In Hungary, a household energy price regulation for network energy carriers and services has been in place since 2013 (in Hungarian: rezsicsökkentés). Until 2022, the system was not differentiated, meaning that household consumers benefited from the welfare transfer provided by the regulation regardless of their income status and consumption volume. The restriction of the scheme enforced in 2022 did not enforce social considerations either, it only limited the annual consumption volume of energy supplied at the fixed tariff to a relatively high amount established uniformly nationwide.

The beneficiaries of this system do not include households that heat their homes partly or entirely with solid fuels, including firewood. In this context, the government has been operating the Social Fuel Program for a much narrower social stratum since 2012. The program was designed with several significant differences compared to the reduction of utility costs for grid-connected energy services:

• The program is limited to energy subsidies for those in social need only, and actual eligibility must be determined based on a series of sophisticated social indicators.
• In addition to determining social need, a volume limit was set for the amount of subsidized fuel per person and per household.
• The program is also limited by settlement size, as this fuel subsidy can only be used in settlements with a population of no more than 5,000.
• The annual subsidy is not unlimited, and has been only HUF 5 billion per year for the last seven years, compared to the subsidy fund used to reduce utility costs for grid-connected energy, which was opened from above and has been between HUF 700 and HUF 1,300 billion per year for the last four years.
• The allocation of social fuel subsidies is carried out by local governments, from the application for subsidies through the identification of beneficiaries to the purchase, transport and distribution of subsidized social fuel.

In the following, we present our research results based on our own data collection, in which we evaluate the Program from an economic perspective, including the efficiency of social firewood distribution. We believe that our results may be relevant not only for the announced further development and expansion of the firewood program, but also for the development and improvement of the sustainability of household tariff regulation of network energy services. In the first part of the policy brief, we summarize the regulatory details of the Social Fuel Program and its results to date. Then, we describe the research database we used and the statistical characteristics of households using firewood. In the third part, we describe how we captured social need status, and finally we present how successful the firewood part of the Social Fuel Program can be based on four different efficiency indicators.