'Building climate bonus' for landlords could speed up heating transition, prevent hardships - researchers

The German government should protect poorer households against incurring higher costs from the rising national carbon price, researchers at the Mercator Research Institute on Global Commons and Climate Change (MCC) said in a report. The rise means badly-insulated homes heated with oil and gas boilers would pay relatively more. In the report, the researchers propose that landlords, not tenants, should pay the associated carbon costs of heating with fossil fuels. They could in turn receive a so-called building climate bonus, paid regardless of income but geared towards the building's characteristics and living space.

According to the recommendation, buildings would be divided into similar classes depending on their carbon emissions per square metre and features relevant to the best timeline to swap heating systems, such as the age and type of boiler used, as well as building design. Revenues from carbon pricing would be collected separately for each building group, and then redistributed fully among owners as a 'building climate bonus'. Homes that switch to climate-friendly heating would no longer pay the carbon tax, but would receive the bonus until the final building in the group is retrofitted. This should advance the heating transition without overburdening building owners, the researchers said, but added that accompanying investment support was needed to ensure that everyone could afford this.

"Climate protection in the boiler room is proving to be so politically difficult that compensation for cases of hardship should be the starting point," Matthias Kalkuhl, the report's lead author, said. Germany is gradually increasing its national price on carbon emissions in the buildings sector to incentivise the move towards more climate-friendly ways of heating – such as district heating, geothermal or heat pumps – and reduce fossil fuel use.

The German government had promised to introduce 'climate bonus' (Klimageld) support payments to citizens to compensate for the increasing costs. Revenues from the national carbon price currently go directly into the Climate and Transformation Fund (KTF). The fund supports, for example, the further development of electromobility, the development of the hydrogen industry and measures for energy efficiency, including subsidies for the switch to climate-friendly heating.