Discussion Papers 2009. No. 73.
Governance for Sustainability – Two Case Studies from Hungary
CENTRE FOR REGIONAL STUDIES
OF HUNGARIAN ACADEMY OF SCIENCES
DISCUSSION PAPERS
No. 73
Governance for Sustainability –
Two Case Studies from Hungary
by
Ilona PÁLNÉ KOVÁCS – Viktor VARJÚ (eds.)
Series editor
Zoltán GÁL
Pécs
2009
Discussion Papers 2009. No. 73.
Governance for Sustainability – Two Case Studies from Hungary
The research was financed by the G-FORS (Governance for Sustainability)
FP6th Framework Project
Authors
Ilona PÁLNÉ KOVÁCS, scientific adviser, Centre for Regional Studies of HAS
Viktor VARJÚ, junior research fellow, Centre for Regional Studies of HAS
László FARAGÓ, senior research fellow, Centre for Regional Studies of HAS
István FINTA, research fellow, Centre for Regional Studies of HAS
István FODOR, scientific adviser, Centre for Regional Studies of HAS
Viktor GLIED, PhD Student, University of Pécs, Multidisciplinary Doctoral
School
ISSN 0238–2008
ISBN 978 963 9899 16 2
© Ilona PÁLNÉ KOVÁCS – Viktor VARJÚ
© Centre for Regional Studies of the Hungarian Academy of Sciences
2009 by Centre for Regional Studies of the Hungarian Academy of Sciences.
Technical editor: Ilona Csapó.
Printed in Hungary by Sümegi Nyomdaipari, Kereskedelmi és Szolgáltató Ltd., Pécs.
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Discussion Papers 2009. No. 73.
Governance for Sustainability – Two Case Studies from Hungary
CONTENTS
1
Introduction ................................................................................................................. 5
2 Theoretical Frameworks – Knowledge, Governance and Sustainability ...................... 5
2.1 Knowledge and Governance ................................................................................ 6
2.2. Sustainability ......................................................................................................... 8
3 Strategic Environmental Assessment of the South-Transdanubian ROP
in Hungary .................................................................................................................... 9
3.1 Hungarian Planning System and the Second National Development Plan
(SNDP) ................................................................................................................. 9
3.2 The National Legislation on SEA ....................................................................... 10
3.2.1 The Actors of the Environment Assessment ........................................... 10
3.2.2 The Process of SEA Making ................................................................... 11
3.3 The Operative Programming of South-Transdanubia (STOP) ........................... 11
3.4 The Strategic Environmental Assessment (SEA) ............................................... 14
3.5 The Action Arena ............................................................................................... 15
3.5.1 Involved
Actors ....................................................................................... 15
3.5.2 Absent Actors .......................................................................................... 18
3.5.3 Observed Modes of Interactions .............................................................. 19
3.6 Governance Arrangements – Predominant Hierarchy ........................................ 21
3.6.1 Rules
in Use ............................................................................................ 22
3.7 The KnowledgeScape ......................................................................................... 23
3.7.1 The Dominant Steering, Institutional Knowledge and Holders ............... 23
3.7.2 Social/Spatial
Distribution of Knowledge ............................................... 24
3.7.3 Excluded/Silent
Everyday/Local Knowledge and Holders ..................... 24
3.7.4 Reflective
Knowledge ............................................................................. 25
3.7.5 Synergies/Contradictions
between Knowledge Forms ............................ 25
3.7.6 Knowledge
Deficits ................................................................................. 26
3.8 Interaction Between Knowledge and Governance Arrangements ...................... 26
3.8.1 Relation of Knowledge and Governance Arrangements
and the Learning Process ........................................................................... 26
3.9 The conclusions: ‘Governance for Sustainability’ .............................................. 27
3.9.1 Assessing
Sustainable Development ....................................................... 27
3.9.2
Legitimacy .............................................................................................. 27
3.9.3 Synergy of Governance and Knowledge for Sustainability ..................... 28
4 EU-ETS in Pannonpower Power Plant – Mobilising Knowledge for Efficient
and Sustainable Solutions in the Shadow of Hierarchy and the Messiness of
Networks .................................................................................................................... 29
4.1 Case History ....................................................................................................... 30
4.1.1 The Relations of Market, Hierarchy and Networking ............................. 32
4.2 The Influence of Key Themes and the Respective Forms of Knowledge ........... 34
4.3 Filtering Mechanisms – Knowledge and Governance ........................................ 39
4.4 Conclusions ........................................................................................................ 42
Acknowledgement ........................................................................................................... 44
References ........................................................................................................................ 45
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Discussion Papers 2009. No. 73.
Governance for Sustainability – Two Case Studies from Hungary
List of figures
Figure 1 KnowledgeFlower ............................................................................................ 7
Figure 2 Micro-regions, counties in South-Transdanubian Region .............................. 13
Figure 3 Hungarian System of regional policy and the management of ESF ............... 16
Figure 4 The South-Transdanubian regional planning network ................................... 17
Figure 5 The Main Roles/Competences of the Actors .................................................. 18
List of tables
Table 1
Conclusions .................................................................................................... 43
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Pálné Kovács, Ilona - Varjú, Viktor (eds.):
Governance for Sustainability – Two Case Studies from Hungary.
Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
1 Introduction
The EU 6th Framework Programme entitled Governance for Sustainability (G-
FORS – www.gfors.eu, Contract No.: 028501) was aimed at the analysis of
different governance forms from the aspect of sustainability. The consortium in-
cluding ten partners1 was to investigate the following topics: how the environ-
mental regulations and rules fit in the decision making processes, who are the
most important actors of the decisions and how intensive and in which quality are
those involved, what type of knowledge or cognition is necessary to enforce envi-
ronmental interests?
The task of the Hungarian team was to prepare two case studies within the
theoretical and methodological frameworks elaborated by the consortium. The
first case study’s topic was the process of preparing strategic environmental as-
sessment (SEA) on the example of the South Transdanubian Operational Pro-
gramme of the II. National Development Plan, while the topic of the second was
the analysis of the EU’s emission trade scheme (EU-ETS) on the example of the
Pécs Pannonpower Company from the aspect of the Hungarian participation. The
current study is worth the attention not only due to its interesting theoretical and
methodological dimensions, but it is also important in terms of the future shaping
of domestic environment management system.
2 Theoretical Frameworks – Knowledge, Governance
and Sustainability
Following the millennium the large mass of law approximation tasks was charac-
teristic for the Hungarian environmental legislation, resulting that by today there
are occasionally to be found such community regulations, that would not have yet
been implemented in the Hungarian legal system and that is also a transitional
situation (Horváth et al. 2004).
The measures, norms and assessments (environmental impact assessment, en-
vironmental examination, strategic environmental assessment, the EMAS system,
ISO 14001, EU’s sixth Environmental Action Plan, etc.) serving the protection of
nature are to protect in the natural, build and social environment from the conse-
quences of human activities. However, we have to build consciousness that it is
1 University of the West of England, Bristol, Darmstadt University of Technology, University of
Warsaw, University of Twente, Politecnico di Milano, University of Göteborg, Norwegian
Institute for Urban and Regional Research, Panteion University, Centre for Regional Studies of
Hungarian Academy of Sciences, Institute for Regional Development and Structural Planning,
Erkner.
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Pálné Kovács, Ilona - Varjú, Viktor (eds.):
Governance for Sustainability – Two Case Studies from Hungary.
Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
not sufficient alone to regulate. But it is also necessary to call attention to the
problems of governance in environmental policy.
A necessary but satisfactory condition in environment policy is the existence
of regulations and legislative frameworks. In order to achieve efficient environ-
ment policy it is necessary to establish a decision making mechanism bearing the
adequate structure and conglomerate of knowledge, able of interest harmonisa-
tion.
2.1 Knowledge and Governance
The professional starting points of the project were formulated on knowledge
sociological and political scientific basis, therefore the approach was not focused
on the outcomes of the different policies, respectively on professional features of
environment assessment methods, but much more on the new connections of gov-
ernance-knowledge and in the action space formulated by the actors. The research
investigated the added impact of governance and knowledge in the mirror of sus-
tainability. Beside the sociological approach the political scientific aspect was in
special focus, presuming that the governance position and the scope of knowledge
of actors would significantly influence the embedding of environmental aspects
into the decisions. We endeavoured to detect the impacts of different governance
modes, of the concrete institutionalisation process and the regulation itself on the
efficiency and political legitimacy keeping track of sustainability as the main
focus. Further we have investigated the knowledge types used and created during
the above process.
Therefore we will not just scrutinize the formal scientific infrastructure in en-
vironmental research but (local) governance arrangements which regulate or en-
able the production of various types of knowledge.
Governance arrangements are made of bundles of rule systems which each
have a distinct influence on the combination, application and the trading of
knowledge (Heinelt et al. 2006). Our research is therefore guided by the following
questions:
What are the dominant knowledge forms within each case study area and
who are the respective knowledge holders (what types of knowledge was
applied by the actors of the process)?
How can governance arrangements help to organize the boundary-crossing
of non-scientific everyday knowledge with scientific and/or high-tech and
expert knowledge in an orderly manner?
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Pálné Kovács, Ilona - Varjú, Viktor (eds.):
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
In which ways do certain governance modes/arrangements (for example
arguing, bargaining, hierarchical) encourage and facilitate or obstruct and
hinder the development and application of knowledge forms?
According to the approach of the consortium the different knowledge “prod-
ucts” can be attached to different governance modes (market, hierarchical, and
network). The research was to prove, how certain environmental policies can
encourage the use of different knowledge types (expert knowledge, local knowl-
edge, economic knowledge, managerial knowledge, etc.) (Figure 1). Further, we
wished to detect the special governance forms (hierarchical, non-hierarchical,
market governance etc.) which can especially contribute to sustainability. The
target of the research was the identification of the spaces of environmental policy
games and to analyse the types of „KnowledgeScape” required to shift the differ-
ent environment policies towards sustainability (Heinelt et al. 2006).
