Template.png

Răzvan Nicolescu

Former Minister of Energy

Romanian Ministry of Energy

April 6, 2021
  • iTunes
  • Spotify
  • YouTube
  • Twitter
Ep 9: Răzvan Nicolescu - Former Minister of Energy, Romania
00:00 / 01:04

Adam Zuckerman
So today, we're here with Răzvan Nicolescu. With more than 20 years experience in the energy and climate change sectors, he is one of Romania's and Europe's leading experts. Now, you've got a storied background. It's fantastic. You're currently at Deloitte, the advisory partner for energy resources. You're the leader for Romania and the sector leader in Central Europe since 2018. You're the Associate Professor of Bucharest Academy of Economic Studies between 2008 and 2014, Director for Regulatory Affairs at OMB Petrom, which is the biggest Romanian energy company. In 2014, the Romanian Minister of Energy and your bio goes on and on. Chairman of the European Agency for the Cooperation of Energy Regulators, Romanian energy attache to EU, non Executive Board member at the Romanian Power Transmission Systems Operator Trans-electrica, and even more electrical engineering background MBA Răzvan, welcome to the Energy Impact Podcast.

Răzvan Nicolescu
Thank you very much. I'm very glad to be here with you.

Adam Zuckerman
It's great to see you today. Where do we find you in the world? I know that you're on the road often.

Răzvan Nicolescu
Say it again, because I did not hear it very well.

Adam Zuckerman
Where are you today in the world? Are you in Romania? Or are you somewhere else?

Răzvan Nicolescu
Oh, no, I'm in Romania planning to travel.

Adam Zuckerman
Okay, so we've got you at home. It's a great context. Let's talk about you before we actually hop in. Tell us about your career. How do you get your start in the energy market?

Răzvan Nicolescu
Well, it's a nice story. Actually, I had a passion for physics. And my teacher during my high school, he recommended to me to go to and to become an engineer. And I was I mean energy, I saw that it was something to the future. And I was thinking of going, becoming an engineer, electrical engineer. My mother, she wanted me to become an IT engineer and my father wanted to follow his career path. I mean, doing sports. My father was a soccer player, and trainer and teacher teaching sports. I also was when I was very young. I like doing sports. I actually am the national champion of Romania in three different sports.

Adam Zuckerman
Which sports?

Răzvan Nicolescu
Volleyball, indoor volleyball, I mean, beach volleyball, and when I was younger, I was champion in chess.

Adam Zuckerman
Okay, interesting.

Răzvan Nicolescu
But I mean, I said, when to be an engineer and to deal with energy could be something very nice. And I think that I made a nice choice. And also, I mean, I managed to have peace in my family. Because if I, if I decided to go to follow the recommendation of my mother, maybe the father would have been upset, or the other way around. So they were both happy. So everybody was happy.

Adam Zuckerman
Do you have brothers and sisters?

Răzvan Nicolescu
No I am the only child in my family.

Adam Zuckerman
Okay, so heavy weight on your shoulders, you almost became a professional beach volleyball player you were going to take over as a grandmaster in chess, but instead you disappointed your family when you became the Romanian Minister for Energy in 2014. I think that your parents are probably pretty proud about that. But it was so interesting when you came into office. You are not a member of any political party. How does that work?

Răzvan Nicolescu
Well, actually, it was a very, very intensive political momentum. Because it happened just before a couple of very important elections. And probably the party ruling the country at that time, wanted to have a technician able to conduct in a consensual, consensual political type of approach to conduct some very important actions. So it was just before the presidential elections, which are the most important elections in Romania, like in the US, we have a president elected by people pretty powerful in comparison with, with other presidents from other EU countries. So our model is close to the French model and following or being closer to the American model than other models existing in Europe. And then, it was just before also the elections for the European Parliament. So the politicians were busy doing politics and they wanted to let something go people to conduct some important, some important actions processes at that time. For example, it was I initiated the revision of the Romanian energy strategy, I managed to complete successfully the largest IPO ever organized on the Romanian and London Stock Exchange.

Adam Zuckerman
What do you mean, are you you orchestrated an IPO as a Minister of Energy? How does that work?

Răzvan Nicolescu
It was a state owned company, the largest utility in the energy sector, a company called Electrica. So actually, I was responsible, I was the coordinator. I mean, of the process to sell 51% of the company via an IPO, on the Romanian stock market and on the London Stock market. So the company was listed in London and in Bucharest at the same time.

Adam Zuckerman
So it sounds like part of your job was opening up of the market, what are the other responsibilities of the Minister of Energy in Romania?

