Evaluation of the Hungarian DROP Plus Programme in light of sustainable development
The green growth concept offers an opportunity to reconcile economic/technological growth and sustainability, making it a realistic option for the world to avoid a global climate catastrophe in the future. Hungary has chosen this concept when it became the first country in the region is committed to a climate-neutral economy by 2050. Will the DROP Plus programme, which supports the country’s digital renewal, help or hinder the achievement of climate goals?
- Technological progress vs. environmental sustainability
Nowadays, there is a strong scientific consensus about global warming, which is mainly caused by human activities. Sustainable development aims to take urgent action to combat climate change and its impact, while trying to find a balance between economic/technological development, environmental protection, and social well-being. Therefore, the question arises: what is the relationship between economic growth and sustainability?
Is economic growth a barrier to sustainability, or can they work in parallel by complementing each other? Several theories have emerged in the economic literature analysing the relationship between environmental pollution and economic development.
In the 1970s, William Nordhaus pointed out that long-term growth is not constrained by depletion of fossil fuels or minerals because issues of scarcity can be solved by using more efficient production methods and alternative, renewable resources.
According to techno-optimism, based on Nordhaus’s theory, environmental impacts or emissions per capita are an inverted U-shaped function of per capita income, also known as the environmental Kuznets curve (EKC). The EKC is named after Simon Kuznets, who proposed that as economic development rises, the degradation of environment increases. However, once a threshold in economic development is reached, the degradation begins to subside.
While in some countries pollution has declined over the last 100-150 years as economic development has progressed, this is explained by rich countries just “outsourced” their climate pollution to poorer countries. This means that the EKC based on technological progress cannot be justified at global level. Based on our current knowledge, global economic growth may be associated with further increases in environmental pollution.
The green growth concept of the early 2000s, led by Nicholas Stern, regards fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. According to Stern, greenhouse gas emissions need to be cut by 3 % a year to keep global warming below 2 degrees Celsius.
At the end of the 2000s, a new school of ecological economics called degrowth emerged, who argued for a reduction in global consumption and production. This line of thought advocates for a socially just and ecologically sustainable society with social and environmental well-being replacing gross domestic product (GDP) as the indicator of prosperity. Degrowth supporters argue that at current growth rates, greenhouse gas emissions should fall by an average of 7% per year to return to 2000 levels by 2050.
Overall, the techno-optimist and radical degrowth approaches offer too permissive and overly restrictive solutions to the impacts of climate change, and they have a number of drawbacks.
Techno-optimism underestimates the environmental, economic and social consequences of global warming, while degrowth rejects the possibility of sustainable economic growth and takes an extreme approach to tackling climate change.
The golden mean seems to be green growth, which is a realistic growth option for the world. Under this approach, economic growth and sustainability could go hand in hand in a mutually supportive way through green growth and green innovation, avoiding global climate catastrophe.
- Green growth opportunities in Hungary
By adopting the Climate Protection Act in 2020, Hungary was the first country in the region to support achieving full climate neutrality by 2050, as set out in the 2015 Paris Agreement. As a first step, the National Clean Development Strategy was adopted in 2021, setting out a path for the Hungarian economy to become fossil fuel-free by 2050. The strategy sets out three possible scenarios for projecting greenhouse gas emissions up to 2050:
1) Business-as-Usual (BAU): this scenario is a benchmark, assuming that all current sectoral policies and measures remain in place and no new measures are taken.
2) Deferred Action (DA): this scenario envisages a later and slower pace of emission reductions in the energy sector until 2045, i.e. a less ambitious effort.
3) Early Action (EA): this scenario projects the achievement of net carbon emissions by 2050, while also exploring the short and medium-term benefits of job creation and mitigation of environmental externalities and the economic potential of early action, higher productivity and faster GDP growth.
Under both climate neutrality scenarios examined, net zero emissions are achievable by mid-century, but the clean energy transition takes place at different rates under different assumptions and their socio-economic impacts differ.
The final results showed that although the EA scenario requires stronger emission reduction efforts, increased investment will boost the country’s economic growth and generate most of the associated benefits.
Achieving net zero greenhouse gas emissions by 2050 will require efforts in areas such as digital renewal, research and development and innovation, and appropriate education and training programmes.
