Part I — Situation overview

A government decision published in the 11 September 2026 issue of the Hungarian Gazette (Magyar Közlöny) concerns averting the industrial-safety hazard and environmental damage threatening the site of the Dunai Vasmű steelworks. In it, the Government asked the minister responsible for public finances to provide up to 657.103 million forints from the 2026 central budget for the costs incurred in August. The justification is clear: the business entities in liquidation cannot cover the necessary measures. Preventing environmental damage, however, is in the public interest, so the task falls to the state by way of a public-service contract. In the same week, the local government of Iváncsa had residential wells tested at 55 locations after the SK On Hungary battery plant’s own self-monitoring measurement detected NMP, a solvent harmful to the unborn child, in an on-site monitoring well. The wells were clean. The Balaton Limnological Research Institute, for its part, joined a constitutional complaint seeking a review of a government decree regulating lakeside construction. The series has continued since. On 25 September it became public that on Hermina út in Kőszeg, which is covered with asbestos-containing crushed stone, the 24-hour average was 40,246 asbestos fibres per cubic metre of air, forty times the limit of 1,000 for the same period (a four-hour measurement showed 76,254). In Dorog, 37 times the permitted lead content was measured in the Kenyérmezői stream.

MIAK has previously addressed industrial pollution from several angles: independent and public measurement in connection with the Debrecen case (CATL Debrecen), plant-safety oversight after the Tiszaújváros explosion (MOL explosion in Tiszaújváros), and the health consequences of asbestos damage in May (Asbestos-contaminated crushed stone). One question, however, has so far remained open: who pays if the polluter can no longer pay? This is now topical for two reasons. In May, in Vienna, the Prime Minister declared that the “polluter pays” principle would be enforced in the asbestos case. According to Magyar Nemzet, however, by the end of September there was no visible Austrian financial commitment from which the remediation of the Hungarian municipalities could be financed. In addition, on 23 September the Government put out for public consultation the draft of a new national environmental chief authority to be set up from 1 January 2027. This authority would license, inspect and sanction, among others, battery plants as well.

MIAK’s reading: the “polluter pays” principle is today an ex-post principle, and ex post it fails precisely when it would be needed most. Remediation cannot be recovered from a company in liquidation, and from a distant quarry or an unidentified polluter only over years, if at all. The risk must therefore be priced at the moment of investment, not after the damage is done.

Part II — Foundations in the literature

Three authors provide the interpretative framework. János Kornai (Hungarian-born economist who developed the theory of the soft budget constraint; Harvard professor 1986–2002) describes in his work A hiány (Economics of Shortage) that if a firm can shift its losses onto the state, it does not bear the risk alone, and its decisions are no longer bound by its own solvency. The state taking over the remediation of a polluter in liquidation is the environmental version of this. Nicholas Stern (British economist, former chief economist of the World Bank, author of the climate-economics report prepared in 2006 at the request of the British government) states in his report The Economics of Climate Change that if the state takes over the liabilities associated with waste, decommissioning or leakage and does not charge the operators for this insurance, it is in effect a subsidy. According to Governing the Commons by Elinor Ostrom (American political scientist, who in 2009 became the first woman to receive the Nobel Memorial Prize in Economic Sciences), a promise to comply with the rules is credible only if there is working monitoring and a graduated sanction proportionate to the seriousness of the violation. The detailed discussion of the literature — by author, with quotations — can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures. The first sets the mandatory amount and forms of the security, the second determines who manages it and when it can be drawn down, and the third covers its public disclosure and the inventory of existing, ownerless pollution.

3.1 A mandatory, risk-proportionate and bankruptcy-proof security as a condition for the permit (bill in the first half of 2027, for new permits from 1 January 2028)

MIAK proposes that in the first half of 2027 the Government submit to the National Assembly a bill that makes the permit of hazardous industrial facilities conditional on an environmental financial security. The scope should cover plants storing large quantities of hazardous substances that fall under the EU Seveso rules, hazardous-waste treatment operators, landfills, and battery-manufacturing plants using hazardous chemicals. The amount of the security should be set by a remediation cost estimate prepared by an independent, accredited expert: how much it would cost to shut down the site safely, remove the hazardous substances and avert the worst realistically expected pollution scenario if the operator disappears. The estimate should be approved by the authority and reviewed every three years and at every significant expansion. Acceptable forms are a bank guarantee, surety insurance and a segregated escrow account. A parent-company guarantee may cover at most the smaller part of the security, because a group-level bankruptcy may take the guarantor down with it. Environmental liability insurance is useful for sudden accidents, but often does not cover slowly accumulating pollution, so on its own it is not enough. The key is bankruptcy-proofness: the law should state that the security is not part of the insolvency estate and that creditors cannot access it. In Kornai’s framework (see 6.4.1), this is what hardens the polluter’s budget constraint. Plants already in operation should be subject to a three-year phase-in, starting with the highest-risk ones.

