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Sustainable Energy Development

 

This paper is based on the presentation given by the author at the 10^th Anniversary of Romania’s Sustainable Development Forum, organized by the Romanian Academy’s Institute for National Economy on November 28, 2012. It was subsequently developed into an article which was published in the Forum’s Proceedings. The text was submitted during the consultation with the energy experts that was conducted for the Pact for Energy initiative in February and March of 2013, contribution for which ROEC is particularly thankful.

This analysis looks into the sustainability of the Romanian energy sector against the main trends in the world economy and within the framework of the energy and environment policies of the European Union (EU). The gloom and doom conclusion, that sustainable economic and social development is not possible in Romania under current circumstances, is due not so much to the financial crisis, as it is to the absence of significant economic development, numerous and compounded social problems, underfunding and delays in investments. Other problems such as the very big energy losses, ”energy poverty” (very high in Romania), the lowest expenses for social protection in the whole of EU (just 1% of the GDP), dangerous practices such as that of political management of state owned energy enterprises (SOEs), as well as appointing persons without experience and with a low professional quality to management positions, or the dire situation of the urban and rural energy systems aggravate this state of affairs. Some of the constructive proposals include setting up an Institute for Strategic National Planning and a Ministry for Energy and Resources; merging the energy strategy with the environment one in a joint and coherent document; creating a national priority program for the energy rehabilitation of residential and public buildings; and drafting a national policy for urban energy, cogeneration and district heating.

1. Global constraints

The world has always been complex: numerous factors (endogenous, exogenous, circumstancial and enduring ones) have determined reactions, connections and influences, modifying humanity’s evolution for better or worse. Conflictual situations, natural catastrophies, climate change were not absent. The complexity of the living world is the consequence of the evolutionary process that takes place in circumstances that lack equilibrium [1], where survival implies adaptability to new factors and its success belongs to those who master innovation and intelligence.

The threats of the world we are living in are multiple, interdependent, having started thousands of years ago and intensified latetly, when a certain degree of awareness has developed towards them. Here are but a few factors that endanger life on Earth, factors which were originally generated unconsciously by man, in his endeavor to meet his basic needs, normal or exagerated: excessive agriculture, which depleted the soil; endangerment on the verge of extinction of several species of animals, birds, fish, plants due to the changes in their natural habitat; deforestation; population growth with its increasing pressure on the environment; development of industry, transportation, urban and rural settings with multiple ecological effects; the growth and diversification of global energy consumption applying constant pressure on primary energy resources, themselves unequally distributed; increasing difficulties regarding access to usable water resources; air, water, soil, and subsoil pollution; the growth of regional disparities (between developed and developing countries) and social disparities (between rich and poor); major climate change and the process of global warming, caused particularly by greenhouse gases (GHG); increased difficulties regarding access to food, medical assistance and education in certain regions of the world; social tensions, wars, and more recently, the development of terrorism as brutal solutions for resolving conflict situations caused by economic and social inequalities, and religious differences [2].

Next to wide ranging phenomena such as the high rate of the global population growth, the associated and inevitable increase in energy consumption, decline of mineral resources and the resulting reality of a worrisome environmental degradation, accompanied by global warming, the contemporary society is confronted with a triple problem – economic and demographic growth, energy and resource consumption, conservation of the environment – in other words, the world faces today a trilemma without precedent [3].

Energy is a product with a great economic, social, strategic and political value. It is indispensable for the entire economy of a country, for industry, services and social activities alike. Lack of access to energy has big consequences, whereas the strategic and political role of energy was clearly emphasized in the last 30-40 years by the various oil crisis, regional conflicts, that degenerated in wars, serious energy accidents, social tensions and energy policy errors in certain countries.

Four specific characteristics of the energy sector are worth mentioning: first, it is characterized by great inertia, with a 4 to 15 years time difference between decision and implementation; secondly, next to the transportation sector, energy is the main contributor to environmental pollution and climate change; thirdly, energy requires considerable investments, oftentimes very difficult to obtain; fourth, the existenace of a proper institutional and legal framework is absolutely necessary, alongside a medium and long term energy strategy, accompanied by national energy policies and instruments of a free economy [4].

