Will Romania be EU's Green Deal laggard?

For central and eastern European countries like Romania, the recovery package could be an important catalyst for the energy transition - but not without intentional and future-focused investment planning.

Romania, along with its fellow EU members, faces the sizeable task of achieving climate neutrality by 2050, and of reducing greenhouse gas emissions by 55 percent by 2030.

Government estimates place the cost of this transition between €15bn to €30bn – costs towards which the RRF could make significant contributions. However, Romania's current plan fails to make the most of this opportunity for developing a targeted investment plan for the transformation of the energy sector.

Romania's plan for spending its RRF funds was published in recent weeks, leaving much room for improvement on energy spending.

The RRF requires that member states dedicate 37 percent of their recovery funds to climate action and biodiversity efforts.

The 'Green Transition' pillar of Romania's recovery and resilience plan focuses mainly on water management and mobility (investments that, while relevant, could have been considered under other pillars), leaving a relatively small proportion for renewable energies.

Of the total €30bn allocated to Romania under the RRF, €1.3bn (just four percent) is slated to go to renewable energy and energy efficiency.

Only a few concrete examples of renewable energy projects that can benefit from the funding are given. Despite the pressing need to decarbonise Romania's heat and power sectors, this is not an investment priority in the recovery plan.

Gas trap

At the same time, natural gas is a major priority in the energy section of the plan, and 'smart gas networks' are deemed to fall under the climate action requirement of the facility.

The plan emphasises the expansion of natural gas use, seeking to connect new consumers to the gas networks despite the existence of renewable alternatives.

Gas is considered a 'transition fuel', an approach which does not represent a strategic management of the energy transition and risks prolonging Romania's dependence on fossil fuels.

Given the relatively short time frame until 2050, there are not enough investment cycles remaining for a leisurely transition through gas to renewable energies.

Investments made in natural gas infrastructure today run a real risk of not delivering an adequate return.

What's more, failure to invest in renewable energies now, while other EU countries are doing so, risks putting Romania on a backward footing compared to its EU neighbours.

Romania has significant renewable energy potential, but investments in renewables have stalled in recent years, due to constantly changing policies, bureaucratic hurdles and the above-mentioned policy focus on natural gas.

In its country-specific recommendations for Romania, the European Commission has highlighted the importance of orienting investment policies towards low-carbon energies and energy efficiency.

Now, the EU funds are available to do so; at least €32bn could be made available for Romania's green transition if climate mainstreaming and the recycling of EU emission trading scheme revenues for climate purposes are properly implemented.

The RRF could provide a needed boost to Romania's energy transition and set the country on its way to climate neutrality.

Instead, relatively little focus is given to renewable energies, while policymakers remain fixated on fossil fuels.

Romania risks losing money by investing considerable sums in 'transition' technologies, while the attention must in fact be directed to concrete decarbonisation solutions and on comprehensive financing schemes for renewable energy sources.

Climate mainstreaming is not a tick-the-box exercise. Rather, for EU states willing to grasp the opportunity, it represents the chance to get ahead of the curve in the energy transition.