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Will the Romanian Offshore be the Expected Investment Driver for New Energy Projects? 

by Ruxandra Bologa, Emanuel Flechea

Published: February, 2021

Submission: February, 2021

 



With the main goal of the EU being to cut CO2 emissions in order to become carbon neutral by 2050, offshore represents valuable “available space” for the development of clean energy projects. While in some cases offshore is already a crowded place, other offshore locations are still free of significant energy infrastructure. Therefore, planning ahead is more important than ever.


The EU has already acknowledged the potential of offshore energy projects to help Member States reaching their climate goals through the EU Strategy on offshore renewable energy[1] recently approved in 2020. One major item highlighted by the strategy is that achieving the 300-400 GW of offshore renewable energy by 2050 will demand careful planning and identification of the appropriate sites for offshore renewable energy generation, also by assessing the environmental, social and economic sustainability of each project. Although not expressly mentioned in the strategy, existing offshore energy projects need to be considered as well in the grand scheme of things, irrespective of their current stage of development.


Where is Romania in terms of planning of its maritime space?


According to the Maritime Spatial Planning Directive[2], each Member State must draft and submit its national maritime spatial plan with the European Commission by 31 March 2021. Romania implemented the Maritime Spatial Planning Directive in 2016 through Government Ordinance 18/2016[3], thus laying the groundwork for drafting the national maritime spatial plan.


According to the national law, once prepared, the national maritime spatial plan will have to be approved by the Parliament through the passing of a law. Approval by law is undisputedly a process that will ensure the much needed debate, transparency and legitimacy. On the other hand it is to be expected that it will require a considerable amount of time until finally approved. Moreover, once approved, the amendment thereof, depending on how it is drafted, will also require undergoing the same parliamentary procedure, potentially providing limited flexibility for future revisions.


The main efforts so far seem to have focused on the ongoing partnership with Bulgaria[4], the Member State with whom Romania shares the Black Sea coastline. The main goal of the project is to develop a maritime spatial plan for the Romania-Bulgaria cross-border area, focusing on developing the maritime spatial surface and its interactions with the coastal area. Although the maritime border between Romania and Bulgaria is still under debate and a delineation line is not yet drawn, both EU Member States ensured their full cooperation in order to better prepare the Black Sea offshore sector for new investments, in this case by harmonizing the national maritime spatial plans of each state.


Romania has also recently initiated a public tender procedure for the selection of the contractor who will draft the national maritime spatial plan. According to the public tender documentation, the maritime spatial plan must be completed no later than 15 May 2021. Including the period of time required for parliamentary debates in view of approving the draft national maritime spatial plan once ready, it seems that the 31 March 2021 deadline set out under the Maritime Spatial Planning Directive for the submission with the European Commission of the maritime spatial plan will not be observed by Romania.


Why is the approval of a maritime spatial plan an urgent action point for Romania?


In addition to the obvious need to comply with its Member State duties, there are other very good reasons for which the approval of a maritime spatial plan should be a priority for Romania.


First and foremost, such plan would be part of a clear, transparent and predictable legal framework for the planning and permitting of the investments in the Romanian sector of the Black Sea. Given the proven energy potential of the Black Sea, such plan is important for both conventional and renewable energy projects, existing, planned or future.


Secondly, any delays in approving the maritime spatial plan could have an impact on Romania’s ability to meet its target under the Renewable Energy Directive II[5]. It is to be expected that any potential investment in offshore wind projects could be delayed until the plan is duly approved, not only because it is of paramount importance for the actual location of a project, but also because of a potential impossibility to have the project permitted in the absence of an approved plan. Indeed, pursuant to the Draft Offshore Wind Law[6], all offshore wind projects will have to observe the Romanian maritime spatial plan; if the Offshore Wind Law is passed before the law approving the maritime spatial plan and absent any amendment to the current draft, the public authorities in charge of permitting will not be in the position to issue the necessary licenses.


Another key aspect to be considered is that the absence of proper planning could not only impact the development of new energy generation projects, but it would also evidently affect the development of the offshore grid, having circular negative effects (lack of offshore grids or the risk of delay in grid development can represent a significant setback in commissioning new generation projects).


Last, but not least, the legitimate interests and activities of the existing investors in offshore oil & gas projects and those of future investors in renewable energy projects in the Black Sea need to be harmonized. Given that most of the oil & gas concession agreements are still in the exploration phase, identification of fair, practical and sustainable solutions for co-existing with renewables projects is not necessarily an easy task. Be it as it may, the maritime spatial plan will need to take into account rights granted under existing oil & gas concessions, for both legal and strategic reasons. Legally, they are binding agreements which need to be observed by the parties. Strategically, Romania has the privilege of having a rich energy potential in the Black Sea, and the role of natural gas in the transition to a low and later, carbon neutral economy should be carefully considered and exploited.


Conclusion


Concrete steps have been taken by the authorities in order to prepare the offshore area for long-term development and, although not all initiatives are finalized, we can expect substantial changes to the offshore investment framework in the next period. The Romanian Parliament will have a crucial role in finding the most suitable solutions for unblocking investments in offshore renewable projects while preserving and complying with EU principles on biodiversity and rights of existing investors.


 


Footnotes:

[1] EU Strategy to harness the potential of offshore renewable energy


[2] Maritime Spatial Planning Directive


[3] Government Ordinance no. 18/2016 regarding martime spatial planning


[4] Mars Plan


[5] RED II


[6] Offshore Wind Law


 

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