3.2 The security is managed by the authority, and the drawdown procedure is determined by a rule fixed in advance (with the setting up of the new chief authority, from 1 January 2027)

MIAK proposes that the beneficiary of the security be the new national environmental chief authority, and that this role be included in the draft government decree now under consultation, within the limits of the statutory authorisation. The amount drawn down should not flow into the general revenues of the central budget, but into a remediation account segregated by site, from which only the restoration of the given area can be paid. The conditions of drawdown should be set by a rule fixed in advance: the opening of liquidation or bankruptcy proceedings, failure to comply by the deadline with a final official remediation order, or abandonment of the site without a permit. In line with Ostrom’s design principle (see 6.4.3), the sanction should be graduated: as a first step, a notice and an order to top up the security if the estimated cost has risen; as a second step, a partial drawdown for urgent works; and finally the full drawdown. The division of labour should also be clear. Measurement, orders and drawdown are carried out by the authority, not by the local government. The local government, however, should have the right to initiate proceedings with the authority, and the authority should take a reasoned decision within 30 days. In Iváncsa it was the local government that ordered the well testing, and in Dorog a local councillor had to request the result of the official measurement through a freedom-of-information request. If the security does not cover the full damage, the state should advance the costs, but the law should provide a right of recourse against the former owners and the guarantor.

3.3 A public register of securities and an inventory of ownerless pollution (within 90 days of the law entering into force, annually thereafter)

MIAK proposes that the chief authority keep a public, machine-readable register of every facility subject to the security requirement. It should include the risk category, the approved remediation cost estimate, the amount, form, issuer and expiry of the security, as well as every drawdown and its use. Publicity here is not a gesture of courtesy. It is from this that residents, the municipality and investors alike can see whether the coverage is real, and it is from this that it becomes clear in time if a guarantee expires and is not renewed. Alongside the register, the Government should publish an annual report on how much the central budget has paid for remediation for which there was no security, and how much of this it has been able to recover. This includes the 657 million forints for the Dunai Vasmű and the 3-billion-forint grant scheme announced to avert asbestos damage. The same report should contain the inventory of ownerless contaminated sites, with estimated costs and a timetable. According to Stern’s argument (see 6.4.2), insurance that is not charged for is a hidden subsidy. The report makes this hidden subsidy visible. The proposal builds on the K3 pollution-monitoring and the A1 public-money dashboard programme points.

The common principle of the three proposals is that the “polluter pays” principle must be made real at the moment of licensing, when the company is still solvent and when the investment can still be priced. The security is not a new tax, but the price of an already existing risk, which today is borne by the people living in the municipalities and by taxpayers. Kornai’s and Stern’s arguments lead to the same place: what the state tacitly takes over is a subsidy, and it worsens the quality of corporate decisions. And according to Ostrom, this promise is credible only with monitoring and predictable sanctions.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Budget Remediation ending up as a public cost decreases, as in the case of the Dunai Vasmű The security does not retroactively cover the cost of existing, ownerless pollution; these remain a burden on the state
Industry and investment Pricing the risk encourages better choices of site and technology The guarantee fee and tied-up capital may be a barrier to entry for smaller plants, which may favour the large ones
Financial market Banks and insurers assess the risk, which provides an independent second opinion Narrow domestic supply of products covering gradual pollution, high fees
Municipalities The local government does not have to fund protection from its own budget If the estimate is too low, the security gives a false sense of security
Public administration A single authority manages the estimate, the security and the drawdown The capacity of the new chief authority and the quality of the estimates may become a bottleneck

The main question to weigh is the amount of the security. If it is too low, it is merely symbolic, and in a situation like that of the Dunai Vasmű the state pays again. If it is too high, it may deter investment, or only large international groups can afford it, as they can cover it more easily with a parent-company guarantee. That is why the amount must be based on an independent estimate and on risk categories, not on a uniform sum. The second question is the inclusion of existing plants. A security imposed retroactively raises a question of legal certainty, so the three-year phase-in and the risk-based sequencing are not a concession but a condition for the defensibility of the rule. The third is the market for securities. If domestic banks and insurers do not offer a suitable product, the segregated escrow account as the basic form bridges this gap. The proposal becomes risky if the authority cannot check the estimates professionally. That is why the estimate must be tied to an accredited expert and a public register.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

