COUNTRY REPORT:
IDENTIFYING THE VULNERABILITIES TO THE ETS 2 IN ROMANIA
POLICY RECOMMENDATIONS FOR THE ADOPTION OF THE NATIONAL SOCIAL CLIMATE PLANS
Andreea Vornicu-Chira, Anca Sinea, Melania Leșe, George Jiglău
Objectives and scope
The European climate ambitions, while necessary and designed to change the socio-economic landscape of the Member States' societies, entail greater social costs significantly impacting lower-income citizens. The introduction of EU ETS 2 will have a regressive effect especially on the lower to middle income households, but also implies a direct financial participation of the entire society citizen in transitioning to greener energy sources and achieving climate goals. Therefore, this report aims to firstly identify patterns of energy and transport vulnerabilities and then assess how the implementation of ETS 2 will impact the Romanian households' welfare. It explores the issues of energy and subsidiary transportation poverty, introducing metrics for their assessment. Based on these metrics, the report identifies the most vulnerable groups and proposes targeted measures to be included in the national Social Climate Plans. Moreover, the report offers recommendations for policymakers tasked with enacting these EU directives in Romania, drawing on insights from extensive expert consultations.
Executive summary
Carbon pricing mechanisms are necessary instruments for the transition to greener societies. ETS 2, designed as a component of the Fit for 55 package, foresees a new emission trading system for buildings and road transport fuels. The package, adopted by the European Parliament, will become operational across all Member States in 2027. While important in reducing the emissions associated with the process of heating the buildings and the road transport, ETS 2 is expected to have a regressive effect and impact especially the vulnerable households.
As a means to tackle the regressive effect of ETS 2, the European Commission has adopted the Social Climate Fund, which aims to provide dedicated funds to the Member States for addressing households in energy and transport poverty. Romania will be the one of the largest recipients of the Social Climate Fund which translates into considerable opportunities to address the regressive effects of carbon pricing and develop targeted measures for the impacted households.
In this context, this report has three important objectives: a. to explore and identify the various patterns of energy and transport poverty; b. To assess the impact of ETS 2 on household expenditures and income and c. to propose tailored solutions that have been identified during several consultations processes and can be used by various stakeholders (from national to local authorities and other relevant actors). Using both quantitative and qualitative analysis, the report offers a comprehensive image of the energy poverty manifestations across Romania, proposes indicators for assessing transport poverty and identifies a set of recommendations for designing and implementing the national Social Climate Plan.
One of the main findings indicates that, in Romania, not only households that use gas for heating will be affected by the ETS 2 mechanism, but indirectly also the income poor households that use wood. As the previous energy crisis showed, the wood price spiked alongside the gas and electricity prices, putting a lot of financial pressure on the low-income households to secure their energy needs.
Download the full report here.
This report was produced under the project “Facilitating Socially Just Carbon Pricing in Central and Eastern Europe”, a part of the European Climate Initiative (EUKI) of the German Federal Ministry for Economic Affairs and Climate Action (BMWK). The opinions put forward in this policy report are the sole responsibility of the author(s) and do not necessarily reflect the views of the Federal Ministry for Economic Affairs and Climate Action (BMWK).