In a comprehensive analysis of potential, the Federal Environment Agency, commissioned by the WKÖ federal division for banking and insurance, calculated that the additional investment required for climate neutrality by 2040 in the energy, industry, building and transport sectors by 2030 amounts to a total of around 145 billion euros. This corresponds to an annual investment volume of 13.9 to 18.5 billion euros up to 2030, which is additionally triggered by the consistent investment path towards climate neutrality. With these additional investments, annual value-added effects averaging 2.4 percent of GDP can be generated and around 70,000 jobs can be created or secured every year. In particular, the climate-friendly conversion of the infrastructure has a high financing requirement.
Franz Rudorfer, Managing Director of the Federal Bank and Insurance Division of the Austrian Federal Economic Chamber (WKÖ), states: “The war has made the green turn even more urgent. Renewable energies ensure security of supply and free us from dependencies. At the same time, combating climate change is a huge opportunity for Austria and Europe, which we should use together. The capital requirement for this is huge – an additional 145 billion euros in investments are required by 2030. A capital market that also deserves the name is the logical answer. This is the only way we can guarantee that the necessary money goes where it is needed.”
These additional investments cannot be made without mobilizing private capital. “This potential analysis is impressively demonstrated: Whoever says K for climate transformation must also say K for capital market. The Russian war in Ukraine has given us a new urgency,” says Franz Rudorfer, Managing Director of the WKÖ federal division Bank and Insurance.
Highest investment requirement in infrastructure
In addition to the investment requirements, the resulting added value and employment effects were determined using a macroeconomic model. Georg Rebernig, Managing Director of the Federal Environment Agency, explains: “The climate-friendly conversion of the infrastructure is a prerequisite on the way to climate neutrality. Investments in the construction and conversion of energy networks, rails and roads, but also buildings and industrial plants not only reduce emissions , but also added value and created jobs.”
The transport sector requires the highest additional investments at 67.3 billion euros. This is partly due to the high investment requirements for rail transport, but also for emission-free vehicles in the Austrian vehicle fleet. To supply other sectors with sufficient renewable energy, around 44.4 billion euros must be additionally invested by 2030. In the building sector, around 26 billion euros in additional investments are necessary, primarily for thermal renovation of buildings and conversion of heating systems to renewable energy sources. “In the industrial sector, due to the long-term investment cycles, there will only be a comprehensive structural change after 2030,” emphasize the experts from the Federal Environment Agency. Above all, the industry needs planning security at an early stage.
The Federal Environment Agency and the Federal Chamber of Commerce and Insurance agree that a successful climate transformation is not feasible without an efficient capital market as an enabler.
Federal Chamber of Commerce and Insurance: Austria needs an efficient capital market more than ever
This requires appropriate measures to strengthen the capital market. According to current statistics from the Oesterreichische Nationalbank (OeNB), Austrians have financial assets of around 800 billion euros. Federal Division Managing Director Franz Rudorfer emphasizes: “With appropriate incentives, a tax measure for financial products such as a capital gains tax exemption if a retention period is observed, billions could be set in motion for climate transformation. In the same way, an exemption from the Insurance tax required for life insurance and correspondingly for pension fund products.” This means that people in Austria can invest in a sustainable future and at the same time counteract losses in value caused by inflation.
In addition to insurance companies with their investment potential of over 100 billion euros and pension funds with 27.3 billion euros, company provident funds manage 16.5 billion euros, but have restrictive statutory investment requirements. The permitted investment universe should be opened up for climate transformation.
In order to advance the climate transformation in the building sector, realistic data on buildings (e.g. energy certificates on thermal building quality, type of heating and building technology) and plans (e.g. in the form of renovation schedules) are needed. What is important is high quality and uniform availability of digital energy certificates throughout Austria.
In order to be able to guarantee the insurability of natural hazards in the future, there needs to be a legal framework for public-private partnership models, as are already being successfully implemented in other European countries. The Austrian insurance industry is ready as a partner for a joint implementation.
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