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Background on the Energy Scene in Austria

From 2000 to 2016, Austrian energy consumption rose 18.6%, mainly in the transport and industry sectors. Oil, gas, and coal make up for 65.9% of the energy sources in the country. Energy efficiency improved by 20% from 2000 to 2016 and was mainly achieved within the household sector. Efficiency in industry and transport improved by 16% and 9%, respectively.

According to the OECD profile on environmental taxes in Austria, energy taxes represent 53% of the environmentally related tax revenue, compared to an OECD average of 70%. With a population that is still expected to grow in the next twenty years, it is vital to Austria’s economy and environment to consider methods best at reducing energy consumption and increasing energy efficiency. On the following page, the focus will be on reducing consumption through the market. Austria, through their membership in the European Union (EU), submitted their Nationally Determined Contributions (NDC) to the Paris Agreement in 2015 where they agreed to a 40% (as compared to 1990 levels) domestic reduction in greenhouse gas (GHG) emissions by 2030. The overall reduction in energy consumption will therefore not only benefit the domestic economy but also play a pivotal role in the international environmental stage.

Excise Tax v. Explicit Carbon Tax

Austria has failed to enact an explicit carbon tax, as revealed by the Austrian Taxing Energy Use 2019 Report. Austrian energy taxes are placed on mineral oil, natural gas, solid fossil fuels, and electricity. The energy excise taxes are placed across six sectors from the road, off-road, industry, agriculture and fish, residential and community, and electricity. These taxes are excise taxes and mostly targeted towards road and railway fuels, mainly being diesel. Furthermore, excise taxes exist in smaller levels in the industry sector when used for heating or in stationary motors. There are few electricity excise taxes as well which are placed on natural gas and renewables. There is a clear concern from an environmentalist perspective regarding taxes on renewables.

From the initial introduction of excise energy taxes from 1996 to 2016, the Austrian energy tax revenue increased from 142€ million to 899€ million. That is a 15.8% increase in energy tax revenue, however, when compared to the overall tax revenue of Austria, is it simply an increase of .4%. Energy taxes do not account for overall very much economic growth in Austria, yet may prove to be more impactful if the energy taxes were strongly regulated.

Sun Tax

The Austrian Government, prior to the recent election in late September, had removed the “sun tax” in which solar households had been required to pay 0.015€ on every kilowatt-hour (KWh) above 25 megawatt-hours (MWh). The removal of this tax is important in reaching the goal of 100% electrical energy independence by 2030. This important political gesture allows for increased usage of renewable energy that will be attractive to average consumers. Push for expansion of renewable energy comes from Austria's renewable energy companies, such as Photovoltaic Austria (PVA). At the conclusion of negotiations, Austrian officials were able to set aside “€36 million per year from next year to 2022 to fund solar and energy storage as part of the green electricity package,” a pivotal move prior to the snap election that took place a few days later. Whereas it is critical to increasing green taxes, Austrian authorities must simultaneously make it easier for the introduction of renewable energy to take over the market.

Balancing Green Goals Amidst Political Instability

The previous Austrian government had set an ambitious goal to have 100% of electricity production to be sourced from renewables. Though Austria displays a strong attitude towards the environment, there is some indication of greenwashing. After all, Austria is currently only 10% of reaching this goal. Austria had failed to introduce stronger and more radical mechanisms necessary to reach their international commitments. States made worldwide 2030 commitments but with a lack of enforcement mechanisms, it is possible that goals will not be reached. The use of an excise tax is necessary but they are currently at relatively low levels. “Relatively” being that the excise tax is currently around 15€ per gigajoule (GJ) or less. This is slightly lower than the average of energy excise taxes across the EU at 20€ per GJ or slightly higher.

Furthermore, the lack of an explicit carbon tax will likely diminish any hope of a strong environmental conversation within the Austrian government and therefore result in the exacerbation of consequences related to anthropogenic climate change. While this was an already alarming characteristic of the previous government, the recent parliamentary election handed the majority to a more conservative, People’s Party. The People’s Party quickly denounced any potential CO2 tax. Considering that this is not a priority for the new government, it will be up to private companies, such as Verbund, to invest in the renewable energy sector.

Works Cited

Austrian Energy Agency. “Energy efficiency trends and policies in Austria.” Intelligent Energy Europe Programme. Last updated June 2018. https://www.odyssee-mure.eu/publications/national-reports/energy-efficiency-austria.pdf

Enkhardt, Sandra. “Austria scraps its sun tax.” PV Magazine. Last updated September 23, 2019. https://www.pv-magazine.com/2019/09/23/austria-scraps-its-sun-tax/

European Commission. “Excise Duty Tables.” Directorate-General Taxation and Customs Union. Last updated January 1, 2019. https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/excise_duties/energy_products/rates/excise_duties-part_ii_energy_products_en.pdf

Latvian Presidency of the Council of the European Union. “Intended Nationally Determined Contribution of the EU and its Member States.” Last updated March 6, 2015. https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Belgium%20First/LV-03-06-EU%20INDC.pdf

OECD. “Environmentally related taxes - taxes related on energy use.” Centre for Tax Policy and Administration. Last updated 2016. https://www.oecd.org/tax/tax-policy/environmental-tax-profile-austria.pdf

OECD. “Details of Tax Revenue - Austria.” OECD Stat. Last updated 2019. https://stats.oecd.org/Index.aspx?DataSetCode=REVAUT#

OECD. “Taxing Energy Use 2019: Country Note - Austria.” Supplement to Taxing Energy Use 2019. Last updated 2019. http://www.oecd.org/tax/tax-policy/taxing-energy-use-austria.pdf

Population Pyramid. “Austria.” Population Pyramids of the World from 1950 to 2100. https://www.populationpyramid.net/austria/2025/

Shwarz-Goerlich, Alexandra. “Carbon pricing inevitable for Austria: Verbund CEO.” Reuters. Last updated October 15, 2019. https://www.reuters.com/article/us-verbund-ceo/carbon-pricing-inevitable-for-austria-verbund-ceo-idUSKBN1WU1IY