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Hungary tabled a 16 bln euros plan to ensure secure and sustainable energy supply

Hungary’s State Secretary for Energy and Climate Policy, Attila Steiner said that although recent infrastructure developments granted access to alternative gas supplies, Hungary is still largely dependent on Russian gas. The government has a masterplan that aims to provide secure, sustainable and affordable energy to Hungary, a project list worth 16 billion euros is already on the table.

The Hungarian State Secretary started by stating that in this current situation it is no longer evident that we have energy. He underlined that the Hungarian government doesn’t want to abandon its commitment to reach climate neutrality by 2050, however, the current situation brought forward the aspect of a secure and affordable energy supply. The main challenge now is finding a balance between sustainability, security and affordability in the energy markets.

He emphasised that despite its post-Soviet heritage, Central and Eastern Europe is not in a bad situation as the countries of the region learnt a lot from the 2009 gas crisis. Hungary for instance, built gas interconnectors in the direction of all neighbouring countries, with the exception of Slovenia, to purchase gas from almost every direction.

“It is also important that the long-awaited North-South gas corridor was finally completed, as its last section, the gas interconnector between Poland and Slovakia was inaugurated,” highlighted that State Secretary pointing out that the link will grant access to Hungary to the LNG shipments arriving in Poland.

He underlined that although Russian gas was dominant in the region up until the current crisis, following the infrastructure developments of the past years, Hungary and the CEE region have more alternative supply sources. The Croatian KRK LNG import terminal, which started commercial operations in January 2021 is viewed as a cornerstone of regional energy security. Attila Steiner confirmed that Hungary would like to see the terminal expanded, which can already happen for the gas year 2024-2025. Another important step according to the Hungarian State Secretary would be if Azerbaijan would supply more gas to Europe which could largely improve the security of the supply situation in the region.

However, even with all the infrastructure developments of the past years, Hungary still has a very significant import exposure on the gas market (80-85 per cent), and Russian gas still amounts to 80 per cent of the country’s demand, which determines Hungary’s standpoint at the EU negotiation tables. Hungary is the most vocal opponent of expanding the sanction regime on Russia and ruled out sanctioning Russian gas from the start arguing that it cannot replace it from other sources in the short term.

According to the State Secretary, Hungary is not alone with this in the region, other member states face similar problems. At the same time, he emphasised the importance to reduce Hungary’s exposure to Russian gas, stating that the government already have some plans for this.

Cutting back on gas consumption will be necessary, which will be supported by energy efficiency investments on the one hand and increasing renewable energy production on the other hand. Simultaneously, Hungary plans to continue the diversification of supplies from non-Russian sources and increase domestic gas production to cover about 20 per cent of the annual domestic gas consumption. In the medium and long term the government bets on biogas and hydrogen. The State Secretary also emphasised the potential of electrification, underlining that electric vehicles are rapidly gaining ground in the automotive industry.

He revealed that the Hungarian Ministry of Technology and Industry has already tabled a project list with a total value of 16 billion euros which reflects the strategic goals of the government until 2030. According to the State Secretary, these projects which are planned to be financed partly from EU funds, are also strengthening regional energy security.

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