Blog entry

How a pioneering Slovak town is modernising its district heating system

How Slovakia’s coal phase-out changed the game

Partizánske is a mid-sized town in western Slovakia, located along the Nitra River in the Upper Nitra region. It was founded in the 1930s as an industrial town connected to the nearby Nováky coal power plant. Home to roughly 20,000 residents, the town has its own municipally owned district heating system, which today is powered by 66% fossil gas and 34% biomass.

In December 2018, the Slovak government announced that coal would be phased out by 2023 at the latest, giving the Nováky plant a five-year countdown until shutdown. This meant that all municipalities connected to the plant needed to find a new heating source. However, unlike some neighbouring towns, Partizánske was no longer directly dependent on domestic brown coal for its district heating.

Yet the national coal phase-out changed the outlook for the entire region. With coal leaving the energy mix, district heating systems across the region would have to reinvent themselves. By December 2023, all of the municipalities had successfully developed plans for replacement systems for all of the affected households across the region.

However, the reinvention couldn’t stop simply at transitioning to gas. With the EU’s target of complete decarbonisation by 2050, the transformation of these systems had to go further. This meant municipalities had to start planning how to modernise their district heating systems using sustainable, renewable and modern technologies.

Planning for the future

Partizánske started by working with the Slovak non-governmental organisation Friends of the Earth–Centre for Environmental Public Advocacy (Friends of the Earth–CEPA). It developed an in-house pre-feasibility study, outlining a structured plan for transforming the town’s district heating system. The study mapped:

heat consumption across individual buildings and zones;

the technical condition of boiler rooms;

equipment efficiency and emissions;

operating costs;

precise pipeline routing;

collisions with underground utilities; and

terrain constraints;

Three core ideas emerged: interconnecting of the two currently separate heating systems, utilising geothermal resources and, in the long term, recovering waste heat from the town’s wastewater treatment plant. The next step was to consult external experts to assess the viability of these conclusions.

In February 2023, Partizánske reached out to the European Investment Bank (EIB). The EIB’s advisory services typically focus on larger infrastructure projects in major cities. Yet the 2022 launch of the Technical Assistance for Regions Undergoing a Green Energy Transition (TARGET) programme by the EIB and the European Commission opened the door for regions like the Upper Nitra region that have been historically dependent on fossil fuels like coal, peat, and oil shale.

As the municipality increasingly demonstrated readiness, clarity and technical preparation, interest grew. Eventually, a formal technical assistance agreement was signed in August 2024 under the Energy Efficiency and Energy Advisory Division of the EIB’s Energy Department. By September 2024, the terms of reference had been approved, with external experts procured up until March 2025. A kick-off meeting followed in April 2025, and the final feasibility study was published in February 2026.

The technical assistance confirmed the conclusions of the earlier Friends of the Earth–CEPA study: the need to interconnect the existing heating systems, and the potential to use geothermal energy and recover heat from wastewater. This endorsement will help the municipality apply for funding, as it gives investors and partners confidence in the viability of the planned project, which the EIB estimates at around EUR 6.1 million.

Next steps

With this feasibility study now complete, Partizánske is moving forward by preparing a technological concept. This will define specific technologies, required capacities and preliminary cost estimates, helping the municipality to secure building permits and negotiate financing, including an application to the Slovak Environmental Fund’s district heating modernisation financing schemes from the EU’s Modernisation Fund.

Other immediate major structural decisions have already been agreed. The current four-pipe system will be replaced with a two-pipe system, simplifying infrastructure and improving efficiency. Boiler rooms in critical or emergency condition will be prioritised and integrated first.

Additionally, Partizánske is now preparing a communications strategy aimed at residents, with the goal of building long-term public support through clear, accessible information – a particularly important step as municipal elections approach.

This pathway shows that even small municipalities can use EUservices such as the TARGET programme. Thanks to thorough preparation and municipal readiness, Partizánske is set to become a first mover in Slovakia in decarbonising its district heating system. This approach has potential for replication across Europe, where additional EU support programmes are available through the Directorate-General for Regional and Urban Policy (DG REGIO), the Joint Assistance to Support Projects in European Regions (JASPERS) programme, Horizon Europe, and networks like the EU Covenant of Mayors.

Can the EU’s Social Climate Fund reach vulnerable households in Estonia?

