Driven by a desire to shift towards the West and away from dependence on Russia, Hungary is investing heavily in biofuels. By Thomas Ország-Land  Hungary has launched a bold agricultural development programme intended to turn its fertile croplands into Europe’s principal region for green energy production. Traditionally a breadbasket country lacking in fossil fuel resources, Hungary’s hope is that it can cash in on the anticipated biofuel surge while reducing its own vulnerability to imported energy.
The programme is driven by a binding promise made by Hungary during its membership negotiations with the EU to double the capacity of its renewable energy infrastructure. It must now invest €1.5bn in various renewable energy industries within four years. This was a condition of Hungary joining the EU back in 2004. Current concern over the accelerating effects of global warming has changed the conditions, however. A major report published in February by the International Panel on Climate Change (IPCC) projects the risks presented by the carbon-intensive global energy economy in terms of rising sea levels, increased heatwaves and storms, and spreading desertification and diseases. Both the EU and the US have embarked on increasingly ambitious biofuel production projects. As the price of crude oil has risen, so the price of biofuels has fallen in relative terms. The trend has created an opportunity for Hungary to convert its investment commitment into a lucrative export business. Prime Minister Ferenc Gyurcsány recently declared: “The conditions are ripe for Hungary to become the main supplier of environmentally friendly, renewable transport fuel for the EU.” Predictably, the energy industry and the money markets have responded swiftly. Zoltán Gogös, under-secretary at the Hungarian Ministry of Agriculture, has issued a national master plan to enable the rapidly expanding biofuel industry to consume more than Hungary’s entire 3-4-million-tonne annual grain surpluses and even to provide a market for substantial extra energy crops. His calculations have just been confirmed by the EU, which has resolved since the IPCC report to raise the share of biofuels consumed by the road transport industry of its 27 member countries to 10% by 2020. This is part of the broader objective of a 20%-30% reduction in the overall greenhouse gas emissions of the EU by that year, depending on agreement on a global environment protection package now under negotiation with the world’s developing countries. According to the International Energy Agency’s (IEA) 2006 World Energy Outlook report, biofuels will provide up to 7% of global road transport energy requirements by 2030. This would necessitate a land area devoted to energy crops equal in size to France and Spain combined. The IEA projects a steep increase in biofuel production starting this year and next. Hungary plans to exploit the market by boosting its bioethanol production 10 times from this year’s level of 80,000 tonnes within three years, and to encourage the long-term development of all the green energy industries. The administration has so far committed €350m in EU funding and €70m from the central budget to that purpose. In the medium term, the national master plan proposes dedicating 1 million hectares of farmland to energy crops, mostly corn, satisfying domestic market demand and leaving another 500,000 tonnes for exports. The growth potential is huge; Hungary possesses 9.3 million hectares of low-lying, phenomenally fertile arable land, of which only 5.8 million hectares are properly utilised. Traditional Hungarian crops like wheat, sunflowers and corn are suitable for ethanol. Oilseed rape, widely favoured for biodiesel production, thrives in many areas. SEKAB Bioenergia of Sweden has announced a plan to build four ethanol production plants in Hungary at a combined cost of €380m. These plants would employ some 10,000 people and consume an estimated 1.5 million tonnes of wheat and corn as well as 600,000 tonnes of biomass and 60,000 tonnes of organic waste every year. United Biofuels of Switzerland has signed a contract for the construction of a €70m ethanol production plant in Mohács, on the Danube. The Hungarian oil and gas concern MOL and Rossi Beteiligungs of Austria have also just announced a €40m joint investment in a biodiesel facility. Central EU Biofuels of Australia plans to establish a biodiesel oil production plant at Hód Industrial Park with a 500,000-tonne annual capacity. The company also plans a biodiesel refinery and a biomass-burning power plant in the Hódmezovásárhely area. Bioethanol plants are being established at more than 20 additional sites with a combined annual processing capacity sufficient to consume 7.5m tonnes of corn and 1 million tonnes of wheat. These biofuels are approximately carbon neutral. The CO2 that they release into the atmosphere through burning is roughly equal to the amount originally absorbed by those plants from which they are derived. The overall equation is somewhat less favourable, however, because of the energy-intensive agricultural and refining processes involved in their production. Nevertheless, they are the most environmentally benign road transport fuels ready for the mass market. This is great news for cost- and environment-conscious Hungary, for this former Soviet satellite country is still struggling to reorientate its national economy towards the West in order to escape prolonged dependence on Russian natural gas imports. Hungary’s only other significant, conventional, proven energy resources are the plentiful, sulphur-rich lignite deposits that used to fuel its obsolete power plants during the bygone days of communist industrial management. The resulting atmospheric pollution is associated with the increasing frequency and intensity of storms and floods that plague this region. Professor Dennis L. Meadows of New Hampshire University, author of the well-known 1970 study Limits to Growth, has told a world conference in Hungary that in his view the country is the most exposed within the EU to the whims of the energy export markets. This in part explains Hungary’s persistent budget deficit, now in excess of 10% of GDP, the highest in the EU. There has never been more pressure to find alternatives, and biofuels look set to play that role in Hungary. |