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Austria’s green economy flourishing, OECD says

February 6, 2014

Environmental goods and services reached almost EUR 33 billion in 2011

Environmental goods and services are now a bigger driver of Austria’s economy and job market than traditionally strong sectors like tourism and construction, thanks to the Austrian government’s policy of subsidizing green investments, a new OECD report shows. The OECD’s latest Environmental Performance Review of Austria gives a positive assessment of those policies so far, but notes that environmental performance could be improved more efficiently with a tax reform to shift the policy focus onto penalizing polluters and away from heavy spending on subsidies.

The review shows that revenue from environmental goods and services reached almost EUR 33 billion in 2011. This corresponds to 10.8% of gross domestic product (GDP), or nearly twice that of the tourism sector. This green growth has spurred job creation in the sector, even during the economic crisis. From 2008 to 2011, employment in the environmental sector increased by 2%, compared to just 0.4% jobs growth for the economy as a whole. Over 170,000 people, or almost 5% of the workforce, are employed in the environmental sector today, mainly in renewable energy, soil and water protection, and energy efficiency. The OECD report recommends greater co-ordination of environmental and employment policies to ensure that the creation of jobs in the green economy does not lead to losses elsewhere.

The report backs the socio-ecological tax reform that Austria has long been debating, which would shift some of the tax burden from labor to polluters, aiding both growth and employment. Austria has taken steps in this direction with a flight tax and a CO2 bonus/malus scheme for car registration taxes. Other measures, including a carbon tax, should be implemented to ensure that all sectors pay for their CO2 emissions.

Despite many environmental strong points in Austria, such as the high quality of its drinking water and the high share of renewables in energy supply, there are also still challenges.