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Austria has made commendable progress on R&D and developing renewables, but needs to act on energy efficiency and market competition

27 February 2008

“Austria has made good progress in bringing renewable energy technologies forward and is a leader in sustainable energy technology research,” said the Executive Director of the International Energy Agency (IEA), Nobuo Tanaka, today in Vienna. During the presentation of the publication Energy Policies of IEA Countries – Austria 2007 Review, Mr. Tanaka also praised the government’s 2007 revision of the Climate Strategy as a realistic re-assessment of the options available to Austria to meet its Kyoto target, and commended the forward-looking clean energy research undertaken in Austria. “Projects such as the sustainable community of Güssing in Burgenland are inspiring examples for the way in which communities can reduce their environmental footprint and are a model for other countries,” Mr. Tanaka said. Nonetheless, he pointed out that Austria’s energy policy could be improved in some areas and cited the country’s rising CO2 emissions, the policy balance between renewables and energy efficiency, and the lack of effectiveness in introducing competition in the national electricity and gas markets.

Climate Change Strategy
“The revision of the climate strategy in 2007, as well as the introduction of the Klim:Aktiv programme, are very welcome moves by the government,” said Mr. Tanaka. Doubts remain, however, whether these initiatives will suffice to achieve Austria’s Kyoto target set under the EU agreement in 1998. These doubts are exacerbated by the new, much more stringent targets which are expected to be set to Austria under the new European Commission proposals published in January. “It is now important for the Austrian government to rapidly implement all measures in the strategy, to monitor it closely, and to stand ready to amend it further, should it fall short of expectations”, Mr. Tanaka said. Given the scale of the challenge, the Austrian government may have to consider a stronger co-ordination of policy and measures development on the ministerial level.

Balancing Energy Efficiency and Renewables
Austria has done very well in increasing renewables supply, from an already high base, so that today it counts among the IEA member countries with the highest share of renewable energy. Great progress has been made in the utilisation of biomass for heat and electricity production. Austria is leading in the area of energy research and deployment of competitive solutions for the use of biomass, as well as in the field of integrated sustainable energy solutions that are among the most forward-looking anywhere in the world. “This positive development needs to be sustained, but care should be taken to control the cost of adding new renewables capacity, which has increased rapidly in recent years,” Mr. Tanaka observed. It is also doubtful whether the current government policy strikes the right balance between growing renewables supply, and ensuring that energy is used in the most efficient manner. This is particularly the case for buildings: Austrian building standards are a patchwork and generally below what the IEA considers "best practice". Questions also remain whether the Austrian building industry has the capacity to deliver the ambitious goals in the area of refurbishment, foreseen in the climate strategy. Mr. Tanaka encouraged the government to focus more on energy efficiency and called on it to implement the solutions provided by the world-class Austrian research in sustainable building technologies. “The right balance between policies to grow clean energy supply and policies to promote energy efficiency, has not yet been found in Austria,” Mr. Tanaka said.

Market Liberalisation
Austria has commendably been one of the first movers in continental Europe to liberalise its electricity and gas markets. Even though the market was opened in 2001, competition has not developed; so the market continues to be dominated by the traditional, partially state-owned Austrian suppliers. “To be able to provide the environmental solutions we require to deal with climate change, we need functioning energy markets,” Mr. Tanaka said. “A fully competitive market will ensure that the cost of pursuing a more sustainable energy system will be as low as possible.” It is of particular importance for the Austrian energy supply system to improve market transparency and to ensure that investments in new supply infrastructure can be undertaken by new entrants. Regulatory arrangements between the federal government and the state governments should also be considered with a view to remove potential and real conflicts of interest.