Austria’s long-term budget projection published at the end of 2022 considers climate via the integration of physical and transition risks into macroeconomic models.
The two models used, the DELTA macroeconomic model from the Austrian Economic Research Institute and the MIO-ES (Macroeconomic Input-Output model with integrated Energy System) model from the Environment Agency Austria, evaluate long-term trends in government debt, GDP growth, and sectoral policies for emission reduction. Alongside standard macroeconomic indicators such as the public debt ratio, key outputs include climate indicators such as projected emissions and potential compliance costs for meeting EU targets.
- The model suite helps consider the economic impact of reaching net zero targets, the fiscal risk of noncompliance with emission targets, and budgetary trade-offs of green versus conventional policies. This includes granular, sector-level analysis of how climate policies interact with fiscal metrics. These insights are especially helpful for budget planning, economic policy, debt management, and supporting targeted policy decisions.
- These models struggle to represent short-term dynamics such as the impacts of COVID-19 or the energy crisis, and they are also unlikely to be suited to forecasting major societal transformation processes.
- Recent applications of the modeling suite include evaluating the fiscal implications of Austria’s 2030 emissions targets and the projected cost savings from the country’s Renewable Energies Expansion Act. The data has also informed Austria’s policies on green subsidies and taxation adjustments.
Embedding climate considerations into budget projections requires adaptable models that reflect evolving regulatory and technological landscapes. Austria’s experience shows that even with limited resources, robust insights can be obtained by focusing on high-impact sectors such as energy and transport. Additionally, designing alternative scenarios allows MoFs to develop a deeper understanding of climate policy processes, which can inform domestic negotiations such as National Energy and Climate Plans.
Future improvements could include more granular, sector-specific data on emissions and improved representation of technological advancements. Expanding model sensitivity to variables such as international carbon pricing could further refine fiscal impact predictions.
Keywords
budgetary processesfiscal impactsfiscal riskmodelspolicy process