2. Sustainable development and energy

Ecology and economic development were considered for a period antagonistic, but after the 1992 Rio de Janeiro Conference, the concept of sustainable development was adopted as an essential syntagm, based on the possible complementarity of economic and ecological solutions for human development [5].

Economic development and environmental protection can be compatible within the framework of sustainable development, a concept strengthened under the United Nations Organization’s aegis beginning with the Brundtland Report (1987). Sustainable development is a constantly evolving process aiming to improve the economy, society and the environmental conditions for the benefit of the current and future generations [6]. This definition, broader than the one offered by the Brundtland Report, emphasizes the complexity of the decisions that law-makers, governments and the entire civil society are faced with and suggests the measures that have to be taken in order to create an inhabitable world.

When committed to by a country, sustainable devlopment assumes fulfillment of the following objectives: general social progress, while addressing the needs of each member of society individually; efficient environmental protection, arrest and control of global warming and climate change processes; ensuring a high and stable level of economic growth, and implicitly, workforce employment [7].

Over the last 30-35 years, the evaluation of environmental problems has recorded a worsening of environmental conditions. The discussion went successively though the following stages: at first, it focused on environmental pollution, it then centered on GHG and especially CO₂; subsequently, the existence of global warming was proved by the incidence of climate change effects; and lately a series of ecological disasters have occurred. The approach to environmental problems in this period has changed successively from environmental pollution to the influence of GHG, then global warming, continuing with climate change and lately focusing on the ecological catastrophes [8].

Over the same period, the general context and regulatory framework have changed fundamentally. Until the 1990s, the general preoccupations referred almost exclusively to energy, only later has the energy-environment dichotomy emerged; nowadays, the two major factors have switched places becoming environment-energy which will likely make room over the next decades for only one controlling factor, the environment, as shown in Figure 1. The conclusion reached was that the Earth’s temperature should not increase by more than 2^oC compared to the 1990s, when the average Earth temperature was 14^oC. Today, this value is almost 15^oC and there is a general preoccupation to cap this growth. The main cause for global warming is the GHG emissions, especially CO₂, resulting from energy and industrial activities.

The economic costs of climate change and the economic advantages of early and decided actions to control these changes were analyzed in the well known report of the British economist Lord Nicholas Stern, published in October 2006 [9]. The global economic losses stemming from climate disasters doubled in the past 20 years, reaching approximately EUR 8.5 Billion annually. The Stern Report estimates that without future action to limit the GHG emissions, the damages caused by climate change will lead to a global GDP reduction of 5 to 20% per year. If not stopped, climate change can lead to the risk of destroying all economic and social activity at the end of this century, on a scale similar to the transformations caused by the two World Wars and the economic recession of the 1930s. In contrast, the benefits of prompt action to reduce the emissions far outweigh its costs, while early action is least costly. If stabilization of the GHG concentrations starts now, at a level that shall not lead to dangerous consequences, the cost of these actions would reach aproximately 1% of GDP per year.

Sustainable energy development represents that development model which maximizes the societal long term well being, while simultaneously maintaining a reasonable dynamic equilibrium between security of supply, competitiveness of energy services and environmental protection, as a response to energy industry challenges [10].

The instruments of a sustainable energy policy are:

• diversification of energy suppliers, including increased utilization of renewable energy sources;
• increased energy efficiency, reduction of energy losses;
• progress in reducing energy’s impact on the environment;
• building a strong and modern industrial structure, with less polluting and more energy efficient technologies;
• improving the competition framework and the functioning of energy markets.

Like in the case of any ecological phenomenon or process, economic or social, sustainable energy development too has a number of uncertainties, which can be grouped in six categories [7]:

• technological uncertainties: technology itself, the links between technology and infrastructure, availability of alternative technological solutions;
• resource uncertainty: quantity and availability of energy, financial and human resources;
• competition uncertainty: regarding the actions of present and future competitors, as well as the effects of these actions;
• uncertainty of supply: regarding the opportunity, quality and price of supplies;
• consumer uncertainty: regarding the clients’ preferences and characteristics, as well as the evolution of demand;
• political uncertainty: deteremined by lack of clarity, uniformity and even regulations, or changes in government behaviour and legislation;
• future uncertainty: predicting the future is difficult, unforeseen events can play a major role, even the brightest minds can be wrong, while technical inventions can change everything [11].

