Landlords and tenants should split costs from new German CO₂ price – env min

Landlords should be obliged to shoulder at least 50 percent of the additional heating costs resulting from Germany’s new national CO₂ price in order to cushion its social effects and ensure the public’s acceptance, said environment minister Svenja Schulze. From January 2021, tenants living in houses with oil or gas heating must pay a carbon price for their consumption of heating fuels, amounting to extra annual costs of about 50-110 euros per household (example calculations by environment ministry here). According to current law landlords can pass on the full CO₂ costs to tenants, but the Social Democrat (SPD) minister aims to cut this by at least half. Tenants have no say in whether the house they live in is made more energy-efficient or the heating switched to a low-carbon alternative, explained Schulze. However, the CO₂ price is supposed to incentivise the transition to climate-friendlier alternatives. “A CO₂ price that does not hold landlords accountable is a blunt sword,” she said in a press conference. She called on all relevant ministries to quickly agree legislation. The SPD parliamentary group supports the proposal.

The German government sees a price on greenhouse gas emissions in the transport and heating sectors as a key tool for reaching its climate targets. At the same time, it says it aims to ensure the system is socially fair. For example, it does not want to put an extra high burden on low-income households, which spend a higher share of their budget on transport and heating fuels. So adjustments have been made such as a lowering of the renewables levy, which consumers pay with the power bill to finance renewables support. It is now capped at 6.5 cents per kilowatt hour (ct/kWh) for 2021, making electricity cheaper than it would be otherwise. This is financed by revenues from the carbon price and other federal budget funds.

A blog post by the Institute for Applied Ecology (Öko-Institut) states the CO2 price actually relieves lower income households and burdens those with a higher income. “Overall, the changes resulting from the CO2 price and simultaneous limitation of the EEG levy and thus the electricity price increase in 2021 are socially balanced,” write the authors.

The national emissions trading system began on 1 January with a fixed price of 25 euros per tonne of CO2, which translates into a price increase of around 7 cents per litre of petrol, 8 cents per litre of diesel, 8 cents per litre of heating oil and 0.6 cents more per kilowatt hour of natural gas.