“Branchentalk” in the newspaper Die Presse, 1 February 2023

Sustainability and smart energy are top priorities for Austrian firms

The big question is whether the ambitious climate targets can be achieved at the pace at which the energy transition is currently proceeding. Together with Raiffeisen Kapitalanlage-Gesellschaft (Raiffeisen KAG), the “Presse” invited the following experts with insight on this topic for a discussion:

• Henriette Spyra, head of Section III “Innovation and Technology” at the Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology,

• Wolfgang Anzengruber, former CEO of Verbund AG and an advocate for true sustainability in the group CEOs for Future,

• Hannes Loacker, fund manager at Raiffeisen KAG, investment expert for the topics (renewable) energy, energy efficiency, and mobility.

Crisis as a booster

A look at the past shows that crises always drive changes. As the moderator of the discussion, Eva Komarek, General Editor for Trend Topics at Styria Media Group, asked the guests whether or not this also holds true for the Ukraine conflict and if it was possible to accelerate developments in sustainability, or whether this crisis would be another setback in the struggle against climate change, for example if it becomes necessary to use coal-fired power stations more intensively again as a source of energy.

At the moment, all three of the experts tended to view the crisis more as a booster, but with certain reservations. “The topic of the energy transition has become more important,” according to Loacker. “For example, with the European Union developing its RePowerEU plan. This should help to speed up permitting procedures and allow renewables projects to be implemented more quickly.” The EU package ‘Fit for 55’ also contains a number of proposals for new EU regulations that should contribute to the achievement of the EU’s climate targets.

With these moves, the EU is establishing a good framework. Nevertheless, it is also important for the countries and municipalities to use these opportunities. Anzengruber, who has recently also been active as an energy consultant for Austria’s Federal President, noted that “The Ukraine crisis will be more of a negative factor rather than a booster in the event that a lot of money is spent preserving systems that need to be abandoned.” Nonetheless, he remained optimistic that the energy transition would be a success, provided that Europe not only set its goals, but also moved towards achieving them as quickly as possible. “There is some inflation in the targets. What we need now is a clear roadmap for how the targets will be achieved.”

Moreover, the ex-CEO of Verbund would like to see Austria give up the idea that it can be self-sufficient in energy matters. “It won’t work without cooperation with other countries and regions.” Spyra emphasised that, looking at the issue from the government perspective, a number of different interests had to be satisfied. “On the one hand, we are responsible for the energy transition, but on the other hand we are also responsible for security of supply, and this is a difficult balancing act.”

In any case, one key aspect was to get the public on board. In this respect, the experts agreed that, first and foremost, a change in communication was needed. “When we are talking about the transition, the focus is always on the costs,” said Anzengruber. “But it would make more sense to actually ask what it will cost us if we don’t invest in renewable energy right now. Ultimately, doing nothing is a far more expensive approach than changing things.”

A new narrative

A former politician once said that the energy transition is not possible without giving up something. “This is precisely the wrong kind of communication, because it makes people afraid, rather than enthusiastic,” said Loacker. At a minimum, it would also be important to stress that giving up something does not necessarily mean a lower standard of living. It would be important to underline and communicate the positive aspects.

Spyra agreed, noting “We need to get away from the crisis narrative. While it is true that crises can be a factor that drives change, they are not really effective for motivating action. Progress is driven by a desire for something new. It takes time to change people’s way of thinking. But this can be accelerated with positive communication.” The expert from the Federal Ministry for Climate Action cited the advertising strategy from the past, which was able to equate automobiles with freedom. “As a result, people accept that automobile traffic, which is not a pretty thing in and of its own right, takes up a lot of space in their environment.”

If the energy transition is associated with positive images, it will enable a transformation that is driven by desires. Part of this is integrating people into development processes. “For instance, when it comes to building wind farms,” Loacker explained. “Involvement creates a different commitment. And it is clear that society will only play along if there are incentives for change.”

One problem with the big climate targets is that they are specific and long range. But without detailed, transparent roadmaps, people tend to postpone change. According to the guests, most Austrian firms are thinking about the energy transition. Big companies have roadmaps, with milestones. In general, what is needed for the transition? “It won’t work without technology,” said Spyra. “We are experiencing scale effects, cost reductions, and technological development more quickly than ever before.”

This is should give us the hope to see the energy transition as an opportunity. As Anzengruber noted, “We are at the beginning of the end of the age of fossil fuels. Transcending the carbon economy represents a massive opportunity for the Austrian economy. The earlier we get involved in this industrial revolution, the better the economic benefits we can derive from it.”

Rising demand

One thing that is needed to accelerate the transformation of Austria’s economy is investors. As the number of exchange-listed companies is relatively low by international comparison, from an investor perspective it may appear that Austria is lagging behind when it comes to innovation. “It’s not for lack of innovative drive,” according to Loacker. Austria has been an innovation pioneer in many fields. “For example, we’re technology leaders in the areas of e-mobility, the digitalisation of measurement equipment such as smart meters, and in hydropower generation,” said Anzengruber.

Loacker also pointed out that the investable universe is constantly expanding as more and more companies are opting for smart energy. “Consequently, new companies are making their way onto the stock exchange, and existing companies are changing their portfolios.” For Raiffeisen KAG, this is good news as the scope of options for the funds is constantly increasing. The progress of sustainability in the corporate sector is reflected in the development of the fund Raiffeisen-SmartEnergy-ESG-Aktien, which was launched in 2020 with a volume of EUR 8 million and now has a fund volume of around EUR 390 million.

The fund exhibits elevated volatility, meaning that unit prices can move significantly higher or lower in short periods of time, and it is not possible to rule out loss of capital.