General project data

Programme:

Programme for the Environment and Climate Action (LIFE)

Project budget:

14 878 324 EUR (~ 5,2 billion HUF)

EU co-financing – 60%:

8 926 994 EUR (~ 3,1 billion HUF)

Project name:

Secure and start implement an effective roadmap for the low-carbon transition of the single largest coal-region in Hungary

Acronym:

LIFE-IP North-HU-Trans

Project type:

LIFE Integrated Project (LIFE-IP)

Project time:

1. September 2020. – 31. October 2029. (9 years)

Project objectives

The overall objective of the project is to enhance the successful implementation of the Hungarian National Energy and Climate Plan (NECP), with special emphasis on the decarbonisation and sustainable, just transition of the Mátra Power Plant (hereinafter: MPP) and its region. 

Detailed project objectives:

  • Decarbonisation, GHG emission reduction: Roadmap for the gradual phase-out of MPP’s lignite-fired units.
  • Develop, test and evaluate renewable-based and innovative flexibility solutions at the post-minig sites. 
  • Capacity-building – recruitment and training of decarbonisation and coal phase-out experts.
  • Sustainable and just transition for lignite-sector employees: contribution to the Territorial Just Transition Plans of Heves and Borsod-Abaúj-Zemplén counties, complex training programmes for MPP workers.
  • Recultivation of post-mining sites: repurposing of the post-mining sites for sustainable (preferably touristic and outdoor sports) use.
  • Mobilization of complementary funds – for the region and Hungary and for the implementation of decarbonisation measures.
  • Assessment and removal of legal barriers – creating a favourable regulation environment for the full implementation of the NECP: establishment of a national Coal Commission, establishment of an NECP Working Group within the Ministry for Innovation and Technology.
  • Economic diversification in the post-coal region: mitigating the negative social effects of decarbonisation, supporting the transition of enterprises currently dependent on lignite sector.
  • Reduction of energy poverty in the (low-income) households using lignite for heating: assessing resilience and emissions of households, implementation of energy efficiency and energy community measures.
  • Greening public transport in the region and preparing for nation-wide replication.
  • Dissemination of results, awareness-raising and knowledge sharing: Replication Strategy, Best Practice Toolkit, workshops and conferences.

Expected results

Major expected results in the field of DECARBONISATION

  •  1st implementation of 100% industrial coal phase-out in Eastern-Europe (2030);
  • 6.5 million tonnes CO2 emission reduction (= 14% of total domestic CO2 emissions = 50% of total domestic CO2 emissions from power generation;
  • 5 innovative prototypes  to replace coal-fired technology;
  • 1 toolkit of innovative technologies for the protection of weather-dependent renewable infrastructures;
  • 1 innovative prototype of combined energy community and households’ energy efficiency to replace residential lignite use and reduce energy poverty;

Major expected results in the field of JUST TRANSITION

  • Establishment and operation of a national Coal Commission;
  • Contribution to the development and implementation of „Territorial Just Transition Plans” for Heves és B-A-Z counties;
  • Trainings and knowledge sharing for 500 workers and miners of the MPP;
  • 250 affiliated and supply chain companies of MPP will enter new markets and supply chains and find new clients and customers.

Project background

LIFE programme

The LIFE programme is the EU’s funding instrument for the environment and climate action. Created in 1992, it has co-financed approximately 5500 pilot, demonstration and best practice projects until nowadays. The scope of the programme was broadened by the sub-programme for Climate Action in 2014, and by the sub-programme for Clean Energy Transition in 2021. As a direct EU fund, the programme is coordinated by the Climate, Infrastructure and Environment Executive Agency (CINEA) of the European Commission.

The „LIFE Integrated Project” (hereinafter: LIFE-IP or IP) project type was also introduced in 2014. LIFE-IPs are large-scale, ambitious projects usually implemented via policy coordination, targeting the implementation of a whole climate change strategy or action plan. Furthermore, LIFE-IPs are usually implemented on a large territorial scale and in a wide stakeholder cooperation. In the 2014-2020 period Hungary – as all Member States – had an indicative national allocation of 3 LIFE-IPs, which the country has used successfully and managed to receive co-financing for 3 IPs, (1 in Nature, 1 in Environment and 1 in Cimate Action). Within the 2021-2027 LIFE programme, IPs will be called Strategic Integrated Projects (hereinafter: SIP), with the same scope and objective.

For other LIFE-IPs in the sub-proggramme for Cimate Action, please see the following link: Link

For other LIFE-IPs in the sub-proggramme for Environment, please see the following link: Link

The European Union’s climate policy in brief

The 2030 Climate and Energy Framework defines the EU’s key climate related objectives and specifies the following three main targets:

  • a 40% reduction in greenhouse gas emissions compared to 1990,
  • increasing the share of renewables to 32% in the gross final energy consumption,
  • at least a 32.5% energy efficiency improvement.

