German govt agrees on new building CO2 costs split between tenants and landlords

Landlords in Germany will have to participate in a carbon dioxide (CO2) levy for residential buildings that so far has solely been borne by tenants, reports news agency Reuters in an article carried by Handelsblatt. Germany’s “traffic light” coalition – formed by the Social Democrats (SPD), the Green Party and the Free Democrats (FDP) – has agreed on a tiered cost-sharing system for a CO2 levy on building emissions first introduced in 2021. The new tier model will see costs distributed between landlords and tenants depending on the consumption and condition of the building; in the case of buildings with particularly high emissions, landlords would have to bear a maximum of 95 percent of the costs. “This gives landlords a greater incentive to make energy-saving investments,” Bernhard Daldrup (FDP) told Reuters. “Conversely, landlords in the upper segment are largely relieved,” he added.

The CO2 levy in residential buildings covers emissions in the sector caused by the combustion of fossil fuels and is currently paid entirely by tenants via their heating bill. According to the tenants’ association, the CO2 levy on average will cost tenants in an apartment building an additional 67 euros for gas and 98 euros for heating oil systems annually. The CO2 price in the building sector is set to gradually increase, however, the rise for next year has been postponed amidst the energy crisis. The agreement in the traffic light coalition comes after the FDP initially postponed the introduction, originally planned for October. The law is set to be passed this week and to enter into force in 2023.