Austria Grabs Climate Lead as Kurz Takes Power With Greens

(Bloomberg) -- Austria’s new government plans to push the boundaries of conventional economic, energy and tax policies in its bid to radically reduce the greenhouse gas emissions responsible for global warming.

The conservative People’s Party and the environmentalist Greens on Thursday laid out their policy blueprint for their new coalition under Chancellor Sebastian Kurz, 33, who’s expected to be sworn in for a second term next week. The 300-page document pledges a range of measures to put the Alpine country on a path to become climate neutral by 2040 while keeping the federal budget in check and lowering taxes on workers.

The coalition agreement, hashed out over months of negotiations, aims to use the shift to cleaner technologies to create jobs and boost the economy to position Austria as “a pioneer in Europe for climate protection.” It’s a marked shift for Kurz, who is seeking to return to power after his previous alliance with the far-right Freedom Party collapsed in the fallout from a lurid influence-peddling scandal.

Pending approval by Green party members at a conference Saturday, Austria will become a test bed for some of the most ambitious policies in Europe to protect the environment. The new government plans to raise the price of carbon pollution, offer financial incentives to boost energy efficiency and expand nationwide public transportation. It also pledged to lower taxes on middle-income workers and refrain from increasing federal debt.

“We deliberately combined the best of both sides,” Kurz said. “The negotiations were demanding because these were very different worldviews. But we’ve chosen to structure a new way forward.”

Amid increasingly frequent droughts and wild fires, Greens have gained traction as climate change climbs the agenda of voters. The movement, which emerged some four decades ago, is now active in more than 90 countries and helped propel Ursula von der Leyen to the role of president of the European Commission.

Austrian President Alexander Van der Bellen became the first politician from Austria’s Greens to be voted head of state in a national election in 2016. Joschka Fischer was previously the highest profile Green politician to serve in office, as Germany’s foreign minister from 1998 to 2005.

“The coalition aims to be a role model for Europe,” said Werner Kogler, leader of Austria’s Greens who’ll become vice-chancellor. The key to the government will be implementing market-based environmental policies , he said.

Austria’s coalition offers a potential template for politicians across the continent searching for a formula to repel the threat of right-wing populism. Von der Leyen, a member of Angela Merkel’s party in Germany, unveiled a plan to decarbonize the European economy, and the next government in Berlin could see a similar alliance as the Greens supplant the ailing Social Democrats as the natural partner for the conservative Christian Democrats.

A government focus on climate change could help Austria get back on track to achieving its Paris Agreement targets for cutting harmful emissions. Despite its wealth of hydropower resources, the country’s efforts to tackle global warming rank only 38th worldwide, according to this year’s Climate Change Performance Index.

Austrian steelmaker Voestalpine AG and oil refiner OMV AG could be among the companies most effected by higher prices on carbon-dioxide emissions. Airline passengers face a new 12-euro ($13) surcharge on flight tickets, while tickets on the country’s railroad will become cheaper.

The administration expects to spend billions of euros remaking transportation networks, bolstering light rail and guaranteeing affordable nationwide public options. New government vehicles will need to be emissions free by 2027. Internal-combustion engines for car-sharing, rental and taxi fleets will be restricted from 2025.

--With assistance from Tereza Elisabeth Pusca.

To contact the reporter on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Chris Reiter, Iain Rogers

©2020 Bloomberg L.P.