9. Financing the circular economy transition

Abstract

This chapter provides an overview of public funding mechanisms to facilitate the circular economy transition in Hungary, including direct and indirect EU funding as well as other international and national financing opportunities.

    

9.1. Financial resources are needed to drive the circular economy transition

The transition to a circular economy needs resources to drive the uptake of new business models, support the development of innovative technologies and motivate behavioural change within society. Governments can support the transition to a circular economy by using specific economic instruments.

Economic instruments provide important market signals, which can influence the behaviour of producers and consumers. Implemented across different life cycle stages, they help internalise environmental costs in decisions made by firms and households, and help establish incentives to change behaviour. They may also stimulate greater innovation in technologies and can generate revenues for specific environmental objectives and funds. The economic instruments that can facilitate the circular economy transition in Hungary include taxes on construction aggregates and primary plastics packaging, PAYT-based charges for municipal waste, landfill taxes, as well as EPR schemes and GPP, as presented in chapters 5, 6 and 7.

An additional way for governments to help reorient market forces towards a circular economy is through the use of incentive subsidies. Financing circular economy projects and initiatives through grants and loans helps decrease the cost of capital for circular investments and helps overcome financial and information barriers. Public funding can thereby stimulate the development of new circular business models, innovative technologies and strategic partnerships. This chapter provides an overview of the public funding available to stakeholders in Hungary to hasten the uptake of circular economy practices.

9.2. Principal EU funding instruments

The EU is providing several funding programmes covering a wide range of areas including the circular economy.1 The three principal funding instruments for the transition to a circular economy include: shared management funds, the Horizon Europe programme, and the LIFE programme.

Shared management funds are EU funds that are shared with Member States and regions. These include the European Structural and Investment Funds (ESI funds), in particular, the European Regional Development fund (ERDF), the European Social Fund Plus (ESF+), the Cohesion Fund (CF), and the Just Transition Fund (JTF) (European Commission, n.d.[1]). The operational programmes, co-funded through shared management funds and by the Hungarian Government, target a number of circular economy topics (Government of Hungary, 2022[2]; Government of Hungary, 2022[3]) (see Box 9.1 for more details) such as:

• The Environmental and Energy Efficiency Operational Programme Plus (EEEOP Plus) aims at reducing environmental pollution and the excessive use of resources, and protecting biological diversity and prioritising the circular economy.

• The Economic Development and Innovation Operational Programme Plus (EDIOP Plus) aims at increasing the competitiveness of the domestic economy by making the SME sector more resilient, developing the R&D&I ecosystem, improving the adaptability of domestic workers, and ensuring a high quality workforce.

• The Digital Renewal Operational Programme Plus (DROP Plus) aims at improving the country’s digital readiness and competitiveness, among others, through a green and hi-tech transition promoting the uptake of digital solutions and the shift to a climate-neutral, circular and more resilient economy.

• The Territorial and Settlement Development Operational Program Plus (TSDOP Plus) aims at improving the development of regions and counties, with a focus on climate awareness and adaptation to climate change, liveable settlements, and sustainable urban development strategies, among others.

Horizon Europe is the EU’s Research and Innovation programme with a budget of nearly EUR 100 billion, running until 2027. This includes almost EUR 5.5 billion from the NextGenerationEU (NGEU) instrument to support greener, digitalised and more resilient societies and economic recovery from the COVID crisis. The budget is divided among 4 pillars and 15 components to support several areas of research and innovation (R&I). The “Global challenges and European industrial competitiveness” (pillar 2) comprises a cluster that also targets the circular economy (European Commission, n.d.[4]):

• Cluster 6 “Food, bioeconomy, natural resources, agriculture and environment” covers the following areas of intervention: environmental observation, biodiversity and natural resources, agriculture, forestry and rural areas, seas, oceans and inland waters, food systems, bio-based innovation systems in the EU’s bioeconomy, and circular systems.

Additionally, several partnerships have been established under Horizon Europe to address some of Europe’s pressing challenges. One of these partnerships relates to the circular economy:

• The Circular Bio-based Europe Joint Undertaking (CBE JU) is a public-private partnership between the EU and the Bio-based Industries Consortium, which funds projects to strengthen competitive, circular bio-based industries in Europe (Circular Bio-based Europe Joint Undertaking, n.d.[5]).

The LIFE programme is the EU’s funding instrument for the environment and climate action with a budget of EUR 5.4 billion for the funding period 2021-2027. It has four sub-programmes, one of which covers the circular economy (European Commission, n.d.[6]).

• The “Circular economy and quality of life” sub-programme co-finances projects in the area of circular economy, including the recovery of resources from waste, as well as projects concerning water, air, noise, soil and chemical management, and environmental governance.