The EU aims to achieve the 40% greenhouse gas (GHG) reduction target through the Emissions Trading Scheme, the Effort Sharing Regulation and the Land Use and Forestry Regulation.

As part of the European Green Deal, the European Commission proposed in September 2020 to increase the GHG reduction target to 55%. The Commission is expected to publish its detailed legislative proposals in July 2021.

National Energy and Climate Plan (NECP)

LIFE IP North-HU-Trans aims to contribute significantly to the National Energy and Climate Plan as a key strategic document in the climate and energy policy of Hungary. 

Regulation 2018/1999/EU of the European Parliament and the Council requires Member States of the European Union to create a National Energy and Climate Plan (NECP).  The Hungarian Government adopted the NECP on 8th January 2020 and it was submitted to the European Commission on 22th January 2020. 

Annex I of the regulation sets the structure of the NECPs which contain the current status, goals, measures and projections of each Member States for the dimensions of the energy union (decarbonisation; energy efficiency; energy security; internal energy market; research, innovation and competitiveness).

The following table contains the main objectives of the Hungarian NECP broken down by dimension of the energy union.

Dimensions

Indicators

Baseline

(2017)

Target until 2030

Decarbonisation

GHG emission reduction (compared to 1990 levels)

-31,9 %

min. -40%

GHG intensity of the GDP

1,98 t CO2e/million HUF

continuous reduction of GHG intensity

Emission reduction in non-ETS sectors (compared to 2005 levels)

-9,3%

min. -7%

Share of renewable energy within gross national energy use

13,33%

min. 21%

Energy efficiency

Final energy consumption

775 PJ

max. 785 PJ

(energy use above the target shall only come from renewable sources between 2030 and 2040)

Final energy intensity of GDP

0,579 toe/million HUF

0,429 toe/million HUF

Energy security

Net import dependence – natural gas

~96%

~70%

Net import dependence – petroleum

~86%

max.85%

Net import dependence – electricity

32-33%

max.20%

N-1 rule for natural gas infrastructure

143%

min.120%

Internal energy market

Ratio of electricity system interconnections

~50% 

min. 60%  (EU obligatory target: min.15%)

Research, innovation and competitiveness

Number of innovative pilot projects

0 db

min.20 db

Number of international patents registered during the implementation of pilot projects

0 db

min. 10 db

The NECP’s goals relevant for the LIFE-IP North-HU-Trans project

Coal phase-out

One of the most important decarbonisation tasks is the conversion of the lignite-fired Mátra Power Plant to low-carbon technologies, thus removing coal and lignite from domestic electricity production by 2030.

The construction of a new gas turbine power plant, which is especially important for the security of supply in the eastern part of the country, the construction of a new photovoltaic (PV) power plant and industrial energy storage unit utilizing refuse-derived fuels (RDF) at the MPP site are currently under investigation.  

The reorganization of the Mátra Power Plant goes beyond the technological issues and must also consider the socio-economic and environmental impacts of the Northern Hungary region affected by the power plant’s operation. The power plant has a significant socio-economic impact within its narrower area, including the creation and maintenance of jobs, indirect job creation in related businesses or local tax revenues. Therefore, the revitalization must pay special attention to the diversification of the region’s economy and labour market and to a just transition (“Just Transition”), building on the unique potential of the site and the power plant’s value chain.

A significant part of households in the country relying on lignite-based heating are in the region of the Mátra Power Plant. During the revitalization and transition, our goal is to supply residential heating demand with clean energy and reduce energy consumption. Furthermore, we want to encourage the installation of residential solar systems in the region of the power plant, to partially replace electricity production.

The large-scale site of the Mátra Power Plant may be suitable for multi-purpose utilization beyond its energy related functions. These include opportunities for expansion and diversification of the industrial park, expansion of agricultural or storage and logistics functions, and the preservation and presentation of the mining cultural heritage.

Energy poverty

Hungary will measure the effectiveness of its policy to further reduce heating difficulties by monitoring the share of households that spend at least 25% of their income on energy management (9.8% in 2016). Priority should be given to vulnerable user groups. In connection with this, Hungary will focus primarily on two well-defined social groups: large families living in a family house in small settlements, and pensioners living alone in an apartment complex (and sometimes a family house).

Public transport

In order to slow down the growth rate of energy consumption in the transport sector, it is of outmost importance to develop the public transport system and increase its utilization. Under the Green Bus Program already adopted by the government, nearly 1,300 environmentally friendly local buses are expected to be operational by 2029.

The Mátra Power Plant and its region

Mátra Power Plant is a key player in Hungarian energy sector, providing 15% of domestic electricity production. It is also a major regional employer, providing a livelihood for 2,100 workers and their families in the region, and the activities of a 1,000 companies are also closely linked to the plant’s operations.

