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04 Apr 2022, 14:04
Sören Amelang

Germany splits CO2 price for heating between landlords and tenants

Clean Energy Wire

Tenants living in well-insulated homes in Germany will have to shoulder the lion’s share of their CO2 costs for heating, while landlords must cover most of the bill in inefficient buildings. The less CO₂ a building emits, the higher the proportion tenants pay, according to a tiered model agreed by the economy, buildings and justice ministries, which said the split is socially fair and  will bring a boost to emission reduction efforts in the buildings sector, which is lagging behind in the country’s energy transition. “Landlords have an incentive to invest in energy-efficient renovations. Tenants remain motivated to reduce their own energy consumption,” said buildings minister Klara Geywitz, a Social Democrat (SPD).

The new system will ensure that an outdated heating system and leaky windows will translate into higher CO2 costs for landlords because tenants' options to reduce consumptions are limited in this scenario, said Green Party economy and climate minister Robert Habeck. "Conversely, a landlord who has renovated the building well in terms of energy efficiency can also apportion the costs" because it now falls on the tenants to save energy, he added. On average, the splitting mechanism will save tenants between 12 and 72 euros per year, according to price comparison website verivox, reported newspaper Tagesspiegel. Consumer advocacy groups welcomed the agreement but criticised that it will only apply from next year.

Since the beginning of 2021, Germany has charged a price in the building sector for CO₂ emissions caused by the combustion of fossil fuels to make the switch to climate-friendly alternatives more attractive. A tonne of emissions currently costs 30 euros, leading to additional heating costs of 130 to 190 euros per year in an average unmodernised flat, but the price is set to rise to 55 euros by 2025. As long as the distribution of costs remains an unsolved issue, landlords can pass them on in full to tenants, which is highly controversial in a country where a relatively high proportion of citizens do not own their home.

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