The energy crises of the 70s led to the vigorous interventions of the industrialized states in the energy sector. On the European political agenda a new problem appeared, namely the one regarding the security of the energy supply. Romania is the third geothermal power in Europe, after Italy and Greece. The energy potential produced by means of geothermal resources of the West and North - West regions is approximately of 144 MWt. The production of a MWt of electricity through conventional sources (in our case study we chose diesel) emits into the atmosphere about 21,673 tons of CO2. If itâ€(tm)s used the entire installed capacity in these areas Romania reduces pollution by approximately 6,935,552 TCO2.durability, externalities, renewable, geothermal, energy independence, pollution

Florea Adrian

Maghear Diana

Perticas Razvan

English

Research Papers in Economics

283 
 
THE ECONOMIC IMPLICATIONS OF THE GEOTHERMAL POTENTIAL OF 
WEST AND NORTHWEST REGION OF ROMANIA 
Maghear Diana 
University of Oradea 
Faculty of Economics 
Florea Adrian 
University of Oradea 
Faculty of Economics 
Per￿ica￿ R￿zvan 
University of Oradea 
Faculty of Economics 
 
The energy crises of the 70s led to the vigorous interventions of the industrialized states in the 
energy  sector.  On  the  European  political  agenda  a  new  problem  appeared,  namely  the  one 
regarding the security of the energy supply. Romania is the third geothermal power in Europe, 
after Italy and Greece. The energy potential produced by means of geothermal resources of the 
West  and  North  -  West  regions  is  approximately  of  144 MWt.  The  production  of  a MWt  of 
electricity  through  conventional  sources  (in  our  case  study  we  chose  diesel)  emits  into  the 
atmosphere about 21,673 tons of CO2. If it’s used the entire installed capacity in these areas 
Romania reduces pollution by approximately 6,935,552 TCO2.  
 
Keywords: durability, externalities, renewable, geothermal, energy independence, pollution.  
 
Jel classification: H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies 
 
For a long time it has been considered that the production and selling of energy is an area 
regulated by national policies and direct involvement of the governments. The natural monopole 
of production and distribution of energy activities and transport activities represents one of the 
reasons that determined the strengthening of the initial ideas of the governments.  
The energy crises of 70s led to the vigorous intervention of the industrialized states in the energy 
sector. On the European political agenda a new problem appeared, namely the one regarding the 
security of the energy supply. Costly programs were initiated for the construction of nuclear 
plants and were allocated grant – in – aids for alternative energy. International Energy Agency 
was created in order to supervise the allocation of the financial resources and to encourage the 
diversification of alternative forms of energy. Meanwhile, in a modest way, began to emerge 
national  energy  policies  and  the  implementation  of  agencies.  However,  some  traditionally 
planned interventions proved to be hasty or even useless, so the capacity of the governments 
alone to intervene in energy policy began to be questioned.
157  
In the history of the European Communities, the energy policy has been rather insignificant, 
although, paradoxically, two of the basic treaties, the Treaty establishing the European Coal and 
Steel Community (ECSC) and the Treaty establishing the European Atomic Energy Community 
(EAEC or Euratom) refers to energy. ECSC established through the Treaty of Paris of 1951, 
created a common cola market. Then was the Euratom Treaty that was signed in Rome in 1957, 
which originated in the Suez oil crisis of 1956. 1956. It aims to reduce the dependence on imports 
from the Middle East. Also, the Maastricht Treaty signed in 1992 and known as the EU Treaty, 
has brought some additions to the definition of the internal energy market (PIE).  
                                                       
