Austria has one of the most ambitious climate and energy targets in the world; achieving them requires actionable delivery strategies and adequate funding. The country’s commitments to climate neutrality by 2040 – a full decade ahead of the EU – and a 100% renewable share in the national annual electricity balance by 2030 are bold. These goals are underpinned by a large hydropower fleet (accounting for around 60% of electricity generation), including 5.6 GW of pumped hydro storage and a nationwide smart meter roll-out. Austria has the highest share of renewable energy in electricity consumption in the European Union and is the first European country to develop a pioneering approach to integrated energy system planning. However, the gap between ambition and delivery is widening. This report “Energy Policy Review Austria 2026” published by IEA provides advice on how Austria can achieve its policy goals with particular focus on two areas: energy system flexibility and industrial competitiveness and decarbonisation.
Austria’s industries – which contributed 22% of gross domestic product (GDP) and employed 26% of the workforce in 2024 – face challenges from high energy prices, competitive pressures and the need to decarbonise. In response to the energy crisis in 2021-2022, the government introduced tax relief, direct grants and targeted support measures for industry and households, including measures to promote energy efficiency and electrification. Many of these measures have been recently scaled back or cancelled. The Electricity Market Act (ElWG) adopted in December 2025 is overhauling electricity market design in a bid to reduce energy costs, improve system flexibility, empower consumers and protect low-income households. The new Industrial Strategy 2035 provides a clear vision and new funding support for boosting Austria’s industrial productivity, attractiveness for investment and economic success.
In 2024, renewables accounted for 90% of Austria’s electricity demand, with variable renewables accounting for 23%. Solar photovoltaic (PV) has grown rapidly, reaching 11.3% of electricity supply in 2024. Wind deployment must expand to help address seasonal demand and balance solar output, but Austria is not on track to meet its target to add around 10 TWh of yearly generation by 2030, due to permitting barriers and governance challenges. Full use of legal mechanisms to designate wind zones, transparent long-term leases on public land, co-ordinated spatial planning, streamlined permitting and proactive stakeholder engagement are needed. Austria’s hydrogen strategy targets 1 GW of electrolysis capacity and at least an 80% replacement of fossil-based hydrogen in industry by 2030. By aligning action with ambition, Austria can deliver on its climate and energy goals and reinforce its leadership position.
Access the report here