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Market News

 April 17, 2007
Romania: Environmental Market

 The environmental market is unquestionably increasing in Romania. This evolution can be attributed both to the general concern for environment protection at the global level and to the European Union integration process -- and resulting higher environmental standards- that Romania is obligated to follow.

Romania had to commit to specific obligations regarding environment in order to become a European Union (EU) Member State. While successful in achieving admittance to the EU in January 2007, it must now continue the improvement processes in all agreed areas in order to reach the EU standards. The main scope of this report is to identify the major key topics and opportunities on the Romanian environment market that could be exploited by the companies active in this sector and willing to offer products and services here.

Market Overview

Romania needs investments totalling US $38 billion to implement EU environmental protection standards by 2018, when all transitional periods negotiated with the EC will expire.

The investments are planned to be made in the following sectors:

Air Pollution Control

Romania was the first country among the developed and in transition countries that has been included in the Annex I of United Nations Framework Convention on Climate Change. It ratified Kyoto Protocol and committed itself to reduce the greenhouse gases emissions with 8% in the first stage of commitment period (2008 -2012) relative to the baseline year of 1989.

However, the major weaknesses in this sub-sector are:

  • Particulate matters exceed the maximum allowed concentration;

  • Air quality is still low because of the inadequate control of industrial emissions;

  • Great number of non-compliant thermal plants (LCP's);

  • Transport is an important factor influencing low air quality with many old and improperly maintained cars and trucks. This factor is, however, decreasing considering changes in legislation aiming to meet EU standards and the purchase of newer models;

  • The pollution with SO2, NOx-- in the last years the level of emissions has increased by 95%. If the specific measures for reducing the emission will not be enforced rapidly, Romania is in danger of significantly over passing the limits. The main sources of pollution with SO2 and NOx are the high consumption of primary resources (especially within LCP's)

Wastewater

There are 1310 wastewater treatment plants and storage installations (municipal and industrial). In 2005 only 492 plants were functioning adequately. The critical situation of wastewater treatment plants results from old pipes and wastewater networks and the modification in their treatment capacity without being adapted from initial design parameters. All in all, there is a high need for investments to be done both for collecting systems and wastewater treatment plants, especially in Bucharest, Ilfov county -- the countries' largest metropolitan area that, to date, has no wastewater treatment plant.

The existing wastewater treatment plants in Romania cover only 77% of the total flow evacuated through the public sewage networks. Therefore important investments are necessary in order to construct adequate facilities for treatment of sludge generated from wastewater treatment. Furthermore, only a small part of the sludge is used for agricultural purposes. However, sludge usage in agriculture is being encouraged.

There is a need for new reorganized management system in water and wastewater infrastructure. In order to achieve this, local authorities as owners of the assets will enter into concession contracts either with experienced utilities operators with a proven record of capacity to prepare and implement comprehensive investments or with new regional operators (consortiums of existing operators). For the same purpose, collaboration and association of multiple municipalities is encouraged.

All in all, this sub-sector is characterized by:

  • Absence of or insufficient wastewater treatment facilities -- water pollution is Romania's largest environmental issue; water pollution from household, industrial and agricultural sources has negative impact on fish breeding, irrigation and drinking water supplies

  • Low percentage of population connected to centralized drinking water supply

  • Insufficient and/or low quality of drinking water

  • Fragmented water system in small and medium cities and poor management

  • High volume of unpaid water caused by networks leakages and low level of payment collection from the consumers

  • Public funds allocated exist but are not sufficient; an existing need for large scale investments

  • Lack of experienced staff for promoting, management and implementation of large scale investments

  • Inadequate facilities for sludge treatment

Solid and Hazardous Waste

In Romania, the past practices of co-disposal of different types of waste (industrial and domestic) on inappropriate lands (too close to the cities and/or improperly controlled) are causing considerable problems for this sector. The main generators of waste identified are mines, industrial facilities and municipalities.

There are two types of waste: municipal waste and similar waste from commercial activities, industry and institutions, construction and demolition waste and sludge resulted from the urban wastewater treatment plants (about 29%) and production waste (about 71%). Municipal waste management is carried out through specialized services in urban areas and the ratio of urban population covered by sanitation companies increased to more than 90% in 2003.In rural areas, there are no organized services for waste management. In 2004 only 6.5% of the rural localities were covered by sanitation services. Land filling is the main method for municipal waste disposal. In 2005, 252 landfills were functioning out of which only 18 were complying with the EU standards.

During the accession negotiations with EU, Romania assumed the obligation to cease activity on 177 landfills in urban areas (approximately 427 hectares) until 16 July 2009 and decrease the quantity of waste on 101 municipal waste landfills (about 301 hectares) between 16 July 2009 and 16 July 2017.

