After the final election on Sunday, the federal government that takes energy in Austria will face mounting stress to diversify its power provide away from dependence on Russian fuel, simply because the financial system is caught in a downturn.
No celebration is anticipated to win sufficient seats to win an outright majority. Opinion polls give a slim result in the opposition far-right, Russia-friendly Freedom Party (FPO), and the consequence might affect the velocity of the power transition.
Since Moscow invaded Ukraine in 2022, the European Union has moved to exchange Russian fuel imports quickly. Alternative power sources are typically costlier, including to prices already stoked by the inflationary affect of the pandemic and the warfare.
Austria is among the many most reliant on Russian fuel throughout the bloc. In the previous two years, its inflation has outstripped the EU common, even because the financial system has shrunk, dragged down by a hunch in its high commerce companion, Germany, which is grappling with the power transition and competitors from China.
“Other countries aren’t happy Austria is still consuming such large volumes of Russian gas,” stated Stefan Schiman-Vukan, senior economist on the Austrian Institute of Economic Research.
“The political pressure to withdraw from it is high.”
The EU has dedicated to phasing out Russian fuel by 2027, and Austria’s Greens-run power ministry desires to speed up the method. Nevertheless, Austria was nonetheless drawing 83% of its imported fuel from Russia in July. By comparability, in 2023, the proportion of EU fuel imported from Russia had fallen to fifteen%.
The Greens, junior gamers within the authorities, have led efforts to faucet different provides. Their companion, Chancellor Karl Nehammer’s conservative Austrian People’s Party (OVP), has additionally pledged to wean the nation off Russian fuel.
Pointing to provides from Norway and elsewhere, the power ministry stated it had taken steps to make Austria unbiased of Russian fuel in the long run, noting the nation had ample import capability for non-Russian fuel through Germany and Italy, and that its massive fuel storage amenities had been greater than 90% full.
“The high dependence on Russian gas supplies is a major economic and security risk for Austria,” the ministry stated in an announcement. “It is therefore essential for our country’s security to further reduce gas consumption and stop buying Russian gas.”
The FPO says Russian fuel should stay a part of Austria’s power combine, though its lead is narrowing.
Opinion polls present FPO assist at round 27-29%, with its lead slipping to as little as one level greater than the OVP, with three extra events forecast to win near 10% or extra.
The different events have rejected serving below FPO chief Herbert Kickl, which might open the door to coalitions extra dedicated to distancing themselves from Russia. At current, it seems to be extremely possible a postelection coalition will function the OVP.
Whoever governs should grapple with an financial system that the central financial institution has forecast will shrink by 0.7% this yr, contracting for a second yr working.
Diversification
Efforts to diversify the power provide are gathering tempo.
Vienna’s most important energy firm, Wien Energie, stated this month that it will ditch Russian fuel in 2025.
But the chance of an power crunch has loomed since Ukraine stated it will not prolong a take care of Gazprom expiring on the finish of 2024 that transits Russian fuel to Austria.
A sudden cease to Russian provides would possible push up wholesale fuel costs by about 20% for 2 to 6 months, stated Walter Boltz, former head of utility regulator E-Control.
Austria can handle, officers say, pointing to a latest government-commissioned examine that states imports via Italy and Germany, in addition to its reserves, might cowl its wants.
Politicians are wanting to spur demand or discover further sources to elevate the financial system. The FPO and OVP are pledging tax cuts, with the center-left Social Democrats, working third in polls, proposing wealth and inheritance taxes.
“Austria is the prime example of what happens if inflation is too high, and of the negative consequences,” stated Gunter Deuber, chief economist at Raiffeisen Bank International. “If you’re uncompetitive in terms of costs and wages, people stop investing, it becomes less attractive to produce in Austria.”
Source: www.dailysabah.com