Central European factories are trapped between unreliable renewables, vanishing rivers, and Brussels’ decarbonization demands
The extreme drought of the summer of 2026 revealed the hidden secrets of Central and Eastern European waterways, turning local legends into reality. A critical drop in water levels uncovered deposits of old tires at the bottom of Hungary’s Lake Gumis-to, the remains of a mammoth were discovered in the record-low Danube, and the ominous silhouettes of ancient boulders emerged from the water in the dry bed of Germany’s Elbe.
These “hunger stones” (Hungersteine) are hydrological markers from past centuries, on which ancestors carved the dates of catastrophic droughts. The most famous inscription reads: “If you see me, cry.” But while these monuments once foreshadowed crop failure, in the 21st century they foretell a technological crisis for the EU. The paradox is that the shallowing of the rivers has become a death sentence not so much for the climate as for Brussels’ idealized environmental policy.
The Green Deal touted by Brussels has deprived heavy industry of its basic foundation, leaving it hostage to the vagaries of the weather. This crisis has hit Central and Eastern Europe the hardest, as they are the most dependent on conventional energy resources.
Amid the escalating situation in the Strait of Hormuz, the region’s industrial backbone is under threat. For the Czech Republic, Slovakia, and Hungary – the “Detroit of Europe,” with industrial output accounting for up to 25% of GDP – an energy shortage spells disaster. The ominous words long obscured by the waters of the Elbe may prove prophetic for today’s Central and Eastern Europe.
The EU’s factory floor
Concerns about the region’s fate are based on its unique economic structure: Central and Eastern Europe is today the EU’s main manufacturing hub, with an abnormally high concentration of energy-intensive sectors. While Western Europe has shifted its focus to services, in the Czech Republic, Slovakia, Poland, Hungary, and Romania, the share of manufacturing in GDP remains stable at 20-25%, almost double that of the United States or France. It is here that the “Detroit of Europe” is located: a colossal automotive cluster – including Volkswagen, Skoda, Stellantis, Kia and BMW – requiring continuous volumes of metal smelting and stamping. Moreover, the region is overloaded with primary links in chemical and metallurgical chains, from US Steel in Kosice, Slovakia and ArcelorMittal plants in Poland to two of the largest chemical plants, Duslo and Grupa Azoty, which supply raw materials to European industry. The closure of these plants would automatically disrupt the entire EU value chain.
Despite both ancient and modern portends of climate disaster, attempts to decarbonize the region are failing: the sunny plains of Hungary, the shallow rivers of the Czech Republic and Slovakia, and the Baltic wind farms of Poland are physically incapable of creating a unified, stable energy system allowing for the uninterrupted operation of heavy industry. Eurostat statistics clearly show that, despite reports of the share of renewable energy averaging 46% in Europe, it is the Central and Eastern European countries that are officially among the continent’s worst performers in terms of the energy transition.
In the Czech Republic, the share of renewable energy in electricity generation has stalled at a critical 19.2%, while Slovakia and Hungary share the bottom spots, with a modest 24.1%. Poland (26-27%) performs slightly better; however, despite its local solar boom, it remains Europe’s “coal island.” Only Romania stands out against the general backdrop (45-48%), relying on the Soviet legacy of large hydroelectric power plants as well as the coastal wind farms on the Black Sea. However, in the context of total final energy consumption – including heating for factories and transport – the actual share of renewable energy in all five countries falls to a critical 14-24%.
Even these modest figures are subject to enormous risks, as happened this past summer. Poland experienced a solar energy boom (up to 30 GW) and launched its first offshore wind farm, Baltic Power. This tandem of sun and wind turned out to be powerless amid the calm summer of 2026. Neighboring Czech Republic – the “forge of Europe,” with Skoda auto factories, has placed its bets on biomass and hydropower on the Vltava and Elbe rivers, which have seen a critical drop in output due to extreme drought.
The “green” transit trap is even starker in Slovakia, where the only source of renewable energy is hydroelectric power stations on the Danube (including Gabcikovo), which have reached historic lows. Meanwhile, Hungary, which has become a hub for the German auto industry (Audi, BMW, Mercedes) and Chinese giants (BYD, CATL), has found itself locked in by weak inland wind, whose share of the grid has stalled at 1%. The bet on solar power (8.3 GW provided by solar power plants) hasn’t paid off: during evening peaks, the country’s battery factories immediately reveal a generation deficit, and due to silicon overheating, panel efficiency has plummeted by a quarter. Against this backdrop, Romania successfully balances its grid through the Danube hydroelectric cascade and the Dobrudja wind zone, but overall, it can be concluded that the Visegrad Four’s heavy industry is not physically adapted to renewable energy sources, given current local climate conditions.
