Lack of knowledge about CO2 price among Germans raises questions over efficacy - researchers

Most people in Germany have only very little understanding of the mechanism and effects of the price on carbon emissions in transport and heating that the country introduced in 2021, a survey of 6,000 households by economic research institute RWI has found. The CO2 price is set to increase in coming years as part of a bid to incentivise the use of low-emissions alternatives. The majority (62%) of respondents said they feel either rather or very poorly informed about the carbon pricing scheme, especially when it comes to the financial consequences for consumers of petrol, diesel, heating oil or natural gas. For example, while the actual average cost increase of the CO2 price for commuters is a little more than one euro per week, respondents in the survey estimated that, on average, the additional burden would be about 20 euros per week, with the highest guess even being 200 euros, RWI said. Moreover, many people erroneously believed the carbon price would also apply to products like kerosene or plastic bags. Over 60 percent correctly assumed that the scheme’s objective is to reduce the use of fossil fuels to protect the climate. However, 30 percent also believed that the government was also aiming to generate additional taxes through the carbon price, something that the government has explicitly denied. The funds raised by the scheme are instead supposed to be returned to citizens according to their financial needs in the form of a so-called ‘climate bonus’ (Klimageld).

RWI energy expert Manuel Frondel commented that the empirical findings “put the efficacy of a CO2 price into question.” Policymakers and researchers both have a responsibility to better communicate the scheme, Frondel said. He added that, on the one hand, knowing that actual costs of the CO2 price are lower than many expect could increase public acceptance towards the scheme. On the other hand, the steering effect that prompts people to adapt their behaviour by using less fossil fuel could only be achieved through higher prices.

Beginning in 2021, Germany put a fixed price on carbon emissions from fuels used predominantly for transport and heating, in addition to the EU emissions trading system (EU ETS), which covers the energy and industry sectors. Germany’s coalition government in July agreed a higher CO2 price for 2024: the fixed carbon price for fossil fuels such as diesel, petrol and heating oil is set to rise from the current 30 euros per tonne to 45 euros.