Preserving the past, building the future: Budapest’s climate challenge

As a European crossroads of culture and a historical intersection of power, Budapest’s streets, food, ruin bars, historical monuments, castles, bridges and spas tell the story of Roman, Ottoman Turkish, Slavic, Jewish and Viennese influence. They have left their stamp on the city, the ‘Pearl of the Danube’, marking it with undeniable singularity and charm that captivates visitors from all corners of the globe. What is less apparent while strolling through the beautiful city, especially in the historic centre, are the climate consequences of Budapest’s built environment. This article looks at how the city is addressing some of the most impactful climate consequences through the NetZeroCities Pilot Cities Programme, led by EIT Climate-KIC.

Like many European cities, Budapest has a vastly outdated building stock, which is responsible for around 60% of the city’s carbon emissions. For Ada Ámon, Head of Department for Climate and Environmental Affairs in Budapest, tackling these has become a priority.

“Budapest is a huge source of emissions in Hungary, responsible for around 16% of the country’s carbon emissions. Around 60% of those are attributed to buildings. That means that around 10% of the total Hungarian emissions are somehow connected to the buildings in Budapest. It’s a climate issue, but it’s also a health and air quality issue,” says Ámon.

Building ownership vs sustainability?

The historical buildings that are part of the city’s cultural heritage present their own specific difficulties, as retrofits to such buildings carry extra legal and technical challenges. For example, installing rooftop solar panels is often questionable because of their particular tiles, roof stability, and potential visibility of the installations.

And the problems go beyond preserving historical buildings. Along with the challenges of upgrading the building stock are strong questions around ownership and where the money for upgrades will come from.

“After the collapse of the regime under the former Socialist Bloc, everyone began building their flats. This helped the municipality make quick money, to operate and refurbish outdated utilities. But this was also the will of the people, that was deeply important for families to own their homes. They provided an anchor for them,” explains Ámon.

The result of the forces at play in Hungarian society in the early 1990’s is that many buildings in Budapest are owned by private individuals or families who would bear the financial responsibility for retrofits. As the country with the lowest energy prices in Europe, motivations for Hungarian homeowners to invest in retrofitting is expectedly low, while the city budget has suffered from political wrangling with the central government.

Added to this is the challenge of low levels of public funding available for retrofitting private homes, which the city administration has decided to address, exploring creative and innovative alternatives.

Enter Budapest CARES – the Climate Agency for the Renovation of homES

Almost a quarter of Hungarian homes are situated within Budapest’s borders. According to Ámon, they represent the largest source of emissions on a national level, as well as the most difficult and costliest to address by the city. By supporting homeowners in retrofitting their homes, the city hopes to see accelerated rates of renovation in the city.

Budapest is one of the 112 cities participating in the EU Mission to deliver 100 climate-neutral and smart cities and the Pilot Cities Programme, led by EIT Climate-KIC. As part of the programme, Budapest will use the associated grant funding to set up a Climate Agency, focusing on the renovation of homes. The agency’s starting point is two parallel surveys.

“We are running a socioeconomic survey to understand who owns apartments and buildings in the city and whether they are single family homes, for example. The other survey will provide us with a technical overview of the typologies of buildings. We have a lot of historical buildings in Budapest that we need to preserve, but they are also a big challenge to our efforts to reduce energy consumption,” says Ámon.

When it comes to technical knowledge around retrofits, collaborating with other cities with similar challenges like Paris has been an opportunity for peer learning. Ámon looks forward to cooperating with other European cities to deepen this knowledge, especially cities with similar typologies and ownership landscapes.

The results of the surveys will be combined to give a comprehensive overview of the building stock and ownership to the newly established agency as a knowledge and data foundation for its work. The agency is an innovative institution itself, set up in collaboration with commercial banks and international financial actors:

“Based on the building typology and the household typology, we can create clusters of homogenous client groups that cumulatively represent a large saving potential and could be handled as a bigger market. These are easy targets for the banks and financial institutions. We will then invite the financial actors to develop schemes together to deploy the retrofits to these clusters,” explains Ámon. “At the same time, the Climate Agency [for the Renovation of Homes] was set up with a very clear purpose and mandate to act without the political and administrative restraints that the local government has.”

In its early life, the Climate Agency will be able to use this information to liaise with national and international financial providers. The financial solutions will be negotiated based on the results of the ongoing market research.

“We don’t yet have clarity on the specific financial mechanisms we can offer; what we can provide will very much be dependent on the grants (non-refundable resources) targeted at energy efficiency that we are able to offer, and we need to ensure that these will not be eaten up by all the middlemen involved in the upgrades. It will also highly depend on the technical requirements – for example, a prefabricated block of flats or a single-family home require very different approaches, and the difference in the required investment cost could be threefold by square metre,” says Ámon.

Agile governance and energy efficiency

A significant element of the pilot involves defining the financial mechanisms that the agency will be able to design. By the end of the two-years in the Pilot Cities Programme, the goal is that the agency will be making steady progress and will have amassed strong expertise on the housing market and potential financial solutions. In combination with strengthening relationships with the financial actors interested in Budapest’s housing market, the agency hopes to see some uptake of the new, tailored financial offers.

The second priority is to set up good working relationships with civil society organisations in the field of energy efficiency, like the Hungarian Energy Efficiency Institute, as well as in the field of energy poverty, like Habitat for Humanity or energy communities. In the long run, the agency’s goal will be to deal not only with energy efficiency, but also to promote the uptake of renewables and work within the wider energy management of the city.

“We hope to demonstrate that the agency is quicker and better equipped to navigate the financing of building retrofits than the municipality. We are very thankful to have the opportunity to set this up, and are excited and optimistic about its future,” says Ámon. “However, it’s important that we do not lose sight of what is needed in the long run, which is large-scale municipal reform. Climate neutrality requires much faster action than the municipality is able to deliver, so to really progress we need to introduce changes to municipal governance, not just in Hungary but across Central and Eastern Europe that address the slow and overregulated structure which has been only moderately adjusted to the new challenges over the last century,” argues Ámon.

The Budapest CARES initiative is an innovative and comprehensive approach to enhancing energy efficiency in housing and tackling energy poverty. Through the Climate Agency, administrative and political hurdles can be side-stepped, making it more likely to match the agility needed to meet energy efficiency targets. It is also a reminder that favourable governance at all levels is required for successful climate action in cities.

This article is part of EIT Climate-KIC’s #LiveableCities Campaign, where we explore the pathways to a climate neutral, just, and more beautiful future. By 2030, our goal is to help transform over 400 cities into thriving, climate-resilient communities. This campaign captures the stories and lessons of ambitious cities in Europe and around the world. We want to show a vision of what’s possible when cities and stakeholders come together to tackle the climate crisis.