COMMISSION STAFF WORKING DOCUMENT Energy Union Factsheet Hungary Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Third Report on the State of the Energy Union
Date: 2017-11-23
Institutions: European Commission, Secretariat-General
Subjects: Hungary, climate change policy, competitiveness, economic and social cohesion, energy cooperation, energy policy, innovation, investment, regional cooperation, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.11.2017 SWD(2017) 397 final  COMMISSION STAFF WORKING DOCUMENT Energy Union Factsheet Hungary Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK  Third Report on the State of the Energy Union  {COM(2017) 688 final} - {SWD(2017) 384 final} - {SWD(2017) 385 final} - {SWD(2017) 386 final} - {SWD(2017) 387 final} - {SWD(2017) 388 final} - {SWD(2017) 389 final} - {SWD(2017) 390 final} - {SWD(2017) 391 final} - {SWD(2017) 392 final} - {SWD(2017) 393 final} - {SWD(2017) 394 final} - {SWD(2017) 395 final} - {SWD(2017) 396 final} - {SWD(2017) 398 final} - {SWD(2017) 399 final} - {SWD(2017) 401 final} - {SWD(2017) 402 final} - {SWD(2017) 404 final} - {SWD(2017) 405 final} - {SWD(2017) 406 final} - {SWD(2017) 407 final} - {SWD(2017) 408 final} - {SWD(2017) 409 final} - {SWD(2017) 411 final} - {SWD(2017) 412 final} - {SWD(2017) 413 final} - {SWD(2017) 414 final}  
 
 
                              Energy Union –Hungary 

  Hungary 

                              Energy Union factsheet1 

1.  Macro-economic implications of energy activities 

Energy and transport are key sectors for the overall functioning of the economy as they provide an 
important input and service to the other sectors of the economy. Together the activity in these two 
sectors2  accounted  for  8.4%  of  the  total  value  added  of  Hungary  in  2015  which  is  above  the  EU 
average of 6.9 %. Similarly, their share in total employment3 was 6.6% in 2015, of which 5.9% in the 
transport sector and 0.7% in the energy sector. 

The  decarbonisation  of  the  energy  and  transport  sectors  will  require  significant  investments  and 
economic  activity  beyond  the  remit  of  these  sectors  themselves.  The  energy  transition  implies  a 
structural  shift  in  economic  activity.  Energy-related  investment  and  jobs  will  in  part  migrate  from 
traditional  fossil  fuel  based  activities  towards  construction,  equipment  manufacturing  and  other 
services related to the deployment of low carbon and clean energy technologies. At the moment the 
efforts  related  to  the  energy  transition  in  other  sectors  cannot  be  reliably  quantified  and  are 
therefore not included. 

(Source: Eurostat) 

In the case of renewable energy sector, both the direct as well as the indirect effects on employment 
are  being  estimated.  According  to  EurObserv'ER,  in  2015,  the  share  of  renewable  energy  related 

1  The  indicators  used  in  this  country  factsheet  largely  build  on  indicators  developed  for  the  Commission  Staff  Working 
Document  "Monitoring  progress  towards  the  Energy  Union  objectives  –  key  indicators"  (SWD(2017)  32  final) 
https://ec.europa.eu/commission/sites/beta-political/files/swd-energy-union-key-indicators_en.pdf 

2  Gross  value  added  and  employment  in  NACE  sectors  D-Electricity,  gas,  steam  and  air  conditioning  supply  and  H-

Transportation and storage 

3 National accounts, Eurostat 

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employment in total employment of the economy in Hungary was at about 0.18%, well below the EU 
average of 0.54%. The turnover of the renewable energy industry in the same year was estimated at 
around EUR 830 million, the biggest part being attributed to the biomass industry (EUR 410 million) 
followed  by  the  biofuels  (EUR  200  million),  geothermal  (EUR  85  million)  and  photovoltaic  (EUR  75 
million) industries. 

(Source: EC based on Eurobserv'Er and Eurostat) 

An indication of the level of efforts and challenges encountered by Hungary in the energy  sector is 
given  by  the  gross  fixed  capital  formation  (GFCF)4.  Investments  in  the  electricity  and  gas  sectors, 
which are taken as reference sectors, have peaked in 2011 reaching a level of about 1% of GDP and 
declined since then. It amounted to about 0.5 % of GDP in 2015. 

(Source: Eurostat) 

4  Gross  fixed  capital  formation  consists  of  resident  producers´  acquisitions,  less  disposals,  of  fixed  tangible  or  intangible 
assets. This covers, in particular, machinery and equipment, vehicles, dwellings and other buildings. It also includes foreign 
direct  investment  (FDI).  Steam  and  air  conditioning  supply  are  also  included  in  the  figures  mentioned  above  as  Eurostat 
reports electricity, gas, steam and air conditioning supply together. 

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                              Energy Union –Hungary 

Hungary is a net importer of fossil fuels and electricity. The trade deficit in energy products has fallen 
from  above  6%  of  GDP  in  2006  to  close  to  4%  in  2015,  influenced  by  improvements  in  energy 
efficiency  and  a  decrease  in  the  prices  of  energy  commodities.  The  largest  decrease  in  the  trade 
balance is accounted for by gas (from 2.9 % of GDP in 2006 to 1.7% in 2015), followed by petroleum 
products (from 2.7 % of GDP in 2006 to 1.9% in 2015).  

(Source: Eurostat) 

2.  Energy security, solidarity and trust 

2.1. Energy Mix 

In comparison to the average energy mix in the EU, the Hungarian energy mix has a lower share of 
renewable energy (12.5% vs 13%), a lower share of oil (28.8% vs. 34.4%), similarly to solid fuels (9.8% 
vs.  16.2%).  In  contrast,  natural  gas  has  a  much  higher  importance  in  Hungary  than  in  the  EU  as  a 
whole (31.2% vs 22%). To a lesser extent, this applies to nuclear energy as well (17.1% vs 13.6%). 

    (Source: ESTAT) 

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2.2. Import dependency  and security of supply 

In 2015 about 53% of Hungary's energy consumption came from imports, being comparable with the 
EU average (54%). However, given that the country has significant gas storage capacities, the overall 
import dependency rate can show large variations from one year to another, as it happened between 
2014 and 2015 (59.3% vs. 53.4%). 
Consequently,  a  clear  trend  could  not  be  established  in  the  overall  energy  import  dependency  in 
Hungary  between  2005  and  2015,  whereas  the  overall  import  dependency  in  the  EU-28  increased 
slightly; from 52.1% to 54%. In the case of hard coal, Hungary's import dependency remained close 
to 100% over this period (reaching 99.3% in 2015), while for crude oil5 it increased by 3 percentage 
points  (from  88%  to  91%)  at  the  same  time.  Increasing  share  of  renewables  and  share  of  nuclear 
being  higher  than  in  the  EU-28  energy  mix  helped  in  keeping  the  increase  in  the  overall  energy 
import dependency rate under control. 
In 2015 Hungary's net gas import dependency was almost 70%, with a dominant share of Russia as 
import source (95%). In the case of crude oil Russia also had a dominant share (81% in 2015), while 
for hard coal the most important trading partner were the United States (48% of all coal imports6). In 
the case of nuclear energy, the fuel came exclusively from Russia. 

