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Standpoint of Hungary on the Green Paper on a European
Strategy for Sustainable, Competitive and Secure Energy
Hungary warmly welcomes the publication of the Green Paper. We agree with the
standpoint of the European Commission that a common European response shall be given to
the energy challenges concerning Europe, so Hungary supports the efforts to develop a
common European energy policy. The efficient, secure and sustainable energy supply shall be
one of the main priorities of the EU.
The Green Paper gives an excellent summary about the challenges, which justify the necessity
of a common European reaction, for example the growing energy demand and import
dependency, and the current trends and developments on the oil and gas markets. The
common reaction could be realized through the development and implementation of an EU
energy policy, which shall be based on the already agreed three pillars, the competitiveness,
security of supply and sustainability. Besides emphasizing the importance of the other two
pillars, it must be noted, that the security of supply shall get more attention and emphasis in
the future. The present principle that Member States are responsible for their own
security of energy supply alone is not sufficient any more.
The Green Paper determines six key areas, which we think cover the whole dimension of
energy policy. The main areas of the energy policy, which are managed by the national energy
policies and which shall be incorporated also into the common EU energy policy, are
highlighted, such as security of supply, energy markets, infrastructure issues, renewable
energy sources, energy efficiency, research and development and external relations.
The first priority area in the Green Paper is completing the internal European
electricity and gas markets. The EU, due to its liberalization efforts started from the mid
90’s, has reached significant achievements in this field, but further efforts are needed, because
the fragmentation of national markets still exists, the internal market did not come off. In
order to reach the objectives set out, the work shall be continued in the field of strengthening
the cooperation in the regional market, from which the single internal market will be
developed. We agree with the statement, that the construction of interconnection
infrastructures shall be promoted. The most important projects have been already defined in
the framework of Trans-European Energy Networks. Unfortunately, it can be noted, that the
Community financial source linked to the objectives is not sufficient, it cannot set forth
substantive stimulating effect on the investments. As for the liberalization, the emphasis shall
not be put on further Community legislation-making, but on the enforcement of the
implementation of the existing legislations. In connection with the European grid code, it shall
be noted, that since Hungary is bordering several non Member States also, in the course of its
observance and application with the external partners would come up problems. We assess as
a good initiative, that a European Centre for Energy Networks would be established, in order
to strengthen the cooperation between network operators and to ensure a more formal body to
this work. Theoretically, we assess positively the initiative to set up a European energy
regulator looking at cross-border issues, however, its relation to the national regulatory
authorities and the characteristics of its decisions shall be unambiguously clarified.
The second priority area is the solidarity between Member States and security of supply.
We support the initiative to establish a European Energy Supply Observatory, and we would
like to express at this forum as well, that Hungary offers to have the seat of this very

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important new organization of the European Commission in Budapest. Better use could be
made of existing actions in relation with exchange of information, such as the Madrid and
Florence Forums. The development and extension of comprehensive information exchange
and cooperation among national regulatory authorities, transmission system operators and
other market players is necessary, particularly on issues related to cross-border activities. We
agree with the statement, that the existing security of supply measures in the gas and
electricity markets shall be re-examined and further developed, in connection with this,
Hungary had floated many concrete proposals to the Austrian Presidency. We would like to
also express our support to the initiative concerning the consideration of a new Community
legislative act concerning gas stocks. The natural gas storage is very important in the light of
security of supply. In Hungary, there is a new Law on Strategic Gas Reserves, which was
discussed and approved in February 2006 by the Parliament. That would mean a new capacity
of 1,2 bcm until 2010.
The third priority area is the development of a more sustainable, efficient and diverse
energy mix. The sovereign right, that Member States can choose the energy-mix according to
their capabilities, shall be acknowledged in the future also. Sincere, open debate is necessary
about the questions of future role of nuclear energy and coal, without discrimination and
prejudices. Advantages and disadvantages of the use of certain energy sources shall be also
analyzed, including renewable energy sources as well; particularly taking into account what
has been mentioned in the preamble of Directive 2005/89/EC concerning measures to
safeguard security of electricity supply and infrastructure investment, that when promoting
electricity from renewable energy sources, it is necessary to ensure the availability of
associated back-up capacity, in order to maintain the reliability and security of the network.
Rapid investments in wind power generation capacities without appropriate and timely grid
reinforcements can endanger the security of electricity supply in the concerned and
neighbouring countries.