MIAK suggests following these performance indicators (KPIs, Key Performance Indicators):

  • Security coverage: what percentage of the facilities subject to the security requirement have an approved security. Suggested target value: 100 per cent for new permits from 2028, and 100 per cent for existing plants by the end of 2030.
  • Coverage ratio: what percentage of the approved remediation cost estimate the amount of the security represents. Suggested target value: at least 100 per cent in the highest risk category, with reviews carried out every three years.
  • Remediation at public cost: the annual amount of remediation paid from the central budget without a security, and the share of it recovered. It is worth tracking annually, taking the 2026 Dunai Vasmű expenditure as the baseline.
  • Handling of local-government initiatives: in what percentage of local-government requests to initiate proceedings a reasoned official decision is taken within 30 days. Suggested target value: at least 90 per cent.

5.2 Summary

MIAK asks the Government, together with setting up the environmental chief authority now under consultation, to prepare the bill on a mandatory, bankruptcy-proof environmental security for hazardous plants. The amount of the security should be set by an independent remediation estimate, its forms listed by the law, its manager and beneficiary should be the authority, and drawdown should be governed by a graduated rule fixed in advance. The register should be public, and the Government should account annually for how much the state has paid for pollution for which someone else should have been responsible.

Two MIAK foundational values are at play here. Accountability, because the “polluter pays” promise cannot be enforced today at the point where it matters most: bankruptcy. The security brings responsibility forward, ahead of the damage occurring. Transparency, because the security protects only if residents and the municipality can see whether it exists, how much it is, and whether it has expired. Without the register, the same after-the-fact surprise would recur as at the Dunai Vasmű.

Part VI — Reasoning and further sources

6.1 Press framing by spectrum

In the left-liberal band, Telex covered the Iváncsa case factually, in light of the local government’s statement: the wells are clean, and piped water comes from another source. In its Dorog article, however, it highlighted that the councillor could obtain the measurement results only through a freedom-of-information request, and that according to the mayor, identifying the polluter is not the town’s job but the specialist authority’s. In its Iváncsa article, 444.hu gave prominence to the trade union’s claim that the fines lack precisely a deterrent effect. In the Balaton case, it explored in detail the circumstances of the local government’s sale of the Fonyód plot. HVG took up the financial side of the asbestos case: according to the paper, not a single municipality applied for the 3-billion-forint grant scheme, and Greenpeace is demanding a halt to the surfacing works.

In the public-affairs band, ATV explained the Dunai Vasmű decision in accessible terms: since the companies cannot bear the costs, the state steps in for them. It recalled that the company responsible for the steelworks’ energy supply laid off half of its workers in July. Alongside its Iváncsa article, it also referred to the new authority’s fines of up to 5 billion forints, and in August it reported on the alkaline leak next to the former red-mud reservoirs in Almásfüzitő. 24.hu reported from a residents’ forum in Rákospalota, where according to the expert faster decontamination would be very expensive and would involve demolishing houses. This shows the real price of pollution from decades earlier.

In the economic band, Portfolio covered the Dunai Vasmű case in an emergency frame under the headline “environmental disaster threatens”, and in the asbestos case, following the Austrian Kurier, it highlighted the Burgenland origin of the stone material (some of the articles are paywalled, so only their introductions could be downloaded). In the conservative band, Magyar Nemzet put most sharply the question that this proposal answers. According to the paper, the municipalities are advancing the costs of averting the damage from their own resources, the state fund requires own contribution, and by the end of September the “polluter pays” principle touted by the government had not produced any Austrian payment commitment. The paper contrasted the current slow response with the swift crisis management of the 2010 red-mud disaster. Mandiner did not put the topic in focus during the period examined. The common point across the spectrum is that every band argues about payment after the damage; none of the papers raised the question of coverage in advance.