 (Source: Eurostat) 

The Regulation concerning measures to safeguard security of gas supply requires that, if the single 
largest gas infrastructure fails in one Member State, the capacity of the remaining infrastructure  is 
able to satisfy the total gas demand during a day of exceptionally high gas demand. This condition is 
met  if  the  value  of  the  N-1  indicator  is  equal  to  or  above  100%.  Hungary  complies  with  this  rule, 
principally  relying  on  its  significant  gas  storage  capacities  and  increasing  interconnections  with 
neighbouring countries. Demand side measures (e.g.: voluntary load curtailments for large industrial 
gas consumers) also play a role in maintaining continuous gas supply in case of the disruption of a 
large infrastructure item. 

5 National statistical data show slightly different numbers on the share of imports in crude oil consumption: 91.7% for 2005 

and 95.9% for 2015. 

6 National statistical data show slightly different numbers on top extra-EU suppliers: United States: 53.8 %, Canada: 10.2 %, 
Australia: 5.7 % 

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(Source: Gas Coordination Group) 

3.  Internal market 

3.1. Interconnections and wholesale market functioning 

3.1.1.  Electricity 

(Source: EC based on ENTSO-E scenario 
outlook and adequacy forecast 2014) 

(Sources: EC services based on Eurostat for the left graph  and based 
on Platts and European power exchanges for the right graph) 

Hungary  is  part  of  the  electricity  system  of  Central  Eastern  Europe,  and  its  wholesale  electricity 
market has been coupled with the Czech Republic, Slovakia and Romania since 2014. The Hungarian 
electricity  system  is  directly  connected  to  all  of  the  country's  neighbours  with  the  exception  of 
Slovenia, where the interconnector is planned to be built in the forthcoming years under a Project of 
Common  Interest  (PCI).  In  2017  the  electricity  interconnection  level7  of  Hungary  was  58%,  having 

7 The interconnectivity level is calculated as a ratio between import interconnection and net generation capacities 
of the country (i.e. the 2017 value is the ratio between simultaneous import interconnection capacity [GW] 
and net generating capacity [GW] in the country at 11 January 2017, 19:00 pm as resulted from ENTSO-E 
Winter Outlook 2016/2017) 

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increased from 29% in 2014 and being well above the 2020 EU target of 10%. However, the current 
national arrangements for congestion management and bidding zone definition in Central Europe do 
not  necessarily  accurately  reflect  actual  congestion,  and  this  is  leading  to  increasing  limitations  of 
cross-border flows of electricity. 

The  concentration  of  the  power  generation  market  is  well  below  EU  average.  Between  2013  and 
2016  wholesale  electricity  prices  decreased  in  Hungary  by  16.3%,  following  the  general  decreasing 
trend in the EU. In 2016 the annual average wholesale electricity price in Hungary (35.4 €/MWh) was 
close to the EU average. However, it is worth noting that the price level has been higher compared to 
most of its neighbouring countries over the last few years, as the 2016 average wholesale price was 
29.2 €/MWh  in  Austria,  31.5 €/MWh  in  Slovakia,  33.2 €/MWh  in  Romania  and  36.6 €/MWh  in 
Slovenia. The main reason for this price premium is the structural exposure to electricity imports, as 
a significant part of the generation portfolio in Hungary is producing electricity at higher costs than in 
the regional peers. As a result, Hungary is importing electricity, mainly through Slovakia8, Ukraine and 
Austria. During peak demand periods (e.g.: heat waves in the summertime or cold periods during the 
winter) the price of imported electricity can rise significantly, as hydro based electricity generation in 
the  Balkan  region  can  diminish  substantially.  Although  Hungary's  electricity  interconnection  level 
with its neighbours is good in EU comparison, it would still be important to ensure that competitively 
priced electricity from Western Europe could reach Hungary in order to decrease the persisting price 
premium to the peer markets in Central Europe. 

For  assuring  more  competitive 
from  Central  and  Western  Europe,  electricity 
interconnections with neighbouring Slovakia are planned to be reinforced in the future through the 
following three PCI projects: 

imports 

 

 A new AC 400 kV double circuit interconnection with a total capacity of 2 772 MVA between 
SK  and  HU  from  Gabčíkovo  substation  (SK)  to  the  Gönyű  substation  (HU),  with  one  circuit 
connected to Veľký Ďur substation (SK). The permitting process started on the 14th of June 
2016, foreseen to be completed in 2020. 

  Connection  of  the  two  existing  substations  R.  Sobota  (SK)  and  Sajóivánka  (HU)  by  a  new 
2x400 kV AC double circuit line – In permitting, foreseen to be implemented in 2020. It has 
obtained a Connecting Europe Facility (CEF) grant for studies of 0.7 million EUR. 

Hungary  signed  with  Slovakia  a  construction  agreement  at  Ministerial  level  for  the 
implementation of the two aforementioned interconnectors in October 2016. 

  Erection of new 400 kV AC double circuit line (OHL) with a capacity of 2772 MVA between 
Veľké Kapušany (SK) and a substation in the area of Kisvárda (HU) – Under consideration, to 
be completed by 2029. 

The  electricity  interconnector  with  Slovenia  (Cirkovce  (SI)  to  Héviz  (HU)/Žerjavinec  (HR)  -400  kV 
double circuit line) is planned to be built until 2019. 

88 According to data from the national regulator, top electricity import suppliers with the share in total import in 

2015 were Slovakia (49%), Ukraine (28%), Austria (13%) 

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3.1.2.  Gas 

By 2015 the market concentration index of wholesale gas supply in Hungary grew significantly above 
the  EU  average,  though  in  2011  it  was  below.  The  main  reason  for  this  increasing  supply 
concentration  was  the  dwindling  domestic  gas  production  that  amplified  the  role  the  dominant 
import supplier. Both in Hungary and the EU as a whole natural gas prices in the wholesale market 
decreased  significantly  (respectively  by  48%  and  46%)  between  2013  and  2016,  largely  owing  to 
decreasing  crude  oil  prices  that  resulted  in  price  decrease  in  the  oil-indexed  gas  supply  contracts. 
Hungary's price premium decreased compared to Western European hub prices, due to the impact of 
the aforementioned oil-indexation  and  to  the increasing competition  on  the  gas  internal  market in 
the  EU,  pushing  external  gas  suppliers  to  acknowledge  price  signals  from  free  market  gas  hubs 
besides oil-indexation in their price setting factors. 

