3.1 Székesfehérvár's renewable energy potential

Hungary has a historical dependence on external energy resources (mainly of Russian origin). Even the National Energy Strategy (NED 2012) declares that this status quo is intended to be preserved for the coming decades. On the other hand, the country has considerably good potential in renewable energy resources (Sáfián 2014) that are now increasingly being exploited. The availability of the energy sources varies according to the geographic location.

Székesfehérvár is located in the Central Transdanubian region. The city is the county seat for Fejér county and one of the biggest industrial centres in Hungary. It has nearly 100,000 inhabitants (9^th biggest in Hungary), but its population is decreasing, something that causes workforce problems for the local economy. Nevertheless, industry development programmes in the ‘80s and ‘90s helped the city to build its infrastructure (Varga et al. 2020). The most important industries in Székesfehérvár are the automobile, electronics, plastic and metalworking, mechanical engineering and food industries, most of these clustering in the six industrial parks of the city.

The county statistics indicate that 75% of aggregate energy consumption (c. 11,300 GWh) is consumed by industry in Fejér county (Széphő 2012). The ratio is slightly smaller for Székesfehérvár itself (c. 60%), as shown in Fig. 1. A change in classification or accounting method might have caused the drop in the industrial and the jump in the ‘other’ consumption in 2012. The agricultural and public lightings' use of electricity is marginal. However, the total consumption has been growing since 2012, which means that a green transition and energy-saving investments would most benefit the private sector.

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Electricity consumption in Székesfehérvár, MWh, 2011–2018Source: authors (data by E.On Hungary).

Citation: Society and Economy 44, 1; 10.1556/204.2021.00023

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The city has moderately good potential in different types of renewable resources. According to the Sustainable Energy Action Plan (SEAP 2015) and other sources (see, e.g., Solargis.com and Europa.eu), the annual sum of global horizontal irradiation is around 1,250-1,300 kWh m⁻², meaning that the city has about 1,200 kWp photovoltaic potential. With further developments in solar technology, it can be expected that energy transformation efficiency will rise and PV potential will grow in the future. The numbers above indicate an economically beneficial potential in solar energy for Székesfehérvár.

Since no up-to-date local data was available, two simple yet common models were used to calculate wind potential compared with other secondary sources (documents, former reports, etc.). We used “power law” and “log law” calculations on Katabatic Power's online calculator (Websites.pmc.ucsc.edu) where higher and lower initial (surface) values have been chosen from former reports (e.g., SEAP 2015). The models resulted a wind speed of 4–5.5 m s⁻¹, which indicates that wind power can be adequate, accepting the rule of thumb, which says 5 m s⁻¹ windspeed at a 100 m height can be profitable for wind power utilisation. However, more precise examination and local measuring of wind potential is needed around Székesfehérvár to make a correct decision regarding wind energy investments.

Biomass estimations also show conditional eligibility. The reviewed calculations (SEAP 2015) seem thorough, but those have limitations such as efficiency shortcomings, processing costs, reliability of the estimation of territory (land usage), etc. As for the resulting energy capacity, biomass can be the second most important energy source after solar in this region, but an interviewee from the Project Management Office underlined that most of it is already harnessed by other nearby towns or private companies. Nevertheless, a correct and more detailed analysis would be necessary to make business decisions.

Unlike most of the Hungarian regions, geothermal energy cannot be efficiently utilised in Székesfehérvár according to the scientific calculations, due to the geological conditions. Hydropower is not an option either for this region, for geological reasons (Table 1).

3.2 The strategic aims and determining trends of the city and the region

Several national, regional, and city-level planning documents present the achievable development directions for Székesfehérvár and its region. Some of these policy intentions are related to sustainability, energy issues, and green solutions of the local economy. The national and regional strategic and planning documents identify Fejér county as an industrial production zone with a research, development and innovation focus. The Rural Development Programme (RDP 2014) lists, among other things, the supply and use of renewable energies, by-products, waste and residues among the priorities for this region, but these are not repeated in the regional documents. However, some strengths, weaknesses, opportunities and threats (see SWOT analysis) are connected to the sustainable development and energy transition of Székesfehérvár and are listed in the regional and county smart specialisation strategies (CTRIA 2013; S3 of Fejér County 2014) (Table 2).

