Romania has an extraordinary opportunity that few countries in Europe have: its own natural gas resources and, in particular, the significant deposits discovered in the Black Sea. But in the context of the new European regulations under the Green Deal umbrella, which emphasize green energy, this window of opportunity could close for us sooner than we would like.
The energy system in 2050 will be completely different from today's, Frans Timmermans, executive vice-president of the European Commission responsible for the Green Deal, recently announced.
And "at the end of the road, there will be no room for coal, there will be very little room for oil and only a marginal role for fossil gases"he said, in a speech at the Eurogas annual conferencethe European Natural Gas Industry Association.
The energy sector is one of the main contributors to carbon dioxide emissions in the EU, which is why the European Commission's decarbonization rules are a crucial part of the Green Deal package. Here, Discussions about the role of natural gas in the future configuration of the energy system are very heated, given that Countries heavily dependent on coal in their energy mix, such as Poland and Romania, are campaigning for continued support for the use of coal in the energy transition.
Incidentally, at the European Council meeting last December, which adopted an increase in the greenhouse gas emission reduction target from 40% to 55% by 2050 compared to 1990 levels, EU leaders, including the President of Romania, reaffirmed that Member states are free to decide their energy mix and to use transitional technologies such as natural gas.
It produces half the carbon emissions of coal when burned, natural gas can make a significant contribution to climate goalsIt is also a flexible power generation solution with clear benefits for the stability of national energy systems. In addition, Natural gas transportation infrastructure can be used for future technologies in the sector, such as hydrogen or biomethane.
Timmermans: "The most important step is the closure of coal-fired power plants"
On the other hand, in his speech at the Eurogas conference at the end of March, Timmermans stressed: "Let me be very clear: fossil fuels do not have a viable future. And this is also true for fossil gases in the long term". He added that "the most important step to be taken is the closure of coal-fired power stations"adding that 21 member states have already switched off coal or announced plans to do so.
To support this process of moving away from coal, the European Commission has launched Just Transition Mechanismwhich will focus on the regions and sectors most affected by the transition, given their dependence on fossil fuels - including some in Romania. The Ministry of Public Finance explained that "this Facility will mobilize investment funds for 2021-2027 and will be implemented through three pillars:
- Just Transition Fund (JTF);
- dedicated InvestEU scheme to attract private investment;
- public sector lending facility, under which the European Investment Bank will mobilize additional investment for the regions concerned".
The Commission's analysis in the framework of the European Semester 2020 (Annex D of the Country Report: Investment Guidance for the Just Transition Fund 2021-2027) identified 6 regions significantly affected by the transition to a GHG neutral economy. These are Hunedoara, Gorj, Galati, Mures, Prahova and Dolj.
The Just Transition Operational Program 2021-2027 has an indicative allocation of around €2.139 billion, of which €0.937 billion from the JTF and €1.2 billion through Next Generation EU, plus national co-financing of €0.321 billion, bringing the total available funding to around €2.460 billion. Romania was counting on the huge funds made available through this mechanism, including for the transition from coal to gas-fired power plants. Last summer, along with 7 other Central and Eastern European countries (Bulgaria, the Czech Republic, Greece, Hungary, Lithuania, Poland, Slovakia, the Czech Republic, Greece, Hungary, Lithuania and Poland), it asked the EC not to exclude gas projects from JTF funding. However, in In December 2020, the European Council announced that "the Just Transition Fund will not support any fossil fuel related investments, including natural gas" (see communication HERE).
Taxonomy decisive for future investments
By far, however, the Taxonomy remains one of the most important pieces of legislation that will shape the future of the EU energy sector for the next three decades and has an impact on the natural gas sector, as it is a system that classifies investments for sustainable activities. The Taxonomy, as drafted last year by the European Commission, made it virtually impossible for new gas-fired power plants to qualify for EU-funded investments. How? By imposing a CO2 emissions threshold of 100 grams of CO2/KWh, which is unattainable with current technologies, whereas the BREF BAT reference document for large combustion plants indicates values above 350g CO2e per KWh.
"We would like to draw attention to the emission limits recommended by the EC, which refer to electricity production from gaseous or liquid fossil fuels, values designed from the outset to discourage investment in such technologies and resources, not based on best available technology (BAT). According to data now available, emissions from natural gas-fired power plants operating at optimal efficiency in Romania are around 360 gCO2/kWh", said the Romanian Energy Center (CRE) last December.
The organization explained that in order to meet the limits recommended by the EC, the fuel mix used should contain decarbon gases such as hydrogen. In addition, there are other issues to consider:
"Even if current generation capacities allow the use of such a decarbonized gas mix, this is not yet validated in practice. (...) Also, there are currently no commercial capacities in Romania and in the region for the production, transportation and storage of decarbonated gases, such as hydrogen, this resource being a medium or long term prospect".
Find the full point of view HERE.
In a new draft taxonomy presented at the end of March this year, natural gas-fired power stations that produce electricity and heat can be classified as green investments if they replace a more polluting plant, thereby reducing emissions per KWh by at least 50% or moreaccording to EurActiv.com. The power plant must also be operational by 2025, be able to use low-carbon fuels in the future and emit no more than 270 grams of CO2 equivalent per KWh.
For power plants that only produce electricity or cogeneration plants that do not replace a more polluting one, Commission maintains 100 grams CO2 equivalent/KWh. That means, to qualify as a sustainable investment, new natural gas power plants will need to add carbon capture technology, he adds source cited.
State-private dialog needed more than ever
So, as things stand, Romania will find it increasingly difficult to modernize its ageing fleet of thermal power plants with reliable natural gas-fired ones. And the extension of the natural gas distribution network will have to provide for the possibility of hydrogen blending in the future. This is set out in the National Recovery and Resilience Plan sent by the authorities to Brussels, a plan that could provide Romania with around €30 billion by 2026.
European legislation is therefore changing rapidly, and Romania must defend its interests as much as possible in order to make the best use of the natural gas resources it has at its disposal for the benefit of the national economy and its citizens. Exploiting these resources not only provides significant budget revenue and numerous jobs, but could also position us as an important player in the production of blue hydrogen, which is considered to be a basic energy source of the future, which can be used for heating, transportation and in industry. It is up to us whether we will succeed in having a Country Strategy that makes intelligent use of our own resources.
To realize this potential and to shape a sustainable future, it is necessary to strengthen the collaboration between experts from national authorities and the Romanian private sector.