6.2 Facts and data

Data Value Source
State funds for averting the hazard at the Dunai Vasmű up to 657.103 million forints, from the 2026 central budget, by way of a public-service contract government decision, Hungarian Gazette, 11 September 2026 (ATV, Portfolio)
Reason for state intervention the companies in liquidation cannot provide the financial coverage ATV, 13 September 2026
Iváncsa well testing 55 locations, NMP was not detected in any of the wells Iváncsa local government, 12 September 2026 (Telex, 444.hu, ATV)
Occupational-safety fine for the Iváncsa plant 100 million forints (August) ATV, 12 September 2026
Confirmed asbestos-containing rock in western Hungary 155 thousand cubic metres (179 thousand tonnes) government statement (Telex, HVG, 25 September 2026)
Municipalities affected as many as 250 Magyar Nemzet, September 2026
State remediation grant scheme (asbestos) 3 billion forints, with own contribution; 30 per cent own contribution for cities with county rights HVG, Magyar Nemzet, September 2026
Estimated sealing cost for Szombathely some 1.5 billion forints Magyar Nemzet, September 2026
Kőszeg, Hermina út, asbestos fibres in the air 76,254 fibres/m³ (4-hour measurement), 40,246 fibres/m³ (24-hour average); limit: 1,000 fibres/m³ as a 24-hour average HVG, 25 September 2026
Dorog, Kenyérmezői stream lead 37 times the limit, nickel 12.6 times, petroleum hydrocarbons 14 times freedom-of-information request (Telex, HVG, 25 September 2026)
New national environmental chief authority set up on 1 January 2027, draft government decree, comments until 30 September Telex, 23 September 2026
Fine ceiling of the new authority up to 5 billion forints ATV, September 2026
Almásfüzitő, alkaline leak into the Danube pH 10, over a length of almost one kilometre ATV, 21 August 2026
Built-up share of the southern shore of Lake Balaton 75 per cent Telex, 12 September 2026

Two remarks belong to the figures. First, there are no public, aggregated data on how much the state spends each year on remediation without a security; the items above are made up of individual decisions and grant schemes. That is precisely why MIAK proposes the annual report in point 3.3. Second, the Kőszeg value of 76,254 refers to a shorter measurement period, whereas the limit applies to a 24-hour average. The comparable value is the daily average of 40,246, which is forty times the limit.

6.3 Policy dimensions

  • Environment and climate (programme points) — the pollution-monitoring data provide the factual basis for drawdown, and the circular economy is affected through waste-treatment facilities (programme point ID: K3, K4);
  • Healthcare (programme points) — the health consequences of asbestos and heavy-metal exposure, the prevention data programme (programme point ID: E4);
  • Construction (programme points) — asbestos-containing crushed stone spread as a building material, and public construction data are needed to uncover the chain of responsibility (programme point ID: EP4);
  • Territorial inequality and rural policy (programme points) — the burden of remediation today falls on smaller municipalities with tight budgets, which endangers the minimum level of public services (programme point ID: TE4);
  • Economy and Transparency and anti-corruption policy (programme points) — the leniency of the authority is a typical arena of regulatory capture, and state remediation spending is public money that must be public (programme point ID: G6, A1).

6.4 Literature in detail

6.4.1 János Kornai: Economics of Shortage

In Chapter 13 of A hiány (Economics of Shortage), Kornai contrasts the hard and the soft budget constraint. By the soft budget constraint he means that a losing economic actor is regularly bailed out by the state, so the actor’s behaviour is no longer tied to its own solvency. Among the channels of softening he lists tax remission, non-repayable state grants and soft credit. Among the consequences, he describes risk-sharing as follows:

“The firm does not bear the risk alone, but shares it with the state.”

According to Kornai, the firm can in such cases shift the consequences of bad luck or poor adaptation primarily onto the state. A side effect of this is that the firm adapts not in the workshop but in the offices: it bargains to obtain privileges and concessions. Kornai analysed the planned economy, but the mechanism also works in a market economy if there is no advance coverage for environmental risk. In the case of the Dunai Vasmű, this means that the risk of remediation did not appear in the owners’ decisions during the years of operation, because in the end the state took it over. The bankruptcy-proof security hardens the constraint on the side of environmental risk: the company must see the price of the damage already while operating.

📖 Source: János Kornai: A hiány (Economics of Shortage, 1980), Section 13.5: The soft budget constraint

6.4.2 Nicholas Stern: The Economics of Climate Change: The Stern Review

Among climate-policy instruments, Stern’s report also discusses how the state should handle the long-term liabilities associated with technologies: nuclear waste, decommissioning costs, or possible leakage from facilities that capture carbon dioxide and store it underground. His thesis is simple:

“Governments can bear some of these costs but, unless suppliers and ultimately consumers are charged for this insurance, it will be a subsidy.”

Elsewhere, the report also presents the “polluter pays” principle as a principle derived from rights: the right to protection from environmental damage caused by other people’s production and consumption patterns gives rise to an obligation to compensate. Stern’s line of argument is not about traditional industrial pollution, but its logic can be transferred to it directly. The shutdown and remediation risk of a hazardous industrial facility is just as much a long-term liability as the decommissioning of a power plant. If the state takes this over for free, it is covertly subsidising the industry, and the amount of the subsidy appears nowhere in the budget. That is why MIAK asks in point 3.3 for an annual statement of remediation expenditure without a security.

