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The future of the energy industry: optimism runs in the Budapest Energy Summit

The third Budapest Energy Summit, organised by White Paper Consulting, gathered the leaders of the energy industry, connecting policymakers, the business ecosystem and innovators to review how the sector has coped so far with the challenges of the fast-moving coronavirus situation and adjusted to the new normal.

Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó opened the discussion highlighting the historic gas purchase agreement concluded this year, which is the first long-term contract in the history of Hungary with a Western player.

“This means that by 2027 Hungary will secure 10 per cent of its gas supply from the Krk LNG terminal, which is set to start operation from January,” the Minister said. “This is a huge step in Hungary’s energy diversification.”

Also leaders of the biggest players Tellurian, NOVATEK, TurkStream, MET Group and MFGK Hungarian Gas Trade highlighted the importance of energy diversification, pointing out that all these new regional gas infrastructure projects were long-awaited because they allow more trading, which translates into more competition and more opportunities.

However, the energy sector as a whole faced different challenges this year due to the outbreak of the coronavirus pandemic early in March. But when a challenge is ahead of us, there is no other way but overcome it turning it into an opportunity, as underlined by leaders of MET Group, E.ON Hungária and Shell.

“The COVID-crisis provided us with a future snapshot of how digitalisation will play a powerful role in our industry and it will also be a factor of unleashing disruptive solutions,” said Gergely Szabó, Regional Chairman of MET Central Europe. “We are heading towards a data-driven culture in which the most efficient data-process systems and the related decision-making mechanisms will be essential attributes of the successful market players.”

Mahdjouba Belaifa, Head of Gas Market Analysis Department of the Gas Exporting Countries Forum (GECF) highlighted in her assessment that gas markets are more resilient to economic shocks, yet there is still a dire need to cooperate and collaborate together to mitigate their exposure to unprecedented circumstances.

Kadri Simson, Commissioner for Energy at the European Commission underlined that achieving climate neutrality requires the transformation of our entire economy, for the benefits of the whole society.

“The Green Deal provides a comprehensive vision that covers many sectors and offers a credible growth strategy for the future,” she said.

And speaking of the future, László Varró, Chief Economist of the International Energy Agency (IEA) presented for the first time in the region the IEA’s flagship publication, the World Energy Outlook 2020, which models different future energy scenarios. According to him, energy demand is set to fall by 5 per cent in 2020, the largest shock in seventy years. However, not all fuels felt the impact in the same way.

Indeed, as emphasised by Szabolcs I. Ferencz, Chairman of the Board and CEO of Hungary’s Natural Gas Transmission FGSZ one thing is for certain: even in long term gas will still be used to meet energy demands.

“FGSZ knows that the wind of change has started to blow, while as the saying goes we cannot direct the wind, we can adjust the sales, what we have already started, and we are in the best position to riding those new waves with success,” he said.

As showed by Mr Varró renewables emerged as a clear winner.

“To decarbonise the energy system, we can look at a scenario based on 100 per cent renewables in 2050,” said Walburga Hemetsberger, CEO of SolarPower Europe. “The results are surprising: it is not more expensive, on the contrary, we have seen a 6 per cent lower cost overall compared to a scenario when we still have fossil fuels.”

Therefore more and more countries are committed to a net-zero future.

Péter Kaderják, Hungary’s Minister of State for Energy and Climate Policy confirmed that Hungary is fully dedicated to get to net-zero by 2050 and this is enshrined in law. He emphasised that pursuing climate objectives must be balanced with supply security considerations and competitiveness.

“Hungary is willing to go ahead with more ambitious middle-term climate goals but we would like to see more progress in the EU in terms of climate convergence,” he said.

Completing the decarbonisation of the electricity sector is one of the urgent tasks as Hungary would like to see 90 per cent of its power production becoming carbon-free by 2030. The clean mix will rely largely on new nuclear investment, phasing out lignite capacity, scaling up solar, while keeping gas a back-up capacity for flexibility and investment in grid infrastructure.

At the Budapest Energy Summit also the recent US election was discussed. Daniel Yergin, energy expert and Pulitzer-price winning author introduced his latest bestseller The New Map: Energy, Climate, and the Clash of Nations. Considering what is at stake for the CEE region’s energy agenda after the recent US elections, the conference featured Kurt Donnelly, Deputy Assistant Secretary of the State Department’s Bureau of Energy Resources and Kevin Book, Managing Director, ClearView Energy Partners who shared their insights on the expected turning points of US energy policy.

Dr Graham Cooley, CEO of the world’s leading green hydrogen technology company, ITM Power highlighted that the reason why everybody in Europe is now interested in green hydrogen is first because of the cost reduction, secondly because it is the only net-zero gas if we want to achieve a net-zero future.

“The reality is that the energy industry is slow to change and the transition of the energy system will take a long time, because of its size, its complexity and the amount of infrastructure required to keep it running efficiently,” concluded Jeroen Kirschbaum, Lead Country Manager of ExxonMobil Global Business Center Hungary. “We seek to improve the society, we are inspired to solve big problems and we know that we can make a real difference for the world through the application of science, technology and innovation.”

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