Debate over CO2 price makes social fairness key issue in German election campaign

Debates about Germany’s carbon price on heating and transport fuels have put the question of who can and should pay for climate action at the centre of election campaigning. The renewed dispute about the country’s perennial issue of higher petrol and diesel prices gained full speed as the Greens’ chancellor candidate Annalena Baerbock explained during an interview with tabloid Bild that her party’s call for a higher CO2 price would translate into 16 cents more per litre of petrol. This has led to campaign slogans, as well as a debate about the social fairness of the carbon price: low-income households spend a higher portion of their earnings on transport and heating and cannot easily afford to switch to more climate-friendly options such as buying an electric car. People living in rural areas often don’t have access to good enough public transport to stop using their cars. SPD chancellor candidate Olaf Scholz told Bild: “Those who now simply keep turning the fuel price screw show how little they care about the hardships of the citizens.” Conservative transport minister Andreas Scheuer also told Bild that “mobility is also a social aspect.” In their draft election programme, the Greens propose an “energy bonus” in which revenues from the CO2 price are paid back to citizens “fairly divided per capita”. The party says this means low-income earners and families will be relieved and people with high incomes will be burdened.

At the same time, the government coalition partners are knee-deep in a dispute about splitting the extra costs from Germany’s new carbon price for heating fuels 50:50 between landlords and tenants. The government previously reached an agreement, but conservative lawmakers have come out against it.

Many politicians – including from the governing conservative CDU as well as CSU – industry representatives and other stakeholders advocate for a more rapid rise of the CO2 price to reach higher climate targets, which would translate into higher petrol, diesel and heating oil prices. At the same time there are worries about upsetting the electorate, as seen with the yellow vest protests in France which were triggered by plans to tax fossil fuels. Germany introduced a national carbon price on transport and heating fuels at the start of 2021 with a fixed price of 25 euros per tonne of CO2, which translates into a price increase of around 7 cents per litre of petrol, 8 cents per litre of diesel, 8 cents per litre of heating oil and 0.6 cents more per kilowatt hour of natural gas. The price is set to increase to 55-65 cents by 2026, and after that will be decided by the market in the trading system.