16 May 2019, 18:28
Kerstine Appunn Sven Egenter Julian Wettengel

Tracking the CO2 price debate in Germany

After shying away from the debate for a long time, Germany's political leaders are finally considering putting a price on CO2 to help reach the country's climate targets. Chancellor Angela Merkel and her "climate cabinet" will look into CO2 pricing, and ministries, major parties and research institutes are all pitching their ideas for how a carbon price could be designed - whether in the shape of a CO2 tax or a trading scheme. CLEW will follow the debate and regularly update this article with the latest developments. For more background on the different options discussed see this factsheet. [UPDATE adds Merkel proposes European coalition of willing for CO₂ price in transport, buildings and agriculture]

[Also read the factsheet Putting a price on emissions: What are the prospects for carbon pricing in Germany? and the article Fear of public backlash and complexity hold back German CO2 price]

 15 May 2019

Carbon tax: Better than the status quo, but not the optimal solution - analyst

A carbon tax would be superior to the current climate policy patchwork of subsidies and regulatory law for both environmental and economic reasons, argues Eric Heymann, analyst at Deutsche Bank in a policy brief.  However, while a tax sets a price for carbon emissions, it does not set a cap, he writes. "That is why emissions trading is even superior to a carbon tax." Despite advantages of market-based in-struments, a fundamental re-orientation of German and European climate policy appeared unlikely. Instead, existing instruments will probably be adapted again and again once their negative side effects become too obvious, making climate policy less efficient than it could be and more expensive than necessary, he says.


10 May 2019

Merkel proposes European coalition of willing for CO₂ price in transport, buildings and agriculture

Germany's Chancellor Angela Merkel has proposed forming a coalition of the willing among European Union countries for CO₂ pricing in transport, buildings and agriculture to meet 2030 climate targets. At a meeting of EU leaders in Romania, Merkel also said she partly supported an appeal by France and other countries to boost EU climate action, but said Germany could not fully sign on, because Germany’s 2050 targets differed from the proposed net-zero objective. Environmental NGOs criticised that many EU leaders fail to recognise their responsibility to act on climate.


Regional environment ministers calls on federal government to examine CO₂ price

The conference of Germany’s regional environment ministers has called on the federal government to examine the introduction of a CO₂ price in the current legislative period. The ministers also demanded that German Chancellor Angela Merkel’s grand coalition push for the goal of climate neutrality by 2050 in the European Union.


9 May

Merkel’s partner CSU wants climate action through lower taxes

The Bavarian Christian Social Union (CSU) – part of Chancellor Angela Merkel’s alliance of centre-right parties – is sceptical regarding the introduction of a new CO₂ tax. The party is calling instead for a reduction in existing energy taxes, such as the electricity tax, to steer Germany towards a low-carbon future.


8 May 2019

European Commission President candidates clash over CO₂ tax

Germany's Manfred Weber and the Netherlands' Frans Timmermans – the two most likely candidates succeed Jean-Claude Juncker as European Commission President – clashed over the question whether the EU should introduce a carbon tax to protect the climate.


7 May 2019

German climate cabinet to debate CO₂ price in July

German Chancellor Angela Merkel’s climate cabinet, a round of ministers relevant for Germany’s climate policy, will use a meeting on 17 July to debate CO₂ pricing, said a spokesperson of the environment ministry during a regular government press briefing. Environment minister Svenja Schulze plans to present her own proposal of a CO₂ price concept ahead of the parliamentary summer break, the spokesperson added. After much delay, German ministers will present their proposals for sector-specific climate action measures at the upcoming meeting of the climate cabinet, planned for 29 May, the spokesperson said.


Expanding European emissions trade to transport and buildings “very difficult” – economists 

Expanding the European Union emissions trading system (EU ETS) to transport and buildings as an instrument to reach climate goals would be an “ideal solution” in principle, but the necessary reform would be “very difficult” to enact in the European reality, write Ottmar Edenhofer and Nicolas Koch of the Mercator Research Institute on Global Commons and Climate Change (MCC) in a guest article in Die Welt. “Such institutional changes at EU level cannot be expected at present,” they note, and instead call for a national overhaul of Germany’s energy taxes and levies. “Otherwise, the enormous investments required for sustainable mobility will not get off the ground.”