Răzvan Nicolescu
Well, actually, you need to define the strategy. That's to the to define a plan for public policies to create a good environment for investments. You are also responsible for the administration of some state owned enterprises that are still state owned enterprises in the energy sector. So you have a lot to do. I, in the US, at my time was as a, as a State Secretary in the in the Department of Energy, Professor Moniz, we used to work very closely, and he's a very nice person.

Adam Zuckerman
All right, what was it like on your first day?

Răzvan Nicolescu
The first day in office?

Adam Zuckerman
First day in office, what did you do?

Răzvan Nicolescu
The first day in office, it was probably the most important day, because at the end of the first day, I said that it's completely different being in in comparison with being out of the decision making process. There are many, many internal fights that you you feel, but if you're not in, you have no clue about it. And I said, at the end of the first day that I am going to behave, like each day is my last day in office, and I'm gonna do whatever I can, in order to make good things for the country, for the people for the energy sector. So politics is a thing very dangerous. It's a very dangerous sport. So this was the conclusion of the first day I said, probably I'm not going to stay too much here because I didn't want to make too many compromises. And let's say that each day is my last day and let's do whatever I can.

Adam Zuckerman
In many administrations around the world, there's a transition of true of traditional, a tradition of transition gags and notes. Is there anything like that in Romania that you could share? Did you leave a note for your predecessor? Did you leave the lights on what's the transition like?

Răzvan Nicolescu
I did the kind of transition with my predecessor. But my predecessor was appointed as a Minister of Economy and he was a politician. So we did not share the same, let's say the same views. And also I tried to do it better with my successor. I mean, in terms of transition, my mean to have to share with him, my thoughts Oh, and to be useful for to be useful for him. Otherwise, it was a great experience, it was a great experience. I am not sure if I want to make it again. Because as I said, it's completely different than you are expectations.

Adam Zuckerman
Okay, let's, let's dig into that. Let's start with Romania, and then work ourselves outward to the European stage and then and then globally. Now, for many of our listeners that are located in the US and not in Europe. Let's talk a little bit about basic georgraphy. So Romania is a country in southeastern Europe, It borders the Black Sea between Bulgaria and Ukraine. It's about twice the size of Pennsylvania, slightly smaller than Oregon, and it has about 21 million people in it. So the same number is Florida. Your energy landscape is very diverse. There's coal, natural gas, hydro, nuclear, wind, biomass, solar. And currently, the country is undertaking a, a mission to achieve a quota of 30.7% renewable energy that's set forth by the National Integrated Plan for Energy and Climate Change 2021 to 2030. All right. Can you explain what a national integrated plan actually is?

Răzvan Nicolescu
I'm gonna I'm going to explain it. But before if I may, I would like to add a little bit to the to the, to the presentation that you made for the country in terms of energy, because I think it's very interesting for, for the people who are watching, what we what we discuss, please still, Romania was the first country in the world, record it officially as an oil producer. It's not sure if it was the real first one producing oil. But because it might be a situation it was another one producing but not being recorded officially, but official is recorded as being number one. Maybe it was not the as I said, number one, but it was among the first countries producing oil. No doubt about the fact that the first refinery in the world was built in Romania. This is not not questionable. Yeah, it was built in Ploiești, where there is an amazing oil museum. Bucharest was the first capital in the world with public lighting. Timishoara was the first city in the world that, another Romanian city, with public lighting. So there is a huge, huge history in the energy in the energy sector. That's why what you have just said about the country having the most balanced energy mix in the European Union. It's a nice journey. I mean, from oil and gas towards much cleaner, much cleaner type of energy sources was the first country in the Europe with a complete nuclear fuel cycle.

Adam Zuckerman
What does that mean a complete nuclear fuel cycle.

Răzvan Nicolescu
I mean, except the technology which was both from Canada, Romanian, Romanians did not want to have the Russian technology in the nuclear field. Because they didn't they didn't trust the Russians much. So they weren't the only country from the, let's say from the former Soviet influence sphere that refuse to have Russian technology in the nuclear field. And they decided to develop a partnership with with Canada and there is in the nuclear field, there is a CANDU technology. All the rest external technology is produced locally. Heavy water, uranium, everything is produced is produced locally, giving the country a lot of independence in terms of especially in relation to the former Soviet Union. And I think that the future will be linked to the development of clean technologies renewable nuclear, in order to replace to replace coal and gas, especially if coal and gas are not able to develop carbon capture and storage. Yeah.

Adam Zuckerman
So let's shift to the national integrated plan for energy. What does that actually mean? Is it a binding obligation? Or is it strict? Is it just general guidelines that European nations have to place out? But nobody actually follows? How does that work?

