REVIEW #17: Fossil-Fueled Politics: Multidimensional Energy Dependency of Orbán’s Hungary

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Olga Łabendowicz for 4liberty.eu

Green development is a topic covered extensively in literature as it has been of utmost importance in the past decades. The European Union (EU) has mostly agreed that sustainability is a key value of the EU and that the effects of climate change require cooperation on an international scale. Carbon emissions must be reduced, and non-renewable energy sources (such as fossil fuels) must be gradually replaced by more sustainable alternatives. 

The EU Green Deal was a bold policy proposal that set the stage for an EU-wide joint effort to become carbon-neutral, while allowing some leeway for countries with high carbon-dependency. However, Russia’s invasion of Ukraine, and the economic turmoil that followed, threw a wrench in the works on the reform package, and some of what was imagined about green development in the EU must be unlearned. 

Several countries – including Hungary – depend heavily on Russian energy, and it could take quite a while to diversify and reimagine their energy mix, even though time is a very limited resource, should the conflict with Russia escalate to complete isolation. In this paper, let us explore the case of Hungary, as it shall provide much needed insight into how current events may force a country to return to the drawing board.


Download full article: 05-MÁRTON SCHLANGER FOSSIL-FUELED POLITICS THE MULTIDIMENSIONAL ENERGY DEPENDENCY


Hungarian energy dependency has several distinct dimensions. Hungary is heavily reliant on fossil fuels, as they make up almost 70% of the country’s energy consumption. The rest of the consumption is split between nuclear and renewable sources. Hungary is not just reliant on fossil fuels, but primarily on imported fossil fuels.

The country’s general import dependency is 54%, with oil import dependency being close to 90% and gas import dependency at 67%. Specifically, the imported energy comes in large part from Russia, with gas imports being less diversified than oil imports. This vulnerability was already formulated during the Soviet era, but this does not explain why the country is still so dependent on Russian imports.

Beyond these forms of dependency, the Fidesz government, under the leadership of Prime Minister Viktor Orbán, also depends politically on energy policy – so much so that they have built two general election campaigns on energy policy in the last decade, both netting them a 2/3 supermajority in Hungarian parliament. Their “overhead reduction” policy – which is essentially a price cap for residential energy consumption – has been the flagship of Fidesz’s and Viktor Orbán’s political agenda since 2012, and a major contribution to their election victories. This strategy comes with a high price, literally: the overhead reduction can cost a lot of money to the government, and these costs have skyrocketed since Russia’s invasion of Ukraine, to the point where the Hungarian government had to find extra funds to maintain the overhead reduction policy.

In the face of Russia’s invasion of Ukraine, and the ongoing green development debate in the European Union, one can discover a conflict of interest within Hungarian energy policy. On the one hand, it would clearly be in the interest of Hungarian society to reimagine Hungarian energy policy and say goodbye to the band-aid philosophy of the overhead reduction law in favor of long-term solutions.

On the other hand, the interest of the governing party is to hold on to their golden goose–overhead reduction–and to maintain their good relationship with Russia, and, therefore, to keep up an energy structure that, in turn, keeps them in power. There was no apparent escape from this stalemate until this year, when Russia’s aggression forced the hand of the Hungarian government to try and adapt to the new circumstances. How did this affect Hungary’s energy policy and our uneasy relationship with the idea of green development? That’s what I explore in this article.

To demonstrate the significance of the current events, during the writing of this article, PM Orbán’s government had to change their overhead reduction policy, limiting the number of beneficiaries, and essentially break their very recent campaign promise to keep the policy intact. This gives analysts the perfect chance to compare the policy as it was a month ago and as it is in its current form, and through the case of Hungary, explore the opportunities and challenges of implementing the Green Deal policy in the face of a global crisis.

In the Loving Embrace of Pipelines

In hindsight, it may seem strange that not so long ago there were times when Hungary could extract enough oil and gas domestically to cover the country’s consumption. Then again, oil reserves were running low, and both oil and gas consumption were much lower in the 1960s, only to increase drastically by 1970 and onward. Whether it would have been possible to avoid dependency on Soviet import or not will never be known, as Hungary, being part of the Soviet bloc, had no issues with dependence on the ‘motherland’ for energy. In fact, János Kádár (the head of Hungary’s communist-socialist government between 1956-1988) initiated talks with the Soviets regarding oil imports in the late 1950s


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Marton Schlanger
4liberty.eu