authorities. Ensure that the input of the public and stakeholders is effectively incorporated in the final documents and facilitate feedback loops. Ana-Maria Niculicea, EPG Researcher Ana-Maria Niculicea is a Researcher at Energy Policy Group focusing on aspects relating to climate governance and the social acceptance of the transition. She holds a MSc in Politics, Economics and Philosophy from University of Hamburg and a bachelor’s degree in Political Science from National University of Political Studies and Public Administration.  Contact: ana.niculicea@enpg.ro

Romania's climate policy is strongly influenced by the European Union's objectives to reduce emissions and achieve climate neutrality. By adopting the National Long-Term Strategy (LTS), Romania has committed to achieve a net emission reduction of 99% in 2050 compared to 1990 levels. This study assesses the most recent draft version of the National Energy and Climate Plan (NECP) by addressing three key questions: 1) How adequate are the proposed measures to achieve the emission reduction targets? 2) How robust is the evidence base for the proposed measures? 3) To what extent have stakeholders been involved in the development of the plan The assessment is based on four groups of key performance indicators (KPIs):  data, modelling and science; stakeholder engagement; the five dimensions of the NECP; and equitable transition and socio-economic impact. Following the assessment, it can be concluded that the draft version is limited by a lack of holistic perspective, transparency and references to scientific literature. It does not incorporate enhanced climate objectives under the Effort Sharing Regulation (ESR) and the Land Use, Land Use Change and Forestry Regulation (LULUCF). The differentiation of emissions under the Emissions Trading Scheme (ETS) and ESR is missing, as well as detailed implementation plans. Sector specific measures, the use of renewable energy in industry and buildings and decarbonisation measures for the transport sector are also not sufficiently detailed. The draft does not fully comply with the requirements of the revised Energy Efficiency Directive (EED) or specify the Renewable Energy Directive (RED III) target on renewable fuels. It shows a lack of ambition in terms of long-term renovation strategies and overall emission reductions, with no explicit plans to reduce gas consumption or improve energy storage. In addition, the document does not contain concrete measures to support research and innovation in renewable energy technology and adaptation to climate change. There is no mention of addressing impacts on social groups, health, education or regional development. To increase the effectiveness and impact of the NECP, the following recommendations should be considered: (1) Increase the level of ambition of key targets such as solar and wind capacity development, grid-scale storage solutions, smart grid and CCS technologies; (2) Mandate the use of heat pumps in renovated buildings and extend renovation rates by 2% annually; (3) Upgrade airport infrastructure, create green shipping corridors, implement low emission zones, align industrial strategy with climate targets; (4) Creating the incentive framework for afforestation and reforestation, sustainable aviation fuels, allocating funds for research and development, promoting public-private partnership and developing a medium term investment strategy; (5) Clarifying institutional responsibilities and ensuring effective and transparent governance, involving stakeholders and empowering consumers; (6) Analyse the socio-economic impacts and extend just transition measures to all affected sectors by creating green jobs programs, supporting affected workers and addressing energy poverty; (7) Conduct a climate vulnerability analysis with performance indicators to monitor implementation progress. Ioana Vasiliu, EPG Senior Researcher Ioana works as a Senior Researcher within the Clean Economy Programme of EPG. She holds a bachelor degree in management for public administration and a post university diploma as expert for sustainable development both from the Economic Academy of Bucharest. Before joining EPG, Ioana worked for Romanian Ministry of Environment, Waters and Forests as european affairs advisor within Climate Strategies and Reporting Department. Over the last years, she has been involved in addressing climate change at national level, by developing policies and strategies for reducing greenhouse gas emissions and adapting to the effects and impacts of climate change. At international level she acted as rapporteur for climate change adaptation policies and NECP, is member of UNFCCC expert roster and coordinated Romania’s accession process to the OECD, in the field of climate change. Contact: ioana.vasiliu@enpg.ro