At the same time, the coal-fired power plant is responsible for 8% of domestic GHG emissions and 10% of domestic CO2 emissions, making it the largest emitting facility in Hungary. Therefore, it’s clear that without the environmentally and climate-friendly transformation of the Mátra Power Plant, the emission reduction targets set in the domestic policy strategies cannot be achieved. The aim of the project, in addition to carbon offsetting, is to preserve jobs and businesses in the region and to bring about economic development and diversification in the region.

The project also aims to address the challenges of typically low-income households in the area that are still heated with lignite, contributing to the deterioration of air quality in the power plant’s region.

Access to Hungarian NECP documents (HU):

Actions

Preparatory actions

  • A1 – Stakeholder Analysis
  • A2 – Building the Transition Governance model 
  • A3 – Build relationship with domestic and other EU coal regions
  • A4 – Preparation of an impact assessment for the electricity and heating sector
  • A5 – Socio-economic impacts of the lignite phase-out and the economic diversification potential assessment
  • A6 – Ex ante environmental impact assessment of the lignite phase-out
  • A7 – Ex ante impact assessment and potential analysis of supporting vulnerable households to improve energy efficiency and achieve decarbonisation by using renewables and leaving the use of lignite for heating
  • A8 – Strategy for converting post-mining landscapes into regional assets
  • A9 – Assessment of legal barriers and legislation proposals to remove them Beneficiary responsible for implementation

Implementation actions

  • C1 – Improving human capacities for the implementation of the LIFE IP and the Hungarian NECP
  • C2 – Develop and implement transitional roadmap on the MPP sites
  • C3 – Operation of Hungarian Coal Commission and the preparation of the Territorial Just Transition Plan for Heves County and Borsod-Abaúj-Zemplén County
  • C4 – Installation of prototype projects on the premises of MPP
  • C5 – Just Transition for pre-existing workers of MPP
  • C6 – Develop, test and promote the reduction of vulnerability of energy consumers through energy consumption and GHG emission reduction of households below the poverty line
  • C7 – Supporting the economic diversification of the business partners and the supplier network of MPP through a complex mentoring programme
  • C8 – Converting post-mining landscapes into regional assets
  • C9 – Coordination with the complementary funding sources
  • C10 – Preliminary studies regarding the innovative carbon neutral energy generation technologies to repurpose the sites of MPP
  • C11 – Sustainable and replicable mobility solutions and transition in Heves County

Monitoring actions

  • D1 – Monitoring and evaluation of the project’s impact on climate objectives (GHG reduction and Renewable Energy capacities and generation) and contribution to the implementation of the NECP 
  • D2 – Monitoring of pilot projects, prototypes
  • D3 – Monitoring and evaluation of the environmental impacts of the transition (other than GHG), incl. ecosystem functions
  • D4 – Evaluation of the socio-economic impact of the project
  • D5 – Monitoring of the effects of decarbonisation and energy poverty and assessing societal awareness levels within the intervention areas in Northern Hungary

Communication-dissemination actions

  • E1 – Strategy for proactive communication to different target groups
  • E2 – Creation of communication products
  • E3 – Awareness raising campaign to support regional and structural transition from coal to low-carbon society and economy
  • E4 – Replication strategy and Final Conference of the IP
  • E5 – Networking with other projects
  • E6 – International dissemination and support for replication in other member states

Project Management action

  • F1 – Project Management and Steering Committee

 

Project partnership

Central and local administration

  •       Ministry for Innovation and Technology
  •       Western Balkans Green Center
  •       Government Office of Borsod-Abaúj-Zemplén County
  •       Government Office of Heves County
  •       Municipality of Abasár
  •       Municipality of Bükkábrány
  •       Municipality of Markaz

Other public bodies

  •       Hungarian Energy and Public Utility Regulatory Authority
  •       Eszterházy Károly Catholic University

Private commercial entities

  •       MVM Zrt. (MVM Plc.)
  •       MVM Mátra Energia Zrt. (MVM Mátra Energy Co.), formerly known as: Mátrai Erőmű Zrt. (Mátra Power Plant Co.)
  •       MVM ERBE Zrt. (MVM ERBE Power Engineering & Consulting Private Company Limited)
  •       MVM Balance Zrt. (MVM Balance Plc.)
  •       MVM Zöld Generáció Kft. (MVM Green Generation Limited Liability Company)
  •       MVM Démász Áramhálózati Kft. (MVM Démász Áramhálózati Limited Liability Company)
  •       MVM Optimum Zrt.  (MVM Optimum Plc.)
  •       REKK Energiapiaci Tanácsadó Kft. (Regional Centre for Energy Policy Research Ltd.)

Trade unions and chambers

  •       Chamber of Commerce and Industry for Borsod-Abaúj-Zemplén County
  •       Chamber of Commerce and Industry for Heves County
  •       Trade Union of Mining-, Energy- and Industry Workers
  •       Trade Union of Electricity Workers

Civil organisation

  • Hungarian Charity Service of the Order of Malta