📖 Source: Nicholas Stern: The Economics of Climate Change — The Stern Review (2006)

6.4.3 Elinor Ostrom: Governing the Commons

Examining long-enduring self-governing institutions for common-pool resources, Ostrom concludes that a promise to comply with the rules is credible only if someone actually monitors compliance. Without solving the problem of monitoring, credible commitment cannot come about. Among her design principles, the fourth is accountable monitoring and the fifth is graduated sanctions: the rule-breaker can expect a gradually escalating sanction depending on the seriousness and context of the violation. Ostrom observes that in well-functioning systems the initial sanctions are surprisingly mild; the deterrent force comes from predictability and the continuity of monitoring. For the environmental security, two lessons follow from this. First, the security on its own is only a promise; its validity depends on official monitoring and regular review of the estimate. Second, drawdown should not be a single all-or-nothing decision, but a set of steps known in advance. That is why MIAK proposes in point 3.2 the sequence of notice, partial and full drawdown. (Because of the volume’s legal status, it appears here only in paraphrase.)

📖 Source: Elinor Ostrom: Governing the Commons — The Evolution of Institutions for Collective Action (1990)

6.5 International comparison

EU law today treats environmental financial security differently by sector. The Landfill Directive and the Directive on the management of waste from extractive industries make financial security mandatory as a condition of the permit. The 2004 Environmental Liability Directive, by contrast, only requires Member States to encourage the development of financial security instruments and markets. Some Member States, such as Spain, have gone further and required a security tied to a risk analysis for a wide range of hazardous activities. In the United States, facilities handling hazardous waste have for decades had to demonstrate that they have coverage for the estimated cost of closure and post-closure care. Accepted forms include a trust fund, surety bond, bank guarantee (letter of credit), insurance and, under strict conditions, a parent-company guarantee. There, too, the clean-up of contaminated sites left without such coverage had to be financed from public money for decades. This shows exactly what Stern’s thesis (see 6.4.2) expresses: insurance that is not charged for ultimately becomes a public burden. The Hungarian lesson is that the security is a proven instrument and its forms are well developed; the domestic task is to define the scope, to declare bankruptcy-proofness and to ensure publicity. The cross-border nature of the asbestos case is also a warning that a domestic security does not cover the risk of imported contaminated material. There, distributor liability and a Hungarian–Austrian agreement remain the possible route.

Environment and climate

  • K3 — Pollution monitoring
  • K4 — Promoting the circular economy

Healthcare

  • E4 — Prevention data programme

Construction

  • EP4 — Construction-industry transparency

Territorial inequality and rural policy

  • TE4 — Rural public-service minimum

Economy

  • G6 — Programme against rent-seeking and regulatory capture

Transparency and anti-corruption policy

  • A1 — Public-money dashboard

Proposed new programme point: Mandatory, bankruptcy-proof environmental financial security — a security tied to the permit of hazardous industrial facilities, based on an independent remediation estimate, with management by the authority, a graduated drawdown procedure, a public register and an annual statement of state remediation without a security — for the Environment and climate area.

6.7 List of sources

Press sources (MIAK press monitor, 13 September 2026 — topic 5; 24 September 2026 — topic 8; 26 September 2026 — topic 5):

Knowledge base references (books):

  • 📖 János Kornai: A hiány (Economics of Shortage, 1980)
  • 📖 Nicholas Stern: The Economics of Climate Change — The Stern Review (2006)
  • 📖 Elinor Ostrom: Governing the Commons — The Evolution of Institutions for Collective Action (1990)

MIAK internal materials:

  • MIAK policy area: Environment and climate (background material — current situation, pricing of externalities)
  • MIAK policy area: Environment and climate (programme points; programme point ID: K3, K4)
  • MIAK policy area: Healthcare (programme points; programme point ID: E4)
  • MIAK policy area: Construction (programme points; programme point ID: EP4)
  • MIAK policy area: Territorial inequality and rural policy (programme points; programme point ID: TE4)
  • MIAK policy area: Economy (programme points; programme point ID: G6)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point ID: A1)
  • MIAK topic monitor, 27 September 2026 — topic 2, score: 83/100

Supplementary public data sources:

  • Hungarian Gazette (Magyar Közlöny), 11 September 2026 — the government decision on averting the hazard at the Dunai Vasmű (as reported by ATV and Portfolio)
  • Vas County Government Office — the record of the asbestos-concentration measurement in Kőszeg (as reported by HVG)

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