Following the summer break, the Oeconomus Economic Club has resumed. Its latest event, held on 11 September, was titled “European Energy Security in an Era of Global Turbulence”. All participants agreed that high European energy prices needed to be addressed urgently as the continent was falling behind in global competitiveness as a result, to name just one consequence. In addition, there were opinions that approached the question of European energy security from less common angles, highlighting the thought-provoking and productive nature of Oeconomus Economic Clubs.
Opening the event, Péter Törcsi, Chairman of the Board of Trustees at the Oeconomus Economic Research Foundation said that energy is a crucial issue in Central Europe. We still haven’t had the chance to fully diversify our energy sources, but the Hungarian government as well as other regional governments are working on it, as exemplified by the recently announced gas supply deal between Hungary and Shell.
In his keynote speech, Viktor Horváth, Deputy State Secretary for Energy Transition at the Ministry of Energy presented the main trends in energy at the EU as well as the Hungarian level. Europe has very little energy sovereignty compared to the US and China. Around two thirds of its energy sources are imported, which is approximately the ratio in Hungary’s case too. Oil and petroleum products account for around 55-57 per cent of the EU’s imports, while natural gas constitutes 25-30 per cent of its imports. There have been no major changes in this regard over the last 5-8 years, which shows that it takes a long time to wean off fossil-based fuels. In Hungary, the extraction of gas compared to the level of consumption is high, around 25-30 per cent. Oil production is much lower, but still higher than the EU level.
Electricity is the only energy source that is not imported at the EU level. Electricity produced in the EU is also consumed here. The volume of energy exports and imports between EU member states is quite low. Only Estonia and Latvia don’t really import energy sources and rely on their own production. In terms of electricity – an upcoming energy source for both industry and the population – the figures in Hungary are not too good, as around 20-25 per cent of electricity consumed is imported. This can be managed, but the problem is that during certain periods of the year – the early evening hours in summer – the import ratio is higher than 60 per cent. It’s important to bring this proportion down.
Regarding fossil fuel imports, the Hungarian government has a diversification strategy, within the framework of which the gas deal with Shell was signed a couple days ago. The agreement is about purchasing 2 billion cubic meters of gas over 10 years (Hungary’s yearly gas consumption is around 8 billion cubic meters). We also have a contract with Azerbaijan for nearly the same amount of gas on a yearly basis as the Shell deal. The Deputy State Secretary pointed out that as a landlocked country, Hungary has to rely on pipelines, and in this regard the Croatian transit fees are about three times higher than the average rate in the EU; however, we have no choice but to rely on Croatia.
Will renewable energy be a game changer, both at the EU and state level? Looking at electricity, even Germany has quite a high import ratio. The issue is how to handle the weather dependency of renewable energy sources. Storage solutions would require large investments not only from states but also private companies. In Hungary, we won’t be able to fully rely on renewable energy sources; we also want to use nuclear power, which is one of the greenest energy sources.
Óki Sugimoto, First Secretary at the Embassy of Japan in Hungary highlighted two aspects of energy security that are important for Japan. One has to do the public perception of nuclear energy in the wake of the Fukushima accident in 2011. Following the accident, all nuclear power plants in the country were closed. Before 2011, almost 20 per cent of Japan’s energy was generated by them; now it’s around five per cent. The public perception of nuclear energy continues to be bad. The other aspect is geopolitics: Japan faces geopolitical risks from neighbouring Russia, China and North Korea. Like Hungary, Japan also doesn’t have energy resources, so it imports them mainly from Gulf countries, but also Australia and the US. The long way these resources have to travel poses further risk.
Dominik Lelkes, Co-Founder of Export Analytica, an independent Slovak analytical platform stressed that for Slovakia, the question of energy is perhaps even more important than for other EU countries due to its geographical location. Slovakia has always been a proponent of nuclear energy; in terms of nuclear energy production, Slovakia’s rate is 60 per cent, ranking second in the EU. Regarding renewable energy, at around 20 per cent, Slovakia is just below Hungary and below EU average, but the government is trying to increase this ratio. Before the war in Ukraine, Slovakia was fully reliant on Russia for gas; today, gas accounts for around 24 per cent of its energy mix, with Russia still being a major supplier. The government, like in Hungary, keeps electricity prices low, resulting in Slovak electricity prices being the second lowest among the V4 countries. In regards to gas imports, Slovakia was hit hard when the contract between Ukraine and Gazprom ended. The government decided to diversify, and is now buying energy from Africa, the US, Qatar, Poland and Croatia. Dominik Lelkes emphasised that Hungary has also been very supportive in this regard.
Szabolcs Pásztor, Director of Research at the Oeconomus Economic Research Foundation pointed out how little energy sovereignty Europe has by citing figures relating to business demography. In the 1970s, there was much talk about the so-called seven sisters: five big American energy companies and two big European ones. At that time, the energy landscape was balanced. However, the situation in 2025 is different: in terms of market capitalization, in the top 10 there are only 3 European companies; in the top 20, there are only 4; in the top 30, only 7, and in the top 70, only 10. We don’t have large energy companies, which clearly shows Europe’s weakness in this sector.
Mihály Tatár, Senior Analyst at the Oeconomus Economic Research Foundation talked about the European green strategy, likening it to the fugayzi mentioned in the movie The Wolf of Wall Street, which means a fairytale or a pyramid of promises that can’t be kept. Recent news about European steel companies begging the EU to impose tariffs on Asian competitors otherwise they’ll be forced out of business, or European chemical companies leaving the continent in waves highlight the damaging impact of the European green strategy. Despite this, yesterday Ursula von der Leyen, the President of the European Commission talked about deepening the green transition. In contrast, Mihály Tatár stressed that Europe must end the fugayzi and return to market-based mechanisms, allowing companies to innovate and compete without telling them what to do.
The participants of the discussion agreed on a number of points, e.g. that Europe is in trouble because it’s lost its competitiveness due to high energy prices, and that it needs cheap and abundant energy to be able to compete with the US and China. Several participants said that cutting Russia out of Europe’s energy supply was a mistake that has led to high energy prices. It was mentioned that in the EU, taxes on fuel range between 40-60 per cent, whereas in the US the average fuel tax is no higher than 20 per cent. This is also a matter of philosophy, as the participant stated, whether to overtax and ration fuel, or to channel it into abundance and resilience. Artificial intelligence was also mentioned in the context of energy consumption growing globally, with AI being a significant contributor, and this is a challenge that the EU can’t answer at present.
During the event, there were also comments that differed from the usual narratives about energy security. An economist stated that diversification is the enemy of low energy prices, and is for political safety. He pointed out that in speeches made by leaders of our main competitors, China, the US and India, we don’t hear about diversification, as they follow a different strategy than Europe. Another participant questioned the economic viability of Western nuclear power plants, given that, for example, in France or the US their construction always goes over budget. By contrast, ex-Soviet and Chinese nuclear power plants are immediately economically viable, meaning the ex-Soviet plants in Hungary and Slovakia are also viable. In fact, he believed Hungary could become a major regional nuclear energy exporter in the long term if it focused on becoming one. A participant with a background in microeconomics highlighted the importance of the fact that from a business perspective, once energy is secured, the next step to consider is how to operate efficiently. Hungary’s success in utilising solar energy was mentioned too, and in relation this, the question of using geothermal energy on a wider scale also arose, since we have good potential in this area too. Furthermore, geothermal energy could contribute to local sovereignty in some regions, not only in Hungary, but in Europe as well.
