Austria and its Energy Transition: Passive Politicians as Key Risk

View of the Schlegeisspeicher (a reservoir lake for a hydroelectric power plant) in the Zillertaler Alps, across from the Große Greiner
Teaser Image Caption
View of the Schlegeisspeicher (a reservoir lake for a hydroelectric power plant) in the Zillertaler Alps, across from the Große Greiner

At first glance, the Austrian performance in the energy sector looks quite bright: In the year 2014, about 33% of the gross final energy consumption was provided by renewable energy sources.

Only Latvia, Finland, and Sweden had higher shares of renewable energy in the EU. Furthermore, about 71% of the electricity consumption in Austria is already provided by renewable energy sources. The Austrian government is in favor of binding renewable targets at the European level and opposes the ambitions by the nuclear industry to receive more subsidies. But there is also a big dark side on the climate front. Austria failed to meet its Kyoto target: instead of reducing greenhouse gas emissions by 13% compared with 1990 levels, greenhouse gas emissions increased by 2.5% by 2012. Therefore, Austria had to buy CO2 certificates amounting to 71.55 million tonnes of CO2. There are deep rooted reasons for this in the country’s climate and energy policy over the last two decades.

Building blocks from the past

In Austria, the energy production from renewable energy sources is based on hydropower and biomass. Although it is a relatively small country, Austria is the 4th largest producer of hydropower in Europe. The core development of Austria’s hydropower was completed twenty years ago. Today, there is little potential left for hydro. The same is true for biomass; therefore, the potential for „traditional” renewable energy sources is already used up to a large extent.

On the other hand, the Austrian government has not been particularly open to new renewable energy sources, such as wind and solar. The share of renewable energy in the electricity sector has therefore been decreasing every year for many years, while the share of energy from fossil fuels increased. In 2011, after the Fukushima nuclear accident, the Austrian „Ökostromgesetz“ (similar to Renewable Energy Sources Act (EEG) in Germany) was substantially reformed in a way that enabled more wind and solar power onto the grid. Though this reform came too late to go into effect within the Kyoto-period, which ended in 2012, it can still be regarded as a relaunch of an Austrian energy transition in the electricity sector. By 2020, Austria will likely reach a share of 80 percent of electricity provided by renewable energy sources, which could put Austria in a front runner position again. During the 2015 Climate Conference in Paris, Chancellor Faymann and the Environmental Minister, Mr. Rupprechter, declared that by 2030 electricity shall be provided by 100 % by renewable energy sources. However, Faymann stepped down as chancellor in May 2016 without having enshrined this ambitious goal into formal legislation.

Pioneers and lack of political support

While the electricity sector plays a major role in the country’s energy transition, there are other important playing fields in the climate and energy policy that deserve attention, for example the building sector. Buildings contribute to about one third of the Austrian final energy demand. Austria has a pioneering role with the highest density of passive houses in Europe. In the heating sector, emissions have been reduced by 34% from 1990 levels, and the potential for further reductions is vast.

The main drivers of this success have been subsidies incentivizing building renovations as well as higher energy efficiency requirements by many Austrian states, which are responsible for regulations in the building sector. However, the last strategy agreed between the central government and the federal states to increase energy efficiency in buildings dates back to 2008, and the last step to increase efficiency requirements for building renovations was made in 2010. Furthermore, the government cut subsidies for building retrofits by half in 2015. Therefore, the renovation rate of about one percent each year remains alarmingly low. This means that Austria would need about 100 years to renovate its entire building stock. While architects are already constructing the first „ Energy-Plus buildings” that produce more energy than they consume in a given year, more political support for energy efficiency in the building sector is desperately needed in order to build on the success stories of the past. 

While the efficiency in the building sector slowly increases, the share of fossil-based heating systems remains high: out of 3.7 million households, about 1.5 million are still heated with gas, oil, or coal. Furthermore, 616,000 households are connected to district heating systems that are provided by 55% of fossil fuels. A lot needs to be done to put the energy transition in Austria back on track. Unfortunately, Austrian policy makers are alarmingly passive as cheap oil prices make progress even more difficult.

The transport sector is still one of the biggest challenges in Austria. By 2014, greenhouse gas emissions increased by a remarkable 57.6% from 1990 levels in this sector. While policy-makers fail to deliver proposals for real emission cuts, the Austrian economic institute, WIFO, calculated environmentally harmful subsidies of 3.8 to 4.7 billion EUR paid to fossil fuels in Austria. About 2 to 2.2 billion EUR of environmentally harmful subsidies are identified in the transport sector – mainly tax cuts, e.g. for diesel are responsible for this high share. Therefore, incentives for a change in the modal split remain low. A real decarbonization strategy for the transport sector is missing.

Big challenges ahead

In general, Austria has a pioneering role in many aspects, but policy-makers do not act as decisively as they should. Although a poll conducted in 2014 showed that 79% of Austrians supported a rapid phase-out of fossil fuels, there is still no long-term government strategy to phase out fossil fuels in Austria. This is a major gap, as there are strong economic arguments for taking action. About 64% of the energy needed in Austria has to be imported. The import bill for fossil energy has reached 11.4 billion EUR a year in 2014.

As a consequence, much remains to be done if Austria wants to turn back into a real frontrunner in the energy transition. Political action and the implementation of an ambitious decarbonization strategy must be the key drivers for this change.

This article is part of the Heinrich-Boell-Stiftung series on "Energy Transition Around the World".