In the period under review, the EU’s energy policy was again largely characterised by attempts to cushion energy prices as well as by activities to reduce dependency on energy imports in the context of Russia’s war of aggression against Ukraine. This explains why three EU emergency regulations that were adopted in the context of the energy crisis in December 2022 were extended by one year in December 2023.
At EU level, a comprehensive amendment to the existing Renewable Energy Directive (RED III) was adopted in October 2023; it came into force on 20 November 2023. RED III raises targets for the expansion of renewables in the EU from 32.0% to 42.5% by 2030. Particular attention is being paid to increased land use planning for energy purposes and accelerated procedures.
The agreement on the EU gas package in December 2023 largely prevented the horizontal unbundling of natural gas and hydrogen grid operators, as it will generally only apply to transmission grid operators. The de minimis exemption for vertical unbundling of transmission grid operators applies if hydrogen and natural gas do not exceed 100,000 connection points all told. In the future, a new, independent EU body for hydrogen grid operators will promote an EU-wide hydrogen infrastructure, cross-border coordination and the development of interconnectors.
In the field of climate policy, the EU Commission presented an interim greenhouse gas (GHG) target in February 2024, with a view to achieving climate neutrality by 2050. The intent is to reduce GHG emissions by 90.0% compared with 1990 by the year 2040.
The Building Efficiency Directive adopted by the EU Parliament in March 2024 is also intended to contribute to a CO2 reduction in the building sector in line with the Green Deal. According to the EU Commission, 36.0% of all greenhouse gas emissions in the EU are caused by buildings. The directive envisages all new buildings in the EU being emission-free by 2030 at the latest. The intent is to achieve a complete phase-out of fossil fuel-based heating systems by 2040. In addition, the EU member states will be obliged to renovate non-residential buildings in the lowest energy efficiency classes. To push the energy transition forward, new buildings will need to provide a charging point for electric vehicles and a solar energy system from 2030.
The reform of the future European electricity market policy had not yet been finalised by March 2024, as the adoption of the trilateral agreement and publication in the EU’s Official Journal are still outstanding. Besides an ordinance, the new electricity market policy will also be implemented in the Internal Electricity Market Directive, which requires national implementation.
In view of the persisting uncertainties relating to the supply of natural gas from Russia to Austria, an amendment to the Gas Industry Act (GWG) and the Electricity Industry and Organisation Act (ElWOG) was passed by the National Council plenary session in October 2023. The aim here is to extend the period of validity of Austria’s strategic gas reserve until 1 April 2026. By maintaining gas reserves, the gas supply for protected customers will be guaranteed for up to 45 days between 1 October and 1 March from 1 October 2024 to 30 September 2026.
The Electricity Industry and Organisation Act (ElWOG) also envisages provisions equivalent to those under the Gas Industry Act (GWG) for electricity generated from natural gas. Additionally, provisions were also adopted under the Gas Industry Act (GWG) with a view to achieving greater price transparency and boosting competition.
An amendment of the Renewable Energy Expansion Act in December 2023 governs VAT exemption for small photovoltaic (PV) systems up to a maximum output of 35 kWp up to the end of 2026. The extension of commissioning deadlines for wind and hydropower plants, changes due to the General Block Exemption Regulation and a suspension of the flat-rate renewable energy subsidy and the renewable energy subsidy contribution for 2024 were also laid down. A further amendment in March 2024 clarified the fact that VAT-exempt companies that do not benefit from the tax exemption can continue to receive funding.
In December 2023, the Electricity Cost Subsidy Act, which expires on 30 June 2024, was extended by six months to the end of 2024 by an Act of Parliament. Due to the drop in electricity prices, the upper limit was adjusted from 40 cents/kWh to 25 cents/kWh; the federal government will provide relief for consumption of up to 2,900 kWh up to this value.
In addition to this, an amendment to the Emissions Certificate Act in December 2023 led to the legal implementation of the revised Emissions Trading Directive, creating the administrative framework for the national implementation of EU Emissions Trading Scheme (ETS) 2. Facilities that incinerate municipal waste are included in the EHS reporting system.
In order to fully implement the Internal Electricity Market Directive, the Electricity Industry Act requires action in the field of energy industry legislation. The corresponding review process was launched in January 2024. A resolution will be passed by parliament by the summer of 2024.
The Renewable Gas Act was passed by the Council of Ministers in February 2024 and submitted to Parliament as a government bill. The main change compared to the review draft was a reduction in compensation payments from 20 ct/kWh to 15 ct/kWh if the supply quotas are not met. Additionally, a provision was adopted to allow suppliers to pass on the additional procurement costs resulting from the substitution obligation to customers.
The Federal Act on the Energy Crisis Contribution – Electricity, which is based on the EU Emergency Regulation on Revenue Skimming and which expired at the end of 2023, was extended by one year in February 2024 by a resolution of parliament. Within this scope, the deductible amount was increased; this sees the legislator taking into account the huge investments in the energy transition required on the part of suppliers.
The Renewable Heat Act came into force at the end of February 2024. The resulting legal ban on installation applies to all fossil fuel heating systems in new buildings. Since 1 January 2024, increased subsidies, averaging of 75.0% of the investment costs, have been in place to support the transition to alternative heating systems in existing buildings.
The accompanying ordinance on the allocation of market premiums to promote larger renewable electricity generation plants up to the end of 2025, and the ordinance on investment grants for 2024, were passed in March 2024. Subsidies for PV were reduced due to falling prices, while other technologies experienced an inflation-related increase.
A review process has been initiated for the Hydrogen Promotion Act with an RFC period up to 25 March 2024. This establishes the basis for Austria’s participation in the auctions of the Innovation Fund for the European Hydrogen Bank.