EUROPEAN COMMISSION
Brussels, 18.11.2015
SWD(2015) 227 final
COMMISSION STAFF WORKING DOCUMENT
Country Factsheet Hungary
Accompanying the document
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK
State of the Energy Union
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Towards an Energy Union
Hungary
Macroeconomic relevance of energy
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IMPORTANCE OF THE ENERGY SECTOR
The energy sector plays an important role in the Hungarian economy, where its contribution to the gross value added and to employment is much greater than the European average. Recently, the contribution of energy to gross value added increased, whereas the share of total employment in the energy sector remained quite stable between 2005 and 2012.
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Source: EUROSTAT – National Accounts
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According to EurObserv'ER, in 2013, the share of direct and indirect renewable energy related employment in total employment of the economy in Hungary was at about 0.18%, below the EU average of 0.53%.
Source: European Commission, based on EurObserv'ER and EUROSTAT
TRADE BALANCE OF ENERGY PRODUCTS
Hungary is a net importer of energy products, mainly due to considerable oil and gas imports, even though the contribution from electricity import also increased between 2006 and 2014. The energy trade deficit is higher than the EU average. In 2006, the current account and the energy trade balance were both in deficit. By contrast, in 2014 the net positions in the accounts diverged: the current account was in surplus, while the energy balance was still in deficit.
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Source: EUROSTAT
Note: Current account balance for EU28 from European Commission (AMECO)
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1. Energy Security, solidarity and trust
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ENERGY MIX
The energy mix of Hungary is relatively similar to that of the EU-28, with the notable difference of a higher share of gases and nuclear. Compared to 1995, the share of renewable energy and nuclear increased more than the EU average (from 3% to 9% and from 14 to 18% of gross inland energy consumption respectively), while the share of gases slightly decreased (by 3 percentage points) The main decrease concerns the use of solid fuels (by 8 percentage points). The share of low carbon emission energy sources (if renewables and nuclear are put together) was slightly above the EU average.
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Gross inland energy consumption in 2013
Source: European Commission, based on EUROSTAT
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IMPORT DEPENDENCY
For overall fossil fuels, Hungary's import dependency is higher than the EU28 average. Import dependency for petroleum products is at the EU average, while that of gas is above, although having decreased since 2005. Hungary imports gas almost exclusively from Russia. Hungary has a significant energy trade deficit, expressed as percentage of GDP.
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Source: European Commission, based on EUROSTAT
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2. A fully-integrated internal energy market
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INTERCONNECTIONS
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Source: European Commission based on ENTSO-E scenario outlook and adequacy forecast 2014
Note: Reference to 2030 target is based on October 2014 European Council conclusions stating that "the Commission will also report regularly to the European Council with the objective of arriving at a 15% target by 2030"
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The Hungarian interconnection capacity for electricity was 29% in 2014, which is above the 2020 target. Additional interconnectors between Hungary and Slovakia would, among others, allow increased electricity imports in the mid-term.
In the case of gas, the main element that requires urgent implementation and hence was also identified as very important project in the European Energy Security Strategy is the reverse flow from Romania towards Hungary and the reverse flow from Croatia to Hungary. This project would allow future Black Sea sources to flow towards Hungary and Austria / Slovakia and would increase trade already in the short term. The reverse flow from Croatia would connect Hungary to Liquefied Natural Gas (LNG) and other western gas sources. The Hungary-Slovakia gas interconnector became operational as of 1 July 2015, giving Hungary access to competitively priced North and West European gas markets and thereby allowing the diversification of supply routes and sources.
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ELECTRICITY AND GAS MARKETS
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Market concentration index for power generation (left) and gas supply (right) (2013) (Herfindahl index – 10000 means monopoly)
Sources: European Commission based on ESTAT, CEER and Platts Power Vision
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Sources:ESTAT and European Commission Calculations
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The concentration of power generation (based on installed generation capacities) in Hungary is below the EU average, while the concentration of the wholesale gas market is high, primarily owing to the dominant import supply source and to the decreasing share of indigenous production in the national consumption. Wholesale gas and electricity prices are comparable with EU average. In September 2012, the market coupling of the Czech, Slovak and Hungarian day-ahead markets was successfully launched (Romania joined in 2014).
Retail market performance indicators show no signs of competition at retail level. Switching rates for electricity and gas markets are insignificant in the case of households, while for industrial consumers switching rates are higher. In 2013 and 2014 significant retail electricity and gas price cuts have been implemented by the government. As a result, by the end of 2014 electricity and gas retail prices for household consumers were down by more than 20% compared to 2012. In combination with other regulatory measures (e.g. special levies in the energy sector) and market interventions, network operators and energy suppliers suffer financial losses in the regulated utility business segment, implying that current retail electricity and gas prices are not fully cost reflective. According to an EU-wide survey, consumer's satisfaction with regard to the retail electricity market in Hungary is slightly below the EU average while it is lowest in the EU in the case of the gas market. Following a first economic assessment of long term costs and benefits, there is no legal framework in Hungary for a mandatory roll-out of smart metering. Instead, it has been decided to undertake a further assessment of related costs and benefits (scheduled by end 2016) based on results from ongoing pilots.
