We have to do more with less

Although improving the energy-efficiency is part of the overall energy strategy in Hungary, it is set out in different section in the document. The particular attention has its reason: the control of the energy use and to produce more GDP with the same amount of energy are economic reasons as such.  The environmental and climate aspects are emphasized as well, partly in relation to the compliment of the EU obligations. Although a reduction and a slowdown characterize the energy use due to COVID-19, the recovery might start again within months. The strategy calculates until 2030, but its prospect extends to 2040.

One of the main arguments set out in the paper says that the energy-efficiency shall be the first aspect to be considered when it comes to start a new investment or make a policy decision. This aspect is not a new term; however, it was not emphasized so remarkably. The results reached in this field are demonstrated with numbers as well: while between 2005 and 2017 the Hungarian GDP increased by 1,5 percent, its final energy use was dropped by 10 petajoule, to 775 petajoule, which means it became more effective. Although, according to the strategy, in 2030 the use cannot exceed the 785-petajoule result measured in 2005, there is a good change that the concrete numbers will change due to the coronavirus.

On the other hand, the economy will recover and require more energy than in 2005. In terms of this surplus, the strategy declares two main statements: the used energy exceeded the amount in 2005, after 2030 can only emerge from carbon neutral, i.e. renewable and nuclear sources, and from this date on, the mitigation of the energy demand is given more emphasis in the energy efficient policy.

According to the uniform energy saving indicator of the Eurostat, Hungary shall reduce its final energy use by 0,8 percent between 2020 and 2021, which is equal to 331,23 petajoule in the given period. This could be reached by a 7-petajoule new saving, i.e. doubling the 2014-2020 period, therefore it is quite challenging. The solution, according to the strategy, would be to launch an obligation scheme, where the energy distributors and/or retailers would be responsible for the certified energy savings. In order to these savings, the regulation will improve the conditions of the market investing schemes, in which the loan taken up will be paid by future savings. This is mainly possible by modernizing the energy system in the buildings. This should be emphasized because the residential energy use is particularly high compared the neighboring countries.

According to the foreign experience, the energy use of the approx. 960 thousands of facilities 12-15,000 public institutions could be dropped by 15-30 percent.  The tightening regulations will further facilitate to reach this aim by making the operators of the public institutions personally interested in the result (saving). What is more, it becomes clear that how the recommendations of the audits and policy officer can be used, and what requirements we must meet in terms of almost-0 energy demand houses. The regulation on building energy certification will be updated as well.

The transportation sector is responsible for one quarter of the Hungarian energy use, and the use has been significantly growing since 2014. No wonder: there is a growing demand for individual mobility, carriage of goods, and the regular transportation to workplaces, but the appreciation of certain rural regions goes hand in hand with the increase of energy use. The proportion of the railway was only 3 percent in 2016, while a decisive ratio of the energy use on roads was divided between the consumption of the cars with 52 percent and the carriage of goods with 37 percent. In order to reduce the increasing tendency of the use, the railway and vehicular transportation shall be harmonized, while the vehicular goods supply shall be directed to the railway.

The energy-efficiency part of the energy strategy was evaluated by László Szabó, head of the Regional Centre for Energy Policy Research (REKK).

• REKK: the implementation of the obligation scheme will be challenging

  The EU’s objective on energy-efficiency is a challenging task for a reason: the economical cycle of growth highly influence the energy use, and it is affected by the increasing consumption trend in the transportation sector. In Hungary, the reduction of the living cost is another hindering factor, as the reduced energy prices do not encourage the realization of the energy-efficient investments. Therefore, it is not a coincidence that the energy-strategy requires to launch a “powerful”, although not easily achievable tool, the obligation scheme. 15 member states already use this tool in the EU, however it has not brought the anticipated results, and certain former obligation schemes have undergone several reforms as well. The transition was smooth where there was a voluntary history or it was implemented gradually, with longer introductory period.

  The key concerns in the operation of the system are who the obligated parties will be and how strong objections they will face. The strategy itself does not go into detail, the paper implies that the obligated parties or the energy distributors or traders will be the obligated parties and the aim is to reach half of the 7-petajoule reduction undertaken in the strategy. This is a relatively high value that justifies a gradual launch. Huge debates are expected about designation of the obligated party. The energy companies are already burdened with high taxes, therefore a high resistance is expected against the system, due to the fact that a very high share shall be paid by them. Pursuant to the international experience, the obligated parties pay up to one third of the overall costs, therefore it would be important to cover a large range.

  Pursuant to the modelling calculations of REKK, the highest energy-efficient potential is in the residential building energetics, and it is worth making this to a priority target area. Particularly because the strategy, in a break with the previous practice, do not delegate money from the budget and the EU to this field through operational programs. Another further downside of the obligation system could be that they do not really incentives the deep reconstruction of buildings.

  The coronavirus will likely to contribute to reach the energy-efficiency aim set out for 2020 through a drastic reduction of energy use, but it will have a short-term effect according the expectations. In order to reach the goal, set out for the period until 2030 (i.e. maintaining the final energy use measured in 2005, i.e. 785 petajoule), concrete and additional actions and solutions are needed, which an obligation scheme could only realize if the obligated parties can actively participate in the establishment of the system.