Budapest’s heat detox against all odds

Along the Danube and at the heart of the Pannonian Basin, Budapest is widely appreciated for its unique landmarks and its famous thermal springs. As part of the Mission cities aiming to reach climate neutrality by 2030, Budapest is also committed to enhancing quality of life and citizen wellbeing, while reducing emissions and protecting its environment. In its journey to become climate-neutral, Budapest faces challenges and opportunities well known by other eastern European cities.

Thermal baths and Geothermal heat: a dream detox

Buildings are the biggest emitters of CO2 in Budapest, responsible for more than 60% of the city’s emissions, mainly due to the high demand for heat. Budapest’s biggest potential to decarbonise its fossil-based district heating system lies on two key sustainable heat sources: geothermal energy and heat pumps utilising sewage water treatment. 

These sources tap into Hungary’s rich geothermal potential and the untapped energy within the city’s sewage treatment system. Together, they could significantly green Budapest’s district heating, projected to account for one third of its district heating supply by 2035, boosting the Hungarian capital’s journey toward climate neutrality.

District heating: challenges and opportunities

District heating (DH) has an essential role to play in Budapest's decarbonisation efforts, providing the city with the regulation capacity and a flexible framework to detoxify its heating infrastructure. However, to fully leverage this potential, efforts must be made to enhance its efficiency in addition to greening its sources. Historical inefficiencies and negative perceptions from the socialist era linger, making public trust a vital factor in expanding the system.

Although Budapest has identified geothermal energy and heat pumps as avenues for greening their district heating, success hinges on overcoming financial and regulatory barriers. The city needs billions of euros for the retrofitting of buildings, upgrading pipes, and expanding connections within the district heating network. Unfortunately, access to European Union funds for such projects is restricted, and Budapest’s hands are tied by the need for national government approval to secure loans. 

This creates a significant roadblock, as the government has been less supportive in helping acquire the necessary capital for long-term investments. These financial and regulatory challenges, coupled with the unpredictability of the policy environment (e.g. sudden and retroactive changes in the solar feed-in regulation), further hinder the city's ambitious decarbonisation plans.

Overcoming Eastern European obstacles

Budapest’s journey is further complicated by the legacy of high private homeownership—approximately 99% of dwellings are privately owned. This contrasts sharply with cities like Vienna, where public ownership facilitates large-scale infrastructure projects and makes the housing crisis less of an issue. In Budapest, public investment in district heating must navigate the complexities of engaging private homeowners.

Moreover, rebuilding citizens’ confidence in a historically inefficient district heating network, requires visible improvements in service quality, energy efficiency, and affordability. Budapest is working to modernise its infrastructure while fostering collaboration between key players such as the sewage and district heating companies, breaking down institutional silos.

Conditions for Success

For Budapest to realise its climate-neutral ambitions, three critical conditions must be met:

1. Predictable regulation: long-term, stable policies are essential to encourage investments from households and companies alike.
2. Blended financing scheme: comprehensive financial frameworks must combine public (EU sources) and private funds, providing support for retrofitting project`s and green technology adoption.
3. Technological integration and collaboration: Seamless cooperation between municipal entities and utility companies is crucial for aligning district heating with sustainable energy sources.

Main challenges to detoxify heat:

1. Securing the funding, of both national and EU origin.
2. High private ownership of dwellings, limiting the city in terms of public investments.
3. Dealing with the past reputation of district heating companies and regaining citizens’ trust.

Next steps:

1. SECAP followed by CCC financing plan identified the needed resources.
2. Budapest CARES project – Climate Agency for the Renovation of Homes. 
3. Detailed typology and cadastre of housing and other buildings to be created.
4. Survey of the Budapest homeowners’ attitude towards energy related issues.
5. New institution is established – Budapest Climate Agency supported by NZC.
6. Pilot projects targetting different types of buildings.
7. Design of an overall energy strategy for Budapest.
8. Exploring synergies among utilities (Sewage and DH company). 
9. Integration of PV and other renewable technologies.
10. Design of the Heat Transition Strategy.

Where Budapest is in the heat strategy:

Budapest's Heat Detox:

Key Heat Figures:

• Emissions related to heating: 60%
• Km of DHC currently: 571 km (singe direction)
• Percentage of renewables in the heating system: 10% (waste incineration)
• Budapest has the largest DHC in Hungary - 38% of the DHC market

Covenant Figures:

• Signatory to the Covenant of Mayors since 2008
• Emission reduction ambitions: 80% by 2030