To reach climate neutrality by 2050, the European Union has set a 55% emission reduction target for 2030 and the European Commission has proposed a 90% reduction target for greenhouse gas emissions by 2040. Romania, through its multiple strategies and plans, has set out a vision for gradually decreasing its emissions. While these documents reflect significant strides forward for the energy transition, especially by committing to a coal phaseout calendar by 2032, they are fraught with inconsistencies and partly rely on sizeable investments in fossil capacities. Various projects on nuclear and hydro energy are also constantly announced with limited assessment of their suitability in an increasingly decarbonised power sector. In this report, we assess Romania’s energy transition pathway. The European Gas Market Model and the European Power Market Model developed by REKK were utilised to understand the impact of Romania’s plans on emissions and the energy market and to see how Romania could resize its fossil capacity investments and achieve a carbon-neutral power sector in 2040. The models simulate a fully functional and liberalised energy markets to show the impact of different measures on wholesale energy prices. Based on the modelling results several important conclusions can be drawn: Romania can reach a completely decarbonised electricity production mix in 2040 with no security of supply risks by aiming to have no more than 3.5 GW1 of total installed gas-fired capacities by 2030 and by focusing more on wind power and a higher deployment of storage technologies. In contrast, the investments outlined in Romania’s National Energy and Climate Plan (NECP) do not ensure a decarbonised energy sector by 2040. The Romanian power sector would emit 9.2 MtCO2 in 2030 (which can be halved in a lower-gas scenario) and 3.5 MtCO2 in 2040, at slightly higher wholesale electricity prices. Replacing natural gas with hydrogen in 2035 in the all-installed capacities (as outlined in Romania’s Long-Term decarbonisation Strategy) would mean that these assets would no longer be utilised. This is because replacing gas with hydrogen would significantly deteriorate the cost-competitiveness of these capacities, immediately reaching a utilisation rate lower than 0.1%, given the high fuel prices of 82 EUR/MWh in 2030, according to renewable hydrogen cost estimations presented in the draft National Hydrogen Strategy. There is therefore a significant risk that even ‘hydrogen-ready’ investments would continue to operate on fossil fuels for economic reasons, consequently not achieving their promised emissions reductions. A higher focus on wind energy (17.7 GW onshore and 7.3 GW offshore in 2040,compared to 13.1 GW altogether in official plans) can contribute to decarbonising the power sector by 2040. Romania appears to have a regional competitive advantage in wind production. The market value of wind remains higher than that of solar for all modelled years, while lower wind investments are expected in Hungary and Bulgaria. Even with higher renewable shares than presented in official documents, Romania’s power sector can deliver on security of supply requirements. The higher balancing reserve requirement can be accommodated through investments in storage (reaching 880 MW in 2030 and 3.4 GW in 2040) covered by existing hydro capacities, new storage installations and, until 2035, gas power plants. An annual installation of 800 MW rooftop PV and 120 MW in battery can further decrease balancing pressures and slightly decrease wholesale prices (by about 1.1 EUR/MWh in 2040). A high renewables scenario would also have a positive impact on the electricity trade balance. In either scenario, Romania becomes a net exporter of electricity from 2030. 17.5 GW of solar capacities as well as 17.7 GW onshore and 7.3 GW offshore wind is sufficient to achieve a decarbonised power sector by 2040. Existing hydro power facilities are key for balancing a renewables-dominated power sector. However, new investments in hydro capacities (including 300 MW in small hydro installations and a 1 GW pumped hydro capacity that would come online in 2032) would only have a limited effect on electricity prices and security of supply – assuming the mentioned battery storage investments are realised. Hard coal and lignite phaseout are manageable from a security of supply perspective, even with lower than planned investments in gas capacities. Based on market prices alone, the modelling results show that coal fired production will rarely be economical from 2025 (expected capacity factor of less than 1%). New nuclear energy capacities can contribute to achieving a decarbonised power sector, even if the planned investments suffer delays. The modelling results show that slight delays in the construction of new nuclear (two new conventional CANDU reactors and 460 MW of small modular reactors) do not pose security of supply risks, even in a lower-gas scenario of 3.5 GW installed gas capacities. Even with such delays, Romania would continue to be a net electricity exporter after 2030 based on the expansion of its renewable capacities, albeit the prices of electricity and CO2 would be slightly higher, because of the nuclear delay. Additionally, the refurbishment of Cernavodă’s Unit 1, scheduled for 2027–2029, which will take 700 MW out of the system, will not pose supply security risks, even in a lowergas scenario. This is because significant new renewable energy sources (RES) will begin operating, with solar energy nearly doubling from 4.3 GW to 8.2 GW and onshore wind increasing by more than 50% from 5 GW to 7.9 GW between 2025 and 2030. Natural gas capacities will increase by 500 MW, and battery storage will see an approximately fourfold growth in the same timeframe. Mihnea Cătuți, EPG Head of Research Mihnea is the Head of Research at EPG, coordinating the research strategy and activities within the organisation. His expertise includes EU climate and energy policy and the transition in South-East Europe.He is also an Associate in E3G’s Clean Economy Programme, contributing to the work on industrial decarbonisation. In the past, Mihnea was an associate researcher at the Centre for European Policy Studies (CEPS), where he led the work on the future of hydrogen in the EU. He was also an associate lecturer in Public Policy at the University of York. Mihnea has a Bachelor of Science degree from the University of Bristol and...

