General economic environment 1)Sources: IMF (International Monetary Fund): World Economic Outlook, October 2019. IHS (Institute for Advanced Studies): Press Release, 4 October 2019. WIFO (Austrian Institute for Economic Research): Economic Data, URL: www.energieag.at/19-101, 17 October 2019. WKO (Austrian Economic Chamber): Economic Situation and Forecast Release, October 2019, and Economic Profile Czech Republic, October 2019.
The 2018/2019 fiscal year (1 October 2018 to 30 September 2019) was characterised both internationally and in Austria by noticeably slower growth than in the previous year. According to International Monetary Fund (IMF) forecasts, global growth in 2019 is likely to be the slowest since the 2008 global financial crisis due to increasing trade conflicts and geopolitical risks as well as climate change.
Economic growth and inflation
YoY real change (in %)
In the reporting period, economic growth in the Euro zone slowed, with experts forecasting average growth in the amount of 1.1% to 1.2% for 2019 and 1.2% to 1.5% for 2020 (2018: 1.9%) after a two-year boom. In addition to the economic policy uncertainties mentioned above, the risk of a disorderly Brexit in particular represents a considerable downside risk for both the Euro area and the domestic economy.
Experts have also recently downgraded their forecasts for the Austrian economy, even though Austrian growth in 2019 is likely to be well above that of the Euro zone. In concrete terms, economic researchers expect Austria's gross domestic product (GDP) to grow by 1.5% to 1.7% in 2019 and by 1.3% to 1.4% in 2020 (2018: 2.7%). Domestic exports in particular recently lost considerable momentum, while private consumption continued to grow at a steady pace. Inflation should level off at an average of 1.6 % in 2019 and 2020.
In the Czech market area, GDP growth is forecast to fall slightly in 2019 to an average of 2.6% (previous year: 3.0%).
Energy policy environment
In the reporting period, the EU package “Clean Energy for all Europeans” was finalised after more than two years of negotiations. The objective of the “electricity market design” is to define the market stakeholders' roles more precisely with a view to the future development of a liberalised electricity market; the legal basis for the activities of new market players (active customers, energy communities, aggregators, storage facilities) has now been created. Due to the national implementation deadlines of the member states by 30 June 2021 at the latest, intensive talks on the implementation of the new electricity market design, energy efficiency targets and the promotion of renewable energies in Austria can therefore be expected in 2020.
At the end of November 2018, the EU Commission published its long-term decarbonisation strategy “A Clean Planet for All” for the reduction of greenhouse gas emissions in the EU by 2050. A number of different scenarios have been used to outline possible paths towards climate neutrality in Europe by 2050.
In order to reduce CO2 emissions in the transport sector, the reporting period saw new stricter CO2 fleet limits of -37.5% for passenger cars and -31.0% for commercial vehicles, compared to the emission limits already due to take effect as of 2021, adopted for the EU as of the year 2030. It can be projected that alternative, emission-free drive systems will become even more significant as a result.
The implementation of the “Green Deal” presented by the new EU Commission President, Ursula von der Leyen, in the summer of 2019 will bring an even more ambitious climate policy into focus with a further tightening of CO2 reduction targets, the goal of climate neutrality by 2050 and other proposals.
At the end of January 2019, a timetable was adopted in Germany for the gradual phasing-out of coal-fired power generation by 2038 at the latest, which will also continue to influence the Austrian electricity market.
During the reporting period, Germany agreed in September 2019 on a comprehensive Climate Package 2030 to ensure that the CO2 reduction target of -38% by 2030 compared to 2005 will be achieved. The central element is a gradually rising CO2 price for CO2 emissions in the transport and buildings sectors from 2021.
The amendment to the Austrian Green Electricity Act adopted in September 2019 is primarily intended to regulate existing problems in the operational implementation of green electricity subsidies and bring about a reduction in the waiting list of applications for wind, photovoltaic and hydropower projects. In addition, due to the lack of approval of the Federal Council for the new regulation of the successor tariffs for biomass promotion, a federal basic law on biomass promotion was passed; enactment in the federal states in the form of implementation legislation is still outstanding.
The “Renewable Energies Expansion Act” planned in Austria for 2019, which is intended to replace the existing Green Electricity Act on the one hand, while dealing with “Greening the Gas” and the “Integration of System Responsibility in Market Design” on the other, had to be postponed due to political developments. The draft legislation is expected to be reviewed in the first half of 2020.
As further central implementation steps of Austria's “#mission2030” climate and energy strategy, a heat and hydrogen strategy was worked on in the reporting period. The heat strategy supports the achievement of CO2 targets in the area outside the emissions trading for Austria with planned savings targets of -36% by 2030. The aim of the hydrogen strategy is to create suitable general conditions for the increased use of CO2-free hydrogen in the course of sector coupling.
At the end of 2018, the Austrian Federal Government submitted a draft “Integrated National Energy and Climate Plan 2030” to the EU Commission in time. The main goals are expanding renewable energies, reducing greenhouse gas emissions from sectors outside emissions trading, increasing energy efficiency, and reducing dependence on imports of fossil fuels. At the same time, the Federal Ministry for Sustainability and Tourism launched a consultation in summer 2019 on the “Development of a long-term climate strategy for a climate-neutral Austria 2050”, the results of which, along with the final “Energy and Climate Plan 2030”, are due to be presented to the Commission by the end of 2019.
The European Court of Justice (ECJ) has granted comprehensive party status and judicial review rights for non-governmental organisations and neighbours in water law proceedings in the case “Protect Natur-, Arten- und Landschaftsschutz Umweltorganisation” (“Protect Nature, Species and Landscape Protection Environmental Organisation” C-664/15 dated 20 December 2017). The Austrian legislator has responded to the need for action and submitted proposals in the form of the Aarhus Participation Act. This regulates the participation of NGOs in the areas of water legislation, waste management legislation and the Air Pollution Control Act. In addition, some federal provinces, including Upper Austria, adapted their nature conservation legislation to reflect the case law of the European Court of Justice during the reporting period.
In the 2018/2019 fiscal year, the Austrian legislator also enacted a pertinent statutory environment for project development and implementation of infrastructure companies. The Site Development Act is intended to create opportunities for speeding up procedures for site-relevant environmental impact assessment (EIA) projects.
Following a protracted debate, the Waste Management Act Legal Streamlining Amendment 2019 came into force on 1 August 2019. This is the result of a legal streamlining process to simplify administration which introduces innovations and simplifications in waste management legislation. Among other things, these include simplifications and deregulations in plant and equipment law, such as the elimination of the notification requirement in the case of machine replacement, innovations in licensing law, such as the approval of waste type pools, and procedural innovations in the Waste Management Act determination procedure.