The climate money is one of the showcase projects in the coalition agreement: The traffic light wants to relieve consumers of rising energy prices. The project now seems a long way off. Finance Minister Lindner has just announced that a milestone has been reached.
During the parliamentary summer break and school holidays, many a mosquito becomes an elephant and in Brandenburg a wild boar becomes a lion. Relevant topics get lost there. Like one Interview by Federal Finance Minister Christian Lindner with the newspapers of the Funke media group from the penultimate weekend in July. In it, the head of the FDP made a surprising announcement: “We connect the tax identification number with an IBAN bank account so that we can make a per-capita payment. This should be possible from the end of next year,” said Lindner.
What initially few noticed caused a stir among specialist politicians – whether they read the interview on vacation or between two constituency appointments. For months, members of the Bundestag have been waiting for a new water level report on this topic from Lindner’s house. After all, the ability to transfer money directly to all citizens is a prerequisite for the climate money planned by the traffic light coalition – a compensation mechanism that is intended to relieve primarily lower incomes during the switch to renewable energies and thus strengthen acceptance of climate policy.
Why so late?
The surprise was sometimes followed by disillusionment, for example with Andreas Audretsch, Vice-Chairman of the Greens parliamentary group. “We need the payment mechanism as social compensation. It’s a long time until the end of 2024,” says Audretsch ntv.de. After the cabinet meeting eleven months ago, Lindner spoke of at least a year and a half that it would take to develop such a payment method. Now it will probably take nine months longer – at least. “Yes, that’s technically a complex undertaking. It’s all the more important that the finance minister gives the matter the necessary priority, he has our support,” says Audretsch.
“It is known that Germany’s administration – to put it mildly – is not at the forefront of digitization. In addition, the government was involved with Russia’s war against Ukraine,” says FDP climate politician Lukas Köhler to ntv.de Climate money is a complex official process. So far, there is no blueprint for this in Germany’s administration. The Ministry of Finance has therefore carefully examined which solution is technically feasible at all.” It is crucial that the payment mechanism comes.
A query from ntv.de as to why its construction is so lengthy was left unanswered by the responsible Federal Central Tax Office. “The Minister of Finance has the task of creating the technical basis for the direct transfer of public services, also in order to use the climate money to pay back the income from CO2 pricing to the citizens. I expect that the Federal Ministry of Finance will soon make a proposal on this.” , says Esken in an interview that appears on ntv.de on Saturday. She expects climate money to be introduced in the current legislative period. “We agreed that in the coalition agreement and I expect a certain amount of loyalty to the contract.”
Do SPD and FDP stand by climate money?
Skepticism had recently grown among the Greens as to how serious Lindner was about the climate money project, after they had perceived the Free Democrats as allies at the beginning of the government. The Greens presented the concept, which was still called “energy money” at the time, during the federal election campaign. The idea: Oil and gas will become more expensive and less attractive as a result of European emissions trading for fossil fuels and the German CO2 price. This motivates consumers and the economy to reduce their consumption and switch to renewable energies. A fixed amount financed from CO2 pricing – the climate money – compensates for these additional costs, which relieves people with low incomes and lower energy consumption in particular. On the other hand, if you consume more energy, drive gas guzzlers or heat the pool in your villa, you pay more.
The Greens’ concept matched the FDP’s ideas of controlling the energy transition solely through emissions trading with CO2 certificates that are constantly becoming scarcer. The Free Democrats have recently missed opportunities to push social climate money, says Green politician Audretsch. “We Greens are pushing for both to come, a moderately increasing CO2 price and climate money as social compensation.” But the work on climate money is progressing slowly in the FDP-led Federal Ministry of Finance, while the SPD is also criticizing it.
The climate politician and vice-chairman of the SPD parliamentary group, Matthias Miersch, warns when asked by ntv.de: “Social distortions” caused by emissions trading are inevitable and would not be compensated for by the climate money. Miersch had it even worse in April in the “Tagesspiegel” put it this way: “Mobility and energy could then become unaffordable for some, while the wealthy could continue to afford any kind of climate mess.” Now Miersch explains: The climate money could “be a long-term instrument of compensation if it is designed properly”. The coalition agreement applies.
How much is it supposed to be?
What exactly the climate money could look like is still unclear today. The Greens had calculated in their election program with a C02 price of 60 euros at 75 euros per person per year. That would be 300 euros for a family of four, but the sum was much more impressive in 2021 – before the massive war-related inflation of the following two years – than today.
75 euros times 83.2 million inhabitants would be an impressive 6.24 billion euros a year, plus administration costs. The Federal Republic of Germany received 13.2 billion euros from European and national emissions trading last year. Trend for 2023: rising. In the long term, the certificates from European emissions trading should even become significantly more expensive and generate even higher government revenues. In return, consumer prices should then also rise sharply, which is why the climate money would have to grow beyond the 75 euros. None of the politicians asked wanted to name a target value for this.
Precedent energy price crisis
In fact, an ever-increasing CO2 price is not set in stone. Until it is transferred to national or European emissions trading, the CO2 price is set politically via the Fuel Emissions Trading Act (BEHG). When energy prices skyrocketed as a result of the Russian war of aggression in Ukraine, the federal government suspended the price path. The planned increase from 30 to 35 euros per tonne for the current year failed; by 2025 it will only rise to 45 euros instead of the originally planned target of 55 euros. An ominous precedent for Audretsch: “It was not good that we suspended the increase,” says the Green politician. “Central is reliability, that people can and adapt to it.”
Whenever political leaders are threatened with hardship due to the high cost of living, the CO2 price is the obvious choice. Even emissions trading can be politically controlled through the distribution of additional CO2 certificates. FDP politician Köhler still believes that emissions trading is the better price path because it is more reliable: “I can well imagine that we will introduce national emissions trading in 2025 in 2024 in order to bridge the time until European emissions trading is expanded,” he says . Lindner immediately had an application to start emissions trading in 2024, which had been passed by a majority at the FDP party conference in spring cleared: “That is no longer politically and technically possible,” said Lindner, referring instead to the start of European emissions trading in 2027.
Lindner “stands by the idea”
So is Lindner not in such a hurry to introduce climate money? A spokesman explained to ntv.de that the Minister of Finance “is committed to the idea of achieving climate neutrality via the market-based instrument of the CO2 price and returning the corresponding income to the citizens for social compensation”. And when is it? “The interdepartmental votes on ‘climate money’ are ongoing,” said the Ministry of Finance. Köhler is also convinced that the climate money will come. “Christian Lindner made that very clear.”
In the Funke interview, Lindner passed the buck on to Federal Economics Minister Robert Habeck. The approximately 200 billion euros in the climate and transformation fund (KTF), into which the CO2 income has flowed so far, are largely planned – for the promotion of electric cars, heat pumps and the conversion to a climate-neutral industry. Lindner called on Habeck and other cabinet colleagues to “gradually get out of the subsidy regime” so that the money collected can flow directly to the citizens. The climate money and use of the KTF billions become two of many aspects of economic policy if the debate on economic stimulus measures continues to gain momentum: The Greens are demanding massive investments and – together with the SPD – an industrial electricity price. So far, Lindner has said no to both – and has always known that the Chancellor has his back when it comes to budgetary discipline and compliance with the debt brake.
FDP climate politician Koehler, who, together with Vice-Chairman Johannes Vogel, is promoting national emissions trading and climate money, is not convinced by the budget problem: “There is enough money in the KTF to finance climate money.” If necessary, Habeck would just have to relocate. Or else: The national CO2 price is rising faster, so that more money is flowing into the KTF. As is well known, a set screw can be turned in two directions.