3.The European Union policy for sustainable energy development

The European Union, one of the world’s most industrialized regions, is competing with countries from North America (U.S.A. and Canada) and from East Asia (Japan, South Korea, China). Energy is the main factor that conditions EU’s development and economic competition. The major problems that energy raises within the EU refer to: choice of energy sources, security of primary energy supply, the pressure exerted on the environment, the evolution of the oil price, and functioning of the energy market.

The European Commission’s „Green Paper – towards a European strategy for a secure energy supply” (published in 2000 and finalized in 2006) analyzes the present energy situation of the EU, subsequently (in 2006) this document was approved as the EU’s energy strategy until 2030 [12].

The EU’s energy policy [12] is based on the concept of sustainable development and defines three main objectives:

Durability:

• development of competitive renewable energy sources and other sources as well as energy carriers with low carbon emissions, especially alternative fuels for transportation;
• reduced energy demand in Europe;
• channelling global efforts towards combating climate change and improving air quality at a local level.

Competitiveness:

• ensuring that consumers and the economy as a whole benefit from energy market opening, stimulating investments in clean energy production and energy efficiency;
• lessen the impact of spikes in international energy prices on the EU’s economy and its citizens; keeping Europe’s leadership position in the field of energy technologies.

Security of supply:

• coping with EU’s increasing dependency on imports through:
• an integrated approach, combining demand reduction, energy mix diversification with greater utilization of domestic energy and competitive renewables together with import sources and supply route diversification;
• creating the framework that would stimulate adequate investments to respond to growing energy demand;
• strengthening the EU’s means to deal with emergency situations;
• improving the conditions allowing European companies to access global resources;
• guaranteeing access to energy to all citizens and enterprises.

In March of 2007, the European Council approved the “Integrated strategy for energy and climate change”, the strategic objective of which is to reduce the GHG emissions (especially, carbon dioxide) by 20% until 2020, compared to the reference year 1990 in order to limit the effects of global warming to 2°C in comparison to the pre-industrial era temperatures (the 1900s).

The European Union through its 2009 legislative package of energy-climate change directives has adopted the following targets in the energy-environment field:

• to reduce energy consumption by increasing energy efficiency up by 20% until 2020;
• to increase the share of renewable energy sources (RES) in the EU’s gross energy consumption to 20% by 2020;
• to increase the share of electricity produced from RES to 22% of total consumption in 2010;
• to increase the share of biofuels in transportation to 10% by 2020.

Within the 20-20-20 targets of the EU’s legislative package, Romania has specific objectives, such as increasing the utilisation of RES from 17.8% in 2005 to 24% in 2020, reducing the GHG emissions for big polluters by 21% and, in the spirit of equity between member states, the permission to increase the GHG emission by 19% for small polluters. It is considered that the 20-20-20 targets of the legislative package pose great difficulty even for EU’s developed countries, consequently being extremely difficult to achieve for a country like Romania, with an emerging economy.

Against the background of the economic and financial crisis triggered in 2007, it was concluded that the Lisbon Strategy, launched in March 2000, did not reach the objectives set for EU development; in this context, the Strategy Europe 2020 was proposed for the 2010-2020 decade, with new forms of economic development while maintaing the 20-20-20 targets for energy and climate change [13]. A new number of Directives were issued (the 3^rd Energy Package, energy performance of buildings) or recently approved (the Directive for energy efficiency, 2012/27/EU, meant to recoup the lags in this field), while other long term documents are under preparation (Power Perspective 2030, Roadmap 2050, the last document projecting an energy sector characterized by security of supply, competitiveness, decarbonisation, and a 80-95% emissions’ reduction).