Hungary has significant import capacities from Ukraine and Austria. In 2015 the new interconnector 
with Slovakia was put in operation, through which Hungary has a further link to Western European 
hubs.  Nevertheless,  up  to  now  the  utilisation  rate  of  the  Hungarian-Slovakian  interconnector 
remained low, as imports from Russia became cheaper and further North-South infrastructure (that 
would enable e.g.: LNG imports from Poland) is still missing (i.e. Poland-Slovakia and/or Poland-Czech 
republic). Hungary has significant interconnection capacities enabling gas exports to Serbia, Romania 
and Croatia. However, physical reverse flows on the Croatian and the Romanian side are needed to 
enable  gas  imports  from  alternative  sources9  to  Hungary.  Efforts  are  being  made  by  the  European 
Commission to this effect, including through CEF grants to both projects. 

(Source: ACER for the left graph and EC services based on Platts, gas hubs, Eurostat for the right graph) 

Main natural gas PCI projects: 

  New  interconnector  between  the  Hungarian  and  Slovenian  transmission  systems  (currently 
Slovenia is the only neighbouring country not having gas interconnection with Hungary) on the 

9 e.g. Black Sea, South Eastern Europe infrastructure connections, and the Krk LNG regasification terminal in the future 

7 

 
 
 
 
 
                                                            
                              Energy Union –Hungary 

route  Nagykanizsa    Tornyiszentmiklós  (HU)  -  Lendava  (SI)  –  Kidričevo,  enabling  access  to 
underground storages in Hungary for Slovenian gas suppliers, enabling access to LNG terminals 
in northern Adriatic and other gas sources for Hungarian gas suppliers. Planned completion by 
2020 the earliest. 

  Phased  capacity  increase  on  the  Bulgaria  —  Romania  —  Hungary  —  Austria  bidirectional 
transmission corridor (currently known as "ROHUAT or BRUA") to enable an indicative capacity 
increase at the Hungarian-Romanian interconnection point and related necessary investments in 
the  rest  of  the  transmission  system  in  three  phases,  as  a  reference  for  the  corridor  including 
new resources, inter alia from the Black Sea.  

3.2. Retail electricity and gas markets 

3.2.1.  Electricity 

In 2016, retail electricity prices for households in Hungary were below the EU average. Between 2013 
and  2016,  medium  band  retail  electricity  prices  for  households  decreased,  primarily  owing  to  the 
mandatory  price  cuts  in  regulated  prices  for  household  customers,  ordered  by  the  government.  In 
2013-2014 the cumulative cuts in electricity prices exceeded 20% in national currency. The share of 
taxes in the final electricity price decreased; however, these tax elements were instead added to the 
price for business customers, negatively affecting economic competitiveness. 
As  retail  electricity  prices  for  household  customers  are  regulated,  switching  rates  was  not 
significant10 2011 and 2015 in Hungary, whereas in the EU the switching rate went up from 4.8% to 
6.2%. 

(Source: ACER) 

(Source: Eurostat) 

(Source: Eurostat) 

3.2.2.  Gas 

10 According to the national regulator, in 2012 switching rate for household electricity customers amounted to 1.6%, while 

in the same year for natural gas the switching rate was 1.5%. 

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The  share  of  natural  gas  in  Hungary  is  one  of  the  highest  in  the  EU  in  domestic  heating  and  heat 
generation.  Therefore,  both  security  of  supply  and  affordability  issues  relating  to  gas  are  of  key 
political interest in the country. Gas retail prices for household customers were lower compared to 
the  EU  average  in  2016  and  decreased  compared  to  2013  as  a  result  of  the  mandatory  price  cuts 
ordered  by  the  government,  which  exceeded  20%  in  national  currency.  The  share  of  tax  content 
within the final retail price did not change in this period, and was slightly lower than the EU average. 
As  retail  prices  are  regulated  for  all  customers  that  are  supplied  by  universal  service  providers, 
switching  rates  was  not  significant  between  2011  and  2015  in  Hungary.  As  the  universal  service 
segment  was  not  profitable  in  the  last  few  years,  utilities  withdrew  from  this  business  and  as  of  1 
October  2016  the  state  owned  Főgáz  Ltd.  practically  became  the  single  provider  of  natural  gas  for 
households in Hungary. 

(Source: ACER) 

(Source: Eurostat) 

(Source: Eurostat) 

Regulated  retail  electricity  and  gas  prices,  often  not  reflecting  all  incurring  energy  supply  costs, 
network costs and taxes and levies (below-cost price regulation) have resulted in losses to the service 
providers over several years and prompted energy retailers to return their universal supply licences. 
The  state-owned  First  National  Utility  (ENKSZ  Zrt.)  has  been  established  in  order  to  take  over  the 
universal  service  segment  for  households  from  utilities,  and  besides  natural  gas  it  aims  to  supply 
electricity for all customers in Hungary on the long run. The dominance of a single electricity and gas 
utility  company  results  in  a  lack  of  consumer  choice  and  competition.  Below-cost  prices  do  not 
subsidise  only  the  vulnerable  households,  but  also  all  the  wealthier  customers.  The  accumulating 
potential  financial  losses  in  the  balance  sheet  of  the  state-owned  energy  utility  may  not  be 
sustainable  in  the  long  run  and  may  result  in  regular  recapitalisation  needs,  implying  a  risk  on  the 
state budget. 

3.2.3.  Market performance indicators 

According to the periodical survey of the Directorate-General Justice and Consumers of the European 
Commission  (DG  JUST),  the  Hungarian  consumers  are  more  satisfied  than  the  EU  average  with  the 
services received on energy retail markets. The market performance indicators on the chart embrace 
factors  such  as  satisfaction  on  the  easiness  of  comparing  offers,  consumers'  trust  in  retailers  on 
complying with consumer protection rules, problems experienced (and the degree up to which they 
led to complaints) and consumer satisfaction (how consumer expectations are met). 

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(Source: DG JUST survey) 

3.3. Energy affordability  

In  Hungary  the  share  of  energy  in  the  total  expenditure  of  the  poorest  households  was  16.9%  in 
2014, being almost twice as high as the EU average and up from 13.9% in 2005, implying that energy 
affordability  for  poorer  households  is  a  significant  issue  in  the  country.  This  can  be  explained  by 
relatively  low  purchasing  power  in  the  country  and  relatively  high  energy  consumption  in  the 
residential sector in EU comparison, pointing to low energy efficiency performance. At the same time 
the  share  of  households  (in  the  total  population  at-risk-of  poverty)  being  unable  to  keep  home 
adequately warm was only slightly higher in Hungary than the EU average in 2015 and measurably 
decreased since 2005. 

(Source: Ad-hoc data collection of DG ENER based on HBS with the support of Eurostat and national statistics) 

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4.  Energy efficiency and moderation of demand 

Since  2005  primary  energy  consumption  in  Hungary  decreased  by  8.5%  and  reached  23.3  Mtoe  in 
2015. Over the same period, final energy consumption decreased by 5%, to 17.3 Mtoe in 2015. While 
primary  energy  consumption  in  2015  was  below  the  indicative  2020  national  target  (24.1  Mtoe), 
further efforts are needed in order to  attain the final energy consumption target (14.4 Mtoe) until 
2020,  bearing  in  mind  that  in  2015  both  primary  and  final  energy  consumption  temporarily  rose 
compared to the previous year, going against the decreasing trend since 2005. 

