EU REGULAR ECONOMIC REPORT 10
PART 2
Clean Tech Value Chains
Using Trade Data to Guide
a Complex Policy Space
Zooming in
on Romania
The EU RER 10 Clean tech value chains: Using trade data to guide a complex policy space shows that
Romania has the potential to become a significant player in the EU’s green value chains but needs
to address its weaknesses to fully capitalize on the opportunities. The EU RER 101 shows that among
the 4CEEs studied, Romania performs relatively well in clean tech value chains2, standing to benefit
from the opportunities that the green transition may bring. Based on conservative estimates, Roma-
nia currently exports almost 0.3 percent of GDP in clean tech3
(Figure 1), generally specializes in more complex segments
of the clean tech chains (Figure 2), competitively exports FIGURE 1 Exports of Net-Zero Technologies
products characterized by strong external demand (Figure 3), by Value Chain
and exports a high number of products with high ‘onshoring BG
attractiveness’ (OAS)4, particularly in solar and wind tech-
nologies (Figure 4). However, Romania demonstrates lower HR
overall OAS than, for example, Poland in terms of overall in- PL
vestment attractiveness, principally because of its smaller
RO
market size, smaller and less diversified supplier networks,
and infrastructure challenges. Its logistics infrastructure 0 0.1 0.2 0.3 0.4 0.5 0.6
and processes lag Poland and the EU average, presenting a Percent of GDP
potential barrier to efficient and cost-effective production Electrolysers EV Batteries Heat pumps
and export of clean technologies. Moreover, compared to the Solar Wind
other of the 4CEEs, Romania exports proportionately more Source: WB staff calculations.
1 World Bank Group EU Regular Economic Report 10 (EU RER) focuses on 4 Central and Eastern European (4CEEs) EU mem-
ber states: Poland, Romania, Bulgaria, and Croatia.
2 For the purpose of this report, the products that either produce, store or deliver low-carbon energy will be referred to as
‘clean energy technologies’ in line with the IEA, or ‘clean tech’ for short. The EU nomenclature includes ‘clean technologies’,
‘net zero technologies’, ‘green technologies’, among others. Note that in line with the emerging nomenclature, ‘technologies’
here refer to products: capital goods, consumer goods and intermediate goods, and not ‘productive’ knowledge. The clean
tech value chains mapped in this report are electric vehicle (EV) battery, heat pumps, wind, solar PV, and electrolyzers.
3 In conservative estimates – please see the main report for details.
4 Please refer to EU RER 10 Part II for more details. Onshoring attractiveness is a composite index that summarizes 18 de-
mand, supply, and ease of market access variables, and is generated using Principal Component Analysis (PCA). PCA reduc-
es the dimensionality of the dataset by transforming a large set of variables into a smaller set still containing most of the
information. We select the maximum number of components (eigenvectors or factors) with eigenvalues greater than one.
Zooming in on Romania | Clean tech value chains. Using trade data to guide a complex policy space 2
in subcomponents rather than final products in these technologies. Simulations conducted in the
EU RER 10 Part 2 suggest that Romania’s export potential might not translate into higher export vol-
umes, for example compared to Bulgaria and Croatia, possibly due to a low number of products with
a high OAS in the largest market (batteries) and limited export market diversification.
FIGURE 2 Exports of Clean Technologies by Complexity
Share of respective technology’s exports, 2022
100
80
Percent
60
40
20
0
BG HR PL RO DE BG HR PL RO DE BG HR PL RO DE BG HR PL RO DE
1 1 1 1 1 2 2 2 2 2 3 3 3 3 3 4 4 4 4 4
EV batteries EV other Solar Wind
Extremely Low Low Medium High Extremely High
Source: Green Value Chain Explorer (WB internal) and WB calculations.