Two important elements deserve a special attention: on one hand, the EU’s main instrument to combat climate change is the energy policy, while on the other hand, looking forward, the next decades will most certainly be dominated by the challenge to develop an energy efficient economy, with reduced carbon, competitive and with a secure supply [15].

4. The situation of the energy sector in Romania

Romania has adopted the fundamental concept of sustainable development in a series of declarations and official documents, while as a EU Member State it has obligations that derive from the reflection in the national policy and legislation of the Integrated Strategy for energy and climate change, elaborated by the EU, with the startegic objective of reducing the GHG emissions (and especially CO₂). There are however numerous experts who believe that, to a great extent, the Romanian energy setor is not sustainable, situation which is linked to the fact that the energy sector did not receive, for a long time, the due attention appropriate for a strategic infrastructure, that over a long period its evolution was mostly inertial, that the late restructuring of this sector started and was conducted mainly at the pressure of international organizations and financial institutions, leading to the compounding of a great number of unfavourable and unresolved aspects today [4, 8, 14].

In 1990, the former State Planning Committee was broken up, considered to be a structure specific to a centralized, command-and-control economy, and was not replaced by anything until today.

An important cause of the chaotic development of the Romanian economy and society, a process that beginning with 2009 has deepened into an alarming social and economic decline, is the lack of such an institution with permanent activity. As a rule, it was susbtituted with ad-hoc measures and proposals, with political government programs of an electoral nature, which due to the power rotation, did not have any continuity or significant practical relevance. In this context, the different sectorial strategies, including „Romania’s energy strategy for the period 2007-2020” represent official documents that lack coherence, since they do not have a common national foundation.

In 2007, the goverment has approved the National energy strategy for 2007-2020, an important document at the time it was produced, but in urgent need of special ammendments, in part due to the new EU regulations in the field of energy and climate change, the elaboration of the Europe 2020 strategy and the EU’s Energy strategy 2011-2020 immediately aferwards, and on the other hand, the grave effects of the economic and social crisis, that brought and continue to bring considerable damages to Romania.

Due to numerous other factors, sustainable economic and social development is not possible in Romania. This fact is due as much to the financial crisis, as it is to the absence of significant economic development, the high degree of foreign debt, numerous social problems, underfinancing or delays in investments, the high number of the European Commission’s warnings regarding the delays of various committments, including the ones in energy and environment, reflecting this state of affairs.

The energy losses are very big and stand at 30-35% of energy consumption (20-25% in industry, 40-50% in buildings, and 35-40% in transportation). Energy efficiency, and its opposite, energy inefficiency, expresses the level of proximity or distance towards internationally accepted standards in final utilisation of energy. The major sources of energy inefficiency, and accordingly energy losses, show up in materials, appliances, equipments, technologies, due to their low quality, but also in the behaviour of energy users. Energy intensity, expressed in energy consumption compared to a unit of GDP, is three times higher then the EU average, our country being one of the most energy intensive in the EU. In Romania, consumer information and education for energy savings are very low.

In its simplest from, the bill of a consumer is the product of a unitary energy price and the quantity of energy consumed. While there have been numerous disputes related to the price of energy, the preocupation for reducing energy consumption was insignificant.

The energy market, which opened up gradually to competition starting with the year 2000, did not record any real competition and transparency until July 1, 2007, the date of its full opening. There have been, and continue to exist, important long term contracts, especially with Hidroelectrica (the

’cheap energy’ producer), obtained in a preferential manner, with political support, which lead to considerable and unearned profits, to the detriment of the national interest and in favor of private suppliers and interest groups.

„Energy poverty” defined as the share of a family’s revenues that covers a decent cost of a household’s energy consumption (electricity, heat, natural gas, transportation) is very high in Romania.

While at EU level, this indicator is 18-20%, in Romania it is over 40-50% taking into account the low monthly income of the inhabitants (16% have monthly revenues of over 2000 lei, 34% have between 1000 and 2000, and 50% have below 1000 lei).