Like other EU Member States, Estonia has submitted its social climate plan to the European Commission. The plan, which has recently undergone changes based on the Commission’s recommendations, is expected to focus primarily on building renovation and energy efficiency measures, while also addressing the broader complexities of energy and transport poverty.

The Estonian Green Movement is currently working closely with national decision makers to answer a fundamental question: How can the Social Climate Fund – one of the EU’s first major instruments linking climate policy with social justice – best reach vulnerable households?

To find an answer, we hosted a round-table discussion on 13 January 2026 in Tartu. The event brought together regional and national representatives to identify and evaluate successful solutions and innovative measures adopted in countries across central and eastern Europe.

Regions left behind

While Estonia has made major strides in the renovation of multi-apartment buildings in recent years, the benefits have not been distributed equally. A clear gap remains in regions with high levels of energy poverty, such as in Ida-Virumaa – Estonia’s just transition region – as well as in the south-east of the country.

Our recent round-table event focused on these weaker regions, identifying two key bottlenecks: first, regional authorities urgently require greater technical assistance and knowledge; second, the current ‘first-come-first-served’ approach to funding often leaves regional authorities with less administrative capacity behind. Participants also agreed that future measures must be intentionally designed to target vulnerable households.

In these regions, the high proportion of older people are typically reluctant to invest in large-scale building renovations. Additionally, many of the regions’ five-storey multi-apartment buildings contain as few as 10 households, making the individual financial outlay required to renovate a property prohibitively high, which also discourages residents from the idea of renovating in the future. However, regional officials noted that the existence of a renovated roof is often a sign that an apartment association is cooperative and potentially open to a deep renovation.

While Estonian cities offer examples of neighbourhood-based initiatives successfully tackling building renovations – notably the SOFTAcademy project in Tallinn – regional authorities indicate that these urban models are difficult to replicate in rural areas.

Finally, the language barrier must also be taken into account. According to 2021 statistics, 73% of the population in Ida-Virumaa are native Russian speakers. All of the regional authorities agreed that information must be accessible in Russian to be effective. Success in these areas also depends on informal engagement and sharing information among the local community. Establishing a ‘friendly connection’ at the regional level is not only possible but essential for building trust.

A fairer way to fund renovations

Researchers at the Centre of Applied Social Sciences at the University of Tartu recently released the results of a new data-driven model aimed at improving how renovation subsidies for apartment buildings are allocated in Estonia. Already tested in Tallinn’s Annelinn and Karlova neighbourhoods, the model seeks to direct financial support towards households experiencing the highest rates of energy poverty.

According to the model’s creator, Mariia Chebotareva, Estonia’s existing renovation support scheme focuses solely on the technical parameters of buildings and fails to reflect the socio-economic status or financial capacity of households. The new model seeks to address this gap by combining socio-economic data with building-level technical parameters. Using specific datasets, the model generates a ranking of apartment buildings based not only on their energy efficiency, but also on the risk of energy poverty among households.

This innovative model is a first for Estonia. If implemented, it would replace the existing performance-based approach – aptly described in the Estonian language as a ‘race of nimble fingers’ – with a more socially just system. Though the researchers note that accessing and integrating the data required will be a challenge, simplifying the system for regional authorities could help them better identify and support those most at risk.

Making EU money work

Ensuring that EU funds deliver equitable benefits to the regions and people of Estonia is crucial. The model introduced by the Centre of Applied Social Sciences has the potential to become a ‘best practice’ in Estonia and inspire similar models across central and eastern Europe. At the Estonian Green Movement, we’re committed to making sure that EU policy translates into real benefits at the local level – and that those who need the most support are not overlooked. As the cost of living in Estonia continues to rise, the design and implementation of future measures is now more important than ever.

Deregulation endangers Latvia’s forests

Latvia’s forests, in particular, are coming under increasing threat from short-sighted policy proposals that prioritise short-term profit over long-term sustainability.

Latvia joins EU deregulation drive

The push to increase competitiveness by simplifying regulation has sat high on the EU agenda in recent years, translating into initiatives at both EU and national levels. The European Commission, for example, has proposed a number of ‘omnibus’ packages aimed at streamlining legislation, with EU Member States simultaneously reviewing which requirements can be reduced to improve operating conditions for businesses and boost economic growth.

