Climate Counterproductive Subsidies in Austria

Discussions on the identification and reform of subsidies with negative climate impacts have been going on for decades at the (international) policy level and in the scientific community. Such subsidies counteract climate protection efforts, contradict the polluter-pays principle, and reinforce market distortions and the carbon lock-in.

Based on a literature review of international studies, the paper summarises the results of a comprehensive bottom-up analysis of direct subsidies and fiscal measures (indirect subsidies) that are granted on the federal level. The focus is put on the areas of energy generation and use, transport, and agriculture. The analysis on the one hand considers the legal foundations and original motivations for the subsidies and on the other hand quantifies the respective subsidy volumes and identifies the beneficiary groups.

In addition to the quantification of subsidy volumes related to the mainly indirect subsidies (e.g., commuter allowance, energy tax exemptions and reductions), relevant regulatory framework conditions that have a subsidy character (e.g., parking space obligations) are examined. Considering the environmental effectiveness, economic criteria (like distributional impacts) and potential legal constraints reform suggestions are developed for the selected support measures.