Study finds CO2 price of 50 euros per tonne would be 'socially balanced' for Germany

Putting a price of 50 euros per tonne on carbon emissions would allow for a "socially balanced" climate policy in Germany, a study commissioned by the Agora Energiewende and Agora Verkehrswende* think tanks has found. "Social balance is achieved by repaying all of the earnings to citizens. Low-income households on balance will even be better off," the think tanks say. One-person households and households with a strong income will on average see "a moderate rise" in costs, whereas commuters and people living in rural areas will not be as strongly affected "as commonly thought," they argue. More than half of all households are said to benefit from such a model. "Fears that a CO2 price will inevitably lead to social imbalance are unfounded," said Christian Hochfeld, head of Agora Verkehrswende. "There's no excuse anymore, the government has to get CO2 pricing on track," he said. According to the study, a carbon price of 50 euros, combined with other policy measures, would mean that taxes for one litre of diesel fuel would increase by 16.3 euro cents and for gasoline by 11.8 cents per litre, while heating oil prices would rise by 13.2 cents and natural gas by 1 cent per kilowatt hour. This would generate earnings of about 11 billion euros per year and each citizen should in turn receive at least 100 euros per year in the form of a "climate premium".

Having long shied away from the debate, German political leaders are finally considering a price on CO2 to help reach the country's climate targets. Chancellor Angela Merkel set up the climate cabinet to find ways to reach Germany’s 2030 climate targets and has promised to announce key results of the minister group on 20 September.

*Like the Clean Energy Wire, Agora Energiewende and Agora Verkehrswende are projects funded by Stiftung Mercator and the European Climate Foundation.