 (Source: Eurostat) 

Although  primary  energy  intensity  in  Hungary  decreased  over  the  2005-2015  period,  it  remained 
significantly  above  EU  average  (about  90%  higher  in  2015),  which  indicates  an  unexploited 
improvement  potential. Primary  energy  intensity  in  Hungary  decreased  by  1.6%  on annual  average 
between 2005 and 2015, whereas in the EU on it decreased by 2%, implying that difference in energy 
intensity remained constant. A detailed sectorial assessment can illustrate these trends. 

In 2015 the residential sector was the biggest energy consumer in Hungary, representing 34% of the 
total final energy consumption, followed by transport and industry (about 25% both). The residential 
sector  had  a  higher  share  in  the  final  consumption  than  the  EU  average,  whereas  in  the  case  of 
transport the opposite is true. 

(Source: Eurostat) 

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As for industry, in 2015 the energy intensity was significantly higher than the EU average (153 vs. 92 
toe/EUR million) and  was  up  by  19%  compared  to  2005,  while during  the same period  average  EU 
final  energy  intensity  in  the  industry  decreased  by  18%.  In  the  services  sector,  though  practically 
halving since 2005, energy intensity in Hungary in 2015 was almost twice as much as the EU average. 
However,  final  energy  intensity  in  the  residential  sector  (measured  as  consumption  per  square 
meter,  with  climate  correction)  has  slightly  decreased11  over  the  last  decade;  it  was  above  the  EU 
average in 2015, whereas in 2005 it was close to the EU average. 

(Source: Eurostat) 

(Source: Eurostat) 

(Source: Odyssee database) 

Although showing a favourable trend, there is still room for energy efficiency improvements in the 
residential sector in Hungary. During the funding period of 2014-2020, approx. EUR 949 million will 
be granted to energy efficiency programmes for buildings from European Structural Investment Fund 
(ESIF). Current and planned levels of support for residential building renovation do not seem to be 
sufficient  to  achieve  the  targets  of  the  2015  long-term  building  renovation  strategy12.  While  the 
strategy foresees renovating 700,000 households by 2020, only 25,000 households are planned to be 
renovated  under  ESIF,  since  Hungary  plans  to  reallocate  ESIF  grants  for  50,000  to  public  buildings. 
There  is  significant  energy  saving  potential  in  modernisation  of  district  heating  systems  and  in 
broader deployment of combined heat and power generation (CHP). 

Between  2005  and  2015  the  final  energy  consumption  in  transport  recorded  an  average  annual 
increase  of  0.3%  in  Hungary,  which  was  lower  than  the  0.9%  average  annual  increase  of  the  GDP. 
Behind the slight increase in energy consumption in transport divergent trends could be observed in 
this period: while passenger transport activity increased by 4.4%, freight transport activity decreased 
by 0.7%. 

11 According to the Odyssee database energy consumption in the residential sector in 2005 was: 21.06 koe/m2, while in 
2015 it decreased to 20.93 koe/m2 
12 https://ec.europa.eu/energy/sites/ener/files/documents/2014_article4_hungary_en%20translation.pdf 

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(Source: Eurostat) 

(Source:  Eurostat  and  DG  MOVE  pocketbook)

The  share  of  collective  passenger  land  transport  in  total  passengers'  transport  decreased  slightly 
between 2005 and 2015, indicating an increasing use of private transport means in Hungary, while at 
EU level it remained practically the same. However, the use of collective transport means is almost 
twice in Hungary than at the EU average. 

(Source: Eurostat) 

The new  National Transport Strategy  (NTS)  was  approved  by  the  Hungarian  Government  in August 
2014  and  covers  the period  until  2050.  The  NTS  provides  a  strategic background for  the  use  of  EU 
funding that will be available for the period 2014-2020. 

Next to the use of CEF funding, Hungary has significant investment plans in improving rail and road 
connections, with the support of the European Structural and Investment Funds (ESIF). This includes 
the  building  of  intermodal  nodes,  the  improvement  of  suburban  rail  services  as  well  as  the 
replacement  of  old  rolling  stock.  A  number  of  projects  aim  at  fostering  the  electrification  of  the 
railway  network.  Hungary  is  also  investing  in  the  development  and  reconstruction  of  the  road 
network. In parallel, the update of the technical regulations in road transport is to set the legislative 
framework for the development of safe automated road vehicles. 

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5.  Decarbonisation of economy 

5.1. GHG emissions 

implementation  of  National  Climate  Change  Strategy  2008‐2025  resulted 

The 
in  notable 
achievements in reaching GHG reduction targets. Hungary has met its Kyoto and EU obligations rate-
proportionally.  Hungary’s  total  greenhouse  gas  (GHG)  emissions  decreased  by  34.2%  compared  to 
199013,  and  were  down  by  19.6%  compared  to  the  level  of  2005.  This  decline  in  greenhouse  gas 
emissions is not only correlated with the economic transition after the collapse of heavy industry of 
the  communist  era.  Around  half  of  the  aggregate  decline  in  GHG  emissions  is  related  to  the 
diminishing role of coal in electricity generation (by replacing it with other sources, including nuclear) 
and to the applied climate policy measures, also exerting their impact over the past fifteen years. The 
country  is  right  on  track  in  meeting  its  2020  emission  target  under  the  Effort  Sharing  Decision:  in 
2016 emissions in the non-ETS sectors (including transport, buildings and agriculture) were  already 
24  pps.14  below  the  2016  target  and  are  projected  to  be  29  pps.15  below  the  2020  target  (which 
allows for a 10% increase of non-ETS emissions compared to 2005 emission levels). 

(Source: EC and EEA)   

In 2016, the GHG intensity of the Hungarian economy was significantly higher than the EU average 
(by more than 70%), however, since 1990 it decreased more in Hungary than the average decrease in 
the EU. In 2016, the GHG emissions per capita in Hungary were about 30% below the EU average, as 
compared to the 25% gap in 1990. 

In 2015 in the largest sectors in Hungary in terms of GHG emissions were the energy sector (24% of 
the total  GHG  emissions),  followed  by  transport (20%),  industry  and  product  use  (19%),  residential 
and commercial sectors (17.5%) and agriculture, forestry and fishery (13.2%). 

13 If LULUCF is included, GHG emissions were down by 40.3% in 2015, compared to 1990. 
14 Based on approximated inventory data.  
15  Taking  into  account  the  effect  of  the  Commission  Decision  2017/1471/EU,  dated  on  the  10th  of  August  2017,  which 
resulted in a recalculated 2020 target (in absolute terms). 2020 emissions projections were taken from Member States 2017 
submissions under the MMR regulation (quality checked by EEA).  

