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Eco-innovation in

Romania

EIO Country profiles 2010

April 2011

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Eco-Innovation Observatory

The Eco-Innovation Observatory functions as a platform for the structured collection and analysis of an extensive range of eco-innovation information, gathered from across the European

Union and key economic regions around the globe, providing a much-needed integrated

information source on eco-innovation for companies and innovation service providers, as well as

providing a solid decision-making basis for policy development.

The Observatory approaches eco-innovation as a persuasive phenomenon present in all

economic sectors and therefore relevant for all types of innovation, defining eco-innovation as:

―Eco-innovation is any innovation that reduces the use of natural resources and decreases the

release of harmful substances across the whole life-cycle‖.

To find out more, visit www.eco-innovation.eu

Any views or opinions expressed in this report are solely those of the authors and do not necessarily reflect

the position of the European Commission.

http://www.eco-innovation.eu/

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Eco-Innovation Observatory

EIO country brief 2010: Romania

Author: Magda Burlacu

Coordinator of the work package: Technopolis Group Belgium

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Part 1. Introduction: Innovation and environment in Romania With a total area of 238,391 km

2, Romania is the thirteenth largest country in Europe. According to the

most recent census, which took place in 2002, the population is 21.7 million1.

Romania is located at the meeting point of the Carpathian-Danube and Danube-Black Sea ecosystems and brings to the European Union a wealth of natural assets. The exploitation of these natural resources, in the form of both renewable and non-renewable raw materials, and their transformation into goods, determines the social and economic development of the country, its environmental status and the living conditions of its population. A few facts and figures related to Romania’s environment are provided in the box below. (SOP ENV 2007-2013)

Natural and semi-natural ecosystems represent 47% of the country’s territory; the surface of natural protected areas covers up to 8%.

97.8% of the Romania’s hydrographical network belongs to the Danube River Basin;

With an average of only 2,660 m3 water/inhabitant/year, comparatively with European average of 4,000 m3 water/inhabitant/year, Romania is one of the relatively poor countries in water sources;

Only 52% of Romania’s population is connected both to water and sewage services;

79% of the wastewater are untreated or insufficiently treated and flows directly into natural receivers;

Approximately 90% of waste is produced by mining industry, 4% by energy industry, 4% by other industries and only 2% is the municipal wastewater; only 2% of the recyclable waste materials is recovered;

234 out of 252 municipal landfills do not comply with environmental standards; additionally there are approx. 2,686 small dumping sites in rural areas

The share of innovative enterprises in Romania is smaller in comparison to the EU 27 average. However in 2004-2006 there was an increase of innovation activities in enterprises (from 17% in 2000 – 2002 to 20% in 2002 – 2004 and to 21.1% in 2004 - 2006) [INS, 2006, 2008]. Furthermore, one of the main objectives of the National RDI Strategy for 2007 – 2013 is to double the share of innovative enterprises by 2013. The level of research and development expenditures is very low, representing about 25% from average level of EU27 (INS, 2008). In Romania, research and development (R&D) covers over 50 specific scientific and technological areas and continues to be predominant in the public sector (over 60 percent)

2. In accordance with the Lisbon Strategy, Romania made a commitment to increase

public expenditure on research to a level of 3 percent of GDP by 2010. Romania is one of the growth leaders among those countries catching up with the more developed EU member states, with an innovation performance well below the EU27 average but a rate of improvement that is one of the highest of all countries. Relative strengths, compared to the country’s average performance, are in the fields Innovators and Economic Effects; and relative weaknesses are in Finance and Support and Throughputs. The efforts undertaken by Romania in the process of accession to the EU have led to positive economic changes in the last few years. In order to achieve the objectives of the Lisbon Strategy and to speed up the transition to an innovative economy, the Romanian Government drew up its National Reform Programme, which highlights 14 key priority areas emphasising the role of innovation and environmental technology in economic development and improved competitiveness. According to the National Reform Programme, the efficient use of renewable and non-renewable resources, as well as the protection of biodiversity, are high priorities for Romania. One of the objectives in the reform

1 The next census is due to be carried out in 2011

(http://www.insse.ro/cms/files/RPL2002INS/index_rpl2002.htm) 2 http://ec.europa.eu/enterprise/policies/innovation

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programme was to achieve a significant reduction in the rate of biodiversity loss by 2010 by using clean and eco-friendly production methods and new eco-efficient materials.

Part 2. Eco-innovation performance The analysis in this section is largely based on the EU 27 Eco-innovation scoreboard (Eco-IS). Eco-IS via its composite Eco-innovation index demonstrates the eco-innovation performance of EU27 countries compared with the EU average and with the EU top performers. Eco-IS is based on 13 indicators which are aggregated into five components: eco-innovation inputs, eco-innovation activities and eco-innovation outputs as well as environmental outcomes and socio-economic outcomes

Figure 2.1: EU27 Eco-innovation scoreboard, composite index

According to the eco-innovation index, the overall eco-innovation performance of Romania is significantly below the EU average, placing it within a group of countries with a very low eco-innovation performance. Eco-innovation inputs The eco-innovation input index based on the indicators of R&D personnel, governmental allocation in energy and environmental research and the cleantech investment. The total R&D personnel and researchers in percentage of total labor force and total employment was at 0.43% in Romania in 2007, while the community average was higher, at 1.43%. This is clear sign of a shortage of technological and innovative capabilities of the country, which is a necessary prerequisite for promotion of formal R&D for eco-innovative solutions, as well as in generic areas.