Box 9.1. Hungary's Operational Programmes for 2021-2027

Environmental and Energy Efficiency Operational Programme Plus (EEEOP Plus)

The EEEOP Plus is the continuation of the previous EEEOP under the new framework for the period 2021-2027 (as illustrated in Figure 9.1). Its priorities include:

• Water management and disaster risk reduction

• Circular economy systems and sustainability

• Protection of the environment and nature

• A renewable energy economy

• Just transition

The overall budget of the Operational Programme (OP) is HUF 1 612.56 billion (EUR 4.3 billion), with HUF 411.97 billion (EUR 1.1 billion) allocated to the priority covering circular economy systems and sustainability, among others, such as:

• The waste management objective funds projects with a focus on: i) improving the existing separate waste collection system; ii) supporting waste recycling and the production of high quality secondary raw materials; iii) developing new waste management centres and upgrading existing ones; iv) optimising municipal waste collection and transport; v) supporting residual waste facilities; vi) rehabilitating abandoned old landfills; and vii) active, experience-based, community-building awareness-raising activities.

• The circular economy-related objective is a new topic of the OP. Its aim is to pave the way for a circular transition through small-scale investments targeting mainly SMEs. The funding focuses on: i) service provision; ii) promoting decoupling of raw material consumption and GDP growth; iii) building value chains/value circles; and iv) developing new business sectors and business models. It targets a diverse range of projects, translating circular economy principles into practice (from both upstream and downstream perspectives), as well as awareness-raising activities and small demonstration/pilot projects.

Figure 9.1. EEEOP Plus and its precursor EEEOP

Source: Hungary’s Prime Minister’s Office.

The indicators and targets for these two objectives are summarised in Figure 9.2.

Figure 9.2. Indicators and targets of waste and circular economy related actions within the EEEOP Plus

Source: Hungary’s Prime Minister’s Office.

Economic Development and Innovation Operational Programme Plus (EDIOP Plus)

The EDIOP Plus is the continuation of the previous EDIOP under the new framework for the period 2021-2027. The programme includes 6 priorities:

• Business development

• Research, development and innovation

• Sustainable labour market

• Youth guarantee

• Higher education and vocational training

• Tourism and heritage protection

Various aspects of waste management are covered in parallel by resources of the EEEOP Plus, the Recovery and Resilience Facility (RRF) and the EDIOP Plus. While the EEEOP Plus and RRF support the improvement of existing and new waste management systems, respectively, the EDIOP Plus launches actions through the Green National Champions programme to support the production of secondary raw materials and products containing such materials, as well as the transition to substitute products, manufacturing processes related to e-mobility, and energy and water savings. The budget represents HUF 30 billion (EUR 75 million) to be disbursed as grants (with a self-funding of minimum 50%) to eligible SMEs across the following activities: i) new tools for technological improvement; ii) acquisition of new technologies; iii) manufacturing licence/know-how; iv) investment in infrastructure and real estate; v) resource efficiency investments to supply production processes and on-farm installations energy needs; vi) experimental development; vii) acquisition of consultancy services; and viii) information technology development.

Source: Hungary’s Prime Minister’s Office, and Hungarian Government (2022[2]; 2022[3]; 2022[7]).

9.3. Other financing opportunities at the EU level

Hungarian stakeholders could benefit from a number of other funding opportunities for the circular economy transition.

• Interreg is a funding instrument to support cross-border, trans-national and interregional co-operation, as well as for outermost regions. It seeks to tackle common challenges and find common solutions in several areas (European Commission, n.d.[8]). “Interreg Europe” strives for better regional governance through capacity building in a number of topics, including for a smarter and greener Europe (total budget of EUR 379 million). “Interreg Central Europe” aims to improve capacities for regional development in innovation, carbon dioxide reduction, protection of natural and cultural resources, and transport and mobility (total budget of EUR 246 million).

• Single Market Programme (SMP) has been designed to help the single European market reach its full potential and ensure Europe’s recovery from the COVID-19 pandemic. With a budget of EUR 4.2 billion over the period of 2021-2027, and an additional EUR 2 billion allocated under the InvestEU Fund, the objectives of the programme include food safety (40% of total budget allocation), support to SMEs (24% of budget allocation), strengthening the single market (13% of total budget), and high quality European statistics (also 13% of total budget) (European Commission, n.d.[9]).2

• The New European Bauhaus (NEB) is a creative and interdisciplinary initiative connecting the European Green Deal to living spaces and experiences. With a budget of EUR 85 million funded by different EU programmes (such as Horizon Europe, LIFE and ERDF), it aims to provide citizens with access to goods that are circular, less carbon-intensive, support the regeneration of nature and protect biodiversity (European Commission, 2021[10]).

• The Digital Europe Programme (DIGITAL) is a new EU funding programme. It aims to accelerate economic recovery and shape the digital transformation with its focus on businesses (especially SMEs), citizens and public administrations. Although the scope of this programme is much broader, it also supports the goals of the Green Deal and the Circular Economy Action Plan (European Commission, n.d.[11]).

• The Innovation Fund (IF) targets the commercial demonstration of innovative low-carbon technologies. It also funds projects that bring about other environmental benefits within the framework of the European Green Deal, among others, related to the circular economy (European Commission, 2022[12]).