În siajul crizei energetice declanșate în 2022, caracterizată de un deficit de gaze naturale pe piețele europene și niveluri record ale prețurilor energiei, pompa de căldură iese în evidență ca fiind cea mai eficientă și mai puțin poluantă soluție pentru încălzirea și răcirea clădirilor. Prezentul studiu estimează perspectivele pompelor de căldură pentru locuințe individuale și clădiri în România până anul 2030, luând în calcul tehnologiile mature comercial în prezent printr-o modelare bazată pe multiple scenarii plauzibile de adopție a tehnologiei. Prima secțiune a studiului prezintă principiul termodinamic de funcționare al pompelor de căldură, principalele tipuri constructive și caracteristicile generale de utilizare. Supozițiile, scenariile și metodologia de lucru sunt descrise pe scurt în secțiunea 2. Secțiunea 3 redă rezultatele analizei din punct de vedere al numărului de pompe de căldură instalate, pe tipuri de clădiri și de tehnologie, precum și costurile estimate ale instalării și operării acestor sisteme. Rezultatele includ date comparative privind consumul dislocat de gaze naturale prin înlocuirea centralelor de apartament cu pompe de căldură, împreună cu emisiile evitate de gaze cu efect de seră (CO2 echivalent). Secțiunea 4 conține o serie de recomandări de politici publice prin care este facilitată adopția pompelor de căldură în România, inspirate de bune practici din alte state membre ale UE pentru depășirea barierei costurilor mari de investiție (CAPEX) și asigurarea unui raport al prețului final energie electrică/gaze naturale care să stimuleze utilizarea pompelor de căldură. Radu Dudău, EPG Co-Founder & President Radu Dudău is President and co-founder of EPG. He was, from 2007 to 2023, an Associate Professor at the Bucharest University. From 2006 to 2010 he was Deputy Director at the Romanian Diplomatic Institute (Ministry of Foreign Affairs). He graduated in Physics and Philosophy from the University of Iași. He holds a Dr. Phil. degree in Philosophy (magna cum laude) from Konstanz University (Germany) and a PhD in Political Science (International Relations) (summa cum laude) from the National School of Political and Administrative Studies (SNSPA, Bucharest). He was a Fulbright Fellow with the National Security Program at Harvard Kennedy School of Government (2011), a New Europe College Fellow at the Danish Institute of International Relations (Copenhagen, 2006) and an OSI/FCO-Chevening scholar at Oxford University (1999-2000). His work focuses on energy policy, energy technology, and energy markets. Contact: office@enpg.ro

Electricity grids play a critical role in the European Union’s efforts to reduce greenhouse gas emissions (GHG) and become climate neutral by 2050. They must accommodate an increasing demand of clean electricity in transports, buildings’ heating and cooling, industry, production of green hydrogen, and data centres. Projections indicate a surge in electricity consumption of no less than 60% between 2023 and 2030 at EU and UK level. According to the draft NECP, Romania’s electricity consumption is expected to grow by approximately 38% until 2030, from 46.5 TWh in 2021 to 64 TWh. The increase will be driven by the electrification of several economic sectors. The adoption of heat pumps, along with a steady rise in the number of electric vehicles (EVs) will visibly add to higher electricity consumption. The European Commission (EC) estimates needed investments of €584bn in the power grids to achieve the integration of vastly increased RES generation – 42.5% by 2030. The figure includes both the distribution and transmission networks, with about of €170bn required for digitalisation (EU Action Plan for Grids, 2023). As Romania charts its course toward a sustainable and decarbonised energy future, the importance of expanding and modernising the transmission and distribution grids cannot be overstated. Grid infrastructure forms the backbone of the energy transition, facilitating the integration of renewable energy sources (RES) and ensuring a reliable and efficient delivery of electricity to consumers, as well as their empowerment according to the new electricity market design. The investment needs for Romania’s electricity grids are substantial, with €6.8bn earmarked for transmission and an estimated €9.2 - 11.5bn required for distribution. Such investments are essential to accommodate the growing RES capacity and to meet the targets outlined in the draft NECP. Failure to adequately invest in the power grid risks bottlenecking the transition to clean energy and Romania’s ability to achieve its climate and energy objectives. Investing in the power grid development represents a critical opportunity for Romania to modernise its energy infrastructure, enhance grid resilience, and drive economic growth. Strategic investment in grid modernisation will improve energy efficiency, reduce transmission losses, and bolster reliability, ultimately benefitting consumers and businesses alike. To realise these benefits, the following recommendations should be considered: Stable and clear regulatory framework that supports investments Increased funding from EU mechanisms such as the Modernisation Fund (MF) Consistence between the national strategic documents Ensure adequate workforce for grid development Prepare for a back-up scenario in which not all investment needs are met by 2030. Alina Arsani, EPG Head of Energy Systems Alina Arsani is leading the Energy Systems Programme of EPG. She has experience in (macro) economic analysis and public affairs, being specialised in public policies assessment. She is a PhD candidate at the Bucharest University of Economic Studies, where she taught microeconomics and macroeconomics courses for undergraduate students. Before joining EPG, Alina worked for the Department for Foreign Investments and Trade within the Romanian Government, as well as a public affairs expert for one of the largest utility companies in Romania and as a manager for PwC Romania. Contact: alina.arsani@enpg.ro

