1. NEW EUROPEAN CHALLENGES IN ENERGY POLICY IN HUNGARY György Hatvani Deputy secretary of state

2. 2 Energy policy Energy-related challenges of the 21st century: Realisation of the single internal market Fight against climatic change Maintaining the safety of supply Meeting the challenges requires common actions and measures Time has come for the elaboration of a common energy policy in Europe!

3. 3 The three pillars of the new energy policy SUSTAINABILITY: Development and application of competitive renewable energy sources, improvement of the efficiency of consumption in Europe, mitigation of the effects of climatic changes; COMPETITIVENESS: To assure that opening up of the market serves the benefit of the consumers and the economy as a whole; counter-balancing the effects of international energy price increase, use of modern energy-technologies; SAFETY OF SUPPLY: Diversification of the energy- mix, the sources and the purchase routes, promotion of investments, preparation for the situations of emergency.

4. 4 The most important challenges facing the EU During the next 20 years investments in the value of 1000 Mrd EU are necessitated in the energy sector Dependency on energy import will increase The sources will be limited Energy requirement will be on the rise The prices of energy-carriers will increase Global warming The development of the single internal energy market has not been completed yet

5. 5 The key topics of the Green Paper I. Development of single and uniform internal energy markets II. Safety of supply, and solidarity among the Member States III. Development of sustainable, efficient and diversified energy-source structure (energy-mix) IV. Fight against climatic changes V. Research and development VI. Development of common external energy policy, establishment of uniform conduct and action in the external energy- related contacts of the EU

6. 6 I.1. Development of the Hungarian electricity market 200320042005 Legal opening up of the market (%)3570 Number of licensed traders (pieces)112230 Registered authorised consumers - number (pieces)505501740 - premises (db)908304930 Extent of active market (%)192235

7. 7 I.2. Operation of the Hungarian gas market 20042005 Legal opening up of the market (%) 70 Number of licensed traders (pieces) 10 14 Registered authorised consumers 2363 - number (pieces) 67,5

8. 8 I.3. Hungarian tasks stemming from joining the single European energy market Development of the new market model, definition of the optimum function of objectives, dealing with HTMs in the long run Harmonisation with the regulations on the single European system-use (European Centre of Energy Networks), uniform structure of fees payable for the use of the system (?) Priority plan and system of stimulations for the infrastructural investments intensifying the market Comprehensive exchange of information among the market actors

9. 9 II. Increasing the safety of supply Diversification of gas supply Creation of the necessary regulatory capacities in the electric energy system Regulation on Community stock-building (?) Monitoring Centre for the Safety of European Energy Supply Regulations on the security and reliability of the common EU-level network

10. 10 III. Development of optimum energy-mix Consequent continuation and implementation of the current nuclear option and the elongation of life-span Use of renewable energy sources in a rational way and with maximum economic benefits (EU:12-15%) The Commission does not question the energy-policy sovereignty of the Member States with respect to the energy- mix, but calls the attention to the fact that every Member State shall implement a policy respecting the interests of the neighbouring countries and that of the Community as a whole, not to speak about the aspects of competitiveness and the environment.

11. 11 III./1 Foreseeable future of coal use in Hungary Lignite (2.9 Mrdt industrial property) is the dominant element of Hungary’s coal property that can be extracted profitably Even in the long term, the electric energy sector will remain dominant in the utilisation of coal The obstacle before use might be : measures limiting CO 2 emission The chances might be improved by: the constant increase of the price of carbon hydrates and the development of clean coal technologies

12. 12 IV. Fight against climatic change Energy efficiency, as a priority: Elaboration of a new action plan on energy efficiency (objective: 20% saving by 2020); launching information campaigns; introduction of new financial tools (for example: energy efficiency guarantee fund); putting the transportation sector into the forefront (improvement of urban transport in the first place); introduction of the European white certificate system. Elaboration of a long-term Renewable Energy Guideline: supervision of the objectives defined for the period after 2010; new directive on the utilisation of renewable for heating purposes; long-term plan on the reduction of oil import (more is needed than 5.75%); assuring stabile environment for the investments at EU level.

13. 13 V. Promoting innovation: research and development Elaboration of a strategic energy- technological plan focusing on common objectives (bio-fuels, hydrogen cells, photo- electric equipment, clean coal technologies, development of the electricity networks) Setting up of the European Technological Institute

14. 14 VI. Elaboration of a common external energy policy, establishment of joint actions in the external energy-related contacts of the EU Initiation of an international treaty on energy efficiency Deepening relations in the area of energy with the major countries of production and consumption New energy-partnership with Russia Establishment of the Pan-European Energy Community Setting up of a joint European mechanism for the purpose of reacting in a uniform manner at European level on the external energy crises Definition of European priorities in the area of infrastructural investments aiming at the improvement of external supply

15. 15 Common energy strategy How to continue the common energy strategy of the EU? „Historical change, or the catalogue of ideas full of good intentions? ” ____________________________________ How to continue the Hungarian energy policy? We should continue to go on the road defined, but should not delay making the necessary decisions!

16. THANK YOU VERY MUCH FOR YOUR ATTENTION! Ministry for Economy and Transport www.gkm.hu hatvani.gyorgy@gkm.gov.hu