Hungary faces energy crossroads amid EU’s Russian gas ban
The European Commission’s latest plans could have a major impact on Hungary, which still relies heavily on Russian energy sources. The European Union’s 2027 target to completely eliminate Russian gas imports raises serious questions about Hungary’s future energy security and economic stability. The new roadmap, which has been updated under the REPowerEU programme, is not only a symbolic step by the EU but also sets out a forced path for member states, including Hungary.
Hungary’s energy economy has been heavily dependent on Russian gas for many years. For decades, low-cost, piped supplies have provided a stable base for both industry and domestic supply. Although some diversification has started in recent years (for example, through access to LNG terminals), the share of Russian imports remains dominant. According to Brussels’ plans, Hungary should also submit a concrete roadmap by the end of 2025, showing how it will gradually withdraw Russian gas, oil and nuclear feedstocks from its energy supply. This poses significant challenges, especially when taking into account energy-intensive sectors of the Hungarian economy, such as chemicals and manufacturing.
Direct impacts: energy prices and economic pressures
For domestic residents and businesses, the most tangible impact may be the increase in energy prices. Energy from alternative sources, such as US LNG, is much more expensive than the current price of Russian pipeline gas. According to Index, the price increase would indirectly affect almost all sectors: it could increase utility bills, make goods and services more expensive and reduce household purchasing power. In addition, the competitiveness of exporting companies could be weakened, as energy costs play a key role in global price competition.
Following the announcement in Brussels, the reaction of markets was already noticeable, with the forint weakening significantly against the euro to above 406. Analysts said that concerns about the future of energy supplies were partly behind the weakening. More expensive energy imports will worsen Hungary’s current account, as it will have to pay more for imported energy, while exporting sectors may find themselves in a more difficult situation. In the long run, this could slow economic growth, reduce investment and increase inflationary pressures.
Alternative solutions and the future of nuclear energy in Hungary
Hungary has several possible directions to take, but all require significant investment and quick decisions. One way is to look for alternative suppliers, for example by expanding gas imports from Azerbaijan, Qatar or Norway. Another option is to increase the share of renewable energy sources such as solar and wind power, although these take time and require infrastructure development. Regional cooperation could also play an important role, for example, in joint energy infrastructure developments with Central European countries (e.g. interconnectors, joint storage, LNG terminals).
Hungary’s situation is further complicated by the fact that the expansion of the Paks Nuclear Power Plant (Paks II project) is planned to be implemented using Russian technology. The restrictions imposed by Brussels may also impose restrictions on nuclear fuels, which may call into question the realisation of the project or at least make it significantly more expensive. In the long term, this will pose new challenges not only for energy security but also for Hungarian energy policy independence.
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