In mid-April 2021, the Hungarian government presented a first complete public draft of its Recovery and Resilience Plan. The original plan set out measures for the full amount of grants and loans for which Hungary is eligible. The plan was subsequently fundamentally revised in late April. During the revision, the Plan was substantially scaled down, and the loans were completely deleted from the plan. The final Recovery and Resilience Plan was submitted to the Commission on the 11th of May 2021, and officially published only on the 17th of May, therefore external stakeholders had no chance to articulate any feedback to the fundamental changes made by the government. The final Hungarian Recovery and Resilience Plan includes € 7.2 bn in grant funding (almost 5% of the domestic GDP). Overall, Hungary’s recovery measures make a positive contribution to the green transition.
We find that the Hungarian recovery plan (RRP) achieves a green spending share of 37%, equal to the EU’s benchmark. Furthermore, we find that 13% (€ 0.93bn) may have a positive or negative impact on the green transition depending on the implementation of the relevant measures. According to the government, the plan’s climate spending share is 41% (see report for more details).
Our calculation of the green spending share aims to mirror the approach used for the official assessment of national recovery plans, which distinguishes between measures contributing fully to the green transition (100% coefficient) and measures contributing partly (40% coefficient). Therefore, we fully count “very positive” measures towards the green spending share, while “positive” measures are weighted using a coefficient of 40%, which is applied to the associated costs. All individual assessments can be accessed via the country page on our website.
The measure aims to significantly expand both the power transmission system and distribution network. Improvements to these systems will be particularly important in the context of the government’s plan to increase solar power and the electrification of heating systems.
The Plan includes a number of good measures for increasing the share of renewable energy in final energy consumption. However, energy efficiency measures in the building sector are underrepresented in the plan. If the use of renewable sources in heating systems is not combined with deep renovation measures, these heating systems will not be able to effectively contribute to decarbonization.
Following a successful pilot project, this measure seeks to implement environmentally and socially sustainable housing solutions using renewable energy, with the revenues from a small power plant to be used for social housing in a settlement through pre-payment meters. For the long-term success of the measure, it would be extremely important to combine renewable energy production with building energy efficiency measures.