Răzvan Nicolescu
So it is a, it is a binding plan. So when you submit it to Brussels, it's like a strategy. But you commit, it's a commitment that you are going to do it.

Adam Zuckerman
What happens if a country doesn't meet the obligations of the plan?

Răzvan Nicolescu
So normally, when it's a binding plan, as I said, if you don't do it, you are brought in front of the European Court of Justice, and you pay penalties.

Adam Zuckerman
Who sets the plan, then are country's independent in their energy sovereignty, or are member states of the EU obligated? And when they do their plans? If there are new power production facilities and generation facilities in the country? Do they have to get everything approved? Where does that plan in mix of who's responsible for what lie?

Răzvan Nicolescu
It is the responsibility of the member states

Adam Zuckerman
Of the member states? Okay, yeah,

Răzvan Nicolescu
They consult with the European Commission. But it is their responsibility. They make the final decision, they submit the plan,

Adam Zuckerman
As the country then is moving towards the renewable goals, what needs to be done in the country, what actions have already been taken?

Răzvan Nicolescu
You have to I mean, the country has to make a couple of things. First, for the energy slowly transition, you need to prepare the networks, the electricity networks. If we are not talking about like, electricity consumption, yeah, you have to prepare the networks to have the networks more digitalized, and more capable to integrate renewable. That's number one. Number two, we need for example, to learn from the California example. And to develop backup capacities. When renewable cannot supply, if it is batteries, storage batteries or other types of storage, but you have to have backup capacities. Electricity is a type of commodity pretty unique, because you produce it and you consume it almost at the same time. And it's not easy to store it. So what we have to develop, we have to develop and to do more in terms of storage. If we want to have more renewable, then you need to create a friendly environment in order to get clients. Yeah, if you want to install something, you have to decrease the bureaucracy, you have to increase the transparency. And you have to make it to I mean, in a decent period of time, have to wait for I don't know how many approvals how many months. That's very important to eliminate bureaucracy. The rest there is a very good potential for wind, there is a very good potential for photovoltaic there is a very good potential for geothermal energy, very good potential for biomass. And people people are positive and friendly in relation to the nuclear energy. We as I said, we have had a great experience with this Canadian partnership. Our nuclear power plants are on top of the top in terms of nuclear safety. People are favorable. So this is it's a good environment. And it's an interesting, it's an interesting market.

Adam Zuckerman
What are some of the challenges that you've seen? Romania face over the past decade and have they changed.

Răzvan Nicolescu
In terms of challenges, I think that the biggest problem is linked to the performance of the public administration. Public Administration has the need to be reshaped, shuffled or restructured. In order to increase that performance, with less bureaucracy, better efficiency. So the biggest problem is linked to the to the public administration, and it affected a lot. The sector, that's why when I had the the honor and the opportunity to work to work for the state, as a member of the cabinet, my one of my, one of the most important projects that I initiated, was to open the ministry for fresh people, young people. And I was it was an amazing positive surprise, how many young people wanted to work. However, the wages of the time were not amazing now are slightly okay. But my time they were not so great. But they wanted to it was a great day, it was a great experience for them, and they wanted to be part of the journey.

Adam Zuckerman
Let's talk about that. So the there's an increased interest in people joining the ministry is getting the government making a change. But at the same point in time, the Romanian government is having this repeated series of turnover. So there have been 789 ministers of energy over the last decade or so in Romania. Is that a challenge that the country is facing from an energy planning perspective that there's too much turnover in government? Or do you think that things are beginning to stabilize?

Răzvan Nicolescu
I think the things are going to be stabilized. But it's not good when you have so many changes in a short period of time. You know, sometimes ministers top level politicians, top level decision makers, they have their own egos. They think that their vision is the best in class. They do not want to agree or they refuse to agree with what the predecessors did. Okay. There are also these type of things unfortunately. It was not my case. But unfortunately, there were also these type of attitudes. And this is not good. This is this is not good. And this is everywhere. I mean, dealing with NGOs. It's, I mean, it's an important issue everywhere, not only the protocols in corporations, I noticed that sometimes it goes to destroy business.

Adam Zuckerman
Certainly. Now, in preparation for today, I spoke with a few subject matter experts in Romania. And one of the questions that I continually asked was of all of the various ministers of energy who is most capable, and without fail, you are always the first that people responded. So congratulations on that. It makes sense that you would shift into a large corporation like Deloitte because of your expertise. Again, you're now the advisory partner for energy and resources in Romania. But it's not just Romania in Central Europe, even beyond. Let's talk about the global view, what can we do to succeed in the global energy transition not from a country level, not from a European level, but globally.

