Positioning the country against the EU Green Deal, Romanian politicians appear to be on the wrong side of history and disconnected from the economic reality of energy markets, writes Suzana Carp.
Suzana Carp is Brussels Office Lead at Sandbag, an environmental NGO.
Last week’s negotiations on the EU budget for 2021-2027 had everyone on their tip-toes: will the block be able to fill the Brexit gap in the budget? Will the ambitious financing mechanism proposed by Commission President Ursula von der Leyen under the EU Green Deal get buy-in from Member States?
In this highly politicised context, certain politicians from Central East European Member States did not miss the chance to opportunistically position their countries as EU Green Deal skeptics.
But is this really true? Does Mr. Basescu have any foundation in saying that some Member States, like Romania, would be ready to leave the EU over the EU Green Deal?
Nothing is further away from the truth. In fact, 66% of Romanians are supporting the EU Green Deal, according to the autumn 2019 Eurobarometer. Furthermore, the EU’s climate policies, together with cohesion funding and the Just Transition Mechanism could set countries like Romania into the driving seat of the low carbon transition.
Three reasons why Romania stands to benefit from the EU Green Deal:
- In 2019 the country has paid the fourth highest price in the EU on wholesale energy prices on the energy market, with a €7/MWh average price increase on 2018, despite it having the second lowest GDP in the EU. Swiftly decarbonising the power mix will help to minimise the disproportionate burden between per capita income and energy prices, directly benefiting Romanians;
- Central East European countries have the worst air quality, with Romania in particular suffering more premature deaths from air pollution than average and having the lowest life expectancy is the lowest in the EU. Phasing out its old lignite plants, already on negative profitability, which lack appropriate filters and are breaching EU legislation will help in this regard;
- According to a briefing we launched in partnership with Bankwatch, Romania has at least €35-40 bilion available to mobilise towards the energy transition over the next decade, which matches its transition costs as estimated by the former Government. This requires pooling together it’s cohesion funding (now increased from the 2014-2020 period) and its climate funding tools, such as the JTM and revenues from the EU ETS under a national strategic investment plan. The amount is the bare minimum available, which would only be increased by a higher level of ambition for the EU by 2030, which could double the amount of ETS funds and revenues.
It is undeniable countries like Romania still need basic infrastructure, such as highways, but they could jump leap and directly develop highways for the future, with the necessary electric charging infrastructure for light and heavy duty electric vehicles. However, the move towards electrified transport needs to take place simultaneously with the decarbonisation of the electric grid.
Romania stands to emerge as a regional leader of the energy sector transition, as it has a small percentage of coal left in the mix (20%, declining in total use by 12% from 2019 on 2018 alone), a very different reality than the one mentioned by Mr. Basescu when he mentioned an imaginery 40%. Romania’s coal regions have been ranked on having a “very high potential” for both wind and solar energy generation, according to a report by the European Commission. This is an ideal set up and with the funding available, solutions are certainly feasible.
So what is getting in the way? The country’s nostalgic attachment with its gas reserves, which the interim government has advanced on the weekend following the EU budget negotiations. Strange decision, since Romania was the only country in the EU where the demand for gas and in fact the use of gas in the mix decreased in 2019.
The Romanian attachment to the gas agenda already hit a brick wall during the country’s 2019 Council Presidency, when 11 Member States failed to sign on to a Declaration tabled by the Romanian Government aiming to qualify gas as a “sustainable and smart infrastructure”.
Later on in 2019, The European Investment Bank shifted its lending criteria to make gas ineligible for loans as from 2021. In reality, the idea that gas would be a transition fuel in the EU pre-dates the net zero discussions and the Paris Agreement and is simply not supported by the new economic and policy infrastructure in the EU.
Despite all this, in a press conference in Bucharest last week, MEP Siegfreid Muresan stated there would be no job losses in Romania’s coal regions if the country is allowed to switch the coal plants over to gas, saying that in this scenario everything would stay as is until 2050. This promise ovelooks the increasing price of EUAs, which are projected in some scenarios to reach close to €50/t at some point the next Phase of the EU ETS (up to 2030) and go above that in the decades to follow.
Projections by the European Commission further indicate that by 2022, it will be cheaper on European energy markets to build new renewable capacity than to continue operating existing gas and coal ones. The Modernisation Fund under the EU ETS will also not qualify for supporting gas infrastructure and so, the Romanian interim government is setting its citizens on a very expensive journey to what is ultimately a dead end, increasing the bill of the transition.
Positioning the country against the EU Green Deal, Romanian politicians appear to be on the wrong side of history and disconnected from the economic reality of energy markets. They also seem to be pursuing a different agenda than that of their citizens, who do support the EU Green deal, would like to see public health measures advanced (i.e. reducing air pollution) and could win economically from the innovation agenda of the transition.