Capitalising on this deregulation trend, Latvia’s Ministry of Agriculture has put forward a series of far-reaching proposals aimed at reshaping forestry policy.

Forestry safeguards under pressure

In October 2024, the Ministry proposed amendments to logging regulations that would have significantly weakened safeguards, including more than doubling the maximum size of clearcuts in many forests as well as expanding canopy gaps – openings in tree cover – to a quarter of the permitted size.

The amendments also sought to considerably lower thresholds for declaring forest stands unproductive, effectively making them eligible for harvest sooner. Additionally, under the pretext of disease prevention, the rules for harvesting tree species like aspen and spruce were set to be eased. According to the Ministry, the aim was to grant forest owners greater freedom and to accelerate the permitting process.

Fortunately, sustained pushback from environmental organisations, certain political parties within the government, and concerned institutions led to the postponement of these amendments. The Ministry is currently organising another round of discussions with stakeholders, with a significantly reduced set of amendments now under consideration.

But these are not the only restrictions the Ministry is intent on loosening. In September 2025, the Ministry proposed amendments to the Forest Law, allowing a consultation period of just three working days. The proposals included a substantial reduction in the minimum harvest age for several tree species and a highly restrictive and baseless definition of ‘old-growth forests’, setting a minimum area of 30 hectares along with other excessive requirements.

The proposals also attempted to introduce an unlawful provision, namely that any forest management activities compliant with the Forest Law would automatically satisfy nature protection legislation, even though many key protection measures are not covered under the Law. As before, efficiency was used as a justification for deregulation.

Once again, due to numerous objections from environmental organisations, institutions and other stakeholders, the amendments were withdrawn. A key counter-argument in both cases was the precedent set by a 2024 Constitutional Court case, in which amendments significantly reducing minimum tree diameters for harvesting were repealed due to the lack of a proper environmental impact assessment.

Defence at all costs?

Similar trade-offs have emerged in the context of efforts to increase logging, but under a different pretext – generating additional revenue to support Latvia’s defence spending. While investment in defence infrastructure is undeniably necessary in today’s geopolitical climate, funding sources should seek to avoid creating long-term damage elsewhere. In May 2025, the Minister of Agriculture made the first of several attempts to significantly increase allowed harvesting volumes in state forests until 2030, arguing it would raise over EUR 100 million, including funds for defence.

However, the proposal was met with widespread criticism: not only on ecological grounds, but also from an economic perspective. Critics contend that such a short-term approach – one reliant on a sudden intensification of harvesting – would likely lower timber prices as well as anticipated profits, and limit harvesting potential in the coming years.

Another objection concerns the lack of existing capacity within the country to harvest and process such volumes. This will likely result in delays and an increased share of low-value timber exports, given that most of Latvia’s exported timber is already minimally processed wood, including roundwood, fuel-wood, sawn wood, and plywood.

Governing without a plan

Notably, all of the Ministry’s legislative efforts have been pursued without an updated mid-term forestry policy planning document. Latvia’s existing forest policy guidelines cover the period from 2015 to 2020, yet no new document has been adopted since.

Draft guidelines released for consultation in autumn 2025 were widely criticised – including by other state institutions – for neglecting the social and ecological functions of forests emphasised in the national forestry policy. Pushing through legal amendments in the absence of clear, balanced and updated policy guidelines provides yet another example of irresponsible and short-sighted governance in action.

How far will deregulation go?

This period has proved demanding for both forestry institutions and nature protection organisations, but the fight is far from over. Removing environmental safeguards may indeed make economic activity easier in the short term, but at what cost?

Nature is not limitless – ecosystem capacity and natural resources are finite, and recovery can take decades. This is why it’s so essential to balance the environmental with the social and economic – the latter two being entirely dependent on the first. Clean air, fresh water, healthy soils, and resilient ecosystems are prerequisites for human well-being.

Latvia’s forests are a national treasure, and should offer far more than just short-term economic gains for the privileged few. State-owned forests, comprising roughly half of the country’s total forest area, should lead by example. They must provide benefits that go beyond timber profits and instead serve to safeguard Latvia’s rich local biodiversity.

Time for action

In Latvia, individuals and civil society organisations have the right to participate in public consultations and decision-making processes, defending their right to a healthy environment. They can also make their voices heard through elections and by supporting political parties that act responsibly and plan for the long term.