Note: for panels a and b, the results are shown for three out of five clean tech manufacturing exports: EV, solar PV, and wind, in line with the current
functionality of the GVCE tool. b. Extremely Low=-3<PCI<-1, Low=-1<PCI<1, Medium=1<PCI<3, High=3<PCI<5, Extremely High=5<PCI<7.
FIGURE 3 Romania Product with clean tech export competitiveness (RCA ≥1), selected sectors
50
Export Value Growth, Percent
Pipe fittings of non-malleable cast iron Export Value
Bar/rod nes, alloy steel nes, nfw cold formed/finishe (US$, Million):
40 Flywheels and pulleys including pulley blocks
Electricity supply, production and calibrating meters
2,000
AC generators, of an output 375-750 kVA
30
Threaded elbows, bends and sleeves of stainless steel 1,000
20 Magnesium raspings/turnings/etc, size graded, powder
DC motors, DC generators, of an output < 750 watts
Primary cells, primary batteries nes, volume < 300 cc
Bar/rod, alloy steel nes,nfw hot rolled/drawn/extrude
10 Plastic articles nes Electrical control and distribution boards, < 1kV EV
Compounded (carbon black, silica) unvulcanised rubber
Transformers electric, power capacity < 1 KVA, nes Solar
Semi-finished product, iron or non-alloy steel <0.25%C, nes
Machinery for treatment by temperature change nes
0 Wind
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Revealed Comparative Advantage (average between 2017–2021)
Source: Green Value Chain Explorer
Notes: EV results shown for EV battery only (excluding other EV components); growth rates truncated at 50 to exclude minor outliers showcasing high
growth rates from a small base.
FIGURE 4 Unique value chain components with high onshoring attractiveness score
Exports to other EU countries
BG
HR
PL
RO
0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360
Number of clean tech value chain products
Electrolysers EV Batteries Heat pumps Solar Wind
Source: World Bank calculations.
Firm network analyses presented in the EU RER 10 Part 2 suggest that despite some overall con-
nectedness, Romania currently has a limited role and limited potential as an emerging interme-
diary in the clean tech value chains. While Romania’s firms are less centrally positioned in clean
tech value chains5 than the EU average, they nonetheless have a high domestic supplier base. This
5 Measured by ‘Betweenness Centrality’ (critical intermediaries): Quantifies how often a firm appears on the shortest
paths between other firms, highlighting its role as a critical intermediary in the network.
Zooming in on Romania | Clean tech value chains. Using trade data to guide a complex policy space 3
signals a potential impact from government policy as, for FIGURE 5 Romania intermediation in green value chains
example, subsidies under the TCTF6, under which Roma-
nia has utilized funds amounting to more than one per-
cent of GDP in 2022-2024, or other state aid schemes would
activate domestic supply chains, trickle down to domes-
tic suppliers, and create more jobs and attract more in-
vestment. In addition, the US remains the most important DK KR
FR
foreign supplier for Romanian firms in the clean tech val- US US
ue chain, currently accounting for 5.9 percent of supplier- DE
buyer relationships, which exposes Romania to the risks
AT US
of more inward-looking trade policies.
US
Simulations conducted in the EU RER 10 Part 2 show that Ro- CH AT
mania could potentially triple its clean energy technology-re- DE
lated exports from 2022 level, under current EU policies; and
US
quadruple them if Net Zero Industrial Act targets for onshor-
ing production are achieved. Clean tech exports could grow NL
DE
from US$ 1 billion (0.3 percent of GDP) in 2022 to 4.5 billion (0.7
percent of GDP) by 2030 (Figure 6) with EV battery technology DE
expected to dominate exports at 56 percent of total clean tech SE
exports followed by wind at 22 percent of total clean tech ex-
Source: World Bank calculations using FactSet.
ports. These simulations anchored in EU policy targets and
Note: Segments of the global green tech value chain that involve 4CEE
demand projections also suggest that US$1 billion in invest- firms. The green nodes represent a company located in the respective
ments are required to meet its production and export poten- country; the blue nodes represent key companies in the clean tech sector,
while the size of each node reflects the betweenness centrality of the
tial. However, there are risks to the implementation of EU poli- companies in the overall network
cy because of insufficient coordination and financing at the EU
level, and constrained domestic fiscal space. Moreover, the diversity of manufactured products at vari-
ous stages of production in the clean tech value chains makes the use of targeted policies challenging.
