Chapter 3: Hungary

3.1 Summary of Findings

Annual environmental expenditures in Hungary amounted to USD 258 million in 1994 (0.76 percent of GDP), and USD 385 million in 1995 (1.1 percent of GDP). Today, expenditure on water protection accounts for 55 percent of the total, while spending on air protection accounts for 15-16 percent, and waste management for 12 percent. During the next six years, the share of air protection expenditures is expected to double, while the share of waste management is expected to rise to 19 percent.

A major change is expected in the financing of environmental protection. Currently, some three quarters of environmental expenditures come from the state budget (including the Central Environmental Protection Fund), while businesses contribute only 9 percent. It is expected that in the forthcoming six years the share of the state budget will decrease to 55 percent, while the share of the business sector will grow to 40 percent.

The energy sector is the main source of air pollution (SO₂, NO_x, solid particles, and CO), although emissions from transportation and vehicles have also become a growing source in Budapest and other cities. Municipal waste generation has doubled over the past 15 years. About 85 percent of municipal waste is landfilled. There are 602 official landfills operated in Hungary, with an estimated 2,000 more operating illegally. It is expected that most landfills will reach capacity in the near future. Many landfills do not meet required standards. The disposal of hazardous waste is one of the most pressing problems. A significant proportion of hazardous waste is stored on-site at the source in so-called temporary storage facilities. Currently, 96 percent of the Hungarian population has access to the water supply system, but only 53 percent are connected to sewage systems. Poor water quality is a frequent problem. 54 percent of wastewater is discharged untreated, while only 36 percent is treated mechanically and biologically. The government plans to treat 90 percent of all wastewater by the year 2010.

The Hungarian market for environmental technologies was estimated to be worth between USD 164 and 192 million in 1994, and between USD 127 and 289 million in 1995. Significant project opportunities are expected in wastewater treatment, in the energy sector, and in air quality protection and waste management. Project opportunities will result from the major environmental problems such as catalogued and uncatalogued hazardous waste disposal sites; municipal and industrial wastewater pollution of surface and groundwater reserves; and emissions and noise from transportation. Demand for environmental technologies is also driven by national environmental priorities, environmental regulation, and available state funding and subsidies.

Based on the above, demand for environmental technologies in the following areas is expected to grow in the near future: monitoring systems for water, air and noise; remediation work on hazardous waste dumps; treatment of municipal solid waste and wastewater; treatment of industrial solid waste and wastewater; energy efficiency improvements; and reducing emissions to air and noise from transportation. Currently, end-of-pipe technologies are mostly used to solve the above problems, but the significance of preventive solutions is expected to increase.

There is no institution or clearinghouse in Hungary collecting information about environmental business opportunities. Personal and professional contacts are the main source of information. Business and environment-related publications, as well as participation in environmental trade fairs and conferences are other important sources. The public procurement procedure currently in force is a potentially important way to identify business opportunities.

Purchasing environmental technologies does not pose any significant problem in Hungary because of the wide range of products available on the market. The major ways of gathering information when buying environmental technologies include: personal and professional relations; industry associations; fairs and exhibitions; journals and catalogues; the foreign owner or parent company; and references.

In most categories, demand for environmental technologies in Hungary was estimated to be between moderate and high. Significant demand was identified for energy-related technologies, and for technologies related to industrial wastewater treatment and the treatment and disposal of hazardous and radioactive waste.

High demand in the air sector was identified for instrumentation and process control/software, while growing demand was expected for technologies for air sampling/laboratory analysis of gaseous emissions, and for air pollution control/flue gas purification equipment.

Demand for environmental technologies related to water and wastewater was moderate. The most needed technologies in this category were for industrial wastewater treatment. High demand was identified for sludge treatment and disposal technologies for industrial and municipal wastewater. Specific technologies where demand is expected to rise included those for the construction of collection networks for municipal and industrial wastewater; water recycling and reuse for potable water and industrial wastewater; spill control and containment/clean-up for surface and groundwater; instrumentation, process control, and software for industrial wastewater; standard and advanced treatment technologies for industrial wastewater; and inspection and reconditioning of existing wastewater collection networks.