157 http://www.renerg.eu/Document_Files//Evenimente/00000058/9dn9j. 284 
 
The European Commission plays a central role in the debate between different actors on the 
energy market, some of them wanting decentralization, while others, on the contrary, as it had 
been seen previously. The first statement of the European Commission that approaches the issue 
regarding a common energy policy dates from 1995 and was called the Green Paper "For a 
European Union Energy Policy." In the same year came out, the White Paper "An Energy Policy 
for the  European  Union, then  a  new  sequence of  communications  in  1996 and  1997,  called 
"Green Paper for a Community Strategy - Energy for the Future: Renewable Sources of Energy 
"and" White Paper: Energy for the Future - Renewable sources of Energy.  
These  documents  underpin  the  current  common  energy  policy  and  the  European  legislation 
designed to implement it. The complexity of the problems regarding the production of energy, the 
transport and the energy consumption has much increased in the last decades, together with the 
ingravescence of the global environmental problems, climate changes and depletion of 
natural  resources.  In  addition,  the  EU  confronts  itself  with  some  specific  problems 
among  which  the  most  serious  being  the  one  linked  to  the  increased  dependence  on 
imported energy resources.
158 
The efficient conservation, valorization and in an ecologic manner of the energetic resources and 
also the sustainable use of these resources, represent in recent decades is a major worldwide 
concern. Finding viable solutions for the problems with which man confronts today in the energy 
domain, is imperative because of:  
-  the gradual depletion of oil resources; 
-  the increased rhythm of growth of the greenhouse gases’ emissions; 
-  the  expansion  of  the  nuclear  power  plants,  having  as  consequence  the  volume  of 
radioactive wastes; 
In  order  to  avoid  these  unwanted  phenomena,  over  time  it  has  been  tried  the  adoption  and 
implementation  of  measures  designed  to  prevent  the  occurrence  of this phenomenon.  In  this 
category belong the eco-taxes or environmental taxes that represent "extraordinary constraints" 
introduced by governments as to counterbalance the social costs resulting from damages to the 
surrounding environment due to externalities generated by people. This notion was introduced by 
the economist Alfred Pigou in 1920 which stated that for an economy it would be useful to 
correlate the price of goods with that of the common consumption goods by using property taxes.  
Another implication is this sense has the British economist Ronald Coase, Nobel Prize winner in 
Economics in 1991 who contributed to the development of the economic Theory of Externalities.  
Marketable pollution licenses - LPT (Tradable Permits)
159 are based on the principle of the right 
to emit pollutants within the limits stipulated by laws and regulations concerning environmental 
protection. This system is the most often used in the U.S.A. (regulated by the U.S. Clean Air Act). 
Through the system of tradable pollution licenses a company or a country has the permission to 
sell to a third party the right to issue the amount of pollutants due to the difference between the 
level of pollution permissible by law, considered as the maximum allowable level of pollution 
and achieved by adopting new ecologic technologies or ecologising the existing ones.  
Reducing the environmental impact of the energy sector involves the use of regenerable energies 
including biomass, geothermal energy, solar energy, aeolian and hydropower that should play a 
key role in the future. On the other hand, it is necessary to strive for a more efficient energy use, 
as a relatively easy means to reduce the environmental impacts of energy. Thus, the geothermal 
potential of Romania and especially of the west and north - west region shows a great energy 
importance and implicitly an economical and environmental one for the country.  
 
The population of the West and Northwest area  
                                                       
158 Idem. 
159 http://www.bibliotecadigitala.ase.ro/biblioteca/pagina2.asp?id=cap4. 285 
 
The northwest Region is one of the eight development regions of Romania and includes six 
counties:  Bihor,  Bistri￿a-N￿s￿ud,  Cluj,  Maramure￿,  Satu  Mare,  S￿laj.  The  surface  area  is  of 
34,159 square kilometres, representing 14.32% of the country’s surface, with a total population 
of 2,744,914 inhabitants.  
The West Region of development of Romania is located at the border with Hungary and Serbia, 
and is organized from administrative and territorial point of view in four counties: Arad, Caras-
Severin,  Hunedoara  and  Timis.  The  West  Region’s  population  is  of  1,924,442  inhabitants, 
representing 8.93% of Romania’s population. The West Region covers up an area of 32,034 km2, 
representing 13.4% of the country.  
The  table  below  presents  a  synthesis  of  the  main  parameters  of  the  important  geothermal 
perimeters from Romania, including theoretical power potential. Using the extracted geothermal 
energy is used for heating in a proportion of 37%, 30% for agriculture (greenhouses), 23% in 
industrial processes and 7% for other purposes. From a total number of 14 geothermal wells dug 
from 1995 to 2000 at depths of 1500-3000 m, only two wells were unproductive, registering an 
86% rate of success.
160 
 