Similar opportunities exist at the EU level. While the EU’s recent call for feedback on simplification has now closed, engagement remains possible through initiatives such as the Hands Off Nature petition, which calls on EU policymakers to halt the erosion of environmental safeguards. Now is the moment to speak up and push back – before short-term political choices turn into irreversible environmental damage.

Fear and fossil fuels in Romania

A 3-page draft law initiated by former energy minister, Sebastian Burduja, last week sent shockwaves among coal dependent communities and climate activists alike. Accompanied by 50 pages of justification, wrapped in national security rhetoric and delivered with a side dish of geopolitical fear tactics, the draft law aims to derogate from the country’s Decarbonisation Law. It re-opens the possibility of building new coal power plants and operating new and existing ones alike, under vaguely formulated conditions.

But strip away the alarmist language about Russian invasions and infrastructure attacks, and what remains is a cynical attempt to derail Romania’s energy transition, betray coal-dependent communities, and potentially defraud the EU of EUR 2.14 billion – Romania’s allocation under the Just Transition Fund.

Manufacturing crisis for political gain

The 50-page justification opens with the Russian invasion of Ukraine and the shock it delivered to EU energy markets. However, it omits to acknowledge that since then European energy markets have recovered and diversified. The EU’s response wasn’t to resurrect coal, it was to accelerate renewables.

Romania itself has surpassed its renewable energy targets, adding more than 1,200 megawatts in 2025 and projecting between 2,500 to 3,800 megawatts this year. The energy landscape is transforming rapidly, but you wouldn’t know it from reading this law’s apocalyptic preamble.

The justification then goes on, suggesting Russia might attack Romania’s electricity infrastructure, therefore reserve coal capacity is needed. This isn’t energy policy, it’s fear-mongering dressed up as strategy.

Arguably, one of the most disturbing details is the law’s citation of a national security strategy from 2010, which indeed mentioned coal stockpiles for security reasons. In 2010, coal contributed roughly 20-25% to Romania’s energy mix. Now it is just 13.7% and keeps falling. Context matters.

In 2025 it was renewables that supplied the largest share of Romania’s electricity mix: wind, solar and hydropower. Interconnection capacity with neighbouring countries has expanded, storage is catching up. The grid looks fundamentally different. Using 2010 data to justify 2026 energy policy is not only outdated, it’s deliberately cherry-picking a moment in time that supports a predetermined conclusion, while ignoring 15 years of transformation.

The Just Transition Fund – taking the money but refusing the transition

In 2022, Romania received an allocation of EUR 2.14 billion from the EU Just Transition Fund (JTF) specifically to support coal phase-out by 2032. This fund is designed to support almost 30,000 workers through retraining and to create approximately 11,000 new jobs. The whole logic behind the JTF funding is Romania’s commitment to transition away from coal. Without coal phase-out, there is no transition to fund. And who will be deceived at the end of this political theatre yet again? Coal-dependent communities, who are regularly given false hopes by politicians that lack courage to plan for the real future.

The State aid paradox

Oltenia Energy Complex, Romania’s main lignite producer, has since 2021 received hundreds of millions of euros in State aid specifically for closure operations. The country’s hard coal mine operator was also granted nearly EUR 800 million State aid for closure in 2024. This money has already been disbursed and spent, justified under EU State aid rules as compensation for the costs of phasing out uneconomic coal operations.

State aid for closures is legal under EU rules precisely because it facilitates an orderly phase out of operations that would otherwise fail in the market. Closure is the key condition for the aid.

Now, Burduja and thirty other parliamentarians want to put coal ‘back on the table and into production’. But what happens to the hundreds of millions in closure aid already received? If coal operations are to continue, that State aid becomes illegal retroactively. It was granted under false pretences. Under EU State aid rules, illegal aid must be recovered, with interest. This additional financial burden could very well destroy the industry they are trying to revive. And the law should explicitly stipulate the mechanism for returning this aid to the state budget. It doesn’t.

So this adds another bill to the tab: EUR 2.14 billion in Just Transition Funds received under commitments this law would violate, and over EUR 3 billion for restructuring of Oltenia Energy Complex and closure of hard coal mines. This is over EUR 5 billion that is likely to be lost if this law is adopted.

The communities politicians claim to protect

Every year that politicians delay the inevitable coal phase-out is another year of distraction from genuine alternatives. Every legislative attempt to extend coal operations signals to potential investors that Romania isn’t serious about transition.