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The governments environmental and energy R&D appropriations and outlays are around 0.05% of GDP in 2008, the highest amount since 2004. This is slightly above the EU27 average performance in this indicator, which gives a positive impression. However, it is necessary to note that in January 2009 as a consequence of the economic crisis, gross expenditure on research and development (GERD) was cut to 0.18% of the GDP instead of the foreseen 0.89%. Following strong protests from the scientific community, it was supplemented one month later with approximately EUR 148 million, reaching 0.27% of the GDP (approximately EUR 430 million, 1 EUR = 4.2 RON), but still remained significantly lower than the 2008 GERD level. While the exact data specific to environmental and energy R&D expenditure is not available, one can expect a big cuts in these fields too. There was not cleantech venture capital investments project registered in Romania in 2007-2009, which is an indication of poor entrepreneurship capacity and lack of eco-innovative projects that have viable market potential.

Figure 2.2: Eco-innovation composite index components, Sweden

Eco-innovation activities As regards eco-innovation activities Romania is lagging far behind the EU27 average (35%). In terms of innovations targeting reduction of material and energy use Romanian companies perform 30% below the EU27 average. Based on Community Innovation Survey (CIS) results for the period 2002–2004, less than 15% of innovative enterprises in Romania indicated that their innovation contributed significantly to the reduction of material use per unit. The latest CIS-2008 shows that the situation in Romania has improved with 31% of companies using innovation to reduce material use, 32.8% reducing energy consumption, and around 22% reduced CO2 emissions through innovative activities.

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The number of EMAS registered organization in Romania is low which keeps the country almost at the bottom of the EU27 ranking list. Currently three organizations in Romania have EMAS certificate (those are Oradea Metropolitan Zone, Sibiu Evangelical Parish (with two certificates for two different locations, and SC Schaeffler România SRL Braşov- from the industrial sector). In this regard, it is worth mentioning the fact that Romania has two approved EMAS environmental verifiers. Eco-innovation outputs Eco-innovation outputs are measured in the national patenting outputs in pollution abatement and energy efficiency field. The OECD statistics shows that in 2008 in Romania there was hardly any patent filing in the field of environment and energy. According to the Eco-IS (2008) country scores 1 while the EU27 average is 100. It is necessary to note that the intellectual property rights (IPR) system is still gaining its importance and the patenting institute is not well developed in Romania. According to the statistical research results in 2004 – 2006 periods, only 15.3% of innovative enterprises and 2.5% of the non-innovative enterprises have applied for mark registration. In the same period, 6.4% of innovative enterprises and only 1% of no innovative enterprises applied for invention patents. Most enterprises that go for protection of IPR are large ones. Environmental outcomes Regarding environmental outcomes Romania is positioned as the second last country. Material productivity (GDP/DMC) was below the EU average (1.51 EUR/kg) with 0.52 EUR/kg in 2007, representing 34% of the EU average. This indicator did not change much and was fluctuating between 0.45 and 0.54 EUR/kg since 2000, which suggests lack of activities and innovations addressing the material efficiency. Water productivity represents a quarter of the EU average in 2001, pointing at the fact that the country’s industry was still relying upon water intensive and inefficient technologies. Considering that the given data is from 2001, there is a need in investigating the updated statistics on water consumption. Energy productivity (EUR/toe) in 2008 was at 91% of the EU average. In last decade energy productivity in country has been constantly increasing (from 2.8 EUR/toe in 1998 to 6.38 EUR/toe in 2008). Social economic outcomes The social economic outcomes indicator is based on the performance of eco-industries, including export, employment and turnover. Data on eco-industry goods in total export is not available. The overall performance of Romania in the social economic outcomes indicator is on the level of the EU average. The indicator of eco-industry turnover in GDP was 1.53% in 2004, which is 14% below the EU average. It indicates that the Romania eco-industry sector is still at a relatively small scale. However, the share of eco-industry employment in the total Romanian workforce was 1.69% in 2008, representing 14% more than EU average. These statistics points towards the facts that the eco-industry in Romania is rather labour intensive and less relies on the high-tech solutions not requiring manpower.

Part 3. Leading eco-innovation areas

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Energy efficiency of buildings The Romanian Ministry of Regional Development and Tourism, together with local authorities, is implementing the Thermal Rehabilitation Programme, aimed at associations of owners that want to improve the energy performance of housing blocks built between 1950 and 1990, regardless of the heating system in use.

Thermal rehabilitation comprises:

the thermal insulation of external walls; the replacement of windows and exterior doors with elements of superior quality that provide

better insulation; the thermal and hydro insulation of roofs or terraces, and the thermal insulation of the floor on

the highest level if roof trusses are used in the building; the thermal insulation of the floor over the basement if ground-floor apartments are included

in the design; the dismantling of installations and equipment located on the facades and terrace of the

apartment block and their re-installation on completion of the thermal insulation work; and restoration work on the building envelope.

