Romanian Power Plants Avoided €1.16 Billion in Carbon Payments, Penalties
Two publicly-owned Romanian power plants broke European Union law by avoiding carbon payments and penalties, which now stand at more than €1.16 billion ($1.36 billion), OPIS has learned.
The Paroșeni coal-fired power plant in western Romania did not buy European Union emissions allowances (EUAs) to cover more than 2.8 million metric tons (mt) of carbon emissions over 2014-2024, while the coal- and natural gas-fired CET Govora power plant in southern Romania missed payments for almost 3.1 million metric tons of emissions between 2019 and 2024, European Commission data compiled by OPIS show.
Paroșeni’s operator, Complexul Energetic Valea Jiului (CEVJ), is controlled by the Romanian Ministry of Energy, and the Govora power plant is fully owned by the county of Vâlcea county through the company SC CET Govora SA.
Large emitters subject to the EU Emissions Trading System (ETS) are legally obligated to obtain an EUA for every metric ton of carbon equivalent (CO2e) they produce each year and then surrender EUAs to domestic authorities, but the two power plants did not do so. Paroşeni owes €567 million and Govora owes nearly €590 million in allowances and penalties adjusted for inflation and based on the OPIS-assessed benchmark December 2025 EUAs price of €75.530/mt on October 1.
| Installation | Paroşeni | Govora |
| Unsurrendered Allowances | 2,855,249 | 3,099,873 |
| Period | 2014-2024 | 2019-2024 |
| Cost if paid on time | €83.10 million | €141.92 million |
| Cost at current price including penalties | €566.67 million | €589.25 million |
The plants are the latest examples identified by OPIS of emitters in central and eastern Europe that have been non-compliant with the EU ETS over the last few years, a period which saw average OPIS-assessed carbon prices rise from €15.90 in 2019 to €85.30 in 2023. Last month, OPIS reported that a power plant in Hungary controlled by Russia’s state-owned development bank and currently under liquidation did not pay €655 million in unsurrendered allowances and penalties.
EU law mandates penalties—calculated at €100 per unpaid allowance, plus an adjustment for inflation—if installation operators do not surrender allowances to cover their emissions. ETS authorities in each EU member state are in charge of monitoring installation compliance, as well as imposing penalties. The European Commission is the EU institution responsible for making sure EU member states meet their ETS obligations, and it did not respond to a request for comment.
The operators of many non-compliant installations identified by OPIS faced financial difficulties and never paid for the carbon dioxide they emitted. However, unsurrendered allowances are not voided in the event that a plant changes ownership, so a new owner of a non-compliant installation is expected to pay for those allowances.
According to the EU ETS Directive, member states decide on whether or not to apply criminal or administrative penalties for breaches of the EU ETS in line with their legal systems, while the Commission is only responsible for mandating the €100 penalty for each unsurrendered EUA.
Paroşeni and Govora remain operational, and the deadline for surrendering EUAs for the plants’ emissions in 2024 was Sep. 30, 2025. Аt the time of publication, Govora has surrendered 17,534 allowances to cover its 666,442 verified emissions for 2024 and Paroşeni has surrendered 103,854 EUAs—60,000 allowances short of covering its 163,854 metric tons of verified emissions.
Paroşeni Power Station Emissions, Allowances Data
| Year | Verified Emissions | Surrendered Allowances | Unsurrendered Allowances |
|---|---|---|---|
| 2024 | 163,854 | 103,854 | 60,000 |
| 2023 | 201,325 | 19,317 | 182,008 |
| 2022 | 333,429 | 0 | 333,429 |
| 2021 | 324,416 | 1,497 | 322,919 |
| 2020 | 124,897 | 0 | 124,897 |
| 2019 | 153,808 | 7,394 | 146,414 |
| 2018 | 298,473 | 35,178 | 263,295 |
| 2017 | 339,424 | 0 | 339,424 |
| 2016 | 420,620 | 131,535 | 289,085 |
| 2015 | 832,470 | 820,849 | 11,621 |
| 2014 | 884,101 | 101,944 | 782,157 |
| Total | Outstanding | 2,855,249 |
The Paroşeni power plant now owes over €566.67 million in late carbon payments and penalties. If the plant had paid for EUAs on time, it would have cost €83.10 million, taking OPIS-assessed average prices for the period of non-compliance.
Located in the Jiu Valley in Transylvania – one of Romania’s main coal regions—Paroşeni is part of a larger complex situated alongside four mines that supply the 150-MW power plant with coal.