• The Recovery and Resilience Facility (RRF) is a temporary recovery instrument that helps finance reforms and investments in Member States (from February 2020 to December 2026). Hungary’s Recovery and Resilience Plan foresees the implementation of reforms and investments to drive the transition to a circular economy (component G). These include an investment of HUF 120 billion (EUR 335 million) to develop the waste management infrastructure and an investment of HUF 86 billion net (EUR 240 million) to strengthen intelligent, innovative and sustainable industry and the secondary raw materials market. Altogether HUF 103 billion (EUR 287.7 million) of circular economy-related investments in Hungary will be financed through the RRF (Government of Hungary, 2021[13]).3

• The Technical Support Instrument (TSI) managed by the EC DG REFORM provides tailor-made technical expertise for designing and implementing reforms at the national, regional and multi-country levels. This instrument covers a wide range of reform areas. More than one-third of all requests in 2022 were related to various “green transition” topics, including the circular economy (European Commission, n.d.[14]).

Additional funding opportunities for circular economy projects are provided by the European Investment Bank (EIB) (European Investment Bank, 2021[15]; 2020[16]). The instruments for climate finance supporting the European Green Deal include:

• InnovFin - EU Finance for Innovators is an initiative launched by the European Investment Bank Group (EIB and EIF) jointly with the EC under Horizon 2020 with the aim to expedite access to finance for innovative businesses. The initiative provides loans, guarantees and equity-type funding. This funding targets small and early stage enterprises (including small tech start-ups, large research facilities and circular economy companies) with R&I projects that are riskier and harder to access than traditional investments (European Investment Bank, n.d.[17]). For the circular bioeconomy thematic area, financing is managed through the European Circular Bioeconomy Fund. This venture capital impact fund aims to fill the funding gap in the European bioeconomy landscape, targeting industry sectors such as agriculture and food, forestry, the blue economy (related to the marine environment), industrial biotech, bio-based chemicals and materials, packaging, construction and textiles. The individual investment size ranges between EUR 2.5 million to EUR 10 million (ECBF, n.d.[18]).4

• The InvestEU Fund combines the European Fund for Strategic Investments (EFSI) and 13 other financial instruments. Operational since 2022 and implemented in partnership with the EC, the fund is expected to stimulate more than EUR 372 billion of public and private investment. The fund provides direct and intermediate financing solutions for private and public entities, public-private partnerships and non-profit organisations. It supports financing and investment operations across four priorities: i) sustainable infrastructure (including the circular economy); ii) R&I and digitalisation; iii) SMEs; and iv) social investments and skills (European Investment Bank, n.d.[19]).5 The European Investment Fund is an InvestEU implementing partner, providing guarantees and equity risk-sharing instruments to MSMEs through selected financial intermediaries (European Investment Fund, n.d.[20]).

On the national level, Hungary does not have a specific environmental fund in place to help it achieve its national environmental goals and to provide state support for green and circular economy projects. On the city level, several municipalities have established independent environmental funds to promote environmental protection and nature conservation (City of Budapest, 2009[21]). However, their financial resources remain limited. The country’s National Research, Development and Innovation Fund provides state support for research on environmental topics and for business innovation targeting SMEs and start-ups (with funding worth EUR 220 million) and market-oriented R&D (with funding worth EUR 200 million) (Ministry for Innovation and Technology, 2022[22]).

Due to the lack of dedicated national funds, stakeholders have to rely almost entirely on European grant and loan programmes in order to receive financial support for implementing circular economy practices. Accessing these types of instruments might pose challenges to MSMEs as the funds tend to only provide co-financing (i.e. requiring beneficiaries’ own resources) and the applicants must go through merit-based application procedures.

The overview of public funding mechanisms for financing the circular economy transition in Hungary is provided in Annex Table 9.A.1.

References

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[29] Circular City Funding Guide (n.d.), About Circular City Funding Guide, https://www.circularcityfundingguide.eu/ (accessed on 14 October 2022).

[21] City of Budapest (2009), Fövárosi környezetvédelmi alap, https://budapest.hu/Lapok/2020/fovarosi-kornyezetvedelmi-alap.aspx (accessed on 14 October 2022).

[18] ECBF (n.d.), “European Circular Bioeconomy Fund”, https://www.ecbf.vc/investment-focus (accessed on 14 October 2022).

[24] European Climate Infrastructure and Environment Executive Agency (2023), LIFE - Calls for proposals, https://cinea.ec.europa.eu/programmes/life/life-calls-proposals_en (accessed on 16 January 2023).

[23] European Commission (2023), Funding & tender opportunities - Single Electronic Data Interchange Area (SEDIA), https://ec.europa.eu/info/funding-tenders/opportunities/portal/screen/home (accessed on 16 January 2023).

[12] European Commission (2022), Innovation fund progress report, https://op.europa.eu/en/publication-detail/-/publication/126a0d43-2745-11ed-8fa0-01aa75ed71a1/language-en (accessed on 14 October 2022).

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[1] European Commission (n.d.), Common Provisions Regulation, https://ec.europa.eu/info/funding-tenders/find-funding/funding-management-mode/common-provisions-regulation_en#:~:text=A%20common%20provisions%20regulation%20is,third%20of%20the%20EU%20budget. (accessed on 14 October 2022).

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[8] European Commission (n.d.), Interreg : European Territorial Co-operation, https://ec.europa.eu/regional_policy/fr/policy/cooperation/european-territorial/ (accessed on 14 October 2022).