The cruel irony is that this law, which will be used in political discourse as protecting coal workers, ensures their continued precarity and prolongs a structural limbo. For some, this has been going on for over a decade. It perpetuates dependence instead of facilitating transition. It offers the illusion of security while postponing the hard work of creating actual alternatives.

Ruling by fear

This coal revival law didn’t arrive in isolation. It was submitted to parliament on the same day as another Burduja initiative: a law to classify hydropower plants as military objectives of national security. Both laws invoke ‘national security’ to bypass environmental procedures in force, protected areas regimes and property law. Both weaponize fear of war, enemies, and sabotage. ‘National security’ has become a new catchphrase that short-circuits democratic deliberation, environmental protection, and transparency.

What about ‘We need coal for grid stability’?

Romania’s grid is already diversifying rapidly, renewable capacity is expanding by thousands of megawatts annually and interconnection with neighbouring countries has improved significantly. Grid stability doesn’t come from clinging to 20th-century baseload thinking, but from diversification, storage solutions, smart grid technology, and interconnections that allow for flexibility and resilience.

The choice ahead

The choice to phase out coal was made years ago, and is justified by economics, climate imperatives, and EU commitments that make this trajectory inevitable. The real question is whether this will happen in an orderly, just manner that supports affected workers and communities or whether politicians will delay until crisis forces chaotic closures without support systems in place.

This draft law offers the illusion of security while guaranteeing instability. It invokes the protection of workers while blocking their access to transition support. It wraps itself in national security rhetoric while undermining Romania’s actual long-term energy security. Finally, it is financially reckless, facing the prospect of having to give back billions of euros in closure aid. If Romania is to stay on the path of prosperity and sustainable development, this law must be rejected.

Empowering communities: Using digital innovation to drive Ukraine’s green recovery

Communities with populations of up to 30,000 people account for around 95% of all communities currently under Ukrainian control. Yet they often remain invisible to major investors, despite being the very places where the country’s resilience is forged.

Communities at the epicentre of change

The Regional Centre for Economic Research and Business Support is a non-profit foundation that works with communities across Ukraine, and we have first-hand knowledge of the local investment and recovery challenges they face. Despite the war, these communities are increasingly taking the initiative. Rather than waiting for solutions from above, they’re independently seeking ways to achieve energy independence and environmental security.

However, showing initiative doesn’t always translate into results. Our recent assessments of municipal capacity and investment readiness reveal a significant gap between the ambition of these communities and their current capacity to effectively prepare projects that meet the requirements of potential donors, particularly the demanding compliance criteria of commercial and international banks.

This deficit is largely due to a critical shortage of qualified personnel and a lack of accessible tools. Local communities simply cannot afford expensive consultants, while state support mechanisms tend to prioritise large-scale infrastructure projects, resulting in local initiatives being overlooked.

Driving results, not just spending

Our view of the current state of public investment management reform in Ukraine is clear: the system must transition from a ‘patching holes’ model to one driven by data management. We welcome the development of Ukraine’s public investment management system – the Digital Recovery Ecosystem for Accountable Management (DREAM) – which represents a significant step forward in transparency. However, for a community project to be considered for inclusion in this ‘showcase’ and to attract investors, it must be technically and economically flawless.

We’ve also identified another systemic challenge: state institutions don’t always have the time or resources to provide communities with high-quality methodological support. To address this gap, we’ve launched the ‘project navigator’ designed to level the playing field, providing communities with comprehensive training in effective project management.

Advantages of an independent tool

Community representatives from across the country are already using the project navigator to organise and guide their recovery projects. First, the tool provides direct access to expertise. Second, as a completely independent tool, it helps stakeholders resolve the problem of ‘information overload’ and filter out unreliable data.

After entering their project data, communities can assess their compliance with basic sustainability requirements in a matter of hours. And the feedback has been unanimous: there’s a huge appetite for a digital solution that not only removes administrative burdens, but also pinpoints areas where projects can be improved. Some of its key advantages include:

Independent and objective: With no political mandate, the tool provides an accurate reflection of a community’s actual readiness – one based on data rather than lobbying.

Enhanced project readiness: Projects developed using the tool are primed to receive high scores in the DREAM system. The tool’s rigorous and transparent feasibility framework results in higher-quality project submissions that stand a much greater chance of being selected for the state’s public investment portfolio and securing funding.

