During the past week, a delegation of the International Monetary Fund (IMF) that visited Romania proposed to the Government the solution to reduce the budget deficit by supplementing taxation, including by introducing a new carbon tax in the transport and construction sectors.
“According to the press releases at the end of the IMF missions, which present the preliminary conclusions after the IMF visit to Romania, the institution made a series of recommendations to the Government to reduce the budget deficit. Among these recommendations is the ‘Introduction of a carbon tax in the transport and construction sectors or additional excise duties on fossil fuels’.
In the situation where the carbon tax would be applied, the expenses at the population level would increase by about 8% for households in the urban environment and by 10% for the households in the rural environment”, claims Dumitru Chisăliță, president of the Intelligent Energy Association (AEI).
“It is a new tax that will apply to buildings that use polluted fuels and to the use of fossil fuels in road transport. A building that uses natural gas emits in a year for every kWh consumed 0.205 kgCO2, so we have the following situations:
– A 2-room apartment emits approx. 2 tCO2/year
– A 4-room apartment emits about 3 tCO2/year
– An average insulated house of about 120 square meters emits about 6 t CO2/year
The introduction of a carbon tax in the construction sector, considering that the ETS 2023 carbon price is 80 Euro/t, would additionally take them out of the pocket of a Romanian living in a:
– 2-room apartment, approx. 800 lei/year, i.e. the household would face a 26% increase compared to the current natural gas costs considering the capped gas price of 0.31 lei/kWh with VAT included, respectively the cost of natural gas will reach approx. 3,900 lei/year
– 4-room apartment, approx. 1200 lei/year, i.e. the household would face a 26% increase compared to the current natural gas costs, considering the capped gas price of 0.31 lei/kWh with VAT included, respectively the cost of natural gas will reach approx. 5,850 lei/year
– house-type property, approx. 2400 lei/year, i.e. the household would face a 26% increase compared to the current natural gas costs considering the capped gas price of 0.31 lei/kWh with VAT included, respectively the cost of natural gas will reach approx. . 11,700 lei/year”, the AEI press release states.
A building that uses wood emits in a year for every kWh consumed 0.390 kg of CO2, and thus, a house of approx. 120 m² averagely insulated emits approx. 11tCO2/year.
By introducing a carbon tax in the construction sector, considering that the ETS 2023 carbon price is 80 Euro/t, the additional money that a Romanian living in a house will take out of his pocket is about 4,680 lei/ year, i.e. an increase of 48%, compared to the current wood costs, considering the wood price of 800 lei/m3, respectively the total wood cost will reach about 14,280 lei/year, AEI claims.
A Dacia Logan car emits 0.116 kg of CO2 in a year for every km driven, so that approximately 2 tCO2/year is emitted for about 15,000 km traveled on average in a year
By introducing a carbon tax, in the transport sector, considering that the ETS carbon price in 2023 is 80 Euro/t, the additional expenses that a Romanian who uses a Dacia Logan car will have to make are around 800 lei/year , i.e. a 12% increase compared to the current fuel costs, considering its price of 6.5 lei/liter, i.e. the total fuel cost will reach around 7,600 lei/year.
“The CO2 tax on construction and transport will bring price increases in the chain to all products and services, which we estimate to be around 10%. In the situation where the carbon tax would be applied, the expenses at the population level would increase by about 8% for urban households and by 10% for rural households. It is worrying that with the application of this tax, according to the estimates, rural households would find themselves unable to pay all their expenses with their current incomes. Thus, even if this tax would reduce the budget deficit, it would cause a significant increase in the poverty level of Romanians. The solution is not to increase taxes, but to reduce expenses,” also said Dumitru Chisăliță.
