New energy law could raise gasoline prices by up to 95 cents

The Austrian Economic Chamber (WKO) has warned that the planned Renewable Energies Act for Transport (EEG-V) could lead to steep increases in fuel prices and economic losses due to what it calls excessive compliance with European Union regulations, known as "goldplating." According to a study by the research institute Economica, the law would raise diesel prices by up to 95 cents per liter by 2035. Environmental groups accused the WKO of fossil fuel lobbying. The warning stems from the draft legislation for the EEG-V, which aims to implement the EU's Renewable Energy Directive RED III at the national level. While RED III sets a minimum target of 29 percent renewable energy in transport by 2030, Austria’s proposed plan, currently under review, targets 65 percent by 2035. This ambitious goal aligns with Austria’s aim for climate neutrality by 2040, compared to the EU’s target of 2050. Jochen Danninger, general secretary of the WKO, criticized this approach as “massive goldplating.” He argued that attempting to achieve climate goals 10 years earlier than the EU would accelerate transformation costs and result in significantly higher energy prices than in neighboring countries. He noted that if Austria leads the way, unutilized emissions would effectively be transferred to other EU member states. According to Economica director Christian Helmenstein, the price increase at the pump through the EEG-V in 2035 would amount to 95 cents per liter of diesel and 86 cents per liter of gasoline compared to the emissions-oriented EU reference path (RED III THG). This would represent a 40 to 50 percent rise in fuel prices. For the Austrian economy, Economica calculated an annual additional burden of around €2.2 billion in 2035, approximately four times the cost of adhering strictly to EU requirements. Helmenstein anticipated a slower-than-expected transition to electric vehicles, estimating that by 2035, only one-quarter of vehicles on Austrian roads would be purely electric. Hydrogen-powered cars played such a negligible role statistically that their impact was too small to appear in charts. The increased fuel prices would negatively affect overall economic development. According to Economica models, gross domestic product (GDP) would be permanently lower by 0.30 percent by 2035 compared to the reference scenario. Private consumption would decrease by 0.72 percent, and real wages would fall by 0.56 percent. Additionally, the extra burden would be regressive, meaning households in the lowest income quintile would face a 0.93 percent load relative to their gross income, while those in the highest income quintile would experience only a 0.52 percent burden. Danninger outlined three key demands for policymakers: abandoning national overcompliance with EU transport targets, ensuring technological openness, and safeguarding supply security and competitiveness. He emphasized that discussions about fuel price brakes should not occur simultaneously with new cost drivers. Environmental organizations such as WWF cautioned against yielding to the WKO’s demands, arguing that doing so would prolong dependence on oil. WWF climate spokesperson Viktoria Auer stated that serious cost assessments must include savings from imported fossil fuels and avoided climate damage. The Austrian Transport Club (VCÖ) reminded that the current fuel crisis highlights how costly the country’s reliance on oil in transportation has become. Meanwhile, the Freedom Party of Austria (FPÖ) used the WKO’s findings to launch a direct attack on the federal government, calling it the “next blow to the wallets of Austrians.” The WKO’s warnings have intensified pressure on the government, particularly regarding the early pursuit of climate neutrality. Danninger stressed that the proposed EEG-V would impose substantial financial burdens on both individuals and businesses, with potential long-term economic repercussions.