From the total amount of production waste only 30% is recovered; the rest being disposed of by land filling or incineration. There are only seven incinerators for hazardous waste in Romania and seven cement kilns are authorized for the co-incineration of waste. The total number of industrial landfills in Romania is 169 out of which only 15 are in accordance with EU standards. The rest will be gradually closed. As a special regulation, the waste is disposed of in crematories or by direct incineration and thermal treatment installations.

Although there are 346 installations for the thermal treating of medical waste, they do not comply with EU requirements and cannot be modernized requiring alternative solutions to be found in this area.

In this context, one of the important environmental problems in Romania is that of soil pollution. Statistics indicate that 350,000 hectares are affected to some degree of pollution. The main causes are:

  • Land filling is the main mean of municipal waste disposal and include a high number of non-compliant landfills

  • Low proportion of recycling and recovering waste; low level of selective collection; insufficient development of waste recycling and recovery market

  • No proper infrastructure for collection, transport and disposal of waste

Engineering and Consulting Services

Romania will receive, in 2007 - 2013 period, about 4.5 billion Euros that are to be spent in major environmental projects. This amount of money was allocated from the EU budgets on enforcing EU Regional Policy (Structural Funds). The money allocated for Romania will be "absorbed" only if the public authorities (which are the main beneficiaries of Structural Funds) will be able to create feasible project proposals and to manage the projects once they receive the financing. There was identified a limited capacity of final beneficiaries/local authorities to develop good project proposals.

Therefore, there is a high need of expertise in technical assistance, engineering and project management. In the private sector, for example, there are companies that provide new technologies and products directly connected with the environmental sector. Many of them are just "sellers" and do not offer engineering support and/or consultancy for the implementation.

The consulting companies operating in Romania should obtain specific certification for delivering services. For example, in case of engineering and design services offered in water infrastructure, a specific accreditation from the Ministry of Environment and Water Management is needed. In addition, the companies that realize Environmental Impact assessment and environmental balances need specific accreditation.

The market for delivering environmental consultancy is increasing continuously. For example, in most of the cases the projects that are financed out of the Structural Funds (not only the environmental ones) should include an Environmental Impact Assessment in the application folder in order to receive the financing.

Best prospects

The market demand for environmental technologies will be influenced in the next years by Romania's efforts focused on reaching the EU standards on environment. The main environment sectors that will benefit of most investments are water and wastewater, waste management, followed by integrated pollution control and risk assessment.

Opportunities for exports in air pollution control area: air monitoring instrumentation of carbon dioxide (SO2), sulfur dioxide (NOx ) pollutant dust and technology systems to progressively reduce these emissions; dust control systems and acid gas removal systems; technologies to retrofit older and current model heavy duty diesel trucks, buses, and non-road equipment such as the use of catalyzed diesel particulate filters; targeted industry: public transportation, freight industry; micro turbines (CHP systems) as an alternative to large and medium scale gas fired turbines for electricity generation which can achieve reduction of CO2 , NOx and other greenhouse gases and pollutants ; measuring devices for Volatile Organic Compounds (VOC) emissions; systems designed to recover vapors at pumps, gas from storage tank vents and other low-pressure hydrocarbon vent sources for utilization or sale; targeted industry: fuel pump stations; fuel storage and distribution industry; production and processing facilities of oil and natural gas; scrubbing waste incinerator gases technologies; adsorption as alternative to destruction of organics; wet precipitators for capturing liquid aerosols; targeted industries: restaurants, metalworking and other applications where greasy fumes are emitted; laser targeting device for spray painting to reduce paint mist and other painting related air emissions, including volatile organic compounds (VOCs) and hazardous air pollutants (HAPs).

Opportunities for exports in wastewater area: micro-level water and wastewater treatment systems, especially decentralized packaged systems using membrane filtration, reverse osmosis, molecular sieve, hollow fiber separation technologies; industrial water treatment using ultraviolet light disinfections systems; water and wastewater testing technologies; groundwater monitoring instrumentation sampling devices, specialty chemicals, such as certain polymeric materials used in filtration devices; industrial process control technologies; engineering and construction services.

Opportunities for exports in waste management area: ecologic incinerators for destruction of hazardous and contaminated wastes or other alternative technologies used in a manner to control emissions and eliminate formation of hazardous by-products and minimize dioxins and furans; targeted industry: hospitals, labs, food industry, animal farms, chemical and petrochemical industries etc.; reprocess and recycle pre-consumer polyester textile remnants which otherwise in non-biodegradable; targeted industry: the textile local industry; smart systems for treatment of dental waste streams which account for a big part of mercury found at sewage treatment facilities; bailing machines for solid waste disposal and other products and services designed for the residential and industrial solid waste-recycling sector.

Excerpts from "Romania: Environmental Market Brief", US Commercial Service, April 2007.