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Recent Changes in Romanian Legislation Aim to Support the Renewable Energy Sector, Subject to Some Question Marks

Recent Changes in Romanian Legislation Aim to Support the Renewable Energy Sector

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In the current energy context, the RePower Europe package talks about an accelerated permitting procedure for renewable energy in Europe, as an absolutely measure to accelerate the development of green energy projects. However, in Romania, the permitting process for such projects is long, bureaucratic and takes about 540 days.

Recently, a draft law amending and supplementing the Land Law no. 18/1991 (and the Emergency Ordinance 34/2013) has been approved by the Parliament and sent to the Romanian President for promulgation (it will enter into force only after promulgation and publication into the Official Gazette) which, in principle, should simplify this permitting process.

The new law provides that projects specific to the production of electricity from renewable sources (solar energy, wind energy, biomass, bioliquids, biogas, storage units, transformer stations or other similar systems) can be located in the outer city limits (RO: extravilan) of a locality on agricultural lands from classes III, IV and V (agricultural, pastures, vineyards, orchards), based on the building permit and on the approval of removal from the agricultural circuit, within an area of maximum 50 ha. Linking these projects to the category of investment objectives that can be built outside the city limits is welcome and normal, as they are rather compatible with the area outside the city limits. The introduction of these projects into the city limits (RO: intravilan) of a locality in order to build them was just a formality with multiple bureaucratic obstacles, without having, in fact, substance or any real benefit from an urbanistic point of view. On the other hand, as the intention is for these projects to be carried out outside the built-up area of the city, it is difficult to understand the limitation to the surface of 50 ha, which could practically become a problem in case of large projects. Instead, the large projects themselves are those that should be carried out outside the cities, given their nature and potential impact, like other objectives that are currently allowed, such as telecommunications networks, high voltage power lines or main pipelines.

The surface of agricultural land outside the built-up area – except for lands from arable use category – can be used in a dual system both for agricultural activities and to produce electricity from renewable sources, the final or temporary removal from the agricultural circuit being done only for the land areas effectively occupied by these investment objectives, the rest of the area remaining in the agricultural circuit. It is also important to mention that the payment of the tariff for removal from the agricultural circuit is made at the time of construction authorization.

The law also modifies the current system of exploitation of permanent grasslands and allows the use of areas occupied by permanent grasslands in a dual system, both for animal grazing and feed production, as well as to produce electricity from renewable sources.

Therefore, from the date of entry into force of the new law, the procedure for authorizing renewable energy projects should be significantly shortened, given that, in principle, it is no longer necessary to go through the procedure for approving a Zonal Urban Plan (PUZ) for the introduction of the land inside city limits (RO: intravilan) of a locality, in order to carry out constructions. However, it is unclear whether the approval of a PUZ does not remain necessary for the approval of some urbanistic parameters necessary for the respective constructions (POT, CUT, height etc.). In connection with this aspect, we note that Law no. 50/1991 on the authorization of construction works provides that building permits are issued under and in compliance with the provisions of urban planning documentations, approved by law, and does not include renewable energy projects into the category of constructions exempted from the need to have such urban planning documentations in place.

There are arguments to support the interpretation that, in fact, the purpose of the legislator was exactly to eliminate the need to approve a PUZ for this category of projects, given that the substantiation note of the law states that the purpose of the new regulation is to simplify the administrative procedures and that the current practice of imposing the need to approve a PUZ for the transfer of land into the built-up area of a city, with the payment of related fees prior to securing the investment, is a major impediment to making significant investments in the field.

Moreover, it would be somewhat illogical to consider that the need to approve the PUZ was removed from the perspective of the transfer of land from outside the city limits to inside city limits, but was maintained from the perspective of the need to approve the urbanistic parameters.

However, due to the lack of clarity and legislative coherence, until the express amendment of Law no. 50/1991, the issue of the PUZ remains unclear and subject to interpretation.

Another discussion on the text of the law is related to the meaning of the limitation to 50 ha – does this limitation refer to the entire land area affected by the investment objective, respectively both the land area remaining into the agricultural circuit and the area actually affected by the construction elements of the investment objective? Or does the respective limitation exclusively consider the area actually affected, respectively the area to be permanently or temporarily removed from the agricultural circuit in order to build the constructions related to the electricity production installation?

In this case, also, the text of the law is unclear, and it remains to be seen how it will be understood and applied in practice, as it is somewhat predictable that there will be different interpretations of both authorities and investors in renewable energy projects.

Beyond the ambiguities, the new law is a step forward, which needs to be done in the context of the urgent need to simplify the permitting process for renewable energy projects. The provisions of the law will take effect until 31 December 2026 only. It remains to be seen whether this period of time is sufficient to authorize investment objectives in accordance with Romania's policies on the production of energy from renewable sources.

By Paula Corban-Pelin, Local Partner, DLA Piper

Romanian Knowledge Partner

Țuca Zbârcea & Asociații is a full-service independent law firm, employing cross-disciplinary teams of lawyers, insolvency practitioners, tax consultants, IP counsellors, economists and staff members. It also operates a secondary law office in Cluj-Napoca (Romania), and has a ‘best-friend’ agreement with a leading law firm in the Republic of Moldova. In addition, thanks to the firm’s dedicated Foreign Desks, the team provides the full range of services to international investors seeking to gain a foothold or expand their existing operations in Romania. Since 2019, the firm and its tax arm are collaborating with Andersen Global in Romania.

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