The state-owned complex was previously known as the Hunedoara Energy Complex, but after years of insolvency and its final bankruptcy in 2022, the complex’s assets were transferred to a newly-created company, Energy Complex Valea Jiului (CEVJ), in October 2023. Fully controlled by the Ministry of Energy, CEVJ is one of the largest employers in the Hunedoara region, with over 2,000 workers.
The plant operator’s first missed carbon payment was in 2015, when it had to cover emissions for 2014 and emitting a ton of carbon dioxide cost only €5.96, taking average OPIS-assessed prices for 2014. By 2016 the complex was already in financial trouble, with debts of 1.2 billion lei (€237 million), according to Romanian media.
CE Hunedoara’s liquidator pointed to overstaffing, unsustainable bonus schemes and questionable procurement procedures. Despite that, the decision to announce the insolvency of the complex was annulled during an appeal procedure. CE Hunedoara was saved for the time being, until its final liquidation in 2019, when total debt had reached 2 billion lei (€395 million).
After the long restructuring process was complete in October 2023, a court case was initiated in January this year by the Environmental Fund Administration—the Romanian body responsible for managing allowances and penalties under the EU ETS—against CEVJ. The environmental authority demanded that it pay 114 million lei (€22.5 million) as penalty for the plant’s unsurrendered allowances for 2023. But the state-owned company countered by pointing out that it did not assume control of Paroşeni’s assets until October 2023. CEVJ told OPIS the plant was compliant for the last quarter of 2023 with respect to surrendering allowances.
The case is still under appeal at the Alba Iulia Court of Appeal. However, it does not address the amount of unpaid EUAs accrued between 2014 and 2022.
In 2018, the European Commission announced that the energy producer, then still called CE Hunedoara, must return over €60 million in state aid received in 2015, because it deemed the transfer of funds to be illegal, declaring that the company had not provided a coherent restructuring plan. The state aid was paid back through the sale in 2022 of the complex’s coal-fired Mintia power plant.
Last year, CEVJ, the new Paroşeni plant operator, secured nearly €800 million under Romania’s Recovery and Resilience Plan for the closure of the four mines supplying coal to Paroşeni. The sum will be used to cover social costs for workers losing their jobs, safety works and environmental remediation work lasting until 2032.
Govora Power Station Emissions, Allowances Data
| Year | Verified Emissions | Surrendered Allowances | Allowances Outstanding |
|---|---|---|---|
| 2024 | 666,442 | 17,534 | 648,908 |
| 2023 | 467,626 | 0 | 467,626 |
| 2022 | 94,357 | 2,092 | 92,265 |
| 2021 | 184,870 | 30,685 | 154,185 |
| 2020 | 876,946 | 0 | 876,946 |
| 2019 | 1,028,701 | 168,758 | 859,943 |
| Total Outstanding | 3,099,873 |
The 200-MW Govora power plant is owned by the Vâlcea municipality and strategic decisions are made by the Vâlcea county council. The plant provides heating to the nearly 100,000 inhabitants of Râmnicu Vâlcea in southern Romania.
If CET Govora had paid for the unsurrendered allowances on time, the operator would have paid approximately €142 million, taking average OPIS-assessed prices over 2019-2024. Instead, the plant now owes nearly €590 million in unsurrendered EUAs and penalties at current prices—far exceeding Vâlcea county’s budget for 2025 of just over 1.02 billion lei, or €200 million. The management of CET Govora did not respond to a request for comment.
The Govora plant, which has been insolvent since 2016, operates mainly with coal and natural gas inputs, but sometimes still burns fuel oil. As a result, the operator has committed to reducing emissions by building a natural gas-fired plant at the Govora site by the end of 2026. The project will cost approximately 534 million lei, or €105 million, and be fully covered by European funding.
The contract was signed in April 2025 and construction will take 25 months, according to the project’s contractors. Work began in July this year, meaning that the project will be completed in the second half of 2027 at the earliest. Until then, the existing CET Govora plant will be required under EU law to surrender allowances in addition to covering its outstanding emissions-related obligations.
CET Govora’s previous director, Mihai Bălan, was accused in 2018 of awarding unnecessary contracts to a legal company, receiving a personal benefit and causing the plant a loss of 1.3 billion lei (€256 million) between 2011 and 2014. Bălan received a suspended three-year prison sentence, and appealed against it. The legal action was later dropped due to the statute of limitations.
At the time of publication, the company has surrendered only 17,534 allowances—a fraction of its 666,442 verified emissions in 2024. OPIS asked Govora’s management last month whether the company intended to pay for all of its 2024 emissions by the Sep 30 deadline, but did not receive a response.
–Reporting by Nia Simeonova, nsimeonova@opisnet.com; Data work by Guadalupe Ruiz, gruiz@opisnet.com; Editing by Anthony Lane, alane@opisnet.com
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