VZCZCXRO1582
RR RUEHAST RUEHDH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHSL RUEHTM
RUEHTRO
DE RUEHVI #1554/01 3431503
ZNR UUUUU ZZH
R 091503Z DEC 09
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC 3824
INFO RHEBAAA/DEPT OF ENERGY WASHDC
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 1247
RUEHFR/AMEMBASSY PARIS 0978
RUEHSW/AMEMBASSY BERN 1222
RUEHRL/AMEMBASSY BERLIN 1805

UNCLAS SECTION 01 OF 02 VIENNA 001554 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG SENV ECON KGHG AU
SUBJECT: Hydropower, Austria's Mixed Blessing 
 
REF: (A) VIENNA 1155; (B) 08 VIENNA 1819; (C) 08 VIENNA 956 
 
¶1. SUMMARY:  Austria is blessed with extensive hydropower resources 
which provide the bulk of its electricity supply -- but come with 
environmental and political costs.  Austria's hydropower potential 
is (TWh) 56 terawatt hours annually -- of which 38 TWh are already 
installed -- but further expansion will likely meet fierce 
environmental resistance.  A popular uprising which scuttled a huge 
Danube hydropower project ("Hainburg") 25 years ago this month 
remains a touchstone for environmentalists, almost on par with 
opposition to nuclear power.  The resulting contradiction -- 
environmentalists dead-opposed to the country's main clean energy 
source -- puts Austria at risk of missing its EU renewables target 
for 2020 (34% of energy mix, up from 24% now).  END SUMMARY. 
 
Hydropower Accounts For Bulk Of Renewables Potential 
- - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶2. With its steep geography and abundant fresh water, Austria 
already relies on hydropower for 60% of its electricity production. 
Since hydropower is "carbon-neutral" and relatively cheap, it is an 
attractive source for Austrian policy makers and utilities to reach 
the country's "ambitious" EU renewables target (34%) rather than 
more costly options such as wind, solar, and biofuels.  The Austrian 
Association of Electricity Producers (VEO) estimates that hydropower 
accounts for half of Austria's feasible new renewable capacity 
through 2020.  Barbara Schmidt, VEO General Secretary, told Post 
that providers will invest over $12 billion in high-voltage grid and 
renovation/ construction of hydropower stations over the next eight 
years, to increase output by a tenth. 
 
¶3. The industry fears that public resistance and tighter 
environmental standards (in a planned National Waters Management 
Plan/WMP) could significantly hamper extension of hydropower.  The 
WMP foresees high water quality and biodiversity standards near 
hydropower stations in accordance with the EU Water Framework 
Directive (2000/60/EC).  "Water quality is very good already" says 
Schmidt and further improvement would require investments of $1.5 
billion (for measures such as fish migration support), which 
producers could not afford.  In that case, Austria will not reach 
its renewables goals for 2020. 
 
Is Hydropower A Threat To Austria's Rivers and Wetlands... 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶4. Austria's environmentalists oppose new dams.  2009 marks the 25th 
anniversary of the biggest environmental "uprising" in Austria's 
history:  thousands of protestors occupied alluvial forests for 
weeks in December 1984 to oppose construction of a Danube hydropower 
station in a sensitive habitat (now part of the "Danube-Auen" 
National Park).  A leader of that movement and now Director of 
Vienna's Natural History Museum, Bernd Loetsch, calls hydropower 
"massively overrated" as a "clean energy" response to the climate 
challenge.  Austria's hydropower potential is virtually tapped out 
already; new projects would merely cover five years worth of 
projected new 
electricity demand.  Austria should focus instead, Loetsch argues, 
on the potential "40 percent reduction" in demand achievable via new 
efficiency measures. 
 
¶5. New hydropower projects would mean "disaster" to natural habitats 
in Austria's few remaining river biotopes, says the Austrian chapter 
of the World Wide Fund for Nature (WWF).  Environmentalists point 
out that Austria's 5,400 kilometers of rivers are already bisected 
by 747 power stations and 3,700 barriers. 
 
