Economists demand: Climate law should also hold federal states financially accountable

Why the states should be more involved

Specifically, economists propose that the costs for climate-relevant investments should in future be based on a binding distribution key between the federal government and the states. Models for this can be found in existing financial equalization mechanisms. This would be accompanied by a regular reporting obligation on the part of the states regarding their progress in emission reduction.

According to the current status, several ministries are involved in the planned architecture of the law. These include the Ministry of Transport, the Ministry of Environment and Agriculture, the Ministry of Economics, the Ministry of Finance, and the Ministry of Foreign Affairs. Interministerial coordination is considered a prerequisite for sector-spanning measures to be effective at all.

Representatives of the Federation of Austrian Industries, including Georg Knill, emphasize that companies need planning certainty. Binding interim targets and a clear timetable are necessary so that investments in climate-friendly technologies and processes can be initiated at an early stage. At the same time, the IV warns against one-sided burdens on the industrial location.

Positions from business and politics

From the ranks of the SPÖ, there are also calls for a fairer distribution of burdens between the federal government and the states. Within the party, it is argued that the goal of climate neutrality by 2040 cannot be achieved without financial responsibility on the part of the states. The ÖVP and FPÖ have not yet commented in detail on how they intend to weigh the role of the states.

Norbert Totschnig, involved in the debate as a representative of the Ministry of Agriculture, points to the special role of farming operations in achieving the climate targets. At the same time, he points out that adaptations to climate changes already require considerable resources. Co-financing by the states could help to set up regional programs more effectively.

EU framework and open questions

EU legal framework conditions increase the pressure for a clear domestic division of tasks. With the European Climate Law and tightened reporting obligations, the need grows to also demonstrate comprehensibly at the national level who is making which contributions. Economists see a direct connection here to the debate on co-financing by the states.

It is still unclear in what form financial participation by the states will be included in the law. Earmarked transfers from the federal government, an expansion of existing funding instruments, or an extension of financial equalization to include climate-relevant facts are conceivable. The final decision on this is likely to be made only with the announced climate roadmap by the end of 2027.

What is certain is that the coming weeks will show whether the economists' demands will be incorporated into the draft law. Observers expect that the question of the distribution of burdens between the federal government and the states will be one of the central political dividing lines in the further deliberations.

The role of the Ministry of Finance is also likely to be decisive, as without appropriate budgetary provisions, neither the federal government nor the states can reliably plan their respective contributions. Economists expect the government to set initial course directions for climate-related co-financing by the states in the upcoming budget negotiations.