The Integrated Urban Development Strategy of Székesfehérvár (IUDS 2016) pays keen attention to top-down planning, something that is important from the public sector's point of view when it comes to financial support from the EU or the Hungarian state. But the specific goals do not directly reflect the renewable energy potential mentioned in the smart specialisation strategies. Nevertheless, some environmental priorities can be understood as sustainability-related issues, e.g., the rationalisation of urban structure, energy-saving and CO₂ reduction (through urban monitoring systems, education, changing the way of thinking, good examples, etc.), or the complex renewal of local energy production and service (mainly from biomass and wastewater, plus in addition the renovation and decentralisation of district heating).

The city's Sustainable Energy Action Plan (SEAP 2015) suggests some actions directly leading to a more sustainable town, e.g., preparations for being a smart city is a primary goal besides energy efficiency and pollution reduction, involving more financial support. However, the action plan enlists some already realised green projects: energy-saving streetlights, energy modernisation of the district heating sector, building energy capacity using renewable energy and thermal energy, and electricity production using renewable energy for the city ice rink. Beyond existing projects, the action plan also includes some planned development projects. Finally, it gives hints as to how the public sector can motivate the private sector to invest in energy modernisation: low-rate state subsidies, faster money transfer from funds, tax reductions (as state solutions); plus free parking for electric cars, local tax reductions, professional consultancy, and creating a business development project office (as local solutions), etc.

3.3 The public sector's contribution to sustainable development

The authors conducted interviews with the local municipality, the Custodian's Office, the Chamber of Commerce and Industry of Fejér County, Széphő Zrt. (district heating company), and Depónia Kft (waste management company). The Environmental Office at the mayor's office refused to participate in the interview; therefore, the Project Management Office was called instead.

In general, actors of the public sector showed commitment and openness to sustainable development. All of them were able to cite examples and good experiences from their operation. These institutions are usually not prepared to measure energy usage separately at high and low-consuming units (such as machines, buildings or departments). However, energy costs take only a low rate (5–10%) of their total costs. All these actors selectively collect office waste, and some use low-energy items or recycled materials, e.g., eco-friendly light bulbs, motion sensor lighting, or recycled paper partially. Different national and European funds support the public projects (such as energy efficiency development and renovation) by a considerable volume and on a broad scale. At the same time, seemingly, these institutes have better chances when applying for financial support than the private sector (see Section 3.4). All the interviewees mentioned that being “green” and sustainable is good for the city's reputation, which also strengthens public actors' commitment to sustainable development.

A few things connected to sustainability can be found at only one or two of the interviewed institutes. For example, the district heating company has electric cars for technical services which run inside the city. The waste management company receives a payment quota regarding a power (gas) generator planted on the company's waste dump. The Custodian's Office uses ceiling heating which requires less water than conventional heating systems to reach optimal temperature.

Thanks to a sustainable development project, the main building of the Chamber became a quality standard that demonstrates eco-friendly and profitable solutions for interested member companies. It has the most developed energy system, including PV collectors, a rainwater tank (attached to toilets), a compost heap, and a heat pump connected to the heat streaming system. Furthermore, visitors can watch some basic statistics for actual energy usage on screens in front of the entrance. Besides its demonstrative role, the Chamber also advises about its experiences regarding the solutions mentioned above.

All the interviewed public sector actors described their partnership with the private sector as a good one, albeit partly administrative and not really going beyond the companies' obligatory contacts with the local authorities. They are open to working together and receive mostly good feedback, even though they could not name many projects or areas with organic cooperation between the sectors. The municipality considers the 100 biggest local taxpayers for collaboration or shared decisions, which implies an imbalance when dealing with private interests. Still, it means that the public sector tends to involve the private sector to a certain extent. It is not surprising that the public institutes consider their work (regarding sustainability) to be good, innovative and open to further development. The interviewees tend to believe that large companies in the industrial parks (especially the multinational ones) are “isolated in their industrial world,” which implies that public-private networking is not perceived well. However, there have been some new ideas on improving the communication between the municipality and the companies (through online questionnaires and platforms), which have only recently been initiated directly by the city's mayor.

3.4 The private sector's contribution to sustainable development

Companies of different sizes and profiles were called for interviews. Sixteen firms out of the contacted 77 answered the calls positively and provided relevant and variably analysable information. The authors focused on larger companies because of their higher environmental impact. Still, small enterprises have also been interviewed so as to represent the interests of SMEs and other important industries in the study. Some sustainable solutions possibly remained uncovered, but the interviews achieved full coverage in respect of the researched topics.

