The International Monetary Fund (IMF) has given a series of recommendations to the Romanian government to reduce the budget deficit, one of which is the “Introduction of a tax on carbon emissions in the transport and construction sectors or additional excise duties on fossil fuels”. The Intelligent Energy Association conducted an impact analysis of the tax and found that at the population level, costs would increase by about 8% for urban households and from approx. 10% for rural households.

What is a carbon tax?

It’s a new tax that will apply to buildings that use polluting fuels and to the use of fossil fuels in road transport, according to the Smart Energy Association.

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A building that uses natural gas emits 0.205 kg of CO21 per year for every kWh consumed, so we have the following situations:

• A 2-room apartment emits about 2 tons of CO2/year
• A 4-room apartment emits about 3 tons of CO2/year
• An average insulated house with an area of ​​about 120 square meters emits about 6 tons of CO2/year

The introduction of a carbon tax in the construction sector, given that the ETS 2023 carbon price is €80/t, will additionally take them out of the pocket of a Romanian living in:

• 2-room apartment, approx. 800 lei/year, i.e. the household will face a 26% increase compared to current natural gas costs, taking into account the capped gas price of 0.31 lei/kWh including VAT, thus the cost of natural gas will reach approx. 3900 lei/year
• 4-room apartment, approx. 1,200 lei/year, i.e. the household will face a 26% increase compared to current natural gas costs, given the capped gas price of 0.31 lei/kWh including VAT, thus the cost of natural gas will reach approx. 5850 lei/year
• residential building, approx. 2,400 lei/year, i.e. the household will face a 26% increase compared to current natural gas costs, given the capped gas price of 0.31 lei/kWh including VAT, thus the cost of natural gas will reach approx. 11,700 lei/year

There will be price increases in the chain

A building that uses wood emits 0.390 kg of CO22 per year for every kWh consumed, so a house with average thermal insulation of approximately 120 m² emits approximately 11 t of CO2/year.

The introduction of a carbon tax in the construction sector, given that the ETS 2023 carbon price is 80 EUR/t, the additional costs that a Romanian living in a house will have to take out of his pocket approx. 4,680 lei/year, i.e. an increase of 48% compared to the current wood costs, taking into account the wood price of 800 lei/m3, accordingly the total cost of wood will reach approx. 14,280 lei/year.

A Dacia Logan car emits 0.116 kg of CO2 per year for every kilometer driven, so approximately 15,000 km traveled on average per year emits approximately 2 t of CO2 per year.

The introduction of a carbon tax in the transport sector, given that the ETS 2023 carbon price is €80/t, the additional costs that a Romanian using a Dacia Logan car will have to take out of his pocket approx. 800 lei/year, i.e. an increase of 12% compared to current fuel costs, taking into account its price of 6.5 lei/l, respectively, the total cost of fuel will reach approx. 7600 lei/year.

But a CO2 tax on construction and transport would raise prices across the chain for all products and services by around 10%, the Intelligent Energy Association also reported.