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"Green New Deal - Sustainable
Economic Prosperity for the
Danube Region"
Dr. Jávor Benedek
Chairman
Sustainable Development Committee of the
Parliament of Hungary
July 7, 2011
Sustainable Development Committee
The triple crisis of our days (‘triple
crunch’):
 Economic-financial (credit crisis, debt crisis –
social tensions )

Climate change (growing temperature, growing sea
level, changing of the environment, deforestation,
desertification, extreme weather – food crisis)

Energy (oil)(the end of the cheap oil; decreasing assets,
growing drilling costs; non conventional oils; the energyhunger of China)
1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, [email protected], www.parlament.hu
Sustainable Development Committee

Solution: a Green New Deal

Broad support in the political and academic scene:
◦ Stavros Dimas, European Commissioner for the
Environment, 2009. march, Budapest:
„A global environmental agreement or "green New Deal" could halt the
irreversible damaging effects of climate change. (…)Brussels
environment protection objectives have been crafted in line with
the union's goals to stimulate the economy, (…) the strategy on
climate change was aimed at reducing energy dependence and
creating 700,000 new jobs in the renewable energy branch of the
economy. ”
◦
◦
◦
◦
Green New Deal Group, eg. Larry Elliott, the economic s editor of the
Guardian
New Economics Foundation
Wuppertal Institute
UNEP: The Green Economy Initiative
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Sustainable Development Committee
Green New Deal


International examples:
◦ USA: Green elements in the fiscal package, 1-2 years, 110-120
billion USD
◦ South-Korea: Green Investment Program, 4 years, 38 billion
USD
◦ Ireland: Building Ireland’s Smart Economy, 10 years 50
billion EUR
◦ EU: Energy efficiency and renewable program, 4-5 years,
200 milliárd EUR
◦ Germany, France, Japan, China, India, etc.
European Greens: „Green New Deal”, 5 years, 500 billion EUR, 5
million „green collar” jobs
1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, [email protected], www.parlament.hu
Sustainable Development Committee
The ‘triple crunch’ in Hungary
Economic crisis (indebtedness)
 Energy (external dependence, dependence
on fossils)
 Employement (very low level of
employement for more than a decade;
unsustainable state expenditures)

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Sustainable Development Committee
Indebtedness


State debt: was a key factor in the falling of the state socialism.
In the 80’s it grew till 73% of the GDP in 1989. Because of the
transition crisis it went to the 90% of the GDP. In the second
half of the 90’ the debt decreased, mostly because of the
privatisation and later because of strict fiscal policy. In 2001 it
was 52%. Untill 2010 it grew again to the 80% of GDP.
Public debt: before 2008 great part of the population got
‘cheap’ credit for building/buying habitation denominated in
swiss franc. The rate went up by a 40% after 2008, causing a
major crisis: the current ammount of the franc debt is the 19%
of the GDP.
1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, [email protected], www.parlament.hu
Sustainable Development Committee
Energy dependence

External dependence: the 62,5% of the primary energy come
from abroad (mostly natural gas and oil). If we count the 14,2%
of nuclear energy, which get the fuel also from oter source, the
total external dependence is 77%. We can produce only onequater of our energy demand.

Dependence on fossils: In the primary energy in Hungary the
natural gas is 45%, the crude oil is 23%, and the coal is 13%. 81%
of our energy come from fossil sources.
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Sustainable Development Committee
Energy dependency of Hungary: the energy import
compared to the volume of total export.
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Sustainable Development Committee
Employement


After 1989 in Hungary the transformation of the economy from
state socialism to market economy went very fast (‘shock
therapy’). The former ‘full employement’ ended, millions
became ‘unnecessary’. The Hungarian ‘solution’ was not to
bring bact these people to the labour market by re-training, but
to keep out them by early pesions and other forms of social
supply.
The rate of employement is 55%, which is more than 10% lower
than the European average. The employment is critically low in
3 groups:
◦ Uneducated (maximum 8 classes);
◦ Mothers with children of 0-3 years;
◦ People older than 55 years
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Sustainable Development Committee
The economic problems of the EE area/Danube Region –
historical background
The greatest problem of Eastern Eurpe and of Hungary that since the systen
change of 1990 they do not have a coherent vision how to connect to the
world economy, which way to chose for a real develeopment – they just
accepted what came. So the crisis has a unique face in Eastern Europe.

The pillars of the system introduced in 1990 are swaying. Exept of the
GDP every economic and social indicator signs a stagnation or
deterioration. The wages, employement, infrastructure, innovation,
knowledge, demography and social differences.

Eastern Europe became a semi-periphery again. 40 and 70 years of
soviet type planned economy this region returned to the world economy to
the same place where it were before (exept of Slovenia). This semiperiferical role is similar to Latin-Americas role: their real export is the low
added value products and the low wages. This means stagnating living
standars – among who have jobs, because this system can secure much less
jobs.
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Sustainable Development Committee
The economic problems of Hungary - historical bacground I.

Hungary has eated up its resources. In the past hundred years, the
economic resources of Hungary steadily decreased. After the two world
war and the socialist era Hungary started the 1990s with a collapsed
economy and a great debt. After the privatization period the debt
decreased, but after 2000 it grew again.

In 2010 we had the same rate of debt – the difference is that in 1990 we
had the major part of the economy in state property, which we could sell
– but now we have nothing. Meanwhile the social capital and cohesion
also disappeared, so we are in a state where all our inner economic and
social resources are in a very low level.
1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, [email protected], www.parlament.hu
Sustainable Development Committee
The economic problems of Hungary - historical bacground II.