6 May 2019

Merkel’s CDU struggles to find position on CO2 price

Comments by several politicians from German Chancellor Angela Merkel’s conservative CDU party over the weekend indicate dissent over how best to put a price on carbon emissions. Party head Annegret Kramp-Karrenbauer called for a smarter solution than simply raising taxes. “I’m convinced there are more intelligent solutions than simply raising a tax or introducing a new one,” she said at a regional party conference in Saxony-Anhalt. “The term CO₂ tax simply means an additional burden on fuels, diesel, petrol heating oil and gas.” This particularly impacts low-income households that depend on their cars to get to work, she added.

Some media commentators took her remarks as a clear rejection of a CO₂ tax, which prompted several of her party colleagues to call for an open debate, among them Armin Laschet, state premier of North Rhine-Westphalia.

In a radio interview with Deutschlandfunk, Kramp-Karrenbauer on Monday qualified her statement from the weekend. “We only said we wouldn’t make a CO₂ tax the first point of discussion,” she said, adding that her party prefers an emission allowance trade system. “The steering effect, the leverage effect, is much better when it comes to allowance trading, when it comes to emissions trading. This is what we are now concentrating on in the discussion,” Kramp-Karrenbauer said.

“We will not protect the climate and reach targets without the measures being felt at the end of the day – both in the economy and by the end consumer,” she added.


3 May 2019

Germans see great need for climate action, oppose CO₂ tax – survey

A large majority of Germans (81%) see a great need for action to protect the climate and say that climate change cannot be stopped without restrictions on people’s lives, according to a representative survey conducted by pollster infratest dimap and commissioned by public broadcaster ARD. However, 62 percent of respondents said they are against the introduction of a CO₂ tax.


German economy minister “not convinced” of CO₂ tax

Germany’s economy and energy minister Peter Altmaier is sceptical of the idea of introducing a tax on CO₂, he said on Maybrit Illner, a political television talk show by public broadcaster ZDF. “As far as the CO₂ tax is concerned, I say: I am not convinced of it, and I also believe that it would be wrong to rush a decision." While the federal government is currently discussing “all possibilities,” the disadvantages outweigh the positive effects of such a tax, he said, referring to the yellow vests protests in France. “There will be winners and losers. […] In the end, we must not put a heavier burden on either the economy or the people,” he said, adding that it would require a “huge bureaucratic effort” to introduce a CO₂ price in a socially fair way – one that does not overburden low-income households, especially those in the countryside. The minister called emissions trading the most efficient solution from an economic perspective. Altmaier also said Germany must decrease its levy to support renewables expansion, and abolish the electricity tax.


30 April 2019

Merkel’s CDU party to wait until after European elections with CO2 price decision

Germany’s main conservative party (CDU)  will present its own concept for a CO2 pricing scheme to reach the country’s climate targets in a few weeks - but not before the European elections, the party’s general secretary Paul Ziemiak said after a party meeting. “We want market instruments to reduce emissions,” Ziemiak said, according to a report by dpa carried by Focus Online. It would be wrong to simply raise the price for petrol and the consumer shouldn’t bear the burden alone, he said.
Carsten Linnemann, of the CDU’s business-friendly wing, said that a national CO2 price would put an additional burden on companies and people, while its climate benefits were doubtable.
CDU state premier Armin Laschet of North Rhine-Westphalia said that he didn’t believe a CO2 price would be implemented within the current legislative period, i.e. by 2021.


29 April 2019

CO₂ price debate gathers speed within German grand coalition

More and more politicians from German Chancellor Angela Merkel’s grand coalition are showing openness to the idea of introducing a price on CO₂ and have entered a debate about its possible form and details, writes Konrad Schuller in Frankfurter Allgemeine Sonntagszeitung. While economy minister Peter Altmaier had long insisted the concept was not on the government’s agenda for this legislative period, a source said his ministry “expects that CO₂ pricing will be introduced in some form or other”, writes Schuller. Several Conservatives from Merkel’s CDU and its CSU sister party have proposed setting up emissions trading for the transport and buildings sectors instead of a CO₂ tax, writes Schuller.

However, current EU legislation stands in the way of extending the European Union’s Emissions Trading System (ETS) to other sectors, Jochen Flasbarth, state secretary in the environment ministry, told Tagesspiegel in a separate article. The relevant EU directive would have to be amended, which would be very complicated politically, said Flasbarth.

