“Klimageld” to return CO2 price revenues to citizens not before 2025 – econ min Habeck

The introduction of a so-called climate premium (“Klimageld”) to return the revenues from Germany's national carbon price on transport and heating fuels to citizens will take several more years, economy minister Robert Habeck said at an event by webinar series project Europe Calling. Asked whether citizens could expect a payment before the next planned federal elections in 2025, Habeck said: “No, but a system allowing that such a transfer can be made after those elections.” The government parties had promised in their coalition agreement to introduce a premium as a mechanism to cushion the future rise in the national CO2 price for transport and heating fuels for lower-income consumers and thus increase acceptance for this climate action instrument. An annual per capita payment – the same amount for each person – would mean that people with lower and middle incomes are relieved more financially, as they statistically have a smaller CO2 footprint. However, a major hurdle is the question of how to get that payment to the population, as “the German state lacks a central interface with all citizens”. Merging information from existing systems – for example to pay out child benefits or collect income tax – is “a data protection challenge,” said Habeck, but added that the finance ministry was working on it. “As always in Germany, it is complicated and takes longer,” the minister said.

The Klimageld has led to disputes within the government, with labour minister Hubertus Heil proposing to hand it out preferably to those in need, rather than the same amount to all citizens – as supported by the Free Democrats (FDP). Researchers have said the possibility to hand out direct payments to individual citizens or households could be a key to a more socially just energy and climate policy, as it can target those most in need. The financial burden for citizens in Germany is increasing with the growing transformation of the energy system, for example due to a rising CO2 price for transport and heating fuels, compounding the drastic price increase caused by the European energy crisis. In order to ensure that the energy transition is supported by civil society and that low-income households are not burdened too much, a social compensation mechanism is necessary, said researchers from the Ariadne initiative, who advise the German government on energy and climate policies.