Figure 1
KnowledgeFlower
Source: UM/IRS 2006 in: Heinelt et al. 2006. p. 42.
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Pálné Kovács, Ilona - Varjú, Viktor (eds.):
Governance for Sustainability – Two Case Studies from Hungary.
Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
2.2 Sustainability
Our understanding of sustainability somewhat differs from the meaning of the
term as explicated in the Brundtland Report and the related discussion. Ap-
proaches to measure sustainability are usually based on substantive criteria that
relate to the substance of the policy programmes. Here one might focus on the
ultimate effects and outcomes of the implemented policies. These effects are usu-
ally measured using a fixed catalogue of indicators. (Such as for instance the
sustainability scale of values in the course of the preparation of Strategic Envi-
ronmental Assessment, or in Emission Trade the quality of allowances). This ap-
proach leaves us with some doubts because of two reasons:
1. Sustainability is not an absolute, but a relative concept that cannot be fully
analysed outside a certain governance context or dissociated from its politi-
cal, social, economic and wider socio-spatial context. In particular, sustain-
ability is highly dependent on local knowledge.
2. Indicator-based approaches to sustainable development are not able to
measure interdependence and fail to provide strategic guidance for policy
integration. This is why we refer to the notion of reflective knowledge. Re-
flective knowledge develops out of the purposive interaction and perceived
interdependence of various forms of knowledge, often in particular socio-
spatial contexts, and represents the creative interaction of and interdepen-
dency between these knowledge forms within a certain context (Heinelt et
al. 2006).
The research has examined in a retrospective way the environment policy ac-
tion arenas and besides – where ever it was possible – participating observations
were included into the process of research. The documents prepared about the
discursions about the action arenas, the media materials in connection with envi-
ronmental policy actions, and other documents, regulations, and legal materials
were the vases of document analysis and discourse analysis. These were comple-
mented by interviews and questionnaires done with the most important actors.
The first case in this paper focuses on knowledge and governance reviewing
the entirely scale of governance arrangements while the second case study dis-
cusses the local level via local interactions.
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
3 Strategic Environmental Assessment of the South-
Transdanubian ROP in Hungary
3.1 Hungarian Planning System and the Second National Development Plan
(SNDP)
We have selected as the subject of our case study the SEA for the operative pro-
gramme of the South-Transdanubian region in the framework of SNDP (2007–
2013). This planning has followed the regulation of European Structural Funds as
a part of a massive Europeanization process taking place in the new member
states.
The making of the plan was based on a special regulation in many respects in-
compatible with the national order. The adaptation to the European Union’s re-
quirements was carried out in many respects through external, special solutions,
since the government was unable to integrate the new values and mechanisms into
its own national structures. Hungary received practically ready-made procedures,
institutions and policy means required to access the resources in the ESF.
The time pressure was characteristic during the entire process contributing to
the separation of European and national planning. The SNDP was made under the
control of the government commissioner responsible for development policy with
separate office, the National Development Agency (NDA). The preparation of the
SNDP was primarily influenced by the European Commission and the main ob-
jectives of the national plan were defined mostly externally.
Similarily, the regional planning took place in a centralised scheme. The
elaboration of regional operational programmes (ROP) strictly followed the con-
tinuously changing requirements by the EU and the central expectations. ROPs
were made on the residual principle, (targets were often included which were not
important enough for the sectoral ministries) and their content was determined in
the NDA. The Government concentrated the planning and implementation in the
NDA, and ROPs were prepared in a similar linear/vertical process.
The success of interest reconciliations was seriously limited by the general in-
sufficient density of civil networks, the low level of the citizens’ participation, and
the general lack of the cooperative political culture (Arató, 1999). Societal actors
participated in the preparation of the SNDP mostly in the early phases of plan-
ning. The social discussion of the National Development Policy Concept was a
two-month procedure, involving almost four hundred organisations. Nevertheless
the participants complained about the one-way communication: in the majority of
the forums the intentions of the Government were introduced and the debate was
restricted to why the recommendations could not be accepted. An argument fre-
quently used to conclude the debate was that the European Commission did not
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Governance for Sustainability – Two Case Studies from Hungary.
Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
allow something or that something had to be included on the recommendations of
Brussels.
The draft of the SNDP was considerably amended after the elections of 2006
so new discussions became necessary prior to the submission of the final version.
For the reconciliations of the final versions of the operational programmes, the
time was also far too short, making it impossible to have real discussions, the
process was from the bottom not really understandable.
3.2 The National Legislation on SEA
In the course of the preparation of the governmental decree on SEA there was a
significant debate basically among four ministries. Compared with the first draft
the proposal was in many respects simplified and a number of provisions were
eliminated, which originally were to ensure a larger space or more definite con-
sideration for environment protection and for the publicity as well. The modifica-
tions imply that in the course of the legislation the administrative organisational
interest and knowledge could better succeed than the special professional/ envi-
ronmental aspects.
3.2.1 The Actors of the Environment Assessment
Planner (elaborator)
The planner decides himself, whether in the process of the preparation of the plan
it is necessary to carry out environmental assessment or not, the only exceptions
are the obligatory cases listed by the legal regulation. The SEA must be fulfilled
by a person with adequate expertise. The planner is the “master of the case”–
apart from the final acceptance – it makes all the important decisions.
Green authorities
The authorities responsible for environment protection are present in every phase
of the process and their involvement is made compulsory by law, but they only
have the right of expressing their opinion.
Public
The concerned public is practically anyone, who is effected by the plan – espe-
cially due to its environmental impacts –, among others especially environmental
or other civil organisations considered as concerned by the law or the planner.
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
Decision makers
Public organ, the government or the parliament to which the planner submits the
plan, and as a part of the plan the environmental assessment for approval.
3.2.2 The Process of SEA Making
As the first step the planner decides based on the opinion of the authorities
responsible for environment protection about the necessity of environmental
assessment.
The second step is defining the content of environmental assessment. Environ-
mental authorities have the right of opinion, and the planner is obliged to pro-
vide them with necessary information. The planner publishes the syllabus and
the schedule of the SEA and defines the circle of concerned public based on
these documents.
The third step is the elaboration of SEA and its submission for evaluation. The
form of the evaluation is actually not mentioned in the legal regulation sepa-
rately. Also the procedural order between the planner and the expert elaborat-
ing the environmental assessment is not regulated. The planner publishes to-
gether with the SEA the target of the plan and also the information where and
when the reconciliation documentation can be inspected. It is compulsory to
give orientation on the plan and the environment assessment at least in one na-
tional or local press organ, and shall the planner have a website the information
must be published there too. 30 days are available to the public to express
opinions and comments concerning the information published. In the case of
divergent opinions reconciliation must be held, and following that the remain-
ing divergences must be included in the documentation.
As the last step the planner has to submit the draft plan and programme to the
decision making organ together with the environment assessment, as well as
the summary of opinions and comments received during the environment as-
sessment. The decision maker must consider the both the environment assess-
ment and the opinions and comments received.
3.3 The Operative Programming of South-Transdanubia (STOP)
The number of the selection options was strongly limited by the fact that the SEA
became first compulsory in the NDP and therefore there were no former adequate
domestic plans available. We have to imply that the selected case is in many re-
spects not ideal from the aspects of our research due to the new requirements of
European planning. The ROP and SEA process was fairly hard to understand,
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
bearing unforeseeable turning points, where the actors, roles, knowledge and
processes are far not clear and settled not only due to the loose regulation but also
due to the lack of routine and time. We can agree with those who call attention to
the importance of the general decision-making and policy frameworks (Nilsson –
Dalkman, 2001; Nitz – Brown, 2001). Our case is a typical example of the phe-
nomenon that the dominant model of governance can hardly adapt, interiorize the
philosophy of SEA.
We reconstructed the process of ROP and SEA preparation fundamentally
with empirical methods. We made interviews with the main actors and analysed
all important documents (plans, minutes, websites, etc., altogether about 80 items)
concerning the legislation, planning and SEA making process. We have reached
almost all actors in the issue of SEA, made more than 40 interviews striving to
represent the different types and levels of actors adequately. On the other hand in
the case of this case study we could hardly rely on information by the media since
there were scarcely any articles concerned with this topic.
The region of South-Transdanubia is one of the seven NUTS 2 regions in
Hungary belonging to the most underdeveloped ones. With regard to the fact that
the traditional meso level unit of Hungary is the county (19 NUTS 3 units), this
larger regional unit originally serving developmental-statistical and planning tar-
gets is constituted by counties (Figure 2).
The planning process of the STOP has been launched at the end of the year
2004. Following the decision on the main targets the planning team made decision
on the so called strategic development programmes which are to break down and
unfold the comprehensive overall targets.
In the frameworks of the regional reconciliation facilitated by regional devel-
opment agency (STRDA) – in a written, electronic form – 469 comments were
submitted concerning the STOP, and the agency answered these comments. From
among these comments only few dealt with the aspects of sustainability
The South-Transdanubian Regional Development Council (STRDC) passed at
its 2006 November session the final version including the opinions formulated
during the civil reconciliations. In December 2006 the Hungarian Government
also accepted the STOP and subsequently the European Committee passed it in its
resolution of 1 August 2007.
The two years action plans were developed on the bases of the above priority
axes in the first half of 2007. The reconciliation of the action plans was carried
out involving mainly those groups, which were potentially expected to submit
future proposals, tenders.
According to the report on the national public internet based reconciliation of
the action plans only 14 organisations considered it necessary join in the discus-
sion formulating altogether 45 proposals. One complaint is definitely to be
stressed according to which “the documents published at the website of the NDA
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Governance for Sustainability – Two Case Studies from Hungary.
Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
and the web-portal of the regional agency often show even significant factual
divergences”.