... or the Carbon-Free Answer to Growing Energy Needs? 
- - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶6. Schmidt from VEO says building hydropower stations in the 
national park areas is not planned and counters the 
environmentalists' position against hydropower.  The producers' case 
for further expanding hydropower: 
- Over the past decade, both overall energy demand (up 17%) and 
particularly electricity consumption (up 25%) have grown inexorably: 
 even in the crisis year of 2008, electricity demand was up 2%; 
- There is little potential to expand other renewables dramatically 
in the span of a decade; 
- Over the long term, Austria must dramatically expand "carbon free" 
energy; 
- Austria's renunciation of nuclear energy (unlike most of its 
neighbors) gives it no other large-capacity, low-carbon energy 
sources; and 
- Austria has been a net electricity importer since 2003, making it 
increasing dependent on others. 
 
¶7. Schmidt cited a July 2009 Gallup poll in which 93% of Austrians 
 
VIENNA 00001554  002 OF 002 
 
 
rated hydropower as "very important" or "important" source of energy 
supply to maintain a "sound environment".  42% had a positive 
opinion about hydropower stations, 7% a negative view, and 51% were 
neutral.  "We want to speak up for the silent majority", she said. 
 
Divisions within the "Green" Community 
- - - - - - - - - - - - - - - - - - - - 
 
¶8. The debate over costs and benefits of hydropower was in the 
center of a recent Umbrella Organization of Environmental NGOs 
(UOEN) meeting to discuss the lessons of "Hainburg" 25 years later. 
A representative of small hydropower operators emphasized 
hydropower's potential to reduce greenhouse-gas emissions, create 
local jobs, avoid electricity imports, and bolster security of 
supply.  In contrast, UOEN's water specialist termed potential new 
hydropower capacity (which he pegs at just 2-3 Terawatt hours) "a 
drop in the ocean" and not worth destroying the remaining 15% of 
Austria's river landscapes which are still ecologically intact. 
 
Should Austria Pursue Energy Independence? 
- - - - - - - - - - - - - - - - - - - - - - 
 
¶9. Austria's mainstream policy-makers generally support hydropower, 
but lack consensus on overall energy policy.  GoA Environment 
Minister Berlakovich (whose portfolio extends to renewables and 
water management) advocates "energy autarchy" through renewables -- 
but Wolfgang Anzengruber, CEO of Verbund (Austria's largest 
electricity provider) calls energy independence a "nonsensical" goal 
for Austria, a country which foreswore nuclear power (the source of 
30% of Europe's energy).  Anzengruber advocates extending hydropower 
"wherever possible" (COMMENT: a formulation which sidesteps 
ecological concerns). 
 
International Dimension 
- - - - - - - - - - - - 
 
¶10. Building on its alpine image, Austrian companies are 
frontrunners in building and operating hydropower facilities in 
Europe and beyond.  Verbund, for instance, is bidding for hydropower 
licenses from Electricite de France (EdF) and holds a 46% stake in 
Poweo, France's second largest distributor.  In Italy, Verbund's 
market share in hydropower is 10%; Verbund is targeting in similar 
share in Turkey in conjunction with partner Sabanci (ref C). In 
Albania, Verbund will soon be the first foreign company to build a 
hydropower station there. 
 
¶11. Another prominent Austrian firm in the sector is Andritz, a 
world leader in building and servicing hydroelectric dams.  Andritz 
was slated to lead the consortium building of the huge Ilisu dam 
project in Turkey, with guarantees from Austria's export financing 
arm (Kontrollbank) and the German and Swiss export authorities.  In 
July, Germany and Switzerland withdrew financing due to 
environmental concerns, with the Austrian Kontrollbank reluctantly 
following suit.  According to press reports, Andritz is considering 
a deal with Chinese investors to realize the Turkish dam project. 
In addition to building new plants, Andritz specializes in 
modernizing and rehabilitating of hydropower stations around the 
world, including in the United States: Tacoma Power's Mossyrock dam 
in Washington State was a 2009 project.  Andritz has expressed hope 
to participate in more U.S. projects in connection with the current 
USG push towards energy independence and lower emissions. 
 
COMMENT 
- - - - 
 
¶12. Hydropower is Austria's primary source of electricity -- but 
covers just 20% of overall energy consumption.  Hydropower 
availability was a big reason Austrians had the luxury of 
"renouncing" the use of nuclear power.  While the energy industry 
and most politicians (except the Greens) regard new hydropower as 
the best means to reach renewables goals, environmentalists and many 
scientists are adamant about its ecological costs.  Rather than ease 
the debate, the new urgency to stop climate change is likely to 
bring differences to the forefront, if and when utilities move to 
construct large new dams in Austria.  END COMMENT 
 
EACHO