Hungarian Heavy Industry Decarbonisation: Policy and Financing Roadmap

Equilibrium Institute’s analysis linked to the decarbonisation of the heavy indutries is out.

If Hungary wants to achieve climate neutrality by 2050 in line with its Climate Act, it cannot avoid drastic reductions in emissions from heavy industry. Equilibrium Institute, in the framework of its project funded by the European Climate Initiative (EUKI), is seeking to present a roadmap on how to decarbonise these sectors.

Based on our modelling work, the total investment cost (CAPEX) to be spent between 2016 and 2050 for all 3 industries in Hungary amounts to EUR 2.64 billion, which is approximately 1.6 percent of the current Hungarian GDP. The private financing potential of the three sectors considered – taking into account the safe debt level – is estimated at EUR 3.17 billion until 2030, assuming zero dividend payments. When it comes to public financing, the main tools for heavy industry are expected to be the Innovation Fund and the Modernisation Fund.

Sustainable finance options are there, but some building blocks are still needed to make investments in decarbonisation of heavy industries a reality:

– a clear policy environment,

– a thorough industrial decarbonization strategy,

– a platform on carbon capture, storage and use that meets regularly,

– more funding for R&D,

– the rethinking of the educational and training system related to these industries,

– a continuation of the central bank’s green capital requirement programme,

– capacity building in the relevant sectors to make companies more successful in applying for grants from the Modernisation Fund or the Innovation Fund, among others.