FIGURE 6 Annual exports to EU27, by value chain, 2022 actual and 2030 simulations
Export to other EU countries
20
2022 US$, Billion
16
12
8
4
0
Baseline Current NZIA NZIA+ Baseline Current NZIA NZIA+ Baseline Current NZIA NZIA+ Baseline Current NZIA NZIA+
BG Trend BG BG HR Trend HR HR PL Trend PL PL RO Trend RO RO
BG HR PL RO
BG HR PL RO
Electrolysers EV Batteries Heat pumps Solar Wind
Source: World Bank calculations.
Despite having a potential in clean tech chains, Romania may face challenges. In targeted inves-
tor surveys conducted by the World Bank, Romania has ranked highly on energy costs and ease
of obtaining licenses, but ranked average on all other indicators of attractiveness. To mobilize the
aforementioned investments, Romania may want to invest in upskilling its workforce, improve con-
nectivity and infrastructure quality, provide lower-cost infrastructure, expand its technology and
6 Romanian is the only country of the 4CEEs to utilize these funds made available under TCTF.
Zooming in on Romania | Clean tech value chains. Using trade data to guide a complex policy space 4
innovation ecosystem, simplify access to finance for investors, reduce dependency on imports by
developing local supply chains and boost confidence in its climate resilience.
Romania has room to make use of the broader industrial policy toolkit. The analysis of the types of
implemented industrial policy shows that Romania deploys industrial policy less often than the EU
average, and when it does, the toolkit almost exclusively relies on domestic subsidies, especially in
the form of state loans (Figures 7 and 8). The broader policy toolkit presented in the EU RER could com-
plement subsidies with tools targeting the supply side, demand side and governance. On the supply
side, this includes performance standards, where subsides for specific firms come with conditions;
and policies targeting all firms such as improving the availability of skills, well-functioning capital
markets, entrepreneurship and innovation policies, the latter already strongly supported by the EU.
On the demand side, available policies include strengthening product standards, improving con-
sumer awareness, and public procurement to conditions. As with the selection of sectors to target,
if at all, the selection of policies should be done carefully and in a coordinated fashion, with a view
to implementing complementary policies that can help make any individual policy more effective.
Strengthening the governance (coherence between policies, and enabling bodies), and the overall state
capacity is therefore important for creating the conditions for such coordinated policy implementation.
FIGURE 7 Annual industrial policies passed in each of FIGURE 8 Composition of industrial policy interventions
the 4CEEs and the EU average (simple) in Romania
40 State loan
Total number of Industrial
Policy interventions
Loan guarantee
30
Financial grant
20
Trade finance
10 State aid, unspecified
Financial assistance in foreign market
0
Capital injection and equity stakes
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Controls on credit operations
BG HR PL RO 0 20 40 60
EU27 avg. (excl. 4CEEs) Percent
Source: World Bank calculations based on Juhasz et al. 2022. Source: World Bank calculations based on Juhasz et al. 2022.
More knowledge about the domestic and international policy space would help, and so would a
coordinated policy approach at the EU level. The analysis of global clean tech value chains and
the specific types of participation by individual countries is currently difficult to capture given
the limitations of the existing data. The EU RER shows some ways in which these value chain rela-
tionships can be approximated, but Romanian policy makers could benefit from investing in get-
ting a detailed understanding of the existing and potential participation in global value chains to
inform a targeted policy strategy. EU level coordination would also help in that it could help min-
imize the fallacy of composition risks (too many countries crowding into the same product space)
while overlooking other critical parts of the value chains.
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