The public dispute was finished in the middle of June, the document was
passed by the STRDC on the 29 June, by the Hungarian Government in July. The
central reconciliations of the ROP practically could not be attached to concrete
events or negotiations, since they meant nothing else in practice than the uninter-
rupted “guiding of the pencil” of local planners. The local decisions were always
preceded and than followed by consultation with central planners.
Figure 2
Micro-regions, counties in South-Transdanubian Region
Source: Edited by the authors
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3.4 The Strategic Environmental Assessment (SEA)
The SEA originally targeted the region to become the “model region of high envi-
ronmental quality”, therefore environmental aspects received special accent. The
creators of SEA emphasised that in terms of interpretation of sustainable devel-
opment South-Transdanubia is one of the best prepared regions in the country.
The NDA selected a consortium through open public procurement to carry out
the SEA. This consortium was led by Respect Ltd., which was at that time the only
organisation in Hungary having a reference in SEA preparation. The methodologi-
cal description of the SEA report was available to be viewed by official and social
partners, and was discussed at a partnership forum.
During SEA consultation, the NDA provided a multi-channel option for re-
ceiving partner’s comments: partly on the website of the NDA and partly through
a web interface. The planner, in this case did not seek for a stronger cooperation
with the SEA makers, but paid only attention to the proper ready made report.
In case of the STOP, two SEA forums were held in Budapest together with
other regional OPs and especially, for this region in Kaposvár. The consultation
was made available to the general public on the NDA website and in national
newspapers. However, if we take a look beyond the formal procedures we will see
that the philosophy of SEA was injured. The SEA makers were not authorized to
conduct direct negotiations with the different planner units just indirectly though
the Department of Evaluation of the NDA. This indirect manner led to the point
that the SEA was first prepared subsequent to finishing the social dispute on the
OPs and therefore their dispute also followed after finishing the OPs. This was
extremely significant mistake also criticized by the participants in the social dis-
putes.
Concerning the media publicity of SEA preparation the picture is depressing.
Practically we could hardly find any press organ which would have dealt with the
statements and conclusion of the SEA prepared for the NDP. One single article
reporting on the social dispute of the NDP and the OPs mentions also environ-
mental aspects and the SEA. We can not report on a more intensive media interest
concerning the preparation of the STOP either, and the SEA phase completely
disappeared from the eyes of the wider society. As mentioned, the reason for that
is especially that the language, content of the union plans and programmes is a
fairly hard communication task towards the lay public, moreover often even for
the politicians participating in the different decision-making organs. Furthermore
the introverted attitude of the “planning experts” was explicitly apprehensible
during the entire planning period. The fairly hectic and incalculable process of the
bottom up and external (EU) reconciliation consumed all the energy of the plan-
ners, and acquiring the support of the local society was rather unimportant for
them.
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3.5 The Action Arena
The topic of our study makes it necessary to highlight the weakness and the un-
settled character of the regional tier. The reform of the meso-level of governance
has been a subject of political and professional debates since the systemic change,
i.e. the question whether the traditional county system (19 counties plus the capital
city, Budapest) should be replaced by administrative spatial units bigger than the
counties. The decision has not yet been made, but the discussion contributed to
the parallel and often competing operation of different institutions and functions at
three spatial tiers of the meso-level of governance (174 micro-regions, 19 counties
and the capital, and 7 macro-regions). South Transdanubia, is a so called NUTS 2
unit created definitely for the absorption of the resources by the European Union.
However, the so called development councils created at this level have weak com-
petencies compared to the central government level. Subsequent to the accession
Hungary set up new managing authorities in a too centralised manner. For the
programming period 2007–2013 the steering competencies of the SNDP and the
OPs have been concentrated in one single mega organisation, namely in the NDA
and the regions could play a secondary role in planning and implementation of the
plan. In spite of the domestic development institutional system created 10 years
ago the management of the ESF has been built up separated contributing to par-
allelism and overlaps (Figure 3).
3.5.1 Involved Actors
The creation of the SNDP, ROPs and the two-year action plans was fundamen-
tally carried out under the steering of the NDA, with the participation of a high
number of actors of course. The NDA was responsible for the interaction with the
competent authorities of the EU, the plan itself together with the OPs and action
plans were finally accepted by the Government.
Local/regional planners (South Transdanubian Regional Development Coun-
cil (STRDC), Regional Development Agency (STRDA) have/had several tasks in
the process. The STRDA, founded and supervised by the STRDC, planned and
submitted the draft of the STOP having no decision-making competencies. The
ROP was approved by STRDC containing the representatives of the dominant
self-governments and the delegates of certain ministries. Beside the Council,
other actors are present as consulting partners (Figure 4).
The so called Regional Working Group (RWG) was set up by Government
Decree, with the aim to involve the social-economic, professional partners and the
representatives of sectors and science in the planning. The RWG of the region had
47 members, some of the representatives of science and the economic sphere got
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Governance for Sustainability – Two Case Studies from Hungary.
Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
Figure 3
Hungarian System of regional policy and the management of ESF
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Citizens
EM
self governments
L
T
T
SE
MARKET SECTOR
PUBLIC SECTOR
NON-PROFIT, CIVIL SECTOR
control
representation
co-operation, consultation
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a place in the organisation. There was no civil actor member in the working
group. The further members represented the central government and the more
significant urban self-governments and the STRDA, STRDC (see Figure 5).
Civil actors and the general public have opportunities to express their opinion
in a fairly formalised order. The environmental organisations belong to the rela-
tively well organised organisations within this sector, and therefore they were
able to express their opinion more successfully.
Experts have a predominant role in the ROP and the SEA as well. The plan-
ning was based on previous regional planning documents made by the Hungarian
Academy of Sciences and the University of Pécs. Experts were also important
actors in the regional planning working groups. The SEA makers are themselves
experts of course. Sectoral experts appeared also in the planning working groups
having a fairly good experience in regional planning due to mostly the previous
PHARE programmes.
Figure 4
The South-Transdanubian regional planning network
Source: Based on National Development Agency (www.nfu.hu).
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Figure 5
The Main Roles/Competences of the Actors
Source: Edited by the authors.
3.5.2 Absent Actors
Party politicians
The leaders of larger self-governments seek to enforce their party affiliation in the
course of their membership in the STRDC (generating conflicts), and also the
persons representing the ministries are often not public servants but party politi-
cians. Despite of that the parties and their ideology were present only in a hidden
way.
Economic actors
The economic chambers currently only bear the right of consultation in STRDC
and in practice their activity is strongly regressing. Despite of that certain eco-
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nomic actors exert mostly in an informal way significant influence on the prepa-
ration of the ROP.
Independent experts
The independent experts were absent who would have been able to reason with
professional arguments with the creators of SEA or to assist the participation of
other partners with their expert opinion. We are not convinced that the SEA
creators were able to formulate a really independent opinion towards the planners.
Environment protection authorities
The role of the Ministry of Environment Protection (MEP), and its regional or-
gans responsible environmental issues were not very strong or accented. The in-
terviews with the green authorities implied that the reason of their fairly low in-
fluence on the process was actually their own interpretation of their role. Namely
it is the duty of the green authorities to express their opinion on the SEA. They
interpreted this as a kind of controlling or quality assurance. As the head of de-
partment of the green authority formulated: “We have no voice in the strategies, if
we are invited to the reconciliation forums, we may at best sit down but we can
not intervene in the discussion.”
3.5.3 Observed Modes of Interactions
The Vertical Dimension
The planning process was for the first sight carried out in a very formalised sys-
tem based on a hierarchical, multilevel governance model supplemented by the
element of networking (partnership). The National Development Agency coordi-
nated the planning organising official forums. One of the planners characterised
the sessions “we were too many to go into details”. The written documents and
correspondence were in general not used to confront different approaches but
rather to provide for orientation, information and record the results of informal
negotiations. Especially the relationship of the SEA creators and the NDA was
indirect and formal. As one of the SEA creators formulated: “we have sent eve-
rything to the NDA and we have received everything from them”. However even
in the hierarchical segment the informal moments were also present: The infor-
mal, lobbying types of interactions were less effective between the central and
regional actors, but much more in the relationships between the sectors/ministries
and between bureaucrats and politicians.
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The Horizontal Dimension
A part of the civil organisations could participate in the central tier reconciliations
through direct invitation, like green organisations with a more significant network
and further the National Council of Environment Protection (NCEP) as advisory
organ of the Government, in which professionals, civil organisations, the eco-
nomic sphere and the scientific life is represented. The leader of one of the civil
organisations remarked that they have in vain requested to the minister to involve
them but they have never received an answer. This observation actually implies
that the planner had the chance of filtering.
The regional level reconciliation is also regulated. The civil sector is compul-
sory consulting partner, in the form of the so called Civil Reconciliation Forum
(CRF). Civil organisations could freely register into this forum. Civil actors were
at the beginning fairly distrustful towards the regional planner. Since the autumn
of 2006, the revitalisation of the CRF has been on the agenda. The first more seri-
ous task of the forum was the consultation on the ROP and SEA interpreted its
participation as learning process.
The company assigned with the elaboration of the SEA set very strict dead-
lines for the social dispute. Of course the invitation of the CRF was obvious. The
Green Circle Association was the opinion leader among the environmental or-
ganisations. CRF did not participate in the discussion on the SEA organised in the
city of Kaposvár. Their opinion was transferred to the SEA creators in written
form and through the internet. One of the civil organisations attending the Kapos-
vár forum remarked that their representative addressed a question during the
meeting, but the SEA makers instead of dealing with the question indicated that
they will “forward the proposal to those responsible”. Partly for these kind of
reasons the opinion evolved on behalf of the civil actors that the SEA is only a
task to be tickled, without any real significance.
During the joint work it became clear for those elaborating the SEA that sev-
eral of the recommendations of the civil partners are worthy to consider. Still the
cooperation was not without any conflicts. The genuine character of the discus-
sion was defected by the fact that the civil actors were overwhelmed with a large
amount of unprocessed information deriving directly from the Government, there-
fore the civil actors were not really able to treat the information adequately due to
the lack of capacity and time.