Romania has the lowest expenses for social protection in the whole of EU, just 1% of the GDP. In the past 20 years social protection was exercised by means of low energy and fuel prices through price regulation. This policy, used for too long, inflicted important economic and financial prejudices on energy suppliers, while international and European financial institutions asked explicitly to end it. In the last couple of years, a dangerous practice has spread – that of political management of state owned energy enterprises (SOEs), as well as appointing persons without experience and with a low professional quality in management positions with all the negative consequences that stem from it.

The urban energy system is the most deficient subsector of energy, while the rural energy systems which affects practically half of Romania’s population is next to unaddressed in official documents. There are 80,600 residential multilevel buildings, designed and built for centralized distribution of thermal energy, with cca. 3 million apartments and 7 million inhabitants, that have huge energy losses. Of these, less than 3% are thermally rehabilitated. In general, the thermal energy centralized distribution systems (sistemele de alimentare centralizată cu energie termică (SACET) of residential areas have considerable difficulties: of 251 operators in 1989, today there are only 80 active operators, most of whom in bankruptcy situations; individual heating with apartment thermal units and disconnection from centralized heating systems was officially encouraged. The system was based on subsidies for the heating fuel and social protection measures for residents; cutting back the subsidies resulted in a 30-50% jump in the value of thermal energy bills. This subsector (where four ministries and two regulatory authotities were involved, but without any coordination and clear responsability) evolved in the direction of dissolution, contrary to European policy, which repeatedly asks that efficient cogeneration and energy modernization of buildings (including public ones) be promoted.

Particularly after 2009, the regulatory authorities in the energy field lacked autonomy and financial independence, being subordinated to the Government (ANRE, ANRSC, CNCAN) or practically terminated (ARCE), fact which drew severe warnings from the European Commission urging Romania to remedy these disfunctionalities.

To the above mentioned aspects one must add: the chronic underfunding of investments; the still very high environmental impact of energy, especially on compliance of coal-fired thermal power plants with environmental requirements; deficiencies in the legal and institutional framework, especially with respect to stability and predictability; delay of an analysis and a responsible decision on continuing the nuclear program; the reduced utilization capacity of the European structural funds for energy and environment; abuses and crimes in certain activities of the energy field; research, development and innovation in the energy sector are not financed, having fallen to a very low performance level, while the specialized personnel is not stimulated and far from numerous.

5. Proposals for a sustainable energy strategy

In the field of sustainable energy development, the World Bank recommends [16] the adoption of the following definition: an integrated energy strategy represents a set of interdependent measures that direct the energy sector towards the most efficient, equitable and compatible with the environment resource utilization. The strategy requires decison-making for production, transportation and supply, and, on the demand side, for sector structure, institutions, legislation and regulations, property form, financing, fuel availability (coal, oil, natural gas), utilization of renewable energy sources, availability of technologies, the end users’ market structures, pricing policy, social protection, standards, service quality, the impact on the environment, etc.

After 1989, the notion of strategy in Romania has devalued and its importance was minimized, in the sense that each field of activity came up, relatively frequently, at various intervals (generally, within the framework of different governmental mandates) with sectoral strategies, but never have these sectoral strategies been pursued in practice, on one hand, while on the other hand (and which is far more serious) they have never been assembled in a national economic and social policy. Consequently, the sectoral strategies did not have a common basis for reference and correlation and did not produce any notable effects.

In the direction of the above presented facts, the following are deemed necessary [4, 14]:

