The draft European regulation establishes the obligation to build CO2 storage facilities at the expense of gas production companies in Romania, reports Asociația Energia Inteligentă. This is a project that particularly affects Romanian manufacturers. There will be new costs that will require the allocation of financial resources on the part of Romanian producers and may cause an increase in the price of gas. If these storage capacities are not implemented, housing prices will rise. See what reasoning.

Why house prices can rise

According to the Association, in the absence of social acceptability for the development of CO2 storage capacities in Romania, Romanian gas production companies will be obliged to achieve such goals in other countries at their own expense. In this way, other countries will benefit from the existence of these capacities created by the Romanians and thus keep their production facilities open for construction materials (eg cement).

At the same time, Romania will close capacity for the production of construction materials (eg cement) due to the lack of capacity to store CO2.

Such a situation, in addition to macroeconomic consequences (closure of production facilities, loss of jobs, reduction of state budget resources, etc.), will also lead to an increase in the cost of housing due to imports. At the same time, the financial participation of companies in such large-scale investments will lead to more expensive financing, as well as risks in covering the costs of CO2 injection activities, in a situation where the mandatory CO2 storage capacity will be implemented, but there will be no infrastructure or demand for its commissioning, which may be reflected in an increase in the price of natural gas.

Romanian companies will undertake most of the development of CO2 storage capacity in the EU

On 16 March 2023, a proposal for a Net-Zero Industry Act was published, according to which the EU must achieve an annual CO2 storage capacity of 50 million tonnes by 2030. The law requires EU oil and gas producers to be the only ones to finance the development of CO2 storage capacity.

With Romania set to become the largest gas producer in the EU, the main task of supporting much of this development of CO2 storage capacity in EU countries will fall on Romanian gas companies.

The concept of the Net-Zero industrial regulation project refers exclusively to the obligations of gas producers to invest this money (approximately 3.7 billion euros for Romania), which will be used to build warehouses in various EU countries. The public opposition that arose in Romania to a single CO2 injection project in Botesti, Arges county, and in this context the “fear” of proposing such projects in Romania, blocks the development of such storages in Romania and the promotion of such investments (with money from Romanian companies) to other countries that have already developed their specific infrastructure and are waiting for the construction of warehouses.

“An exemplary mobilization is needed to change the initial version of this Project”

But the development of CO2 development capacities in other countries creates competitive advantages for these countries and at the same time will lead to the closure of some production capacities of construction materials in Romania, accordingly, Romanians will be put in a situation to buy, for example, imported cement at higher prices, that is, we will witness an increase in prices for housing

In this context, an exemplary mobilization is needed to change the initial version of the draft Law on Net-Zero Industry to avoid a situation similar to the lack of initiative in the case of the European Methane Emissions Reduction Regulatory Project (from the period 2021 -2023), which will provide services to Romanians through negligence and inaction in the field of European institutions.

3 years ago, the draft European regulation on reducing methane emissions went unnoticed in Romania with all the alarm bells raised by the Intelligent Energy Association, making the final document of the regulation a real blow to Romanians. The lack of firm but science-based positions has resulted in the Regulation being pushed ahead of the approval period, which could potentially increase the price of gas by up to 31%.

More than 13 million tons of carbon dioxide enter the atmosphere every year due to cement production in Romania, a country that produces about 15 million tons of cement annually, a combined figure on par with the biggest players in the Romanian market. To combat climate change, the European Union adopted the European Climate Law, which increases the EU’s target to reduce net greenhouse gas emissions by at least 55% by 2030 (from 40% now) and makes achieving net climate neutrality by 2050 a legal obligation.

“The way you approach this topic will determine the difference between a winner and a loser”

Romanian companies from the chemical industry, construction materials, if they do not introduce approx. 1.5 million CO2 by 2030 will reduce their production capacity, leaving room for products that will come from those countries where the industry will reduce carbon dioxide emissions (due to the new EU Regulation, at the expense of Romanian companies).

In this context, it is extremely necessary to pay attention to the following positions regarding European institutions:

• in addition to CO2 storage projects, projects that are essential to the CO2 storage project, such as CO2 capture projects and CO2 infrastructure projects needed to transport the captured CO2, should also be recognized as net-zero strategic projects. to CO2 storage locations.
• not all oil and gas fields exploited by oil and gas producers are exhausted and thus available for use solely for CO2 storage. Therefore, CO2 injection, which may increase the final crude oil recovery rate, should also be included in the Regulation.
• cancellation of obligations and quotas exclusively for the oil and gas sector in proportion to their production will not ensure the achievement of the set goal, but will lead to an increase in gas prices and energy risks.
• the criteria for the distribution of contributions (quotas) from CO2 injection to an economic entity should not be based on oil and gas production during a certain period of time, but should first of all take into account the actual technical adequacy of CO2 storage places from the depleted reservoir portfolio.
• a quota system cannot be regulated unless there is a corresponding market demand for storage. Imposing a storage requirement that applies only to oil and gas producers while ignoring the entire CO2 value chain (eg CO2 capture, CO2 transport) is not proportionate to the stated objective.

Although over time Romania was talked about as a gas hub, an electric hub, a hydrogen hub, etc., in reality none of them had a real chance of being implemented, the only hub that Romania has a real chance of becoming in Eastern Europe is a CO2 Hub, the Association claims. We have depleted gas deposits, we have the ability to move and develop a CO2 capture and transport system.

“How you approach this topic will determine the difference between a winner and a loser,” concluded the Intelligent Energy Association.

Actually, there should be a discussion about ROMANIA – between a decrease in the price of gas or also a decrease in the price of housing?

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