The discussions were strictly documented in the so called reconciliation dia-
ries, and besides that it was possible to formulate and submit opinions through a
specific scheme on the internet and the feedback by the planner was transferred
here too. Namely the planner had to report in the course of the presentation of the
final plan on the results of the reconciliations.
With respect to the civil dispute some improvements were to be detected due
to the learning process of the civil actors, but the main feature of interactions was
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the indirect character and the limitation of the direct discussions and often the
mere formality of the feedback. One of the SEA creators reported: “The material
was published on the website and anyone who felt to want to say something, had
the opportunity to do so” The representative of one of the civil organs said the
following: “The website of the STRDA is chaotic, I can not find anything and
sometimes I think that it was designed this way on purpose…”. These problems
appeared of course in the officially presented documents only partially.
The argumentation of the “dispute” implies very well that it was carried out on
a quite theoretical level. The preliminary reason of which is that the specification
of ROP at that time did not allow participants to state the case more concretely.
SEA was very hypothetic and could not be based on concrete calculations, the
venues of the planned developments were not known and therefore the SEAs
were rather appropriate for shaping of attitudes than for establishing concrete
preventive steps.
3.6 Governance Arrangements – Predominant Hierarchy
Hierarchy was strongly enforced towards the regional decision-makers, although
mainly not in the form of formalised, official decisions but much more through
direct planners-officials personal “consultations”.
The hierarchical element was enforced also in the process of SEA preparation.
The SEA creators were practically excluded from the territorial and sectoral
reconciliations concerning the ROPs. The integration of the SEA into the process
is practically unregulated. As the department leader of the RDA responsible for
the SEA formulated: “the SEA maker and planner arranged the schedule any-
how.”
Mainly Hidden Networking
The “hidden” sphere of the politicians maintained mainly informal relationships
to the NDA, but there were also some formalised elements in this system:
The minister supervising the NDA, as a politician was the most important
contact point between the planners and the politicians.
Formalized party consultations were held also involving the opposition par-
ties. However the forum was not able to conduct real dialogue.
We felt the signs of networking governance in the circle of civil organisations
participating in the social reconciliation of the SEA. The necessity of cooperation
was by virtue of the character and volume of the task obvious, since the civil or-
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ganisations were only this way able to comment the very diverse topics in a pro-
fessionally competent way and to handle the large quantities of information at all.
Almost Absent Market Mode of Governance
Economic actors were almost completely absent in the planning process of the
ROP but to some extent traceable. One of the interviewees reported that his pro-
fessionally better tender was beaten in the SEA tendering of the action plan be-
cause of his the higher price and the price weighted with 50% among the selection
criteria. One of the SEA makers reported that “NDA pays so they can order as
well”. A part of the experts involved in local planning also received their assign-
ments though application or public procurement. The major part of the knowledge
was therefore “purchased”.
3.6.1 Rules in Use
The regulation of the planning process was rigidly formalised and chaotic at the
same time:
Resulting from the hierarchical governance the role of the position, bound-
ary and authority rules has succeeded regulating the issue of who and what.
However regulations were very soft concerning the question of how
(aggregation rules), for instance how far the planner is bound by the SEA or
up to what extent the planner is obliged to consider proposals raised by the
participants of social reconciliations.
Concerning the civil actors it is hard to clarify whom they represent because
there are no legal, procedural or legitimacy rules existing.
The scope rules are also liquid, the borders of the regions are rather artificial
and the actors can hardly decide in the course of regional planning whether
the given objective will really serve the entire region or will have a smaller
scale impact. The SEAs of the seven ROPs were created by the same expert
team, not only using the same scheme, pattern but also often making the
content elements uniform as well.
The planner decides about the way of informational flows. The processing
of the information arriving with big delays and lacking expert assistance
often did not happen at all, generating only formal opinions or even “silent
agreement”.
We could often find in the planning and also concerning SEA report too
general addressing of stakeholders (like though the internet or newspaper),
which actually was unable to reach to those really concerned.
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3.7 The KnowledgeScape
3.7.1 The Dominant Steering, Institutional Knowledge and Holders
In the planning process of the ROP, interestingly we identified the dominance of
the steering, institutional knowledge. We have found that planners of the NDA
and the regional development agency could acquire the dominant role because
they were familiar with the procedural, organisational and institutional require-
ment system, the specific terminology of the European planning with the logic of
reconciliation mechanisms and the competencies of the different tiers. Often
stated phrases were “Brussels expects that…” The SEA creator said to the ques-
tion, whether it was a disadvantage that they had no experience in the field of
SEA: “It was not a disadvantage, since this type of knowledge was not necessary.
Only knowledge on the legal background and the pervious SEA’s was necessary
and we also reviewed some international projects”. The “European knowledge”
namely “how the Union functions” is in Hungary currently the privilege of a nar-
row expert elite.
A peculiar paradox is that the staff of the NDA had a relatively poor institu-
tional and steering knowledge on its own institution. The instable organisational
context concerning its new, fairly complicated internal regulation reduced the
performance of the staff working there. The employees were new and young
technocrats with relatively poor knowledge on public administration and the or-
ganisation itself.
The makers of the ROP SEA were conscious about their own “rights” in the
course of the reconciliations, but these “rights” could not succeed against the
planners. The SEA makers were in a “vacuum”, and could not integrate in the
planning process. According to the SEA makers the personality is an important
element in the process, e.g. to what extent the expert as a person is able to insist
upon his/her arguments or he/she is able to formulate proposals in a context sym-
pathetic, desirable also for the planner.
Secondary Role of the Expert, Scientific Knowledge (Bundle1) and Holders
The SEA as a completely new policy tool is the privilege of a few experts in
Hungary who are members in international professional organisations and have
scientific and institutional background. Although Hungary now has many good
environmental experts, the SEA as a method and a value system is still not wide-
spread, this is knowledge of a very narrow professional circle. The Central and
East European Regional Environmental Centre (REC) was the organisation pro-
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viding the institutional background for the first SEA pilot project in Hungary car-
ried out in 2003.
But the SEA of ROP action plan was not any more created by this team,
bit based on its lower price a consortium having actually no experience in
SEA creation. Since the NDA had no SEA knowledge at all, and consid-
ered this work as strongly formal, was rather interested in the simply crea-
tion of the SEA report.
3.7.2 Social/Spatial Distribution of Knowledge
ROP and the SEA require strongly intellectual capacities. It is not accidentally
that none of the planning documents could approach the general public (referring
just to the fairly artificial language of European planning). SEA preparation was
limited to state offices, academic sphere or the professional circles at local gov-
ernments. Even the English language knowledge was a filtering factor since a part
of the documents was not or with delays translated into Hungarian. Certain social
layers or groups were prominently absent in the ROP (e.g. gipsies, women,
homeless or elderly), and the interest representation were unable to enforce their
own aspects in the disputes.
A further important element is the strongly centralised character of planning.
The NDA’s staff characteristically missed to “come down” to the region, in oppo-
site rather the local actors had to “go up” to the offices, and this attitude was char-
acteristic for the SEA makers too, the local actors and their knowledge therefore
was not so influential.
3.7.3 Excluded/Silent Everyday/Local Knowledge and Holders
The lack of local knowledge can be explained by multi-fold system of reasons:
The abstractness of the ROP and the SEA did not allow a consideration of
local aspects. Mayors and the civil organisations often expressed their
opinions according to local features and aspects but these opinions could
unfortunately succeed with a very low efficiency.
For SEA experts living in the capital city the region was an “unknown
field”.
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3.7.4 Reflective Knowledge
In the first national development plan (2004–2006) the preparation of SEA was
not yet compulsory. Despite of that a SEA was prepared for the only ROP, and
this rather pilot type of project provided the opportunity for an expert team to
evolve which learned the philosophy of SEA. They had direct contact with the
planners and consequently a tight cooperation developed and the planner could
utilise from the SEA process as much as he wanted.
In the framework of the second national development plan, in our case study
the SEA was created under completely different circumstances. Namely the inte-
gration of the SEA into the process was compulsory as well as the cooperation of
the planner, the SEA makers and the civil partners. Despite of that the experiences
of the former SEA creation and the learning process were not adequately utilised,
reversely SEA makers were kept as far as possible from the operative planning.
We could detect some kind of learning process in the civil sector. The knowl-
edge applied by them is rather an empirical, than expert knowledge. As one of the
civil experts of a green organisation formulated: “we did not receive too much
new information from these documents which were unable to answer the prob-
lems of the region.”
3.7.5 Synergies/Contradictions between Knowledge Forms
The low transparency of the decision-making process, the novelty of the institu-
tional system and inflexible treatment of the requirements of the European Union
as “ultima ratio” upgraded the institutional and steering knowledge and hindered
the enforcement of expert knowledge and the local knowledge forms. Referring to
the typology by Davoudi (2006) the Hungarian case study is much closer to the
instrumental model than to the reflective model of scientific knowledge transfer.
Beside the above we have detected some synergy and some elements of the re-
flective model. The preparation of the ROP and SEA significantly contributed to
the evolvement of a more intensive cooperation between the civil organisations of
the region thanks to which the lacking local knowledge of the SEA makers could
be supplemented – with some regional elements.
The relative professional success was promoted by the fact that the RDA has
in advance possessed an environment protection strategy and such an expert col-
league who could be the real partner of the SEA makers. The “green” fellow
worker maintained contact with the SEA team, and could contribute to the quality
of the report. In this respect the synergy was assured by the fact that there was an
actor within the planning organisation, whose main task was the enforcement of
environmental aspects and on the other hand participated himself as a planner in
the process.