• the proposal to set up an “Institute for Strategic National Planning” as a non-political institution, subordinated to the Romanian Parliament, whose main role shall be to eloborate proposals and follow Romania’s social and economic development strategies, in correlation with the support capacity of the natural capital in the medium and long term, coordinating the interdependent sectoral programs and assuring the coherence of the governmental programs and of those with national, communitary, and international financing. The complexity and difficulties of the current period, and especially the future one, which is key for Romania’s sustainable settling in within the community of the EU Member States, categorically calls for the creation of an institution specialized in strategic national planning, a free market institution capable of finding an equilibrium between national interest, the high and mandatory EU standards and the obstacles of the economic and financial crisis that we are currently going through. I emphasize again that the utility of such an institution depends directly on the quality and professionalism of the employed personnel, since the people represent the main source of and chance for Romania’s progress. The lack of such an institution is likely to further aggravate the present economic and social situation of a country, in which the energy-environment sector plays a vital importance, that of strategic infrastructure.
• The proposal to urgently set up a “Ministry for Energy and Resources”, as an institutional governmental structure responsible for the elaboration of the national energy strategy, policies, tools and mechanisms in the field of primary energy resources, including renewable resources, import of resources, efficient energy production and utilization, energy’s impact on the environment with the goal to ensure national energy security, sustainable energy development and the affordability of energy costs. In 1990, the former Ministry for Electric Energy (Ministerul Energiei Electrice) was closed and all the activities of the energy sector were introduced as departments or general directions in the Ministry of Economy and Resources (Industry, etc.). After that, energy in terms of representation within the Government, did not constitute a priority and received little attention, which had important economic and social consequences. Compared to energy, the “Transportations” and “Communications” sectors were recognized as institutions representing infrastructures in the entire period after 1990, and entered as such in the Government structure. The major problems facing the energy sector today (restructuring, big energy losses in the residential, transports and industry sectors, thermal energy supply of communities, energy market deficiencies, energy’s huge impact on the environment, reduced sources for investments, lack of qualified human resources and others) make it presently unsustainable and this is largely due to the absence of an adequate institutional framework.
• The Government should merge the energy strategy with the environment one in a joint and coherent document, focused on the requirements of the EU’s legislative package. Departing from the obvious acknowledgement that the energy and environment fields represent national priorities and do not have a political color, the strategy should be adopted as law in the Romanian Parliament, in order to confer it more authority, stability and predictability, and it should be accompanied by a long term agreement of support, accepted by the political parties (for reference in this sense, one can look at Denmarks’ example). Because the energy and environment problems are found in all fields of activity, it is important to designate a sole national coordinator to monitor the completion of the strategy’s targets.
• The practice of appointing to top management positions persons without any experience in the field and often without proven managerial qualities, just on political grounds (based on party affiliation) has spread very much during the last couple of years at agencies, authorities, national commissions, as well as state-owned commercial enterprises in the energy sector, and takes place usually after the general elections. This practice, in a sector so important for the Romanian economy and society, faced with intense modernization processes under the pressure of European Directives, cannot have but serious negative consequences amplifying the difficulties through the lack of experience and professionalism of decison-makers.
• Special attention will have to be devoted to the reduction of carbon dioxide emissions and other GHG (20% target). In this sense, the actions of the government will have to concentrate on diversifying the domestic and foreign sources of natural gas supply used for ultra-high performance energy solutions (combined gas and steam cycles, high efficiency cogeneration), ensuring the compliance of big and small polluters with environmental norms. The very high investment requirement (on the order of 23-25 Billion EUR until 2020) will have to be covered mainly by the private sector and via public-private partnerships (PPP) by promoting a stable, attractive and predictable legal framework, by privatizing, and by means of private management at the energy SOEs. The completion of the pilot CCS program started at the Rovinari themal power plant in Romania is of special significance.
• Increased energy efficiency and reduced final energy consumption (20% target) are a priority objective, especially in the context of the new Energy Efficiency Directive 2012/27/EU, which meets all the requirements of the energy-climate change legislative package. Therefore, the following main measures are deemed necessary: a) improving the legislative and regulatory framework; b) facilitating the conditions to execute rigurous energy audits for all consumer categories; c) solving the fundamental problem of heating in urban agglomerations by reconsidering the advantages of high efficiency cogeneration/trigeneration and centralized heat/cold supply; d) setting up again and consolidating the role of the Romanian Agency for Conservation of Energy (Agenţia Română de Conservare a Energiei, ARCE) in promoting and monitoring the national energy efficiency programs; e) promoting voluntary agreements for efficient energy consumption in the industrial sector; f) eliminating the difficulties in financing energy efficiency projects, including a better utilization of European funds.
