“ROMANIA – DEVELOPMENT STRATEGY” CONFERENCE Gheorghe Piperea: “Climate regulations can lead to a contraction of the economy” – 25.04.2024

Climate regulations and European directives regarding CO2 emissions may lead, in the future, to a contraction of the economy and trade, especially in the area of ​​the chemical industry, where companies bear very high costs for meeting climate objectives, says lawyer Gheorghe Piperea.

“We have a trade deficit of 14 billion euros, namely the difference between how much we import and how much we export, and if we look at last year’s trade deficit, which was 33 billion, we notice that this chemical deficit represents half of the trade deficit of Romania. It is absolutely unbelievable and I don’t see how we can overcome these industrial deficits, especially in the chemical and petrochemical industry. Also, due to the European regulations regarding the climate transition, companies in the field bear very high costs.”

Also, he is of the opinion that these directives and programs regarding carbon emissions should be adapted to Romania’s needs and should not be imposed by the European Union.

“I saw some extracts from a World Bank report that said that Romania, in order to implement the Net Zero Program, which is established by a European regulation, will have to spend 1.9 trillion euros until 2050. In accordance with the Treaty on the Functioning of the European Union, competences are shared between the European Union and the member states of the European Union. Personally, I have not seen a single situation in the last seven or eight years in which Romania give their opinion on these regulations regarding the climate transition, which come in enormous installments. Based on the principle of subsidiarity, Romania should give its opinion,” the lawyer added.

Regarding the effect that the directives of the European Union have on the companies in our country, Gheorghe Piperea is of the opinion that, in order to be in compliance with the requirements of these directives, the companies will be subject to very high costs in order to be able to report the developments regarding climate objectives, which will lead to an increase in the price of finished products.

“European Union Directive 2022/2464 related to financial and non-financial corporate reporting, which now also includes environmental reporting, was presented to us, but what companies need to know is that a minimum of 50% of them, regardless by the number of employees or turnover, they have to deal with this environmental reporting. Companies have to report what efforts they are making for these climate transitions. This means a lot of paperwork, a lot experts and consultants who are very expensive. It’s about a lot of experts and consultants who are very expensive. One thing is certain, if these costs will increase, they will not be supported from public funds and it is not good for this to happen either, but they will be borne, in a first phase, from company funds or from bank loans, and the costs of these reports will be found in the price of the finished products on which, in a one way or another, we will buy them”, emphasizes Gheorghe Piperea.

He is of the opinion that the increase in the price of finished products will lead to a decrease in consumption, which will produce a chain effect that, in the end, will lead to a contraction of the economy and a reduction of revenues in the state budget.

“People will have no way to avoid consuming the products, which means that if the shelf price of a product will be 10 lei more expensive than what consumers were used to, they will have no choice. They will have 10 lei less , however, in the long term, this increase in price will make people avoid consuming the product in question. This means a reduction in production, a reduction in jobs, a reduction in VAT and excise duties on the state budget, it means some extremely serious consequences in the chain, which they will lead to the contraction of the economy and, obviously, they will lead to the contraction of budget revenues,” the lawyer added.