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3.7.6 Knowledge Deficits
We can state in general that both, the ROP planning and the SEA were unable to
treat social aspects. The laic politicians and the civil society not concerned with
environment protection, the ordinary citizens, as everyday knowledge holders
were practically completely excluded from the discourse. The strong filtering of
the local and regional aspects and knowledge within the centralised decision-
making mechanism actually had a negative effect even on the quality of the SEA
hardly able to formulate locally specific recommendations. To realisation of
negative consequences will be possible much later perhaps by an “ex post SEA”
or the ex-ante evaluation.
3.8 Interaction Between Knowledge and Governance Arrangements
3.8.1 Relation of Knowledge and Governance Arrangements
and the Learning Process
The hierarchical governance mode was the main obstacle in the process. The
dominant authoritarian position and aggregation rules, institutional knowledge
based on attributes and low level of public communication have been supported
by the governance arrangements which were able to filter largely the local, milieu
and everyday knowledge forms.
The consortium creating the SEA was practically in possession of the scientific
knowledge, what it (could have) used for playing the role of knowledge translator
too. Most of the experts were also teaching at universities and the leading expert
also published a book on SEA (Szilvácsku, 2003). However, the planner and its
governmental context did not allow this translator function. The extremely loose
banter of the staff did basically not interest the planner in the integration of SEA
knowledge which remained stuck outside the government. The high fluctuation,
contra-selection of the staff has hardly encouraged the inclusive attitude of plan-
ning bureaucracy against the external environment and import knowledge.
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3.9 The conclusions: ‘Governance for Sustainability’
3.9.1 Assessing Sustainable Development
We tend to share the opinion formulated by Fernandez (2004) on the Spanish
politics that similarly to Spain, in Hungary the sustainability is exogenous, unable
to interpenetrate the everyday practices.
The entire governance is interpenetrated by some elements limiting the com-
prehensive enforcement of sustainability:
Poor dialogue between public power and the civil society.
The environment protection is institutionalised within the government in a
“sectoral”, isolated way.
It is not accidentally that the social consideration (social and special cohesion)
could not succeed in planning, or similarly that according to the general opinion
in the second national development plan competitiveness conquered sustainabil-
ity.
As concerns the aggregation dimension of the governance policy the model of
governance is also not optimal. The sectoral ministries concerned defiantly en-
deavoured to narrow the scope of the application of SEA. The environmental
aspects were therefore external and posterior within the process of governmental
policy making.
3.9.2 Legitimacy
The polarized political situation, the unstable position of civil servants and the
weak social partnership, further the weak cohesion and the lack of confidence
forming the context, as well as the loosely established character of the regional
tier all imply the weak legitimacy of the ROP and the SEA.
The actors may not be excluded from the reconciliations, but this is very far
from the real participation as the requirement of input legitimacy. The transpar-
ency of the decision making process was not adequate either, and therefore
throughput-legitimacy is originally absent. The union planning and especially its
regional tier suffer under serious malfunctions in terms of both the legitimacy and
social embedding of institutions, and the transparency of the processes.
It is still a question, what level of output legitimacy the quality of the ROP and
its acceptation by the actors can guarantee? The public consensus in relation to
the ROP means practically a very narrow local political and civil acceptation.
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3.9.3 Synergy of Governance and Knowledge for Sustainability
The given national case can not be understood of course without the concrete
physical, social, cultural environment (attributes of community) and the general
model of governance as we could learn from the IAD framework (Ostrom, 2005).
The Hungarian case study supported that the general frameworks of governance
are the most crucial factors from the aspect of the concrete action arena they may
even overwrite the special regulation and institutional environment.
The ROP and the SEA are novelties for the Hungarian public administration
requiring:
decentralised governance,
partnership of non public actors,
networks for arguing and bargaining,
measurement the quality and efficiency of decisions, and
respecting the normative value of sustainability.
Since in Hungarian planning the SEA was placed “externally”, even the advo-
cacy coalition could give a chance to a more efficient enforcement of sustainabil-
ity. The top down, closed planning model did actually not allow this, the interac-
tion mechanism was missing. The Hungarian regional planning and within that
the SEA has not yet produced a „mature policy subsystem” (Sabatier, 1999, pp.
129–130).
We tend to believe that in Hungary the SEA can achieve adequate level of ef-
ficiency only if it is an integrated, internal part of the planning institution and
procedure. Our conclusion is far from the concept of the G-FORS project. While
the open character of the action arena, the penetrability of organisational borders,
the dominance of network elements and the expansion of learning opportunities
could serve the sustainability, in our case the rigid/strict top down regulation, the
knowledge integrated in the organisation seem to be the practicable paths. The
opinion of Nitz and Brown does not seem to be applicable in our case, according
to which: „Environmental Assessment practitioners have the potential to contrib-
ute significantly to ensuring that environmental dimensions are considered in
policy making and that policy making outcomes shift us in more sustainable di-
rections.” (Nitz – Brown, 2001, p. 339) since the chance of “external” actors rep-
resenting sustainability for the partnership is practically zero.
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4 EU-ETS in Pannonpower Power Plant – Mobilising
Knowledge for Efficient and Sustainable Solutions in
the Shadow of Hierarchy and the Messiness of Networks
To assess the emergence of sustainable development and the result of policy
processes is not so easy. The Kyoto Protocol and one of its European implemen-
tation mechanisms the EU-Emission Trade Scheme (EU-ETS) deals with reduce
the carbon-dioxide emission in the member states. Reacting to the challenge of
climate change (and the regulation provided by the ETS) affected local actors
have to attend in the carbon-dioxide quota exchange system. The question is how
they can be involved, using what forms of interests and KnowledgeScape
(Matthiesen, 2005). What kind of strategies and actions can lead the sustainabil-
ity? What the situation is in the field of Emission Trade Scheme (ETS)?
In the framework of the G-FORS project Pannonpower Power Plant Company
as an “emitter” was selected. The firm is situated in Pécs (the seat of the South-
Transdanubain Region). Concerning the EU-ETS guideline and its instructions to
the Hungarian legislation the power plant – as a company obliged to involve in
ETS – participated in the procedure of the second Hungarian National Allocation
Plan (NAP) and National Allocation List (NAL) standing for their interests. These
are to meet the demand of the local community (clean air and climate friendly
operation) and the claim of economic efficiency as well. The response of the cho-
sen company to the CO2 reduction (clean air and profit maximisation) was the
change from black coal to gas and biomass as a ‘green’ energy. The research –
touching upon the challenges rose by climate change – also sought after the reac-
tions of the local administrative level to the new regulative, legislative back-
ground and was to identify the role of the local governance in these processes.
As regards the research methodology the first step was to select and analyse
the concerning regulations identifying the key actors and the main procedures.
Parallel with it we started to collect data, articles from local and national daily
presses, different periodicals and reviews and other written materials looking for
the local situation and mapping the whole arena and its processes. Interviews also
have been done with the key actors on national and on local level as well. The
task was hard with the interviews since the research touched sensitive economic
interests on both levels. Actors usually abstain from giving interviews therefore
sometimes we needed personal acquaintance to the appropriate person. The diffi-
culty was to go through the desks of secretariat.
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4.1. Case History
Pannonpower is the second biggest power plant in the South-Transdanubian Re-
gion (following the Paks Nuclear Power Plant, which is the largest in Hungary).
The company has continuously improved and modernised its technology in order
to achieve a better dust emission rate but also due to the pressure by the local
society and by the city council. The main argument was the unhealthy air. In 2004
Pannonpower introduced gas and biomass (with 50 MW built-in capacity) as its
new combustible. This change resulted in lower sulphur and nitrogen-oxides pol-
lution and in reduced gross carbon-dioxide emission. These mitigations are meas-
urable in the air quality of Pécs and also appear in the competitiveness of the Pan-
nonpower.2 Further, due to this change-over from fossil to renewable fuel the
company successfully transacted the so called Joint Implementation procedure in
2004.
Thus the first key theme/moment in the story line was the decision on the
project, in the spirit of which the company changed from coal to gas, then to bio-
mass. The targets of the change-over to biomass were the following3:
profit maximization A: The new biomass block was built based on and
utilizing the Joint Implementation (JI) Mechanism of the Kyoto Protocol
performing the obligation set by the EU-ETS;
where the company reduced the CO2 emission;
where the company can gain profit with the Best Available Technology;
where the company can gain profit with selling the remained quotas;
profit maximization B: The electricity won from renewable sources (“green
electricity”) is marketable on a higher price (guaranteed by the government)
than conventional (fossil) energy.
We could find other spin-off goals which could help the fuel change. As we
could realise during the research, these were very good promotional/marketing
tools which shows the public that the investment is an environmental friendly
sustainable development. These spin-off reasons/goals:
environmental interest: clean air in the city; rehabilitated former dumping
(of flying ashes of coal) areas
2 Pannonpower is recently owned by ‘Dalkia Group’. The case company, Pannonpower itself is a
holding with several Ltds (companies) – one dealing with the district-heating, another with elec-
tricity providing and another operating the blocks of the power plant. The managers are the same
persons holding various positions in the different companies (e.g. the same person is deputy man-
ager in one member-company and director general in the other one.) The business strategy is built
up in a common way which is a direct outcome of the teamwork based on the common managerial
staff.
3 Sources: Interviews with the leaders of the Pannonpower; new articles; www.pannonpower.hu.
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stimulations of the new local, regional and national energy policy (e.g.
higher rate of renewable energy).
Concerning the new strategy of the Pannonpower until 2010, the company will
build two other biomass blocks with 35 MW and 50 MW built-in capacities.4
The local government of the city of Pécs also plays an important role, but in
another way. Since the built and the planned biomass blocks are located within
the territory of the city, the local government has to permit the construction (con-
cerning the legislation and the local development plan).