The fourth priority area is tackling climate change. We agree that more efforts on energy
efficiency are required, because the energy efficiency is the only measure contributing to all
three goals of our energy policies. The emphasis could be placed on the energy end-use
efficiency. There is considerable room for progress in achieving additional energy savings in
the building and residential sector. Hungary has proposed previously, that a new EU energy
efficiency guarantee fund should be established, so we welcome the initiative related to this.
The new financial instrument shall concentrate its activities to the field of energy efficiency of
buildings. Hungary is also looking forward to the EU energy efficiency action plan, which
will be published by the European Commission this year, and which shall contain ambitious,
but realistic and achievable objectives.
We agree that the further promotion of using renewable energy sources and bio-fuels is
necessary, and the possibility of setting new objectives beyond 2010 and the development of a
long-term Renewable Energy Road Map shall be analyzed. However, it shall be emphasized,
that possible new targets after 2010 have to be set out based on a reasonable compromise;
they shall be effectively achievable targets, taking also into account the technical, economic
and cost aspects of different RES technologies.
The fifth priority area is research and development. The Green Paper proposes to develop
a Strategic Energy Technology Plan, which we fully support, because we have also suggested
previously, that common EU level research and development objectives/programmes have to
be set out, in order to increase the security of energy supply, to reduce the energy

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consumption, to develop new alternative energy sources, and to improve the efficiency of
energy generation, transport and utilisation. The Community financing of these tasks shall be
adequately ensured.
The last, sixth priority area is the development of a common external energy policy and
acting in concert in the external energy relations of the EU. Without depreciating the
importance of other energy dialogues, the highest priority shall be given unambiguously to the
cooperation between the EU and Russia. In the course of decades of cooperation, Russia has
proved to be a reliable energy supplier and partner for Hungary and other countries as well;
however, the supply disturbances at the very beginning of the year, which was without
precedent during the last 30 years, can be assessed as a warning signal. Because of the
interdependency between the EU and Russia, it is also in the interest of the EU to maintain the
stable commercial relation. When putting this relation on a new basis, we shall build on the
results of the former cooperation, and the continuous, balanced dialogue shall be maintained,
and Russia shall be treated as an equal partner.
However, beside this, we shall make huge efforts to diversify our supply, which can
contribute significantly to the security of supply of Europe. The importance of diversification
can be best grabbed in the case of natural gas. The diversification shall be extended to the
sources and transport routes as well, and in order to this, all possible viable ways and
suggestions have to be taken into account and analyzed, including those of new pipeline
projects, reasonable interconnections between existing infrastructures, new LNG terminals.
From the view point of Hungary and certain part of Central Europe, three projects have
particular importance.
1. The NABUCCO project aims to build a new pipeline system between Turkey and Austria,
crossing Hungary. The project could have a double positive effect on the security of supply:
firstly, it ensures a new import source by reaching the gas sources in Iran and the Caspian
region; secondly, it ensures a new transit route for the transports.
2. On 21 June 2006, MOL and GAZPROM signed an agreement to analyze the feasibility of
the extension of the Blue Stream pipeline from Turkey to Hungary, and the construction of a
new underground gas storage facility of 10 billion cm in Hungary. With the realization of
these projects, Hungary can become the gas hub for the Central European region. The two
companies will found a study company with 50-50% shares, registered in Hungary. This study
company will have 3 years to submit all the feasibility studies necessary for the decision about
the project. It is important, that there is not yet a decision about the route of the pipeline, the
storage, the costs, the financing etc. The importance of the project is that it will transport
Russian gas in a new pipeline to Europe, avoiding Ukraine.
3. The building of a new LNG terminal in the Adriatic Sea region, to specify it in Croatia,
complemented with the necessary pipeline systems could also be an additional opportunity to
increase our security of supply.
We agree, that the EU shall act in concert in the different external energy dialogues, these
relations should be possibly developed and operated in a common pattern and based on a
regional approach. The development of the Pan-European Energy Community can be
theoretically supported by Hungary, but its objectives, geographic extension and other
attributes shall be set out in a concrete, detailed manner. We assess it a good idea, that the
European Commission will publish an annual report called Strategic EU Energy Review,
which will detail the energy situation of Europe, within this for example the security of
energy supply.