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Hungary

Hungary has embarked on numerous national energy-saving initiatives since the early 1990s, many of which are very relevant to, and some directly focused upon, the public sector. One of the earliest programs promoting energy conservation in the country was the Energy Saving Credit Fund (ESCF), launched in 1991 with the assistance of the German government. Initial funds, amounting to about US$18 million, were provided from the sales of German coal in Hungary. By the end of 2000, almost 500 projects had been conducted in the industrial, service and local government sectors. Cumulatively, these projects represented about 14.5 billion HUF (roughly US$60 million) of investment, two-thirds of which came from ESCF. Annual energy savings are estimated at about 160,000 TOE (6,800 tJ).

The next important step toward promoting public sector energy efficiency in Hungary was the National Energy Efficiency Improvement and Energy Conservation Program, adopted by the government in 1995. One offspring of this program was the Energy Saving Credit Program (ESCP), launched in 1997, which was focused on improving the energy efficiency of Hungarian municipalities. ESCP provides preferential loans for the implementation of energy conservation measures to public facilities (schools, hospitals, social services buildings, etc.). From 1997 to 2000, over 300 projects were implemented through ESCP. These projects entailed a total investment of 5.7 billion HUF (US$24.5 million), three-quarters of which came from ESCP, and are saving roughly 27,000 TOE (1,150 tJ) each year. In 2000, ESCP was expanded and renamed the Energy Saving Program (ESP). The updated program includes an initiative tailored for reconstruction of district heating systems.

In 1998, another source of funds, the Energy Efficiency Co-financing Scheme (EECfS), was established as part of the European Union (EU) PHARE program for Hungary. Loans are available to the private sector, local governments, and non-governmental organizations providing public services. So far, nearly 40% of the successful applications have been from local municipalities. By the end of 2000, total investment for the 76 projects was 9,400 HUF (about US$40 million), more than 60% of which was granted from the EECfS credit line. It is estimated that efficiency measures implemented through the EECfS program are saving approximately 15,000 TOE (640 tJ) annually.

In 1999, Government resolution 1107/1999 initiated the Energy Saving and Energy Efficiency Action Program. The program defined energy policy targets for 2010, two of which are directly linked to energy efficiency:

  • Reduce energy intensity by 3.5% each year (assuming an annual GDP growth of 5% and an energy consumption growth rate of 1.5% per year);
  • Decrease the use of primary energy by 1.8 million TOE (75PJ) per year.

The budget for the program doubled to 2 billion HUF (US$8.6 million) in 2001, its second year. For the 2000-2010 period, the program intends to mobilize 200 billion HUF (US$860 million) by leveraging 50 billion HUF (US$215 million) of its own investment. Funding to borrowers is being provided either by preferential credit (subsidized interest rates) or as non-reimbursable grants. In 2003 the program adopted a new name - the National Energy Savings Program.

In 2001, the United Nations Development Program (UNDP) and the Global Environmental Facility (GEF) jointly initiated the Public Sector Energy Efficiency Program in Hungary. The five-year program aims to assist the country in improving energy efficiency specifically in its public sector facilities (including schools, hospitals and other public buildings). A total investment of nearly US$20 million is planned, with US$4.6 million from UNDP/GEF and the rest to come from the Hungarian government and private investors.

In 1996 GEF and the International Finance Corporation (IFC) initiated Hungary: Energy Efficiency Co-Financing Fund (HEECF) with US$25-30 million in seed money. The Fund was established to support energy efficiency financing activities of qualified domestic financial intermediaries such as commercial banks and bank-owned leasing companies by providing credit enhancement, co-financing and technical assistance. The targeted energy efficiency areas are lighting, industrial motors and processes, and district heating. Following HEECF's initial promise, HEECF II was introduced in 2001 with US$16 million from IFC and GEF for an additional four years. The projected cost of cost-effective targeted measures has been estimated at nearly US$94 million. The Fund finances municipal street lightning projects through several financial structures, typically involving private ESCOs acting as financial intermediaries. Other public sector energy efficiency projects range from scientific institutes (e.g., the Hematology institute in Budapest) to public infrastructure (e.g., a railway station in Gyor).

In 2000, Government Decree 1031/2000 established a national energy efficiency agency, called the Energy Center (the Efficiency, Environment and Energy Information Agency Non-profit Company), in Hungary. The center's activates range from implementation of energy efficiency measures identified in the Energy Saving Program (formerly ESCP; see above) to operation of a nation-wide energy statistical system to participation in national energy policy development.

The Energy Center works actively in the public sector. For example, under the UNDP program, the Center conducted energy management training for representatives of Hungarian municipalities, ranging from city mayors to facility managers.

Hungary's assortment of energy efficiency programs demonstrates its strong commitment towards transforming its energy-intensive economy. The country has provided - or sought from abroad - not only political support but also the financial means to conduct energy efficiency projects in the public sector. After joining the European Union in 2003, Hungary is expected to continue its transformation to achieve an energy intensity typical of other European Union economies.