The public discourse is still flooded with faulty narratives on the future of hydrogen, especially on the doubtful expectation that hydrogen can either replace the use of natural gas in most current uses and it can therefore provide a lifeline for the continued use of fossil fuels throughout the following decades. To counter such narratives, this paper dispels a set of nine myths that are still pervasive in national discussions on hydrogen.

The decarbonisation of primary steel production is one of the most pressing challenges for the future of Romania’s industry. A highly carbon-intensive process, conventional primary steelmaking faces increasing pressure to transform in the context of the EU’s climate commitments: a phase-out of free allocation under the EU Emissions Trading System, upcoming regulations on sustainable products, and a rapidly rising carbon price. This pressure is insufficiently recognised in Romania’s industrial and climate strategies: its Long-Term Strategy, draft National Energy and Climate Plan, and draft national Industrial Strategy all fail to account for the scale of the transformation challenge and the associated opportunities for green steelmaking. While Romania’s steel sector has shrunk since 1990, it still contributes significantly to the national economy and employment, and emits approx. 6.3% of total national carbon dioxide (CO2) emissions. These contributions are centred on Liberty Galați, Romania’s only remaining primary steel producer, which employed nearly 5,000 people in and emitted 4.39 mega-tonnes (Mt) of CO2 (5.9% of Romania’s total CO2 emissions) in 2021. It is a major contributor to economic activity in the Galați county, a Just Transition region, and is an essential part of any attempt to revive Romania’s upstream manufacturing sector and any ambition to supply domestic and foreign downstream sectors, such as the auto industry, with high-quality, low-carbon steel. The main pathway to deeply decarbonise conventional primary steelmaking is conversion of the conventional blast furnace-basic oxygen furnace (BF-BOF) process to the direct reduction of iron, coupled with melting in electric arc furnaces (DRI-EAF). To achieve deep decarbonisation, the DRI process must use low-carbon hydrogen as a reducing agent, and the whole steelmaking process must be supplied by renewable electricity. Transitioning from BF-BOF to hydrogen-based DRI-EAF production will shift the fuel mix of primary steelmaking from fossil-based to using primarily electricity and hydrogen, and will change raw material requirements, including an increased consumption of scrap steel. Other decarbonisation pathways include a complete conversion to secondary steel production (using scrap steel or imported green iron) or carbon capture, all with their own challenges. Liberty Galați has publicly announced a decarbonisation pathway involving a conversion from BF-BOF to DRI-EAF, using natural gas as a transitional DRI agent and fully switching to renewable hydrogen by 2030. This deep decarbonisation plan (the “GREENSTEEL plan”) will accompany a doubling in production, reaching 4.1 Mt of liquid steel by 2030. According to our estimates, executing the GREENSTEEL plan could slash emissions from the production of liquid steel (responsible for 81% of emissions in primary steel production) by 93% by 2030, a reduction of 3.26 Mt CO2 per year. This could give Liberty Galați a significant competitive edge as a green steel supplier, meeting increasing demand from downstream sectors such as the auto industry. It could also spur a local green economy, including for the production of renewable electricity and hydrogen to supply the DRI-EAF pathway, which will consume over 160,000 tonnes of hydrogen per year. To truly achieve deep decarbonisation, the transformation of Liberty Galați under the GREENSTEEL plan will require a massive mobilisation to deploy renewable energy capacities, invest in renewable hydrogen production, and secure a reliable supply of scrap steel. Electricity consumption of the steelmaking process alone would increase ten-fold, and even if hydrogen production is outsourced abroad, meeting the target specific emissions of the GREENSTEEL plan will require the carbon intensity of Romania’s electricity grid to halve. Using domestically-produced renewable hydrogen will require an additional 6.35 GW of renewable electricity capacity, 136% of Romania’s total installed wind and solar energy in January 2024. The renewable hydrogen requirement of Liberty Galați in 2030 would be more than currently stipulated in Romania’s national Hydrogen Strategy for the entire Romanian economy, and scrap steel consumption would increase four-fold, amounting to 80% of Romania’s current scrap exports. The investment cost of the transformation itself, including the operating costs of using renewable hydrogen, will likely require state support both directly and indirectly to increase investment certainty. If Romania’s primary steelmaking is to spearhead industrial transformation and revive the competitiveness of manufacturing, urgent action must be taken to provide concrete, detailed transformation plans which are accounted for in national industrial and climate strategies. Targeted and carefully sized public financing instruments, including Green Public Procurement and Carbon Contracts for Difference, will be essential to meet upfront investment costs, especially in the coming decade as industrial operators begin to strain under increasing carbon prices. Infrastructure development will also be crucial, most importantly the deployment of renewable electricity capacities, strengthening of Romania’s national electricity grid, installation of electrolysers and construction of hydrogen transport infrastructure. New supply chains for raw materials will also be needed, particularly a rethinking of Romania’s export-oriented scrap steel sector. These actions will be necessary regardless how Liberty Galați decarbonises and require a shift in the approach of policymakers to the challenges of Romania’s industrial transformation. A correction was made to this report on 14/03/2024. The increase in direct electricity consumption quoted in the Conclusions and Recommendations section (page 33) was corrected to 1,000%. A further correction was made to this report on 03/06/2024. Figure 4 (page 17), Table 5 (page 16), and Table 4 (page 15) were updated with small corrections to the values for electricity and natural gas consumption. Luciana Miu, EPG Head of Clean Economy Luciana Miu is the Head of Clean Economy at Energy Policy Group. She holds a Master’s degree in Sustainable Energy Systems from the University of Edinburgh and a PhD in Energy Efficiency of Residential Buildings from the Imperial College London. Before joining EPG, Luciana worked for the UK Parliament and for the British Government’s Department of Business, Energy and Industrial Strategy (BEIS), as well as a consultant for Climate-KIC and London City Hall. Contact: luciana.miu@enpg.ro