On the other hand, since the local government fall in financial trouble in 2000,
the body of representatives decided to sell the 49% stakes of the local government
in the local district heating company (PÉTÁV Ltd.) to Pannonpower, and there-
fore the Pannonpower became a stakeholder in PÉTÁV Ltd. Further the
deal/contract also included that PÉTÁV (where the owner of 51% of the stakes is
still the city of Pécs) is obliged to purchase100% of its heating energy from Pan-
nonpower until 2014. Therefore in this share holding situation local government
is affected by the strategies, the actions and the decisions of Pannonpower so the
city and Pannonpower must cooperate as shared interest holders.
Pécs has also a very important role in the field of emission trading and sustain-
able development. In 2004 the development concept/strategy entitled “Pécs ECO-
CITY Mecsek Dráva ECOLOGICAL REGION” was prepared in which the key
actor is the city. The main aim was to achieve sustainable and sufficient regional
development, and to be supplied by the surrounding rural areas especially with
eco raw materials for energy production. The idea is accompanied by the devel-
opment of the rural areas, (based on public-private partnership or private invest-
ments with public support). A concrete example in the concept was the fuel
change of the Pannonpower Power Plant, based on future biomass cultivation and
production in backward agricultural areas (Kiss – Girán, 2004). (At the moment
the biomass is coming from the nearby forests.)
Concerning the common concept we could distinguish three main steps (sub-
arenas) within the Hungarian case history. The first is the decision on the project
where the Pannonpower (and its owner holding) made decision on what and how
to answer the challenge by the EU-ETS (climate change). We analysed both deci-
sions. The first decision resulting the first biomass block in 2004, created the pos-
sibility of Joint Implementation, while the second decision in 2006–2007 on the
construction of two further blocks by 2010 reply the challenge of EU-ETS II. The
second sub arena is the relationship of Pannonpower to the local government,
where different interests meet at the same time raising several questions, like:
How can Pannonpower work in the sub-arena where the other key actor is the
local government? How will these decisions and the relationship with (the claims
4 http://www.pannonpower.hu
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
of the) local government react to the aspect of profitability? The third element is
the relationship with the local community (NGOs, media, residents). How will the
reactions by the local community affect further investments?
4.1.1 The Relations of Market, Hierarchy and Networking
Despite of the peculiarities of the EU-ETS we can state that the most important
element/structure/governance mode of the action arena is the market. The idea of
the market mode of governing says that the attempts to coordinate societal inter-
actions by binding decisions intentionally, societies (like private company and a
local government) are also governed by the “hidden hand” of market (Heinelt et
al, 2006). In order to mach the requirements set by the ETS – next turning to
green investments – Pannonpower must use BAT (Best Available Technology) to
maximise its profit. But the other segment of the action arena is that the power
plant also has to sell the electricity. Besides the higher price of the “green elec-
tricity” the Hungarian electricity market was regulated until the end 2007 (the
price of the electricity was maximized) by the state.
The third market element in the action arena is the market of the district-heat-
ing. The price of district heating always depends on the negotiation of common
owners; Pannonpower and the local government. (Here, the local government
realises “virtual profit” during the next election. Cutting down the price and im-
proving the quality of district-heating by the efforts of the local government may
result in the contentment of the residents which again may result a better position
in the course of the next local elections.)
Therefore it is clear that market modes of governance are important elements
but several other modes are involved, pluralized by the network of the governance
modes in the arena.
In terms of market model of the ETS a number of external factors influenced
the decisions not only by the company itself. As mentioned before Pannonpower
is part of a holding (a group of companies, called DALKIA group). Therefore the
management is well-informed on distribution matters, and knows the quota dis-
tributed to different companies located in various countries but belonging to the
same mother company. The amount of quota distributed to different sectors varies
by countries, so that sectors and companies lobby at their own government for
more advantageous distribution of quotas by referring to the practices in foreign
countries. The holding’s governance arrangement in connection with ETS is well
illustrated by the words of the former general director of Pannonpower: ‘they are
grouped into a holding, therefore they are well-informed on distribution matters,
they know how much quota is distributed to the companies located in different
countries but belonging to the same Holding from their native country. The
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
amount of quota distributed to different sectors varies by countries. Therefore
sectors and companies may lobby at their own government in connection of the
distribution of quotas by referring to the practice of the foreign country.’
Besides the cooperation with group members, the decision-making of Pannon-
power is hierarchical and the leaders of DALKIA group (the mother company)
can intervene. However the governance mode of hierarchy can be identified much
easier by the investigation of the governing structure within Pannonpower. The
steering mode of the company is very strict based on command and control inter-
action. According to the director of the company this topic may affect serious
business interests and confidential business information therefore he maintained
reservations in connection with the research. This hierarchical, controlled method
of steering helps maintaining the rigid business procedure and it is also acquiring
and preserving competitive advantages not only in the domestic but also in the
international markets of electricity and emission trading.
The hierarchical mode of decision-making is based on command where the de-
cision is politicized based on the profit maximisation policy of the private com-
pany (and its group).
The key factor for the company is to be successful in the market, to reply to
the challenges of EU-ETS. The steering or governing mode within the company is
based on a strict, hierarchical mode where every actor inside the company has is
fixed position, and tasks, available information, resources are defined and limited
by the position: ‘The experts are always responsible for the information of their
own field (trading, technical etc.) and they are involved in the preparatory work
of decisions. But it is always the management who makes the final decision.’5
The previous example well illustrates that hierarchical and market based gov-
ernance modes may appear parallel and coexist. The well designed mixture of
them can lead to successful operation both in the economic sense6 and from the
aspect of the strategy of emission trading participation.
As regards the relationship between Pannonpower and the local government,
which was previously based on networking and partly market and hierarchy gov-
ernance modes we found that this type of networking relationship has changed
during the research period (2006–2007). The reason for this transformation is that
during the past year not only the person of the mayor changed (the previous major
according to media archives and other documents maintained good personal con-
tacts with the former director general) but also of the power station’s director
general. The old personal relations of the city and the power station (based the
former good financial negotiations) have changed and until the formation of new
5 Interview with Pannonpower
6 Pannonpower was among the top 500 (No. 492) firms in Hungary in 2006 in terms of the gross
income. Concerning profit its member firm (Pannongreen Ltd. which is technically different, but is
a member of the Power Plant) is on the 294th position. (HVG, 2008/1, 2008/2)
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relations the local government chooses the strictly formal, procedural way of
communication with the power station (i.e. regarding the change of circumstances
nearby forest degradation; Pannonpower’s too long monopoly position in the
sector of district heating and its impact on the price).
The relationship was analysed during the reconciliation period where the Pan-
nonpower wished to obtain permission for the next two biomass blocks in order to
get benefit in the ETS market. As the other side of the coin the local government
wanted to benefit but in the “market of residents”: so it sought to reduce the price
of the district heating, arguing that green energy was cheaper. A further problem
during the bargaining was that Pannonpower was in monopole situation selling
heating to the city but the city wanted to rearrange this situation.
Regarding – the “attributes of the physical world” (Ostrom – Gardner –
Walker, 1994) – the market segment of district-heating, the liveability of the city
with sustainable development (ECO-CITY, ECO-REGION concept), and the
reaction to the challenges of EU-ETS resulted in another governance form. While
in the first period – in the sub-arena – the networking and good cooperation were
the characteristic, nowadays rather the competitive one (sometimes command and
control behaviour, mainly on behalf of the city council) is dominant. The local
government realising that the “PÉTÁV” contract (running until 2014) is not defi-
nitely advantageous for the city (although it functioned as a kind of life-belt as
serious financial problems appeared), the representative tried to bargain for a
better position by using the “weapon” of permission, concretely by delaying the
issuing of the permission. One of the tools for it was changing the communication
channel: the former, personal/informal communication between the two leaders
(director and mayor) was replaced by official/formal interactions and governance
(i.e. instead of personal meetings the city tried to communicate with the Pannon-
power via the authorities delaying the planning process of the new biomass
blocks). The former friendly relationship with well flowing negotiations changed
to heavy “games”, consents based on negotiated agreements changed to individual
contentment based adjustments.
4.2 The Influence of Key Themes and the Respective Forms of Knowledge
Every actor is a knowledge holder in a certain way. In order to analyse the knowl-
edge forms of holders selected we collected the relevant documents (minutes,
interviews, consultation documents etc.) and conducted content analysis to reveal
the most significant knowledge forms.
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As Pannonpower – and its sub-arena regarding the EU-ETS – is concerned
bundle 17 could be identified as a knowledge form, which is obvious since in the
lack of expert or professional knowledge the company would be unable to obtain
good market positions. The reconciliatory documents and their ‘terminus techni-
cus’ support the above statements. As the interviewee said: ‘Economists, engi-
neers, environmental experts and a commissioned external expert participat in the
decisions on quota-trading. Experts bear responsibility for their relevant field of
expertise knowledge (trading, technical information, etc.) and they are engaged in
the preparatory phase of decision’. Therefore, knowledge holders within the col-
lective actor are different and they complement each other. Besides professional
knowledge economic/market knowledge are also present. As mentioned earlier8,
the first investment was targeted at acquiring the financial benefits deriving from
the Joint Implementation Mechanism both for Pannonpower and its mother com-
pany, while the second investment with its Best Available Technology (BAT) was
aimed at profit maximization within the frame of EU-ETS.
Beside economic knowledge the remaining part of knowledge bundle 2
(steering/institutional knowledge) can be detected in the interviews. Actors within
the Power Plant (external or internal experts, managers) know the preparatory
procedures of decision making and in case of problems are aware of the appropri-
ate solutions (they know the organisation and the institutional settings of the
company).
In the sub-arena as Pannonpower has decided what to do with the allowances
and permits deriving from the EU-ETS, synergies/contradictions between knowl-
edge forms and reflective knowledge had significant important role. As the inter-
viewee declared, at the beginning of the process the management of Pannonpower
had to learn not only the method and the procedures of the Kyoto Protocol
(mechanisms) and ETS, but also the ‘what to do’ strategy in this special situation.