Depending on the results of the technical expert’s report and the energy audit carried out on the block, the following may be added:

repairs to construction elements that pose a potential threat of detachment and/or affect the functionality of the housing block; and

intervention work on the distribution of the thermal agent for heating the common parts of the housing block.

The owners association pays 20 percent of the total cost of the rehabilitation work. The remaining 80 percent is provided from the state budget and local budgets. The 20 percent is divided proportionately among all the owners. If one or more owners are unable to pay their share of the costs, the local city hall may cover the partial or full costs and decide how it will later recover this sum. The remaining 80 percent of the thermal rehabilitation costs comprise 50 percent from the state budget, through the Ministry of Regional Development and Tourism within the limit of the annual funds approved for the Thermal Rehabilitation Programme; and 30 percent from the local budget, within the limits of the annual funds approved for the Thermal Rehabilitation Programme. The total funds allocated to the administrative and territorial units in 2010 were RON 150 million. On July 1, 2010, the Romanian Ministry of Environment and Forests launched the national programme ―Green House‖, which aimed to stimulate the development of renewable energy equipment. Subsidies for the Green House programme are allocated via the Environment Fund Administration and will include solar panels, geothermic pumps and other installations which produce energy from pellets, waste or wood fragments. The budget for 2010 was RON 110 million, and in the period July 1 to August 27, 2010, some 8,727 applications for financing were approved to a total value of over RON 50 million.

Energy carriers and renewable energy sources The most important renewable energy sources (RES) are wind, biomass and hydro. According to the European Bank for Reconstruction and Development (EBRD) 2009 Country Profile, Romania is considered a strong candidate for wind power development, despite lower energy prices. The total estimated mid-term wind potential is 3,000 MW.

Romania has great biomass potential, estimated at 88,000 GWh per year. Assuming an available biomass energy supply, district heating systems represent the most immediate and low-cost biomass application, especially combined heat and power (CHP) plants, industrial co-generation and co-firing.

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Romania has the third highest geothermal potential in Europe, with significant potential locations on the Western Plain, the southern plains around Bucharest, and the Carpathian region. Exploration and research into geothermal resources began in Romania in 1962. Over 200 wells have been drilled, confirming the existence of low enthalpy geothermal resources with temperatures between 40 and 120°C. At present, Romania has a total installed geothermal capacity of about 145.1 MWt, producing 2,841 TJ/year. This energy is produced from around 96 direct-use wells, from water with temperatures in the range of 55 to 115°C. Of these direct-use wells, 37 are used exclusively for health and recreational purposes.

The total potential hydroelectric potential in Romania, given the optimum technological conditions, has been calculated at some 70 billion kWh in an average year. However, for technical and economic reasons, only a fraction of this potential has been developed. The Romanian Government has encouraged foreign investment in hydropower through Hydroelectrica, the state-owned hydropower producer. Hydroelectrica has 150 small hydropower plants, which it must sell on the basis of a commitment assumed by Romania during negotiations for EU accession. By March 2009, Hydroelectrica had sold 87 small hydropower plants to private investors.

Romania has exploited significant solar power potential in the past, but since 1990, manufacturing, installation and R&D activity has virtually ceased. The potential market for solar applications is very large, but specific incentives will be needed in order for this potential to be realised.

In October 2006, Romania became an official partner in the Renewable Energy and Energy Efficiency Partnership (REEEP). Eco-innovation in urban transport Many cities in Romania are implementing innovative measures in public transport in order to become more energy efficient. By upgrading public transport infrastructure and renewing the fleet base, the aim is to improve passenger comfort and increase the efficiency of transportation. Suceava, Ploiesti, Bucharest and Craiova are part of the EU’s CIVITAS Initiative (City-Vitality-Sustainability) and are transferring technologies and implementing eco-innovation research results. Craiova, for example, is integrating intelligent technologies within the CIVITAS MODERN project, which will result in a 40 percent reduction in the energy consumption of trams. National initiatives supporting eco-innovation The Ministry of Environment and Sustainable Development (now, Ministry of Environment and Forests) in Romania has taken a leading role in implementing activities under the EU’s Environmental Technologies Action Plan (ETAP). One of the most relevant measures are combined in the project ―Developing Emergent Ecological Markets in Romania‖ (ECOEMERGE), financed through the bilateral Romanian-Norwegian cooperation programme. The Romanian Ministry of Environment and Forests and the Norwegian Ministry of Environment work in collaboration to promote environmental technology and green public procurement with the aim of strengthening the national infrastructure in Romania in order to support eco-innovation and promote emerging eco-technologies and eco-procurement practices.

ECOEMERGE is structured along two major axes — EcoTechnoNet and Green Procura — which simultaneously address both production and consumption. The results of these two components will be strongly interlinked and will provide input for future national policies in the fields of sustainable consumption and production. The project is ongoing, and activities implemented between July 2009 and April 2011 include developing a database of companies involved in promoting green technologies (production, transportation, R&D); training (400 specialists in green public procurement); supporting the gradual inclusion of green criteria in public procurement procedures; compiling a database of companies from Romania and Norway that qualify for the EU Eco-label and EMAS certification; and collecting best practice cases in eco-innovation.

