Although the Hungarian recovery and resilience plan has undergone major changes since its first draft, it is still far from ensuring a green and just recovery. Despite MTVSZ / Friends of the Earth Hungary’s proposals, the final version leaves households alone in their efforts to improve energy efficiency and fails to propose easily-achievable biodiversity measures. If small modifications are made during the EU-level approval process, the plan could be improved considerably.
Teodóra Dönsz-Kovács, NSC-FoE Hu, Alexa Botár, Bankwatch National campaigner Hungary | 2 June 2021
The final draft of the Hungarian recovery and resilience plan submitted to the European Commission is the result of a last-minute decision to shrink the plan to about 40 per cent of its originally planned budget. In order to do this, the government limited the amount requested from the EU’s Recovery and Resilience Facility (RRF) to grants, excluding all loan financing. Thus, the content of the plan also had to be reduced substantially and in a rush. Even though some concerning measures like non-refundable support to large solar power plants run by state-owned suppliers have been removed, the remaining investments fail to trigger a transition to a climate-friendly, resource-efficient, sustainable and crisis-resilient economy.
Regarding housing, the plan includes a welcome measure on community solar energy projects for social housing, which would be organised through community-level decisions about revenue distribution. However, Hungary’s housing programmes in general lack comprehensive support for renovation to improve energy efficiency, and the recovery plan will not improve the situation.
One such programme in the plan, the residential programme (a 100 per cent grant) combined with solar panels and/or electric heating is a waste of money and energy for the targeted low-income families because it is not combined with deep energy efficiency renovation. Instead, it only provides funds for the replacement of existing windows with plastic ones, a particularly poor solution. The renovation of public education buildings has been deleted from the plan, and higher education buildings are planned to have only medium-level instead of deep renovation, which will cause the lock-in of lower-quality energy efficiency measures, ignoring the potential for cost-efficiency and awareness raising that deep renovation could bring.
The plan also does not address biodiversity loss in a meaningful way and fails to identify biodiversity targets and milestones. The few habitat restoration projects in the Water Management component of the plan are too small to substantially contribute to halting the loss of biodiversity. On the other hand, the large-scale real-estate investments (new buildings, renovation of old buildings, development of roads and infrastructure) which dominate the plan fail to incorporate biodiversity friendly solutions.
An opaque planning process with several public drafts but without clear timelines and timely feedback forced consulting partners like Friends of the Earth Hungary (but also the planners themselves) to work in a rush. More substantial input from social stakeholders could also have improved the plan’s resilience to crises, its environmental performance and its social acceptance, but the process would have had to be more transparent.
According to the plans, partnership in implementation is limited to one-way communication with the public. While the monitoring committees of Cohesion and Structural Funds are planned to also track the implementation of the Recovery and Resilience Plan, the competence of each monitoring committee needs to be clarified towards the partners and the public. Proper and timely public consultation on the implementation documents, calls for proposals, etc., would also be crucial.
Below, we provide further insight into the problematic topics identified above.
Energy efficiency first
The plan does not contain broad, non-reimbursable (or non-reimbursable combined with reimbursable) support for the energy renovation of domestic residential buildings. There have been no calls for EU grant funding of proposals that would exploit the huge potential for this renovation in the last 10 years (only for limited loans). Based on the 1.4 million houses/flats that a recent study of the Hungarian Energy Efficiency Institute (MEHI) suggests should be renovated in the next five years, a broad energy efficiency housing renovation subsidy scheme with a 30 to 40 per cent non-reimbursable grant is required to make sure these renovations really happen.
Such a grant scheme would have multiple benefits for the national economy, the study by MEHI revealed. If only about half of these, i.e. 650,000 flats, underwent cost-optimal renovation in five years, about 7.5 PJ of energy per year and nearly 420,000 tonnes of CO2 could be saved. The state budget would also benefit (the revenue per unit of state aid would be 1.01 units for a 40 per cent grant and 1.35 units for a 30 per cent grant), and the additional employment generated by the increase in investment demand could exceed 100,000 people.
Along with public demand, the EU Recovery and Resilience Facility’s Technical guidance (January 2021) and the EU Renovation Wave strategy, as well as the country-specific recommendations for Hungary, called for an increase in the energy efficiency of buildings. Still, the energy efficiency programme outlined in the draft Operational Programme for Environment and Energy Efficiency (EEEOP+), linked to energy suppliers as beneficiaries (Energy Efficiency Obligation Scheme), is not likely to deliver the necessary large-scale and deep renovation for residential energy efficiency improvements.
Electrification of heating – inefficient and does not reduce air pollution or emissions enough
Without improving buildings’ insulation, the electrification of heating to combat energy poverty is not efficient or cost-effective and its climate protection impact is negligible. Combining electricity with solar panels for heating is also not a good solution, as sufficient quantities of solar electricity are not produced during the winter when heat is needed most. This forces residents to use more expensive grid electricity, mostly based on fossil fuels, for their heating panels. The possibility to store this energy for short periods of time would not help the situation.
With the primary objective to reduce heating energy demand, efficient clean alternatives for heating modernisation are heat pumps, solar collectors and in some cases wood gasification boilers. The recovery plan includes a measure requiring that before and after the investment there must be an energy certificate verifying the energy consumption performance of the house, which we welcome. However, the ‘before’ certificate should be the clear guide for the most cost- and energy-optimal investment decision for that particular house – it should determine what energy efficiency and renewable heating technology should be applied for. (In most cases, the best option is not infrapanels or electric heating panels.)