Table 1. The Geothermal System Today  
No. 
Unit  The geothermal system 
Estimated 
area 
No. of 
wells 
Drilling 
Depth 
Exploitable 
flow 
Resource’s 
temperature 
Theoretical 
energy 
potential 
km 
2 
 
m  ￿ ￿ ￿￿￿
￿￿ ￿ ￿￿￿ 
0 C  MW t 
1. 
Cri￿ul Negru – Some￿  
S￿cuieni, Margita, Ciumeghiu, Salonta – the 
counties of Bihor and Satu Mare  
3570  18  1500 
￿￿￿
￿￿￿  77  29,14 
2. 
Bor￿  
Bor￿ City – Bihor County  13  4  2800 
￿￿￿
￿￿￿  100  8,79 
3. 
Oradea  
 Oradea City –Bihor County   77  12  2800 
￿￿￿￿￿
￿￿￿￿￿  83,8  34,1 
4. 
Mures – Crisul Negru  
Curtici, Macea, City of Arad - Arad County   1060  113  1500 
￿￿
￿￿￿  58  9,3 
5. 
Western Banat 
N￿dlac,  Sâmnicolau  Mare,  S￿ravale, 
Tomnatic,  Lovrin,  Jimbolia,  Periam, 
Teremia  Mare,  Comlo￿u  Mare,  Grabat, 
Beregs￿ul  Mic  –  the  counties  Arad  and 
Timi￿ 
2790  20  2000 
￿￿￿
￿￿￿￿￿￿  77  62,75 
Source: http://www.minind.ro/domenii_sectoare/energie/studii/potential_energetic.pdf 
 
National exploitable reserve of geothermal water is of approximately 167,000 tep / year of low 
enthalpy  resources,  which  currently  capitalizes  about  30  000  tep/  year.  The  total  installed 
capacity in Romania in the west and northwest part is of 320 MWh (for a reference temperature 
of 300 °C).  
Western and North – Western Regions have an electric potential of approximately 144 MWt of 
the current well installed. The production a ton MWt of electricity through conventional sources 
(in our case study we chose diesel) produces and emits into the atmosphere about 21,673 tons of 
CO 2.  
From a simple calculation we observe that if we use the entire installed capacity in these areas of 
Romania  reduces  the  pollution  by  about 6,935,552 TCO  2.  By  the  end  of  2009  the  price of 
pollution certificate was of 15 Euros (a pollution certificate equals a ton of CO2 emanated in the 
atmosphere). So, we can observe the economic benefits that Romania would obtain in the case of 
using at maximum the installed capacity of electricity generation that is of 104,033,280 Euros.  
                                                       
160 http://www.minind.ro/domenii_sectoare/energie/studii/potential_energetic.pdf.  
In the White Paper it is proposed that by the end o
resources 1GW t of electricity and 5 GW of thermal heat
liquid combustibles can generate and emanate approx
pollution it the case of using available geothermal
 
Graphic no.1. Analysis of CO2 emissions for the pro
Source: The data were elaborated by the authors wit
Graphic’s explanation
RETScreen Analysis for emission reduction 
Emission Analysis
Method 2     Greenhouse effect’s potential of GES
25 tons CO2 = 1 ton CH4         (IPCC 2007)
298 tons CO2 = 1 ton N2O 
GES Summary for the case of reference (Level of ref
Combu
stible 
debit 
Combustible 
mix 
 
Emission 
agent CO2 
kg/GJ 
Emission 
agent CH4 
kg/GJ 
Diesel 
(comb#
2) 
100.0%  69.3%  0.0019 
Total  100.0%  69.3%  0.0019 
GES Summary for the proposed case (Heat production 
Combu
stible 
debit 
Combustible mix 
 
Emission 
agent CO2 
kg/GJ 
Emission 
agent CH4 
kg/GJ 
286 
In the White Paper it is proposed that by the end of 2010 to be produced using geothermal 
of electricity and 5 GW of thermal heat. The production of 6 GW t by burning 
liquid combustibles can generate and emanate approximately 21,672,499 TCO 2. Or, it can reduce 
pollution it the case of using available geothermal potential or other renewable resource.  
Graphic no.1. Analysis of CO2 emissions for the production of one MWt, using liquid fuels 
 
Source: The data were elaborated by the authors with the help of Retscreen 
 
Graphic’s explanation 
RETScreen Analysis for emission reduction – Heat production project 
Emission Analysis 
Greenhouse effect’s potential of GES 
25 tons CO2 = 1 ton CH4         (IPCC 2007) 
298 tons CO2 = 1 ton N2O      (IPCC 2007) 
 