[6] European Commission (n.d.), LIFE Programme, https://cinea.ec.europa.eu/programmes/life_en (accessed on 14 October 2022).

[14] European Commission (n.d.), Technical Support Instrument (TSI), https://commission.europa.eu/funding-tenders/find-funding/eu-funding-programmes/technical-support-instrument/technical-support-instrument-tsi_en (accessed on 16 January 2023).

[11] European Commission (n.d.), The Digital Europe Programme, https://digital-strategy.ec.europa.eu/en/activities/digital-programme (accessed on 14 October 2022).

[9] European Commission (n.d.), The Single Market Programme, https://ec.europa.eu/info/funding-tenders/find-funding/eu-funding-programmes/single-market-programme/overview_en (accessed on 14 October 2022).

[15] European Investment Bank (2021), Circular Economy Overview 2021, https://www.eib.org/attachments/thematic/circular_economy_overview_2021_en.pdf (accessed on 14 October 2022).

[16] European Investment Bank (2020), The EIB Group Climate Bank Roadmap 2021-2025, https://op.europa.eu/en/publication-detail/-/publication/98cc83ef-4f06-11eb-b59f-01aa75ed71a1/language-en (accessed on 14 October 2022).

[17] European Investment Bank (n.d.), InnovFin - EU Finance for Innovators, https://www.eib.org/en/products/mandates-partnerships/innovfin/index.htm (accessed on 14 October 2022).

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[3] Government of Hungary (2022), Gazdaságfejlesztési és innovációs operatív program plusz (GINOP PLUSZ), https://www.palyazat.gov.hu/gazdasagfejlesztesi_es_innovacios_operativ_program_plusz (accessed on 14 October 2022).

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[13] Government of Hungary (2021), Helyreállítási és Ellenállóképességi Eszköz (RRF), https://www.palyazat.gov.hu/helyreallitasi-es-ellenallokepessegi-eszkoz-rrf.

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Annex 9.A. Supplementary information