Waste management appears to be one of the most promising environmental market sectors in Hungary. Significant opportunities are expected in hazardous waste disposal, followed by radioactive and industrial waste management. High demand was identified for technologies for site remediation/ clean-up of contaminated land for hazardous waste; and for radioactive waste, equipment for sample analysis/waste characterization; site monitoring; and waste collection, transportation and storage. Demand was expected to rise for pollution prevention/waste minimization equipment for industrial and hazardous waste; technologies for recycling/resource recovery for industrial waste; technologies and equipment for waste collection, transportation and storage of hazardous waste and hazardous waste site monitoring; and technologies for spillage control/decontamination for hazardous waste.

Demand for energy-related technologies was generally high, especially in comparison with other environmental sectors. High demand was identified for instrumentation and equipment for retrofitting/rehabilitation of existing systems. Demand was found to be increasing for equipment related to process management and control; new and efficient energy and heat generation systems; and technologies related to heat recovery and energy savings. Many experts noted that there were significant market opportunities in decreasing energy losses in production processes, transmission, and consumption.

In the noise, vibration and occupational health and safety sector, high demand was identified for abatement technologies (e.g. insulation, absorbtion), and for protection equipment in the occupational health and safety sector. Increasing demand was also identified for noise and vibration abatement technologies for the construction industry.

The energy/power generation sector and municipalities are the main end-users of environmental technologies in all categories. The chemical industry, and other raw material extraction and processing industries are also significant end-user groups. Additionally, the transport sector was identified as a significant user of technologies for air pollution control, and noise and vibration abatement. Water and wastewater, and waste management technologies were widely used in the mining sector, agriculture and food processing, and textile industry.

Five out of six respondents considered product quality and references major factors when making purchasing decisions. One interviewee in six preferred domestic technology whenever possible. Among those respondents buying foreign environmental technologies, about half buy directly from a foreign supplier, while the remainder buy from local representatives. With the growing number of local representatives, local buying is on the rise.

About 50 percent of respondents specified high quality, and reliability and durability of products as advantages of foreign environmental technologies. A third of respondents thought that foreign environmental technology products offer good value for money, and are user-friendly and easy to operate. Also, a third of respondents regarded available credit or other forms of funding from a foreign supplier as a major advantage. Opinions were divided about the quality of after-sales service.

The major barrier to buying foreign environmental technologies in Hungary is the price. 80 percent of respondents mentioned high prices as a major disadvantage of foreign products; about a quarter regarded foreign technologies as unsuitable for local conditions and technical culture. Other barriers cited (about 15 percent of respondents) included high customs duties, changing environmental regulations, difficulties to ensure local technical service, communication problems with foreign suppliers (mainly language), and the lack of information available about suppliers.

Domestic environmental products and services are only available on a limited scale, and foreign environmental technologies are frequently used. Austrian and German environmental technologies enjoyed good to excellent reputation in air, water and wastewater, waste management, and energy sectors. The perception of American technologies was good in the water and wastewater, waste management, energy, and noise, vibration, and OHS sectors. Dutch technologies were rated highly in the water and wastewater and energy sectors. French products were evaluated highly in the water and wastewater, and waste management sectors.

Austria and Germany are the major players on the environmental technology market in Hungary, followed by Holland, France, USA, Japan and Scandinavian countries. Foreign companies are most active in the energy, water and wastewater, and waste management sectors, followed by air protection. In air, and the related energy sector, German, Austrian, and American companies are most active. German firms dominate the water and wastewater sector, followed by Austrian, French and American suppliers. In the waste management sector, German, Austrian, French, and American companies seem to be represented quite evenly.