Distributional Impact of Carbon Pricing in Central and Eastern Europe

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: 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:

Small Modular Reactors: A Technical and Economic Assessment. General Considerations and the Case of Romania

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:

The Case for a Climate Law in Romania

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 – the enabler of Romania’s decarbonisation

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.

Recommendations for Romania’s Long-Term Strategy: Pathways to Climate Neutrality

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.

Phasing out coal in Romania: an assessment of the governance framework

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.

An assessment of Bulgaria’s Long-Term Strategy

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.

District heating in national Long-Term Strategies

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.

Cât de pregătită este România pentru aprovizionarea cu gaze naturale în iarna 2022-2023?

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%).

EU taxonomy of sustainable economic activities and its relevance for the Romanian energy sector

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”.

A roadmap for advancing carbon capture and storage in Romania

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.

Opțiunile României pentru eliminarea dependenței de importuri de gaze naturale din Federația Rusă – Perspective pentru 2023, 2030 și 2050

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.

Clean Hydrogen in Romania – elements of a strategy

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.

Romania’s Post COVID-19 Recovery – Enabling a Green Transformation of the Economy

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.

Executive summary: Assessment of current state, past experiences and potential for CCS deployment in the CEE region

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.

Assessment of current state, past experiences and potential for CCS deployment in the CEE region

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.

Evaluarea stării actuale, a experiențelor anterioare și a potențialului de implementare a CCS în România

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.

Assessment of current context, past experiences and potential for CCS deployment in Romania

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 sustainable transition of Gorj County

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

Code of Good Practice for Renewable Energy in Romania

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.

Romania’s Energy Storage: Assessment of Potential and Regulatory Framework

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. 

Romania’s Offshore Wind Energy Resources: Natural Potential, Regulatory Framework, and Development Prospects

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.

Accelerated lignite exit in Bulgaria, Romania and Greece

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.

The Outlook for natural gas in Romania and proposals for its value-added capitalization

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.

Oil and Gas History – tradition and strategic opportunity

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 Ukraine crisis: legal and energy security impact in the Black Sea basin

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.