Annex Table 9.A.1. Public funding mechanisms for financing the circular economy transition in Hungary
Programme	Description	Calls	Beneficiaries	Cooperation	Funding rate	Co-financing rate	Duration	Links
Environmental and Energy Efficiency Operational Programme Plus (EEEOP Plus) [KEHOP Plusz]	The EEEOP Plus is a continuation of the previous OP, but the priorities reflect the lessons learned from the previous period and the results of the evaluations, and introduces several new investment topics, including the circular economy. With a budget of HUF 1 612 billion (approx. EUR 4.3 billion), the investments focus on five priorities: i) water management and disaster risk reduction; ii) circular economy systems and sustainability; iii) protection of the environment and nature; iv) renewable energy economy; and v) just transition. The budget allocated to the circular economy, including waste management and circular development of SMEs and the sustainability priority, amounts to HUF 97 billion (approx. EUR 258 million). The whole priority amounts to HUF 412 billion (EUR 1.1 billion).	First calls to be announced in 2023. Separate calls will be launched for waste management (mainly municipal waste) and for circular economy development (mainly destined for businesses, but project partners listed under “Beneficiaries” can join the project in consortium).	Depending on the purpose of the investment, they can include: ministries and their background bodies, local governments, their associations and owners of public service companies, state and local government companies, business organisations, enterprises, education and higher education institutions, research institutes, scientific organisations and NGOs, non-profit companies and social enterprises, professional representative bodies and consortia of the above, participants required for R&D&I activities, natural persons and communities (where necessary and effective for the purpose of the investment).	Circular models and projects can be more efficient with several partners. Depending on the type of projects, it is highly recommended to involve several businesses across the value chain, as well as universities for R&D&I aspects.	Waste management funded with a budget of HUF 77 billion (approx. EUR 205 million). Circular economy development funded with a budget of HUF 20 billion (approx. EUR 53 million). Half of the amount (i.e. HUF 10 billion) will be spent on the introduction of business models via combined financial instruments (grant + loan) and the other half on demonstration and pilot projects (e.g. eco-design, circular buildings).	For the introduction of new business models (e.g. sharing economy, servitisation): 10-30% grant and 90-70% soft loan (with low or close to zero interest rate). Large enterprises will be allowed to take part for the benefit of SMEs (e.g. their supply chain). The grant rate for pilot and demonstration projects will be calculated by means of cost-benefit analyses.	To be announced	Calls and tenders announcement website (Link here) EEEOP Plus website (Link here)
Economic Development and Innovation Operational Programme Plus (EDIOP Plus) and the Green National Champions programme [GINOP Plusz]	The aim of EDIOP Plus is to increase competitiveness of the domestic economy by strengthening the resilience of the SME sector, developing the R&D&I ecosystem, improving the adaptability of domestic employees, and ensuring a quality workforce. The programme includes 6 priorities: i) business development; ii) R&D&I; iii) sustainable labour market; iv) youth guarantee; v) higher education and vocational training; and vi) tourism and heritage protection. The Green National Champions finances the circular economy with a budget of HUF 30 billion.	Last call opened in Q4 2022. New calls expected to open in 2023.	The Green National Champions call is specifically targeted to MSMEs; serving energy efficiency improvements; production-related water efficiency improvements; electromobility; producing and/or using raw materials from secondary sources; manufacturing finished products replacing single-use and other plastic products.	There is no explicit requirement to cooperate.	From HUF 20 million to HUF 1.5 billion	Grants: 50%	30 months		Green National Champions website (Link here)
Digital Renewal Operational Program Plus (DROP Plus) [DIMOP Plusz]	The DROP Plus aims to improve Hungary's digital readiness and competitiveness. Taking a comprehensive approach, the programme addresses emerging global, technological, security and sustainability challenges, and interconnects all relevant policies With an overall budget of EUR 1.87 billion, the programme targets four priority axes: i) A more intelligent Hungary; ii) Hi-tech and green transition; iii) Hungary connected; and iv) Digital Skills. The second priority axis supports green and hi-tech transition to promote the uptake of digital solutions and the shift to a climate-neutral, circular and more resilient economy through the use of data. One of the targeted areas is waste management.	Publication of the call is to be announced. The first call will be published in 2023.	Specialised authorities, municipalities and their associations, higher education institutions, scientific and professional interest groups, waste producers, transporters, collectors, traders, brokers, treatment operators, landfill operators, the general public.	Depending on the type of projects there will be an explicit requirement to cooperate in specific topics.	EUR 48.4 million earmarked for projects creating digital solutions for waste management (related to monitoring of household waste, and locating and preventing illegally disposed waste).	Intensity: 100% The projects have national impact. The breakdown of the support between regions is based on the ratio of the population of Budapest/Hungary, which is 17.72% for the more developed regions and 82.28% for the less developed regions.	Depends on the specific call		DROP Plus website (Link here)
Territorial and Settlement Development Operational Program Plus (TSDOP Plus) [TOP Plusz]	The programme aims at improving the development of regions and counties, with a special focus on the territorial development of the least developed counties and underdeveloped regions, while strengthening the position of more advantaged regions. With a budget of EUR 5 billion, it primarily supports local government development, focusing on local economic development, employment, tourism, as well as development of municipal infrastructure, municipal management and local public services. Of its six priorities, three are relevant for the circular economy. The respective calls target: i) Climate awareness and adaptation to climate change; ii) Liveable Settlements; and iii) Support for sustainable urban development strategies.	Next calls to be published in May 2023.	The target groups of the calls for Liveable Settlements and Support for sustainable urban development are local municipalities involved in: i) awareness raising activities in this topic; ii) preparing circular strategies for different types of settlements; iii) municipal water management actions; and iv) use of green waste.	There is no explicit requirement to cooperate, but the involvement of local citizens is a key factor.	Funding rates vary: i) HUF 50 million - 500 million ii) HUF 1 million - 10 million iii) HUF 50 million - 5 billion iv) HUF 1 million - 100 million	Grants: 100%	30 months		TSDOP Plus website (Link here)