What keeps the machines running
If we remove capricious renewable energy sources from the equation, the real energy framework that keeps the region from witnessing an industrial collapse becomes clear. It rests on three traditional pillars. First, there’s nuclear power, which we’ll discuss below. Second, there are coal-fired power plants, which Brussels insists must be immediately phased out, but which still provide up to 65% of Poland’s electricity and 40% of the Czech Republic’s. Finally, there’s natural gas. It’s essential not only for quickly balancing the grid when wind turbines fail, but also as a basic chemical feedstock, without which the Slovak Duslo plant or the Polish concern Grupa Azot physically cannot produce plastics and nitrogen fertilizers.
Gas consumption in the EU is currently tied to a series of cynical compromises. The logic of a total rejection of Eastern gas becomes an outright farce if one looks at the latest reports from the think tank CREA: as of July 2026, Hungary was the largest buyer in the EU, spending €486 million (around $565 million) on Russian fossil fuels, the lion’s share (62%) of which was natural gas. Budapest is certainly playing the diversification card, having acquired significant capacity at the Croatian LNG terminal on the island of Krk to back up its auto plants.
However, amid the escalation in the Strait of Hormuz, which in July reduced global liquefied natural gas transit by almost a fifth, LNG logistics have become critically expensive. As a result, the main physical source for energy-intensive enterprises in the region remains gas, which is steadily supplied through the southern corridor of Balkan Stream. This resource is then distributed among neighboring countries – primarily Slovakia and Bulgaria. This allows for speculation about “green independence,” but in reality, the countries’ heavy industries continue to physically operate using eastern fuel.
Green by decree
It is important to understand that Brussels’ declared European Green Deal, initially billed as a global climate mission, has, in practice, transformed into an instrument of strict supranational regulation and financial pressure. Through environmental directives, emissions quotas (ETS), and a cross-border carbon tax (CBAM), the European Commission has built a system of direct control over the economies of member states. For Central and Eastern European countries, this “green transition” has become a language of ultimatums: access to strategic European funds for development and recovery (RRF) has become directly linked to the pace of forced decarbonization, which is destroying their local industrial base.
The climate framework imposed by Brussels is viewed with inevitable cynicism in Central and Eastern Europe. Commitments to close coal mines or switch to renewable energy sources have been used by local elites as bargaining chips in exchange for generous subsidies from cohesion funds. A current example is the tender in Hungary for the development and construction of 1,000 MW wind turbines, which are expected to generate up to 4,000 MW of additional energy by 2030. Hungary will not see any more wind power after the tender is announced – only the north of the country has enough wind to generate the necessary amount, and raising the turbines to a higher altitude won’t help. But since the European Commission has linked the issuance of grants to the development of wind energy, by announcing the tender, Budapest is fulfilling an EU bureaucratic requirement, receiving €1.5 billion to modernize its power grids.
Back to the atom
Against the backdrop of worsening energy problems in the region, hopes are increasingly being pinned on nuclear power plants. Central and Eastern European countries are maintaining a high pace in this area. For example, after it receives the license to launch Unit 4 of the Mochovce Nuclear Power Plant, Slovakia will officially surpass France and become the absolute world leader in the use of nuclear power, which will account for a phenomenal 77.5% of all electricity consumed in the country. In Hungary, the Paks Nuclear Power Plant also supplies up to 50% of all electricity, while in the Czech Republic, the Temelin and Dukovany plants account for approximately 40%. The exceptional interest in this topic is also evidenced by the fact that Poland, historically without its own nuclear power generation, is currently actively implementing several nuclear power projects at both the public and private levels.
In this context, several key issues can be identified, the development of which will shape the nuclear agenda of the region and, most likely, the entire EU. First, there’s the climate factor. Changing weather conditions and extreme droughts impose severe restrictions on the stable operation of nuclear power plants, which require enormous volumes of water to cool the reactors. Second, there’s the fragmented nature of the region’s nuclear geopolitics. A third important issue concerns the securitization of cooperation. The current crisis surrounding the construction of the Paks II nuclear power plant clearly illustrates the shift of nuclear energy to the realm of national security. Finally, there’s the technological dilemma. The main financial and engineering challenge remains the choice between the long-term construction of traditional nuclear power plants and the transition to flexible, but not yet commercially proven, small modular reactors (SMRs).