A majority of companies from the energy efficiency industry are in favour of a CO₂ price in the buildings sector, said the German Industry Initiative for Energy Efficiency (DENEFF) in a press release. However, the government has to make sure such a price will actually help steer investment decisions and that it is flanked by other climate action measures.


26 April 2019

Business-friendly Free Democrats rejects "national solo-runs like a CO2 tax"

Germany’s liberal, pro-business Free Democratic Party (FDP) said it rejects “national solo-runs like a CO₂ tax”, writes Daniel Brössler in the Süddeutsche Zeitung. Instead, the main instrument should be Europe’s Emissions Trading System (EU ETS), which should be expanded to the transport and buildings sectors, the party declared ahead of its party conference. The FDP leadership opposes sector-specific CO₂ targets as outlined in the government’s Climate Action Plan 2050. “Under no circumstances should such goals be enshrined in law, or enforceable in court,” it writes. Environment minister Svenja Schulze aims to do just that with her draft Climate Action Law


25 April 2019

Green Party: CO2 tax is not enough

As new warnings of drought show that "the climate crisis is intensifying", the German government must implement effective climate policies, and fast, Annalena Baerbock, co-head of the opposition Green Party says in an article by Cerstin Gammelin for Süddeutsche Zeitung. A carbon tax is not enough, Baerbock argues. “We need a mix of instruments, strong regulation and, most of all, a coal exit law,” she told the paper, adding that a carbon tax would have to price a tonne of CO2 at at least 40 euros. This would increase the cost of a car journey from Berlin to Munich by 3.50 euros. Revenue from a CO2 tax should go back to consumers in the from of “energy money” which would benefit lower-income households with smaller carbon footprints most.


23 April 2019

German politicians pitch design ideas for CO₂ price

The debate over a price on CO₂ emissions gathered pace over the Easter break, after Chancellor Angela Merkel said her new “climate cabinet” would discuss the idea over the coming months.
Environment Minister Svenja Schulze (SPD) – who has been calling for a debate over CO₂ pricing almost since she took office over a year agotold weekly news magazine Spiegel she will work out a proposal by summer that will not burden low-income households. “We want to reimburse the people with the money from CO₂ revenues, taking the burden off medium and low-income households,” Schulze said. “Those with a higher income, or big cars or houses will carry a greater burden because they can afford it.” The minister did not suggest a definite price, but mentioned 20 euros per tonne of CO₂, as proposed by experts, as a first step.

In a guest commentary for Tagesspiegel Background, former Economy and Energy Minister Sigmar Gabriel (SPD) said 20 euros would be a “low-threshold opening offer” but for Germany to reach its 2030 climate targets, it would need to rise to 200 euros per tonne. He argues that a CO₂ tax would have “significant advantages compared to emissions trading”. Introducing a tax would be much faster than reforming the EU Emissions Trading System (ETS), Gabriel writes. He says the revenue from such a tax should be paid out to citizens per capita, “the same amount for everyone” meaning that those on lower incomes who emit less CO2 receive back a higher proportion of the tax they pay or even more. Companies covered by the ETS would be exempt from the tax, Gabriel writes.

Wolfgang Schäuble (CDU), president of the German parliament and former finance minister, told the Neue Osnabrücker Zeitung it would be better to reach an agreement at a European level. “Making [CO₂] allowances more expansive or introducing a tax, is the same general idea and should be examined by the responsible politicians,” Schäuble said. He called for decisions on climate action to be made quickly, saying “we cannot afford ten more years of discussions.”


16 April 2019

Decision on CO₂ pricing in Germany by end of the year – Merkel

By the end of 2019, the German government will decide whether to introduce CO₂ pricing to reach its 2030 climate targets, Chancellor Angela Merkel said in her weekly video podcast. Germany must make “tremendous efforts” to reach its 2030 target of reducing greenhouse gas emissions by at least 55 percent below 1990 levels, the chancellor said. She added that her government’s move to set up a “climate cabinet” was a measure of the importance of climate protection. “Our goal is to have the legal framework in place by the end of the year to enable us to achieve the 2030 climate targets,” Merkel said, referring to her government’s planned “climate action law.” She said the government would decide on measures to reduce emissions from all relevant sectors – energy, buildings, transport and agriculture – but would debate “whether we will save CO₂ by sector, or whether we will focus more on general CO₂ pricing” over the coming months, and make a decision before the year is out.