Horizon Europe Programme	Horizon Europe is the EU research and innovation framework program with a budget of EUR 95.5 billion for the 2021-2027 period. The programme includes three key pillars: i) Excellent Science; ii) Global Challenges & European Industrial Competitiveness; and iii) Innovative Europe – and one horizontal focus area ‘Widening Participation and Strengthening the European Research Area’. In addition, Horizon Europe includes five mission areas and 12 public-private partnerships that also share funding. Circular economy is covered in Cluster 6: Food, Bioeconomy, Natural Resources, Agriculture and Environment within the 2nd pillar. The total budget for the cluster is EUR 1056 million (2023) and EUR 904 million (2024). The 3rd pillar aims to improve SME growth and the European innovation landscape.	Deadlines across pillars and sub-programmes vary.	Research institutes and universities can apply for all three pillars, while the 2nd and 3rd pillars are the most relevant for the private sector.	6-12 partners from 4-5 countries	Typically EUR 2 million - 20 million	Research and innovation actions: 100% Innovation actions: 70%	Depends on the specific call		Funding and tender opportunities portal of the European Commission (Link here)
LIFE Programme	The LIFE Programme is the EU funding instrument for the environment and climate action. With a total budget of EUR 5.43 billion, the programme consists of four sub-programmes, one of which is “Circular economy and quality of life”. This sub-programme has a budget of EUR 1 345 billion, providing mostly action grants for projects implementing innovative and best practice solutions in the areas of waste, water, air, noise, soil and chemical management through Standard Action Projects (SAP). It also covers the implementation, monitoring and evaluation of EU environmental policy and law through the so-called Strategic Integrated Projects (SIP).	Calls are published once a year. The last call was published in Q2 2022.	Beneficiaries of the programme can only be legal entities registered in the EU, with the exception of sole proprietors.	There is no explicit requirement to cooperate, but cooperation is considered an advantage during evaluation of applications.	Typically EUR 2 million - 10 million, but some are lower at EUR 700 000	60% for Standard Action Projects (the co-financing through Other Action Grants is 90%)	Typically 36-48 months, and up to 120 months		Website of the European Climate Infrastructure and Environment Executive Agency (Link here) Funding and tender opportunities portal of the European Commission (Link here)
Common Agricultural Policy (CAP) Strategic Plan Common Agricultural Policy (CAP) Strategic Plan (continued)	The reformed CAP, set to start in 2023, aims to shape the transition to a sustainable, resilient and modern European agricultural sector. The Hungarian Strategic Plan will receive EUR 8.4 billion from the EU budget, including EUR 2 billion dedicated to environmental and climate objectives and eco-schemes, and EUR 186 million for young farmers. There are four interventions supporting the circular economy: i) Support for green investments linked to the valorisation of agricultural products; ii) Support for green investments in agricultural holdings; iii) Rural development cooperation for the development of a biomass-based economy; and iv) European Innovation Partnership (EIP) cooperation. (continued)	Publication date of the call is to be announced. (continued)	Support for green investments linked to the valorisation of agricultural products
			Natural persons, legal entities (companies and cooperatives, including social cooperatives), enterprises without legal personality, non-profit organisations with legal personality (such as church, foundations, non-profit-making companies).	No explicit requirement to cooperate.	Total budget earmarked for the intervention is EUR 27.4 million.	Between 50% - 80%. The maximum grant amount per project: EUR 13 million.	To be announced		Hungary's CAP Strategic Plan 2023-2027 website (Link here)
			Support for green investments in agricultural holdings
			Farmers meeting the eligibility criteria: natural persons; legal entities (companies and cooperatives, in particular social cooperatives); non-profit organisations with legal personality (church, foundations, non-profit-making companies). Additional special conditions apply.	No explicit requirement to cooperate.	Total budget earmarked for the intervention is EUR 1.27 billion.	Between 50% - 80%. The maximum grant amount per project: EUR 15 million.	To be announced		Hungary's CAP Strategic Plan 2023-2027 website (Link here)
			Rural development cooperation for the development of a biomass-based economy
			Producers and users of biomass feedstock.	Only new partnerships or new activities of existing partnerships are eligible. The focus of intervention will be on local use of biomass funds, therefore both farmers and regional public service actors should be involved.	Total budget earmarked for the intervention is EUR 4.4 million.	Exact rates are to be announced. A maximum of 25% of the grant may be used for cooperation costs (such as project planning and management), and a minimum of 75% must be used for costs directly related to the project objective.	To be announced		Hungary's CAP Strategic Plan 2023-2027 website (Link here)
			European Innovation Partnership (EIP) cooperation
			Farmers/ farmers’ organisations; forest managers/ workers/ organisations; hunters; consultants, advisories, chambers of agriculture; researchers, research orgs; educational/ vocational training orgs; climate/ environment/ nature conservation orgs; service providers; processors, retailers; consumers/ consumer orgs; public authorities; management teams. Additional special conditions apply.	Only new partnerships and new activities of existing partnerships are eligible. Partners in innovation, agriculture, forestry, food, rural dev, research and consultancy. May involve up to one int. partner.	Total budget earmarked for the intervention is EUR 36.2 million.	100% Eligible costs: Actual costs incurred in implementing the project (including investments); indirect costs for research can be accounted for up to a flat rate of 20%.	At least 2 and up to 7 years		Hungary's CAP Strategic Plan 2023-2027 website (Link here)
