CO2 price on fuels unfairly burdening lower-income households – report

Germany’s CO2 price on fuels, introduced in January, is an additional burden for low-income households, according to a report commissioned by the Federation of German Consumer Organisations (vzbv). The report, which examined the distributional and social effects of the CO2 price, also found that higher-income households are benefiting more from government compensation measures intended to alleviate the higher costs: They get back up to a third of extra expenses while some low-wage earners only get back as little as 10 percent. The vzbv is now recommending an expansion of local public transport as well as income-independent mobility allowances and calling for the next federal government to take countermeasures.

“CO2 pricing is an important climate protection instrument,” said vzbv executive director Klaus Müller. “The federal government has failed to implement it in a socially acceptable way for everyone. Low-income households are suffering from rising fuel costs and urgently need political support.” While the commuter allowance has been increased, people with middle and high incomes benefit disproportionately, while those with low incomes receive little, he added. “If the climate and transport transition forgets to take everyone with them, the risk of social division will increase in the coming years, in addition to the CO2 price. The next federal government must immediately decide on additional relief measures for everyone."

The CO2 price on oil and gas has been in effect since 1 January and is intended to make the use of fossil fuels in transport and buildings less attractive and thus contribute to climate protection. The current price of 25 euros per tonne of CO2 corresponds to a surcharge of 7 to 8 cents per liter of petrol or diesel.