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ECOEMERGE is establishing a national infrastructure to support the development of eco-innovation and the large-scale use of new, eco-friendly technologies through collaboration platforms and partnerships between formerly state-owned R&D institutes and economic units. The project is also building up a critical mass of specialists in green public procurement, which will ensure the promotion of public procurement based on green criteria. Through the example set by the public sector, the market is expected to turn progressively towards green products and services, contributing to the sustainable development of the Romanian economy. Also, Romania is now one of the first EU Member States testing the Industrial Symbiosis approach at regional level, after a similar programme had delivered significant environmental benefits in the United Kingdom and has been declared an „exemplar eco-innovation project‖ by the European Commission, who recommended its expansion to other Member States. The Romanian Industrial Symbiosis Pilot Project – ECOREG is designed to encourage segregation of waste collection and increase recycling and efficient waste disposal, to reduce dependence on fossil fuels in the region, stimulating the generation of energy from biomass, to add value to waste by reducing the use of natural resources and also – to generate jobs, to create new business opportunities and contribute to the creation of new standards and practices.

Good practice examples

Example 1: Rehabilitation of apartment blocks in Sfantu Gheorghe Description of the product/service/technology

The developing city of Sfantu Gheorghe is the capital of Covasna County. The city has 23,235 households, and since 1990 new residential districts have been created. In 2008, a total of 18 blocks of flats (410 apartments) in the Prietenia district of the city were renovated through the government’s National Thermal Rehabilitation Programme (described above), implemented by the Ministry of Regional Development and Housing.

The renovation included:

thermo-insulation of the terrace with fire-proof polystyrene 16 cm thick;

thermo-insulation of the external walls with expandable polystyrene 10 cm thick (including thermo-system); and

the replacing of external woodwork. Barriers to eco-innovation - The long waiting time for the rehabilitation project to be approved by the local authorities. - The difference in costs from one firm to another. - Lack of experience on the part of some firms in carrying out this kind of work. - The programme applies only to apartment blocks, not houses. Drivers of eco-innovation - The programme is a government initiative

Sustainability effects - Significant savings on the energy used for heating. - More efficient energy use. - Contribution to the overall EU goals for reducing greenhouse gas emissions by 20 percent of 1990 levels, and for reducing energy consumption by 20 percent of the projected 2020 levels.

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Example 2: Alternative Fuel Bus Fleet in Suceava, Romania

Description of the product/service/technology

The main objective of this project was to increase the number of public transport vehicles using clean and renewable fuels, thus reducing the use of diesel and leading the way to a sustainable transport system. Suceava Municipality together with the public transport company initiated the implementation of a new public transport plan, which included the introduction of 15 new Euro3 buses. The project was implemented in the period 2006 to 2007. The entire public transport fleet was turned into a Euro3 fleet; 40 percent of the bus fleet is fuelled with liquefied petroleum gas (LPG); and 20 percent of low temperature combustion (LTC) minibuses will be equipped with FPT systems. The concept of eco-routes was introduced for areas within which the level of noise and gas emissions due to public transport is considerably reduced. These areas serve as models to help improve quality of life for all inhabitants. The urban public transport LTC fleet was modernised with the addition of 30 new IRISBUS IVECO buses running according to an updated timetable and on eight new routes. All the old bus vehicles were taken out of service, and 15 buses were converted to use LPG. One of these was equipped with a conversion system produced on the Romanian market, for promotional reasons. The LPG buses were marked with stickers and the eco-routes were clearly signposted. Bus drivers received training on eco-driving and good customer service. Secondary, narrower routes were identified and subcontracted to a private minibus company, fulfilling the public transport plan and meeting mobility needs. The bus fleet was promoted through a variety of activities. The second phase of the project involves the introduction of buses running on biogas, a real innovation at a time when the use of alternative fuel technology in vehicles in Romania is extremely rare. Project costs totalled EUR 70,520. The fleet now includes 30 new LPG buses and two minibuses equipped with FPT systems, reducing emissions and improving energy consumption. These activities were implemented through the CIVITAS SMILE project with co-financing from EU funds. Barriers to eco-innovation

– Initially it was planned to introduce buses running on biogas, but since biogas fuel was not locally available and since local and national vehicle markets were not able to procure such experimental vehicles, this activity was postponed. The city of Suceava planned to produce purified biogas from the fermentation of sludge at a local sewage treatment plant. – The percentage of existing LPG vehicles (buses, taxis, vans and minibuses) in Suceava was low (between 4 and 7 percent in 2004), and at the time of project implementation, vehicles using alternative fuel technology were extremely rare in Romania. – Improving the image of public transport and encouraging citizens to use alternatives to the private car are challenging tasks.

