Economists call for higher CO2 price

The new heating law is now in force. To give further impetus to the heating transition, the economist Grimm is pushing for a higher CO2 price and the promised introduction of climate money. The traffic lights will probably deliver neither of these.

At the launch of the heating law, economist Veronika Grimm is calling for a higher price for the emission of greenhouse gases. "Strengthening CO2 pricing and then introducing emissions trading would be much more effective than further adjustments to the Heating Act," says the economist in the Funke Mediengruppe newspaper. "We will see that all players - both households and heating suppliers, for example - will adapt to the framework conditions."

To compensate for this and to create acceptance for the increase in CO2 prices, Grimm is also calling for the introduction of climate money. The climate money would have a "very positive redistributive effect - on the one hand from high to low incomes and also from those with a high to those with a low carbon footprint", says the economist. "A family of four would get back over 650 euros per year with a carbon price of 45 euros, and over 800 euros per year with a carbon price of 55 euros." The German government should therefore "definitely take action on climate money before the next general election".

Geywitz contradicts Grimm

The climate money should provide citizens with relief for rising fuel and heating costs. However, the introduction agreed in the coalition agreement is becoming increasingly uncertain in view of the tight federal coffers.

A further increase in the CO2 price also seems unlikely: Construction Minister Klara Geywitz recently spoke out clearly against this proposal. "Ms. Grimm's model would mean that all homeowners and tenants who heat with oil or gas would immediately have a more expensive heating bill," said Geywitz. "I'm not sure whether a social balance can be achieved here via the CO2 price - or whether the people in the worst houses, who couldn't afford to renovate, would also have the highest heating bills."

Subsidies of up to 70 percent

The Heating Act - officially known as the Building Energy Act (GEG) - is intended to accelerate the switch to more climate-friendly heating. Newly installed systems must be powered by at least 65% renewable energy; traditional oil and gas heating systems are generally unable to achieve this. However, this initially only applies to new buildings in new development areas.

The maximum subsidy rate for the installation of heating systems is to be increased to 70 percent for private individuals. Every owner who installs a climate-friendly heating system should be able to receive a 30 percent subsidy. A further 30 percent is reserved for low-income homeowners. There is also a "climate speed bonus" of 20 percent, which is reduced over time. These pillars can be combined to a maximum of 70 percent.

The national CO2 price for petrol, diesel, heating oil and natural gas was introduced in 2021 at 25 euros per tonne and will rise from the current 30 euros to 45 euros from January 2024. The instrument is intended to provide incentives to reduce the consumption of fossil fuels and thus CO2 emissions. In 2025, 55 euros per tonne will be due.