• The creation of a national priority program for the energy rehabilitation of residential and public buildings, taking into account that the buildings’ sector represents over 40% of final energy consumption at national level. Accelerated financing of the costs of the buildings’ energy rehabilitation is a fundamental problem and, considering the low revenues of residents, a solution will have to involve the State. According to the new regulations, the local authorities will have to finance from their own budgets the energy modernization of 3% of the public buildings each year.
• Promoting the use of renewable energy sources – RES – (the 20% target) represents a mandatory national objective of Romania which stems from the Directive 2009/28/EC. Three major sectors are targeted by the RES field: electricity, heating/cooling and transportation, if compared to the final gross energy consumption. Romania in particular has to secure a growth of RES utilization from 17.8% (in 2005) to 24% (in 2020). A special attention has to be given to the application of Law 220/2008 and 139/2010 concerning the support and promotion of the RES use, and especially, elaborating the support schemes for heating/cooling processes, as well as eliminating the social, institutional, legal, psychological, and economical barriers in utilization of these energy sources.
• The cogeneration and district heating situation in Romania is particularly serious and very close to a general economic and social breakdown. The vast majority of the existent cogeneration plants is uneconomic, with exceeded lifespans, subsidized, have considerable financial difficulties and are below European norms. Romania must urgently draft a national policy for urban energy, cogeneration and district heating. Due to the economic importance, social and environmental impact of this energy subsector, it is necessary to have a unitary coordination of various central institutions and to establish the responsibilities of central and local authorities. The regulatory problems regarding thermal energy currently the realm of the National Regulatory Authority for Public Services and Utilities (Autoritatea Națională de Reglementare pentru Serviciile Comunitare de Utilități Publice, ANRSC) must come back to ANRE for a coherent and unitary policy. It is mandatory to promote high efficiency cogeneration, according to EU regulations. Recommended modernization solutions could be concessioning (with considerable investments) the urban cogeneration systems and district heating and attracting private investments in the construction of new high efficiency cogeneration plants.
• It is necessary to consolidate the National Energy Regulatory Authority (ANRE)’s autonomy, competences, financial independence and decision-making, professionalism and process of appointing personnel in accordance with the provisions of the 2009 Third Energy Package Directives. Justified measures would be the ones that seek: a) to correct the regulations concerning cogeneration, regulated prices for electricity, heat, and natural gas; b) the control, transparency and ethics of the energy market; c)to regulate the introduction of the binomial tariff for thermal energy and natural gas; d) to separate the establishment of the energy costs from the social protection system, thus ending social protection through the price of energy.
• Continuing the development of the Romanian nuclear program represents an alternative to reducing the GHG emissions and increased prices of fossil fuels. The completion of units 3 and 4 of the Cernavoda NPP has to be correlated first of all with the EU requirements for nuclear safety. It is necessary to secure a firm financing scheme, because now the financing is delayed and uncertain. Romania has the obligation to secure the autonomy and independence of the National Commission for Control of Nuclear Activities (Comisia Naţionala de Control al Activităţilor Nucleare, CNCAN) as the regulatory authority in this field.
• The social protection system has to be urgently reviewed, taking into account the major impact of the energy bills on the residential consumers. The current system is fragmented, spread-out, practices multiple subsidies, and most importantly does not address the poor. A series of measures are recommended including: a) implementing a unitary social assistance system for energy in order to improve the affordability of the energy costs to categories of vulnerable consumers (defining the vulnerable consumer); b) separating in a clear manner the competences and responsibilities of ANRE from those of the Labor and Social Protection Ministry; c) designing a policy concerning the interaction between tariffs, poverty and energy use; d) setting up a way to increase energy tariffs as a result of price hikes for natural gas, developement of RES and internalizing the costs for GHG emissions (especially CO₂).
• It is necessary to create a national organism for managing the energy-climate change package from the point of view of reducing the GHG through the emission trading scheme (ETS) for the big polluters and through non-ETS means for the small polluters (constructions, transportations, agriculture, waste). Although the GHG emissions are a result of the entire economy and of all the sectors of activity, a unitary and efficient record and coordination does not exist. Internalizing the emissions’ cost of the big polluters post-Kyoto is an important aspect (respectively the increase of the power price produced by the thermal PPs after 2013, following the expiration of the Kyoto Protocol).
• Research-Development-Innovation (RDI) became a force of economic progress nowadays in the world. The global RDI expenses doubled over the 1996-2007 period while in Romania these are underfinanced (below 0.2% of GDP), our country occupying one of the last places in the world in this respect.