Drivers of eco-innovation

– Reducing emissions in order to minimise the environmental impact of public transportation. – Improving the quality of public transport and reducing public transport emissions, since diesel vehicles were still the most widely used vehicles for goods distribution, private companies and public transportation in residential and commercial areas. Harmful emissions contribute to the greenhouse effect and generate traffic-related noise and pollution. – The need to offer an alternative mode of local transportation with a focus on clean vehicles

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and fuels in order to reduce environmental impacts and to address the increased mobility needs of Suceava. – Support offered by citizens from crowded residential areas, who understood and acknowledged that traffic was negatively affecting their quality of life and health. – The rehabilitation of the wastewater treatment plant, creating opportunities for the further use of sludge.

– The pressure of motorised traffic on the environment. – The rising prices and general costs of conventional fuel. – Political support, as EU membership committed Romania to meeting the provisions of environment- related directives. – Visionary and quality-based city management, tackling problems in an integrated manner. – Financial benefits for taxi drivers using LPG. – Involvement in the CIVITAS Initiative, including the co-financing of new activities through the project and the sharing of experience with other CIVITAS cities.

Sustainability effects

– The increased number of public transport vehicles using alternative fuels has made public transport more sustainable. – Awareness has been raised regarding the introduction of a public transport fleet using alternative fuels: 82 percent of people interviewed had knowledge of alternative fleets and fuels. – Levels of pollutants and noise have fallen (initially due to the LTC fleet renewal and, subsequently, to the conversion of half the fleet to LPG rather than diesel): CO2 by 11 percent/year; CO by 3 percent/year; NOx by 15 percent/year; and PM10 by 49 percent/year. – The energy consumption of the new LPG buses is lower than that of the new diesel buses. – Conditions were created for the development of the alternative fuel market and for setting up biogas facilities. – Acceptance levels for the implemented measures are good, and a base has been created for the new urban mobility culture, on which other related measures can be built.

Part 4. New trends: Areas on the rise Although the overall innovation performance of Romania is still below the EU average, recent improvements have today made it one of the growth leaders among those countries catching up with more developed EU member states. Romanian enterprises have recently shown a positive trend in research, development and innovation activities (Romanian Innovation Performance in the European Context, 2009). Unfortunately, the recent economic crisis has had a significant negative impact on the Romanian economy and the Romanian Government has focused on measures to mitigate the effects of the crisis rather than on stimulating eco-innovation. Improving the energy efficiency of buildings The Romanian Government will continue to focus on improving the energy efficiency of buildings by continuing the ―Green House‖ programme and the National Thermal Rehabilitation Programme. Green House is a very recent programme, only launched in 2010. It has been postponed for some time, but now the focus is on implementation in order to promote the use of alternative energy resources in the housing sector. The Ministry of Environment and Forests has estimated that as a result of the programme the cost of hot water might see a 60 percent reduction, while heating costs could be reduced by around 30 percent.

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Alongside the Green House programme, there are other isolated examples of the introduction of alternative energy resources in the construction sector. An example of the construction of an energy-independent house is given below. Energy efficiency activities are widely supported by the National Green Building Council in Romania, which was established in 2008. This is the first such council in South Eastern Europe, and the aim is to emulate the success of similar organisations around the globe. At present, it is the leading organisation promoting environmental responsibility and energy efficiency in the design, construction, operation and deconstruction of buildings in Romania. It also brings together key innovation companies and facilitates dialogue between the construction and related sectors and the government in order to create a regulatory framework, through the Legislative Outreach Task Group, that fosters the development of a sustainable built environment. Innovation in the automotive industry The Romanian automotive industry represents a significant share of national industry. It has developed some eco-innovation initiatives and demonstrates good collaboration with national research institutes. Although eco-innovation is still not a general trend, the efforts already made may have a significant impact on the transport sector in Romania. Current research on the new Dacia Electra model, for example, is the outcome of collaboration between the Automotive Engineering Research Centre of the University of Piteşti, Dacia Group Renault, and the Romanian Ministry of Education, Research and Innovation (see example 2 below). Example 1:

Energy-independent house Description of emerging eco-innovation Birta Group Company and the German Chain Kago have developed energy-independent buildings. The construction is almost spherical and uses natural materials, especially wood. In terms of thermal energy, the building is equipped with solar collectors that provide heat and hot water. Electricity is obtained through the photovoltaic panels. Based on the calculations, a house of between 120 and 200 square metres, accommodating two adults and two children with extra guests at the weekend, requires 2.5 KW, which is supplied by the panels. The panels are able to provide heat even when there is no sun. The energy produced during the

day is stored in a battery and can be used at night. The house can also be equipped with alternative energy systems such as coal, gas or pellets. The solar collectors are made in Germany and can produce 50 to 60 liters of hot water per hour. They function throughout the year, as a so-called four seasons energy concept. History of the companies Kago has 35 years’ experience heating installation in Germany and Europe; and

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Birta has 17 years’ experience on the Romanian market. Possible effects The shape of the house can be adapted to the clients’ wishes, but a sphere is the most efficient as it makes maximum use of natural light. The panels heat the water during winter, even at minus 30°C. Costs can fall by 50 percent in the winter and by 100 percent in summer. Barriers to eco-innovation

– The cost of such a house is relatively high, at about EUR 50,000, although this depends on the degree of insulation and the installations required by the client.

