To fully realise the circular potential of the economy, Hungary will need to adopt a comprehensive circular economy policy framework. This chapter reviews the existing circular economy-related policy landscape in Hungary and highlights policy gaps across six policy fields.
Towards a National Circular Economy Strategy for Hungary
3. The circular economy policy landscape in Hungary
Abstract
3.1. Many of the principles of the circular economy are anchored in Hungary’s policy landscape
Hungary has long-established policies for waste management and has taken into account recommendations from the European Commission (EC) and the OECD to further strengthen its legal framework. The EC Environmental Implementation Review 2019 for Hungary (2019[1]), the EC Country Report Hungary 2020 (2020[2]) and the OECD Environmental Performance Review 2018 for Hungary (2018[3]) identified some progress made in the country’s materials and waste management owing, in particular, to the major reforms in the waste sector (the outcomes of which are yet to be examined). At the same time, inefficiencies in the financing of the country’s municipal waste management,1 the recent recentralisation of waste-related governance and the lack of collaborative mechanisms between relevant ministries to steer the transition towards a circular economy are seen as potentially undermining future progress. The EC and the OECD therefore recommend that Hungary strengthens its policy framework to speed up the uptake of circular economy practices, incentivise resource efficiency measures, and introduce new business models (European Commission, 2019[1]; European Commission, 2020[2]; OECD, 2018[3]).
Several recent national policies have considered these recommendations when determining their strategic objectives. While many of the policy documents do not explicitly use the term “circular economy”, seven “core” policies explicitly address the circular economy and at least one of its core principles.2 The documents do so at different levels of specificity. For instance, while the National Development Plan 2030 (Government of Hungary, 2014[4]) and the National Framework Strategy on Sustainable Development 2012-2024 (Nemzeti Fenntartható Fejlödési Tanács, 2013[5]) are broad in scope (calling for the sustainable use of natural resources, the preservation of values and the protection of environment), sectoral policies, such as the National Waste Management Plan 2014-2020 (Government of Hungary, 2013[6]) and the National Environmental Technology Innovation Strategy 2011-2020 (Ministry of Rural Development, 2011[7]), are more specific (aimed at advancing the development of waste management, reducing materials use and waste generation, and furthering environmental technology innovation, respectively).
The Hungarian government and its administrative bodies have also worked on other policies relevant to circular economy processes and concepts. They include “directly related” policies (focusing on one of the circular economy sectors or principles, but applying them to a wider range of areas besides circular economy) and “complementary” policies (having less direct links to the circular economy, acting more as enabling factors). Directly related policies are clustered around raw materials, industry, agriculture and food, energy and climate, transport, construction, R&D&I, and digitalisation. They target resource efficient production and the development of environmental and waste industries, address import dependence on energy minerals, advance new business models by SMEs, promote the sustainable use of natural resources, and focus decarbonisation through circular economy measures in waste management. Complementary policies constitute an enabling framework for the circular economy transition, such as education, or a marginally related sectoral strategy, such as forestry, water and tourism. An overview of the circular economy policy landscape is provided in Figure 3.1.
Figure 3.1. Hungarian policy landscape relevant to the circular economy
3.2. Hungary needs to address the prevailing policy gaps to succeed in fully exploiting the circular potential of its economy
Currently, the levers to realise the transition to a circular economy are dispersed across a wide range of policy fields and documents. Moreover, many aspirations remain conceptual ideas and lack implementation on the ground. The following paragraphs elaborate on the policy gaps vis-à-vis the circular economy3 across six policy fields.
First, the industrial policy landscape in Hungary addresses some aspects of the circular economy transition. While policies for energy, minerals and agricultural raw materials are well established, at present, they only consider recycling and the use of secondary raw materials in an abstract way without setting out concrete actions or targets. Several policies tackle sustainable product design, process innovation, smart production, and the product use and end-of-life strategies, but many of these policies are either outdated or have not been implemented. On a more general level, links between the circular economy and the competitiveness of key industrial segments are weak, and measures related to SMEs are insufficient as they do not leverage their circular economy potential. Additionally, Hungary does not have a comprehensive strategy for the construction sector. To remediate these policy gaps, policies should focus on the creation and promotion of secondary raw materials markets, on developing measures to leverage the circular economy potential across key industrial segments, on incentivising the circular transformation of SMEs and start-ups, and on promoting a circular value chain approach within the built environment.
