VZCZCXYZ0005
RR RUEHWEB

DE RUEHVI #0568/01 0641605
ZNR UUUUU ZZH
R 051605Z MAR 07
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC 6547
INFO RUCNMEM/EU MEMBER STATES
RUEHBS/USEU BRUSSELS
RHEBAAA/USDOE WASHDC

UNCLAS VIENNA 000568 
 
SIPDIS 
 
SIPDIS, SENSITIVE 
 
STATE FOR OES/GC AND EUR/AGS 
STATE ALSO PLEASE PASS TO EPA/OIA - ALMEIDA 
 
E.O. 12958: N/A 
TAGS: SENV ENRG EIND ECON PGOV AU
SUBJECT: CLIMATE CHANGE: AUSTRIA TALKING TOUGH, BUT ACTING SOFTLY 
 
 
Summary 
------- 
 
¶1.  Austria, with one of the most ambitious Kyoto Protocol targets, 
has thus far failed to achieve its emissions reduction goals. 
According to Austria's 1997 Kyoto Protocol commitment, it should 
reduce emissions to no more than 69 million tons of CO2 equivalent 
by 2012.  In 2005 Austria emitted 93 million tons.  Between 1997 and 
2005, there was only one year when emissions did not rise. 
Austria's deviation from its Kyoto target and actual emissions is 
one of the widest among developed countries.  In an effort to 
achieve its Kyoto target, the GoA plans to place more emphasis on 
investments abroad that would count towards Austrian CO2 reductions. 
 If current trends continue, Austria may have to buy as much as Euro 
1.5 billion worth of emissions certificates from nations in surplus. 
 End Summary. 
 
 
Austrian CO2 Emissions Rising and Rising 
---------------------------------------- 
 
¶2.  According to January 2007 figures from the Austrian Federal 
Environment Agency (FEA), Austria emitted a record level of 
greenhouse gases in 2005, the equivalent of 93 million tons of CO2. 
This is 18% more than in 1990, the Kyoto reference year (79 million 
tons).  The figure is also more than 30% above the self-proclaimed 
goal of 68.9 million tons that Austria wants to reach in 2008-2012. 
Since 1995, greenhouse gas emissions rose constantly until 2003. 
The introduction of a federal climate strategy in 2002 apparently 
triggered a turnaround in 2004 with a small drop in emissions. 
However, an increase of 2.3% in 2005 signals a return to previous 
trends. 
 
 
No Sector Improving, But Transportation is Worst 
--------------------------------------------- --- 
 
¶3.  The figures are even more discouraging for Austria's plan when 
you consider sectoral emissions.  26.5% percent come from industry 
with an increase from 22.3 to 24.7 million tons of CO2 equivalents 
compared to 1990.  Transportation (26.2% of total) almost doubled 
emissions from 12.8 to 24.4 million tons.  Energy production 
contributes 17.1% to emissions, with an increase from 13.7 to 15.9 
million tons.  While the EU's Emissions Trading Scheme (ETS) covers 
industrial and energy production emissions, national measures must 
address the fast growing transportation emissions. 
 
 
At Least Seven EU Countries to Miss Kyoto Targets 
--------------------------------------------- ---- 
 
¶4.  Compared to other EU Member States with emissions reduction 
plans, Austria ranks number 21 out of 23 in terms of achieving 
reduction goals.  According to Helmut Hojesky, the chief GoA expert 
on climate change in the Ministry of Agriculture and Environment, 
Austria is among at least seven countries that will miss targets 
with current policies.  Hojesky maintained that many EU countries 
are facing similar challenges.  Most Member States that are 
achieving targets have either profited from the favorable base year 
(1990) following the collapse of the East Bloc or from very low 
reduction goals (e.g., Greece). 
 
¶5.  With regard to the EU's ETS, Austria submitted its second 
National Allocation Plan (NAP) for the period 2008-2012 in January 
¶2007.  The submission was six months late and came only after the 
Commission had sent the GoA a warning letter.  The initial NAP for 
2005-2007 more or less matched with anticipated industrial 
emissions, so companies did not have to buy certificates on the 
emissions certificates market.  The new NAP calculates emissions 
reductions of 5.3 tons per year (-14%), which may trigger 
significant savings efforts.  However, the ETS covers only 43% of 
Austria's CO2 emissions. 
 
