VZCZCXRO3363
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSL RUEHSR
DE RUEHVI #1155/01 2541134
ZNR UUUUU ZZH
R 111134Z SEP 09
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC 3286
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEAEPA/EPA WASHDC
RHEBAAA/USDOE WASHDC

UNCLAS SECTION 01 OF 02 VIENNA 001155 
 
SIPDIS 
 
STATE FOR OES/EGC, EUR/CE 
 
E.O. 12958: N/A 
TAGS: SENV KGHG ENRG EIND ECON AU
SUBJECT: Austria Climate Update: GoA Investing Heavily, But Still 
Far Short of Binding Targets 
 
REF:  (A) VIENNA 743 AND PREVIOUS; (B) VIENNA 272 
 
¶1. SUMMARY:  Leading Austrian researchers say the GoA must invest 
much more in the fight against global warming in order to sustain 
the emissions and energy use reductions associated with the ongoing 
economic crisis.  Existing and planned laws/standards and investment 
levels are not enough to meet Austria's greenhouse gas reduction 
commitments (emissions are 11% above 1990 levels versus a 13% 
reduction).  The GoA's main instrument for "green" financing (the 
Austrian Climate and Energy Fund/CEF) has strong projects -- 
including electric car mobility -- but these represent a "down 
payment" at best.  END SUMMARY. 
 
Lower Emissions, But Still Trailing EU Performance 
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¶2. WIFO (a leading Austrian economic research institute) predicts 
that annual energy consumption will be 10% lower and CO2 emissions 
will be down 7 million tons in 2010 ("Repercussions of the Economic 
Crisis on Energy Consumption and Emissions")  WIFO and others are 
urging the GoA to hold onto this "positive" effect of the economic 
crisis once the economy rebounds -- since Austria has exceed its 
Kyoto emission cap by a much higher percentage (28%) than the EU 
average (4%). 
 
Experts: 5% Green Stimulus Share in Austria / 12% in U.S. 
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¶3. WIFO experts want to make future economic stimulus spending more 
"green" -- particularly in the area of sustainable energy systems. 
WIFO estimates that the "green" share of 2008/09 stimulus packages 
was 16% worldwide, 12% in the U.S., 81 %(!)in South Korea, 21% in 
France and 13% in Germany, but only between 5 and 11% percent in 
Austria, depending on which measures are counted as environmentally 
friendly. (COMMENT:  WIFO's analysis mirrors Post's internal 
estimates of "green" stimulus spending in ref B - END COMMENT). 
 
¶4. WIFO says the key to reducing Austria's emissions is investing in 
a carbon-free energy supply.  Its experts are calling for: 
- More subsidies for thermal retrofitting in industry and 
households, and energy-neutral ("passive") houses; 
- Promotion of sustainable energy sources such as wind and solar 
over "traditional" oil, gas and coal; 
- Increasing the biofuels share of gasoline/diesel blends; 
- Raising the mineral oil tax; 
- More funding for the Climate and Energy Fund (CEF) from 2010; 
- Reducing "forced mobility" by redoing city/regional plans and 
other land-use regulations. 
 
EUR 500 Million Earmarked For Green Investments 
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¶5. The embassy met with CEF Research Manager and Analyst Christoph 
Wolfsegger to learn more about the GoA's main instrument to 
stimulate sustainable energy production and measures against global 
warming.  He reported that the CEF, active since 2007 and with EUR 
500 million in funding, has come under fire for moving slowly as a 
result of frictions within its bloated board structure.  Recent 
amendments to the CEF legislation now limit oversight to two 
ministries (Transportation/Technology and Environment/Agriculture) 
and a small advisory board.  This bureaucratic streamlining should 
allow green funds to reach the awarded companies and organizations 
more quickly. 
 
¶6. Wolfsegger presented us with the 2009 program (published only in 
July 2009 due to infighting over the fund's structure and a late 
government decision to reallocate EUR 29 million from the CEF budget 
to finance an independent program on "Thermal Sanitation of 
Buildings").  The remaining EUR 121 million will be channeled into 
three areas: 
1) Research & Development in the areas of energy technologies and 
climate research (EUR 51 million); 
2) Public and regional transportation, environmentally-friendly 
freight transport and mobility management (EUR 40 million); and 3) 
market penetration of sustainable energy technologies that are 
relevant to greenhouse gas reductions (EUR 30 million -- NOTE: most 
CEF budget cuts were in this area). 
 
U.S. Companies Active In Austria Can Apply For Funding 
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¶7.  All public and private entities, including foreign companies, 
can apply for funding under the CEF guidelines.  Most CEF funding in 
2008 (EUR 150 million) went to government-related Austrian 
companies, but foreign companies were not excluded.  For example, 
General Electric (through its Austrian subsidiary GE Jenbacher") 
received EUR 1.4 million for emissions reductions related 
performance enhancement of gas engines. 
 
VIENNA 00001155  002 OF 002 
 
 
 
A Promising Project: E-Mobility 
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¶8. Asked about the most interesting and innovative project in the 
2009 program, Wolfsegger pointed to the "Framework Program 
E-Mobility" which strengthens innovative companies that invest in 
electric cars. The CEF regards electric cars as a key factor in 
reducing greenhouse gas emissions. EUR 7 million will be earmarked 
for e-mobility research R&D, EUR 4 million for subsidies in 
investments, and EUR 2.5 million in setting up an electric-car model 
region (in the western most Austrian state of Vorarlberg).  The 
first step in this trial will be to equip all public vehicles with 
electric engines.  The CEF's envisions a future where only electric 
vehicles are allowed in the downtown areas of large Austrian cities. 
 
 
¶9. Major Austrian companies, led by government-dominated electricity 
provider Verbund and automotive company Magna Austria, will fund the 
first 100 vehicles for the model region. As part of the "Austrian 
Mobile Power" initiative, they plan to invest EUR 50 million into 
electric cars with the goal of having 100,000 electric cars on 
Austrian roads in 2020.  Verbund CEO Wolfgang Anzengruber estimates 
that the initiative and related projects will trigger EUR 5 billion 
of investments in Austrian electric vehicle infrastructure. 
 
¶10. Other CEF projects include subsidies for residential 
photovoltaic installations (EUR 18 million), battery research, and 
consulting for energy efficiency measures in municipalities. 
Finally, the CEF has also providing EUR 8 million to the Austrian 
Climate Research Program (ACRP); climate research has garnered 
attention recently due to Austria's increasing problems with extreme 
weather situations (a record number of windstorm, flashflood, high 
water, and heat wave since 2002).  The research is intended to 
produce better climate change mitigation strategies. 
 
¶11. By the end of 2009, the Energy and the Environment Ministry plan 
to publish a "Master Energy Plan" to outline concrete measures to 
meet Austria's energy efficiency and supply security goals. 
Economics Minister Reinhold Mitterlehner admits that meeting those 
goals will be difficult, since Austria rejects the use of nuclear 
energy and faces huge resistance from environmental NGOs against 
expanding hydropower and other forms of large-scale energy 
production (septel). 
 
COMMENT: Green Baby Steps In The Right Direction 
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¶12. The latest WIFO study confirms that Austria's investments in 
"green technology" are still more about image than substance.  The 
CEF's new funding strategy seems to be a step in the right 
direction, but it still falls far short of the industrial 
transformation originally envisioned.  Private industry remains 
skeptical despite its collaboration with CEF on e-mobility project. 
Most environmental and energy programs are still tailored towards 
public entities such as municipalities and government-owned 
companies.  END COMMENT. 
 
EACHO