Second, agriculture and food frameworks in Hungary connect well with the circular economy on a conceptual level, including in the sustainable use of natural resources, innovative technologies, viable agricultural, food and energy production, and the development of local food chains. However, these concepts lack integration and implementation in practice. Most notably, the biological treatment of agricultural by-products and food waste, and their use as compost or feedstock for energy, are the focus of several policies. However, the policies fail to spell out specific measures or have quantitative targets. Moreover, Hungary does not yet have a dedicated bioeconomy policy framework in place.4 Hungary should therefore consider strengthening current policies at the nexus of food waste reduction, food waste and biomass use for composting or energy valorisation, and the development of the bioeconomy.
Third, as opposed to industry and agriculture, the focus on the services and commercial sectors is more scattered across policy domains. Although several high-level development and sectoral policy documents address the concepts of resource efficiency and eco-innovation of the service sector, more work is needed to explore its full circular economy potential. In particular, policies should focus on the promotion of innovative circular (digital) business models related to services.
Fourth, to promote supply chain management practices that reduce the ecological and energy footprints of goods, Hungarian policies could focus on creating local value chains (for instance, for biomass and food), incentivising green packaging, and promoting sustainable transport and reverse logistics.
Fifth, Hungary has a long-established policy and legal framework for waste management, supported with quantitative targets and economic instruments, which is well aligned with EU legislation and relevant OECD Council decisions. Nevertheless, significant challenges remain in this area, particularly with regard to diverting waste from landfills towards recycling. This is especially true for municipal waste management, including biodegradable and packaging waste. To incentivise waste management practices, in line with the waste hierarchy, and to fulfil EU waste obligations, Hungary would benefit from strengthening existing obligations and introducing new regulatory measures and economic instruments. This applies both for waste streams already targeted by the National Waste Management Plan and its Waste Prevention Programme as well as for those not yet covered by these instruments (such as textiles and plastics).
Lastly, the R&D&I framework stresses the importance of environmental technological innovations for more efficient resource and waste management, and has specific area-based smart specialisation strategies, one of which focuses on the circular economy. Nonetheless, challenges remain in the practical application of these objectives. Although public support for research and innovation is considerable, the shortage of highly skilled labour stands in the way of a faster uptake of innovative activities. In addition, Hungary has a strong dependence on European and international funds to support its projects and programmes. Hungary’s policies should therefore aim to: i) strengthen talent and skills related to engineering and science; ii) implement a number of support measures related to increased participation in the use of EU funds; iii) diversify the funding of collaborative research and knowledge exchange; and iv) make the innovation, digitalisation and circular economy policy agendas more coherent.
References
[10] BIOEAST (2021), BIOEAST Hungary, https://bioeast.eu/hungary-ministry-of-agriculture-of-hungary/ (accessed on 14 April 2021).
[2] European Commission (2020), Country Report Hungary 2020, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020SC0516&from=EN (accessed on 5 April 2021).
[1] European Commission (2019), The Environmental Implementation Review 2019 Country Report Hungary, https://ec.europa.eu/environment/eir/pdf/report_hu_en.pdf (accessed on 16 March 2021).
[8] Government of Hungary (2015), 4. Nemzeti Környezetvédelmi Program 2015 - 2020, http://www.biodiv.hu/convention/cbd_national/fol444566/iv.-nemzeti-kornyezetvedelmi-program/download/hu/1/NKP-4.pdf (accessed on 14 April 2021).
[4] Government of Hungary (2014), Nemzeti Fejlesztés 2030 - Országos Fejlesztési és Területfejlesztési Koncepció, http://www.terport.hu/webfm_send/4616 (accessed on 14 April 2021).
[6] Government of Hungary (2013), Országos Hulladékgazdálkodási Terv 2014-2020, https://2015-2019.kormany.hu/download/d/a6/d1000/OHT%202014-2020_egys%C3%A9ges%20szerkezetben.pdf#!DocumentBrowse (accessed on 14 April 2021).
[7] Ministry of Rural Development (2011), National Environmental Technology Innovation Strategy 2011–2020, https://kornyezettechnologia.kormany.hu/admin/download/b/4f/50000/NETIS_English.pdf (accessed on 14 April 2021).
[5] Nemzeti Fenntartható Fejlödési Tanács (2013), National Framework Strategy on Sustainable Development of Hungary, https://www.parlament.hu/documents/127649/4101265/NFFT-ENG-web.pdf/f692c792-424d-4f5a-9f9d-9e6200303148?t=1580130885736 (accessed on 14 April 2021).
