Every year the price that companies have to pay to emit a ton of Co2 equivalent increases. On January 1, this Co2 price increased by a whopping 50 percent, from 30 to 45 euros, and next year it will increase to 55 euros. Starting in 2026, the certificates will be freely traded and the federal government will set a price range of between 55 and 65 euros. Emissions will probably be even more expensive then.
The meaning of the Co2 price is quickly understood. The economy should be motivated by money to cause fewer emissions and thus save money. So far there is little to see, but this is also because the necessary renovations will take many years. The price of Co2 has so far had the greatest visible effect on consumer prices, because companies that have to pay higher rates for their emissions add it to final prices.
Although the price of Co2 dates back to the times of the grand coalition of CDU/CSU and SPD, the traffic light coalition, especially the Greens, proposed a compensation mechanism for the last federal elections. Therefore, all revenue from the Co2 price should be distributed equally among all residents of the country in the form of climate money. This is a lot of money: the federal government expects revenues of €10.9 billion in 2024. This would result in climate money of around €129 per capita per year. A family of four would recover about 516 euros.
Vague coalition agreement
In addition to social compensation, this should also have a directing effect, because households that consume little Co2 also pay a smaller proportion of the Co2 price and therefore obtain greater benefits from climate money, while households that consume a lot of Co2 They also pay after deducting the Pay More for Climate Money. Citizens would also have a financial incentive to avoid emissions wherever possible.
But the climate money is not coming. In the coalition agreement, the SPD, the Greens and the FDP had only agreed on a vague formulation, according to which only one mechanism should be introduced in this legislative period under which such per capita payments would be possible. Starting in 2025, this will likely be equivalent to linking the individual tax number to a checking account. But there is nothing left, as Federal Finance Minister Christian Lindner (FDP) made clear at the weekend. “After the next elections we will have to decide whether to politically restructure the financing landscape in this direction,” he told the Neue Osnabrücker Zeitung (NOZ).
For you, this means that with a higher Co2 price but no climate money, your expenses will increase in particular. In these areas:
1. Traffic
The ADAC assumes that a liter of gasoline will cost around 4.3 cents more this year than last year due to the increase in the price of CO2. Diesel increases 4.7 percent. With an average mileage of 12,670 kilometers per year for German drivers and an average consumption of 7.7 liters of gasoline or 7.0 liters of diesel per 100 kilometers, this means additional costs of around 42 euros for gasoline and diesel drivers. 41.70 euros for diesel drivers.
But these are only additional costs compared to the previous year, when the price of Co2 already existed. According to the ADAC, since the introduction of the emissions tax, the cost of a liter of gasoline has increased by 12.7 cents and that of diesel by 14.2 cents. Taking into account typical mileage and consumption data, this means an extra 123.90 euros per year for gasoline drivers and 125.93 euros for diesel drivers.
2. Heating
In the home itself, it is mainly the heating systems that generate CO2 emissions, at least if you are one of the majority of Germans who still heat with oil or gas. The Federal Association of Consumer Organizations estimates that these additional costs for 2024 will amount to around 1.1 cents per kilowatt hour for natural gas and 14.3 cents per liter for heating oil compared to 2020, when there was no Co2 price. .
For a typical single-family home with an annual consumption of 5,000 kWh of natural gas or 500 liters of oil, this would mean additional costs of 55 or 72 euros per year. Families with a consumption of 15,000 kWh of natural gas or 1,500 liters of diesel pay 165 euros more for natural gas and 216 euros more for diesel.
There are few opportunities to avoid costs here. Most Germans live on rent, so they have no influence over the heating system in their home. But: the proportion that owners can pass on to tenants decreases the more emissions a house emits. In this case, homeowners have at least an indirect incentive to switch to low-CO2 heating systems.
3. Generalized inflation
Fuels and heating are the two areas in which the increase in the price of Co2 is directly felt. The Economic Advisory Council, an advisory body to the federal government, had already calculated in 2020, before the Co2 price was introduced, that it would also make many other goods more expensive. Finally, producers of primary and intermediate products must also use energy or production methods that produce Co2 emissions. Therefore, the price of Co2 has the greatest effect on the prices of food, rent, restaurants and clothing stores in the fuel and heating sectors.
For 2021, with a Co2 price of 25 euros, economists expected an increase in inflation of 1.06 percent due to the Co2 price, of which about half would come from fuel and heating and the other half from the rest of the cost of living. In total, experts expected a cost of living increase of 1.96 percent, half of which would be due to fuel and power alone.
The additional costs this entails for you can only be vaguely estimated, as it largely depends on your individual lifestyle. According to the Federal Statistical Office, the average consumption expenditure of a single household in 2022 was 1,833 euros. This would already include around 11.50 euros of additional costs due to the price of Co2, in addition to fuel and energy, which would increase to a total of 17.50 euros in 2024. A family of four would have to pay about 42 euros more for their living expenses, apart from fuel and heating, than before the introduction of the Co2 price.
How much would climate money help?
If we add the three areas, a single household today would pay between 17.50 and 215 euros more per year, depending on their lifestyle. A family of four people would have additional costs of between 42 and 384 euros per year. These are large margins because people who do not have a car in a house without fossil fuel heating are much cheaper than those who heat with oil and travel a lot by car.
This is exactly where climate money would come into play: if single people received 129 euros from the State, at least those with high emissions today would have an incentive to reduce them. Anyone who causes few Co2 emissions would already benefit from climate money.
According to this calculation, families would always be relieved that their €516 of climate money exceeds even the pessimistically assumed €384 of additional costs. However, the latter could be significantly higher if, for example, a family owns two cars. So climate money would be an incentive to think about changing behavior here too.
For this reason, many economists and climate activists are now calling for the introduction of climate money. In addition to the BUND, it is also promoted by the Verdi trade union, social associations such as the VDK social association, consumer advice centers and economic institutes such as the German Institute for Economic Research (DIW).
Follow the author on Facebook