Răzvan Nicolescu
The first thing that we should do is to learn from the COVID crisis. If we are going to manage the energy transition, like we have been managing the COVID crisis, we will definitely fail. We need more solidarity and we need a much better coordination. I mean, if you say I don't care about the others, I care only about our situation in Romania. We have no issue. So yesterday I looked at the latest figures. We have one of the lowest CO2, tonnes of CO2 per capita in the EU. So 50% lower than in Hungary 100% lower in Poland, we said guys, we are okay we are we don't want to do anything. We should not do anything because we are just perfect. Look at the average CO2. In my view, this is the most important indicate. Again, if we want to make money out of the out of the energy transition, that's why I make this comparison with the COVID prices. You see now there are a couple of companies selling products. Selling vaccines I don't know any other products used to, to handle the COVID price is the same in the energy transition. So it should be something balanced. Because if it is too much business on only business, then at one moment in time, we will face trouble troubles. I've traveled a lot, pretty recently before the COVID crisis meeting, many people from many countries discussing how they handle the energy transition. So energy transition in order to be successful, should deliver also good results from the economic perspective. Because if you say everything we produce in China, and you just buy it from us, it does not work like that. Yeah, it should create jobs, it should create the it should create income, it will generate taxes in all the countries otherwise, some of them might say I don't want to act. And I mean, only one for example, if India does not want to act, we will not be successful, will not be successful. Let's talk more solidarity is definitely needed. Maybe a discussion also on the on the WTO rules, in terms of intellectual property rights. For example, if the two of us if we invent an amazing technology that can save the world should the world wait for us to be able to produce the produce based technology and to deliver it at a global scale? Or should the world give us some money is the recognition of our efforts and be able to use it immediately without waiting us to develop the production capacities, the capacities to supply that they want you to the entire world? That's a very that's a very important question. And that's a critical question.

Adam Zuckerman
What about inter governmental and inter country collaboration? Do people get there and mechanisms in place that can encourage collaboration? Or do you think that there should be a renewed focus on collaboration between countries as well?

Răzvan Nicolescu
I think it's good country when the countries collaborate. By the way, the cooperation between Romania and the US is just great. And the Americans are very welcome in Romania. Romanians like Americans, they are were very welcome to come to travel to have fun to do business. So it's a very it's a very friendly country. Yes, cooperation is needed between countries but not only between countries is cooperation is needed between business. businesspeople, people. And but as I said, in order to be successful with the electric transition, we need to we need solidarity and we need to learn from this COVID crisis.

Adam Zuckerman
For listeners who aren't familiar with industry in the business capabilities in Romania. Can you speak to that a bit? What is Romania known for earlier you talked about the innovative spirit, the rich tradition of being first, especially in the the energy landscape. What should people know about Romania that they might not know?

Răzvan Nicolescu
So in terms of as I said, the past is just great. The present I think, is a decent one, the most balanced energy mix in the EU and top three EU countries in terms of energy independence. So we produce a significant part of our resources locally. Including oil, gas and all the rest. Yeah. Already renewable energy supplies 25% of the total needs, I mean, all the energy mix. So it's a, it's an one of the most independent countries in terms of energy from the EU, as you know, many of the EU countries, relies on Russia here is not the case. And the perspectives for the future are just very interesting. Let's put it like that. Because, as I said, an important energy to be saved. For example, in buildings, so great potential for energy savings. Yeah, a great potential to produce wind energies, photovoltaic energy, geothermal energy, biomass energy. An interesting appetite for nuclear, I think without nuclear will be very difficult to meet the to meet the goals in terms of climate change. So that's why it depends how many, again, a good perspective is for hydrogen, good perspective for hydrogen. It's important. Now there are also available, some financial resources to be invested, it's important to invest in a smart manner, and with a good return for the entire society.

Adam Zuckerman
You mentioned nuclear recently, and I'm not sure if you've seen this, the Joint Research Center of the European Commission finished a review on green energy findings. And it's making a recommendation to the European Commission that nuclear energy should qualify as green energy is viewed as one of the primary hurdles to nuclear power, again, being re embraced in the EU, potentially opening the door even for nuclear power to receive equal investment as renewables. Do you think that this is actually going to move forward? Do you think that the perception of nuclear energy in Romania in Europe and maybe even the world might change?