The members within the DALKIA group exchanged knowledge on the ways of
interacting with the governmental level, on the available and useful arguments,
etc. This learning process includes besides information and professional knowl-
edge in the field of ETS, learning institutional settings and the varying institu-
tional systems (in different countries within the energetic group/holding) and as
well as the ability of adapting to the local, cultural specialities/context. The
learning process took place within the frameworks of the Holding, and the hold-
ing members operating in different countries frequently consult each other. On
one hand they are learning what kind of arguments they can efficiently use against
7 From the G-FORS aspect we distinguished 3 types of knowledge bundles regarding the dynamics
of knowledge forms (knowledge bundle 1: scientific/expert/professional/product; bundle2: steer-
ing/institutional/economic; bundle3 everyday/milieu/local (Amendment of Conceptual Frame,
2006).
8 Based on the interviews.
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
their government and also the way how the saleable quotas can successfully be
entered into the market. On the other hand during the preparation of NAP, com-
panies can lobby at their own government around the distribution of their quotas
referring to the other country’s practice.
The research discovered some communication problems between the case of
the city council and the Power Plant. Possessing economic/market knowledge
Pannonpower has to get the permission for the new biomass plans in order to
build the biomass blocks – replacing gas fuel and reducing the emission of car-
bon-dioxide which will result in releasing and saleable carbon-dioxide quota,
which may end up in profit maximization as a final target. Thus time factor was
crucial point. Reacting this economic knowledge based market oriented thinking
Pannonpower would have liked to shorten the known institutional process, and
get the permissions from every actors as soon as possible. From the other side the
interest was similar with other point of view: ‘there were times when formalized
negotiation meetings were held place between the Power Station of Pécs and the
local municipality on a regular, bi-monthly basis. The city considers the power
station as a strategic partner…The power station is a partner of the city, there-
fore (the representative of) Pannonpower thinks that the normal way (acceptable
for both parties) of exchanging critical remarks would be face to face communi-
cation and meetings between the city and the power station’s management instead
of using the Authority as a mediator.’9
Pannopower’s interest was to receive the support of the local government for
its new investments, while the city’s interest was to reduce the price of heating. In
the background of these divergent interests is an economic/market oriented cog-
nition: the good and fruitful interaction with the business partner (as they are
common owner of the PÉTÁV Ltd), (and an added reason is, the economic effi-
ciency of the enterprise resulting in a higher income from the ‘local trade and
industry tax10’ to the local government). During the reconciliation process the
problem was that Pannonpower was not ready to reduce its prices, so that the
local government was eager to find the appropriate tool to force Pannonpower to
do so. One tool applied was temporization. The city tried to elongate the negotia-
tion process by using the most formal and official way, requiring all relevant au-
thorities to submit expert’s reports (maximizing the potential of its institutional
knowledge).
9 Minutes No.3–1/2007/4 item No.15. on the agenda – available for the public on http://logoweb.
pecs.hu/file/index/921?entityType=REG_30179.
10 According to the Hungarian legislation every firm has to pay tax after their yearly income to the
local government where their activities are carried out. The rate is maximised by the law but the
local government has the right to set/to change/to delay the exact rate in every year.
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
A further tool applied was influencing local inhabitants by emphasising that
the fuel for the biomass block will come from the nearby forests, which again
would destroy those forests11.
In terms of interaction of Pannonpower with the city council both partners
were aware of when and how (formal or informal) to communicate, and of the
nature of procedures (milieu knowledge). According to the statements by several
local media organs the (former)12 general director was deeply embedded into
local politics, that is, he had very good personal relationships to the leading offi-
cials of the local government. But the new situation enforced new types of inter-
actions. These cognitions resulted in an outplace event of the Urban Development
Board into the power station, with the participation of the local press for intro-
ducing the new biomass block and the advantages of biomass-based operation for
the city and its local community.
Analysing the sub-arena, the key actors are the company and the local com-
munity. In this context Pannonpower has to respond to the demands and chal-
lenges raised by scientists, experts, NGOs and inhabitants. (In this respect the
most recent problem is that the planned energy-tree [biomass] plantation has a
fairly intensive and large territory demand.)13 Therefore it is necessary for the
given actor to select and apply the appropriate knowledge in a given situation.
Pannonpower is a holder of the knowledge bundle 3. It is manifested in the
newspaper articles and in the reports broadcasted by the local television. Pannon-
power has to convince the public through these channels about the benefits of the
new investment to the public and to propagate that this green investment would
serve the common welfare, that is: the new biomass block saves the climate and
also helps to reduce the price of the heating. These propagandas have to be clear
and understandable for “people of everyday life”, but it is only possible if Pan-
nonpower knows the peculiarities and rules of this ‘world’. To achieve a better
communication strategy Pannonpower must have information of the specialities
of the local community. The mitigation of carbon-dioxide emission – as the mani-
festation of the EU-ETS – is also present in the communication. Certainly, while
the environmental benefit is highlighted (in an explicit way), the aspect of profit
maximization remains hidden.
11 Minutes of the local governments meeting: http://varoslako.pecs.hu/onkormanyzat/kepviseloi_
munka.
12 A Case Study interview was made with the former general director who left the company during
the summer of 2007 and his post was taken over by a French director. The former general director
became the director of the Hungarian branch of Dalkia group which Pannonpower is also a part
of.
13 Biomass now is made of the trees of the nearby forests but later on it will originate from the city’s
surrounding lands (wheat and corn crop fields) grown on plantations which will require large
territories for land use.
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So the Power Plant normally uses expressions of everyday knowledge in the
interaction with residents (via media), and strong expert, professional, (scientific)
knowledge in the ‘battlefield’ of science.
Reflectivity and reflective knowledge can be indentified in this sub-arena on
behalf of Pannonpower. The task was double: firstly, the adaptation to the envi-
ronmental challenge and secondly profit maximisation. Behind these two re-
quirements the expert/environmental and the economic knowledge were interact-
ing and reacting to the challenges of EU-ETS.
In terms of the community we focused on NGOs (and later on the media) – as
a channel between the decision makers (in the local government and the com-
pany) and the residents. Analysing the activity of the NGOs in general, knowledge
of everyday life is to be detected. NGOs on their websites try to access the aver-
age people and to call their attention to climate change. NGOs try to generalize
and simplify their professional expert knowledge to allow a better understanding
for the public. They use expressions of everyday life, instead of scientific or pro-
fessional language, that is they use terms and metaphors like ‘the government is
going to provide further support for the biggest pollutants...’14, etc. This meta-
phor may suggests that the NGO is aware of the institutional settings, however the
phrase is literally not true and NGO also knows it. But these overstatements have
greater mobilization force on people in everyday life. (These phenomena are indi-
cating a knowledge of everyday and milieu knowledge possessed by these actors.)
The phrases used are certainly not untrue; include the real state of the word but in
an implicit way, and for us they suggest that actors using those phrases are well
aware of economic and macroeconomic processes (economic/market knowledge)
and also of processes of everyday life.
The investigation of local NGOs was fairly hard from the aspect of the topic
due to the lack of their activity in this field. As described before, the new biomass
plants generated several problems (trying to meet the requirements set by the EU-
ETS). Although the new biomass plant would decrease the CO2 emission, it
would on the other hand utilise “healthy” trees from nearby forests, and later en-
ergy plants from biomass cultivations, which again will occupy large agricultural
areas and therefore increase the price of agricultural products. However this
means that implementing the requirements set by the EU-ETS results another
environmental problem locally. Despite of the new environmental risks, local
NGOs remained silent, according to our research outcomes, mainly due to the
lack of knowledge and capacity. So we have found15 that none of the “green
NGOs” dealt with the described problem. As the president of a selected NGO
declared: “in order to deal with this particular problem at least one expert is
14 http://www.levego.hu/letoltes/kapcsolodo_anyagok/nkt2008–12_lmcs%20velemeny2007jan.pdf.
15 Interviews and newspaper article: Mecsek: halványzöld civilek [Mecsek: “lightgreen” NGOs]
http://www.pecsihirek.hu/?ac=cikk&id=4444.
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needed who has months to study this special problem, in order to learn the spe-
14
cialties of it”; to obtain expert knowledge in the field. Further NGOs do not
have sufficient resources to “buy” knowledge, or to employ an expert to deal with
this issue. Therefore in this case the missing resources are the filter of knowledge.
4.3 Filtering Mechanisms – Knowledge and Governance
Analysing the filtering processes we have overview the three mentioned sub-are-
nas. The different constellations of knowledge and governance modes predict and
filter different knowledge and governance modes. The varying interests (long or
short term perspectives) accompanied by various knowledge and governing mix.
Focusing on the sub-arena of the Pannonpower the first investment into bio-
mass block implies market behaviour on behalf of the Power Plant. As the inter-
viewee said ‘they (Pannonpower) were the first to sell one part of quota decrease
to the World Bank which they were lobbying for in Hungary. They have done it
within the framework of Joint Implementation.’ In reply to the question how a
quota is given to a firm the interviewee expressed that above all great expert
knowledge and intensive lobby power are necessary. “The whole story is nothing
but purchasing and selling.” The long term perspective is the profit maximization
requiring a strict hierarchical institutional setting (with relevant institutional
knowledge). This filtering phenomenon predicts the necessity of the dominant
role of institutional knowledge in the hierarchy (everybody knows what, how,
when to do). The expert knowledge has a secondary (but important) role. Since all
actors within the system have to know when, and how to use expert knowledge in
the hierarchy in order to achieve the target of profit maximisation (but the whole
process is determined by the “commander” – director general – and due to the
networking, by the relationship of Pannonpower and the “mother” company).
Market knowledge, which is not within the company, but is used by the company
managers, is also important.
The communication between Pannonpower and the city council is not free of
ambiguities and is continuously changing. Both parties try to bargain and focus on
their individual contentment (the price of district heating)16 with egoistic action
orientation using their market knowledge.
