Promoting Energy Security in Hungary: A Model-based Analysis

This paper evaluates Hungary’s energy security vulnerabilities and policy options in the context of Russia’s invasion of Ukraine in 2022 and the EU’s planned phaseout of Russian energy imports by 2027. Leveraging the IMF-ENV global computable general equilibrium model, the analysis simulates the energy security impacts of coordinated EU-wide instruments—such as carbon pricing and electricity market integration—alongside complementary national reforms, including fossil fuel subsidy removal, tighter energy efficiency standards, and accelerated renewables permitting. Results show that, taken together, these policies can significantly reduce Hungary’s import concentration, enhance supply diversification, and lower energy expenditure risks, thereby strengthening the country’s resilience to future external energy shocks.