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April 19, 2024
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Economy Romanian News

Billions of Euros in European Funds to Alleviate Energy Poverty in Romania

In the coming years, Romania has unprecedented European funds amounting to billions of euros to transition to a low-emission energy sector, Energy Industry Review reports. If this transition is not easily understandable and accessible to ordinary citizens and small businesses, the backbone of the economy, the entire decarbonization effort will boomerang in front of the pro-European elites. Anyone who plays with this money without placing the millions of Romanians facing energy poverty at the centre of their concerns is playing with fire.

In 2023, nearly half Romania’s population continues to rely on wood for heating. In rural homes, this figure jumps to 80%, typically utilizing outdated and energy-inefficient stoves with a mere 15% efficiency rate, leading to an astonishing 85% loss of calorific energy from the wood. Meanwhile, the thermal energy rehabilitation rate remains remarkably low, although eight out of every ten buildings require energy-efficient renovations due to their age and inefficiency. A troubling reality persists: tens of thousands of households across Romania lack access to electricity, a fundamental necessity we cannot imagine life without today.

Experts say Romania should channel the billions of euros earmarked for the green transition towards addressing the root causes of energy poverty. These funds should be directed towards illuminating homes that lack electricity, revitalizing heating systems, and renovating energy-inefficient buildings, focusing on rural regions where energy poverty rates are most pronounced.

Energy constitutes a fundamental necessity. The most economically disadvantaged individuals are inclined to skimp on food before enduring darkness or cold. Statistical data attests to this fact. Energy is also imperative for cooling residences with the escalating heat wave frequency. The Romanian Observatory of Energy Poverty (ORSE) has spotlighted the rising phenomenon of summer energy poverty, impacting predominantly the elderly, children, and those with modest incomes dwelling in inadequately insulated homes.

State institutions must approach the intricate factors contributing to vulnerability and energy poverty with a sense of responsibility. In times of crisis, resorting to universal subsidies is an excessively costly remedy. The cap-compensation system for energy prices has incurred a cost of 18.7 billion RON up until August. This is especially significant considering the macro-level context, where we face a budget deficit of 38.6 billion RON within the year’s first seven months.

According to the Energy Industry Review, it is crucial to reevaluate the energy price capping and compensation scheme. This revision would allow us to establish a more comprehensive and nuanced definition of vulnerable consumers rather than relying solely on arbitrary income thresholds as we do presently. Our current lack of a precise definition has resulted in a situation where all consumers, regardless of income, receive protection. Energy vulnerability is influenced by income and factors such as housing conditions, energy expenses, age, and health.

Therefore, according to the article cited, it is imperative to have a national strategy to tackle energy poverty, which has been mandatory since 2012 through the Energy Law. We are in 2023, 11 years later, and we still do not have a strategy. The national plan must include measures to address the causes of energy poverty. Some solutions could be loans with low interest to support Romanian citizens to thermally rehabilitate their homes, replace their current old stoves with energy-efficient systems, and install solar and photovoltaic panels and heat pumps. Only 3% of rural homes have been renovated so far, so it is necessary to have a thermal energy rehabilitation program that addresses individual homes, especially in rural areas. These systemic, structural measures can make a difference and support vulnerable consumers in the short and medium to long run.

The Romanian Energy Poverty Observatory (ORSE) is a project initiated by the Center for the Study of Democracy, a think-tank established in 2006 within the Department of Political Sciences, Faculty of Political, Administrative and Communication Sciences, ‘Babes-Bolyai’ University Cluj, within which it functions as an accredited research centre.

This initiative aims to provide a 360-degree perspective on energy poverty at the national level and to ensure the necessary expertise to combat this complex phenomenon, which affects a large part of the population. Through ORSE, we bring top experts from various fields relevant to the topic of energy poverty in Romania to the same table to identify the best solutions.

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