German government committed to returning CO2 price revenues to citizens – media report

Germany’s coalition government is committed to returning revenues from the country’s rising national CO2 price for heating and transport to citizens, reports energy and climate newsletter Tagesspiegel Background. Such a "climate bonus" mechanism (dubbed "Klimageld" in German) will be in place from 2025, a finance ministry source told the publication. Germany will raise the levy from the current 30 euros per tonne of CO2 to 40 euros at the start of 2024 and to 50 euros in 2025, according to media reports. Next year’s increase would lift the price of petrol by three cents per litre according to calculations from motoring association ADAC, the newsletter reported.

In its coalition agreement, the government said it would implement a “Klimageld” as a social compensation mechanism to increase acceptance of the carbon price, but did not provide a timeline or any details. A key remaining question is that of how to ensure the money reaches every citizen. While all three parties in the government coalition are in favour of the mechanism, they are divided over the details, according to the piece. While the Free Democrats (FDP) favour a lump sum per-capita payment, the Social Democrats (SPD) call for more targeted relief depending on income and wealth. The national emission trading system revenues projected by the government suggest that the CO2 price could rise to 65 euros in 2026 per tonne, the article said. From 2027, Germany’s national fuel emissions trading is to be merged into the European Emissions Trading Scheme for Buildings and Transport (ETS2), where significantly higher CO2 prices are possible.