A spokesperson for the environment ministry said a CO₂ price should not be seen as an alternative to specific climate action measures in each economic sector. “We don’t see it as an alternative. […] We see it as one part of a necessary programme of measures,” the spokesperson told journalists at a regular government press briefing.


11 April 2019

Germany considers CO2 price to reach climate targets- Merkel

German Chancellor Angela Merkel (CDU) has put carbon pricing on the government’s agenda as a possible measure to reduce greenhouse gas emissions enough to meet 2030 climate targets. The government’s new ‘climate cabinet’ – a round of ministers with key responsibilities on climate issues – will look at recent expert opinions on CO2 pricing schemes, Merkel said in a question and answers session in parliament. With a wealth of research and advice available on carbon pricing, it would be “ignorant if we did not include the latest reports in our considerations”, Merkel said.


10 April 2019

Germany’s climate cabinet ready to discuss introduction of carbon price

Germany's so-called climate cabinet - a round of ministers with key responsibilities touching climate issues - has decided to discuss options for a carbon price at its first meeting in Berlin today. Environment minister Svenja Schulze said the talks had been "very constructive" and confirmed that the government will decide on binding climate legislation for all sectors this year. Young environmentalists called on the climate cabinet to speed up emissions reduction efforts, but the government says that implementation takes time.


09 April 2019

German finance minister lays out vision for climate policies including changes to taxes, levies

Ahead of tomorrow’s first meeting of the so-called climate cabinet, German finance minister Olaf Scholz has launched his vision for Germany’s energy transition. In his “Energy Concept 2038”, a four-page paper seen by Frankfurter Allgemeine Zeitung (FAZ), Scholz calls for more commitment for climate action within the government. “We especially have to focus on the expansion of the energy supply and the grid,” FAZ correpsondent Andreas Mihm quotes Scholz’s paper. Scholz backs the proposal for a climate action law by fellow SPD minister Svenja Schulze, saying that her draft is setting the standards to be followed. He also warns that more CO2 has to be saved in the building and transport sectors, stressing that “two decades of private and public investment in cross-sector transformation of the energy and mobility system” were required. To this end, Scholz suggests a balanced reform of the taxes and levies on electricity so as to ensure an efficient sector coupling and development of power-to-x technologies – without, however, mentioning a price on CO2, Mihm writes.


19 March 2019

Germany’s environment minister Schulze reiterates call for carbon price

German environment minister Svenja Schulze has renewed her call for a price on CO2 emissions, arguing it would be one of the most efficient ways to reduce the transport and buildings sectors’ carbon footprint, Nora Marie Zaremba writes in the Tagesspiegel newspaper. At the Global Solutions Summit in Berlin, Schulze said a carbon price in Germany would bring the country in line with a growing number of states which consider similar pricing schemes to comply with emissions reduction targets, arguing that "international coordination on CO2 pricing can bring us economic, ecological and political advantages” and can help avoid a scenario where emissions saved in one country subsequently occur in another. The minister said a carbon price would not be meant to generate additional income for the state as the earnings generated would ultimately be returned to the public.


27 February 2019

Lack of CO2 price is killing energy innovation – German government advisors

An expert panel advising the German government has called for a price on CO2 to spur the development of new technologies that are key for the energy transition. “Innovations are driven into the ground without a CO2 price signal,” said Dietmar Harhoff of the Max Planck Institute for Innovation and Competition, who chairs the government’s Commission of Experts for Research and Innovation. The panel also emphasized the key role start-ups play in fostering innovation, but warned that many young companies are starved of capital.


25 February 2019

German Court of Auditors calls on govt to “seriously consider” carbon price

Kay Scheller, president of Germany’s Court of Auditors (Bundesrechnungshof), says the government should “seriously consider introducing a CO2 price” to meet the country’s emissions reduction goals. “Those who have to pay for pollution have an incentive to reduce it,” Scheller said in an interview with Welt Online. At the same time, the government should examine whether existing subsidies, fees and levies are still fit for purpose, he said, referring to lower taxes on diesel compared to petrol, the exemption for certain companies from power and energy taxes, and the buyer’s premium for e-cars, which the government recently extended despite low interest from customers. “I don’t want to advocate any measure that simply increases taxes, but rather call for a thorough trawl through the system of fees and levies,” Scheller said. “Many taxes and regulations that only benefit particular interest groups could be removed.”