14 

 
 
 
 
 
                                                            
                              Energy Union –Hungary 

(Source: EC and EEA)   

Preliminary accounts under the Kyoto Protocol for Hungary show overall removals of -3.0 Mt CO2-eq. 
as  an  annual  average  in  the  period  2013-2015.  For  comparison,  the  annual  average  of  the  EU-28 
accounted  for  removals  of  -119.0  Mt  CO2-eq.  It  should  be  noted  that  in  this  preliminary  simulated 
accounting exercise, removals from Forest Management did by far not exceed the accounting cap.  

Removals  by  Afforestation  are  clearly  higher  than  emissions  by  Deforestation.  Removals  by  Forest 
Management show an evolving importance becoming by far the largest contributor in 2015. Overall, 
there is a clearly increasing trend in removals, due to the above-noted increasing removals by Forest 
Management.  Deforestation  shows  slight  increases  in  emissions  and  removals  by  Afforestation  a 
varying pattern over the course of the three-year period. 

Note: Forest Management credits are capped and presented as yearly averages when the total Forest 
Management credits of the considered period exceed the simulated cap over the same period. 
(source: EC and EEA) 

15 

 
 
 
 
 
 
  
 
                              Energy Union –Hungary 

CO2 emissions in transport and alternative fuelled vehicles 
In  Hungary,  the  CO2  emissions  from  road  transport  were  in  2015  about  51  %  higher  than  in  1990, 
reflecting the consistent increase of passengers and freight traffic. 

In  2016  average  CO2  emissions  of  new  cars  in  Hungary  were  above  the  EU  average.  The  decrease 
between 2005 and 2016 in Hungary (19.4%) was less than the average decrease in the EU (27.3%), 
implying that the structure of new car sales followed less intensively the shift towards vehicles with 
lower emission in Hungary than in the EU as a whole. 

(source: European Environment Agency) 

The  share  of  electric  and  hybrid-electric  cars  in  total  sales  on  the  Hungarian  market  is  at  around 
0.25% of total cars sales in 2015 (i.e. 70 petrol-electric cars and 121 electric cars). Over the last four 
years the number of electric charging points in Hungary has increased steadily, from 63 units in 2013 
to 205 units in 2016. 

(European Environment Agency)  

      (European Alternative Fuels Observatory) 

National Policy Frameworks under Directive 2014/94/EU on alternative fuels infrastructure have to 
establish targets, objective and measures for the development of the market of alternative fuels in 

16 

 
 
  
 
 
 
 
 
 
 
                              Energy Union –Hungary 

the  transport  sector  and  the  deployment  of  the  relevant  infrastructure.  Hungary  has  submitted  its 
National Policy Framework16 as requested under article 3 of the Directive 2014/94/EU  

A detailed assessment of the Hungarian National Policy Framework in terms of its compliance with 
the  requirements  of  Directive  2014/94/EU  on  alternative  fuels  infrastructure,  its  contribution  to 
achievement  of  long-term  energy and  climate objectives  of  the  Union  and  coherence of  its  targets 
and objectives in terms of cross-border continuity has been published as part of the Communication 
on  Alternative  Fuels  Action  Plans  (COM(2017)652)  and   the  related  staff  working  document 
SWD(2017)365.  

5.2. Adaptation to climate change 

The first National Climate Change Strategy (NCCS I) from 2008 included a chapter on adaptation and 
was implemented by a National Climate Change Programme for 2009-2010. A revised strategy (NCCS 
II)  is  planned  for  adoption  in  autumn  2017  and  will  comprise  a  National  Adaptation  Strategy.  The 
current  NCCS  contains  projections  and  incentives  concerning  adaptation  in  the  following  sectors: 
natural environment, health, water management, agriculture, crop and livestock management, forest 
management, regional development, human/built environment. NCCS II will add to the list regional 
development,  urban  planning,  green  infrastructure,  critical  infrastructure  and  tourism.  Currently 
there  is  no  system  in  place17  for  monitoring  mainstreaming  of  adaptation  into  specific  sectorial 
policies, or assessing adaptation actions that are being implemented. 

5.3. Taxes on energy and transport and fossil fuel subsidies 

The overall  tax  burden  on  energy  and  transport in  relation  to  GDP  has  decreased in  Hungary  from 
2.6% in 2007 to 2.4% in 2014. That is from 0.3 p.p. above the EU average to be on par with the EU 
average.  The  tax  burden  on  transport  vehicles  is  in  line  with  EU  average,  whereas  the  taxation  of 
transport fuel is above the EU average. The taxation of heat and electricity is in contrast below the 
EU average and has only changed slightly since 2007. Hungary has no CO2 component in the taxation 
framework for energy products or vehicles. 

16 The so-called Jedlik Ányos Plan 

17  On  the  basis  of  the  EU’s  Greenhouse  gas  Monitoring  Mechanism  Regulation  (MMR)  member  states  are  required  to 
provide  GHG  projections  called  for  2015,  2020,  2025,  2030,  2035  and,  if  available,  each  year  in  between.  Hungarian 
authorities  were  able  to  monitor  future  GHG  emission  scenarios  and  identify  those  problematic  economic  sectors  using 
MMR projections that have a potential for permanently increasing GHG emission. This gives a chance for the introduction of 
new mitigation and adaptation measures. 

17 

 
 
 
                                                            
 
                              Energy Union –Hungary 

(Source: Eurostat) 

Hungary stopped direct subsidies to coal production in 2000. Moreover, in line with EU regulation on 
state  support  for  uncompetitive  coal  mines,  Vértes  Power  Plant  Zrt.  received  financial  assistance 
between  2011  and  2014  in  order  to  cover  operating  losses,  as  well  as  between  2011  and  2018  to 
mitigate social and regional problems arising from mine closures18. However, it has to be noted that 
fossil fuel subsidies in Hungary also consist of increasing subsidies to gas and petrol. 

5.4. Renewable energy  

Regarding the share of renewable energy, Hungary is right on track in meeting its overall 2020 target 
as set under the Renewable Energy Directive (2009/28/EC). In 2015 the share of renewables in the 
country's  gross  final  energy  consumption  was  14.5%,  which  was  above  the  official  13%  target  for 

18  For  example,  it  received  HUF  42,247  million  (approximately  €140  million)  of  public  funding  for  the  closure  its 
uncompetitive Márkushegy coal mine at the end of 2014. The plan includes measures to mitigate the environmental 
coal 
impact 
(http://ec.europa.eu/competition/state_aid/cases/246728/246728_1415478_129_2.pdf). 

production 

the 

of 

of 

18 

 
 
 
 
 
                                                            
                              Energy Union –Hungary 

2020,  specified  in  the  Renewable  Energy  Directive  (2009/28/EC)  and  was  close  to  the  target  of 
14.65%, which Hungary voluntarily endeavoured for. 

(Source: Eurostat-SHARES) 

In  the  case  of  the  renewable  target  in  the  transport  sector,  Hungary  has  still  to  make  significant 
efforts to attain the 2020 target; in 2015 the renewable share indicator stood at 6.2%. Both in the 
renewable share in transport and electricity generation only minor increases could be observed over 
the last few years, and biomass had a dominant role in renewable electricity generation, while other 
sources, such as solar, geothermal or wind generation had lesser importance, which provides for an 
untapped potential for better exploitation, in order to increase variable renewable penetration in the 
electricity  generation  mix.  However,  current  renewable  policies  in  Hungary  do  not  favour  wind 
energy, as licensing of new wind farms face significant regulatory obstacles. 