Răzvan Nicolescu
I think it's a I've read the I've read the conclusions of the of the study, I did not have time, because it's a very recent study, I did not have time to read the entire study, but I've read the conclusions in recommend is exactly as you said, they also mentioned something that they did not assess other risks in terms of the nuclear energy could bring for the environment. They focus only on climate change. And their conclusion was clear that in terms of climate change, nuclear is is a robust option. It's positive, I think, for the future of nuclear, for the future of nuclear energy. And, as I said, in my view, without the nuclear, it's very difficult to be to be successful. From my point of view, the biggest problem faced by the nuclear sector is the fact that nuclear projects are very high intensive in terms of investments. So you need big money. And that's why the appetite to take the market risk combined with the larger scale of investments, so this appetite is not very, is not very big, because as I said, we are talking about billions. When, of course, I'm talking about ordinary projects. So, I think, probably in the coming in the coming years, the role of nuclear energy will be will be more and more underline in the context of the fight against climate change. I also think that for the moment, we do not pay enough attention to CCS type of technologies.

Adam Zuckerman
CCS meaning?

Răzvan Nicolescu
A carbon capture and storage. So I think we are without the nuclear and without CCS, we will not be able to meet the climate targets. And unfortunately, when we talk about climate crisis? It is a lot of, you know, it's a lot of not all the people are honest. They sometimes defend too much some of their business interests. So in my view is you are honest, you have to I have to accelerate and to act in a smart manner. Yeah, it's very difficult to tell the people stop traveling or now we only go by bicycle, if you want to go from here to watch it on your to go by bicycle or by is difficult to change this and we should not do it. We should we should avoid to be experienced. We should avoid the extremes. Yeah, we should say everyday today. Yesterday, you know what I did yesterday, together with my family, I plant trees. I plant around 20 trees. And I, I do it from time to time. And I feel just great. But if you Tell me, please, tomorrow, as I said to you, I plan to travel by plane, if you tell me Don't go there. It's very difficult for me to accept this, this type of life. So when do we need to be realistic?

Adam Zuckerman
There's a statement about people that says you're unique just like everybody else. And you can take that same type of sentiment and apply it to countries as well. So Spain is unique, just like every other country, when we're talking about this global ecosystem, and you look at the myriad of choices for energy to be renewables from photovoltaic, it can be hydro could be wind, clean energy with nuclear, you can go dirty if you wanted to look at coal, but not every single energy source is great for every single country, some countries may have more sun, some countries may have more wind, some countries might be completely making a different way. When you look at the EU and countries look at their planning matrix, how does that get implemented? So are there different types of approval procedures for wind and hydro than there is for coal than there is for nuclear? And how does that play out?

Răzvan Nicolescu
So, I mean, the the permits and the approvals are handled at the national level. And it's not a coherent approach, how many permits and who should issue the permits in the European Union, it belongs to countries or sometimes it even belongs to regions, I mean, in one region of a country, it is a procedure in another region, it is slightly different procedure. But I do not see the as a major obstacle, I do not see it as a major obstacle. What I see as a major obstacle for some type of energies are the support schemes. There are some type of energies that do not need support schemes anymore, at least in some countries. But politicians they talk about it. They create dreams of accepting the non refundable money, via support schemes and investors instead of investing and making a good and decent return, they wait expecting to make an amazing return. Having subsidies. So a clarification at the European level on what could be financed with non refundable national or EU money could be a great, great push for some investments. If we prolong the discussions about the recovery and the resilience plan about I don't know how many modernization funds This is not good for the especially on a short term is not good for the energy transition. So we need to clarify and you know, technologies, they have been intense. Of course, it's a it's a permanent evolution. You need to propose an let's say your yearly or even twice per year a kind of report the kinds of update on what it has been happening. Look at the photovoltaic industry. So the costs have decreased big big time. So Compared to what was five years ago, it's unbelievable. And this is because the investments in innovation, this is because of production at the, at the global scale at a much larger scale. There are there are many reasons. But a decision on what you subsidize on what you should not subsidize is, I think is a must. And again, it's very important not to discriminate among the technologies that bring at least not to discriminate via the via approvals while permitting the type of actions between the technologies that bring added value in terms of the interests of the energy transition, that's of the fight against climate change, because I want to get rid of coal. But I don't like CCS, why don't you like CCS? Well, I don't like because I want to get rid of coal. But I like only wind. I don't like photovolatic, I only like photovolatic and I don't like nuclear. That's not okay. And that's why I said, it's important to be pragmatic. It's important to be realistic. It's important to be fair, and it's important to show solidarity. Otherwise, if it's too much business behind, we will not make it

Adam Zuckerman
Razvan I don't think that you could have said it better. We could not leave it on a better note. That wraps us up for today. Thank you so much for joining us. I appreciate the time.

Răzvan Nicolescu
Thank you for inviting me.

EIC_Logo_Final__Primary Icon Medium .png

Shownotes