21 February 2019

Germans remain strongly in favour of energy transition, but want fairer distribution of costs

The vast majority (90%) of Germans are supportive of the country's energy transition. However, more and more are losing faith in the government’s ability to pursue this landmark project in a socially just way, a new survey finds. While most Germans are open to changes like CO2 pricing measures, electric mobility and renewables, they don’t support such measures if they perceive them to affect some groups of society more than others, the researchers found. A majority of Germans (54%) said they are in support of pricing CO2 to reduce greenhouse gas emissions. However, if such a pricing scheme would make driving, flying and heating homes more expensive, 46 percent said they would only find it acceptable if some form of compensation was offered.


15 February 2019

New German energy state secretary takes carbon price off table for now

Germany will not get a price on carbon emissions during the current legislative period, new energy state secretary Andreas Feicht said at the annual new year’s reception of the renewables association BEE. While the current complex system of energy fees, taxes and surcharges is hindering innovations necessary to drive the energy transition forward, the government will not pass any legislation and will only study concepts and proposals, Feicht said to the audible disappointment of the around 1,000 managers from the renewables sector.


10 January 2019

Franco-German cooperation treaty does not mention carbon price

The new Franco-German treaty (Treaty of Aachen) that was approved by Germany’s government and will be signed on 22 January does not mention a new carbon price initiative despite calls by five political parties in parliament to do so, reports the energy news service Tagesspiegel Background. The Green Party’s climate spokesperson, Lisa Badum, said this was “more than sad,” given that “we would have needed at least a clear commitment to an immediate transformation to a greenhouse gas-neutral economy.” Badum suggested the German government is to blame for the omission given that “it is well known that President Macron is more than open to the subject.”


12 December 2018

“German CO2 price debate is here to stay”- liberal MP

An international carbon market is nowhere on the horizon. But for Germany, the topic is nevertheless an interesting one, energy politician and MP in the federal parliament Lukas Köhler from the market-liberal, business-friendly Free democratic Party (FDP), tells Clean Energy Wire CLEW. Caught between the yellow-vest protests in France and upcoming European elections on the one side and the pressure to cut emissions from the transport sector in particular on the other, the idea of expanding Germany’s CO2 price to more sectors will nevertheless not go away again, he says.


03 December 2018

Fear of public backlash and complexity hold back German CO2 price

Politicians across party lines, environmental and industry groups and researchers alike are in favour of a price on carbon emissions in all sectors. There is debate on details such as the pros and cons of a carbon tax versus a trading scheme, but all agree that Germany ultimately needs some form of a CO2 price if it wants to succeed with its energy transition. However, politicians still shy away from introducing what tabloids have already dubbed “yet another tax hammer” for fear of angering voters, and protests against fuel prices in France have made them even less courageous.


12 November 2018

German env minister plans CO₂ price concept to boost climate action

Germany's environment minister Svenja Schulze continued her push for a price on CO2 emissions, announcing plans to team up with fellow Social Democrat Olaf Scholz's finance ministry in order to prepare a concept in line with the German tax system. Schulze acknowledged that the idea had so far not gained support from the conservative coalition partners, chancellor Angela Merkel's CDU/CSU alliance. In her keynote speech about her priorities as minister, Schulze voiced optimism that the coal commission was on track to find a pathway to end coal-fired power generation in Germany. The finance ministry said there are no considerations to introduce a CO₂ tax or a new CO₂ price.


9 November 2018

CO2 price could become “next tax hammer” for petrol and heating oil

Environment minister Svenja Schulze’s proposal to introduce a CO2 price could make petrol and heating oil even more expensive, write Fritz Esser, Kai Weise, Karina Mössbauer and Larissa Krüger in mass-daily Bild. “As if petrol and heating oil didn’t have a HIGH price already (…) but it’s also a fact that missing EU climate targets will also become really expensive in two years’ time at the latest.” From 2020 onwards, Germany might have to pay billions if emissions don’t fall rapidly enough, says the article entitled “SPD minister plans special tax on petrol and heating oil”.


23 April 2018

German environment minister open to national carbon price

Germany’s new environment minister, Svenja Schulze, has indicated support for a national price on carbon emissions. “I find the idea very plausible,” the Social Democrat told the daily energy and climate newsletter Tagesspiegel Background. She said that a carbon price model needed to be “socially innovative” to ease the burden on poorer households. Schulze also said that, in her view, hardware retrofits for older diesel cars were “the only realistic measure to avoid driving bans” in several German cities struggling to meet current emissions limits.

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