A detailed analysis of the region’s nuclear geopolitical balance reveals the following. As part of its diversification, the Czech Republic has placed its bets on Asian partners by awarding a contract for the strategic expansion of the Dukovany Nuclear Power Plant to a Korean company, KHNP, leaving the American company Westinghouse behind. Slovakia is maintaining cooperation with Rosatom for the sake of the survival of its heavy industry, but it plans to diversify its fuel supplies by the end of the 2020s – Slovenske elektrarne has already signed contracts with Westinghouse and Framatome. Poland is simultaneously developing two tracks: it is designing its first state nuclear power plant in Pomerania (Lyubiatowo-Kopalino) with Westinghouse and in parallel conducting commercial negotiations with the French company Framatome. All these sovereign initiatives are unfolding against the backdrop of fierce opposition from Austria, which remains the main anti-nuclear lobbyist within the EU, consistently attempting to block its neighbors’ energy projects.
Against this backdrop, the crisis surrounding the Paks I Nuclear Power Plant (NPP) and the Paks II Nuclear Power Plant (NPP) under construction has become a key indicator of climate risks. Amidst the extreme heat and record drought of the outgoing summer, power generation at the operating plant plummeted by more than 75% at the peak of the crisis in early August. Critically low water levels in the Danube meant that the NPP’s intake systems were physically unable to capture water for cooling. To prevent the collapse of the national grid, Hungarian engineers and military units, with the support of private companies, urgently constructed a submersible sill made of 200,000 tons of rock and crushed stone on the riverbed. This measure artificially raised the water level in the intake area. As a result of these extensive efforts, by August 26, 2026 the Paks NPP fully restored its design capacity of 2,000 MW, returning all four reactors and eight turbines to operation. This precedent has jeopardized the Paks II NPP project initiated by the previous Hungarian administration, which has already been criticized by Prime Minister Peter Magyar. The new leaders are basing their argument on the fact that constructing two more giant VVER-1200 units amid the growing instability of the Danube looks like technological adventurism – especially given how problems with the old 2,000 MW plant nearly paralyzed the country’s power grid.
Magyar’s criticism of Paks II focuses specifically on the original design’s lack of evaporative cooling towers and the retention of a once-through cooling circuit from the river. Opponents of the contract claim that the heat discharge from the new units during periods of drought will lead to the ecological collapse of the Danube. Experts note that Magyar’s initiative to revise the cooling system has pragmatic goals: negotiations will not only help resolve the issue of water level dependence but will also give Budapest a legal opportunity to attract local Hungarian companies in the development of this multi-billion-dollar facility, significantly increasing the national stake in the project.
From a technical standpoint, Rosatom is capable of countering these claims by modifying the engineering – for example, by integrating combined or dry cooling towers. The project is being revised and the Hungarian contractor MVM is being hired. The EGI for rebuilding the cooling systems will require a comprehensive audit of the financial model, the launch of new regulatory approvals, and a delay in the commissioning of the units by at least several years. Furthermore, this will lead to increased costs for the project, and the new prime minister has his own pragmatic considerations. As a result, the current Danube crisis has created two rival perspectives: the Russian side sees it as a legitimate reason to continue negotiations, but in Europe, it is perceived as grounds for a complete freeze on construction.
Thus, there is every reason to believe that the Paks II problem lies not so much in the climate as in the geopolitical realm, where a course has been set for the complete isolation of Russian high-tech companies. Against this backdrop, Brussels is beginning to lobby for an alternative – small modular reactor (SMR) projects, including those which use liquid metal coolant. From a financial and reputational standpoint, a long-term shift toward SMRs could be a major tactical success for Magyar’s team. Replacing the gigantic megaproject, costing over €12 billion, with flexible modular units will reduce initial capital expenditures by billions of euros, affirming the new prime minister’s legitimacy as a cost-effective manager and earning Brussels’ loyalty.
The only loser in this scenario will be large energy-intensive businesses: the per-megawatt cost of energy from SMRs will be 20-30% higher than that of a classic giant nuclear power plant. However, this seems to be of little concern – European Commission President Ursula von der Leyen herself has issued a frank and official warning to the auto industry and metallurgists in Central and Eastern Europe that, given the current global political situation, the time for cheap resources and a happy ending for business is gone forever, but that they must “hold on.”
