Please note that this PDF is subject to specifi c restrictions that limit its use and distribution. The terms and conditions are available online at www.iea.org/about/copyright.asp Energy Policies of IEA Countries Hungary 2011 Review Energy Policies of IEA Countries Hungary Regional co-operation is a vital element of Hungary’s energy market and energy security policy. Hungary, which shares borders with seven countries, is well placed to improve regional energy security by catalysing the development of closely integrated regional markets for electricity and natural gas. A country strongly dependent on natural gas imports, Hungary has taken several commendable steps to manage risks to its supply. It has enhanced storage capacity and diversifi ed cross-border capacity, and is developing new supply routes. Hungary is also working hard to strengthen the regional electricity market through new interconnectors and market coupling. Electricity demand within Hungary is expected to grow, while generating capacity is rapidly ageing. Investments are needed for grid improvements and generating capacity, both for increasing capacity (especially for low-carbon electricity) and replacing ageing plants. Ensuring predictable and attractive framework conditions for investing in energy infrastructure is crucial. The government is considering additional nuclear power units. The extent to which nuclear power capacity will be expanded should be clarifi ed without unnecessary delay, as it will have broad implications for the viability of other current and future base-load technologies. Although per-capita energy consumption in Hungary is well below the OECD average, considerable potential remains for improving energy effi ciency across all sectors. Measures to reduce consumption in the large existing building stock should be the government’s top priority for energy policy. Gradually, Hungary should also replace broad subsidies for energy use with direct support to those in need. -:HSTCQE=U^]WWU: (61 2011 06 1P1) 978-92-64-09822-0 €75 Energy Policies of IEA Countries Hungary 2011 Review INTERNATIONAL ENERGY AGENCY The International Energy Agency (IEA), an autonomous agency, was established in November 1974. Its primary mandate was – and is – two-fold: to promote energy security amongst its member countries through collective response to physical disruptions in oil supply, and provide authoritative research and analysis on ways to ensure reliable, affordable and clean energy for its 28 member countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports. The Agency’s aims include the following objectives: Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular, through maintaining effective emergency response capabilities in case of oil supply disruptions. Promote sustainable energy policies that spur economic growth and environmental protection in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute to climate change. Improve transparency of international markets through collection and analysis of energy data. Support global collaboration on energy technology to secure future energy supplies and mitigate their environmental impact, including through improved energy effi ciency and development and deployment of low-carbon technologies. Find solutions to global energy challenges through engagement and dialogue with non-member countries, industry, international organisations and other stakeholders. IEA member countries: Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Japan Korea (Republic of) Luxembourg Netherlands New Zealand Norway Poland Portugal Slovak Republic © OECD/IEA, 2011 Spain International Energy Agency Sweden 9 rue de la Fédération Switzerland 75739 Paris Cedex 15, France Turkey www.iea.org United Kingdom Please note that this publication United States is subject to speci c restrictions that limit its use and distribution. The European Commission The terms and conditions are available also participates in online at www.iea.org/about/copyright.asp the work of the IEA. Table of contents TABLE OF CONTENTS 1. EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS .......................................................................... 9 Executive summary ...................................................................................................................... 9 Key recommendations ............................................................................................................... 11 PART I POLICY ANALYSIS .......................................................................................................13 2. GENERAL ENERGY POLICY...................................................................................................................... 15 Country overview ....................................................................................................................... 15 Supply and demand ................................................................................................................... 16 Institutions ................................................................................................................................. 19 Key policies ................................................................................................................................. 19 Critique ....................................................................................................................................... 20 Recommendations ..................................................................................................................... 23 3. CLIMATE CHANGE .................................................................................................................................. 25 Overview .................................................................................................................................... 25 Energy‐related CO2 emissions .................................................................................................... 26 Institutions ................................................................................................................................. 27 Policies and measures ................................................................................................................ 28 Critique ....................................................................................................................................... 31 Recommendations ..................................................................................................................... 32 4. ENERGY EFFICIENCY ............................................................................................................................... 33 End‐use by sector ....................................................................................................................... 33 Key institutions .......................................................................................................................... 36 Policies and measures ................................................................................................................ 36 Critique ....................................................................................................................................... 41 Recommendations ..................................................................................................................... 45 PART II SECTOR ANALYSIS .....................................................................................................47 5. OIL .......................................................................................................................................................... 49 Supply and demand ................................................................................................................... 49 Infrastructure ............................................................................................................................. 50 Market structure ........................................................................................................................ 52 Prices and taxes ......................................................................................................................... 53 3 © OECD/IEA, 2011 © OECD/IEA, Table of contents Security of supply ....................................................................................................................... 54 Critique ....................................................................................................................................... 55 Recommendations ..................................................................................................................... 56 6. NATURAL GAS ........................................................................................................................................ 57 Supply and demand ................................................................................................................... 57 Market reform and structure ..................................................................................................... 59 Infrastructure ............................................................................................................................