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Hungary’s transition towards a green and circular economy – interview with State Secretary Attila Steiner

Since January, the State Secretary for Energy and Climate Policy at Hungary’s Ministry of Innovation and Technology and the State Secretary for the Construction Economy, Infrastructure Environment and Sustainability are combined into a single position.

CEENERGYNEWS spoke with the newly appointed State Secretary for the Development of Circular Economy, Energy and Climate Policy Attila Steiner about how Hungary will complete the transition towards a green and circular economy, with a focus on the coal phase-out and the transformation of the Mátra Power Plant.

“My predecessors managed to build a strong legislative framework for the transformation of our energy system in order to meet our 2050 climate neutrality target,” he begins. “My task now is to find and implement the most efficient, effective and practical tools to reach this goal. Successfully completing the transition towards a green and circular economy requires thorough planning and strong oversight which is why I think merging the energy and climate policy with the topic of the circular economy into one State Secretariat has been a logical step to take.”

His most pressing task now is to make sure that every small detail fits perfectly into the country’s greater climate neutrality goals.

“This is especially true for the implementation of our new waste law, but also for designing the utilisation framework of the EU funds for energy, climate and waste management,” Mr Steiner highlights. “I would be remiss not to mention the political discussions Hungary has with the EU on its climate policy. The detailed rules of the increased 2030 EU targets are currently being established by the European Commission, which is why we need to be very vigilant to make sure that the outcome is not only fair for all Member States but also that Hungary receives all the support it needs.”

Indeed, the European Commission is insisting a lot on the concept of a just transition that does not leave anyone behind. However, the new emission reduction target of 55 per cent is quite ambitious if we think that some countries (especially from the CEE region) have a different starting point.

“Hungary has supported raising the target to net 55 per cent on the December 2020 European Council meeting, along with all Member States,” recalls Mr Steiner. “We believe it is possible to achieve the higher EU target if the EU policies serving this purpose are designed well.” 

“Putting a disproportionate burden on the Central and Eastern European Member States must be avoided and there is a need for higher climate-related financial support from the EU. Also, we have to pay attention to industrial competitiveness and the financial burden on households. No one should be left behind.”

According to a first strategy sent to the European Commission, it is estimated that reducing Hungary’s CO2 emissions will cost about 50 billion Hungarian forints (approximately 150 million euro). Mr Steiner explains that since the first draft version of the Long-Term Strategy was submitted to the Commission in January 2020, new calculations were made, based on three different scenarios, on the potential investments needed to reach a carbon-free economy.

“According to these new calculations, the investments costs are lower depending on what scenario we want to follow,” he says.

The EU recovery fund, the comprehensive package worth 1,8 trillion euros and approved last year will surely play a role.

“In the national recovery plan, nearly 430 billion Hungarian forints [approximately 1.2 billion euro] will be devoted to green energy transformation,” reveals the State Secretary. “This is nearly 7 per cent of the plan’s total budget.”

“The energy component will focus on the increased use of renewable energy in Hungary and on making the national grid capable of integrating electricity generated by weather-dependent energy sources and upgrading its smart capacities. A smoothly working national grid is the pre-requisite for all other types of investment in renewable energy.”

“The energy component is based on the following investments,” he continues. “Upgrading the national grid, smart meter roll-out, increasing the use of PV in the residential sector both for generating electricity and for heating and building solar parks. We plan to increase the installed PV capacities in Hungary by 1.100 megawatts (MW) which would increase the renewable energy share by around 3 percentage points.”

Increasing the share of renewables means also transforming the Mátra Power Plant, the last remaining lignite power plant in the Hungarian electricity system. Earlier in March, the State Secretary announced that the Mátra power plant will be shut down five years earlier, in 2025 instead of 2030. And later the Coal Region Committee was established, the first permanent platform supporting the coal phase-out in Hungary.

