Hungary pledges to divert AAU cash to green projects

AAU cash will be spent on cutting emissions rather than easing budget woes, the new cabinet said.

The pledge from Hungary’s reshuffled government, including a newly-installed prime minister and finance minister, comes amid repeated warnings from green groups about how the proceeds from last year’s sale of government emission rights will be spent.

Hungary raised around HUF 30 billion ($133.8 million) after selling 8.6 million assigned amount units (AAUs) to Belgium and Spain.

“We will spend all the (AAU) revenues on carbon dioxide reduction-related projects,” a spokesman with the Ministry of Finance told Point Carbon.

Earlier this week, Hungarian pressure groups called on new Prime Minister Gordon Bajnai to scrap plans made by his predecessor to freeze AAU spending and urged him to start funding carbon-cutting projects.

WWF Hungary said that plugging national budget holes with AAU money and delaying spending plans would discredit Hungarian climate efforts.

Too much to spend

The government spokesman said spending will start “soon” and there will not be any freezing of AAU revenue.

Earlier plans for withholding AAU revenue applied only to proceeds expected this year, and not to any of the money already cashed in, he said.

“It would be beyond the impossible to spend more money than the HUF 30 billion already raised, so there would be no point in freezing anything,” the spokesman added.

Ongoing projects

Green groups warned it is not enough to ensure money is put towards emission reductions but also that funding must be additional to business-as-usual plans.

The NGOs fear the cash-strapped government may replace national funding with AAU cash in ongoing projects in a bid to keep its budget deficit low.

The spokesman admitted the government will channel part of the money to ongoing projects, such as an energy-efficiency programme for residential buildings.

But that does not mean it will not be additional, because national funding of ongoing programs already had to be reduced due to budget cuts made amid the country’s economic crisis.

“With the economic crisis business as usual scenarios have been altered everywhere around the world,” he said.

Government officials with the Hungarian environment ministry said even if the government decides to top up funding for projects lacking national funding with AAU cash, there are regulations in place to prevent allocating more than 15-20 per cent of this money towards ongoing projects.