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

Phasing out coal represents a cornerstone of decarbonising power production. Most European countries have committed to phaseout coal within the next decade, with Romania joining the list this year. This represents a remarkable development given the context in which legislation for retiring Romania’s lignite and hard coal power plants was passed – the fossil gas crisis triggered by Russia spilled over in the entire energy sector leading to skyrocketing prices. As a response, some EU countries have delayed phaseout plans, which can provide much needed relief in times of crisis, despite the temporary increase in emissions. Nonetheless, it must be understood that such emergency measures are temporary in nature and should not affect the long-term commitments to phaseout coal capacities.

These developments rather offer the opportunity to accelerate the deployment of renewable energy in order to ensure a coal-to-clean transition which would no longer rely on an intermediary transition to gas. The current energy crisis has laid bare the risks associated with the EU’s dependence on fossil gas imports.

In this context, the main challenge is to sustain a coal phaseout that is as swift as possible while also ensuring security of supply, affordable electricity, and a just transition in coal-dependent regions. A coherent phaseout calendar remains just as necessary for avoiding a disorderly crash of the sector and for allowing sufficient time to build realistic plans for economic redevelopment. Romania did just that by passing legislation to fulfil the commitment in its National Recovery and Resilience Plan to eliminate coal from the electricity mix by the end of 2032. Despite some flaws and being less ambitious than the initial legislative proposal, Law 334/2022 sets a clear coal exit date, includes power plant closure benchmarks, introduces social protection measures, establishes governmental and advisory bodies to manage the implementation process and sets sanctions for non-compliance with the calendar. Some issues that remain to be addressed are more transparency on how technical reserves will be created and how will they be remunerated, elaborating more comprehensive just transition measures, better ensuring public participation, and properly enforcing the legislation. Romania’s Territorial Just Transition Plans have also been approved by the Commission, creating the framework for the economic redevelopment of coal regions such as Gorj and Hunedoara. 

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. The latter appears to be most effective in a country like Romania, but it should be further analysed whether a calendar of decreasing GHG emissions standards for power production could be more suitable for phasing out all fossil fuels from the electricity mix in the long run. Besides, ensuring a just transition from coal does not stop at mitigating the immediate impact on job losses, as it also entails investing in the economic redevelopment of the coal regions. Funding the transition should not stop at accessing European finance – synergies between EU funds and national or private financing streams are also important. Stakeholder and community engagement also need to be ensured to foster public acceptance.

Latest Publications