Also, the implementation documents need to clarify how the target group (low-income households, who cannot afford loans) will have proper access to the grant and how the grant will be distributed in a fair way.
Deep retrofit of schools and university buildings needed
While upgrades of public education buildings (Component A, Demographics and Public Education) have been taken out of the final plan, those of universities (Component B, Highly Educated, Competitive Labour Force) should not fall into the trap of supporting only shallow renovations or only renewable energy installations, which would lock in energy wasting operations for decades. Instead, deep refurbishment, potentially combined with renewable energy installations, are needed, with energy certification before and after the investment to verify the positive impact achieved. These would serve as good examples with the potential to raise climate and energy awareness among visitors, students and teachers.
Community renewable energy production and use
To be fair, we also have to highlight a partially positive element of the Hungarian recovery plan. MTVSZ proposed several times since January 2021 that the plan eliminate electric heating (this has only partially been taken into account: in the Energy component, it was unfortunately kept in). We also proposed that the plan specify what the community solar plants for social housing would mean. Later, in April, we pushed for wider-scale support to various community energy projects, also with the potential to remedy energy poverty.
In the final submitted version, this part has been improved, under the Settlements / Local/Rural development component: low-capacity solar power plants will be financed, and the profits from electricity sold would be used for housing and the upgrading of heating in the residential buildings, based on community-level decision-making. Electric heating is not specified. There are two indicators included: the capacity of community renewable energy production and proposals for legislation on energy communities.
Components of the plan lack substantial biodiversity conservation aspects, investments rarely incorporate nature-based solutions and there are no guarantees that conservation objectives will be met.
A major shortcoming of the plan is that it allocates a meagre amount for awareness-raising and capacity-building. Shaping people’s views and teaching them how to work with nature, not against it, is paramount if we want the envisioned green infrastructure (new buildings, urban green spaces, waste management and water management infrastructure) and digital solutions (e.g. precision agriculture) to be used for what they were meant: the green recovery.
Regarding water management, thanks to intensive lobbying by CEE Bankwatch and its member group MTVSZ, the Hungarian government abandoned the idea of using RRF sources for irrigation. Hungarian conservationist experts pointed out that irrigation is harmful for biodiversity while sustainable landscape management based on water retention has a thousand-year tradition in the country. There are many successful examples of the agricultural use of flood basins in Hungary, like orchards, extensive fishponds, grazing, etc. These models sustain several ecosystem services while creating considerably more jobs than intensive farms. Farmers should be encouraged to farm in a way that is appropriate to the land by means of strong awareness-raising programmes and a reorientation of agricultural subsidies. Based on our suggestions, water retention elements received more emphasis in the final plan, but safeguards for their implementation are still lacking.
The ‘do no significant harm’ assessments (or at least what has been made public from them) in the plan are not consistently detailed. Some are simple declarations, lacking substance and in-depth analysis of alternatives. Others include a more detailed analysis but need to be amended significantly.
The involvement of public institutions and civil society organisations active in nature conservation, even in the elaboration of funding schemes and calls for proposals, could significantly expand the green dimension of the plan and prevent damage to nature at a low cost. The use of vegetation for shading and temperature control, rainwater retention and sustainable rainwater management, wildlife-friendly solutions, increasing green areas, community composting are just a few examples of missed opportunities.
A more meaningful consultation process could have improved the plan’s quality
Despite the fact that the plan’s drafting process, should be subject to the Aarhus Convention, its public consultation did not meet the legal requirements of the Convention, as there was no public and predictable timetable for planning and consultation and no timeframe for expressing views on the various drafts. Unfortunately, this opaque process forced both the planners and the partners who gave their comments, including the Friends of the Earth Hungary, to rewrite their inputs in a rush.
Public control of implementation is questionable
The planned measures of ‘public consultation‘ in the implementation of the plan are inadequate and insufficient as they are limited to one-way communication with the public. The implementation documents of the recovery plan should undergo public consultation. Based on the Commission Staff Working Document Guidance to Member States on the Recovery and Resilience Plans, MTVSZ / Friends of the Earth Hungary recommends that the monitoring committees of the operational programmes of cohesion policy funds be involved in the drafting of implementation documents, calls for proposals and in the monitoring of the implementation of the plan.
Public participation and partners’ involvement in policy-making should be strengthened
Contrary to the EU’s country-specific recommendations for Hungary, which called for ‘effective involvement of social partners and stakeholders in the policy-making process’, the reforms included in the plan itself will do little to strengthen social partners’ participation in policy-making, focusing instead on giving one-sided information and making the government’s decisions understood.
29 April 2021: announcement of the results of the EUCashAwards campaign of the Climate Action Network (CAN Europe), where national spending plans, including recovery plans, ‘competed’ for readers’ votes: https://www.cashawards.eu/
29 April 2021: CEE Bankwatch Network press material on recovery plans in Central and Eastern Europe.
The detailed analysis of the recovery plan and the above summary was compiled by Ákos Éger (executive president), István Farkas (co-president), Alexa Botár (climate&energy), Teodóra Dönsz-Kovács (EU Funds, participation), Bence Kovács (community energy) and Zsuzsanna Ujj (biodiversity) at FoE Hungary. Contact: email@example.com
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