- Evaluation of DROP Plus programme in terms of climate change impacts and greenhouse gas mitigation
Efforts in the field of digital renewal, R&D and innovation are supported by the Digital Renewal Operational Programme Plus (DROP Plus), which has the overall aim of improving Hungary’s digital readiness and competitiveness. The programme includes significant developments that has a positive impact on Hungary’s citizens, businesses and the digital readiness of public administration. The Operational Programme responds to current and emerging global, technological, security and sustainability challenges, thus strengthening digital transformation.
DROP Plus consists of four priority axes:
3.1. ) A smarter Hungary
This priority axis essentially targets two different groups. One part of the development supports the entrepreneurial sector, promoting the digital transformation of domestic enterprises and encouraging R&D and innovation activities.
The other group of improvements grants for the service-oriented improvement of public services and the creation for e-administration.
In the case of both directions of intervention, the spread of digitalisation, the expansion of e-administration, and in particular the development of independent administration and work, will create and expand the conditions for online administration.
On the citizen’s side, this directly reduces the need to travel for administrative purposes, while on the other hand it creates opportunities for businesses and public administrations to introduce a lower mobility work organisation and may eliminate the need to physically move for certain work processes. Ultimately, the measures under this priority axis will help to reduce greenhouse gas emissions from transport by reducing travel demand.
3.2. ) Hi-tech and green transition
The priority axis includes environmentally forward-looking developments. The developments are awareness-raising and training tasks in a number of sectors and areas of activity (energy efficiency improvement, renewable energy use) that has particular importance from a climate protection perspective.
In the area of greenhouse gas emissions, the most important developments in this priority axis are in the energy sector and in the circular economy.
3.3) Hungary connected
The priority axis supports network infrastructure development. This means the development of gigabit-capable network infrastructure, with significant improvements in both wired and wireless network coverage.
The priority developments create the potential for more climate-friendly economic organisation and transport modes, but the programme has little impact on the actual occurrence of this, which is one of the key external criteria for its effectiveness.
3.4. ) Digital Citizenship
The priority axis covers partly improving the conditions for digital education, partly developing digital competences, and partly developing some IT in the healthcare system. All these have relatively little direct relevance to climate change. At the same time, it is worth mentioning that telemedicine and e-health solutions provide an opportunity to optimise patient logistics, thus shortening patient journeys and reducing the impact of climate change.
- Conclusion
The golden mean between techno-optimism and degrowth is green economic growth, and this is the path Hungary is following with the goal of achieving full climate neutrality by 2050. We do not yet know which of the two decarbonisation scenarios outlined in the National Clean Development Strategy the country will eventually implement, but we can be sure that digital technological developments will definitely contribute to the ambitious targets.
The operation of expanded systems developed as a result of DROP Plus will result in additional energy demand, potentially leading to an increase in greenhouse gas emissions.
In this respect, however, the climate change impacts of DROP Plus developments are virtually independent of the programme itself, as it is ultimately the technology of electricity generation that determines the extent of the greenhouse gas impacts of the developments.
If, based on the two decarbonisation scenarios described in the National Clean Development Strategy, 90% of Hungary’s electricity generation will be based on carbon neutral technologies by 2030, and electricity imports – potentially high carbon intensive – will be reduced compared to today, the additional energy demand generated by the DROP Plus developments will not be accompanied by additional greenhouse gas emissions.
The conclusion is that in the future, thanks to technological progress, economic growth and sustainability may even become catalysts for each other. Green innovations can help the former adversaries to mutually reinforce each other, thereby preserving the Earth’s natural resources , and thus the well-being of future generations.
DROP Plus Programme: https://www.palyazat.gov.hu/digitalis_megujulas_operativ_program_plusz
DROP Plus SEA: Operational Programme for Digital Agenda for Europe Plus (DIMOP Plus) SEA Report | Széchenyi Plan Plus (gov.hu)
Economic growth and sustainability: enemies or catalysts? https://klimapolitikaiintezet.hu/elemzes/gazdasagi-novekedes-fenntarthatosag-katalizator
National Clean Development Strategy: https://kormany.hu/dokumentumtar/nemzeti-tiszta-fejlodesi-strategia