In general, private companies reported that the relationship between the public and private sectors is dominantly administrative. However, big companies and SMEs can be distinguished in this regard. Big companies have a stronger connection to the public sector in several ways: for example, co-financed infrastructural projects, individual tax treaties, cooperative CSR actions, etc. On the other hand, SMEs perceive their relationship with the public sector to be purely administrative, and generally find no motivation to work together. Furthermore, they experience that the public sector (services, projects) favours big companies (This has been proven by the interview with the municipality which takes care of only for the 100 biggest local taxpayers, see above.) For example, a medium-sized firm told that public utilities should have been enhanced in the zone where the industrial park developed—and this firm grew its capacities—, but utilities' service arrived late or missed the opportunity.

Another example is of a small company which told in the interview that the municipality was not willing to help them to build an asphalt road of about 200 m unless the company (or the group of companies concerned) financed it fully. As that was over their budget, no road construction took place in the area. Finally, it is worth noting that a road infrastructural problem was mentioned by companies of all sizes concerning one of the industrial parks: the imperfectly organised junction that connects a highway with the Southern part of the city and the neighbouring industrial park (and a hypermarket) causes massive traffic jams every day. According to the SMEs, the municipality does not usually consider their infrastructural suggestions, especially regarding road infrastructure and traffic management.

Secondly, distinction can be made between SMEs and big companies in the field of sustainability. In general, big companies (which are mostly multinational with foreign owners) have better-elaborated strategies, including chapters connected to environmental protection, waste management and sustainable development. They consider that a greener firm can also achieve more advantageous positions in the market because customers tend to prefer eco-conscious products to traditional ones. On the other hand, the local (Hungarian) management of these large multinational or foreign companies usually has no power to shape these strategies flexibly, not even in relation to the practical application of sustainability goals—there is an official way prescribed by the parent company how to deal with waste, how to organise programmes for social responsibility or what types of technical or organisational innovations can be realised (often linked to financial return). Thus, these large companies most of the times have generalised processes for achieving sustainability goals.

The extent of investments made by a local large multinational or foreign company in sustainable solutions depends on the “greenness” of the parent company. Those of Danish or Japanese origin have greater commitment to environmental protection. Some other companies (like an American-owned firm) put more emphasis on work safety and human health. A third version is when mainly obligatory actions are taken, forced by national regulations (both at multinational and Hungarian-owned large companies). Yet, it is important to notice that even in cases where sustainability seems less important in everyday operations, the volume of certain green actions (e.g. waste recycling) is so high that it contributes significantly to environmental protection (and not only at local level). This implies the remarkable potential in the volume effect.

Hungarian large-sized companies named cost reduction as the primary motivating factor for greening their operations. Besides improved building insulation, LED or eco-friendly light bulbs, recycled paper, and other minor energy-efficient solutions have been achieved. However, these investments are seemingly realised in a semi-ad hoc ways because these companies do not implement energy strategies at all, even if they follow some energy management standards. Another motivation can be that certain machines or pieces of energy equipment (e.g., gas furnace) become outdated, and the replacement technology turns out to be more environmentally friendly most of the time. However, one of the biggest Hungarian companies in Székesfehérvár reported that they had recently implemented a PV power station of 94 kW at the top of the building. Though this amount is barely significant (about 1%) compared to the company's total energy consumption, the interviewee said that overall energy efficiency had been improving over the last few years as well.

SMEs struggle with either financial or bureaucratic problems when they decide to act in the domain of sustainability or environmental protection. It is widely acknowledged that smaller companies usually plan less formally (if they do it at all), but besides this, they can rarely collect (or save) enough money to realise a complete institutional renovation or energy efficiency innovation in their systems without halting production for a long time. European or national funds, subsidies and sponsorships may help them financially, but often these have impose strict conditions on applicants; consequently, it was not surprising that only one small company mentioned in the interviews that they had purchased new premises, more efficient machinery and modern equipment this way, and had further pending applications. In addition, interviewees from SMEs mostly agreed that greening would not improve the company's market position.