(Source: Eurostat-SHARES) 

The  newly  proposed  support  system  for  electricity  generation  from  renewable  sources  (METÁR) 
seems to introduce a fundamental reform following the old feed-in tariff system (KÁT). In METÁR for 
renewable generation capacities below 0.5 MW, MAVIR (the Hungarian electricity TSO) will take over 
the generated power and the electricity will be sold on the Hungarian Power Exchange (HUPX) while 
generators receive a guaranteed feed-in price. For new generation capacities between 0.5 MW and 
1.0 MW an administrative premium will be paid above the reference price determined by law. The 
length  of  the  support  period  and  the  supported  yearly  quantity  are  calculated  by  the  Hungarian 
Energy and Public Utility Regulatory Authority (HEA). For larger capacities (at least 1.0 MW) and wind 
installations  competitive  bidding  procedure  will  be  implemented  and  for  depreciated  biomass  and 
biogas generation capacities a so-called brown premium will be introduced, in order to keep biomass 

19 

 
 
 
 
 
 
 
 
                              Energy Union –Hungary 

firing competitive vis-á-vis fossil fuels. The new METÁR system provides operating aid for renewable 
sources and it should fulfil the requirements of EU state aid guidelines.  

Due  to  a  consistent  deployment of  renewables  since  2005,  it is  estimated that  Hungary  avoided in 
2015 about 11.2% of the fossil fuel in gross inland consumption and about 8.9% of GHG emissions at 
national level19. 

(Source: EEA) 

5.5. Contribution of the Energy Union to better air quality 

Air  quality  in  Hungary  continues  to  give  cause  for  concern.  For  the  year  2013,  the  European 
Environment  Agency  estimated  that  more  than  12,890  premature  deaths  in  Hungary  were 
attributable to fine particulate matter (PM2,5) concentrations and more than 390 to nitrogen dioxide 
(NO2) concentrations20.  

For both pollutants Hungary reported exceedances of the binding EU air quality standards21. For the 
year  2015,  Hungary  reported exceedances  of  the limit  value for  PM10  in 4  out of  the 10  air  quality 
zones in Hungary, while exceedances of the limit value for PM2.5 were reported in 1 zone, and of the 
limit value for NO2 in 2 out of the 10 zones; see figure below22.  

19 Avoided GHG emissions mentioned here have a theoretical character as these contributions do not necessarily represent 

'net GHG savings per se' nor are they based on life-cycle assessment or full carbon accounting. 

20 European Environment Agency, 2016, Air Quality in Europe – 2016 Report, table 10.2. The report also includes details as 
regards the underpinning methodology for calculating premature deaths.    
21 Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air quality and cleaner 
air for Europe, OJ L 152, 11.6.2008, p.1-44 
22 Compliance data as reported by the Member States as part of their official annual air quality report for the calender year 
2015 
Repository), 
http://cdr.eionet.europa.eu/hu/eu/aqd  

Eionet/Central  Data 

Environment 

European 

(available 

Agency's 

(EEA) 

the 

on 

20 

 
 
 
 
 
 
                                                            
                              Energy Union –Hungary 

(Source: EEA) 

The health-related external costs from air pollution in Hungary have been estimated to be more than 
EUR 5 billion/year (income adjusted, 2010), which includes the intrinsic value of living a healthy life 
without premature death as well as the direct costs to the economy such as healthcare costs and lost 
working days due to sickness caused by air pollution23. 

The  Energy  Union  can  substantially  contribute  to  addressing  these  air  quality  problems  through 
measures reducing emissions of both GHG and air pollutants such as PM and nitrogen oxides (NOx) 
from major contributing sectors such as (road) transport, energy production, industry and residential 
heating (e.g. stoves and boilers) as shown in figure below24. 

(Source: EEA. This table reflects only sources of primary PM2,5 emissions.) 

23 See also the EU Environmental Implementation Review Country Report for Hungary, SWD(2017)46 final of 3.2.2017 
24  National  emission  data  as  reported  by  the  Member  States  to  the  EEA  (available  on  the  EEA's  Eionet/Central  Data 
Repository), http://cdr.eionet.europa.eu/hu/eu/nec_revised 

21 

 
 
 
 
 
 
 
 
                                                            
                              Energy Union –Hungary 

6.  Research, innovation and competitiveness  

6.1. 

Research and innovation policy  

Priorities for energy research and innovation in Hungary include the development of nuclear power, 
regional cooperation, renewable energy, energy efficiency, and diversification of energy imports and 
fuel storage facilities. Focal research areas in renewable energy include biomass, second-generation 
biofuels  and  geothermal  energy  (e.g.  enhanced  geothermal  systems).  Research  on  nuclear  mainly 
targets nuclear fission and waste disposal. 

Hungary is not a very active contributor to the ongoing work of the Strategic Energy Technology (SET) 
Plan. It only participates in two (out of fourteen) temporary working groups for the implementation 
of the integrated SET Plan, the ones dedicated to carbon capture and storage/use and nuclear safety. 

Regarding  the  Horizon  2020  programme,  Hungary  has  received  so  far  0.4%  of  the  EU  contribution 
devoted  to  the  'secure,  clean  and  efficient  energy'  part  of  the  programme.  As  of  September  2017, 
thirty-eight  participations  from  Hungarian  organisations  have  been  awarded  EUR  7.8  million  in 
Horizon 2020 energy projects. 

The  majority  of  the  EU  contribution  is  attributed  for  participation  in  Low  Carbon  Energy  projects 
(55%)  followed  by  Energy  Efficiency  and  savings  measures  (40%).  Hungarian  involvement  in  the 
Smart Cities and Communities projects is amounting to 5% of the total funding received by Hungarian 
partners. 

6.2. 

Investments and patents in the Energy Union R&I priorities  

In  2016,  public  (national)  investments  in  the  Energy  Union  R&I  priorities  reached  EUR  27  million, 
almost three times the amount reported in 201525. The largest share of these investments (70%) was 
attracted  by  the  Smart  System  priority  of  the  Energy  Union,  followed  by  the  Efficient  Systems  and 
Renewables priorities (15% and 13% respectively). In 2014, the most recent year for which data from 
most Member States are available, public investment per GDP was lower than the EU average. 

Private investment in the Energy Union R&I priorities in 2013 was estimated at EUR 31 million (0.2% 
of the private R&I investment in Energy Union R&I priorities in the EU). The focus was on Sustainable 
transport,  which  received  55%  of  these  investments,  followed  by  Efficient  Systems  with  a  share  of 
28% and Renewables with 17%.  