This paper undertakes a comprehensive examination of Romania's first National Energy and Climate Plan (NECP) which was submitted to the European Commission in April 2020. The aim is to track the implementation progress and to assess the achievability of the outlined objectives based on recent data trends and modelling scenarios using the 2050 Pathways Explorer tool. The paper also takes reference to the revised objectives under the Fit for 55 package, especially for the buildings and transport sectors, with the aim of showing how current NECP implementation shortcomings may make the newer, more ambitious objectives even more difficult to reach.

Carbon pricing is widely seen as an effective policy option to pursue reductions in GHG emissions. Either through carbon taxes or emissions trading systems (cap and trade), carbon pricing reduces the negative externality of GHG emissions. By putting a price on emissions, economic agents can incorporate this cost in their investment, production, and consumption decisions. In time, this leads to lower emissions. At the same time, this policy can have negative effects on the economy and households, associated with the additional cost of emissions. Research shows that the negative effects can be alleviated or even reversed through revenue redistribution. The sums collected by Governments can be directed toward investment in low-emissions alternatives and support for low-income households. The European Union’s Emissions Trading System represents a significant example of carbon pricing. It covers emissions from industry and electricity generation and has been effective at achieving emissions reductions. Recently, a separate Emissions Trading System has been introduced for buildings and road transport (ETS2), with the aim of generating similar results in these sectors. There is concern that ETS2 may affect low-income households and the economy in general by purposely increasing the prices of emissions-intensive goods. To address this, the EU also adopted the Social Climate Fund, which uses part of the revenue collected by auctioning emissions allowances to finance investments in low-carbon technologies and support for low-income households. In this context, this paper adds to the extensive body of evidence on the economic impact of carbon pricing with revenue redistribution. It presents the results of a simulation model of a hypothetical carbon tax in Bulgaria, Germany, Hungary, Poland, and Romania. The macroeconomic impact is evaluated by calculating the effects of this carbon tax on GDP and employment by sector. At micro level, the focus is on households budget, namely on welfare losses across deciles and energy poverty, before and after revenue redistribution. This project is part of the European Climate Initiative (EUKI). EUKI is a project financing instrument by the German Federal Ministry for Economic Affairs and Climate Action (BMWK). The EUKI competition for project ideas is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. It is the overarching goal of the EUKI to foster climate cooperation within the European Union (EU) in order to mitigate greenhouse gas emissions. For more details, please visit: www.euki.de. Constantin Postoiu, EPG Head of Data Analytics Constantin is the Head of Data Analytics at EPG. He holds a PhD in Regional Development and a Master Degree in European Economics, both from Bucharest University of Economic Studies. From 2015 to 2017 he worked as advisor to the Chancellery of Prime Minister Dacian Ciolos where he led data driven policies and advised on education, poverty and public administration reform. Prior, he was a trainee at the EU Committee of the Regions, Europe 2020 Monitoring Platform. Passionate about data analysis and data-based policies, he is also a member of the Advisory Council for the Evaluation of the Impact of Normative Acts, in the Romanian Government. Contact: constantin.postoiu@enpg.ro

