Mobility

Romania allocates EUR 3.9 billion from EU recovery funds to zero carbon railway

Romania EUR 3 9 billion EU recovery funds zero carbon railway

Photo: Presidency.ro

Published

September 30, 2021

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Published:

September 30, 2021

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The European Commission accepted Romania’s EUR 29.2 billion National Recovery and Resilience Plan, of which 41% goes to green and climate investments. The biggest item is EUR 3.9 billion for rail modernization including electric and other locomotives with zero emissions. The government confirmed its commitment to abolish coal use by 2032.

European Commission President Ursula von der Leyen went to Bucharest to announce the green light for Romania’s National Recovery and Resilience Plan for the period through 2026 together with the country’s President Klaus Iohannis (pictured left) and Prime Minister Florin Cîțu (right). She highlighted the fact that 41% of the EUR 29.2 billion package is allocated for green investments, compared to the required minimum of 37% for climate objectives.

Romania vowed to spend EUR 3.9 billion on railway infrastructure modernization and electrified or zero-emission rolling stock. It is the biggest component that contributes to the European Green Deal and the goal to make the EU carbon neutral by 2050. In line with its proposal, the government will now work on phasing out coal in the production of electricity by 2032.

The government in Bucharest is optimistic about reducing the dependence on wood in heating and turning to renewables

On the reforms front, one of the most important items is the commitment to produce a legal framework by the end of 2023 to diversify heating away from wood and forest biomass in general. Half of Romania’s households currently use wood for heating. The idea is to introduce renewable energy in the sector and provide incentives for prosumers.

The plan includes broadening the scope of green taxation, with incentives for citizens and companies that turn to more environmentally sustainable behavior.

Romania to get access to 13% of total funds immediately

The government initially asked for EUR 41.5 billion despite a EUR 29.2 billion quota. The National Recovery and Resilience Plan (NRRP or PNRR in Romanian) is split into EUR 14.2 billion in grants and EUR 14.9 billion in favorable loans, all under the European Union’s Recovery and Resilience Facility, part of an emergency financing package adopted alongside its seven-year budget.

The European Council has four weeks to give the final green light, so 13% of the funds can be immediately disbursed.

The part of the proposal regarding irrigation projects was rejected. Agerpress learned from unknown people with knowledge of the matter in Brussels that there weren’t enough assurances that the EUR 2 billion item wouldn’t negatively affect water sources.

The irrigation segment will have to be financed from somewhere else

The rail system and metro projects in Bucharest and Cluj together account for almost EUR 4.5 billion from the recovery funds, Cîțu pointed out. Overall investments in urban and local mobility infrastructure, with incentives for vehicles with zero emissions and water transportation, amount to EUR 1.8 billion. The prime minister promised charging points for electric vehicles would be “installed all over the country.”

The second-biggest component in the climate action segment is the EUR 2.7 billion for energy efficiency measures and seismic protection in buildings. The Romanian government said it would direct EUR 1.1 billion into reforestation and biodiversity conservation and projects to boost it.

Coal exit ambitions sidelined in financing deal

The clean energy production component is worth a mere EUR 855 million, which should cover the coal phaseout, deployment of renewables and the introduction of hydrogen.

Romania now has an ambitious task to shut down all its coal-fired power plants by 2032. Their combined capacity is 4.59 GW, of which 1.7 GW is planned to go this year and 3.78 GW in total by the end of 2025, leaving the country with just 800 MW.

If all goes well, only 800 MW of coal-fueled power production capacity will remain in the country in 2026

The troubled Complexul Energetic – CE Oltenia runs most of the power plants. Some of the capacity is planned to be maintained as a strategic reserve until the cutoff date.

According to the NRRP, coal plants will be replaced with 1.3 GW in gas-fired facilities by the end of 2025 and an overall 3 GW in renewables by mid-2026. Greece’s PPC recently revealed it is looking at investments in green energy in Romania.

Another obligation that the government took upon itself is to introduce contracts for difference or CfDs by the end of June 2023 as the support system for renewable energy projects.

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