The most basic eco-friendly solutions were seemingly in evidence at every researched company. All the interviewees alluded to selective waste collection (some recycling for their own production), energy-saving lighting (bulbs and motion sensors) and regular CSR actions (sometimes cooperatively). This occasionally takes corporate sustainability further than expected from the companies by environmental regulations (i.e. harmonising with EU directives, which are rather strict if viewed on a global scale). Social responsibility can also be expressed by hiring disabled workers—this is not generally the case, but some firms implement it in their employment policy. Work safety was an important issue as well, and interviewees seemed to be committed when talking about the principle “employees' health first.”

All the private companies expressed their willingness and need to be greener. First, interviewees—though they are the responsible persons for sustainability at the firm, and as such are biased—mentioned they have a personal motivation to behave sustainably, and they were convinced that other employees or people in general can be directed towards sustainable development only by strengthening and expressing their personal motivation. In spite of this, an interviewee at a large enterprise replied that most of the people need regulation and continuous control (e.g. switching off the lights in the room they leave), otherwise they would not care. Secondly, respondents agreed that sustainability can lead to a comparative advantage, but big firms and SMEs differed in this point again. Large companies usually considered that being green is good for the firm's reputation, so it strengthens its comparative position, while smaller companies rather thought of it as a cost that has no return, so green behaviour is more important because of inner motivation.

Certain solutions have not been implemented at all at the researched enterprises. None of the companies owned electric cars, and only some hybrid vehicles serving as pool cars. There are a very few firms that have implemented solar panels on the roof, but almost every interviewee told the authors that their company planned or did calculations on how to realise a solar PV project. Geothermal potential is not exploited either; only one private company (the same one with solar panels) reported its success with heat pumps, plus a public one that reported moderate results. Almost all companies are experiencing a lack of skilled workforce, which is one of their greatest problems both now and in the near future, and one that may also threaten their (otherwise subordinated) ecological missions, if indeed the companies have such a mission at all (Table 3).

4.1 Discussion and policy implications

The research revealed significant disharmonies between the public and private sectors. The regional plans and strategic documents are always elaborated by national entities or institutes of local authorities, occasionally pointing towards EU projects or national programmes. Yet, seemingly municipalities do not do everything in their power to inform and familiarise the private sector with these strategies. Even in those cases where the public and the private sector cooperated in a project, none of the enterprises mentioned that they were aware of any public environmental action plans or other documents. This problem should be tackled by more proactive and supportive behaviour from the decision makers' side.

Another disharmony is in the perceived nature of cooperation between the public and private sector. As was demonstrated in Section 3.3, the public sector often perceives the partnership to be more developed, more fruitful and more attractive in general than the private sector. Private companies usually concentrate on fulfilling administrative requirements and seek no further cooperation, unless their size makes them important strategic partners in an economic sense (witness the large national or multinational companies). SMEs especially feel that the administration is highly bureaucratic, and they consider that politics retains significant influence over local economic development. The public sector does not support the companies' use of renewable energy or greener production by any means.

Multinational companies are in a unique situation in that their use of renewable energy, waste management, and energy procurement policies fully or mostly rely on the owner/parent company's core strategy. The use of renewable energy sources can be theoretically one of the most effective ways of contributing to local sustainability by closing energy cycles in a region or keeping energy streams inside a region as long as possible (Péti 2011); and this might be also true in the case of multinational companies with a very limited room for manoeuvre. Still, only a few actions connect these enterprises to the local community, such as CSR programmes or the mutual sharing of best practices regarding minor environmental, health or waste management cases. The same is true for large companies with Hungarian owners. Big firms can motivate employees to be ecology-conscious through workplace regulations.

On the other hand, the SMEs sometimes need financial or technical aid from the public sector when they want to develop the infrastructure of their surroundings (e.g. to avoid further traffic jams and pollution connected to transportation) or improve the energy efficiency of their buildings or public utilities. The interviews revealed the meagre strategic thinking taking place at small companies, a factor that certainly inhibits green transition. Although some examples—consultations with the Chamber of Commerce and Industry, renovations of public places, etc.—were mentioned, the public sector did not seem to be cooperative in these matters. Inter-enterprise projects (e.g., local water-conduit development, planting a power transformer) tended to be more successful. As was shown in Section 4.2, public sector projects favour general public needs like district heating reorganisation, waste collection development and other public services. Leaders of the SMEs mostly have a personal influence on employees' behaviour, and setting a good example (lifestyle) seems to be how smaller enterprises can be greener and more sustainable environmentally.

