General

In 2005 the Hungarian Excise Tax Act was amended regarding the sale of biofuels. The amendment stipulated that from July 1, 2007 fuels with a 4.4 volume percentage bioethanol content will be sold in Hungary. It equally stipulated that from January 1, 2008 fuels with a 4.4 volume percentage biodiesel content will also be sold. Hungary’s stated 2010 biofuel objective is 5.75%, which is calculated in relation to energy content.  Two EU directives regulate the production and use of biofuels: for vehicles (directive 2003/30/EC) and the harmonization of energy taxes (directive 2003/96/EC). Directive 2003/30/EC sets minimum target levels for member countries to replace crude oil derivates by biofuels. The target use is 5.75 % by the end of 2010.

Share of biofuels in the total amount of fossil fuels placed on the market 3.75%. In 2009 the share of biofuels in annual fuel consumption for transport was 3.75 %; the share of bioethanol in petrol was 3.10 % and the share of biodiesel in diesel was 4.11 %, calculated on the basis of energy content (TJ).

Renewables in transport: biofules

In 2009 approximately 217 750 tonnes of biodiesel and bioethanol were used in Hungary (tonnes of 139 350 biodiesel and tonnes of 78 400 bioethanol), which gives a percentage of  3,75 % calculated on the basis of the energy content of all types of petrol and diesel used in transport.

The mandatory biofuel share must be achieved every month. On the basis of authorisation by law this proportion is regulated by Government Decree 138/2009 of 30 June 2009 concerning the implementing rules for certain provisions promoting the use of biofuels in transport (hereinafter 'Government Decree 138/2009'). If the required blending ratio is not respected and the registration and reporting 3 obligations are not complied with the authority imposes a fine. The fine (based on the energy content of the missing biofuel and on the purchase price of biofuel) will be an appropriate incentive for distributors to comply with their obligations. A penalty of maximum HUF 1 million shall be payable for failing to submit a report or submitting a report with unsuitable content.

From 1 January 2008 as a second step in introducing tax differentiation, two tax levels were established for diesel under the Hungarian standard in force for transport purposes: HUF 88.90 per litre or, if it contained at least 4.4 vol % biodiesel, HUF 85 per litre (Article 52(1)(d) of the Jöt.). In the case of the product E85 for fuel use containing bioethanol (minimum 70 % -maximum 85 %), under heading 3824 90 99 pursuant to the Hungarian standard in force (MSZ CWA 15293) no excise duty had to be paid on the bioethanol component even in 2009.

Tax differentiation for biofuels ended as of 1 July 2009. The intention behind the tax increase on fuels of 1 July 2009 was to eliminate tax differentiation based on biocontent for petrol and diesel in order to avoid the prior approval by the European Commission, which is necessary if changing tax while applying tax differentiation. At the same time, a different incentive had to be introduced to promote the use of biofuels for transport. The relevant regulation was passed in the framework of the same legislative packet that eliminated tax differentiation, thus ensuring the entry into force of the new regulation on 1 July 2009. HUF 79 per litre may be refunded on tax paid on biodiesel produced in biofuel tax warehouses authorised by the customs authorities.

. KEOP 4.6 was launched in 2009, providing support for setting up medium- and large-capacity bioethanol plants. The approved NREAP proposed a support framework of HUF 5 billion for 2009-2010 (19 Mio EUR). The maximum amount of aid may be HUF 1.5 billion (5.7 Mio EUR)  (bioethanol production plant), which may be increased by another HUF 1 billion for setting up a renewable energy block providing energy for bioethanol production.

MOL Nyrt., Hungary's largest fuel producer and an important supplier, is marketing fuels containing biocomponents. The biodiesel plant of Rossi Biofuel Zrt.- in which the MOL group possesses 26% shares – has capacity of 150 kilotonnes and is running  continuously in Komárom. The plant employing 39 employees and producing the biodiesel component (fatty acid methyl ester) was built with investment of approximately EUR 30 million. The basic activity of the Zrt. is production and marketing of refined oil on MOL sites, where Rossi owns the equipment. The undertaking has been operating continuously since 2008. Equipped with the most up-to-date technology, the plant produces biodiesel in compliance with the most stringent environmental requirements using rape seed oil, sunflower oil and used cooking oil. Glycerol, a by-product of the production process, is transferred to biogas plants or for other industrial use.

Europe's largest maize-processing bioethanol plant was opened in Szabadegyháza in Fejér County and, in addition to raw materials for the food industry, produces large amounts of bioethanol that has earned favorable environmental protection rating in the EU. Hungrana Kft.'s communication showed that the company spent around 100 million Euros on capacity building and is currently able to process 3 000 tons of raw materials a day, making it the largest maize-processing plant in Europe. Hungrana, which was created from the former spirit company, produces mainly starch, isosugar and alcohol from maize in its plant in Szabadegyháza, 25 kilometres from Székesfehérvár. The technological level of the company, which is 50-50 jointly owned by British-American Eaststarch and the Austrian AGRANA group, is in the forefront in Europe, but the capacity increase has made this Hungarian plant the most up to date in the sector in the EU. The company processes more than one million tonnes of maize a year and the plant which employs 285 employees made HUF 70 billion in revenue in 2009. Cooperating partners: Agip, Avia, Oil. Gyori Szeszgyár distillery in Gyor also has bioethanol production capacity (production of potable spirits), but the undertaking is still not present on the Hungarian biofuel market although, according to the plans of the Ministry of Rural Development, if small holdings producing raw alcohol are set up using aid there is a possibility of investment to expand capacity.

Future programme changes expected

The further development of biofules consumption in Hungary  has been envisaged in the NREAP: 202 ktoe of biodiesel in 2020 (144 in 2015) and    304 ktoe of bioethanol in 2020 (106 in 2015).

Irish technology entrepreneur Greg Turley (Pannonia Ethanol Zrt.) has emerged as a major backer of a €120 million ethanol production project in Hungary. It is building an ethanol plant in the town of Dunaföldvár in central Hungary, in conjunction with Fagen, a US firm that has built over 60 per cent of the ethanol plants in America. The plant is expected to be operational early in 2012. It will employ about 80 people when it is completed, taking in 575,000 tonnes of maize annually to produce 240 million litres of bioethanol, contributing to a more stable and long term market for Hungarian corn which will help increase rural incomes. The plant will also produce 175,000 metric tons of high protein animal feed that will be available to local farmers. In addition to the seventy-seven direct jobs being created, the project will indirectly support 250 jobs during the construction phase and over 600 once the plant is operational. The facility will use state of the art technology and produce some of the cleanest and most sustainable ethanol in Europe as measured by Greenhouse Gas reduction. The project will advance the EU’s goal for energy independence in the transportation sector. The U.S. company involved in the project, Fagen Inc., is the largest builder of ethanol plants in the United States and is noted for its use of cutting-edge technology, reliability, efficiency and safety.

Sources:

Report on the achievement of the national indicative targets for the use of biofuels and other renewable fuels in transport in 2010:

http://ec.europa.eu/energy/renewables/biofuels/ms_reports_dir_2003_30_en.htm

http://biofuelsdigest.com/bdigest/2011/05/02/cordiant-commits-17m-towards-hungarian-ethanol-project/

http://www.agra-net.com/portal2/home.jsp?template=newsarticle&artid=20017865838&pubid=ag072

http://www.xpatloop.com/news/us_investment_leads_to_bio-ethanol_plant_in_dunafoldvar

http://www.sbpost.ie/news/ireland/turley-backs-120m-hungarian-ethanol-venture-53972.html  

http://biofuelsdigest.com/

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