 
GoA Program Focusing On Energy Efficiency 
----------------------------------------- 
 
¶6.  To meet these targets, the new Austrian Government has announced 
the following measures: 
 
- doubling the production of renewable energy to at least 25% by 
2010; 
 
- increasing the use of alternative fuels to 10% by 2010 and 20% by 
2020; 
 
- improving energy intensity by 5% by 2010 and by at least 20% by 
2020; 
 
- and running 5% of all cars on alternative fuels by 2010. 
 
Further, the GoA plans to create a Euro 500 million fund to finance 
energy and climate protection projects, such as making new 
environmental technologies economically feasible. 
 
 
Blaming Germans And Italians For Rising Emissions 
--------------------------------------------- ---- 
 
¶7.  Reducing transportation emissions remains Austria's biggest 
challenge.  The GoA plans to increase the mineral gas tax slightly 
by leveling a one Eurocent tax on gasoline and a three Eurocent tax 
on diesel fuel.  However, the GoA intends to use the additional 
revenues mainly for investments in road and rail expansion. 
According to the FEA, 34% of transportation emissions originate from 
Italian and German vehicles crossing the border to buy cheaper 
Austrian gas.  The GoA has asked for the Commission's permission to 
deduct these emissions (8.4 million tons of CO2 equivalents) from 
Austria's overall emission figures.  The GoA has acknowledged to us 
that this scheme would do nothing to reduce overall levels of 
emissions in the EU. 
 
 
Climate Change Investments Abroad Are The Last Hope 
--------------------------------------------- ------ 
 
¶8.  A glimmer of hope to achieve Austria's Kyoto goals is the use of 
the Kyoto Protocol's flexible mechanisms: Joint Implementation (JI) 
-- cooperating with developing countries to meet their Kyoto 
targets; and the Clean Development Mechanism (CDM) -- crediting 
climate protection activities in developing countries.  The GoA 
estimates that Austrian emission reduction projects abroad account 
for savings of more than 10 million tons of CO2 equivalents. 
Austria has already completed 31 JI and CDM projects, with 170 in 
process at an investment volume of Euro 290 million. 
 
 
Buying Emissions Certificates For Euro 1.5 Billion 
--------------------------------------------- ----- 
 
¶9.  The GoA has told us that it would most likely have to buy 
emission certificates from countries with a certificate surplus to 
meet its Kyoto targets.  The Commission could start treaty violation 
procedures, should Austria fail to reduce emissions as promised. 
The Austrian Economic Research Institute's climate expert, Stefan 
Schleicher, estimates that Austria will miss its commitments by 30 
million tons per year over the 2008-2012 observation period, or 150 
million tons total.  Assuming an average price of Euro 10 per ton of 
CO2 emissions over this period, Austria would have to purchase 
approximately Euro 1.5 billion worth of emissions certificates. 
 
 
Strategy Emphasizes Cuts In Developing Countries 
--------------------------------------------- --- 
 
¶10.  Minister of Agriculture and Environment Josef Proell recently 
announced details of a new strategy to reduce emissions.  Proell 
acknowledged that Austria's emissions will be at only 77.7 million 
tons of CO2 equivalents by 2010.  The GoA must therefore purchase 
the approximately nine million tons shortfall through JI/CDM 
investments.  Compared to the 2002 strategy, the new plan allows for 
an additional two million tons of industrial and transportation 
emissions per year.  Opposition parties and environmental NGOs have 
harshly criticized the plan, arguing that the GoA should concentrate 
more on reducing emissions in Austria. 
 
 
Comment: Not Practicing What You Preach 
--------------------------------------- 
 
¶11.  Austria will continue to fail to meet its Kyoto Protocol 
commitments.  It appears that the Kyoto targets conflict with the 
prospects of slower economic growth and possible job losses 
associated with strict implementation of Austria's ambitious 
targets.  Austria remains a good example of a developed nation that 
is fighting climate change primarily with strong words, rather than 
with actual deeds. 
 
MCCAW#