AUSTRIAN REACTIONS TO EU COMMISSION'S CLIMATE PLAN

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SUBJECT: AUSTRIAN REACTIONS TO EU COMMISSION'S CLIMATE PLAN


Summary
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1. The EU Commission's Climate Change Package has elicited mostly
negative reactions from the Austrian Government and, especially,
Austrian industry. The plan foresees a reduction in Austria's CO2
emissions by 16% in 2020 from a 2005 base. There has been
particular criticism of the Commission's plan for Austria to
increase its share of renewable energy from 23% (one of the highest
in the EU) to 35%. Austrian industry has also warned that the
"unreasonable" targets could entice companies, particularly in the
steel sector, to relocate from Austria to countries with less
stringent environmental regulations. Most notably, both Economics
Minister Bartenstein and Environment Minister Proell raised the
possibility of some kind of tariffs on goods from "countries that
are not on board with climate change." The Green Party and
environmental groups have criticized the plan as a green light for
the GoA to continue to do nothing. End Summary.


2. The EU Commission's Climate Change Package, unveiled on January
23, but previously widely leaked to Austrian media, has sparked
mostly negative reactions in Austria. According to the package,
Austria must reduce its CO2 emissions by 16% in 2020, using 2005 as
a base year. (Note: in 2005, Austria's CO2 emissions were 14% above
its 1990 base year targets under the Kyoto Agreement. End Note) A
foreseen increase in renewable energy from 23% to 35% has provoked
strong criticism in various circles.


Government Mostly Unhappy
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3. Chancellor Alfred Gusenbauer and Vice Chancellor Wilhelm
Molterer said that Austria remained committed to climate protection,
but only "on the basis of fairness." Noting that Austria's share of
renewables in its energy mix at 23% now is 10% above the total EU
commitment, Gusenbauer argued that the Commission should have
rewarded such "advance work." In Gusenbauer's views, all countries
should bear a comparable burden. (Note: Austrian press reported
that Gusenbauer unsuccessfully lobbied Commission President Barroso
at the last-minute to water down Austria's commitments. End Note).
Molterer cautioned that committing to excessive goals could
jeopardize Austria as a location for affected industries.


4. Minister of Economics and Energy Martin Bartenstein opined that
it was unreasonable to ask countries that had already achieved a
high share of renewables, like Austria, to contribute as much as
"polluters." According to Bartenstein, Austria would not accept a
legally binding EU commitment that would trigger enormous financial
burdens after a failure to achieve unrealistic goals. Bartenstein
suggested the EU should consider a "climate change tariff" for
countries that "are not on board on climate change, like the U.S.,
China and India." According to Bartenstein, steel production in
China, for example, produces double the amount of emissions per unit
compared to steel production in the EU.


5. Within the government, only Minister of Agriculture and
Environment Josef Proell sounded a positive tone: "we cannot have
climate protection for free. The burden sharing commitment among
member states is fairer than it was in the past." Proell maintained
that the 35% share of renewables was feasible. Proell also raised
the idea of imposing punitive tariffs on countries that do not
commit to long-term environmental action plans.


Austrian Industry Most Unhappy
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6. Austrian industry has unequivocally rejected the Commission's
climate change plan. The General Secretary of the Austrian
Industrialists' Association, Markus Beyrer, characterized the
proposals as "an idiot's tax," which would punish those industries
that have already reduced their emissions to a state-of-the-art
level. EU industries, particularly in the steel sector, would
relocate to countries with less stringent environmental regulations.
On emissions certificate allocation, Beyrer spoke out against the
Commission's plan to move towards a system requiring companies in
all CO2 emitting industries to fully pay for the certificates.
Several other Austrian CEOs in the steel and cement sector warned
that the new emissions allowances system "could drive them out of
the EU."


Green Party: Not Enough
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7. The Austrian Green Party and environmental NGOs voiced opposite

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concerns, namely, that the Commission's plan "rewarded" the GoA for
failing to meet its Kyoto goals. The Greens' environmental
spokeswoman lamented that the new reduction goal "was a license for
the government to do nothing."

KILNER#