[9] Nemzeti Hulladékgazdálkodási Koordináló és Vagyonkezelő (2020), Országos Hulladékgazdálkodási Közszolgáltatási Terv 2021, https://nhkv.hu/wp-content/uploads/2020/09/OHKT_2021.pdf (accessed on 14 April 2021).
[3] OECD (2018), OECD Environmental Performance Reviews: Hungary 2018, OECD Environmental Performance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264298613-en.
Annex 3.A. Supplementary information
Annex Box 3.A.1. “Core” circular economy related policy documents in Hungary
The core policy documents were identified as those that focus largely on circular economy-related thematic areas or on at least one of its core principles. They include the following:
Economic development frameworks
The National Development 2030 – National Development and Territorial Development Concept defines a long-term vision with goals and principles based on the country's social, economic, sectoral and territorial development needs. The concept goes beyond the circular economy, but its cross-cutting nature and strategic importance places it in the “core” category of policy documents (Government of Hungary, 2014[4]).
The National Framework Strategy on Sustainable Development of Hungary promotes a common national understanding of sustainability. The strategy integrates some of the key circular economy principles into its core goals, including issues of resource use, production technology and consumption patterns, highlighting the interconnectedness with certain strategic considerations, such as food, energy, and environmental security (Nemzeti Fenntartható Fejlödési Tanács, 2013[5]).
Overarching environment policy framework
The Fourth National Environmental Programme (4NEP) represents a comprehensive framework comprising all the environmental strategies, programmes and plans in Hungary. Developed for the previous period (2015-2020), it covers specific aspects related to the circular economy, such as materials production and uses, waste management, as well as industry, agriculture and forestry, transport and logistics, and environmental industry and infrastructure (Government of Hungary, 2015[8]).
Waste management related policies
The Waste Management Development Concept is the highest level policy for the development of waste management in Hungary in the long term (for the period 2014-2027). The main directions identified by the concept are waste prevention, waste collection and transport, materials and energy recovery, as well as improvements in landfilling. Policy objectives related to waste management up to 2020 are detailed in the National Waste Management Plan 2021-2027. The plan represents the legal background of waste management in Hungary, covering all significant waste streams, and providing the background knowledge for efficient waste management, long-term planning goals, and steps to achieve them (Government of Hungary, 2013[6]).
Part of the plan is also the National Waste Prevention Programme, which sets out the main direction of domestic waste prevention practices. One of its main objectives is the decoupling of materials use and waste generation from economic growth (Government of Hungary, 2013[6]).
The Waste Management Public Services Plan determines the optimal territorial delimitation for the provision of public services, as well as the minimum waste management tasks to be performed in a given area (Nemzeti Hulladékgazdálkodási Koordináló és Vagyonkezelő, 2020[9]).
Sectoral policy on research, development and innovation
The National Environmental Technology Innovation Strategy explores the crucial linkages between innovation and green growth by promoting measures related to the development of environmental technology. Developed for the previous period (2011-2020), the strategy focuses on environmental innovations related to resource efficiency and materials and energy management, as well as waste management and sustainable construction. Besides technologies and products, it also puts forward measures for organisational innovation and services (Ministry of Rural Development, 2011[7]).
Note: Policy documents under preparation but not formally adopted by the Hungarian government at the time of the analysis and were therefore excluded from the scope (including the new National Environmental Programme [5NEP], the new National Waste Management Plan 2021-2027 and its Waste Prevention Programme [NWMP]).
Notes
← 1. The Hungarian waste management system is currently being reformed into a new concessionary system, which is an opportunity to optimise and rationalise its financing and operation. This will also need to be accompanied by adjustments in legislation and existing economic instruments.
← 2. At the time of analysis, the “core” policy documents include: two economic development frameworks (the National Development 2030 and the National Framework Strategy on Sustainable Development of Hungary), one overarching environmental policy framework (Fourth National Environmental Programme), three policies related to waste management (Waste Management Development Concept, National Waste Management Plan along with the National Waste Prevention Programme, and Waste Management Public Services Plan), and one sectoral policy on R&D&I (National Environmental Technology Innovation Strategy). See Annex Box 3.A.1 for details.
← 3. What constitutes a policy gap is loosely defined either as an area that has not yet been covered at all, or has been covered only partly within the existing policies, or where achieving targets might become challenging. In the latter two cases, a policy framework exists but only partially addresses the needed measures required for transitioning to a circular economy.
← 4. Hungary has recently founded the Hungarian Bioeconomy Cluster. It is a member of the Central-Eastern European Initiative for Knowledge-based Agriculture, Aquaculture and Forestry in the Bioeconomy (BIOEAST) (BIOEAST, 2021[10]).