1. How green the Hungarian energy policy? The efficiency and renewable developments and trends by Dr.Miklós Poós Director, Ministry of Economy and Transport Green Power CEE Conference REEEP Regulatory Forum Budapest 2004. 28-29. September

2. Energy policy principles Sustainable elements Basic facts on RUE and RES situation Driving forces and tools for sustainable energy policy Policies and measures, including financial schemes Road map of the presentation

3. The 3 E’s : Principles of Energy Policy Energy supply security Economy Enviroment

4. Sustainability of the energy policy in Hungary Efficiency increase about 3%/year Successfully de-coupling the energy use from economic growth Per capita energy use and CO2 emission significantly less than EU Good chance to fulfil our Kyoto commitment (6%) Ambitious energy efficiency Government programme and financial support EU conform long term renewable energy sources(RES) strategy under finalisation

5. GDP and energy use

6. Energy Intensity International comparison on non-PPP basis

7. Energy Intensity International comparison on PPP basis

8. RES in Hungary (3,6% in TPES)

9. CO 2 /capita emission

10. Hungarian climate change facts Hungary has accessed to Kyoto Protocol in 2002 The Hungarian commitment -6% to baseline Baseline is the average of 1985-87 The today’s actual data: 15-20% under baseline We are interested in the different flexibility mechanisms (Joint Implementation) Introduction of EU ETS 1st Jan 2005

11. Environmental benefits Climate change mitigation Reducing energy import dependency, and hard currency burdens on import EU policy integration & legal harmonisation Development of rural areas Employment policy Driving Forces to the Hungarian RUE and RES Strategy

12. Development towards the right pricing system First steps of the internalisation of externalities Introduction of the EU CO2 emmission trade system Preparation of green, later white certificate system Energy policy background with these sub-policies Strong financial supporting system Effective institutional background Tools of he Hungarian RUE and RES Strategy

13. Starting position:Prices under market level, not reflecting costs, prices influenced by welfare policy, significant cross financing From 1991 solid fuel and oil markets are liberalised 1994-97 gas, electricity prices were gradually increased From 1997 full cost+profit price From July 1999 fine tuning: new tariff system Developments of price regulation I.

14. From 2003 introduction of electricity price competition (liberalisation of the markets) From 2004 introduction of natural gas price competition From 2004 first steps of internalisation of externalities: the introduction of energy tax, new environmental levy on air,soil and water From 2005 introduction the EU ETS Developments of price regulation II.

15. Energy Saving and Energy Efficiency Improvement Action Programme for 2000-2010 From today’s 28 PJ to 50 PJ in 2010 Saved CO2 emission 5 MT/y for 2010 Climate Change Strategy 2000 Fulfil our Kyoto commitment Long Term RES Strategy (Under finalisation) Double the ratio of total RES, Green electricity up to 3,6% for 2010 Concrete targets based on policy documents

16. Energy Efficiency Program. Main financial measures In 2000 cca. 1,6 MEUR grant 5,3 MEUR soft loan for energy efficiency&RES In 2001 8,5 MEUR grant for energy efficiency&RES In 2002 17,5 MEUR grant for energy efficiency&RES In 2003 15 MUSD grant for energy efficiency&RES In 2004 10 MEUR grant for energy efficiency&RES+ In 2004 in frame EPIOP (KIOP) 5 MEUR other financial schemes (soft loans, credit garantiue, support for energy audit)

17. Current measures on four areas: 1/ investment support 2/ guaranteed access to grid 3/ preferential price of electricity generated from RES (feed-in tariff: 0.07-0.11 EUR/kWh) 4./ zero excise tax on biofuels 4/ Pilot plants for biodiesel RES Policy Framework

18. Energy conservation program and available funds in 2003 / I Maximum support MFt, Th Ft Available funds 2003 MFt 2004 MFt Application of households for energy conservation -- household applicant -- undertaker applicant 500 (350) 896 265 ---- Local government establishments25130180 Public lighting, farm electrification, piped LPG 25 (250)7090 District heating supplier50240310

19. Energy conservation program and available funds in 2003 / II Maximum support MFt, Th Ft Available funds 2003 MFt 2004 MFt Renewable energy -- households and flats own by local governments for applicants of undertakers 500 (250) 35 (250) 60 80 100 Small and medium undertakers, bigger productive companies, R&D 10-30-2,53555 Third party financing investments Actual value140180

20. National Energy Conservation Program (NEP) 2003 (1) ApplicationsSupports Energy savings of households -- For household applicants -- For undertaker applicants Doors and windows 24 ThFt/m 2 Maximum 30% of cost, max. 500 ThFt/flat, more flats x 350 ThFt Reduction of energy consumption and cost of establishments of local government and budget Maximum 30% of cost, Maximum 25 MFt Modernisation of public lighting, farm electrification, switching piped LPG supplied settlements to other type of energy Maximum 30% of cost, Maximum 25 MFt Maximum 250 ThFt by flat Modernisation of supplier side of district heatingMaximum 30% of cost, Maximum 50 MFt

21. National Energy Conservation Program (NEP) 2003 (2) ApplicationsSupports Increase of renewable energy sources -households, local governments -undertakers Maximum 30% of cost, maximum 500 ThFt for one flat, solar collector m aximum 250 ThFt, number of flats x 250 ThFt, m aximum 35 MFt. Aid for capital lack undertakers for development, reduction of energy consumption of productive sector Maximum 30% of cost, small and medium undertakers 10 MFt, equipment development 2,5 MFt, over 30 MFt energy cost 30 MFt Third party financing type support for energy saving investments of undertakers Maximum 30% of cost, local governments, state organisations, churches maximum 50 MFt, economic companies 10 MFt. Over 30 MFt energy cost maximum 30 MFt. Increase of renewable energy sources maximum 35 MFt.

22. Thank you very much for your kind attention www.gkm.hu poos@gkm.hu