5 key takeaways from the UK-Hungary roundtable on green economic recovery
Managing Director of Cambridge Econometrics Hungary Dóra Fazekas shares 5 key takeaways from an online UK-Hungary roundtable on green economic recovery.
Last year, I facilitated an online roundtable event on green economic recovery in Hungary hosted by the British Embassy of Hungary. Senior representatives from the Hungarian government, finance sector and UK experts in climate resilience, climate policy and sustainable finance participated in the discussion which was based on a white paper presented by our Chairman, Richard Lewney.
Topics covered in two break-out sessions focused on the actions and impacts of green economic recovery measures on the labour market, industrial output and emissions as well as how to finance such green recovery measures. I was delighted with how the event went with insightful discussion between the participants which we hope will add value to the ongoing discourse around green economic recovery both in Hungary and in the UK. It was clear that Hungarian measures are underway and funding is earmarked for green recovery. There was also an overall consensus across the break-out sessions that governments and central banks have a key role to play.
Here are five key takeaways from the event, reflected in the white paper, which you can find here.
1. With the right measures in place, green recovery can happen.
It was made very clear in discussions that Hungary has been putting in place green recovery measures even before Covid-19 happened. The framework for economic development and low-carbon development for instance is already well established. There are clear targets in place such as achieving a 90% free energy production by 2030, which has two essential pillars (to be supported by government): maintain existing production capacity in the long run, and ensure supply security and stable prices. While the impacts of the green recovery policies can differ across the countries, in general, the green recovery policies can cut time needed for recovering to pre-Covid employment levels. At the same time, they can severely reduce CO2 emissions, contributing to climate mitigation targets.
2. Policy will need to be flexible in building long-term capacity whilst also meeting the short-term needs created by the Covid-19 global pandemic.
There are some trade-offs that need to be considered between building up long-term capacities and the short-term resource constraints. Flexible policy will be an essential tactic in order to achieve the right balance between these two factors.
Whilst green recovery might present risks to businesses and households, there are also opportunities. Some of the UK experts in the roundtable made the point that low-carbon development opportunities are strong stimulus for future growth, especially if we think about long-term development, shifting towards new technologies, and the manufacturing industries of those technologies. There was also a consensus to consider what the options for decarbonisation are more broadly and to try to find the key areas where Hungary might have a competitive advantage. What areas of development for instance would bring the largest benefits for Hungarian businesses?
3.Public sector investors should be leading on green investments.
It was raised by our UK experts in sustainable finance that the public sector should not be overlooked as a cost born through taxation of the economy, but rather an important partner as an ‘emission– oriented strategic investor’ or ‘lead stimulator’ of technical development. Through partnering with the public sector to invest in new technology, it will be important to then complement and support the development of private capital markets in Hungary, which have been historically under-developed (as elsewhere in Central Europe) to bolster long-term investment. The availability of risk capital, especially venture capital, is particularly limited.
4.Recycled funding for green recovery business schemes.
The focus on short-term stimulus packages has led to a lot of funding of emergency liquidity for businesses. This same funding schemes could be recycled into green recovery schemes over the next few years to take a longer green economic recovery focus for businesses.
5.Be wary of the ‘dirty’ activities that need to be restricted or phased out.
Whilst it is important to celebrate the significant moves being made in Hungary and the UK setting various targets and moving towards renewable energy, it was also acknowledged in the discussion that we must be aware of ‘dirtier’ activities which either need to be restricted or phased out as part of the transition.