– The price of the heating technology starts from EUR 4,000, and the photovoltaic panels cost from EUR 3,500.

Drivers of eco-innovation – The price of a solar collector is approximately EUR 500. – Diminished value for the invoice

Example 2:

Dacia Electra – Research on electric vehicles Description of the emerging eco-innovation

In 2008, the Automotive Engineering Research Centre of the University of Pitesti launched the project ECO EV (Ecologic Electric Vehicle) for the realisation of an experimental flexible platform for an ecological electric vehicle. The electric system, developed as part of the EcoMatic Hybrid System, was assembled on an experimental vehicle, the Dacia Electra. The concept car was developed at the new Alternative Propulsion System and Renewable Energies laboratory and was based on the mechanical platform of Dacia Logan. It is under construction with

financial aid granted by the Romanian Ministry of Education, Research and Innovation and with the technical support of Dacia Group Renault, which has a plant near Pitesti. The electrical equipment needed for the generation and storage of electrical energy and for plugging in to the household electric network includes a traction battery, lithium-ion technology, an AC/DC charger and a DC/DC converter to convert high voltages to 12 volts for storage in the auxiliary battery. Photovoltaic cells are also needed on the roof. These are connected only to the low voltage circuit (12V), which supplies the auxiliary preconditioning outfit of the vehicle interior. The electric propulsion system will allow the rationalisation of electric energy consumption through:

– thermal energy from the cooling system of the electrical components (motor, traction battery etc.) when heating is required in the passenger cockpit; and

– solar energy from the photovoltaic cells on the roof to provide air conditioning in the vehicle interior.

To reduce electricity consumption, the incandescent light bulbs were replaced with light-emitting diodes (LEDs). The vehicle produced through this project, based on the mechanical platform of the Dacia Logan, is the ―Dacia Eco‖, the name referring to three particular qualities:

– It is ecological as a result of the zero-emissions vehicle (ZEV) propulsion system.

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– It is economic since it is based on the less-expensive, commercially available Dacia Logan. – It is also economic due to the low price of the electricity used to charge the onboard storage

devices. The experimental ECO EV project is also designed to develop new ecological projects through the implementation of other new equipment: firstly a range extender (fuelled by LPG/natural gas) and in the future a fuel cell. The project is under way and is expected to be finalised in 2011. History of the company The Dacia automobile company was founded in 1966 with assistance from Renault, and the main Dacia factory was built in 1968 in Colibaşi (now Mioveni) near Piteşti. Dacia acquired the tooling and basic designs of the Renault 12. It was named after the historical region that constitutes much of present-day Romania. Automobile Dacia S.A. is now a subsidiary of the French carmaker Renault. The company is the main exporter from Romania with a market share of 10 percent of total exports. In September 1999, Dacia was purchased by the Renault group with a view to making Romania its automobile development hub in both Central Europe and Eastern Europe, and investment was consequently increased. The Dacia Logan type is the most successful model since the original Dacia 1300. It was introduced in August 2004 after considerable media interest, and despite design-related criticism it became one of the highest selling cars in Central and Eastern Europe and Russia. Other car types have since been introduced, including the Dacia Sandero and Dacia Duster. Dacia Group Renault supports research in the field of ecological electric vehicles. Possible effects

– Helps to reduce petrol dependence and helps to save energy by using a combination of different energy sources.

– Dacia is one of the main car suppliers in Romania and is very popular. Its introduction of a new electrical vehicle could be well received by car owners, thus helping to spread the benefits of cleaner vehicles.

Barriers to eco-innovation

– The project is implemented on a small scale due to limited funds. – The project is still in an experimental phase.

Drivers for eco-innovation

– The increasing need for cleaner vehicles with low fuel consumption. – The project is based on existing technology (Dacia Logan model). – The project uses local research and development infrastructure (University of Piteşti). – There are possible profits from commercialisation.

Part 5. Public policy in support of eco-innovation The concept of eco-innovation is defined (according to the EC project ―Measuring Eco-Innovation‖) as: ―the production, assimilation or exploitation of a novelty in products, production processes, services or in management and business methods, which aims throughout its life cycle, to prevent or substantially reduce environmental risk, pollution, and other negative impacts of resources use (including energy use)‖ compared with relevant alternatives on the market. ―Measuring Eco-Innovation‖ is implemented at national level by the working grup for the implementation of Environmental Technologies Action Plan in support of national policy making. The various documents promoting eco-innovation mainly stress the development of infrastructure (as the main factor in economic growth) and the improvement of the entrepreneurial environment.

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The National Strategy for Research, Development and Innovation 2007-2013 provides the basis for organising the RDI system and defines the main areas and the way in which public investment will be concentrated in R&D to support innovation in the coming years. The R&D objectives for the period 2007 to 2013 focus on the development of clean product and process technologies, applicable, in particular, to construction, transportation and energy production and the economic and social mechanisms for their implementation; and the development of new environmentally efficient technologies for waste management using product life cycle analysis in assessing environmental impacts.