Impact monitoring: The tool enables donors not only to provide funding, but also to track the effectiveness of their investments through integrated monitoring modules.

From strategy to investment

This structured approach allows communities to develop their first green project portfolios. This means local waste management plans and energy strategies no longer just exist on paper; they become fully functioning roadmaps that serve as a credible foundation for securing project financing.

Ensuring that Ukraine’s public investment management reform truly benefits communities requires a far greater collective effort – from the state, its partners, international financial institutions, civil society, and the communities themselves. The success of any recovery project – particularly in the case of Ukraine – should solely depend on the quality of its strategy and the transparency of its plans.

Romania’s gas trap: Fossil fuel expansion threatens clean energy transition

These opposing policy directions have potential economic and environmental consequences. Increased gas consumption would result in higher energy costs for consumers and a rise in greenhouse gas emissions, while undermining government claims of improved regional energy security. Meanwhile, the expensive gas infrastructure currently being built in Romania with public funds will likely become ‘stranded assets’ in a future power market dominated by renewables.

Fossil gas remains the weakest link

The main reason the Romanian government is promoting higher fossil gas consumption is to offset the phase-out of the country’s coal-fired power plants. By 2030, the capacity of combined-cycle gas turbine (CCGT) power plants is expected to increase by at least 3.5 GW (1770 MW at Mintia, 850 MW at Ișalnița, 475 MW at Turceni and 430 MW at Iernut). Although no new capacity has yet been commissioned, some of these projects are already at an advanced stage of construction and could be operational as early as 2027.

In 2020, Romania had close to 4 GW of installed coal capacity. The planned replacement is therefore almost a one-to-one swap, even though the new gas-fired power plants are more efficient and could, in theory, produce the same amount of electricity with almost half the installed capacity. Romania’s strategy does not view renewables as capable of replacing coal facilities. The reality, however, is quite different.

After almost a decade of stagnation between 2014 and 2022 due to cancellation of the domestic Green Certificate scheme, renewables are growing again, albeit at a slow pace. The latest data shows that in 2023 the share of renewable energy reached 25.8% of final consumption, compared to 24.5% in 2020.

While the government is targeting a share of 38.3% by 2030 – corresponding to up to 10 GW of new capacity – this remains below the European Commission’s recommended target of 41%. New capacity, particularly from photovoltaic projects installed in 2024 and 2025, is expected to increase the share of renewables in the coming years, though the rate of growth must accelerate to meet national targets.

Romania’s national energy and climate plan sets a target for renewable power to account for 57.8% of consumption, up from 47.4% in 2023. However, the share of gas in the power sector is also projected to increase, from 20 to 24% by 2030.

Since 2021, when the coal phase-out commenced, coal-based electricity production has declined by 4 percentage points, with wind and solar production increasing by 4.4 percentage points. Gas-fired power generation has remained largely stable, recording only minor variations of 1 to 2 percentage points and no change in installed capacity, with hydropower generation fluctuations dependent on water availability.

The chart below shows that renewables are already replacing coal-fired generation without the need for additional gas capacity. This transition can continue in the coming years, particularly if accompanied by investments in storage and network improvements.

Romania’s power consumption by source between 2010 and 2024 (data source: Transelectrica)

The national energy and climate plan foresees a 12% decrease in primary energy consumption by 2030 compared to 2020. However, it also projects a 60% increase in electricity usage, from 55 to 80 terrawatt-hours (TWh) per year. By contrast, Transelectrica’s network development plan assumes electricity consumption will rise to only 60 TWh by 2030. Therefore, the plan’s projections do not align with expected electricity demand at the transmission level or with overall energy consumption.

If all the gas-fired plants are built and the targets for increasing renewable energy consumption are met, Romania may face overproduction relative to domestic demand. Theoretically, 3.5 GW of the gas-fired CCGT power plants operating at a 64% capacity factor could produce around 19.6 TWh per year, almost 50% more than the national energy and climate plan’s estimate of 13.5 TWh for all the installed gas capacity.

If Romania achieves its renewable energy targets, gas-fired power plants risk operating below capacity and incurring losses, given that clean sources are likely to assume market priority amid an abundance of renewable electricity. In this case, the new gas-fired power plants would likely need to rely on exports to remain competitive or require state aid to remain operational.