In 2013, the most recent year for which complete patent26 statistics are available, 9 companies and 
research organisations based in Hungary filed 11 patents in low-carbon energy technologies (0.16% 
of the EU total). The focus was on Sustainable Transport (51%), followed by Efficient Systems (31%) 
and Renewables (18%).  

25 Due to a change in the reporting methodology, the MS is revising data up to 2012. It has not been concluded whether 

26  

this data will be changed or discarded, thus they have not been included here. Data for 2016 are provisional. 
In the context of this document, the term 'patent' refers to patent families, rather than applications, as a measure of 
innovative activity. Patent families include all documents relevant to a distinct invention (e.g. applications to multiple 
authorities),  thus  preventing  multiple  counting.  A  fraction  of  the  family  is  allocated  to  each  applicant  and  relevant 
technology. 

22 

 
 
 
                                                            
                              Energy Union –Hungary 

In 2014, private R&I investments and patents in Energy Union R&I priorities were lower than the EU 
average  when  normalised  by  GDP  and  by  population  respectively.  In  the  period  2007-2013,  both 
private R&I investments and the number of patents in Energy Union R&I priorities have increased on 
average  by  4%  and  14%  per  year,  displaying  slightly  lower  rates  of  increase than  the  EU  indicators 
(6% and 15% respectively). 

Note: Due to a change in methodology, only data for the period 2013 - 2016 are shown. The international 
comparison (right) is shown for 2014 (Hungary had reported EUR 6.7 million). Reporting at EU for 2015 level is 
not as complete, and very few countries have reported for 2016. 

(Data sources: Public investment as available in the International Energy Agency RD&D Statistics database27 for 
codes  relevant  to  Energy  Union  RIC  priorities.  Patent  data  based  on  the  European  Patent  Office  PATSTAT 
database28. Private investment as estimated by JRC SETIS. Detailed methodology available from the JRC29.) 

27 http://www.iea.org/statistics/RDDonlinedataservice/  
28 https://www.epo.org/searching-for-patents/business/patstat.html#tab1  
29 https://setis.ec.europa.eu/related-jrc-activities/jrc-setis-reports/monitoring-ri-low-carbon-energy-technologies  

23 

 
 
 
 
 
 
 
 
                                                            
                              Energy Union –Hungary 

6.3. 

Competitiveness 

In  2014  real  unit  energy  costs  (RUEC)30  in  Hungary,  expressed  as  percent  of  the  total  value  added, 
were significantly higher than the EU average (21.2% vs.15.3%), almost three times as high as those 
in the US (7.5%), comparable with those in Japan but measurably below those in Japan and China. 
Between 2005 and 2014 the relative increase in real unit energy costs was much lower in Hungary 
(2.4%) than in the EU on average (11.5%), which points to improvements in energy intensity in the 
Hungarian  manufacturing  industry,  largely  owing  to  the  increasing  importance  of  less  energy 
intensive  manufacturing  branches  (e.g.:  cars  and  transport  vehicles).  However,  energy  costs 
compared  to  the  total  production  value  were  still  higher  in  Hungary  and  the  EU  in  2014,  both  in 
manufacturing industry and the services sector. 

Retail  electricity  prices  paid  by  industrial  customers  in  Hungary  were  below  the  EU  and  OECD 
averages  in  the  second  half  of  2016.  However,  in  the  case  of  the  largest  industrial  consumers  the 
average price paid in Hungary was of similar magnitude with the EU average.  

Gas  prices  for  industrial  consumers  were  similar  to  the  EU  average,  both  for  medium  and  large 
consumers. However, they were significantly higher than the OECD average.  

It is worth recalling here that national average retail prices paid by industrial customers, especially in 
the  case  of  electricity  prices  for  large  customers,  might  not  reflect  the  actual  prices  paid  in  given 
industries (e.g.: energy intensive industries), as they do not include the impact of tax and policy levy 
exemptions and reductions these industrial players are entitled for. 

(Source: ECFIN) 

                   (Source: EU and IEA) 

Regarding  the  competitiveness  in  renewable  technology,  Hungary  is  neither  specialised  in  solar  PV 
nor in wind as measured by the revealed comparative advantage indicator below 131. An exception is 
power  electronics  for  solar  photovoltaic  panels  where  Hungary  enjoys  some  advantage  over  its 

30   This indicator measures the amount of money spent on energy sources needed to obtain one unit of value added. 

31 The RCA index for product "i" is defined as follows: RCAi =

Xj,i
∑ Xj,i
i
Xw,i
∑ Xw,i
i

 where X is the value of exports, and j is the country and 

w is the reference group, the World economy. 2005 refers in the text to the indicator average over the 2000-2009 period, 
while 2015 represents the average over the 2010-2016 period. The same applies for the RTB indicator - see below. 

24 

 
 
 
 
 
 
 
 
                                                            
                              Energy Union –Hungary 

competitors. The relative trade balance32 confirms the comparative advantage indicator and  shows 
that Hungary is a net importer of both wind and solar energy components. Its relative trade deficit is 
lower than the EU average for solar energy components, while it is above the EU average for wind 
energy components. The latter shows a strong deterioration in the period from 2005 to 2015.  

(Source: UN Comtrade) 

7.  Regional and local cooperation 

The EU macro-regional strategy for the Danube Region in which Hungary takes part can be used as a 
basis  for  regional  cooperation  on  energy.  Hungary  is  a  co-coordinator  of  the  priority  area  'To 
encourage  more  sustainable  energy'.  In  2017  Hungary  is  holding  the  rotating  presidency  of  the  EU 
Strategy for the Danube Region. European Territorial Cooperation  – 'Interreg'  – under EU  cohesion 
policy  also  provides  further  opportunities  for  cross-border,  transnational  and 
interregional 
cooperation, including in the Energy Union areas. 

Hungary  participates  in  the  work  of  the  Central  East  South  Europe  Gas  Connectivity  (CESEC)  High 
Level  Group,  operational  since  February  2015,  having  the  aim  of  implementing  a  regional  priority 
natural gas infrastructure roadmap in order to improve interconnections and security of supply. One 
important CESEC related project for Hungary is the LNG evacuation pipeline Croatia-Hungary, which 
is  to  enable  evacuation  of  gas  from  the  planned  Croatian  LNG  terminal  to  regional  markets  via 
Hungary. 

The Czech, Slovak and Hungarian day-ahead electricity wholesale markets have been coupled since 
September 2012, and Romania also joined in 2014 (4M MC coupling area), establishing an available 
transfer capacity (ATC) based implicit capacity allocation mechanism.  

32 The RTB indicator for product "i" is defined as follows: RTBi =
imports. 

Xi−Mi
Xi+Mi

 where Xi is the value of product's "i" exports and Mi 

25 

 
 
 
 
                                                            
                              Energy Union –Hungary 

Hungary  actively  participates  in  the  energy  cooperation  dimension  of  the  Visegrad  4  Group  (V4). 
From July 2017 to June 2018, Hungary is holding the rotating Presidency of the Visegrad Group for 
the  fifth  time.  V4  aims  at  regional  integration  of  the  energy  markets  in  particular  for  the  gas  and 
electricity  sectors,  and  with  the  Allegro  project  in  the  nuclear  research  sector,  which  is  aimed  at 
demonstrating the operability and technological feasibility of gas cooled fast reactors.  

