The Revision of the Energy Taxation Directive and its Impact on the Romanian Energy Sector

The current version of the Energy Taxation Directive (ETD) is deemed outdated and misaligned with the EU agenda of promoting renewable energy sources, energy efficiency and greenhouse gas emissions (GHG) reduction.

The European Commission’s ETD proposal is a unique opportunity to address some of the missing pieces of the current framework and sets the ground for encouraging the roll out of new, sustainable technologies and products by:

  • Building the tax rates based on the energy content and environmental impact.
  • Widening the taxation base, by including energy sectors that are not in the scope of the current ETD (aviation, shipping).
  • Developing mechanisms to incentivize new energy carriers and technologies, such as hydrogen and storage.

If social risks are properly mitigated, including through exemptions for vulnerable consumers, the ETD can bring substantial changes for the decarbonization process in Romania:

  • It will motivate energy-intensive industries to shift their energy purchases to green producers, determining new wind and solar power plants to be developed, including in new geographical territories. The greatest impact could be offshore, a sector yet to be exploited at national level.
  • It will incentivize investment in energy efficiency, as well as stimulate financing of decentralized electricity production.
  • It encourages renewable hydrogen deployment, which has significant potential in Romania, considering the high renewable potential, as well as the industrial demand for hydrogen.
  • It will incentivize even more the adoption of electric vehicles, which can also help the country’s urgent electricity network adequacy issues.

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