This report has been prepared by Energy Policy Group (EPG) Romania with collaboration and sponsorship from Clean Air Task Force (CATF). This report received no financial support from the government, industry and private sector and it was prepared based on publicly available data, information, articles and scientific publications. Radu Dudău, EPG President Radu Dudău is President and co-founder of EPG. He was, from 2007 to 2023, an Associate Professor at the Bucharest University. From 2006 to 2010 he was Deputy Director at the Romanian Diplomatic Institute (Ministry of Foreign Affairs). He graduated in Physics and Philosophy from the University of Iași. He holds a Dr. Phil. degree in Philosophy (magna cum laude) from Konstanz University (Germany) and a PhD in Political Science (International Relations) (summa cum laude) from the National School of Political and Administrative Studies (SNSPA, Bucharest). He was a Fulbright Fellow with the National Security Program at Harvard Kennedy School of Government (2011), a New Europe College Fellow at the Danish Institute of International Relations (Copenhagen, 2006) and an OSI/FCO-Chevening scholar at Oxford University (1999-2000). His work focuses on energy policy, energy technology, and energy markets. Contact: radu.dudau@enpg.ro

Currently, Romania does not have a comprehensive climate policy framework and relies mostly on transposed EU legislation to formulate targets and plans. Institutional responsibilities on climate change tend to be scattered, with insufficient coordination, weak accountability mechanisms, and a lack of long-term planning based on scientific evidence.

Offshore wind power plays a key role in Europe’s pathways to reducing dependency on fossil fuel imports and decarbonisation by 2050, in a moment when EU’s energy security interests and climate objectives are fully aligned.

ince the initial deadline of January 1st, 2020, several key events and EU-level strategies have unfolded, which should be taken into account in Romania’s upcoming LTS. The European Green Deal and the Fit-for-55 package brought forth a whole new level of ambition for GHG emissions reduction, while the REPowerEU will accelerate the pace of the climate transition in the short and medium-term, following Russia’s invasion of Ukraine. The Romanian LTS needs therefore to outline a plan for the rapid decarbonisation of the economy with the prospect of reaching climate neutrality before mid-century.

Based on an assessment of best practices and other European experiences with phasing out coal, this report highlights the importance of setting into law ambitious targets for a coal exit calendar. Different policy instruments can be used to implement this, such as minimum CO2 price floors or scheduled retirements of individual power plants.

Long-Term Strategies are key instruments for Member States to meet their emissions targets. They vary in their concreteness, scope and level of detail, leading to uncertainties in how Member States will reduce their emissions to meet the EU's climate neutrality targets. This analysis reviews the Long-Term Strategy of Bulgaria and assesses how fit-for-purpose it is in providing a robust pathway for emissions reductions.

As part of the Climate Recon project, EPG has analysed the role of low-carbon district heating in the Long-Term Strategies for climate neutrality of 23 Member States.

România va reuși să atingă anul acesta un nivel de 28,7 TWh gaze naturale înmagazinate în depozitele subterane, aproximativ 87% din capacitatea totală disponibilă (peste ținta UE de 80%).

In this report, EPG analyzes the EU Taxonomy, a classification tool for sustainable economic activities, and its impact on Romania’s energy sector. The EU Taxonomy was meant to become the ultimate manual for financial institution to label their products as “sustainable”.

As part of the CCS4CEE project, EPG has produced a roadmap for advancing carbon capture and storage (CCS) in Romania, building on its analysis of the context and opportunities for CCS in Romania.

Șocul geopolitic cauzat de invazia militară a Ucrainei de către Federația Rusă zguduie nu doar sistemul european de securitate, ci și securitatea energetică a Uniunii Europene, care își acoperă nu mai puțin de 40% din consumul de gaze naturale prin importuri din Rusia. Între statele est-europene puternic dependente de importurile de gaze rusești, România are o situație relativ privilegiată, fiind un producător semnificativ de gaze.

Decarbonising the EU economy will most of all require direct electrification of over 60% of end-uses, based on energy efficiency considerations. However, this will not always be technically possible or cost-efficient. Decarbonised molecules, such as hydrogen, will also contribute to eliminating ‘stubborn emissions’ in hard-to-abate sectors such as high-temperature heat and feedstock in industry, aviation and long-haul shipping, and possibly large-scale district heating and long-term electricity storage, thus increasing the flexibility and resilience of the energy system.