Recovery and Resilience Facility (RRF)	The purpose of the Recovery and Resilience Plan of Hungary is to counterbalance the economic and social effects of the COVID-19 pandemic, and to increase the economy's resilience, sustainability and preparedness for the challenges and opportunities related to the green and digital transition. Within its component G, the plan also includes an objective related to the circular economy transition, “Strengthening of intelligent, innovative and sustainable industry and secondary raw materials market”. The plan foresees a total investment of HUF 2 300 billion for strategic development projects until 2026.	To be implemented between 2021 - 2026 (the two milestones for the investment are 2023 and 2026).	Companies dealing with waste management and waste recycling, petrochemical and plastic companies, and organisations interested in chemical recycling. The beneficiary is expected to be a large company with significant experience in the sector.	No explicit requirement to cooperate,	Total estimated cost of the investment is HUF 86 billion (net), of which the planned cost to be financed from the RRF is HUF 43 billion (net).	50%	Between 2021-2026		Recovery and Resilience Facility calls website (Link here)
Interreg Europe Interreg Central Europe	Interreg Europe is an interregional cooperation programme aiming to reduce disparities in the levels of development, growth and quality of life in and across Europe’s regions. Co-funded by the EU, it has a budget of EUR 379 million to help local, regional and national governments develop and deliver better policy, and support the exchange of good practices and policy learning among the EU 27, Norway and Switzerland. Circular economy is one of the topics covered by the programme. Interreg Central Europe supports transnational cooperation between Austria, Croatia, Czech Republic, Germany, Hungary, Italy, Poland, Slovak Republic and Slovenia to become smarter, greener, more integrated and better connected together. It has a total budget of EUR 224 million from the ERDF. Circular economy is covered by specific objective 2.3.	The first call opened in 2022. The second call will open in Q1 2023.	Interreg Europe: management authorities of development policy instruments, municipalities Interreg Central Europe: public and private partners	Interreg Europe: 6-10 partners from minimum four countries Interreg Central Europe: 6-10 partners from minimum three countries	Typically EUR 1.5 million – 2 million	Interreg Europe: 80% ERDF (70% for private partners) + 15% automatic national co-financing (20% for central budgetary bodies) Interreg Central Europe: 80% ERDF + 15% automatic national co-financing (20% for central budgetary bodies)	Interreg Europe: 2-3 years experience for exchange projects Interreg Central Europe: 2-3 years for cooperation projects		Interreg Europe website (Link here) Interreg Central Europe website (Link here)
Single Market Programme (SMP)	The SMP is designed to help the single market reach its full potential and ensure Europe’s recovery from the COVID-19 pandemic. With funding of EUR 4.2 billion over the period of 2021-2027, the programme supports six key objectives: i) food safety; ii) consumer protection; iii) support to SMEs; iv) a more effective single market; v) high quality European statistics; and vi) effective European Standards. The programme is mainly implemented under direct management by the EC and two supportive Executive Agencies.	Calls open about three times a year. The latest call opened in Q4 2022 and will close in Q1 2023.	The programme strongly supports SMEs. Eligible beneficiaries differ across calls.	Most of the calls require multi-beneficiary applications. Specific conditions for consortium composition, number of beneficiaries and countries vary across calls.	Typically EUR 100 000 – EUR 1.4 million (some calls may require a minimum % of grant to be directed to SMEs)	The costs are typically reimbursed at rates of 90% or 100% (with costs in certain cost categories reimbursed at lower rates, such as 60%). A few calls may have lower funding rates, such as 50%	12-36 months, with up to 42 months		Funding and tender opportunities portal of the European Commission (Link here)
New European Bauhaus (NEB) New European Bauhaus (NEB) (continued)	The NEB aims to accelerate the transformation of various economic sectors in order to provide all citizens with access to goods that are circular and less carbon intensive. The initiative focuses on three key interconnected transformations: i) places on the ground; ii) the environment that enables innovation; and iii) perspectives and way of thinking. The funding comes from different EU programmes, the Horizon Europe programme, the LIFE programme and the European Regional Development Fund, among others. For the 2021-2022 period there was about EUR 85 million dedicated to NEB projects from EU programmes. In addition, the EC invites Member States to mobilise the relevant parts of their Recovery and Resilience Plans, as well as the programmes under cohesion policy. The EC also established the New European Bauhaus Lab - a “think and do tank” to co-create, prototype and test new tools, solutions and policy recommendations. Among others, this project also explores innovative funding solutions, and intends to create a one-stop-shop for small projects across Europe and offer the best funding solutions for each project via crowdfunding, philanthropy, or EU public funding.	Transformation of places on the ground calls 2023-2024: Dedicated calls: Q4 2022, Q1 2023, Q4 2023 Contributing calls: Q4 2022, Q1 2023, Q2 2023, Q3 2023, Q2 2024 Transformation of the enabling environment for innovation calls 2023-2024: Dedicated calls: Q4 2023 Contributing calls: Q4 2022, Q42023 Diffusion of new meanings calls 2023-2024: Dedicated calls: Q4 2022, Q3 2023 Contributing calls: Q4 2022, different submission deadlines in 2023, Q4 2023	NEB funded by Horizon Europe Programme						Transformation of places on the ground calls 2023-2024 website (Link here) Transformation of the enabling environment for innovation calls 2023-2024 website (Link here) Diffusion of new meanings calls 2023-2024 website (Link here) (continued)
			All eligible entities under Horizon Europe.	Consortium to include three independent legal entities each established in a different country (unless otherwise specified in call conditions).	Typically EUR 1.5 million - 8 million, and up to EUR 12 million	Research and innovation actions: 100% Innovation actions: 70% (rate for non-profit of up to 100%) Coordination and support actions: 100%	Depends on the specific call
			NEB funded by Erasmus+ Programme
			Public and private organisations active in education and training or working with or for young people outside formal settings, research institutions, science parks, innovation agencies, companies, chambers and associations, social partners and enterprises, sectoral skills councils.	Requirements for consortium composition vary across calls: 4-8 EU Member States/ third countries, and minimum 5-12 applicants. Requirements on the background of applicants also vary across calls.	Typically EUR 1 million - 4 million (funding rate for “European Youth Together” is lower at EUR 150 - 500 000)	The lump sum value is limited to a maximum of 80% of the estimated budget	24-48 months
			NEB funded by Creative Europe Programme
			Organisations active in audio-visual, cultural and creative sectors.	Both single applicants and consortia are allowed.	No limit	60%	24 months