In terms of the discourse practice the decision-makers of the city prefer the
formal, institutional way. But as the minutes of the general assembly show17 there
16 Olcsóbb lenne a távhő, ha… [District-heating could be cheaper, if...]. Dunántúli Napló, 25.01.
2008. p. 2.
17 Minutes No. 3–1/2007/4 item No.15. on the agenda and also other minutes – available for the
public on www.pecs.hu
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
is an internal debate on the manner of communication. The opposition prefers
face to face meetings and negotiations and considers them very important but the
majority of the city’s officials decided maintain the strictly formal way of com-
munication and interactions through the mayors office. As a response to this man-
ner Power Station invited the City Development Committee – and local press
organs – for a public meeting into the premises of the power station trying in this
way to accelerate the decision-making process by the city and get into a more
advantageous position through personal convincement and practical experiences.
One of the most crucial points was the common ownership of the local heating
company. The example of this property and the decision making process on the
new biomass blocks show that traditional professions (and expert/professional
knowledge) must come to a role in the act of the local government. Concretely,
the decision preparatory experts (lawyers, environmental engineers) are well
aware of the professional part but as their positions are determined by hierarchical
governance mode, they are excluded from decision-making processes therefore
this knowledge should be applied by policy makers and local decision-makers.
The knowledge filters are the decision-makers themselves, defined by the posi-
tion. The actual interests determine which knowledge is relevant in a certain
situation (like in the arguing situation – as the example shows – the ex-
pert/professional knowledge is involved).
Another argument for it is that the power station’s former director general
maintained excellent personal contacts with the city and its head officials and
their relationship was so strong that on the 21st of January, 2007 the former di-
rector general was awarded the so called “Tüke” Prize.18 (This was to communi-
cate to the general public that the matters between the firm and the city were
based on political sympathy and close personal relations.)
The manners of actions are culturally determined. The strict formal and partly
avoiding behaviour was a traditional entity of the earlier institutional settings. On
the other hand the management intends to communicate for the public by this
strictly regulated formal procedure that business is done in an open and transpar-
ent way without any corruption and no events may serve as a reason for suspect-
ing corruption.
Consequently personal relationships and their transformation are the filtering
mechanisms at this point.
At the first level governance arrangement due to the above (and earlier) men-
tioned reasons (interest conflicts originating from common property, the indirect
presence of expert knowledge) politicians are trying to enforce their professional
arguments by communicating through local authorities. The mayor and his deputy
18 Prize for citizens making huge efforts for the city of Pécs – http://pecs.index.hu/index.
php?id=7625.
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are in permanent contact with the Power Station but the previously cited minutes
prove that the representatives do not receive relevant information in due time
which would enable them to make competent decisions. (However here some di-
chotomy exists: as government party politicians are better informed than the op-
position.) As a response to this challenge Pannonpower tried to bridge this infor-
mation gap by manifesting the ‘power’ of its own expertise knowledge and to
vindicate its own economic interests at the mentioned public meeting. Thus, al-
though both parties had expert/professional knowledge for the preparation of de-
cisions, the presence of economic/market knowledge was manifested on the deci-
sion-making level.
As far as the sub-arena of Pannonpower vs. local community is concerned we
can discover another motive for the open and transparent ways of doing business.
The business world uses this openness and the media for enforcing its own inter-
ests and for PR purposes (as the press not always treats firms in a gentle manner,
especially those ones involved in environmental problems.) Naturally the firm
makes it clear which pieces of information are public and for whom. These items
are not selected randomly much more fairly consciously. This policy also defines
which pieces of information should be kept in secret for the other party. Such
behaviour is stemming partly from internationalization, the firms’ grouping into
holdings or merging into multinational firms, and this integration process further
increases the confidential nature of business information and the number of firms
involved.
In order to manage public affairs Pannonpower has a well organised commu-
nication strategy. First Pannonpower had to learn the “public” manner or the
‘public language’ of interaction and communication. Pannonpower had to learn
how to show and how to convince the public that the new investment is environ-
ment friendly, and that serves besides their economic interest public welfare as
well.
In this field the media and the use of the media has an important role (on local
level) from the aspect of Pannonpower, as a form of marketing and transparency.
Highlighting the word/ metaphor of ‘green energy’ is very important19 from the
aspect of source of the fuel (forests) and PR. Therefore the power station’s com-
munication policy is fairly environmental friendly concealing at the same time the
real (but well-known) business interests.
Thus, two types of time perspective can act here as filtering mechanisms. The
long term perspective of the company is profitability and the environmental
friendly functioning. The latter is more important for the local community. The
short term perspective for the company is the contentment of the local community
(which means that the company functioning is environmentally sustainable) ac-
19 Concerning the content analyses of the media.
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Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
quiring the permissions for the construction of the new biomass blocks as soon as
possible. So the two parallel types of time perspectives filter the public use of the
market/economic knowledge (on behalf of the company) but allow the use of
everyday life knowledge (aimed at residents and citizens) in order to convince
them about the green energy policy. The benefit of this marketing policy is dou-
ble: it emphasises the environment-friendly character of production and the as-
pects of environment protection and hides the profit maximization target in the
shadow.
Having regarded the local NGOs – as it was described before – the lack of the
money acts as a filter of knowledge.
4.4 Conclusions
Summing up the outcomes of the emission trading process in the Hungarian case
we can state that the policy was successful. On the local level the outcomes are
‘actions taken by the target groups because they are faced with the outputs’.20 In
our case the action is the newly constructed (and planned) biomass blocks which
are to match the allocated quotas.
In their ideal forms the described governance modes mobilized a broad variety
of knowledge forms. In order to realize profit, market participants have to con-
sider different knowledge forms, but these are filtered by different mechanisms as
short/long term perspective, predictability, institutionalization, personal skills and
relations. (Certainly there are other environmental aspects which we should take
into account as well, when we speak about environmental policy or sustainable
developments like biomass plantations, but from the side of carbon-dioxide re-
duction the above mentioned resources lead to a success policy.)
’One thinks that such a strict distribution system is working against economic
interests. All the industrial and sectoral actors say so. They think, to the hell with
it, I have new extra costs. This is their basic attitude. It was said during the dis-
cussion that if we get the quota we should not bargain with it but return it next
year. But I say this is for trading. This is such a thing which should be sold and
purchased on a daily basis. Therefore this is not a static thing which you get and
then return. So this way of thinking is wrong.” 21 As our case study showed
Pannonpower has made a very rational decision when following this example it
has replaced its fuel and applied the Best Available Technology. The new built
(and planned) biomass blocks fulfilled the requirement to match the allocated
quotas, and allowed the company to maximise profit. As we could see mar-
20 Intervention Theory (Mickwitz, 2006).
21 Interview in the Ministry of Economic and Transport.
42
Pálné Kovács, Ilona - Varjú, Viktor (eds.):
Governance for Sustainability – Two Case Studies from Hungary.
Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
ket/economic knowledge was very important in the decision making process.
Within the company it was accompanied by a dominant hierarchical governance
mode, while in the communication with the local government networking was
dominant. Although in both situations interests were identical (profit maximiza-
tion) the ways of communication was different. The reason is that a company can
only be successful if every action and knowledge is commanded and controlled in
a hierarchical order. (If not, the company may be bankrupted.) On the other hand
a local government has several different ways and manners leading to success and
local governments as such will always exist, even if representatives and political
parties are changing.
The relationship with the local community was based on networking in a cer-
tain way using generalization and the dominance of everyday-life knowledge.
Other knowledge forms in the communication are usually hidden.
Summing up we can conclude the following at the local level. The hard eco-
nomic interest (economic knowledge), and an expert knowledge (which amplitude
depends on the process of learning) on behalf of the selected company is accom-
panied by a strict hierarchical governing mode within the company, with a net-
working behaviour within the company group and a discursive mode of interac-
tion with the local government (Table 1).
Table 1
Conclusions
Sub-arenas/Case
Knowledge Themes
Filtering Mechanisms
Conclusions
History
Pannonpower: Deci-
Profitability
Economic way of
Economic logic with
sions on the project
thinking – long term
high expert knowledge
(biomass blocks) –
perspective
in a strict hierarchical
challenge of ETS
system
(climate change)
Relationship between
Partly profitability,
Personal relationship
Good relations – argu-
Pannonpower and
clean air, dilemma
(actors’ intentions)
ing (mutual interests),<-
local government
solving
-> bad relations –
bargain (individual
interests)?
Relationship between
Hidden profitability,
Long/short term per-
Successful outcome in
Pannonpower and
manifested environ-
spective; actors’ inten- green energy policy
local community
mental cogitation, di-
tions
(ETS)
lemma solving
Source: Edited by the authors.
43
Pálné Kovács, Ilona - Varjú, Viktor (eds.):
Governance for Sustainability – Two Case Studies from Hungary.
Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
The case study shows that coupling networked management mechanisms with
expert/professional knowledge and economic/market knowledge at the back-
ground have a very important role in the decision-making process of the national
sustainability policy. For rationalizing harmonisation (e.g. timely coordination)
procedures the hierarchical system and institutional knowledge are essential.
Summarizing the statements made: a strictly hierarchical steering mode (with
institutional and expert knowledge) within the company; consultative, discursive
behaviour towards the local government (mainly characteristic in the “first pe-
riod”), high expert (and economic/market) knowledge are necessary for a success-
ful emission trading as a green energy policy.
Acknowledgement
We would like to thank our colleagues in the institute and at the University of
Pécs, and especially László Sutus and József Góman students of Department of
Political Studies who helped in the collection of media sources. We also would
like to express our sincere to our interviewee, especially to the planners, fellows
and leaders of the regional and national development agencies who gave us nec-
essary information in order to disclose the analysed processes as deeply as possi-
ble.
44
Pálné Kovács, Ilona - Varjú, Viktor (eds.):
Governance for Sustainability – Two Case Studies from Hungary.
Pécs : Centre for Regional Studies, 2009. 45. p. Discussion Papers, No. 73.
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