Cities and urban areas have a key role in the energy and climate challenge. The Urban Agenda for the 
EU,  established  by  the  Pact  of  Amsterdam  in  May  2016,  better  involves  cities  in  the  design  and 
implementation of policies, including those related to the Energy Union. It is implemented through 
Partnerships, in which the Commission, Member States, cities and stakeholders work together on a 
number  of  important  areas,  including  on  Energy  Transition,  Urban  Mobility,  Air  Quality,  Climate 
Adaptation and Housing. 

Twenty-seven sustainable energy action plans from Hungary have been submitted to the Covenant of 
Mayors by 2016. Overall, plans cover about 2.4 million inhabitants representing around a quarter of 
the  total  population  of  Hungary.  Altogether,  the  concerned  municipalities  committed  to  reduce  by 
2020 the GHG emissions by 22.5% (as compared to 1990 baseline). 

(Source: JRC 2016. Notes: SEAP=sustainable energy action plan, GHG=greenhouse gas emissions) 

In  Hungary,  by  September  2016,  one  city  (covering  0.06  million  inhabitants)  has  committed  to 
conduct  vulnerability  and  risk  assessment  and  develop  and  implement  adaptation  plans  in  the 
framework of the Covenant of Mayors for Climate and Energy. 

8.  Cohesion policy and EU clean energy investments  

EU  cohesion  policy  makes  a  key  contribution  to  delivering  the  Energy  Union  objectives  on  the 
ground,  including  important  investment  possibilities  to  implement  energy  policy  objectives  in 
Hungary  which  are  complemented  by  national  public  and  private  co-financing,  aiming  at  optimal 
leverage.  It  also  ensures  integrated  territorial  solutions  to  energy  and  climate  challenges,  supports 
capacity building and provides technical assistance. 

Over  2014-2020,  cohesion  policy  is  investing  some  EUR  2,121  million  in  energy  efficiency 
improvements  in  public  and  residential  buildings  and  in  SMEs,  as  well  as  in  in  district  heating  and 
renewable  energy  in  Hungary.  Cohesion  policy  is  also  investing  significantly  in  R&I  and  in  SME 
competitiveness in Hungary, based on the national strategy for smart specialisation. For Hungary, the 
strategy  includes  a  focus  on  clean  and  renewable  energies  and  on  advanced  technologies  in  the 
vehicle and other machine industries. At this stage, the allocations foreseen for investments in R&I 
and adoption of low-carbon technologies in Hungary are not specified, but should become available 
in line with the evolving content of the smart specialisation strategy. A further estimated EUR 2,439 
million  is  invested  in  supporting  the  move  towards  an  energy-efficient,  decarbonised  transport 
sector. 

26 

 
 
 
                              Energy Union –Hungary 

(Source: DG REGIO) 

These  investments  are  expected to  contribute  to  around 24,000  households  with improved energy 
consumption  classification,  a  decrease  of  around  103,200,000  kWh  per  year  of  primary  energy 
consumption  of  public  buildings,  around  1,840  MW  of  additional  capacity  of  renewable  energy 
production, as well as to around 470 km of reconstructed or upgraded railway lines, 130 km of new 
or improved tram and metro lines and 50 km of new or improved inland waterways. Overall, the EU 
cohesion policy investments in Hungary over 2014-2020 are expected to contribute to an estimated 
annual decrease of GHG emissions of around 2,964,000 tonnes of CO2eq. 

For example, until recently Budapest Zoological and Botanical Garden was almost entirely reliant on 
expensive and sometimes unreliable supplies of Russian gas to meet its heating requirements. But a 
recently  completed  project  co-financed  by  the  European  Regional  Development  Fund  (ERDF)  has 
enabled  the  Zoo  to  take  advantage  of  its  closeness  to  a  source  of  geo-thermal  water  of  Széchenyi 
Bath  1,000  meters  under  the  ground.  Total  investment  for  the  project  was  HUF 315  million 
(approximately EUR 1 million), of which the ERDF contributed HUF 189 million (EUR 630,000).  

As another example, the construction of a biogas facility in Békés county represented a total project 
cost of HUF 1.3 billion (approximately EUR 4 million), of which cohesion policy funding contributed 
with  approximately  EUR  2 million.  The  plant's  built-in  power  output  is  1,190  kW  and  its  thermal 
output is 1,170 kW. 

So  far  only  one  European  Fund  for  Strategic  Investments  (EFSI)  infrastructure  project  has  been 
approved and signed in Hungary. Supported by the EFSI guarantee, the European Investment Bank is 
providing  a  EUR  42  million  loan  to  energy  and  resource  efficiency  investments  in  sugar  and  starch 
plants  in  Hungary  and  Austria,  including  upgrade  of  a  bio-ethanol  production  unit  in  Austria  and 
construction of a new sugar packaging plant in Hungary. 

Through  its  support  to  sustainable  transport  systems,  the  Connecting  Europe  Facility  (CEF)  also 
contributes  to  the  goals  of  the  Energy  Union.  Following  the  Hungarian  participation  in  the  CEF  – 
Transport  2014-2015  Calls,  the  Hungarian  action  portfolio  comprises  twenty-seven  signed  grant 
agreements, allocating EUR 1,071 million of actual CEF Transport Funding to Hungarian beneficiaries 
(state-of-play  February  2017)33.  The  transport  mode  which  receives  the  highest  share  of  funding  is 
rail  (80.2%  of  actual  funding).  All  Hungarian  rail  actions  aim  at  eliminating  important  bottlenecks 

33 Note that European Economic Interest Groups and International Organisations are excluded from the analysis. 

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                              Energy Union –Hungary 

along  the  three  core  network  corridors  crossing  the  country,  i.e.  the  Mediterranean,  the  Rhine 
Danube  and  the  Orient  East-Med  corridors.  They  will  ensure  increased  capacity,  improved  service 
quality, safety and security and contribute to the modal shift of passengers and freight from road to 
rail. 

The overall objective of the Hungarian road actions is to develop an efficient and competitive road 
transport network by addressing bottlenecks which are currently limiting traffic along the three core 
network corridors crossing Hungary and thereby contributing to the reduction of operating costs and 
improving safety and security. Hungary is also active in inland waterways (IWW), with actions aiming 
at  establishing  a  good  navigation  status  along  the  Hungarian  section  of  the  Danube  mainly  by 
eliminating important bottlenecks along the Rhine Danube core network corridor and to foster LNG 
use  in  inland  navigation  sector,  contributing  to  the  European  alternative  fuels  implementation 
strategy.  The  IWW  actions  cover  a  wide  range  of  activities  which  will  increase  safety  as  well  as 
reliability  of  navigation  thus  contributing  to  the  modal  shift  of  freight  from  road  to  inland 
waterways.34  

34 Source: INEA 

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