The indebtness is a structural problem. The debt is unsustainable
because of the very low rate of employement, which make the state
unfinanciable. And the low rate of employement is a clear consequense
of semi-peripherial, so called „neoliberal” economic model, what we had
chosen after the system change: an extremly open economy
(export/GDP: 80%) and the competition with low wages.

The crisis of 2008 questioned the basis of this model. The crisis did not
hit only the peripheries, but the whole world system. We need a
paradigmatical change: we need a community-based re-formation of the
economy, with greater state intervention and regulation, and focusing to
the inner resources. The key is building a local, sustainable
economy, because only this can bring higher employement and
stability.

We need a Green New Deal 
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Sustainable Development Committee
Green New Deal in Hungary

We need to rebuild our economy with a complex program,
which tackle the three crisis at the same time. Develop a lowenergy (low carbon) and low-material economy, which
preserves the enviroment, and offer work and livelihood to all
social groups, even to the poorests.

So we need to develop those sectors, which are labourintensives, reducing the energy and/or the raw material
demand, and producing primarily to the home market.
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Sustainable Development Committee
‘Sustainable’ sectors
(with the best employement capacity on the top)

energy efficiency and conservation, building renovation

sustainable agriculture

forest management and enviroment protection

waste management, zero waste technologies

water and waste water management

renewable energy

public transport

urban development

education, innovation and R + D

health preservation
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Sustainable Development Committee
Examples I: building renovation




The buildings use the 40% of the energy in Hungary of which
2/3 (360 PJ p.a.) is used for heating and cooling
90% of the energy use is from fossil fuel, mostly natural gas
(directly usd or through disrict heatings). The 80% of the
natural gas come from russian import.
The building sector is struggling since the beginning of the
crisis of 2008. It could employ low educated people in great
number.
Hungarian plans: 500 bn Ft (2 bn euros) state subsidy in 4 years
to renovation – 70-80.000 jobs (2%), 10-15% decrease in energy
use of the buildings.
1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, [email protected],
Sustainable Development Committee
Buildings: Existing inefficiency of Hungarian buildings
Households’ specific energy consumption (kWh m-2 year-1) scaled to EU average climate.
Hungary vs. CEE Member States. Average 2000-2007
ECF, CEU: Employment Impacts of a Large-Scale Deep Building Energy Retrofit Programme in Hungary

Sustainable Development Committee
Employment Effects: a case study by CEU
• Direct impacts
- Positive on the construction industry
- Negative on the energy industry
• Indirect impacts
- Upstream in the supply chain
• Induced impacts
- Caused by the increased disposable income:
- From new jobs (directly and indirectly generated)
- From energy savings
Qualitative analysis
- Types of employment generated and skill levels
- Geographical distribution
- Durability of the jobs (short/long-term)
- Supply of labour
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Costs of CO2-emission reduction
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Sustainable Development Committee
Possible financial sources:
1. EU funds
- EU 2014-2020 budgetary period: independent energy
programmes
- Cohesion funds: 370 billion € (2014-2020)
- 20% of that can be used for buliding retrofit, energy
efficiency programmes
over 10 billion € /year
2. National funds
- Hungary: 15 million € for 2012
must be increased!
Sustainable Development Committee
3. Reshaping energy expenditure
decarbonisation instead of „pro-carbonization”
Stern-report (2007):
1% of GDP is needed to mitigate
climate change
Hungary does spend almost 1% of GDP..
..but mostly on fossil fuel subsidies:
- Natural gas based combined heat
and power (CHP)
- Natual gas subsidy
- Preferential VAT of natural
gas based district heating
- Coal subsidy
Sustainable Development Committee
Examples II: local products, social cooperatives, public
catering

The former agricultural cooperatives mostly disappeared after 1990 –
the employement in the agricultural sector fell from 14,2% (1990) to
4,5% (2010).

Great part of the former agricultural population remained in the
villages, without regular job. In lots of villages the municipality is the
only employer, with schools and social services; and the municipality
have lands leasing out for low rent.

Forming social cooperatives on the municipality land can give job to
the unimployed, supply the kitchens of the schools and social services,
reducing the maintanence cost of these institutes. The excess can be
bring to the local market, reducing the role of the great commercial
chains in the food supply.

This can create only some thousands of jobs, but exactly where it most
needed.
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Sustainable Development Committee
Means of the Green New Deal I. – sources

Ecological tax reform: decreasing the burden on labour, and increasing
the burden on resource use and capital
◦ Tax on heavy traffic
◦ CO2 tax (gradually in 5 years)
◦ Decreasing the subsidies for the fossil sector
◦ Increasing the existing eco taxes: enviroment use fee, mining fee, land
use fee

Other sources:
◦ Structural funds
◦ CO2 quotas
◦ EU GND sources (future)
From these sources, at least 400-500 bn HUF (0,8-1 bn euro) a year can
be used to the measures.
1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, [email protected],
www.parlament.hu
Sustainable Development Committee
Means of the Green New Deal II. – measures


Central investments and programmes: building renovation
programme, green electricity price, building district heating
systems, building water infrastructure for landscape
management and against flood, supporting the education and
R + D, etc.; programmes of the new EU budget period of 20142020 on the basis of structural funds and the agricultural fund
(CAP)
Regulation: green public procurement, energy standards for
buildings, stricter environmental standards in urban
development, transportation, etc.
1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, [email protected],
www.parlament.hu
1.
Sustainable Development Committee
Green New Deal for the Danube Region
Green economy = Economy of future
- Picks out the region from its „semi-peripherical”
state;
- Meets the challanges of climate change, e.g. CO2
reduction;
- Creates jobs in greens sectors;
- Economic activity with absolute decoupling
(economic performance with decreasing ecological
footprint);
Sustainable Development Committee
Green New Deal – a hope to break binding chains of
history for the region
Thank you for your attention!