The National Reform Programme 2007-2010 is aimed at achieving economic stability and sustainable public finances; increasing economic competitiveness and productivity; and improving the functionality of the employment market. On the basis of these medium-term priorities, the National Reform Programme highlights 14 key areas, underlining the role of innovations and environmental technologies in economic development and improved competitiveness.

The Sectoral Operational Programme for Environmental Infrastructure 2007-2013 (SOP ENV) is closely linked to the national objectives set out in the National Development Plan 2007-2013 (NDP) and in the National Strategic Reference Framework (NSRF), which takes into consideration relevant EU objectives, principles and practices. It is designed provide a foundation and to act as a catalyst for a more competitive economy, a better environment and more balanced regional development. The SOP ENV is fully based on the goals and priorities of the EU’s environment and infrastructure policies and reflects Romania’s international obligations as well as its specific national interests.

The Sectoral Operational Programme for Increasing Economic Competitiveness 2007-2013 (SOP IEC) directly addresses the first priority of the NDP – to increase economic competitiveness and develop the knowledge-based economy -- while contributing to the implementation of all the other NDP priorities. The general objective of the SOP IEC is to increase the productivity and competitiveness of Romanian companies, in compliance with the principles of sustainable development, and to reduce the gap between Romanian productivity and the EU average. The target is average annual growth of GDP per employed person of approximately 5.5 percent, which will allow Romania to reach about 55 percent of EU average productivity by 2015.

The specific objectives of the SOP IEC are the: - Consolidation and environmentally friendly development of the Romanian production

sector. - Establishment of a favourable environment for the development of sustainable

enterprises. - Increase in R&D capacity and cooperation between RDI institutions and enterprises, and

better access of enterprises to RDI. - Valorisation of information and communications technologies (ICT) potential and its

application in the public administration and private sector (enterprises, citizens). - Increased energy efficiency and sustainable development of the energy sector.

The National Development Plan 2007-2013 (NDP) is intended to strengthen the strategic focus of economic and social cohesion policies in Romania and to make the appropriate linkages to European policies and the Lisbon Strategy for growth and job creation.

Romania’s National Sustainable Development Strategy, Horizon 2013-2020-2030

approved by Governmental Decision No. 1460 in 2008 ―sets specific objectives for moving, within a reasonable and realistic timeframe, toward a new model of development that is capable of generating high value added, is motivated by interest in knowledge and innovation, and is aimed at continued improvement of the quality of life and human relationships in harmony with the natural environment‖.

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The most important player in the innovation governance system is the Ministry of Education, Research and Innovation (MERI) through the National Authority for Scientific Research (NASR), which has a mission to formulate and implement specific RDI policies. The Ministry of Environment and Sustainable Development (MESD)(now Ministry of Environment and Forests) is the main actor in ETAP implementation and in the elaboration and coordination of the National Action Plan for Green Public Procurement. The Ministry of Environment coordinates the working group for the Environmental Technologies Action Plan (ETAP) in Romania. Communication and information was organised by the MESD (public consultation, draft made available on the ministry website). Government Decision No. 1568/2008 regarding the approval of the Roadmap for the Implementation of the ETAP in Romania (2008-2009 version) creates the framework for and enables the implementation of activities. Responsibility for implementation lies with each member institution of the working group, according to its competencies. Due to the fact that financial resources for implementation were scarce during the last year, two of the actions included in the ETAP, could not be undertaken. Most of the activities are at different stages of implementation, thus a new timeframe for evaluating the existing action plan, and for the drafting and adoption of a new version of the roadmap, had to be set.. In 2000, the Environmental Fund was created as an economic and financial instrument for the support and implementation of environmental priority projects. The Environmental Fund is managed by a public institution with legal personality and is integrally financed from its own revenues under the coordination of the MESD. The revenues are public and comprise taxes, contributions and other duties paid to the consolidated general budget. The funds are directed back to the economic operators that have issued compliance programmes. They are thus supported to meet the environmental requirements assumed in the negotiation of Chapter 22 of the EU acquis: Environment. The fund also supports NGOs, local authorities and educational institutes that contribute to improving local quality of life and to providing public information on environmental issues. In 2005, the Romanian Government created the Programme for the Renewal of the National Car Fleet, which has been re-launched each year since then. It has been a great success and has led to the removal from use of vehicles older than 12 years, thus contributing to reducing air pollution and preventing the production of waste (in the form of abandoned end-of-life vehicles). Owners of old, polluting vehicles are given a first instalment towards purchasing a new car from a certified producer or importer. The Programme for Increasing the Competitiveness of Industrial Products is a multi-annual programme that was launched in 2003 and planned until 2007. It is addressed to companies operating in the processing industry. The programme covers:

- the implementation and certification of quality management systems and/or of environmental management systems;

- the implementation and certification of health and safety management systems for the working environment, systems for social responsibility and food hygiene management and/or information security management systems;

- the certification of products and/or eco-labelling; - the assimilation of new technologies and products of economic operators benefiting from

research results obtained through R&D programmes financed from public funds and the application of Romanian inventions (protected by the State Office for Inventions and Trademarks);

- the organisation of exhibitions for presenting industrial products at the economic operators’ premises;

- the registration and protection on external markets of Romanian trademarks, designs and industrial models;

- the endowment and/or modernisation of existing testing and standardisation laboratories, as well as their accreditation, if needed; and

- the performance of comparative evaluation analyses for activities in the processing industry with a view to realising restructuring–development–feasibility plans.

