Robert Habeck’s heating law met with fierce resistance. Many households are afraid of an expensive modernization obligation. Climate economists, on the other hand, warn against the old technology. Because from 2026 onwards, burning gas and oil will only get really expensive.
If Germany wants to achieve its climate goals, CO2 emissions must be drastically reduced. A particularly large chunk: Around three quarters of all apartments in Germany are heated with fossil fuels. Heat pumps are on the rise, but are only becoming established slowly. With the Building Energy Act, the federal government wants to promote the heating transition. Critics warn of an expensive modernization pressure that many households cannot manage on their own.
But what is the alternative? One Investigation by the climate and economic research institute MCC Berlin warns: The continued operation of a fossil heating system could be even more expensive for households than the installation of a heat pump. Because from 2026, the CO2 pricing of oil, gas and fuels is to be switched to Europe-wide emissions trading. The price is no longer set, but the maximum amount of emissions that may be emitted so that the climate targets set by the EU are achieved. Fossil fuel suppliers must purchase carbon credits for the amount they sell. The price then results from the balance of supply and demand.
“It has not yet fully transpired what this means for consumers,” fears MCC study leader Matthias Kalkuhl. His team has done the math and uses several sample calculations to show which households the climate tax could hit the hardest – and who benefits most from compensation payments such as climate money.
From 2027, the big price shock threatens
So far, German consumers have paid an emissions tax on fossil fuels such as gas, heating oil, petrol or diesel, the price of which is set at 25 euros per tonne. At the start of 2021, this corresponded to around seven cents per liter for premium petrol and eight cents for diesel and heating oil. In the case of natural gas, about 0.5 cents per kilowatt hour were incurred. This tax will gradually increase to 55 euros per tonne of CO2 by 2025, i.e. slightly more than double.
It is difficult to predict what will happen after that. A lot depends on how quickly fossil fuels are replaced by climate-friendly alternatives and emissions are significantly reduced – or how many certificates the EU brings to the market. However, experts assume that the price of CO2 will skyrocket from 2027 onwards.
In model calculations, researchers have determined the price range in which a tonne of CO2 would theoretically have to be traded for the climate protection concept to work. The incentive to save CO2 should be big enough to make investing in climate-friendly technologies worthwhile.
The MCC team also bases itself on these considerations and comes to the conclusion: Without funding programs and effective climate protection measures, the CO2 price could rise to 200 to 300 euros per tonne by 2030. The researchers predict that the result would be a price shock similar to that at the beginning of the energy crisis in 2022.
Accordingly, a four-person household with gas heating would have to raise between 15,300 and 16,200 euros more in the next 20 years. With oil heating, the additional costs even add up to around 18,500 to 23,500 euros. Singles living in single or multi-family houses bear additional costs of 13,500 to a good 21,000 euros if they heat with oil, and 9,700 to 16,800 euros if they operate a gas boiler.
Single people in large houses are heavily burdened
From the point of view of the climate economists, these CO2 costs should be sufficient to make the switch to heat pumps, electric cars or public transport palatable for private households – even without state subsidies. However, those affected can hope for compensation payments. According to the coalition agreement, the revenue from the CO2 tax is to be paid back to the citizens as so-called climate money. An income-independent per capita flat rate is being considered.
Multi-person households in particular would benefit from this. According to the MCC calculations, your CO2 expenditure would even be overcompensated at times. In other cases, carbon spending exceeds repayments. This is intentional: anyone who lives in large houses and drives heavy cars with high fuel consumption should pay more into the system than they get back. The MCC warns that this consumption-based approach not only affects wealthy single people, but also single pensioners. The calculations show that the climate money is hardly sufficient to compensate for the increased heating costs.
The experts are therefore in favor of greater weighting: Instead of distributing the income from certificate trading according to the watering can principle, the state should focus on those who cannot manage the fossil phase-out on their own: people who do it themselves Because of their income or their living situation, they cannot choose what they use for heating or commuting to work.
Those who can afford a heat pump benefit twice over
The MCC paper points to another effect that should be considered when designing the climate money: Those who can afford it and invest in energy-efficient, climate-friendly equipment at an early stage not only have lower CO2 expenditure later on, but also cancel on top of that the climate allowance that less privileged households need to cover costs.
The heat pump business is already booming. In the short term, however, the announced ban on installing fossil fuel heating systems also seems to be boosting demand for gas heating systems, according to figures from the heating technology industry association. Kalkuhl can only advise against investing in a kind of last-minute panic on a new gas boiler in order to be free from a forced switch for the next few decades: “People have to be aware of the high follow-up costs they will have to face,” he says. It is the task of politicians to clearly communicate these costs.
However, it is a calculation with many unknowns. For example, it is unclear how the market prices for electricity, gas and heating oil will develop. A lot also depends on whether the growing demand for electricity for the many newly purchased heat pumps and e-cars can be covered using “green” energy. If the demand for fossil energy remains high, the necessary certificates will be correspondingly expensive. On the other hand, if the emission rights are traded too cheaply, the incentive to save is lost.
Economic experts like Kalkuhl are already warning politicians against price signals that undermine climate protection. In order to give citizens more planning security, a minimum price could also be set, explains Kalkuhl. This would allow everyone to calculate for themselves how large the guaranteed savings will be in each case.
Everything back to the beginning?
Politicians still have time to prepare the economy and the population for the upheavals on the energy market. The Building Energy Act could play an important role here: “Regulatory measures of this kind are actually intended to help citizens to make the right decisions,” says the MCC researcher.
But even within the coalition, there is disagreement as to whether this is the right path. The FDP is now even more or less openly in favor of overturning the project. Even experts like the climate researcher Ottmar Edenhofer or the Economics Veronika Grimm recommend the coalition partners to start all over again – and to focus more on the CO2 price.
MCC researcher Kalkuhl sees it similarly, but adds: “I would be careful to say that the CO2 price is enough as a measure.” The risk is too great that the market principle will place an excessive burden on lower income groups and increase social imbalance. Who bears the brunt of tenancies? Who gets cheap loans or grants for eco-heating construction? “The CO2 price does not automatically solve such things,” says Kalkuhl. Even the climate allowance does not create the necessary compensation. The Building Energy Act could therefore fill a gap. But the coalition partners would have to pull together to do this.