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VULNERABLE CONSUMERS
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Source: European Commission, based on on EUROSTAT SILC survey
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Based on a EUROSTAT survey on income and living conditions, three proxy indicators are used to assess fuel poverty. The values presented on the chart indicate that fuel poverty is a relevant issue in Hungary. Since 2008, the legislation recognises vulnerable consumers on a social and on a health-related basis. Depending on their category vulnerable consumers may benefit from deferred payment, prepayment options, individual assistance to help consumers understand their bills, etc.
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3. Energy Efficiency and moderation of energy demand
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ENERGY EFFICIENCY TARGET 2020
(24.1 Mtoe primary energy and 14.4 Mtoe final energy)
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Source: European Commission, based on EUROSTAT and on national energy efficiency targets as declared by the MS under the Energy Efficiency Directive
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Hungary's recently updated its 2020 energy efficiency target, as comparing to the previous one reported in 2014 (from target number 26.6 to 24.1 Mtoe expressed in primary energy consumption and from 18.2 to 14.4 Mtoe expressed in final energy consumption), did not seem to incentivise improvements in energy efficiency, as the 2013 annual figures were already significantly lower than the 2020 target. This target was based on forecasts made before the global economic downturn at the end of the last decade, implying higher than currently foreseeable energy demand for the forthcoming years.
The new 2020 energy efficiency target is better streamlined to the new economic environment. It is clear that the trend of primary energy consumption decoupled from the evolution of the GDP over the last decade. Yet, Hungary needs to continue its current efforts in order to meet the updated energy efficiency target, assuming that the current economic rebound continues in the next five years.
On 20 February 2015 the Hungarian Government adopted the new scenario for primary energy consumption. In accordance with the new scenario, Hungary is committed to decrease primary energy consumption by 10.4% until 2020 compared to 2005.
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ENERGY INTENSITY
Primary energy intensity in Hungary has decreased significantly since 2005, though it remained significantly above the EU average. Although recent trends showed an improvement in energy intensity in the industrial sector, this trend was reversed in 2013.
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Primary energy intensity of the economy
Source: European Commission based on EUROSTAT
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Final energy intensity in industry
Source: European Commission based on EUROSTAT and European Commission/AMECO
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Final energy consumption in households in Hungary is still slightly above the EU average, though it showed rapid decrease since 2005. The specific energy intensity of passengers cars and freight transport decreased slightly between 2005 and 2010 and it is well below the EU average.
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Final energy consumption per m2 in residential sector, climate corrected
Source: European Commission based on Odyssee database
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Specific energy intensity for passenger cars and freight transport
Source: PRIMES model background data and estimations based on EU Commission and EU MS inputs
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EU legislation sets mandatory CO2 emission reduction targets for new cars and vans. By 2021, the fleet average to be achieved by all new cars is 95 grams of CO2 per kilometre. For new vans, the fleet average is set at 147 g/km by 2020.
Source: European Environmental Agency. 2014 values are provisional. 2013 EU average refers to EU-27.
Regarding transport performance, in EU-28 the inland freight modal shares are 71% by road, 17% by rail, 7% by inland waterways and 5% by pipelines. The respective inland passenger modal shares are 82% by private car, 9% by buses and coaches, 7% by railways and 2% by tram and metro. Compared to the rest of Europe, Hungary reports the highest share of buses and coaches use, and in general the highest share in public passenger transport use.
Modal share Hungary
Source: Eurostat and EU transport in figures 2015. Data refers to 2013. Modal shares based on tonne-kilometres for freight sector and passenger-kilometres for passenger sector, freight data based on activity within country territory. Estimates are made when data is missing.
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4. Decarbonisation of the economy
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NON-ETS GHG EMISSION REDUCTION TARGET 2020
(+10% by 2020 as compared to 2005 in the non-ETS sector)
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Source: European Commission based on EEA. Based on preliminary inventory data.
ESD (Effort Sharing Decision) emissions are the emissions from sectors not covered by the EU ETS.
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In 2014 emissions were lower by 30% compared to 2005 (based on 2014 approximate data).
According to the latest projections, Hungary is on track to reach its greenhouse gas emission reduction target for 2020, with approximately a 40% margin as compared to 2005.
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RENEWABLE ENERGY SHARE TARGET 2020 (13%)
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Source: European Commission based on EUROSTAT
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With a renewable energy share of 9.8% in 2013, Hungary is currently on track to reach its 13% target in 2020. In comparison to its National Renewable Action Plan (NREAP), Hungary is in line with its indicative trajectory for renewable heating and cooling and transport sectors. However, the share of renewable electricity is below the value envisaged by NREAP. Therefore additional efforts need to be made to ensure that the 2020 target is met.
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GREENHOUSE GAS EMISSION INDICATORS
Greenhouse gas emissions per capita in Hungary are about 30% below the EU average. At the same time, due to the low GDP in Hungary, the carbon intensity of the economy is nearly 75% higher than the EU average.
In 2014 revenues from the auctioning of ETS allowances amounted to EUR 56.5 million.
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