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By 2007, a total of 1,350 contracts had been signed. The programme is continuing until 2013 through the SOP IEC. The new Law on Public-Private Partnership was published on November 4, 2010. Public-private partnerships are great tools for boosting economic development and encouraging innovation in periods when the budgets of local or central public authorities are limited. Since green building projects address both criteria (stimulating local economic development and encouraging innovation), it is hoped that the first initiatives of public-private partnerships relating to sustainability in construction in Romania will emerge soon.

Part 6. Understanding eco-innovation performance Main barriers to eco-innovations in Romania: Insufficient knowledge of the market situation and potential for environmental technologies There are various, sometimes overlapping, databases containing research results relevant to eco-technologies, but none of them was designed specifically for research on environmental technologies (they have different approaches and sometimes inadequate monitoring and follow-up). Eco-technologies comprise a wide range of activities, requiring different types of expertise and significant human resources with sufficient awareness and training. Differing perceptions of ―environmental technologies‖ and ―green products and services‖ at EU and national levels are making policy design in the field difficult and can lead to a lack of coherence between innovation policies at the national level.

Financial barriers At present, the majority of financial resources in the research field come from public funds. To improve innovation performance, Romania must give greater emphasis to increasing the financing of RDI activities, which can only be done by encouraging the investment of greater private financial resources. Existing funding for small and medium-sized enterprises (SMEs) is difficult to access due to insufficient knowledge on the part of the staff of the SMEs. The economic and financial crises have affected over 90 percent of the approximately 600,000 SMEs in the country (according to a survey carried out by the National Council of Small and Medium-Sized Private Enterprises in Romania – CNIPMMR). This has led to reductions in investments in new technologies as well as staff cuts. Main drivers of eco-innovations: Increased public interest in “ecological” products Although the market for ecological products is not well developed in Romania, there has recently been increased interest among the public in ―green‖, ―ecological‖ and ―bio‖ products and their health benefits. This trend is supported by media campaigns, although the price of ecologically friendly products is between 10 and 40 percent higher than that of conventional products. However, this growing interest creates an opportunity for providers of clean technologies to demonstrate their social and environmental responsibility. Availability of funding opportunities for the development of related domains European Structural Funds are an important source of financing in the field of research in the coming years (in relation to environmental infrastructure, human resources, research, SMEs etc.). Since its accession to the EU on January 1, 2007, Romania has benefitted from consistent access to Structural and Cohesion Funds under the same conditions as other members of the EU. At the same time, Romania is eligible under the European Territorial Convergence and Cooperation Programmes and has significant chances to access important funds.

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Under the National Strategy for Research, Development and Innovation, 15 programmes are operational based on partnerships between research institutions, universities and enterprises. Most of them focus on specific fields of technological development.

References:

1. European Commission. Enterprise and Industry

(http://ec.europa.eu/enterprise/policies/innovation) 2. INNO-Policy TrendChart. Country Report. 2009 3. INS. National Institute of Statistics (http://www.insse.ro/cms/rw/pages/index.en.do) 4. Manager portal http://www.manager.ro/stiri/afaceri/criza-financiara-afecteaza-90procente-din-

imm-uri-690.html 5. Ministry of Environment and Sustainable Development: Interview with Ms. Iulia Degeratu. 2010. 6. Ministry of Environment and Sustainable Development: Interview with Ms. Ioana Anghelache.

2011. 7. Ministry of Environment and Sustainable Development, National Agency for Environmental

Protection (http://www.anpm.ro/Mediu/raport_privind_starea_mediului_in_romania-15) 8. Norway’s Official Webite in Romania

(http://www2.norvegia.ro/News_and_events/Acordul_SEE/Programul-Norvegian-de-Cooperare-cu-Romania-Norway-Grants/Eco-Emerge-d-anse-unui-viitor-verde-in-Romania/)

9. Pro Inno Europe. Country Profile Romania (http://www.proinno-europe.eu/page/romania-1) 10. Roadmap for Implementing the Environment Technologies Action Plan in Romania. 11. Romania Central. Information on the Romanian economy (http://www.romania-central.com/) 12. Romanian Statistical Yearbook 2008 (http://www.insse.ro) 13. SOP ENV. Sectoral Operational Programme: Environment, 2007-2013 (http://www.fonduri-

structurale.ro/Document_Files//mediu/00000029/kq488_POS_Mediu_EN.pdf)_ 14. Sipos, Gabriela Lucia. Romanian Innovation Performance in the European Context. 2009. 15. Ministry of Environment and Forests, EMAS (http://www.mmediu.ro/protectia_mediului/emas.htm)

http://www.manager.ro/stiri/afaceri/criza-financiara-afecteaza-90procente-din-imm-uri-690.htmlhttp://www.manager.ro/stiri/afaceri/criza-financiara-afecteaza-90procente-din-imm-uri-690.html