In the case of subsidiaries, most often the parent company's strict expectations on following the business strategy make it impossible for the subsidiary to build a closer partnership with other companies, even within the same industrial parks or with potential local suppliers or consumers. However, apart from some collective waste collection agreements and CSR actions, there are several areas and ways in which alliances could be elaborated: logistics cooperation, investments aiming at green energy transition, local sustainability initiatives, etc. Wind energy, for example, has the potential for beneficial use around Székesfehérvár, but normally requires strategic investments that exceed individual budgetary possibilities—consequently, private or public-private cooperation is needed. Similarly, a supportive public sector with transparent and environmentally focused development strategies, and even more importantly, a good fiscal and technical policy supporting and motivating eco-friendly investments and networking would clearly reinforce the achievement of sustainability goals.

4.2 Positioning in the international field

Deutz and Gibbs (2008) took the example of several EIPs in the USA to show the cluster perspectives in regional development. They identified three meta-themes as main aspects: external economies of scale, networking and policy. Financial benefits of economies of scale were evident for all the analysed EIPs. Networking showed close similarities with cluster formation because it also seemed to be based on expected advantages of spatial proximity and commitment to sustainability. Lastly, most of the examined EIPs were planned and led by the public sector, but the most successful processes (in terms of tenant recruitment) were the ones led by the local community and another initiated by the public sector but developed by private companies (Deutz – Gibbs 2008). This is an important conclusion to consider when planning the green transition of an industrial centre, cluster or industrial park.

Heeres et al. (2004) supported the previous findings when comparing EIPs in the USA and in the Netherlands – and found that public-private cooperation leads to a better performance in both countries. In the USA, regional public administration wanted to support local employment and wealth through shared financing. The aim of the Dutch EIPs, however, was to realise economic and environmental benefits simultaneously by concentrating on reciprocal positive effects and synergies, and the whole process was proposed by local entrepreneurs and companies, with the result that many strategic ideas and visions appeared in the projects right from the planning stage. The result of the study is that the Dutch cases were more successful, leading one to the conclusion that entrepreneurial commitment is crucial for the success of eco-industrial parks.

According to other authors, the development of EIPs depends greatly on the financial intervention and public sector policy. Mazzucato and Semieniuk (2018) argued that public investments and policies may enhance private investments in renewable energies, and direct public investments can help in those technologies where indirect means cannot mobilise private funding. Though private utilities are still the biggest investors in renewable energys (with a share of 17.1%), state banks (15%) and state utilities (12.6%) are right behind in the cumulative share, followed by commercial banks (11.7%) and private energy firms (11.3%) (Mazzucato – Semieniuk 2018). Polzin (2017) adds that technology support, demand-pull and fiscal policies can serve as a very effective policy mix to overcome financial barriers – but regulation and political risks also need to be minimised.

The situation is somewhat different, e.g., in China where industrial parks can certainly be seen as key elements of the country's exponentially growing economic and production performance. Data from 2013 reported about three hundred industrial parks in China. Though not all the three hundred facilities are EIPs, most of them are operating as so-called pilot projects. The number of parks where some complex eco-transformation process has begun is nearly one hundred, and these projects also serve as an extremely important platform for innovation and design, as well as an empirical “experimental base” (Shi and Yu 2014).

Between 2010 and 2015, the Chinese government launched one hundred circular economy (CE) pilot projects across the country in various industrial parks, primarily to gather empirical data and information. Parks participating in the projects received both central and local budget support, which can be used for non-profit infrastructure, capacity, knowledge and technology development. These types of developments receive significant resources from the state budget, and are entirely public financed in many cases (Qi et al. 2016).

Based on various international examples and good practices, it can be stated that the involvement and activity level of the public and private sectors is a determining factor in the success of such EIP projects. Nevertheless, socio-economic and political conditions of the given country also must be taken into consideration. In a country where the private sector is traditionally less committed to initiate an investment, and/or the central/regional/local government is the dominant actor in the field of economic development, the patterns of establishing eco-industrial parks which apply the model of circular economy are different from a great extent – as it was shown for China.

In the case of Hungary and Székesfehérvár, the city analysed in this article in detail, a stronger commitment from the public sector would be essential; however, the current limited participation of the private sector might be a barrier of the future spread of EIPs.