Péter Kaderják will be one of the speakers at the Budapest Energy Summit to be held online on 1 December.
With the new European proposal to cut greenhouse gas (GHG) emissions by at least 55 per cent by 2030, the energy transition keeps ongoing. However, all Member States have a different starting point and a different energy mix and the issue must be addressed from different points of views if we want the transition to be just.
CEENERGYNEWS spoke with Péter Kaderják, Secretary of State for Energy and Climate Policy at the Hungarian Ministry for Innovation and Technology about the country’s future energy mix and the social aspect of the energy transition.
“The greatest challenge for those people who are working on the energy transition is how to manage it so that we can reach climate objectives from a global perspective and ensure energy security of supply at the same time,” Mr Kaderják says. “Also without compromising economic development. Reaching climate objectives must not put an additional burden on Hungarian families.”
In this regard, Hungary is performing very well. In 2018, the country’s GDP grew by 5.1 per cent alongside a 0.7 per cent drop in greenhouse gas (GHG) emissions. On a 1990 basis, the country outperforms the European Union average on GHG reduction by more than 9 per cent. Now, Hungary has backed the Commission’s proposal to increase the 2030 emission reduction target from 40 to 55 per cent with certain conditions.
“With the exception of Poland, which has specific problems, the Eastern European Member States have all reduced their CO2 emissions well over the EU average,” Mr Kaderják points out. “Those Members that are asking for higher and higher reduction objectives are those that could not reduce even a ton of CO2 emission compared to 1990 (like Spain, Portugal, Austria, Ireland). Eastern European countries have already over-performed and this should be appreciated.”
However, the new target is only a proposal, for now, a serious one that requires a serious response. So far Hungary has prepared a national energy and climate plan aiming to achieve the 40 per cent target and now the government is analyzing what additional efforts it would require from the country to meet the 55 per cent EU-wide target.
“The question we should ask ourselves is: do we have sufficient measures already in place that ensure that all Member States are converging to zero emissions by 2050?,” asks Mr Kaderják.
At the beginning of June, the Hungarian Parliament already passed a law that confirms climate-neutrality as a legally binding obligation by 2050. But the Secretary of State for Energy and Climate Policy believes that more convergence across EU Member States is needed.
“We propose an additional criterion, what we call climate convergence so that by 2030 we can support an increase in the target,” he says. “We cannot reach a zero-emission in 2050 without everybody working on it. All Member States should show steady convergence of their emission reduction results compared to 1990 in the coming up decade.”
Mr Kaderják reveals that in the process of finalising Hungary’s National Clean Development Strategy 2050, his colleagues have carried out a series of consultations with the leading stakeholders, industrial energy consumers, financial institutions and energy companies asking them how to contribute to the 2050 net-zero target. Most of them were very supportive of the long-term vision.
“What we have to do now is to make a qualitative summary of these consultations and combine it with economic models working also on the social costs and social benefits,” he continues.
And when it comes to costs, according to a first strategy sent to the European Commission, it is estimated that reducing Hungary’s CO2 emissions will require investments up to 50,000 billion Hungarian forints (140 billion euros).
“Hungary should spend every year around 2-2.5 per cent of its GDP in addition to what we do today to reach the transition goals,” underlines Mr Kaderják. “This is more or less the cost of being a NATO Member. The steps we need to take to reach climate neutrality are more or less comparable to the economic challenge that is included for any NATO Member and this is really important for Hungary. We should increase Hungary’s sovereignty in the energy sector as well, in order to be better protected against geopolitical games, create jobs and reduce consumers’ bills.”
Right now Hungary is a big energy importer, with up to 60-70 per cent of energy coming from abroad. So any future investment into renewable energy sources will reduce this import dependence. And also European funds will play a crucial role. Indeed, 30 per cent of the total expenditure from the multiannual financial framework (MFF) and Next Generation EU (1,8 trillion euros) will target climate-related projects.
“We are working very hard on planning how to use the money and how to target the investments needed for the energy transition,” State Secretary Kaderják explains. “Our number one priority is the decarbonisation of the electricity sector. Part of the money will be invested to upgrade the electricity grid so that it can integrate massive amounts of RES. Another plan is to use EU funds to finance energy-efficiency improving projects from industry to the buildings sector.”
Speaking of the country’s energy mix, Hungary today still produces 15-16 per cent of its energy from coal and lignite for which there is no real future under current EU policies. How to close a coal mine while at the same time ensuring that the security of supply in the country is not compromised and that thousands of people do not lose their jobs?
“Phasing out the Mátra power plant is the most important climate project of the next decade, transforming it into something which is more carbon-friendly is essential as the plant provides employment for many in the region,” explains Mr Kaderják adding that the best option is natural gas in the mid-term and photovoltaics in the long term.
Among the future plans, there is to build biomass units, incinerating waste facilities and photovoltaics. There is also the possibility to experiment with lignite for carbon capture and storage. Once that coal is out of the game, Hungary will rely more on nuclear, natural gas and renewables.
“Hungary belongs to those pro-nuclear countries in the EU as we consider this source as a reliable large scale carbon-free electricity source,” he adds. “We plan to continue using nuclear in the electricity mix at the same level as today. So, once we retire the current units in the mid-2030s, new ones gradually will come online to reach 2.4 gigawatts (GW) of installed capacity.”
In the mid-term also natural gas will play a crucial role especially considering that the Krk terminal’s capacity in the neighbouring country of Croatia has been fully booked. For Hungary gas is essential due to the volatility of RES. Photovoltaics work best in the summer while other sources are needed during the winter.
“Until we have better technologies of seasonal storage for green electricity, gas will play a major role. New technologies include hydrogen, which today is still a very costly solution, however, there are some very promising initiatives, that could bring us closer to build up hydrogen ecosystem in the future,” Mr Kaderják says.
“The situation of the gas industry is very positive also thanks to the work done in the past decade when we developed interconnections with all neighbouring countries but one,” he adds. “Now gas supply is diversified, flowing not only from Ukraine but from Austria, Slovakia, Romania – and soon form Croatia and perhaps Serbia. The terminal in Croatia is the most important recent project in the region and I am proud that Hungarian companies were among those booking the capacity.”
Solar energy will also be an important component of Hungary’s future energy mix. Support for larger-scale PV projects is provided on different tenders (METÁR tenders) that have been launched over the last year.
When it comes to RES, Mr Kaderják highlights three different directions: the first one in the transport, the most difficult one, with sources like biofuels and ethanol both for passenger cars and heavy-duty trucks. The second one, is the electricity sector, also in the transport industry. However, e-mobility can only become an option if the country stops producing electricity from coal. Finally the use of photovoltaics, with the aim of reaching 6 GW of installed capacity by 2030.
“We started to move away from feed-in-tariffs to tenders to promote green electricity,” he recalls speaking of the new subsidy scheme called METÁR launched in March. “We already had two rounds of these tenders which were a huge success. The price of the potential winning project is at around 50 euros per megawatt-hour, which is half compared to the feed-in-tariffs.”
After the success of this first year, the government now plans to run these tenders twice a year. Furthermore, a new PV investment support scheme will be launched in the second half of 2021 to reach low-income households.
“The program is tailored on four regions that belong to the most disadvantaged regions in Hungary,” Mr Kaderják announces. “Especially for smaller settlements and larger families so it has a real social focus. Once we introduce the new program the electricity will be measured differently, thus linking climate-related programs to social ones.”