The COVID-19 pandemic and the restrictions imposed by governments throughout the world caused one of the greatest economic crises ever experienced given its magnitude and new nature. To assist countries to recover from the crisis and set their economies on a path towards resilient economic recovery, the EU agreed on a comprehensive financial package of €672.5 billion to be made available in the form of low interest loans and grants through the Recovery and Resilience Facility (RRF). To access these funds, member states must elaborate National Recovery and Resilience Plans (NRRPs), with investments and reforms in line with the broader EU objectives, including the green and digital transitions. The NRRPs must allocate at least 37% of expenditure to climate action and progress towards other environmental objectives of the European Green Deal.

This executive summary provides a brief overview of the report “Assessment of current state, past experiences and potential for CCS deployment in the CEE region”, written as part of the CCS4CEE project.

In this study, EPG brings together the work of project partners in Work Package 3 of the CCS4CEE project. The resulting report is an in-depth analysis of the current context and opportunities for carbon capture and storage (CCS) in the Central and Eastern European (CEE) region.

Acest raport prezintă o evaluare a contextului actual și a potențialului tehnologiilor de captare și stocare a carbonului (CCS) în România, condusă în cadrul proiectului CCS4CEE.

This report presents an evaluation of the current context and opportunities for carbon capture and storage (CCS) technologies in Romania, written as part of the CCS4CEE project.

The main resource of Gorj County is represented by its inhabitants, hence any transformation plan should be centred on them, as they are both the driving force and the beneficiaries of any economic and social progress of their county. The transition towards a carbon-neutral economy, probably the main concern worldwide in the next few decades, requires a significant number of new jobs. That is why Gorj County can rebuild its local identity around the sustainable energy transition, contributing to the significant efforts required for investing in renewable energy, energy efficiency or clean transport, thus continuing to play a central role in the Romanian economy. Gorj County can thus shift from the county with the highest carbon dioxide emissions in Romania to a leading region in this sustainable transition. This is a favourable moment for starting this transformational process for the county’s economy. Post-pandemic recovery, the funding made available across Europe especially for this purpose, but also the significant amounts that Romania has available for the energy transition, along with the commitment of central and local authorities to ensuring a just transition, create the first and, at the same time, a rare window of opportunity for reconfiguring the county’s economy. In supporting this approach, this study proposes a transition path which can ensure sustainable and diversified economic growth, attracting well-paid jobs and increasing the quality of life. For the transition of Gorj towards a sustainable county, this study proposes a series of short-, medium- and long-term objectives. The main immediate priority of the county authorities should therefore be to capitalise on the potential of renewable resources and renovate existing buildings. Renewable energy is the main decarbonisation vector of the European economy. The solar potential in Gorj County is above the national average and, consequently, must represent a priority in this endeavour. At the same time, the renovation of buildings to increase energy efficiency is another opportunity offered by the sustainable transition, with positive effects on the county’s economy, as well as on individual households, by reducing energy costs and improving living conditions. As long-term objectives, Gorj County must attract as large a share as possible of the value chains for advanced energy technologies with a contribution to the decarbonisation process. It is worth mentioning that for the counties where coal mining and its use in the energy sector were the main object of activity, staying relevant in the operation of the national energy system is justified. By developing the proposed value chains, their role will remain relevant.  Following an analysis of the economic situation in the county and of its educational profile, the study identifies four value chains: 1. renewable energy and electricity grids; 2. energy efficiency in buildings and heat pumps; 3. batteries, components and infrastructure for electric vehicles; 4. “green” hydrogen-based technologies. The county’s competitive advantages are also presented as well as a few measures that could enhance them

The present paper comes at a crucial time in the country’s energy transition, to applaud past successes, highlight sector specific challenges and opportunities, and bring together public and private stakeholders united by one simple mission – creating a framework that is both climate friendly and economically viable, for the generations to come.

