Climate and energy efficiency aspects of the Hungarian National Energy and Climate draft
The updated National Energy and Climate Plan (NECP) of Hungary covers the dimensions of decarbonisation, energy efficiency, energy security, internal energy market and research, innovation and competitiveness of the Energy Union. This writing focuses on the climate and energy efficiency aspects of the Hungarian NECP.
Hungary is particularly exposed to the unintended effects of climate change compared to the rest of Europe due to its location inside the continent and the specific microclimate of the Carpathian Basin, but in global comparison the consequences of warming are lagging behind the expected changes in other regions of the world, in particular the most vulnerable developing regions.
Hungary remains committed to achieving long-term climate target, that is, becoming climate neutral by 2050. We want to achieve our energy independence through demand reduction and energy efficiency, diversification and alternative energy sources utilisation and electro-electrification measures. Increasing energy efficiency is our priority by using renewable-based heating/cooling solutions, reducing the share of natural gas in the district heating sector and reducing energy use for residential, public, industrial and transport purposes.
The Hungarian NECP states that the Hungarian Government must pursue a realistic and responsible policy in the field of climate protection. It should be realistic in terms of the expected results of interventions under current technologies and their cost implications. This is in line with the energy mix and climate targets of Central and Eastern European countries. The European Union expects its member countries to have an overall climate-neutral economy by 2050. In the period up to 2035, the extra investment cost of the WAM (With Additional Measures) scenario is in the order of HUF 500 billion per year. On the other hand, investments reduce operating and carbon quota costs. Thus, the annual net additional financing needs are HUF 155 billion. In the view of the Hungarian Government, this objective is achievable for Hungary, but this requires a substantial financial contribution from the European Union. The objectives of economic growth and climate protection are not at odds. Hungary is among the 21 countries in the world where gross domestic product has increased since 1990, while CO2 emissions have fallen by 37% and energy use by 15%. Thus, Hungary is not only at the forefront of economic growth, where the gross domestic product growth exceeds the average GDP growth in the euro area by 2−3 percentage points, but also has an exemplary practice in the field of climate protection.
Hungary is a member of the Visegrad Cooperation and the Central and South-Eastern Europe High Level Group on Energy Connectivity (CESEC), where energy and climate policy issues relevant to the NECP are regularly discussed. The regional consultation on Member States’ Energy and Climate Plans was held in Bratislava on 23 April 2023 with the participation of Czechia, Hungary, Poland and Slovakia. The meeting provided an opportunity to discuss the progress of individual Member States in the preparation of the revised NECPs at regional level, to learn about their draft plans.
With regard to the NECP, the Hungarian Government authorised the Hungarian Ministry of Energy to meet the objectives of the Energy Union and to comply with the Paris Agreement. The ministry is to develop appropriate policy programmes and visions for issues that require a political decision on the future of the energy sector and other sectors affected by decarbonisation; setting national targets and domestic contributions on energy and climate change, in particular emissions reduction, energy efficiency and increasing the share of renewable energy.
Hungary aims to reduce its gross greenhouse gas emissions by at least 50% by 2030 compared to 1990, i.e. gross emissions should not exceed 56.19 million t CO2eq gross in 2030, i.e. a reduction of 7.6 million t CO2eq compared to 2017. Our main energy efficiency target is that the country’s final energy consumption in 2030 does not exceed 750 PJ. This also means reducing our final energy consumption by around 6% by 2030 compared to 2021 (802 PJ). We also set a target of 336 PJ of cumulative final energy savings by 2030 – a new saving of 61 PJ over 10 years. 3% of the floor area of central government buildings will also be renovated each year to the optimal level of cost.
In line with our EU obligations, in 2021 the Government adopted the Long-Term Renovation Strategy (HTFS), which provides the basis for achieving a sustainable, energy and cost-effective domestic building stock by 2050 through energy efficiency, value, comfort and health promotion measures, renewable energy use and the use of smart technologies. The strategy aims to achieve a 20% saving in the energy use of the domestic residential building stock by 2030, a 60% reduction in CO2 remissions related to the energy use of buildings by 2040 compared to the 2018-2020 average, and nearly zero-energy buildings to reach 90% by 2050. With the modernisation of the residential building stock to improve energy efficiency and the shift to alternative heating methods, we estimate that up to a quarter of natural gas imports (around ~2 billion m3 natural gas use per year) could be replaced. The aim is also to further improve the final energy intensity of GDP, which will fall below HUF 0.429 toe/million by 2030, while maintaining economic growth.
In order to achieve the energy efficiency targets in a cost-effective manner, we have put in place an energy efficiency obligation scheme (EEOS) to channel investments on a market-based basis to those areas with the highest energy use and energy efficiency potential. Improving the energy efficiency of the economy is one of the priority projects of the new Energy Strategy. The contribution of the EEOS to the national energy savings target is 26%. Alternative energy efficiency policies should account for 74% of the target. Therefore, we consider it of utmost importance to continue and renew alternative policy measures to improve energy efficiency. In the case of central budget and local government investments in building energy and energy efficiency, ESCO-based services can reduce the use of budgetary resources and EU grants, thus contributing to the reduction of public debt and a more rational use of subsidies that will decrease in the 2021-27 programming period.
Amb. dr. Barbara Botos, Ambassador-at-large for Climate, Ministry of Energy, Hungary
About the author:
Dr Barbara Botos was appointed as Hungary’s Ambassador at Large for Climate in 2022. Prior to her new appointment, Barbara Botos was the Deputy Secretary of State for Climate Policy at the Ministry of Innovation and Technology of Hungary for four years, where she was in charge of international, EU and national climate change, renewable and energy efficiency policy-making and programs. Previously, she was Head of the Department of Climate Policy at the Ministry of National Development. She has been actively involved in the UNFCCC and EU climate negotiations for the last 11 years as head of the Hungarian delegation and UNFCCC and IPCC focal point of Hungary. Previously, Barbara was teaching at universities and worked for local governments in the field of environmental protection and climate policy. She is a member of the Women in Energy Association.