Romania has already invested over EUR 800 million from the EU’s Modernisation Fund in gas infrastructure, which risks becoming stranded assets. As a result, the country may increase its own emissions and use precious public funds to support decarbonisation elsewhere.

Domestic consumption or export?

The national energy and climate plan is also askew with projections from Transgaz, the national gas transmission system operator. While the plan foresees a small decline in fossil gas use, Transgaz estimates that consumption could double from 2027 onwards – an increase of over 10 billion cubic metres – under an optimistic scenario in which all gas projects are completed and operate at capacity. Besides electricity, Romania’s gas use in heating is also expanding significantly, with new district heating plants and distribution networks being supported with billions of euros in EU and national funds. Meanwhile, the government is encouraging industry to increase gas consumption, including gas extracted from the Black Sea.

The Neptun Deep perimeter is estimated to produce 8 billion cubic metres per year, which suggests this output alone would not be enough to cover domestic demand. Under these circumstances, Romania would have to import additional gas. Romanian decision makers have promised that Black Sea gas will strengthen regional energy security, with the Commission viewing it as a potential replacement for some of the gas previously supplied by Russia. OMV Petrom has already signed two sales contracts: one with Energocom in Moldova and the other with Uniper in Germany.

Romania evidently cannot double its gas consumption while securing gas resources for neighbouring countries. This raises questions about how Romania intends to honour national and EU commitments and whether it will ultimately become more dependent on gas imports in the future.

A costly pro-industry transition

Beyond the dilemma of ‘energy independence’, increased gas consumption would hinder decarbonisation of the energy sector and make the transition more expensive in the medium and long term, while also raising consumer energy bills.

First, additional gas consumption means more greenhouse gas emissions and higher carbon-allowance costs. From 2029, a carbon tax on buildings and transport is expected to come into force, placing extra pressure on households reliant on gas for heating. At an emission factor of 1.9 kilogram of CO2 per cubic metre of gas, doubling gas consumption would result in an estimated additional 19 million tonnes of CO₂ emissions, roughly twice as much as coal-fired power plants produced in 2020.

Second, gas drives up electricity prices because it often determines the marginal price in the power market. The goal should therefore be to reduce electricity generation from gas and decouple power prices from gas costs, rather than expanding gas-fired generation.

From 2035 onwards, hydrogen is set to be used in Romania’s new gas-fired power plants and within the national gas network once domestic gas resources are reduced. However, a market for renewable hydrogen does not yet exist globally and may never emerge despite all the bold claims and ambitious targets. Additionally, renewable hydrogen is likely to be far more expensive than previously estimated, making it unrealistic to expect it will ever compete with gas on price.

The broader costs of the transition must also be considered. Producing renewable hydrogen requires additional renewable energy capacity (currently not in place) as well as dedicated transport and storage infrastructure, on top of the investments already made in gas-fired power plants designed to consume hydrogen. This pathway is also highly energy-inefficient, given only one-third of the renewable energy produced would actually be consumed in gas-fired power plants.

This approach would also incur significant energy losses and require substantially higher investment than a transition to an electrification-based renewable system, which must be developed in any case. More public funds – impossible to estimate given the scale of investment required – would eventually be allocated to build hydrogen infrastructure and upgrade gas assets for hydrogen use. In practice, the public would end up subsidising the continued profitability of the fossil fuel sector at a much higher cost than a direct transition to sustainable renewables and electrification.

Swift action required

From a societal perspective, an energy transition based on fossil fuels is a losing proposition from the outset. High investment and operating costs, particularly in the context of a hydrogen-driven scenario, mean that gas-fired power plants risk failing to recover their costs, requiring repeated public bailouts. There is also a risk that operators will continue to run on gas, undermining the goal of reducing greenhouse gas emissions.

Romania is over-investing in fossil fuel capacity, far exceeding its estimated consumption needs and renewable energy targets. This risks creating a market where production cannot be fully absorbed, leading to low returns on investment and a net loss for society. At the same time, the country’s push to increase consumption through Black Sea gas prevents the government from keeping its promises of regional energy security.

Romania needs a bold and consistent energy strategy that focuses on renewables, electrification, storage, and reduced energy consumption. This represents a significantly cheaper, faster and lower-emission decarbonisation pathway than parallel investments in gas and hydrogen.

« Previous Page