The European Green Deal, with its flagship policy, the Climate Law, is set to enshrine into law the target of net-zero greenhouse gas (GHG) emissions by 2050. In this context, the increased electrification of industry, transport, and buildings is a must for decarbonisation. The Commission’s long-term strategy acknowledges that the further uptake and integration of renewable energy necessitates higher flexibility at system level. Its decarbonisation scenarios indicate the need for a tenfold of today’s storage to deal with variability in the electricity sector. The EU’s strategy for energy system integration lays out the groundwork for how an increasingly electrified economy can function efficiently. In anticipation of these future developments, concrete steps have been taken at EU level to favour and accommodate an increase in storage capacity. As part of the Clean Energy Package, the Electricity Directive and Regulation that are the basis for a revamped EU electricity market design set energy storage on an equal footing in the market with power generation. In response to EU Regulation 2019/943, which clarifies the role of storage and its ownership status, the Romanian authorities transposed in Law 155/2020 (amending Energy Law 123/2012) specific provisions related to new storage facilities and their management rules. Among the most significant is the government’s new and clear responsibilities of developing plans and actions for energy storage, aligned with the NECP, European Green Deal, and Next Generation EU. In addition, the ANRE provisions about licenses include references to storage capacities for energy producers. Nonetheless, the current Romanian legislation does not include sufficient details on future-proof systems and technologies. More elaborated provisions are needed for the adoption of different types of storage and norms related to storage system integration. Such enhanced legislation is needed for implementing the Romanian National Energy and Climate Plan (NECP), which lists ‘developing storage capacities’ as an instrument to improve energy security but lacks detail on how storage technologies will be deployed until 2030. The plan makes reference to the assessment study of system adequacy by the TSO, Transelectrica SA, which mentions a minimum 400 MW of needed new storage capacity. Against this background, it is important to understand the necessity for the domestic deployment of new storage technologies. To be able to invest in renewable energy capacities, the Romanian energy sector must first address its network adequacy issues. Increased storage capacity can contribute to overcoming this challenge, especially by increasing grid flexibility. Regardless of technology, energy storage will bring economic, structural and operational advantages. Based on its renewable energy potential and considering the national energy sector’s current characteristics – generation assets, interconnections, market design, regulatory landscape – Romanian authorities should plan for increased deployment of storage technologies. This report analyses the potential of some of the main energy storage technologies, presenting their respective advantages and disadvantages that need to be considered when evaluating the likelihood, scale, and speed of investment. It puts forward a set of policy recommendations. First, the regulatory framework must be revised to address the need for the following: Detailed norms and procedures on technical integration of storage technology; Equal access to ancillary services auctions for utility-scale storage; Regulatory provisions for decommissioning of storage facilities; Regulatory framework for renewable Hybrid Power Plants (HPPs). At the same time, financing opportunities and subsidies need to be developed, such as: Capacity mechanisms for energy storage facilities; Extension of already-existing subsidies for prosumers to include storage installations; Support schemes for off-grid solutions that incorporate storage; Adjustment of current financing schemes to new support mechanisms that can enable an efficient deployment of storage capacities; Clear remuneration framework for V2G owners; Incentivise circular economy initiatives, especially for battery technologies. 

The present study assesses the natural and technical potential of Romania’s offshore wind sector, finding an estimated total potential natural capacity of 94 GW, out of which 22 GW could be installed as fixed turbines, leading to a total Annual Energy Production (AEP) of 239 TWh, with 54,4 TWh from fixed turbines. The data analysed in this report show that wind speeds increase with the distance to the shore, with only the central part of the deep-water sector having more sizeable mean wind speeds (close to 7 m/s). A large part of Romania’s Exclusive Economic Zone (EEZ) consists of a deep-water area (>50 m) that is more suitable for floating platforms. Nonetheless, several offshore wind farms in Europe have been recently built at about 60 km from shore, a distance that is just within the Romanian transition area from shallow to deep water. The study identifies two potential clusters with most favourable conditions for a first stage of offshore wind development, based on fixed turbines: one with capacity factors between 33-35%, in water depths below 50 m at 40-60 km from the shore – an area that strikes the right balance between wind resources and costs of the required offshore network, given the possibility to inject the output in the Constanța Sud electrical substation and the proximity to the Port of Constanța.

All three countries can phase out lignite without implications for the security of supply, with only a few hard coal power plants remaining in the system – the study finds. The difficulties lie in job losses and an increase in end-user prices, which are both politically sensitive consequences of the phase-out.

This report analyzes the current natural gas sector from the point of view of reserves, infrastructure and market setup. The study also addresses the prospects for the evolution of different segments of natural gas consumption by 2030 and provides appropriate policy and regulation recommendations which would lead to the value-added capitalization, on the Romanian Market, of the expected Black Sea natural gas production but also of onshore deposits.

The history of the oil and gas industry has been and is an intrinsic part of the economic and social development of modern Romania. Also, Romania has the prospect that, by the end of the current decade, it will become a top producer of hydrocarbons at European level – especially natural gas.

The present study discusses the legal consequences of Crimea’s annexation by the Russian Federation upon the legal status of the peninsula’s Black Sea offshore (continental shelf and exclusive economic zone), with a focus on hydrocarbon exploration and production activities.