About this report
Hungary has arrived at an important moment in its energy policy. The Hungarian government has improved energy policies in a number of areas. Still, significant challenges remain. To prepare the country for the full liberalisation of the EU electricity and gas market by July 2007, further steps in market reform are urgently required. At this point in time, there is no clarity about the system under which the market should operate after its full opening. Subsidies are another problem. Even though substantial progress has been made in reforming payments to gas consumers, the overall level of subsidies to producers and consumers of energy needs to be reviewed. This analysis makes recommendations to tackle these concerns and also discusses the potential contribution of energy efficiency to increasing energy security and economic competitiveness. The gas dispute between the Russian Federation and Ukraine in January 2006 focused global attention on consumer nations’ vulnerability to supply disruptions. The Hungarian government has since placed greater emphasis on diversification of suppliers and has supported the development of new routes to bring gas into Europe. Hungary has dramatically improved its energy efficiency during the last 15 years. Nevertheless, enhanced efficiency, particularly in the field of gas use will continue to play a key role for securing future national energy supplies. This review has identified significant room for progress particularly in the gas-to-power sector, where old power stations need to be replaced, and in the residential sector, where improved thermal performance of Hungarian housing could bring impressive results.