GES Summary for the case of reference (Level of reference) 
Emission agent N2O 
kg/GJ 
Combustible 
consumption 
Emission 
agent GES 
GES 
emissions 
tCO2 
Mwh  tCO2/MWh 
0.0019  86.062  0.252  21.672.4 
0.0019  86.062  0.252  21.672.4 
GES Summary for the proposed case (Heat production project) 
Emission 
agent CH4 
Emission 
agent N2O 
kg/GJ 
Combustible 
consumption 
Emission 
agent GES 
GES 
emissions 
tCO2 
f 2010 to be produced using geothermal 
by burning 
Or, it can reduce 
 287 
 
Mwh  tCO2/MWh 
Total  100.0%  0.0  0.0000  0.0000  0  0.000  0.0 
Summary for reducing emissions of GES 
 
Emission of GES 
Reference case 
tCO2 
Emission of GES 
Proposed case 
tCO2 
Annual gross emissions 
reduction GES 
tCO2 
Transactions’ taxes for 
GES credits 
% 
Annual 
net 
emissions 
reduction 
GES 
tCO2 
Heat production project  21.672,4  0.0  21.672,4    21.672,4 
Annual net emissions 
reduction of GES  21.672  tCO2  equivalent with            50.400 Unused oil barrels 
Source: The data were elaborated by the authors with the help of Retscreen 
 
In Romania, the capitalizing degree of renewable geothermal energy resources is low, the main 
cause  being  determined  by  the  lack  of  proper  financial  support,  which  doesn’t  favour  the 
development of the energy sector with superior financial and economic effects. Using geothermal 
water constitutes a viable option when the extracted agent at surface insures a supply system at a 
constant flow, and the variation of the energy demand at the consumer in different periods of the 
year is not great. The recommended system is the one with several active wells, of which some 
will be for re-pumping. The advantages of this system, besides the provided energy, are the 
conservation  of  the  water  reserve  and  that  of  the  water’s  layer  pressure.  In  the  U.S.A.,  the 
energies obtained from renewable sources, 5% came from geothermal sources and 1% of solar 
power.
161   
At the present time, studies reveal that the Earth's geothermal potential is about 13,000 per year 
ZJ, of which approximately 2000 ZJ could be used to produce electricity, with the geothermal 
plants. If we could get to use only 0.25% of this potential, we won’t need coal, plutonium, oil and 
gas for the production of electricity. Currently, we use only 1% of the world’s electricity need 
which is covered by geothermal sources, so use 0.0025% of the full potential.
162 
We consider being worth mentioning and underlined the positive effects of using this resource:
163 
- Reducing the imported primary energy resources dependence (primarily fossil fuels)  
- The diversification of the available energy resources.  
-  The  production  capacities  considered  for  different  parts  of  the  country  will 
simultaneously lead to employment’s increase and the labour market will diversify its offer.  
- The business environment will be diversified by attracting private companies (domestic 
and  foreign)  as  well  as  local  and  central  public  authorities,  in  the  process  of  exploiting 
regenerable energy resources.  
- Investments in the domain of renewable energy resources will enable the manufacture, 
transfer and sale of products and modern technologies in this field.  
                                                       
161 http://www.agir.ro/univers-ingineresc/energia_geotermala_1664.html. 
162  http://www.energeia.ro/energie-geotermala/potentialul-geotermal-al-terrei-de-4000-de-ori-necesarul-energetic-
global-549/. 
163 http://www.fonduri-structurale-europene.ro/poscce/valorificarea-resurselor-regenerabile-energie.html. 288 
 
-  The  valorisation  of  renewable  energy  resources  will  lead  to  a  greater  emissions’ 
reduction possibly resulting from the fossil fuel combustion process and to the preservation of the 
environment.  
 
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THE ECONOMIC IMPLICATIONS OF THE GEOTHERMAL POTENTIAL OF WEST AND NORTHWEST REGION OF ROMANIA

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THE ECONOMIC IMPLICATIONS OF THE GEOTHERMAL POTENTIAL OF WEST AND NORTHWEST REGION OF ROMANIA

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