German CO2 price must be adapted to social realities – SPD ministers

Germany’s new price on carbon in the heating and transport sectors does not always reflect “social realities”, environment minister Svenja Schulze and finance minister Olaf Scholz write in an op-ed for Tagesspiegel. The two Social Democrats (SPD) say that the CO2 price as a market-based instrument had to be accompanied by relief for long-distance commuters and tenants. The government has therefore increased living cost supplements and the allowance for commuters. They propose to let tenants and landlords share CO2 costs for heating, since “investing in the heating systems is up to the home owners”. Calling the energy transition the “linchpin of decarbonisation”, Schulze and Scholz say the expansion of wind and solar energy must be accelerated considerably because of the rising demand for electricity in energy-intensive industry, transport and heating.

The German government has decided to put a price on greenhouse gas emissions in the transport and building sectors from 2021 as a key instrument to help reach its climate targets. In the run-up to the system's adoption, several parties had called for the revenues to be paid back to all citizens, to soften the effects especially on low-income households. In the end, the government decided to largely use the revenues to decrease the renewables levy for power consumers.

The op-ed by the two ministers, which mainly outlines how Germany’s climate action programme is to transform all major sectors, is published on the day of a “climate cabinet” meeting in the chancellery, where ministers took stock of how measures to reach Germany’s 2030 climate target are progressing. Anton Hofreiter, head of the Green Party parliamentary group, criticised the track-record of the climate cabinet as “insufficient, unambitious and unfair”. The expansion of renewable energies is lagging, transport emissions are stagnating at a high level while public transport is in crisis and the transition in the farming sector could be blocked for a whole decade, he told news agency dpa.