“The Coal Commission – established in March 2021 in the frame of the LIFE-IP North-HU-Trans project – is the first nationwide coal commission in Hungary uniting approximately 60 organisations, which are – directly or indirectly – affected by coal transition issues,” explains Attila Steiner. “Our mission in the Coal Commission is to establish a permanent platform for discussion, consultation and decision making support in order to ensure a sustainable and just transition in the Mátra region, the last remaining coal region in Hungary. The Commission unites high-level representatives from the central and regional government, background institutions, business, education, health and civil sectors in the frame of the High-level Forum, and technical colleagues from the same organisations in the frame of 6 operative working groups, in the topics of decarbonisation, just transition, economic diversification, environment and health, vulnerable households of coal regions and finance.”

Mátra Power Plant. Source: mert.hu

Regarding the concrete steps for the transformation of the Mátra Power Plant, Mr Steiner speaks about a restructuring process to replace the existing units reaching the end of their lifecycle by advanced power generation technologies (gas-fired, waste-fired and photovoltaic generation). Also, a related regional development program is under preparation to enable a smooth transition.

“As you can see the green transformation of the Mátra Power Plant is the most significant climate effort of the Government, which would contribute greatly to the fulfilment of our 2050 decarbonisation goals,” he says.

He goes on saying that the transformation is not limited to the plant alone.

“For Hungary, just transition to a climate-neutral economy is crucial in order to alleviate the negative social and economic impacts on Hungarian citizens and on corporations operating in the country,” he adds. “The power plant and dependent industrial facilities are of utmost importance to the regional economy, providing significant work opportunities to the local population and tax income to the local municipality. The reorganisation shall take these into account and shall aim not only at preserving jobs, but to provide an environment for innovation.”

In this regard, Mr Steiner mentions that Hungary has joined the Powering of Past Coal Alliance (PPCA), a world organisation set up to phase out coal and lignite-based electricity generation. Participants in the first summit of the PPCA are calling for ambitious global action to achieve the goal of carbon neutrality ahead of the 26th meeting of the Framework Convention on Climate Change (COP26).

“Hungary has joined the PPCA because we are aware that the decommissioning of coal and lignite-based electricity generation requires strong international cooperation,” he underlines. “Thus, we are ready to adapt international good practices and share our experiences with our plans to make Hungary’s largest carbon region sustainable by 2030.”

The other main component of Hungary’s energy mix is the Paks nuclear power plant. According to Hungary’s new Energy Strategy and National Energy and Climate Plan adopted at the beginning of last year, nuclear energy is a key element of a cost-effective, safe and stable energy mix that will help the country to meet its climate mitigation goals.

“Hungary is moving ahead with the Paks II project to construct two new reactor units,” Attila Steiner confirms. “We successfully reached the next milestone when on 30 June 2020 Paks II submitted the implementation license application to the Hungarian Atomic Energy Authority. The decision of the Authority is expected in the autumn of this year.”

“It is our strong belief that all clean energy sources and technologies should be considered to achieve carbon neutrality,” he adds. “Renewable (green) hydrogen technology is important and should be encouraged and supported. However, in our view, the potential of nuclear power in the production of clean hydrogen should not be ignored either. Therefore, we are of the opinion that hydrogen produced on a nuclear basis will play a significant role in the Hungarian energy system and also in the whole economy.”

However, current trends indicate a shift from large reactors to small modular (SMR) ones. In which direction is Hungary going?

“The latest innovations and developments concerning nuclear technologies are closely followed at expert level,” agrees Mr Steiner. “It is of our utmost interest to get familiar with the best and the safest technology available in the market. Concerning SMRs, many issues are still open, for example, their nuclear safety, regulatory and licensing parameters. There is no available operating SMR in the market or a reference unit, and it seems that it is not even expected in the upcoming years.”

“Among others, our great advantage is that we have already gained a significant and valuable operating experience with VVER type reactors,” he continues. “This is not the case with SMRs. We appreciate the nuclear experience gained during the last 40 years as well as the reliable operation of the reactor units of Paks I. Not to mention the fact that building a first of kind type reactor may have a significant increasing impact on the overall budget and the timeframe of the construction.”

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