Hungary sets ambitious targets in reviewed National Energy and Climate Plan

Hungary’s Energy Affairs Ministry has issued an impact study of Hungary's National Energy and Climate Plan (NECP) for public debate.

Hungary prepared a draft of its NECP in the summer of 2023 and will submit the final version in the autumn of 2024, after getting feedback from the European Commission. The plan aims to strengthen Hungary's energy sovereignty and supply security, while preserving the regulated utilities price scheme results for households and implementing the green transition.

The revised NECP now targets at least a 50% reduction in greenhouse gas (GHG) emissions by 2030, revised up from 40%, compared to 1990 levels, and plans to cap final energy consumption at 750 petajoules (PJ).

It seeks to boost the share of renewables in its energy mix to 29% from 21%. This entails increasing the share of solar energy in the energy mix as well. Installed solar capacity is set to reach 12 GWh by 2030, double the earlier target. The four blocks of Hungary’s sole nuclear power plant (NPP) in Paks operate with 2,000 MW capacity at present, and produce 40% of the country's electricity needs, 

Hungary will also increase the share of so-called first-generation biofuels produced from food and feed crops to almost 4% by 2030, while the share of waste and second-generation (or advanced) biofuels and biogas will be increased to at least 4.5%. It would take several thousand billion forints in investments to achieve the goals in the NECP, the ministry said.

A year ago, when presenting the update of the NECP, the ministry said that reaching these ambitious targets could be "greatly facilitated" by investments outlined in the energy chapter of the REPowerEU plan, part of the RRF plan.

But as Hungary failed to meet the criteria (super milestone) set by the European Commission, the latter has withheld funding from the government. Time is running out as an agreement should be clinched before the year ends if these funds are not to be lost. Hungary is entitled to €6.5bn in grants from RRF, including €4.6bn allocated in the REPowerEU chapter. It has also requested an additional €3.9bn in loans.

In a separate report, the ministry said GHG emissions fell by 9.5% last year and was 43% lower compared to 1990. The collapse of heavy industry in the early 1990s was a major contributor. The energy sector achieved the largest emission reduction last year, with an 11% decline. Fossil fuel-based energy production shrank 18%, while solar power generation nearly doubled, increasing by 47%.

Reducing the country’s import dependence has become a priority for the government after the energy crisis. The surge in oil and gas prices has deteriorated the country’s trade balance by close to €10bn in 2022 and led to a currency crisis. Hungary depends on imports for 76% of its energy supply, over the European Union average of 71%.

The public can comment on the impact study until September 22.