"Green New Deal - Sustainable Economic Prosperity for the Danube Region"

"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 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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 energy-hunger of China)

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu • Solution: a Green New Deal • Broadsupportinthepolitical and academicscene: • StavrosDimas, European CommissionerfortheEnvironment, 2009. march, Budapest: „A globalenvironmentalagreementor "green New Deal" could halt theirreversibledamagingeffects of climatechange. (…)Brusselsenvironmentprotectionobjectiveshavebeencraftedin line withtheunion'sgoalstostimulatetheeconomy, (…) thestrategyonclimatechangewasaimedatreducingenergydependence and creating 700,000 newjobsintherenewableenergybranch of theeconomy. ” • Green New Deal Group, eg. LarryElliott, theeconomic s editor of the Guardian • New EconomicsFoundation • Wuppertal Institute • UNEP: The GreenEconomyInitiative

SustainableDevelopmentCommittee1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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)

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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.

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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 one-quater 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.

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu Energy dependency of Hungary: the energy import compared to the volume of total export.

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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 semi-periferical 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.

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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.

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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 low-energy (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 labour-intensives, reducing the energy and/or the raw material demand, and producing primarily to the home market.

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu ‘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

Sustainable Development Committee 1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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.

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 • Directimpacts- Positive on the construction industry- Negative on the energy industry • Indirectimpacts- Upstream in the supply chain • Inducedimpacts - Caused by the increased disposable income: - From new jobs (directly and indirectly generated) - FromenergysavingsQualitativeanalysis- Types of employment generated and skill levels - Geographicaldistribution- Durability of the jobs (short/long-term) - Supply of labour EmploymentEffects: a casestudyby CEU

Sustainable Development Committee

SustainableDevelopmentCommittee1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu Costs of CO2-emission reduction

Sustainable DevelopmentCommitteePossiblefinancialsources: 1. EU funds- EU 2014-2020 budgetaryperiod: independentenergyprogrammes- Cohesionfunds: 370 billion € (2014-2020)- 20% of thatcan be usedforbulidingretrofit, energyefficiencyprogrammes over 10 billion € /year2. National funds- Hungary: 15 million € for 2012 must be increased!

Sustainable Development Committee3. Reshapingenergyexpendituredecarbonisationinstead of „pro-carbonization” Stern-report (2007): 1% of GDP is neededtomitigateclimatechangeHungary doesspend almost 1% of GDP....butmostlyonfossilfuelsubsidies: - Naturalgasbasedcombinedheat and power (CHP) - Natualgassubsidy - Preferential VAT of naturalgasbaseddistrictheating - Coalsubsidy

SustainableDevelopmentCommittee1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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.

SustainableDevelopmentCommittee1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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.

SustainableDevelopmentCommittee1358 Budapest, Széchenyi rkp. 19., Tel.: 441-5051, Fax: 441-5968, ffb@parlament.hu, www.parlament.hu 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 2014-2020 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.

Sustainable DevelopmentCommitteeGreen New DealfortheDanubeRegionGreeneconomy = Economy of future- Picks out theregionfromits „semi-peripherical” state;- Meetsthechallanges of climatechange, e.g. CO2 reduction;- Createsjobsingreenssectors;- Economicactivitywithabsolutedecoupling (economic performance withdecreasingecologicalfootprint);

Sustainable Development Committee Green New Deal – a hope to break binding chains of history for the region Thank you for your attention!

"Green New Deal - Sustainable Economic Prosperity for the Danube Region"