Given the objectives of the Europe 2020 Strategy it is absolutely necessary to update the National Strategy for research-development-innovation and place it within the economic realities and the future evolution of Romania. An adequate RDI financing should be secured at a minimum level of 1% of GDP (from the national budget) plus 2% of GDP (from the private sector). The sectoral Energy Strategy should be framed within a National Strategy and open to all entities on objective criterias, with a clear target of stimulating the personnel.

Romania must conduct its RDI activities within the EU Plan for Strategic Energy Technologies (SET-Plan), conceived along six priority initiatives (wind energy, solar energy, bioenergy, CO₂ capture and sequestration, smart grids, sustainable nuclear fusion).

The International Energy Agency (IEA) in its 2006 World Energy Outlook of November 2006 published a broad study [16] on the energy market reform, energy policy and projections for the energy sector’s future. Two visions of the world’s energy future are explored: an energy sector that is underfunded, vulnerable and dirty and one which is clean, intelligent and competitive.

From the very beginning the analysis sends a true warning signal: “The future of the energy we are building today is unsustainable. If we continue down this path, the energy supply that has to meet the demand of the global economy for the next 25 years will be much too vulnerable and exposed to failure due to underfunding, environment disasters and energy supply cut-offs”.

For the purpose of this analysis it is useful to present the first ten extreme global trends in world energy [17]:

1. We can run out of energy. If new abundant sources of energy will not be found in the next 25 years, the new global energy demand of each nation will surpass production. Less energy will be an obstacle for GDP growth.
2. Democracy is endangered. Energy terrorism may become a future weapon that will threaten democratic reforms, individual rights, global peace and security.
3. Energy, being linked to all the vital services such as health, food, transport and trade, will be a key vector of the future global economy.
4. The world’s dependency on oil will have to cease. Clean renewable energy sources such as solar, hidrogen, nuclear fusion and wind energy will be essential for future prosperity.
5. Foreign oil is politically risky, expensive and uncertain as a fuel for the long term future.
6. The new energy innovations must attract billions in investments. Economic growth and productivity will decrease, unless new, non-oil dependent energy solutions are invented.
7. Pollution caused by fossil fuels will determine a growth of the future public health risks posed by, for instance, global warming.
8. Energy security will become an explosive battle of the 21^st century that will open up a new era which will be either one of global cooperation or one of conflicts.
9. Nations will rise or fall depending on their access to future energy supplies. New economies such as China and India will compete with the U.S.A. and Europe in a new battle for geopolitical power.
10. New innovations in energy will revitalize the global trade, will create new industries and will create new jobs.

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Aureliu Leca is Professor Emeritus at the Bucharest Polytechnic University, Faculty of Power Engineering, Energy Generation and Use Department. With a PhD in thermal power plants from the Bucharest Polytechnic Institute, he is a Founding Member of the Romanian Academy of Technical Sciences. A Fulbright fellow in nuclear engineering at the University of Florida, Gainesville (1968-69), with a teaching career spanning over four decades, professor Leca was a member of the Council of Energy Advisers for the President of Romania (1997-2000) and held top management positions in academia (e.g. Vicedean of the Faculty of Power Engineering between 1972 and 1981), the public sector (as State Secretary and Head of the Energy Department in the Ministry of Industry and Resources, 1990-91), consulting (as president of Bossard-Consultants from 1994 until 1997), the energy sector (President and Director General of RENEL during 1990-1993 and 1997-1998), and professional bodies (twice president of WEC-Romania between 1990-1993 and 1997-2004). Aureliu Leca was a Senator in the Romanian parliament (2000-2004) and the head of the UNESCO Chair for Engineering Sciences, Program for Energy-Environment, at the Polytechnic University of Bucharest (1992-2010). He was awarded by the President of Romania with the National Order „The Star of Romania”, in grade of Knight (2000).

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