			NEB funded by European Urban Initiative
			Public authorities	Consortium to include the main and associated urban authorities, and delivery and transfer partners.	Typically EUR  5 million	Up to 80%	Up to 3.5 years
Digital Europe Programme (DIGITAL)	Investments under DIGITAL aim to support the EU’s twin objectives of a green transition and a digital transformation, and strengthening the EUs resilience and digital sovereignty. The programme supports projects in five key areas: i) supercomputing; ii) artificial intelligence; iii) cybersecurity; iv) advanced digital skills; and v) ensuring a wide use of digital technologies across the economy and society. With a planned overall budget of EUR 7.6 billion, the programme is implemented by means of multiannual Work Programmes. Actions are implemented mostly in direct management by the EC and a supportive Executive Agency.	There were three calls for the 2021-2022 Work Programme in Q4 2021, Q1 2022, and Q3 2022. The latter is open through Q1 2023.	The programme supports industry, SMEs and public administrations in their digital transformation, with a reinforced network of European Digital Innovation Hubs (EDIHs). Eligible beneficiaries differ across calls and to pics.	Multi-beneficiary applications are mandatory and specific conditions for consortium composition, number of participating beneficiaries and countries vary across calls and topics.	Typically EUR 1 - 8 million, and up to EUR 30 million	Simple grants: 50% SME support actions: 50%, and 75% for SMEs Coordination and support actions: 100%	18 - 48 months, and up to 60 months		Funding and tender opportunities portal of the European Commission (Link here)
InnovFin - EU Finance for Innovators through the European Circular Bioeconomy Fund (ECBF)	InnovFin is an initiative launched by the EIB and the EC. It aims to facilitate and accelerate access to finance for innovative businesses and entities supporting projects, which by their nature are riskier and harder to assess than traditional investments. It provides loans, guarantees and equity-type funding, either directly or via a financial intermediary. The financing for circular bioeconomy thematic area is managed through the ECBF, with a budget of EUR 300 million. In addition, InnovFin Advisory provides guidance to promoters on how to structure R&I projects in order to improve access to finance.	Continuous	Growth-stage companies (SMEs, mid-caps, possibly large caps and special purpose vehicles) in the European bioeconomy, with Technology Readiness Level (TRL) of 6-9. Targeted industry sectors: agriculture and food, forestry, blue economy, industrial biotech, bio-based chemicals and materials, packaging, personal and home care, construction, textiles, and others.	No explicit requirement to cooperate.	Typically EUR 2.5 million - 10 million	The ECBF invests with equity, mezzanine financing or debt instruments.	Not specified		European Circular Bioeconomy Fund website (Link here)
Innovation Fund (IF)	The IF is a key funding instrument for delivering the EU’s commitments under the Paris Agreement and its objective to achieve climate neutrality by 2050. With a budget of EUR 38 billion, IF funds the demonstration and commercialisation of first-of-a-kind highly innovative projects. This is done through calls for large and small-scale projects focusing on: i) innovative low-carbon technologies and processes in energy-intensive industries; ii) carbon capture and utilisation (CCU); iii) construction and operation of carbon capture and storage (CCS); iv) innovative renewable energy generation; and v) energy storage. Certain calls may support projects on innovative clean-tech manufacturing of components and final equipment, where the main innovation lies in the product or production processes in line with circular economy principles. The fund is financed by revenues from the auctioning of allowances from the EU ETS and is implemented by the European Climate, Infrastructure and Environment Executive Agency (CINEA). Additionally, the EIB provides the project development assistance to promising projects that are not sufficiently mature.	Calls for proposals open about twice a year for large and small scale projects. Previous calls were opened in Q3 and Q4 2020, Q4 2021, and Q1 and Q4 2022. The latter is open through Q1 2023.	Beneficiaries must be legal entities (public or private bodies) and be established in one of the eligible countries: any country in the world.	No explicit requirement to cooperate.	Large-scale projects with a capital expenditure above EUR 7.5 million. Small-scale projects with total capital costs below EUR 7.5 million.	Grants: Up to 60% of the additional capital and operational costs of large-scale projects, and up to 60% of the capital costs of small-scale projects. Project development assistance (PDA): available to both large and small-scale projects, the support is provided as a tailor-made technical assistance to advance financial, technical or operational maturity of projects, with a view of potential re-submission under future IF calls.	3-15 years		Funding and tender opportunities portal of the European Commission (Link here) National contact point for Hungary (Link here)
Source: Own elaboration based on the information received from the Prime Minister’s Office and from the Ministry of Agriculture, and retrieved from the website of the European Commission (2023[23]) and the respective programme websites (European Climate Infrastructure and Environment Executive Agency, 2023[24]; Interreg Europe, 2023[25]; Interreg Central Europe, 2023[26]; ECBF, n.d.[18]; New European Bauhaus, n.d.[27]).

Notes

← 1. There are two different types of EU funding: direct and indirect. Direct funding represents funds that are directly managed by the European Commission. This comprises tenders and grants to specific projects related to EU policies, including Horizon Europe, LIFE and the Single Market Programme (SMP). Indirect funding are funds managed by national and regional authorities. These are mainly disbursed through shared management funds (European Commission, n.d.[28]).

← 2. The Programme for Competitiveness of Small and Medium-Sized Enterprises (COSME), which existed as a stand-alone programme, has now been integrated within the SMP.

← 3. Using an average conversion rate of HUF 358  to EUR 1 in 2021 reported by the Hungarian National Bank.

← 4. In addition to financing, the InnovFin Advisory provides guidance on how to structure R&I projects in order to improve their access to finance.

← 5. Additionally, the InvestEU Advisory Hub assists promoters and intermediaries with financial, advisory and technical assistance for the identification, preparation and development of investment projects. For instance, the Circular City Funding Guide supports municipalities and businesses in creating circular cities through providing information on financing and funding sources, as well as guidelines for setting up funding programmes to support the transition to a circular economy (Circular City Funding Guide, n.d.[29]).