Social Climate Fund to help tackle energy poverty in Romania

Between 2026 and 2032, Romania will receive 9.25% (6 billion euros) of the Social Climate Fund’s 65 billion euro financial package. The funding is intended to mitigate the potential negative effects of the ETS2 carbon pricing mechanism on households, especially those at risk of energy or transport poverty.

Romania, which will be one of the largest recipients of funding from the Social Climate Fund (SCF), must use the money for investments that support vulnerable groups and people experiencing energy or transport poverty, according to a report by the Center for the Study of Democracy (CSD), cited by Euractiv.

The funding creates “a major opportunity to reduce the high level of energy poverty recorded nationally, provided vulnerable categories of consumers are correctly identified,” said Andreea Vornicu.

The CSD report, prepared in cooperation with Polish organisation Wise Europe and German organisation Adelphi, highlights the need to direct the funding towards investments that support vulnerable groups. Central and Eastern European countries, including Romania, are identified as requiring special attention because of their high levels of energy poverty.

Households

According to official data from the National Institute of Statistics, 37% of Romanian households were experiencing energy poverty in 2022. One of the most important tasks for the authorities in the coming period will therefore be to identify the most vulnerable groups.

In Romania, for example, some households depend on gas heating. The planned carbon pricing system could lead to additional costs being passed on through energy bills, potentially deepening existing energy poverty. The CSD report estimates that a carbon tax of 70 euros per tonne of CO2 could increase total household expenditure by up to 5%.

The ETS2 system will also indirectly affect other types of households, so “there is a strong need to develop programmes tailored to the energy needs of low- and middle-income households that are vulnerable to any price increase,” says Andreea Vornicu, one of the report’s authors.

Vulnerable groups

Although low-income households are less directly affected because they rely on fuels not covered by the ETS2 system, such as wood, they may still feel indirect effects through increased demand for alternative fuels and higher prices.

Middle-income households, which lack significant economic flexibility, will be directly affected by price changes driven by ETS2. They will need government support to switch to low-carbon heating and implement long-term measures such as building upgrades.

The report predicts that the highest-income households will be affected most in the transport sector, where total expenditure is expected to increase by around 4%.