Sigrid Stagl on the green transformation

An economic necessity

For economist and scientist of the year Sigrid Stagl, achieving social goals is more relevant than economic growth. She talked to INSPIRE about the green transformation and why the cost of conversion is much lower than the subsequent costs of climate change.

Connecting business with climate action has been your mission as an economist for many years. From this perspective, what is your current view of the world and Austria?

Sigrid Stagl: Concerned, because you get the impression that climate action has taken a back seat for decision-makers. That is understandable to a certain extent, because there are other concerns. But climate change is continuing to progress. It is becoming more urgent and, at the same time, more difficult every day to implement solutions when we’re not doing enough. That is precisely the difference between a one-off crisis and a latent crisis. Full attention is paid to the one-off crisis, for example, Covid. Decades of intensifying climate crisis seem to invite further postponement of adequate measures. That's completely understandable. Most people need solid justification for change. Science has been providing good reasons for decades. The problem is that there is an economic misinterpretation of the climate crisis in public discourse. 

What is this misinterpretation?

Sigrid Stagl: The public get the impression that it will cost something if we want to tackle the transformation. That’s right, we need to innovate, adapt production methods, and use new technologies. But the public debate likes to present an either-or scenario.

Which is completely incorrect, right?

Sigrid Stagl: Yes, absolutely. Because this “or” will cost much more, billions of euros will be spent on Austria alone. The costs of the conversion are much lower than the subsequent costs. They will be three to six times higher, that is the current expectation. This is a clear economic case for the transition. And that is precisely what must be embedded in the public’s consciousness. This also includes making the material distinction between ongoing costs and investments understandable. This isn’t differentiated clearly enough in public discussions. What may be painful to us as an investment at the moment will benefit us for decades. Austria’s hydropower plants are a wonderful example of this.

The electricity industry states very clearly that wind turbines and photovoltaics pay off under suitable infrastructure, the sooner the better. Didn't that resonate with people?

Sigrid Stagl: Many people have long come to understand why renewables are really cool, because they not only supply climate-neutral electricity, but also leave value creation in Austria. We are saving ourselves the fuel costs that we pay in many billions to unfriendly countries, and we are becoming less geopolitically vulnerable to extortion. Delivery disruptions are very costly. Resilience is increased by renewables.

Is the electricity industry the beacon of hope where many other areas fall short when it comes to climate action? Are politicians giving enough leeway for it to fulfil this role?

Sigrid Stagl: We have had great success in this area over the past few years, and 85% of our electricity demand was covered by renewables in the previous year. But when it comes to total energy requirements, we only manage 35 percent. There's still a lot of room for improvement. What will it take? The benefits of renewables need to be highlighted even more clearly. It is obviously not enough to expect people to optimise their individual goals within their own sphere of life. They can't systematically think about the entire transition to clean energy. Most people are also unfamiliar with climate science. This often leads to solutions that are different from what is systemically desirable.

You can find the complete interview in our INSPIRE magazine.